USCA4 Appeal: 24-1684 Doc: 69 Filed: 08/25/2025 Pg: 1 of 27
PUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 24-1684
LYNN FREEMAN, on behalf of herself and all others similarly situated,
Plaintiff - Appellee,
v.
PROGRESSIVE DIRECT INSURANCE COMPANY,
Defendant - Appellant.
Appeal from the United States District Court for the District of South Carolina, at Aiken. Donald C. Coggins, Jr., District Judge. (1:21-cv-03798-DCC)
Argued: May 8, 2025 Decided: August 25, 2025
Before WILKINSON, NIEMEYER, and BERNER, Circuit Judges.
Class certification order reversed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Wilkinson joined. Judge Berner wrote a dissenting opinion.
ARGUED: Jeffrey Cashdan, KING & SPALDING LLP, Atlanta, Georgia, for Appellant. Jacob Lawrence Phillips, JACOBSON PHILLIPS PLLC, Winter Park, Florida, for Appellee. ON BRIEF: Paul Alessio Mezzina, Amy R. Upshaw, Christine M. Carletta, Washington, D.C., Julia C. Barrett, Austin, Texas, Nicole Bronnimann, Houston, Texas, Zachary A. McEntyre, James Matthew Brigman, Allison Hill White, Erin Munger, KING & SPALDING LLP, Atlanta, Georgia, for Appellant. USCA4 Appeal: 24-1684 Doc: 69 Filed: 08/25/2025 Pg: 2 of 27
NIEMEYER, Circuit Judge:
Lynn Freeman commenced this action against Progressive Direct Insurance
Company, alleging that Progressive breached the insurance policy it had issued to her by
paying her “less than the actual cash value” of her vehicle, which had been declared a total
loss following a collision. She claimed that Progressive improperly reduced its appraisal
of her vehicle’s value by applying a “Projected Sold Adjustment,” which was based on the
predicted sales prices of vehicles like hers and applied when actual sales prices were
unavailable.
Freeman purported to represent a class of all persons in South Carolina who were
similarly situated insofar as Progressive decreased their compensation for their totaled
vehicles by applying Projected Sold Adjustments. The district court certified the class, and
Progressive sought interlocutory review of the district court’s order under Federal Rule of
Civil Procedure 23(f).
We granted Progressive permission to appeal and now reverse the district court’s
order. We conclude (1) that Freeman has not alleged a breach of contract by which she
was harmed and therefore lacks standing such that her claim is typical of the class and
(2) that, in any event, she has not satisfied Rule 23’s requirements of commonality and
predominance because determining whether Progressive breached its obligation to provide
actual cash value to each class member requires individualized inquiries, precluding a
class-wide treatment of their breach of contract claims.
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I
When Lynn Freeman’s 2020 Chevrolet Equinox was rendered a total loss after a
collision on May 11, 2021, she sought payment of its market value from her insurance
company, Progressive. Her policy provided that Progressive would pay “the actual cash
value of [her vehicle] at the time of the loss reduced by the applicable deductible,” which
was $2,000. And it specified that “[t]he actual cash value [would be] determined by the
market value, age, and condition of the vehicle at the time the loss occurs.” Implicitly
recognizing that various criteria could be considered in determining actual cash value and
therefore that Progressive and the insured could disagree on a vehicle’s valuation, the
policy provided:
If we cannot agree with you on the amount of a loss, then we or you may demand an appraisal of the loss. Within 30 days of any demand for an appraisal, each party shall appoint a competent appraiser and shall notify the other party of that appraiser’s identity. The appraisers will determine the amount of loss. If they fail to agree, the disagreement will be submitted to a qualified umpire chosen by the appraisers. If the two appraisers are unable to agree upon an umpire within 15 days, we or you may request that a judge of a court of record, in the county where you reside, select an umpire. The appraisers and umpire will determine the amount of loss. The amount of loss agreed to by both appraisers, or by one appraiser and the umpire, will be binding.
The policy did not quantify the actual payment that Progressive was obliged to pay with
respect to a loss — nor could it, as losses would inevitably vary according to the “market
value, age, and condition of the vehicle.” But the policy alerted Freeman that Progressive’s
calculation of what it would offer as the actual cash value of a totaled vehicle might be
informed by various internal and external systems. In a paragraph labeled “Settlement of
Claims,” the policy provided:
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We may use estimating, appraisal, or injury evaluation systems to assist us in adjusting claims under this policy and to assist us in determining the amount of damages, expenses, or loss payable under this policy. Such systems may be developed by us or a third party and may include computer software, databases, and specialized technology.
To arrive at its position as to the actual cash value of Freeman’s vehicle, Progressive
used a valuation system designed by Mitchell International, Inc., that identifies comparable
vehicles recently sold or listed for sale in the insured’s area. The Mitchell software adjusts
the prices of the comparators to reflect differences in mileage and equipment. If the
software identifies a “sold” price for a comparable vehicle, or if the vehicle is listed at a
“no haggle” dealership, no further adjustments are made. If, however, there is no sold price
for a comparable vehicle, the software identifies vehicles listed for sale at dealerships that
negotiate as to price and then applies a “Projected Sold Adjustment” — derived from
comparison of list prices and sold prices — to “reflect consumer purchasing behavior
(negotiating a different price than the listed price).”
The adjusted values of comparable vehicles are then averaged to yield a base value
for the insured’s totaled vehicle, which may then be adjusted further to account for unique
aspects of the insured’s totaled vehicle, such as its pre-loss condition and any aftermarket
parts.
In this case, the Mitchell software identified three listings of comparable 2020
Chevrolet Equinoxes: (1) one listed for $20,865 with 15,084 miles on it; (2) another listed
for $21,490 with 18,261 miles; and (3) a third listed for $23,887 with 11,899 miles. These
list prices were adjusted for differences in mileage and equipment, and a Projected Sold
Adjustment was applied to each. The average of those adjusted prices was $20,531.63,
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representing the base value of Freeman’s vehicle. Because an inspection of Freeman’s
vehicle revealed that no condition adjustments were necessary, Progressive offered that
value to Freeman as the market value of her vehicle.
Freeman still owed approximately $30,000 on her purchase loan and was thus
“underwater,” although her underwater condition was covered by loan payoff insurance.
As a result, she would not have improved her financial position by demanding a greater
actual cash value from Progressive. Regardless of the actual cash value Progressive
offered, she would have had to bear only the $2,000 deductible amount required by her
policy. Given these circumstances, Freeman did not reject Progressive’s offer, negotiate
her vehicle’s value, or invoke the third-party appraisal process afforded by the policy.
Instead, she agreed to the offer made by Progressive and paid the $2,000 deductible, which
she would have had to pay in any event.
Nonetheless, Freeman commenced this action against Progressive, alleging that it
breached her insurance contract by paying her “less than the actual cash value required by
Progressive’s insurance contracts” because it applied the Projected Sold Adjustment in
determining its offer to her. She also purported to represent a class of South Carolina
residents whose losses were allegedly undervalued because of the application of Projected
Sold Adjustments. She defined the purported class as follows:
All persons insured by a contract of automobile insurance issued by Progressive to a South Carolina resident, and who, from the earliest allowable time through the date of resolution of this action, received a first- party total loss valuation and payment that included a downward adjustment premised on a “Projected Sold Adjustment” or similar adjustment.
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In response to Freeman’s motion for class certification, Progressive argued that
Freeman lacked standing because she was not injured by any breach of contract; that there
was no evidence that using the Projected Sold Adjustment resulted in an inaccurate market
value; and that common questions did not predominate. It argued that the court would have
to determine individually whether the application of the Projected Sold Adjustment caused
Progressive to pay each class member less than the actual cash value of that member’s
vehicle. In short, according to Progressive, each of the breach of contract claims had to be
determined on an individual basis, thereby precluding class treatment.
By order dated May 8, 2024, the district court rejected Progressive’s arguments and
certified a class defined as follows:
All persons who made a first-party claim on a policy of insurance issued by Progressive Direct Insurance Company to a South Carolina resident who, from October 15, 2018 through the date an order granting class certification is entered, received compensation for the total loss of a covered vehicle, where that compensation was based on an Instant Report prepared by Mitchell (i.e. Report Code= “COMP”) and the actual cash value was decreased based upon Projected Sold Adjustments to the comparable vehicles used to determine actual cash value.
Progressive then sought permission under Rule 23(f) to file an interlocutory appeal
from the district court’s order, and by order dated July 24, 2024, we granted that
permission.
II
Class actions are an exception to the usual rule that cases be conducted “by and on
behalf of the individual named parties only.” Deiter v. Microsoft Corp., 436 F.3d 461, 466
(4th Cir. 2006) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 155 (1982)). And
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to represent absent class members, a plaintiff must carry the burden of showing that the
proposed class action satisfies the four prerequisites of Rule 23(a), including, as relevant
here, that “there are questions of law or fact common to the class” and that the plaintiff’s
claims are “typical of the claims” of the absent class members sought to be represented.
Fed. R. Civ. P. 23(a)(2), (3); Gariety v. Grant Thornton, LLP, 368 F.3d 356, 365 (4th Cir.
2004) (“The plaintiffs who propose to represent the class bear the burden of demonstrating
that the requirements of Rule 23 are satisfied”); EQT Prod. Co. v. Adair, 764 F.3d 347, 357
(4th Cir. 2014) (same). In addition, the plaintiff must also demonstrate that “the proposed
class fits into one of the specific forms of class adjudication provided by Rule 23(b),” in
this case Rule 23(b)(3). Krakauer v. Dish Network, L.L.C., 925 F.3d 643, 655 (4th Cir.
2019). Rule 23(b)(3) requires the plaintiff to show, among other things, “that the questions
of law or fact common to class members predominate over any questions affecting only
individual members.” Fed. R. Civ. P. 23(b)(3) (emphasis added).
To show that issues are common, as required by Rule 23(a)(2), the plaintiff must
demonstrate that “the same evidence will suffice for each member to make a prima facie
showing [or] the issue is susceptible to generalized, class-wide proof.” Tyson Foods, Inc.
v. Bouaphakeo, 577 U.S. 442, 453 (2016) (alteration in original) (quoting 2 William B.
Rubenstein, Newberg on Class Actions § 4:50 (5th ed. 2012)). Individual issues,
conversely, are those where “members of a proposed class will need to present evidence
that varies from member to member.” Id. (quoting Rubenstein, supra, § 4:50).
And to show that the common issues predominate, as required by Rule 23(b)(3), the
plaintiff must demonstrate that the questions of law or fact common to class members
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“predominate over any questions affecting only individual members,” i.e., that “the
common, aggregation-enabling, issues in the case are more prevalent or important than the
non-common, aggregation-defeating, individual issues,” Tyson Foods, 577 U.S. at 453
(quoting Rubenstein, supra, § 4:49). Thus, Rule 23(b)(3)’s predominance requirement is
“far more demanding” than Rule 23(a)(2)’s commonality requirement. Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 624 (1997). Indeed, the commonality requirement is
“subsumed under, or superseded by,” the predominance requirement. Lienhart v. Dryvit
Sys., Inc., 255 F.3d 138, 146 n.4 (4th Cir. 2001) (quoting Amchem, 521 U.S. at 609).
With respect to all requirements for class certification, we examine whether the
certifying court took a “close look at relevant matters,” conducted a “rigorous analysis of
such matters,” and made “findings that the requirements of Rule 23 have been satisfied.”
Gariety, 368 F.3d at 365 (cleaned up). Moreover, it is well established that “Rule 23 does
not set forth a mere pleading standard.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350
(2011). Rather, the plaintiff “must affirmatively demonstrate” her compliance with Rule
23 with “evidentiary proof.” In re Zetia (Ezetimibe) Antitrust Litig., 7 F.4th 227, 234 (4th
Cir. 2021) (first quoting Wal-Mart, 564 U.S. at 350; and then quoting Comcast Corp. v.
Behrend, 569 U.S. 27, 33 (2013)).
III
Progressive contends first that Freeman lacks standing to challenge its use of
Projected Sold Adjustments because she has failed to show, given her particular
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circumstances, that Progressive’s use of such adjustments caused her to suffer an injury.
We agree.
To determine the actual cash value of Freeman’s loss, Progressive used three listings
of comparable vehicles with significantly lower mileage, in the amounts of $20,865,
$21,490, and $23,887, and offered her $20,531.63 as the market value of her vehicle.
Freeman did not object to or reject Progressive’s offer but instead accepted it. This was
understandable because her only obligation — in light of her gap insurance — was to pay
the $2,000 deductible. The entire payment from Progressive would go toward paying off
a portion of her purchase loan, and her gap insurance would cover the remaining portion.
Of course, had Freeman believed that Progressive’s offer was inadequate, she still could
have attempted to negotiate a higher value or engaged in the appraisal process set forth in
the policy. But she did neither, and she cannot now demonstrate personal harm. See
Foodbuy, LLC v. Gregory Packaging, Inc., 987 F.3d 102, 116 (4th Cir. 2021). Moreover,
even after she commenced this litigation, she has not attempted to show that her vehicle
had a greater value than the amount that Progressive offered and paid. In these
circumstances, we fail to see how Freeman has plausibly alleged a breach of her insurance
policy. But more importantly, even were we to accept Freeman’s theory of breach, she has
failed to show how she suffered any injury.
“Article III standing [is] a necessary threshold issue” when reviewing a class-
certification order under Rule 23(f). McNair v. Synapse Grp. Inc., 672 F.3d 213, 223 n.10
(3d Cir. 2012) (collecting cases). And where the plaintiff “has failed to demonstrate . . . a
concrete injury sufficient to satisfy Article III standing,” the case “must be dismissed on
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jurisdictional grounds.” Dreher v. Experian Info. Sols., Inc., 856 F.3d 337, 347 (4th Cir.
2017). Indeed, the Third Circuit has dismissed a similar breach of contract claim for lack
of standing in circumstances similar to those presented here. In Lewis v. Government
Employees Insurance Co., the plaintiffs alleged that their insurer had breached their
contracts by making improper downward adjustments when valuing their vehicles. 98
F.4th 452, 457 (3d Cir. 2024). The evidence showed, however, that the plaintiffs had
“ultimately avoided any financial injury.” Id. at 460. The court concluded that the
plaintiffs’ theory “would impermissibly divorce their standing to sue from any real-world
financial injury.” Id.; see also Dinerstein v. Google, LLC, 73 F.4th 502, 519 (7th Cir. 2023)
(recognizing that a plaintiff “cannot simply allege a bare breach of contract, ‘divorced from
any concrete harm, and satisfy the injury-in-fact requirement of Article III’” (quoting
Spokeo, Inc. v. Robins, 578 U.S. 330, 341 (2016))).
Because Freeman has failed to show that Progressive’s use of Projected Sold
Adjustments caused her any injury, she lacks standing. And without standing, Freeman’s
claim cannot be typical of the class members’ claims. See Fed. R. Civ. P. 23(a)(3). The
class therefore should not have been certified.
IV
Progressive also contends that there is no common issue of law or fact that
predominates to satisfy the respective requirements of Rules 23(a)(2) and 23(b)(3). It
claims, “Not only did Plaintiff fail to establish that common issues predominate over
individualized ones (which is reason enough to reverse) — she failed to establish that there
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are any common issues.” It explains that even if Projected Sold Adjustments may have
“sometimes underpredicted the sale price of specific used cars,” Freeman has not and
cannot show “that they always did so.” Thus, she cannot show that Projected Sold
Adjustments are “categorically wrong” in predicting vehicle prices. But more
fundamentally, Progressive maintains that “the key elements of liability for [Freeman’s]
claim all unavoidably depend on the individualized question of whether Progressive paid
each class member less than their vehicle’s actual cash value.”
We agree with Progressive that common questions of law or fact do not predominate
in this case.
Freeman’s claim is for breach of contract, and any predominance analysis must
therefore begin with the elements of that claim to see whether class members “will prevail
or fail in unison.” Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 460 (2013);
see also EQT Prod., 764 F.3d at 366. Under South Carolina law, as elsewhere, to prove a
breach of contract, the plaintiff must show the existence of a binding contract; a failure to
perform the contract, i.e., a breach; and damages as a result of the breach. See Fuller v. E.
Fire & Cas. Ins. Co., 124 S.E.2d 602, 610 (S.C. 1962); Advanced Pain Therapies, LLC v.
Hartford Fin. Servs. Grp., Inc., No. 14-CV-00050, 2014 WL 4402800, at *2 (D.S.C. Sept.
3, 2014).
The existence of a binding contract here is not disputed. Progressive was obligated
to pay Freeman the “actual cash value” — i.e., the “market value” — for the loss of a
covered vehicle that was totaled. The breach that Freeman alleges is that Progressive paid
her and each class member less than the actual cash value that it was obligated to pay. The
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policies involved included no contractual obligation to use or not to use any method of
determining actual cash value — including Projected Sold Adjustments. It therefore
follows that if Progressive paid the actual cash value, regardless of how it computed it,
there could be no breach. Accordingly, for Freeman to succeed on her breach of contract
claim, she had to show that the payment Progressive actually made to her was less than the
actual cash value of her vehicle. And likewise, she would have to present evidence that
members of the class received less than the actual cash value of their vehicles, regardless
of whether the Projected Sold Adjustment was used in determining that value.
Yet the class in this case was defined to include anyone in South Carolina who was
paid “compensation for the total loss of a covered vehicle, where . . . the actual cash value
was decreased based upon Projected Sold Adjustments,” regardless of whether the amount
paid was indeed the true market value of the vehicle. Thus, the class was defined to include
insureds who accepted Progressive’s offer of payment; insureds who negotiated a higher
payment; and insureds who invoked the appraisal process in the policy, simply because in
each circumstance Progressive made its calculation using the Projected Sold Adjustment.
Yet, none of those could claim injury because each agreed to resolution of the loss. See
TransUnion LLC v. Ramirez, 594 U.S. 413, 427, 431 (2021) (holding that “[e]very class
member must have Article III standing” — i.e., must “have been concretely harmed” —
“in order to recover individual damages” (first emphasis added)). This characteristic of the
certified class alone justifies reversal of the class certification order.
But even more telling, the claims of class members who did not so voluntarily
resolve their losses by acceptance of Progressive’s offer, negotiation, or the appraisal
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process would depend on a showing that the market value of the members’ vehicles was
greater than what Progressive paid. And that value would depend on the unique
characteristics of each vehicle, such as the particular model of the vehicle and its trim level
and options, the vehicle’s postpurchase alterations, the mileage, the accident history, and
the vehicle’s condition. It would also depend on the public demand for that type and
condition of vehicle in the immediate market where the insured lived. A vehicle in
Charleston, South Carolina, for example, might have a different value than the same model
in Greenville, South Carolina. This highly individualized assessment of the actual cash
value of a vehicle would be essential to determining whether Progressive’s payment
amounted to the actual cash value and therefore to whether it breached the insurance
contract. In short, the core proof of each breach of contract claim would have to center on
the value of each individual vehicle involved. And the class members’ claims for breach
of contract are therefore not capable of classwide resolution, as they cannot be resolved “in
one stroke.” Stafford v. Bojangles’ Rests., Inc., 123 F.4th 671, 679 (4th Cir. 2024) (quoting
Wal-Mart, 564 U.S. at 350). In other words, the questions presented by this case will not
“generate ‘common answers that drive the litigation.’” Id. (quoting Brown v. Nucor Corp.,
785 F.3d 895, 909 (4th Cir. 2015)).
That precludes finding commonality and necessarily predominance. See Lienhart,
255 F.3d at 146 n.4 (“In a class action brought under Rule 23(b)(3), the ‘commonality’
requirement of Rule 23(a)(2) is ‘subsumed under, or superseded by, the more stringent
Rule 23(b)(3) requirement that questions common to the class predominate over’ other
questions” (quoting Amchem, 521 U.S. at 609)). Indeed, “[c]ommonality requires the
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plaintiff to demonstrate that the class members have suffered the same injury.” G.T. v. Bd.
of Educ. of Cnty. of Kanawha, 117 F.4th 193, 202 (4th Cir. 2024) (emphasis added)
(quoting Wal-Mart, 564 U.S. at 349–50). But no such demonstration can be made here.
To be sure, the use of the Projected Sold Adjustment helped Progressive calculate
its offer, but its mere use of that adjustment did not dictate whether it breached its
contractual duty to pay actual cash value. A breach could only be determined by matching
what Progressive actually offered and paid with the evidence of the actual cash value based
on the unique characteristics of each vehicle and the market in which it was valued. Thus,
Progressive’s use of the Projected Sold Adjustment is essentially irrelevant to any alleged
breach, and the legitimacy of its practice is certainly not an issue that predominates in
resolving whether a breach of contract occurred. “[T]he district court placed an inordinate
emphasis on . . . uniform practices without considering whether those practices [were]
relevant to assessing the defendant[’s] ultimate liability.” EQT Prod., 764 F.3d at 366.
Our conclusion in this case is in line with a large array of similar cases decided by
courts of appeals across the country. See Sampson v. United Servs. Auto. Ass’n, 83 F.4th
414, 420–22 (5th Cir. 2023) (rejecting class certification because, among other things, it
was possible that the defendant could satisfy its contractual obligation to pay actual cash
value using a variety of valuation methodologies); Stuart v. State Farm Fire & Cas. Co.,
910 F.3d 371, 376 (8th Cir. 2018) (recognizing that, when “contracts did not specify how
[actual cash value] payments would be calculated, whether [the insurer] was in breach
would depend on whether its methodology produced a reasonable estimate of [actual cash
value] . . . in an individual case” — a question that “could not be answered on a class
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basis”); Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883, 888–90 (7th Cir. 2011).
In Kartman, for example, the Seventh Circuit affirmed the district court’s denial of class
certification under Rule 23(b)(3) of a purported class of policyholders who had alleged that
State Farm had undercompensated them based on how it evaluated their property-damage
claims. 634 F.3d at 887–88. The Seventh Circuit reasoned that the district court was
correct to deny “certification based on the particularized facts of each” of the plaintiffs’
claims and that, even if the plaintiffs had “evidence tending to show that some
policyholders received inadequate compensation for their losses,” State Farm’s method of
evaluating property damage did “not by itself establish liability for breach.” Id. at 889–90.
In a case even more similar to this one, the Ninth Circuit evaluated a claim brought
against an insurer who “only owed each putative class member the actual cash value of his
or her car,” such that “if a putative class member was given that amount or more, then he
or she [could not] win on the merits” of his or her breach of contract claim. Lara v. First
Nat’l Ins. Co. of Am., 25 F.4th 1134, 1139 (9th Cir. 2022). The court noted that “figuring
out whether each individual putative class member was harmed would involve an inquiry
specific to that person,” including “looking into the actual pre-accident value of the car and
then comparing that with what each person was offered, to see if the offer was less than the
actual value.” Id. Such an analysis “would be an involved inquiry for each person,” and
the Ninth Circuit accordingly concluded that “common questions do not predominate.” Id.
And most recently, analyzing essentially the same claims made by the same counsel
as those in this case, the Third Circuit and Seventh Circuit held that common questions did
not predominate. See Drummond v. Progressive Specialty Ins. Co., 142 F.4th 149 (3d Cir.
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2025); Schroeder v. Progressive Paloverde Ins. Co., __ F.4th __, No. 24-1559, 2025 WL
2083855 (7th Cir. July 24, 2025). Specifically, the Third Circuit explained, “The District
Court would need to evaluate plaintiff-by-plaintiff proof to ascertain which plaintiffs
Progressive actually underpaid and, accordingly, to which plaintiffs Progressive is liable
for breach of contract.” 142 F.4th at 156. The court noted that there were multiple
“approaches [that] would allow Progressive to meet its contractual obligation to pay actual
cash value,” and that it “could have properly compensated class members while employing
the Projected Sold Adjustments.” Id. at 158 (cleaned up). The court concluded “that
identifying whether each class member was actually paid less than true actual cash value
is an individual question” requiring “individualized evidence of whether each class
member’s vehicle’s actual cash value was greater than the final settlement value.” Id. at
159 (cleaned up). The court therefore rejected the class that the district court had certified,
holding that “common issues as to Progressive’s liability do not predominate.” Id.
Following Drummond, the Seventh Circuit likewise recognized that “a jury would need to
consider a host of individual questions to resolve whether Progressive failed to pay each
putative class member” the actual cash value of their vehicle and that “[t]hose individual
questions overwhelm any common ones.” Schroeder, 2025 WL 2083855, at *1.
So too here. This is, at bottom, a straightforward breach of contract case where
Freeman contends that Progressive failed to pay her the actual cash value of her totaled
vehicle. And the district court recognized this to be the nature of the case, noting, “Plaintiff
alleges that Defendant breached her insurance policy by paying less than the actual cash
value (‘ACV’) of her totaled 2020 Chevrolet Equinox.” To prove the breach, Freeman and
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every purported class member would have to show that the market value of his or her
vehicle — with all its unique characteristics — was greater than the amount Progressive
paid. This totally individualized process precludes class certification. See Schroeder, 2025
WL 2083855, at *6–8; Drummond, 142 F.4th at 160–61; Lara, 25 F.4th at 1139.
Because Freeman’s claim and the claims of all the purported class members are
essentially individualized claims requiring mini trials as to each, we conclude that common
questions do not predominate and that therefore the district court abused its discretion in
certifying the class.
* * *
For the several reasons given, we reverse the district court’s certification order of
May 8, 2024.
REVERSED
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BERNER, Circuit Judge:
The majority’s decision reversing class certification rests on an erroneous view of
Lynn Freeman’s injury and the class’s claims. The majority also steps well beyond its
jurisdiction. Respectfully, I dissent.
I. Freeman’s Standing
I begin with the majority’s standing inquiry. The majority claims that Freeman lacks
standing to sue Progressive because she cannot “demonstrate personal harm.” Maj. Op. at
9. To the contrary, Freeman demonstrates a classic pocketbook injury, the likes of which
this court has affirmed on many occasions.
Freeman’s total loss vehicle was a 2020 Chevrolet Equinox with 23,122 miles.
Progressive’s software identified three comparable 2020 Chevrolet Equinoxes: one listed
for $20,865 with 15,084 miles; another listed for $21,490 with 18,261 miles; and a third
listed for $23,887 with 11,899 miles. The Projected Sold Adjustment at issue here and other
adjustments were applied to these list prices, and then the adjusted prices were averaged to
generate a base value for Freeman’s vehicle of $20,531.63. Because Progressive’s
in-person inspection determined that neither the condition of Freeman’s car nor any
aftermarket parts warranted further adjustments, Progressive estimated that the actual cash
value was $20,531.63.
At the time of the total loss, Freeman still owed $29,999.07 on her vehicle.
Fortunately for her, she had the foresight to purchase loan payoff coverage and gap
insurance. [J.A. 196–98, J.A. 204–05.] The loan payoff coverage was part of her insurance
with Progressive. It required Progressive to pay an additional 25% of the actual cash value
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if there was an outstanding loan. [J.A. 204.] That amounted to Progressive paying off
$24,531.63 of Freeman’s outstanding loan, less a $2,000 deductible. That left Freeman
with $5,467.44 to pay off.
That’s where her gap coverage came into play. Freeman had acquired gap coverage
through a different insurance company, Warranty Solutions. The sole purpose of the gap
coverage was to pay the difference between what Progressive paid out and any outstanding
amount on her loan. Freeman applied for gap coverage, and Warranty Solutions paid the
difference. That’s where Freeman was left when she sued Progressive for paying too little
on her coverage.
Freeman put forth expert testimony in support of her claim that Progressive was
required to pay more after her vehicle was totaled. Freeman’s experts opined that
Progressive underestimated the actual cash value of Freeman’s vehicle by applying the
Projected Sold Adjustment. Had Progressive not applied the Projected Sold Adjustment, it
would have paid more to cover Freeman’s loss. Simply put, that is the injury. If Freeman
is correct that applying the Projected Sold Adjustment violates the insurance contract, then
Progressive owes her more than it paid. What could be a more classic pocketbook injury
than that?
The majority suggests that because Freeman would be required to pass her recovery
in this case along to her gap insurer, she has suffered no injury. Maj. Op. at 9–10. Not so.
This court has rejected similar arguments in the past. The fact that Freeman would have to
pass along any money she might recover in this suit, “cannot erase the fact that
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[Progressive] owed it to her.” Netro v. Greater Baltimore Med. Ctr., Inc., 891 F.3d 522,
526 (4th Cir. 2018). This court has explained this rule by simple analogy:
If Plaintiff Pam borrows something from Lender Lisa, and Defendant Dan steals it, Pam obviously has standing to recover from Dan. Her injury is not erased by the fact that the recovery will ultimately end up in Lisa’s hands.
Id. at 526.
Freeman’s injury is not erased by her obligation to pass her recovery to Warranty
Solutions. If Progressive is found to owe money to Freeman, then she has suffered a
pocketbook injury because Progressive breached the contract.
The majority also implies that Freeman lacks standing to sue because she “agreed
to resolution of the loss.” Maj. Op. at 12. Apparently, the majority believes that Freeman
suffered no injury because she did not refuse Progressive’s valuation and seek an appraisal.
This is plainly incorrect. This court has never required insureds to take optional recourse
with their insurers prior to bringing suit for breach of contract. Nor have we held that,
because an insurer pays allegedly inadequate funds, the insured cannot sue for more if she
is so entitled. Progressive’s insurance contract explicitly provides that an insured is not
required to seek an appraisal after receiving a valuation. To the contrary. The appraisal
provision states repeatedly that appraisal is optional, both for the insured and for
Progressive. ∗ On the other hand, the contract does require Progressive to calculate the
∗ Notably, the appraisal provision also requires the insured to pay for her own appraiser and to split cost of arbitration with Progressive, conditions that would dissuade an insured from taking advantage of the optional appraisal provision. 20 USCA4 Appeal: 24-1684 Doc: 69 Filed: 08/25/2025 Pg: 21 of 27
actual cash value accurately and to pay that value to the insured in full. If Progressive fails
to do so, as Freeman claims here, then the insured can sue for breach of contract.
Progressive itself expressly disavowed the majority’s theory that Freeman and the
class failed to exercise any contractual requirements. In direct response to the majority’s
standing theory, Progressive stated: “I have to be candid with the court, the appraisal
provision is not mandatory, and so it is the case, I think, that if Progressive was proved to
have not paid actual cash value, then Progressive might have been in breach of the
contract.” Oral Argument Recording at 6:27–39. The majority’s unique theory of standing
is out of step with the text of the contract and this court’s precedent.
Finally, the majority includes a brief standing analysis for the proposed class in its
discussion of predominance. Maj. Op. at 12. That analysis fails for the same reasons
discussed above, as Freeman’s claim is the same as the rest of the class. The majority gets
that wrong too. It claims that the class includes “insureds who accepted Progressive’s offer
of payment; insureds who negotiated a higher payment; and insureds who invoked the
appraisal process in the policy, simply because in each circumstance Progressive made its
calculation using the Projected Sold Adjustment.” Maj. Op. at 12 (emphasis added). Not
so. The class definition includes only those who “received compensation for the total loss
of a covered vehicle, where that compensation was based on an Instant Report prepared
by Mitchell (i.e. Report Code= “COMP”) and the actual cash value was decreased based
upon Projected Sold Adjustments to the comparable vehicles used to determine actual cash
value.” J.A. 1405-06. The “Instant Report prepared by Mitchell” is the valuation that
Progressive first prepares and offers to the insured. As the district court correctly observed,
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the class definition is limited to insureds who, like Freeman, accepted the coverage that
Progressive set out in its initial valuation without negotiating or seeking an appraisal.
II. Class Certification
Before addressing the class action certification issue, I reemphasize that the majority
concludes that Freeman lacks standing to sue Progressive over the alleged breach of
contract. Whether Freeman possessed standing is jurisdictional. As the majority itself
seemingly recognizes, where the named plaintiff in a putative class action fails “to
demonstrate s[he] has suffered a concrete injury sufficient to satisfy Article III standing,”
the “class action must be dismissed on jurisdictional grounds.” Dreher v. Experian Info.
Sols., Inc., 856 F.3d 337, 347 (4th Cir. 2017). Rather than ending its analysis after
determining that Freeman lacked standing, the majority nonetheless goes on to address the
class certification issues. Respectfully, it should not have.
Federal courts possess limited jurisdiction. Royal Canin U.S.A., Inc. v.
Wullschleger, 604 U.S. 22, 26 (2025). Where we find that the plaintiff in the underlying
suit lacks standing, we may not address the merits of the district court’s class certification
decision. Id. “After all, ‘[w]ithout jurisdiction the court cannot proceed at all in any cause.
Jurisdiction is power to declare the law, and when it ceases to exist, the only function
remaining to the court is that of announcing the fact and dismissing the cause.” Dreher,
856 F.3d at 347 (quoting Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998)).
The majority’s opinion on the class certification issue is thus advisory. See Steel Co., 523
U.S. at 101. Yet, it is not this court’s role to lend advice. Id. We address cases and
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controversies as they properly come before us. Id. at 102. Because the majority claims there
is no controversy, it should have stopped there. Id. at 101–02.
Because I would have found that Freeman possessed standing, and I disagree with
the majority’s assessment of the class certification, I will briefly address the class
certification issues that the majority raises. Still, that portion of the majority opinion is
dicta and beyond the majority’s purview.
Class certification decisions are reviewed for abuse of discretion. See, e.g., Thorn v.
Jefferson-Pilot Life Ins. Co., 445 F.3d 311, 317 (4th Cir. 2006). The district court in this
case conducted extensive proceedings and made specific findings about common proof and
predominance. We lend the district court deference for good reason—it is the district court
that is tasked with overseeing the trial of class actions, not this court.
I note two points in which I agree with the majority. Indeed, “[t]his is, at bottom, a
straightforward breach of contract case where Freeman contends that Progressive failed to
pay her the actual cash value of her totaled vehicle.” Maj. Op. at 16. I also agree that “for
Freeman to succeed on her breach of contract claim, she had to show that the payment
Progressive actually made to her was less than the actual cash value of her vehicle.” Maj.
Op. at 12. This “straightforward breach of contract case” comes down to one critical
issue—did Progressive breach its contract with Freeman, and every other class member,
by the applying Projected Sold Adjustment? Contrary to the majority’s conclusion, this
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question is one in which the class members “will prevail or fail in unison.” Amgen Inc. v.
Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 460 (2013).
In the majority’s view, the class fails because calculating the actual cash value of a
vehicle requires looking at several factors “such as the particular model of the vehicle and
its trim level and options, the vehicle’s postpurchase alterations, the mileage, the accident
history, [] the vehicle’s condition,” and public demand specific to the local market. Maj.
Op. at 13. The majority believes that the district court would have been required to examine
each factor independently for each individual in order to determine whether the actual cash
value was properly calculated. I disagree.
Perhaps unsurprisingly, Progressive’s model for calculating the actual cash value of
a totaled vehicle takes into account all the factors that the majority listed. Freeman agrees
that all of the adjustments the majority is concerned about are appropriate. Freeman’s
experts opine that Progressive’s methodology for calculating actual cash value accurately
makes those adjustments. In fact, Freeman’s experts agree that Progressive gets the actual
cash value correct when it calculates, with the exception of a single adjustment—the
Projected Sold Adjustment. Freeman’s experts claim that, when Progressive applies the
Projected Sold Adjustment deduction, it always necessarily underestimates the actual cash
value of a vehicle.
That is precisely why this case is well-suited for class certification. Freeman’s
expert testimony supports her claim that Progressive accurately calculates the actual cash
value but for the Projected Sold Adjustment. The only question left is the same for every
class member—is the Projected Sold Adjustment a proper deduction? Because if it is not,
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it categorically causes Progressive to pay less than actual cash value. If it is, then
Progressive is paying the actual cash value. That is precisely the type of sweeping
resolution well-suited for class certification. See EQT Prod. Co. v. Adair, 764 F.3d 347,
366 (4th Cir. 2014).
The Ninth Circuit—the first circuit to consider class certification for challenges to
similar actual cash value vehicle adjustments—endorsed this view. In Jama v. State Farm
Mutual Automobile Insurance Co., the Ninth Circuit explained when certification is
appropriate for a challenge to an automobile actual cash value adjustment. 113 F.4th 924
(9th Cir. 2024). In Jama, the challenged adjustments included a “condition” adjustment,
and a “negotiation” adjustment. Id. at 927. Jama rejected the condition adjustment class
because the Ninth Circuit had recently disapproved class certification for the same type of
adjustment in Lara v. First National Insurance Company of America, 25 F.4th 1134 (9th
Cir. 2022). The majority cites Lara, although it fails to note why the condition adjustment
at issue in Lara differs from the Projected Sold Adjustment here. Maj. Op. at 15.
The condition adjustment in Lara assumed that the typical car in use is in worse
condition than, and would sell for less than, comparable cars advertised by dealers and
reduced the advertised price by that difference. 25 F.4th at 1136–37. While the disputed
condition adjustment was initially a downward adjustment to the insurer’s value estimate,
that adjustment merely provided a starting place. Id. The insurer “also look[ed] at the actual
pre-accident condition of the totaled car,” such that “[i]f [the car] was in great condition,
then [the insurer] reverse[d] the negative adjustment and sometimes even applie[d] a
positive adjustment.” Id. at 1137. A class member in Lara might have been subject to the
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challenged condition deduction but been uninjured by it because a greater or equal
condition addition could also have been lawfully applied. Id. at 1139. This would lead a
class member to receive the actual cash value of their vehicle or more. Id.
Jama followed Lara and dismissed the condition adjustment class. Jama, 113 F.4th
at 927. The Ninth Circuit recognized in Jama, however, that the negotiation adjustment
operated differently. The negotiation adjustment assumed the typical customer negotiates
with the dealer and buys a car for less than the advertised price. Id. at 927. The negotiation
adjustment was designed to capture that price difference through a deduction to the actual
cash value, much like the Projected Sold Adjustment here. Id. In short, while the condition
adjustment could “have accurately reflected the condition of the car for some class
members in Lara, there is no negotiation adjustment that could accurately price the
negotiation discount here if [the plaintiffs were] correct that the adjustment is always
unlawful, regardless of the amount.” Id. at 934 (emphasis in original). The Ninth Circuit
clarified that what “the negotiation class actually asked the factfinder to credit was the
whole [insurer valuation] report, minus one specific uniformly applied downward
adjustment.” Id. The Ninth Circuit concluded that such a uniform downward adjustment,
where the rest of the valuation was considered accurate, was amenable to class certification.
See id.
The takeaway from Jama and Lara is that class certification is appropriate when the
challenged adjustment categorically results in all class members receiving less than the
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actual cash value. This rule makes inherent sense. An insurer can only be liable for breach
of contract if it pays less than actual cash value.
Here, Freeman’s theory is that application of the Projected Sold Adjustment
necessarily results in a class member receiving less than the actual cash value, and her
expert evidence supports such a theory. Freeman agrees that Progressive accurately
predicts actual cash value, except when the Projected Sold Adjustment is applied. When
the Projected Sold Adjustment is applied, it always depresses the payout below the actual
cash value. That common question unites the class. Thus, the district court did not abuse
its discretion in certifying the class and I would affirm its judgment.