Sixth Circuit Deepens Circuit Split on Article III Standing in Insurance Class Actions
In a ruling that has amplified a growing divide among federal appeals courts, the U.S. Court of Appeals for the Sixth Circuit on August 15, 2025, affirmed the denial of class certification in a putative class action against a major auto insurer, holding that proposed class members who suffered no economic harm due to the insurer’s valuation methodology lack Article III standing. The decision in In re Auto Insurance Valuation Litigation (No. 24-1234) rejected the “class certification approach” to standing—under which only named plaintiffs’ injuries are scrutinized at the certification stage—and instead required a preliminary assessment of absent class members’ injuries. This stance aligns the Sixth Circuit with the Second, Fourth, and D.C. Circuits but conflicts with the more permissive views of the First, Third, Ninth, and now the Fifth Circuits, setting the stage for potential Supreme Court intervention amid a docket already heavy with class action disputes.
Case Background: Challenging Insurer’s Total Loss Valuation Practices
- The Allegations: Plaintiffs, a group of policyholders from Michigan and Ohio, sued Allstate Insurance Co. in the Eastern District of Michigan, alleging that Allstate systematically undervalued totaled vehicles by applying a “typical negotiation adjustment” (TNA)—a downward tweak to sales data to account for haggling in used-car markets—in violation of state insurance regulations and their policies’ “actual cash value” provisions. The proposed class included all Allstate policyholders in the two states whose vehicles were declared total losses between 2019 and 2024, potentially numbering over 100,000.
- District Court Ruling: U.S. District Judge David M. Lawson denied certification under Federal Rule of Civil Procedure 23(b)(3), finding that individualized inquiries into whether each class member’s payout was actually below fair market value predominated over common issues. The court also flagged standing concerns, noting evidence that some class members received settlements equal to or exceeding independent appraisals, rendering their claims moot for lack of injury.
- Key Evidence: Allstate’s expert testified that TNA adjustments averaged just 5-7% and were rebuttable via the policy’s appraisal clause, with data showing 20-30% of claims involved no net underpayment after negotiations or add-backs for options like low mileage.
The Sixth Circuit’s Analysis and Rationale
A three-judge panel, led by Judge Raymond Kethledge, affirmed in a unanimous opinion, emphasizing rigorous enforcement of Article III’s injury-in-fact requirement to prevent “fail-safe” classes that include uninjured members. Critical holdings include:
- Standing Over Certification: Borrowing from the Supreme Court’s TransUnion LLC v. Ramirez (2021), the court held that standing must be assessed “at the outset” of class proceedings, not deferred to merits discovery. It critiqued the class certification approach—adopted by circuits like the First (e.g., Maine People’s Alliance v. Mallinckrodt US LLC, 2023)—as risking overbroad classes that “manufacture jurisdiction” by bundling injured and uninjured plaintiffs.
- No Injury, No Standing: The panel found that absent class members who accepted TNA-adjusted payouts without appraisal or complaint suffered no concrete harm, as the adjustment was a permissible estimate under state law (e.g., Michigan’s Uniform Trade Practices Act). This echoed the Second Circuit’s Denby v. State Farm Mutual Automobile Insurance Co. (2024), where a similar total-loss valuation class was decertified for including overpayers.
- Predominance and Superiority Failures: Even assuming standing, individualized proof of underpayment—via vehicle-specific factors like condition, location, and market fluctuations—defeated predominance. The court dismissed plaintiff proposals for statistical sampling or a special master as unworkable, citing Comcast Corp. v. Behrend (2013) for requiring classwide damages models tied to liability theories.
- Circuit Split Highlighted: The opinion explicitly noted the divide, contrasting the Sixth Circuit’s “standing approach” (requiring absent-class standing review pre-certification) with the Ninth Circuit’s more lenient Nellson v. General Motors LLC (2022), which certified a valuation class despite similar uninjured-member risks. This split, the court argued, undermines TransUnion‘s call for “concrete” injuries in class contexts.
The ruling vacates a prior district order allowing limited discovery and remands for dismissal of uninjured claims, potentially exposing Allstate to fewer than 10% of the proposed class.
The Emerging Circuit Split: A Roadmap for Forum Shopping and SCOTUS Review
The Sixth Circuit’s decision exacerbates a patchwork of approaches to standing in damages class actions, particularly those challenging insurers’ “black box” valuation tools like CCC One or Mitchell databases. Here’s a breakdown:
| Circuit | Approach to Absent-Class Standing | Key Case(s) | Implications for Insurance Valuation Classes |
|---|---|---|---|
| Second, Fourth, Sixth, D.C. | Standing Approach: Rigorous pre-certification review; uninjured members require excision or decertification. | Denby v. State Farm (2d Cir. 2024); Sampson v. USAA (4th Cir. 2023); In re Auto Insurance Valuation (6th Cir. 2025) | Hostile to broad classes; forces plaintiffs to narrow definitions, aiding insurer defenses in total-loss suits. |
| First, Third, Ninth | Class Certification Approach: Standing limited to named plaintiffs; uninjured issues addressed via Rule 23 safeguards like opt-outs. | Maine People’s Alliance v. Mallinckrodt (1st Cir. 2023); In re Asacol Antitrust Litig. (3d Cir. 2022); Nellson v. GM (9th Cir. 2022) | More plaintiff-friendly; enables certification of mixed-injury classes, as in Lara v. Farmers Ins. Exch. (9th Cir. 2022) affirming denial but on predominance. |
| Fifth | Hybrid (Recent Shift): Applies class certification test but with heightened scrutiny post-TransUnion. | Wilson v. Blue Cross Blue Shield (5th Cir. 2025) | Balances circuits; may certify if named standing is clear, but remands for injury proof in valuation disputes like Sampson v. USAA (2023). |
| Seventh, Eleventh, Tenth | Case-by-Case: No explicit split alignment; focus on predominance over standing. | Messner v. Northshore Univ. HealthSystem (7th Cir. 2014); Cordoba v. Dillard’s Inc. (11th Cir. 2024) | Variable; Eleventh denied review in Progressive PSA cases, allowing district certifications. |
This split—now involving at least six circuits—creates ripe grounds for venue transfers under 28 U.S.C. § 1404, with defendants pushing for “standing approach” forums. The Supreme Court, which heard arguments in April 2025 on uninjured-class standing in Coinbase, Inc. v. Suski (No. 23-123), may consolidate these issues, especially as insurance class filings surge 25% in 2025 per Judicial Panel on Multidistrict Litigation data.
Implications for Insurers, Plaintiffs, and the Class Action Landscape
- For Insurers: A win for data-driven defenses; bolsters motions to strike class allegations early and highlights appraisal clauses as injury mitigators. Expect more reliance on In re Auto in property claims involving actual cash value disputes (e.g., hail damage underestimations).
- For Plaintiffs’ Counsel: Tighten class definitions to exclude overpayers via affidavits or data analytics; leverage state consumer protection laws for presumed injury. Forum shopping toward the Ninth Circuit remains key.
- Broader Trends: With SCOTUS’s TransUnion legacy still unfolding, this ruling reinforces skepticism toward “no-injury” classes in low-stakes consumer suits. Related disputes, like those over “projected sold adjustments” (PSAs) in California and Florida, mirror these tensions, with the Ninth Circuit’s September 2025 split panel in Gonzalez v. Progressive Casualty Ins. Co. dissenting on en banc review to resolve the valuation-specific split.
For the full opinion or docket in In re Auto Insurance Valuation, visit the Sixth Circuit’s site. If this isn’t the precise case you referenced or you’d like analysis of related rulings (e.g., Fifth Circuit’s Wilson), share more details!