5th Circuit Rejects Class-Action Suit that Alleged Autosource Software Undervalued Total Loss Claims

By Claims Journal staff | December 28, 2023

A federal appellate court reversed a trial court’s decision to certify a class of plaintiffs in a lawsuit that alleged State Farm Mutual Automobile Insurance Co. undervalued total-loss claims by Louisiana claimants.

A panel of the 5th Circuit Court of Appeals rejected an assertion by the plaintiffs’ attorneys that State Farm’s use of the Autosource Market-Driven Valuation software was improper because it resulted in actual cash value estimates lower than those in the National Automobile Dealers Association’s Official Used Car Guide. The opinion says the NADA value “was just one of many statutorily acceptable methods for calculation ACV.”

Connie Bourque’s car was destroyed in a March 2018 crash. She filed a claim with State Farm, which determined the vehicle was a total loss and used Autosource’s product to determine the actual cash value of the vehicle.

Bourque filed a lawsuit in October 2019, seeking to certify a class of all persons insured by State Farm who made a claim for first-party total loss that State Farm valued using the Autosource product. The US District Court of Western Louisiana granted a narrower certification that included only those State Farm policyholders whose total-loss claims were valued using AutoSource and received a valuation less than the NADA estimate.

State Farm appealed the decision.

The appellate panel noted in its opinion that another panel of the 5th Circuit ruled in October that NADA is only one source that can be used to determine the actual cash value of a vehicle. In that case, Sampson v. United Services Automobile Association, a putative class of claimants sought to challenge the use of the CCC One Market Valuation Report to determine actual cash value.

The same district court judge who cleared the class-action lawsuit in the State Farm case, James D. Cain Jr., had certified a class of plaintiffs in the suit against USAA. The panel said under 5th Circuit rules, the ruling in Sampson controls its decision in the Bourque lawsuit against State Farm.

The panel said Bourque “picked out NADA and NADA alone” even though “other valuation methods, including (Kelley Blue Book) and others, [are] equally legal and legitimate alternatives.”

The panel concluded that Bourque had failed to establish an underlying breach of contract that would qualify as proof of injury to support certification of a class of plaintiffs in the case against State Farm. The panel vacated the district court’s ruling and remanded the case.

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