Illinois Court Limits State Farm ACV Class Action Claims in Multi-State Dispute
An Illinois district court has issued a partial ruling on a nationwide class action lawsuit against State Farm concerning allegations that the insurer undervalued actual cash value (ACV) payments by applying a "typical negotiation adjustment" (TNA), reducing payouts by 4-11%. The plaintiffs argue this discount was applied to aggregated used vehicle internet prices without proper disclosure. The lawsuit includes claims of breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment, and violations of Illinois consumer protection statutes.
The court granted State Farm summary judgment on claims brought under the consumer protection laws of Alaska and West Virginia, citing state-specific exclusions for insurers. However, the court denied summary judgment for claims under the consumer protection acts of Kentucky and Mississippi, allowing those claims to proceed. Importantly, the court determined that the Mississippi statute's limitation to merchandise claims did not exclude insurance claims in this context.
Regarding unjust enrichment, the court found that such claims are intertwined with alleged fraudulent concealment and fraud in inducement, which remain viable and not subject to dismissal. Similarly, the court ruled that whether State Farm's use and nondisclosure of the TNA under contract terms is permissible should be decided by a jury rather than through summary judgment.
On claims related to the duty of good faith and fair dealing, the court granted State Farm summary judgment where plaintiffs sought independent legal claims under Illinois law, noting no standalone claim exists separate from breach of contract claims. The court also clarified that disputes involving alleged misrepresentations and nondisclosures about the use of the TNA go beyond straightforward ACV disputes and are not subject to mandatory appraisal procedures in insurance contracts.
The ruling addresses procedural aspects such as the applicability of class action claims under Kentucky and Mississippi consumer protection laws despite restrictions, emphasizing that Federal Rule 23 governs the latter. The order dismissed several time-barred individual claims and deferred ruling on some claims pending further motion decisions. Overall, this ruling delineates the complex interplay between state consumer protection laws, insurance contract disputes, and procedural mechanisms in multi-state class action litigation involving ACV valuation practices.
