In Clippinger v. State Farm Automobile Insurance Company, — F.4th —- (6th Cir. 2025), the United States Court of Appeals for the Sixth Circuit upheld class certification in a lawsuit filed by Tennessee policyholder Jessica Clippinger on behalf of herself and all others similarly situated. Clippinger alleged that State Farm breached its auto insurance contracts and violated Tennessee law by applying a “Typical Negotiation Adjustment” (TNA) that reduced the valuation of totaled vehicles. The adjustment, created by a third-party vendor (Audatex), was designed to account for typical consumer bargaining but allegedly resulted in systematically lower payouts that did not reflect true market values. The district court certified a class of Tennessee insureds whose total-loss payments were reduced by the TNA, and the Sixth Circuit affirmed that certification.

The Sixth Circuit held that the seven requirements for class certification were satisfied — the four under Rule 23(a) (numerosity, commonality, typicality, and adequacy), the two under Rule 23(b)(3) (predominance and superiority), and the implied requirement of ascertainability. Judge Julia Gibbons, writing for the majority, found that whether State Farm’s use of the TNA breached its contractual duty to pay “actual cash value” was a common legal question that could be resolved with classwide evidence. The court rejected State Farm’s arguments that individual valuation differences defeated predominance, reasoning that liability could be determined uniformly by recalculating values without the TNA, even if damages varied.

Judge Murphy dissented, arguing that the decision created a circuit split with the Third, Fourth, Fifth, Seventh, and Ninth Circuits, which have refused class certification in similar auto valuation cases on the ground that individualized vehicle value inquiries would predominate. The Clippinger decision is notable for solidifying the Sixth Circuit’s broader approach to class certification in insurance valuation disputes, holding that uniform valuation methodologies alleged to systematically underpay claims may be challenged through classwide litigation.  Texas is in the Fifth Circuit.

No information in this communication is intended to constitute specific legal advice.  For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at phuttenbach@craincaton.com.

Thanks,

Pat

William “Pat” Huttenbach | Shareholder | Banking Litigation
Crain Caton & James | Attorneys & Counselors
Five Houston Center | 1401 McKinney St., Suite 1700
Houston, TX 77010
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Clippinger v State Farm