Sales tax and fee cases continued the trend in favor of insureds, with a merits victory in the Sixth Circuit and a class certification victory in an Ohio state court.
On the labor depreciation front, Texas proved to be the active jurisdiction this quarter. One Texas federal court followed the Fifth Circuit's ruling in Mitchell (a case under Mississippi law), suggesting labor depreciation is similarly inappropriate under Texas law. In another Texas federal court, an insurer used the appraisal process to score summary judgment victories against some of the named plaintiffs.
Privacy class actions continue to persist, but an insurer achieved a victory in a case challenging the transmittal of personal health information.
Sales Tax and Fees: Insureds Prevail in Class Certification and Merits Decisions
On Oct. 11, 2024, in Marchek v. United Servs. Auto. Ass'n, the Sixth Circuit reversed a trial court's dismissal of a complaint seeking sales tax as part of a total-loss motor vehicle settlement.1 There, the policy defined actual cash value as 'the amount it would cost, at the time of loss, to buy a comparable vehicle.'2 Relying on dictionary definitions, the Sixth Circuit construed this to mean 'the total quantity of money that is required to acquire possession of a comparable vehicle.'3 Since a purchaser must pay sales tax in order to take possession of a vehicle, the court reasoned that the definition of actual cash value encompasses sales tax.4 In reaching this conclusion, the court distinguished another Sixth Circuit case - Wilkerson v. American Fam. Ins. Co., 997 F.3d 666 (6th Cir. 2021) - in which the court defined actual cash value to mean 'market value.'5
On Jan. 2, 2025, in Chambers v. Farmers Ins. of Columbus, an Ohio state appellate court materially affirmed class certification in a challenge to an insurer's nonpayment of sales tax.6 Notably, the court found the predominance requirement was satisfied because 'all members of the putative class will prevail or fail based upon the interpretation of the policy.'7
Progressive received final approval of class settlements in New York and Michigan. In Buffington v. Progressive Advanced Ins. Co., on Aug. 6, 2024, the Southern District of New York approved a claims-made settlement of a class action challenging the nonpayment or underpayment of sales tax for total-loss motor vehicle claims.8 And on Nov. 21, 2024, in Ubillus v. Progressive Marathon Ins. Co., a Michigan state court approved a $61 million settlement paid out on a claims-made basis.9
Labor Depreciation: Texas Claims Survive Pleading Stage, but Other Claims Falter Due to Appraisal
For a second time, on Aug. 21, 2024, in Sims v. Allstate Fire and Cas. Ins. Co., the Western District of Texas denied an...
