Ninth Circuit Denies Class Certification in Progressive's Totaled Vehicle Valuation Dispute
The Ninth Circuit recently ruled on Ambrosio v. Progressive Preferred Insurance Company, a class action dispute over the use of a "projected sold adjustment" (PSA) in calculating market value for totaled vehicles. The PSA, a downward adjustment reflecting negotiated sale prices below list price, was challenged by plaintiffs arguing it failed to account for legitimate reasons for below-list sales or sales above list price, raising claims of breach of contract, breach of the covenant of good faith, unjust enrichment, and declaratory relief.
The district court initially found class certification requirements met under Rule 23(a), but denied certification based on Rule 23(b)(3) due to predominance of individual questions related to actual cash value (ACV) calculations for each insured. A split Ninth Circuit panel affirmed this decision. The majority, referencing prior Ninth Circuit rulings such as Lara v. First National Insurance and Jama v. State Farm, held that unlike in Jama where state law prohibited negotiation adjustments, Arizona law did not make PSA use unlawful or create class-wide liability.
The court emphasized that Progressive's policies did not explicitly forbid PSA, and that damages were not presumed. It noted Progressive could show individualized issues preventing uniform recovery, as some insureds received valuations exceeding those from industry standards like NADA and Kelley Blue Book. This necessitated case-by-case evaluation, undermining class certification.
Judge Wallach dissented, contesting that the policy did not authorize PSA use beyond market value, age, and condition at loss time. He argued PSA's method breached a duty to correctly calculate ACV since PSA was exclusively a downward, unbalanced adjustment. He challenged the majority’s acceptance of NADA and KBB as policy-authorized valuation tools, and took issue with the majority’s rationale that hypothetical lower valuations would negate injury claims.
The dissent noted conflicts among and within circuits concerning class certification in PSA disputes, highlighting pro-certification rulings by the Eleventh and Tenth Circuits and mixed outcomes in other jurisdictions. Within the Ninth Circuit, Wallach differentiated Lara and Jama, seeing the policy's valuation terms akin to legal prohibitions found in Jama.
The dissent warned the majority’s approach, which permits uninjured class members to limit certification, conflicts with Ninth Circuit en banc decisions like Olean Wholesale Grocery, which broadly favor class inclusion. The Ambrosio plaintiffs have filed for an en banc rehearing to address these contradictions.
This case underscores continuing judicial division over valuation methodologies used by insurers in totaled vehicle claims, focusing on the interplay of insurance policy language, state law, and class certification standards. It also illustrates challenges in litigating large scale class actions where individualized valuation disputes predominate.
The prospective en banc review could reshape Ninth Circuit precedent on class certification, particularly regarding the inclusion of uninjured class members and the validity of PSA use in insurance claims. Industry stakeholders should monitor these developments for their implications on plaintiff strategies and insurer defense approaches in valuation disputes.
As all Ninth Circuit judgeships are currently filled, a full court rehearing is possible, which would be an unusual and significant procedural event in class action jurisprudence involving insurance claim valuations. This case contributes to broader national discussions on standardizing insurance claim valuation methods and the judicial treatment of class actions in this context.