Q3 2025 Class Action and Arbitration Rights Developments Affecting Insurance

During the third quarter of 2025, significant developments arose concerning class action litigation and arbitration rights, notably impacting insurance-related disputes.

Firstly, circuit courts diverged on how district courts should treat expert evidence in class certification. The Seventh Circuit emphasized that admissible expert evidence must substantiate Rule 23 requirements beyond merely passing admissibility. In contrast, the Ninth Circuit allowed the consideration of expert evidence at certification even if not yet complete or formally admissible, creating a circuit split reflective of unresolved Supreme Court interpretations.

Secondly, several appellate courts clarified circumstances under which parties waive arbitration rights. The Sixth Circuit ruled that extensive litigation activity before seeking arbitration could signal a waiver. However, it also determined that a party cannot waive arbitration rights unknowingly, reaffirming the necessity of actual or constructive knowledge before a waiver is valid. Furthermore, the Eighth Circuit allowed arbitration to proceed on newly asserted claims despite prior waiver of older claims, highlighting that only claims pending at waiver are affected. The Eleventh Circuit confirmed that clear contractual delegation provisions can assign waiver issues themselves to arbitration.

Finally, a circuit split emerged around class certification in "total loss" insurance claims involving automobile valuations. The Third, Seventh, and Ninth Circuits denied class certification due to predominance of individual valuation issues over common questions when insurers used project adjustments in valuing totaled vehicles. Contrarily, the Sixth Circuit certified a class in a similar dispute, deeming individualized valuation disputes as separate damages issues manageable outside certification determination.

These developments illustrate evolving judicial interpretations affecting class actions in insurance, particularly impacting antitrust price-fixing, consumer product labeling, arbitration enforcement, and auto insurance total loss claims. Insurers, litigators, and compliance professionals should note the heightened analytical rigor on expert evidence at certification, the strategic importance of timely arbitration motions, and the challenges of managing valuation-based class actions amid circuit disagreements.