Standing, valuation, and certification: Key takeaways from the Sixth Circuit’s en banc decision

Introduction

On April 24, the en banc U.S. Court of Appeals for the Sixth Circuit decided Clippinger v. State Farm Auto. Ins. Co., 173 F.4th 817. By a vote of 10-7, the court ruled that an insurance dispute about the valuation of totaled cars cannot proceed as a class action. This decision evinces a skepticism of creative forms of mathematical proof and sheds light on how the Sixth Circuit views the intersection of class action law and standing doctrine. 

Facts

The plaintiffs were State Farm vehicle insurance policyholders whose vehicles suffered a “total loss,” meaning that State Farm determined that the cost of repairing the car would exceed the cost of replacing it. Clippinger v. State Farm Mut. Auto. Ins. Co., No. 220CV02482TLPCGC, 2023 WL 7213796, at *1 (W.D. Tenn. Aug. 25, 2023). Under their insurance policies, State Farm compensated the plaintiffs by paying them the “actual cash value” (ACV) of their vehicle, the allowed calculation methods of which were governed by the policies and by Tennessee law. Id. 

State Farm calculated ACV through Audatex, a third-party database that estimates value by aggregating the value of similar vehicles. Id. at *2. The database finds vehicles comparable to the policyholder’s and then applies a “typical negotiation adjustment” (TNA) to estimate the vehicle’s sale price as opposed to its advertised price. Id. Audatex would then arrive at the ACV by applying the comparison vehicles’ estimated sale price to the totaled vehicle and making certain adjustments. Id. 

The plaintiffs challenged use of the TNA as a breach of contract. Id. at *3. They argued that State Farm “cherry-picks” high-price comparison vehicles and that internet-induced market changes have made the TNA obsolete. Id. at *3.

District court decision

The U.S. District Court for the Western District of Tennessee certified a class under Fed R. Civ. P. 23(b)(3). State Farm opposed certification by arguing, among other things, that class issues do not predominate over individual ones because the plaintiffs sustained an injury only if their car was undervalued. Clippinger, 2023 WL 7213796at *11. Thus, each plaintiff’s claim turned on the individualized determination of whether that plaintiff received more or less than the plaintiff was entitled to. Id.

Disagreeing, the district court rejected this argument and held that, if the use of a TNA is improper under the policies, the plaintiffs have alleged an injury for breach of contract regardless of what value they received. Id. Thus, the court said, the individualized injury identified pertains only to damages, not liability. Id. The district court also allowed the plaintiffs to create a harmonized class-wide damages model by “running every step of State Farm’s methodology except the TNA.” Id. at *12.

Panel decision

A three-judge panel affirmed the district court’s grant of class certification. Clippinger v. State Farm Auto. Ins. Co., 156 F.4th 724 (6th Cir. 2025). The court agreed that a breach of contract constitutes an injury regardless of whether the plaintiff suffered pecuniary loss. Id. at 733. The decision further “[a]gree[d] with the district court that such individualized damage inquiries do not defeat predominance because they flow from the same theory of liability.” Id. at 738. In upholding class certification, the opinion explicitly rejected the approaches of the Third, Fourth, Fifth and Seventh circuits. Id. at 739. 

En banc decision

The court reversed itself on rehearing en banc, bringing the circuit’s approach in line with that of its peers. Clippinger v. State Farm Auto. Ins. Co., 173 F.4th 817 (6th Cir. 2026). The court held that “individual valuation questions will predominate over any common issues.” Id. at 832. The opinion did not resolve the question of whether breach of contract without pecuniary loss can ever constitute an injury. Instead, it reached the narrower conclusion that State Farm promised only to pay the ACV of the totaled vehicle, not to use any particular method for calculating it. Id. at 829. Thus, only those plaintiffs who were undercompensated could establish liability. Id. at 830. 

The panel also held that the district court exceeded its authority in violation of the Rules Enabling Act by creating a class-wide damages model that runs State Farm’s formula but omits the TNA. Id. at 834. The Rules Enabling Act does not allow procedural rules to “abridge, enlarge, or modify any substantive right.” 28 U.S.C. § 2072(b). The valuation model, however, circumvented “claim-by-claim proceedings” by using a “trial by formula.” Clippinger, 173 F.4th at 834(quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 367 (2011)).

En banc concurrence and dissent

This decision included concurring and dissenting opinions. Judge John K. Bush’s concurrence covered much of the same ground as the majority opinion, but it added two interesting observations.

First, the concurrence made the economic case that a class action would not be superior to other methods of dispute resolution, as is required for certification under Fed. R. Civ. P. 23(b)(3). Bush argued that, because of the need for complex proof of individualized damages, “Clippinger’s proposed class action is no different from individual suits as a practical matter.” Clippinger, 173 F.4th at 841. He further argued that because class adjudication would impose massive costs on State Farm, which may eventually be passed on to consumers, “certifying this class action could harm consumers in the aggregate far more than it could help them.” Id.

Second, Bush wrote that the case highlights standing issues that may become important in future litigation. The Supreme Court has not yet determined whether the presence of uninjured class members defeats Article III standing. Clippinger, 173 F.4th at 843. However, he argued that the presence of uninjured plaintiffs can create problems under the requirement of Fed. R. Civ. P. 23(a)(1) that “the putative class is so numerous that joinder of all members is impracticable.” According to Bush, uninjured plaintiffs should not count toward the numerosity requirement, so a class represented by a small number of named injured plaintiffs but containing a larger number of uninjured plaintiffs should not be certified. Clippinger, 173 F.4th at 843.

Judge Julia Smith Gibbons, joined by Judges Karen Nelson Moore, Eric L. Clay, Stephanie Dawkins Davis, Andre B. Mathis, Rachel S. Bloomekatz and Kevin G. Ritz, dissented. Gibbons argued that, even if damages must be determined individually, the question of whether a contract was breached provides sufficient connective tissue to satisfy the predominance requirement of Fed. R. Civ. P. 23(b)(3). Clippinger, 173 F.4th at 848. She also noted that allegedly the TNA was always a downward adjustment. Id. at 850. Gibbons thus agreed with Ninth Circuit precedent that she interprets as permitting class certification when “the challenged adjustment categorically results in all class members receiving less than the [ACV].” Id. at 851 (citation modified). Finally, the dissent rejected the majority’s conclusion that the district court’s mathematical method violated the Rules Enabling Act. It argued that “[b]ecause State Farm can still present individualized valuation evidence in later damages proceedings, certifying this class would not abridge State Farm’s substantive rights in defending its valuation practices.” Id. at 853. 

Takeaways

This case’s importance extends beyond this type of insurance dispute. It indicates that novel forms of mathematical proof used to smooth over class differences may violate the Rules Enabling Act, especially in the Sixth Circuit. This may support defenses to class certification in discrimination cases, toxic tort cases and other types of actions dependent on statistical evidence. Additionally, open questions about the effect of uninjured plaintiffs loomed large in this case. Many commentators believe that the Supreme Court may soon try to resolve this confusion. Finally, this en banc decision reined in a panel opinion that diverged from other circuits, demonstrating that litigants can prevail, even short of the Supreme Court, by challenging unfavorable rules that make their jurisdiction an outlier.