State Farm Mutual Automobile Insurance Company, et al. v. Faysal A. Jama, et al.

Auto insurance policies typically promise to pay policyholders the “actual cash value” of insured vehicles that are deemed a total loss. To determine that value, insurers use a variety of methods to estimate a vehicle’s pre-accident fair market value. Policyholders across the country have brought class actions against insurers alleging that the methods they use to determine actual cash value violate a statute, regulation, or contract. Disagreeing with the Fifth Circuit, the divided Ninth Circuit panel below held that plaintiffs are entitled to class certification based on that allegation alone, no matter whether any class member was actually shortchanged as a result of the insurer’s valuation method. The questions presented are:

1. Whether a Rule 23(b)(3) damages class can be certified based on an alleged violation of a statute, regulation, or contract, even if determining whether the violation resulted in any real-world harm to each class member would require highly individualized proceedings.

2. Whether a Rule 23(b)(3) damages class can be certified when some members of the proposed class lack any Article III injury.