Breach of Contract as Concrete Injury and Classwide Challenges to “Negotiation” Adjustments: Sixth Circuit Affirms Certification in Clippinger v. State Farm

Introduction

This published decision from the U.S. Court of Appeals for the Sixth Circuit addresses when auto-insurance policyholders can proceed as a class to challenge a uniform method that insurers use to value totaled vehicles. The core dispute centers on State Farm’s use of Audatex’s “Typical Negotiation Adjustment” (TNA) to reduce the advertised prices of comparable vehicles when computing “actual cash value” (ACV) for total-loss claims in Tennessee. The named plaintiff, Jessica Clippinger (now Pyron), alleges that TNA consistently depresses ACV below fair market value in breach of contract and Tennessee regulatory law. The district court certified a Tennessee class of State Farm insureds whose ACV payments were reduced by TNA. State Farm sought Rule 23(f) review; the Sixth Circuit affirmed certification.

Beyond class certification, the opinion breaks important ground on Article III standing in the post-TransUnion landscape, holding that breach of a private contract is itself a concrete injury sufficient to confer standing. The court also rejects arguments that post-suit appraisal moots the named plaintiff’s claims, recognizes predominance despite individualized damage computations, and declines to follow sister circuits that have decertified analogous classes, instead aligning with the Ninth Circuit’s Jama decision in the “negotiation adjustment” context. A dissent would have reversed, warning of a circuit split and extensive individualized valuation trials.

Case Background and Key Issues

Parties: Plaintiff-appellee Jessica Clippinger, on behalf of a putative class of Tennessee insureds; Defendant-appellant State Farm Automobile Insurance Company.
Policy Promise: For total losses, State Farm promises to pay the “actual cash value” of the vehicle. Tennessee regulations (incorporated into policies) guide ACV methods and data sources.
Valuation Method: State Farm used Audatex Autosource to identify comparable vehicles and applied a “Typical Negotiation Adjustment” (TNA) to reduce advertised prices to reflect presumed buyer–dealer bargaining.
Claim: The class alleges TNA is inconsistent with modern market realities (online shopping, price transparency) and artificially reduces ACV in breach of contract and Tennessee law.
Appraisal Clause: If the insured and State Farm disagree on ACV, either may demand appraisal by three appraisers; the award is binding. After suit, appraisal increased Clippinger’s payout.
Certified Class (Tennessee only): Those who received total-loss compensation based on an Audatex report where the ACV was decreased by TNA between May 8, 2019 and the class-certification order.
Appeal: State Farm challenged certification on standing, typicality, adequacy, predominance, and superiority (ascertainability was not contested on appeal).

Summary of the Opinion

The Sixth Circuit (Judge Gibbons, joined by Judge Moore) affirmed class certification and remanded. The court holds:

Standing: An alleged breach of a private contract is a concrete injury for Article III purposes. TransUnion does not bar certification here. Post-suit appraisal raises mootness (not standing) issues and, under “picking off” principles, did not moot the case.
Rule 23(a):
- Numerosity: Approximately 90,000 members suffice.
- Commonality: The central question—whether using TNA produces artificially reduced ACV rather than contractually required ACV—is susceptible to classwide proof and tied to the breach element.
- Typicality: Clippinger remains typical despite undergoing appraisal; her claims challenge the same methodology on the same legal theory and seek consequential damages flowing from the alleged breach.
- Adequacy: Satisfied; counsel qualified; Clippinger’s interests align with the class.
Rule 23(b)(3):
- Predominance: Liability turns on a common question: whether TNA systematically understates ACV. Individual variations in damages do not defeat predominance. The court adheres to Hicks and is persuaded by the Ninth Circuit’s Jama in the “negotiation adjustment” context, distinguishing Lara and later decisions (Third, Fourth, Fifth, Seventh, and Ninth circuits following Lara).
- Superiority: A class action is superior given many small claims and a uniform practice; the specter of mass individualized appraisals is speculative and manageable at the damages stage.
Ascertainability: Implicit Rule 23 requirement is satisfied using State Farm’s own records.

Judge Murphy dissented, aligning with a growing line of circuit decisions rejecting certification in similar total-loss ACV cases due to individualized valuation inquiries and the insurer’s substantive right to present individualized evidence under the Rules Enabling Act and Wal-Mart.

Detailed Analysis

Precedents and Authorities Shaping the Decision

Class Certification Framework

Comcast v. Behrend, 569 U.S. 27: Requires a rigorous analysis; class issues can overlap with merits but certification is not a free-ranging merits inquiry.
Wal-Mart v. Dukes, 564 U.S. 338: Common question must yield a common answer; Rule 23 cannot abridge substantive rights; “Trial by Formula” is impermissible.
Falcon, 457 U.S. 147; Amgen, 568 U.S. 455: Guideposts for probing certification predicates without resolving ultimate merits.
Speerly v. General Motors (6th Cir. en banc 2025): Commonality requires a question that yields a common answer with common evidence and meaningfully advances the litigation, tied to a claim element.
In re Nissan N. Am. (6th Cir. 2024): Reinforces rigorous commonality analysis.
Whirlpool, 722 F.3d 838; Beattie, 511 F.3d 554: Individual damages typically do not defeat predominance.
Tarrify Properties, 37 F.4th 1101: Predominance asks if class treatment is efficient and administrable relative to individualized suits.
Bridging Communities, 843 F.3d 1119: Potential defenses that apply to some members do not automatically defeat predominance.
Sandusky Wellness, 863 F.3d 460: Ascertainability standard in the Sixth Circuit.

Standing, Mootness, and “Picking Off”

TransUnion v. Ramirez, 594 U.S. 413: Narrows statutory-injury standing; did not decide class standing at certification and did not address breach-of-contract claims.
Hicks v. State Farm Fire & Casualty, 965 F.3d 452 (6th Cir. 2020): Post-TransUnion in the Sixth Circuit remains consistent with recognizing breach as concrete injury; individualized damages do not defeat predominance.
Fox v. Saginaw County, 67 F.4th 284: Standing at filing; later events raise mootness; “picking off” exceptions apply to prevent strategic mooting of class actions.
Campbell-Ewald v. Gomez, 577 U.S. 153: Unaccepted offers do not moot putative class claims.
Wilson v. Gordon, 822 F.3d 934: Sixth Circuit’s “picking off” doctrine in the class context.
CHKRS, 984 F.3d 483; Springer, 900 F.3d 284: Courts independently verify jurisdiction; standing does not collapse into merits.
Attias v. CareFirst, 346 F.R.D. 1 (D.D.C. 2024) (collecting cases); Glennborough, 21 F.4th 410: Authorities recognizing breach as concrete injury; the court here expressly “holds” private contract rights are cognizable injuries.
Distinguishing Thole, 590 U.S. 538, and the Seventh Circuit’s Dinerstein, 73 F.4th 502: Thole’s ERISA context doesn’t control private contract breaches; Dinerstein’s reading of TransUnion rejected.

Governing Tennessee Law

Tenn. Comp. R. & Regs. 0780-01-05-.09 (2017): Insurers may elect a cash settlement based on the actual cost of a comparable automobile; a permissible “statistically valid fair market values” source must:
- Give primary consideration to local market values (with limited permissible out-of-area data);
- Maintain a database covering at least 85% of makes/models for the last 15 model years with major options; and
- Produce fair market values based on current local data (allowing parameter expansion for statistical validity).
Deviations require automobile-specific documentation.
Martin v. Powers, 505 S.W.3d 512; Kogan, 2003 WL 23093863; Costello, 670 F. Supp. 3d 603: Tennessee statutes and regulations are incorporated into insurance contracts and have the force of law.
Stuart v. State Farm Fire & Cas. Co., 910 F.3d 371: An insurer’s chosen methodology and obligation to follow it fairly/good-faith; distinguished from mere “reasonable estimate” standard in In re State Farm Fire & Casualty, 872 F.3d 567.

Competing Circuit Authority on Total-Loss Valuation Classes

Lara v. First National Insurance, 25 F.4th 1134 (9th Cir. 2022): Affirmed denial of certification; individualized injury/ACV inquiries predominate; emphasized adjuster discretion and variable adjustments (not uniformly negative) including condition adjustments.
Following Lara: Drummond (3d Cir. 2025), Schroeder (7th Cir. 2025), Freeman (4th Cir. 2025), Sampson (5th Cir. 2023); all decertifying or reversing certification due to individualized ACV determinations and insurer’s right to present alternative valuation methods.
Jama v. State Farm, 113 F.4th 924 (9th Cir. 2024), cert. denied 2025: Distinguished negotiation adjustments; negotiation class reinstated because the adjustment was impermissible under Washington law and classwide injury could be measured by removing the uniform deduction; allowed use of insurer’s own valuation as a “starting place.”
Ambrosio v. Progressive (9th Cir. 2025): Narrowed Jama, distinguishing where no facially unlawful adjustment exists; found predominance lacking absent categorical illegality.
Shady Grove, 559 U.S. 393 (plurality); Tyson Foods, 577 U.S. 442: Rule 23 cannot abridge substantive rights; predominance can be satisfied even when damages or some defenses require separate proceedings.

Legal Reasoning

1) Article III Standing and Mootness

The court holds that breach of a private contract is a concrete injury satisfying Article III, independent of separate proof of consequential damages at the certification stage. This aligns with longstanding recognition of private rights historically enforceable in courts. TransUnion does not speak to private contract claims in this manner and does not require dismissal of “meritless” breach claims for lack of standing. Post-suit appraisal may raise mootness; but the “picking off” doctrine (as in Campbell-Ewald and Wilson) prevents defendants from strategically mooting a class claim by satisfying the named plaintiff alone, especially where appraisal was invoked only after filing.

2) Rule 23(a)

Numerosity: Over 90,000 class members make joinder impracticable.
Commonality: The central question—whether TNA yields artificially depressed ACV contrary to the policy and Tennessee law—can be answered with common proof (e.g., statistical analyses of market behavior and Audatex’s methodology). The court ties this question to the breach element of the contract claim, satisfying Speerly’s requirement that a common question must connect to claim elements.
Typicality: State Farm argued appraisal rendered Clippinger atypical or outside the class. The court disagreed. As in Hicks, the named plaintiff’s liability theory matches the class: a uniform, allegedly improper adjustment. Appraisal affects damages, not liability. Her consequential-damages theory (including appraisal costs and good-faith/fair-dealing claims) flows from the same asserted breach.
Adequacy: Because typicality is satisfied and counsel is experienced, adequacy is met.

3) Rule 23(b)(3) Predominance and Superiority

Predominance is satisfied because the classwide liability question—whether use of TNA violated the policy/regs by reducing ACV below fair market value—takes center stage and can be answered with common evidence. Individual damages (e.g., exact shortfalls per member; appraisal costs for those who used appraisal) do not defeat predominance and can be handled in later proceedings. The court is not persuaded by Lara’s approach and its progeny for four reasons:

Damages vs. Merits: The individualized issues are damages-centric, not liability-centric, consistent with Hicks and Whirlpool.
Factual Distinctions: Unlike Lara, plaintiffs here present a substantive challenge to a uniform, always-negative TNA applied to comparable vehicles; the class definition excludes those without a TNA decrease. There is no suggestion of individualized, pre-payment adjustments offsetting the TNA.
Persuasion by Jama: The Autosource valuation is State Farm’s own method; removing the TNA provides a “starting place” for classwide injury and damages. That approach is sound even outside a per se illegality regime, though the court recognizes Ambrosio’s subsequent narrowing and declines to adopt its categorical rule.
Abuse-of-Discretion Lens: Because certification rulings are reviewed for abuse of discretion, an affirmance of denial elsewhere does not compel reversal here. The Sixth Circuit’s own jurisprudence (Hicks) supports certification when a uniform adjustment is at issue.

As to superiority, class treatment is warranted given the small per-claim amounts and uniform course of conduct. Potential mass appraisals are speculative, and any appraisal issues affect damages and can be managed by the district court.

4) Rules Enabling Act and Wal-Mart Objections

The dissent argues class treatment abridges State Farm’s substantive rights to present individualized defenses. The majority rejects that contention, noting that Rule 23 certification leaves substantive rights intact: State Farm can still litigate individualized valuation issues at the damages stage. The common liability question—whether TNA is improper under the policy and Tennessee regulations—does not preclude State Farm from offering individualized damages evidence later, aligning with Shady Grove and Tyson Foods.

Further, Tennessee regulations constrain an insurer’s valuation discretion. Having chosen a particular methodology and applied TNA across the class, State Farm cannot evade classwide scrutiny by positing alternative methods after the fact. Breach can be shown if the chosen method is unfair, not faithfully implemented, or inconsistent with regulations or the covenant of good faith and fair dealing.

Impact and Significance

Within the Sixth Circuit

Standing Doctrine: The court expressly holds that breach of a private contract is a concrete injury-in-fact, clarifying post-TransUnion standing in the Sixth Circuit.
Class Certification in Valuation Cases: Plaintiffs may certify classes that attack uniform valuation adjustments (such as “negotiation” deductions) when they can show the adjustment is always negative and susceptible to classwide proof. Damages models that “remove the adjustment” from the defendant’s own valuation method are viable.
Appraisal Clauses: Post-suit appraisal does not defeat typicality or superiority; it goes to damages and cannot be used to “pick off” the named plaintiff.
Litigation Strategy: Plaintiffs can pursue consequential damages such as appraisal costs; insurers remain free to litigate individualized damages but cannot defeat certification merely by hypothesizing alternative valuation approaches.

Across Circuits

Circuit Tension: The dissent underscores divergence with the Third, Fourth, Fifth, Seventh, and portions of the Ninth Circuits that have decertified similar classes (often following Lara). The Sixth Circuit aligns more closely with Jama (as to negotiation adjustments) in finding classwide liability susceptible to common proof and using the insurer’s own valuation without the disputed adjustment as the damages baseline.
Potential for Supreme Court Interest: The deepening split over predominance in total-loss ACV class actions and over what counts as concrete injury post-TransUnion (in private contract suits) may invite further review.

Insurance and Regulatory Compliance

Vendor Methods Under Scrutiny: Insurers that rely on third-party valuation tools (e.g., Audatex, CCC) should expect increased class challenges to uniform negative adjustments that purport to reflect “typical negotiation.”
Regulatory Alignment: Tennessee regulations’ requirements for “statistically valid fair market values” and current, local data loom large. Uniform downward adjustments that do not track real-world transactions may face heightened risk.
Claims Handling: Transparent itemization, data support for adjustments, and documentation for any deviation will be critical; insurers may reassess whether “negotiation” adjustments remain appropriate given evolving market dynamics.

Complex Concepts, Simplified

Actual Cash Value (ACV): The fair market value of a vehicle immediately before loss—the price a willing buyer would pay a willing seller.
Typical Negotiation Adjustment (TNA): A uniform, percentage-based reduction applied to advertised prices of comparable vehicles to estimate what buyers “typically” pay after negotiating. Plaintiffs argue this no longer reflects market reality and always reduces ACV.
Appraisal Clause: A contract mechanism to resolve ACV disputes: each party selects an appraiser, the two select a third, and the decision of any two is binding. Costs are split as specified.
Commonality vs. Predominance:
- Commonality: Is there at least one question whose answer is the same for all class members and tied to a claim element? Here: whether TNA is an improper adjustment that depresses ACV.
- Predominance: Do common questions outweigh individualized ones? Here, liability turns on a common challenge to TNA; individualized damages do not defeat predominance.
Standing vs. Mootness: Standing is assessed at filing; post-filing events go to mootness. “Picking off” prevents defendants from mooting a class by satisfying only the named plaintiff (or triggering appraisal after suit).
Rules Enabling Act / Wal-Mart Constraint: Class procedures cannot strip defendants of substantive rights (e.g., to present individualized defenses). Certification here preserves State Farm’s right to contest damages while allowing a classwide determination of liability.
Negotiation vs. Condition Adjustments: Courts may treat negotiation adjustments (uniformly negative deductions from advertised prices) differently from condition adjustments (vehicle-specific condition steps). The Sixth Circuit found class treatment apt where the adjustment is uniformly negative and challenged as methodologically flawed.

The Dissent’s Perspective

Judge Murphy would reverse certification, emphasizing:

Predominance Fails: The key question is the vehicle-by-vehicle fair market value; individual valuation factors predominate.
Substantive Rights: Limiting State Farm to its Autosource calculations (minus TNA) impermissibly abridges its right to prove ACV by any lawful method, violating Wal-Mart and the Rules Enabling Act.
Alignment with Sister Circuits: Following Ambrosio, Freeman, Schroeder, Drummond, and Sampson, he predicts unwieldy, individualized trials or unfair abridgment of defenses.
Distinguishing Hicks: Unlike the per se illegality of labor depreciation in Hicks, TNA is not facially unlawful; thus a simple “remove the adjustment” damages model is improper under Tennessee law.

Conclusion

The Sixth Circuit’s opinion in Clippinger cements two significant propositions within the circuit. First, breach of a private contract constitutes a concrete injury for Article III standing purposes; TransUnion presents no barrier to certifying a contract-based class challenging a uniform insurer practice. Second, a class challenging a single, uniformly negative “negotiation” adjustment to ACV calculations can satisfy predominance, with damages measured by removing the adjustment from the insurer’s own valuation methodology. The court distinguishes contrary authority from other circuits, aligns with Jama’s treatment of negotiation adjustments, and confirms that individualized damages (including appraisal-related issues) can be managed post-liability.

In the short run, the decision empowers Tennessee insureds (and litigants within the Sixth Circuit) to bring classwide challenges to uniform valuation adjustments that allegedly understate ACV. In the longer term, the ruling deepens inter-circuit differences over predominance in total-loss valuation cases and solidifies a pragmatic approach to class certification that separates common liability from individualized damages while respecting—rather than abridging—defendants’ substantive rights at the damages phase.