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Slade v. Progressive Security Insurance Co.

United States Court of Appeals, Fifth Circuit

May 9, 2017

CHERYL SLADE, Plaintiff - Appellee
v.
PROGRESSIVE SECURITY INSURANCE COMPANY, Defendant-Appellant

         Appeal from the United States District Court for the Western District of Louisiana

          Before OWEN, GRAVES, and HIGGINSON, Circuit Judges.

          STEPHEN A. HIGGINSON, Circuit Judge.

         The court has carefully considered this appeal in light of the briefs, oral argument, and pertinent portions of the record. Having done so, we REMAND the certification of the contract and Louisiana-insurance law class. We REVERSE the district court's certification of a fraud class. We elaborate on only three points.

         I

         Defendant-Appellant Progressive Security Insurance Company ("Progressive") contends that Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013), requires reversal; it does not. In Comcast, plaintiffs brought antitrust claims asserting four separate liability theories. Id. at 1430-31. The district court rejected all but one. Id. at 1431. Nonetheless, the district court certified a class action after finding that damages could be calculated on a class-wide basis. Id. at 1431. The district court based its certification decision on plaintiffs' damages model, which calculated damages based on all four liability theories and did not isolate damages from any one theory. Id. The Supreme Court reversed. Id. at 1432. It reasoned that "a model purporting to serve as evidence of damages in this class action must measure only those damages attributable to that theory. If the model does not even attempt to do that, it cannot possibly establish that damages are susceptible of measurement across the entire class . . . ." Id. at 1433. Accordingly, Comcast held that when plaintiffs argue that damages can be decided on a class-wide basis, plaintiffs must put forward a damages methodology that maps onto plaintiffs' liability theory. Id. at 1433.

         Our cases interpreting Comcast confirm that what Comcast demands is fit between plaintiffs' class-wide liability theory and plaintiffs' class-wide damages theory. See, e.g., Ludlow v. BP, P.L.C., 800 F.3d 674, 683 (5th Cir. 2015), cert. denied, 136 S.Ct. 1824 (2016); In re Deepwater Horizon, 739 F.3d 790, 817 (5th Cir.), cert. denied sub nom. BP Expl. & Prod. Inc. v. Lake Eugenie Land & Dev., Inc., 135 S.Ct. 754 (2014). For example, in Deepwater Horizon, we noted that "[t]he principal holding of Comcast was that a model purporting to serve as evidence of damages must measure only those damages attributable to the theory of liability on which the class action is premised." Deepwater Horizon, 739 F.3d at 817 (internal quotation marks, citation, and alterations removed).

         Here, Plaintiffs' liability theory is that Defendant unlawfully used WorkCenter Total Loss (WCTL) to calculate the base value of total loss vehicles. Plaintiffs claim that using WCTL, instead of lawful sources such as the National Automobile Dealers Association (NADA) Guidebook or the Kelly Blue Book (KBB), resulted in their vehicles being assigned a lower base value and accordingly resulted in Plaintiffs receiving lower payouts on their insurance claims.

         Plaintiffs' damages theory aligns with that liability theory. Plaintiffs contend that damages can be calculated by replacing Defendant's allegedly unlawful WCTL base value with a lawful base value, derived from either NADA or KBB, and then adjusting that new base value using Defendant's current system for condition adjustment. Plaintiffs contend that such a calculation can be done on a class-wide basis because Defendant already possesses NADA scores for most of the class, NADA or KBB scores are otherwise publicly available, and Defendant already has condition scores for each vehicle. In fact, Plaintiffs' damages expert opined that she could apply Defendant's condition adjustment to Defendant's NADA scores or publicly available NADA or KBB data. This damages methodology fits with Plaintiffs' liability scheme because it isolates the effect of the allegedly unlawful base value. That is, by essentially rerunning Defendant's calculation of actual cash value but with a lawful base value, Plaintiffs' damages theory only pays damages resulting from the allegedly unlawful base value.

         And Plaintiffs' damages methodology is sound. Defendant calculates the base value and the condition adjustment separately. Under either the WCTL system or a NADA or KBB system, base value purports to measure the retail cost of a vehicle of the same make, model, and year of the loss vehicle. From this base value, an adjustment can be made to consider the condition of the loss vehicle. Because this condition adjustment is a separate and unrelated step from the calculation of base value, there is no principled reason why Defendant's own condition adjustment scores could not be used to adjust base values derived from NADA or KBB. Indeed, Plaintiffs' damages expert testified that it would not be difficult to apply Defendant's condition adjustment to NADA base values.

         The court finds, for essentially the reasons stated by the district court, that Plaintiffs' damages methodology does not preclude class treatment.

         II

         Defendant argues-for the first time on appeal-that by accepting Defendant's condition score calculation as is, Plaintiffs may have impermissibly waived unnamed class members' ability to assert a future claim contesting Defendant's computation of the condition factor.[1] Because this argument was not expressly raised to the district court, and may present important certification questions, we remand.

         At the outset, it is important to position Defendant's argument into the broader class certification framework. If Plaintiffs had raised challenges to both the condition adjustment and the base value calculation, Plaintiffs' class certification motion may have run into predominance problems because condition adjustments appear to be highly individualized. Perhaps recognizing this concern, Plaintiffs disclaimed any challenge to the condition adjustment. This waiver may have resolved the predominance problem[2]-all parties agree that the base value calculation is ...


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