BlogLine

Third Circuit reverses class certification in insurance underpayment suit

9/3/25

By: Sean R. Riley

The Third Circuit Court of Appeals recently reversed the District Court for the Eastern District of Pennsylvania’s decision to certify two classes against an insurance carrier, holding that individualized issues predominated over common ones. See Drummond v. Progressive Specialty Ins. Co, 142 F.4th 149 (3d Cir. July 7, 2025). Therein, the plaintiffs asserted breach of contract claims against the carrier, arguing that the carrier’s method of valuing totaled vehicles resulted in systematic underpayments to insureds. The plaintiffs moved for class certification, arguing that the common issue of the legitimacy of the carrier’s valuation method predominated.

The trial court agreed, finding that proving whether the allegedly improper method of valuation was applied to the class’s vehicle valuations was easily supported by common elements. The Insurance carrier filed a petition for leave to file an interlocutory appeal, which was granted. On appeal, the Third Circuit reversed, finding that common proof of the allegedly improper method of valuation alone was insufficient to prove each class member was actually underpaid. In so holding, the Court emphasized that while the carrier had not presented evidence that any putative class members were paid in excess of the amount contractually due, the fact that it was possible that some class members may have received a settlement payment equal to or greater than their vehicle’s actual cash value required individualized proof of damages.

This decision demonstrates that appellate courts are closely scrutinizing Rule 23(b)(3)’s predominance requirement to ensure that matters involving individualized evidentiary showings are not improperly permitted to proceed to trial as class actions.

For more information, please contact Sean R. Riley at sean.riley@fmglaw.com or your local FMG attorney.

Information conveyed herein should not be construed as legal advice or represent any specific or binding policy or procedure of any organization. Information provided is for educational purposes only. These materials are written in a general format and not intended to be advice applicable to any specific circumstance. Legal opinions may vary when based on subtle factual distinctions. All rights reserved. No part of this presentation may be reproduced, published or posted without the written permission of Freeman Mathis & Gary, LLP.