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Slade v. Progressive Security Insurance Co.

United States District Court, W.D. Louisiana, Lafayette Division

October 31, 2014

Progressive Security Insurance Co.


RICHARD T. HAIK, Sr., Magistrate Judge.

Before the Court is Motion For Class Certification, filed by plaintiff, Cheryl Slade, individually and on behalf of others similarly situated, [Rec. Doc. 103], a Memorandum in Opposition to plaintiffs' motion filed by Progressive Security Insurance Company ("Progressive") [Rec. Doc. 108] and plaintiffs' Reply thereto [Rec. Doc. 115]. In addition, on September 16, 2014, the Court conducted an evidentiary hearing during which the Court heard live and video testimony and has received and reviewed additional documents and deposition testimony in connection with the hearing. Based on the foregoing, the Court makes the following findings of fact and conclusions of law[1] in finding that plaintiff has met her burden under Federal Rule of Civil Procedure 23 to satisfy the prerequisites for class certification.

Findings of Fact

On November 10, 2011, plaintiff, Cheryl Slade, ("Slade") filed this action in the Fifteenth Judicial District Court, Lafayette Parish, Louisiana. R. 1-2, Complaint & Amended Complaint. Progressive removed the action to this Court on December 16, 2011. Plaintiff, an insured of Progressive in the State of Louisiana, alleges that Progressive paid her, and others similarly situated, less for their total loss vehicles than the amount to which they were entitled under their insurance policies. Plaintiff seeks to recover damages for breach of insurance contract, statutory penalties and attorney's fees under La. R.S. 22:1973(A) and (B)(5) and fraud.[2] Plaintiff also prays that this matter be certified and maintained as a class action:[3]

All named Louisiana Progressive insureds who received payment for total loss motor vehicles located in the State of Louisiana, under the terms of their collision automobile insurance policy with Progressive Security Insurance, utilizing the Mitchell Work Center Total Loss (WCTL) system, from July 1, 2010 to the date of notice of class certification.

In July 2010, Progressive began using a proprietary product called Work Center Total Loss ("WCTL") licensed from Mitchell International, Inc. ("Mitchell")[4], to determine the actual cash values of total loss vehicles in the State of Louisiana. Prior to July 2010, Progressive determined the actual cash value of total loss vehicles in Louisiana by using the National Automobile Dealers Association ("NADA") Guidebook.[5]

Since July 2010, Progressive has used WCTL to determine first party total loss values for approximately 15, 000 claims in Louisiana. R. 123, pp. 177:1-178:6.

WCTL provides total loss valuations automatically based on comparable vehicle data contained in its computer system and objective loss vehicle data provided to it by Progressive inspectors, called Manage Repair Representatives ("MRR"), through a computer interface. Included among the data provided by the MRR to the WCTL system are the Vehicle Identification Number (VIN) - which includes the vehicle make, model, configuration (e.g. extras) and year - as well as the mileage and license plate number. R. 123, pp. 130:20-132:15. The MRR also assigns a numerical value between 1 and 5 to reflect the overall vehicle condition as to each of thirteen characteristics listed in the Valuation Report, including Interior, Exterior, Mechanical and Tire. Id., pp. 84:15-85:15; pp. 142:21-143:4; R. 103, Ex. F; R. 110-4, Nayak Declaration.

Although the Progressive records contain verbal descriptions of the vehicle conditions which the MRR considers and uses in the assignment of the overall condition value, the WCTL computer system does not take this information into account, relying on only the numerical condition characteristics to reach its value determination. Id., p. 144:6-18; Nayak Depo., p. 104:1-24.

WCTL uses weighted averages of the condition values to arrive at an overall condition score between 1 and 5. The score is provided to Progressive within seconds of receiving the loss vehicle information input from the MRR. R. 123, p. 148:15; R. 110-4, Nayak Declaration.

Relying on the loss valuation numerical value only, the WCTL system locates vehicles comparable to the loss vehicle by searching a collection of vehicles being offered for sale by a dealer located as close to the loss vehicle's Zip Code as possible. The WCTL's collection of comparable vehicles is updated at least monthly. Id., pp. 140:15-22; 145:22-25; 147:4-13.

The MRR does not have discretion to deviate from the WCTL numerical value. Creech Depo., p. 21:3-11; Bunney Depo., p. 62:4-10, Prejean Depo. pp. 33:17-34:2, 53:3-54:18.

The WCTL methodology is different from the methodology used by NADA or KBB. R. 123, Hassell, pp. 219:23-25.

NADA and KBB provide values based on all sales within a given region, i.e. Southwestern Edition for Arkansas, Louisiana, Oklahoma and Texas. WCTL bases its value on selected comparable vehicles within a set distance from the loss vehicle: three for cars, five for trucks. Id., pp. 168:1-6; 201:23-203:7.

NADA and KBB publish a single retail number, i.e. "retail clean." Id., p. 109:3-17. The is the same as in the Mitchell condition guide - as a vehicle gets older, the more damage it has. Id., pp. 169:8-171:1.

A Progressive claims adjuster can determine the NADA value of the loss vehicle by pressing an "NADA button" on his or her computer. R. 126-2, Bunney Depo., pp. 60:15-25; R. 126-3, Prejean Depo., pp. 52:14-24, 54:19-25; 58:21-59:11.

WCTL bases its value on an existing pool of comparable vehicles within a set distance from the loss vehicle: three for cars, five for trucks. WCTL then "adjusts" the comparable vehicles to match the loss vehicle, by adding or subtracting value for differences in vehicle equipment or mileage. R. 123, Hassell, pp. 151:9-152:23. The comparable values are then averaged to arrive at a "base price" which is further adjusted for the condition of the loss vehicle. The overall condition factor is used to determine a percentage reduction or increase of the base price. If the condition factor is less than 3.0, the base price is adjusted downward by a certain percentage based on the difference between the overall condition factor and 3.0. If the condition factor is greater than 3.0, then the base value is adjusted upwards. R. 123, Retton, pp. 154:8-155:16.

WCTL adjusts base values downward for condition more than four times more often than it adjusts them upwards for condition. Id., p. 200:6-15; R. 103, Ex. C, at MITCHELL000804; Ex. H.

Comparable vehicles used by WCTL may be in a wide variety of conditions. R. 123, Retton, pp. 216:20-218:18. The WCTL system has no information as to the condition of the comparable vehicles and does not take such information into consideration in determining the base price. Id., pp. 203:22-25; 204:1.

Progressive represents that a condition rating of 3.0 is "typical" throughout its implementation of WCTL. The 3.0 rating is "typical" for vehicles offered for retail sale on dealers' lots, not cars on the street, for which the typical rating is 2.82. This difference is due to the fact that dealers prepare used cars for retail sale to make them "ready for sale." Id., pp. 187:1-192:3; 199:12-19.

If a loss vehicle's rating is 2.82, WCTL reduces the base price by a factor to show the difference between 2.82 and 3.0. Id., p. 193:8-12.

Every Progressive insured whose total loss is determined by the WCTL system in Louisiana receives a Mitchell Work Center Total Loss Report, setting forth the WCTL valuation. Id., pp. 132:22-133:3.

A marketing presentation by Mitchell to prospective insurance company clients stated that the average market value as determined by WCTL was $6780, as compared to an average value of $7, 680 under NADA. R. 103, Ex. C, at MITCHELL 000804. A presentation by Mitchell to Progressive, analyzing Progressive total loss claims adjusted under the WCTL system found that the average condition rating of ...

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