Schroeder v. Progressive: Seventh Circuit Rejects a Stand-Alone “Methodological Duty” in Actual-Cash-Value Calculations and Re-affirms Individualized Proof Requirement for Class Certification

1. Introduction

On 24 July 2025 the U.S. Court of Appeals for the Seventh Circuit decided Heather Schroeder & Misty Tanner v. Progressive Paloverde Insurance Co., No. 24-1559. The appeal arose from a district-court order certifying a Rule 23(b)(3) class of Indiana policyholders who alleged that Progressive breached its auto policies by using “Projected Sold Adjustments” (PSAs) when estimating the Actual Cash Value (ACV) of total-loss vehicles. Chief Judge Sykes and Judges Rovner and St. Eve (author) reversed, holding that:

1. The policy imposed one contractual obligation—payment of the vehicle’s ACV—rather than a separate duty to use any particular valuation methodology; and
2. Whether Progressive in fact underpaid any individual insured required highly individualized proof that swamped any common questions, defeating predominance under Rule 23(b)(3).

The ruling narrows the scope of so-called “methodology challenges” in insurance litigation and creates a clear split with the Ninth Circuit’s Jama/Lara line, while aligning the Seventh with the Third and Eighth Circuits.

2. Summary of the Judgment

The Seventh Circuit:

• Reversed the district court’s class-certification order.
• Remanded for further proceedings consistent with its opinion, i.e., without the certified class.
• Held as a matter of law that Progressive’s Indiana auto policy permits use of PSAs so long as the final payment equals the ACV as defined under Indiana law (“price at which property would change hands between a willing buyer and seller”).
• Clarified that common proof about whether “list prices equal market value” could never, by itself, resolve breach or damages for every class member.

3. Analysis

3.1 Precedents Cited and Their Influence

• Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) – reiterated the “rigorous analysis” required for commonality.
• Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997) – emphasized predominance of common over individual questions for Rule 23(b)(3) classes.
• Eddlemon v. Bradley Univ., 65 F.4th 335 (7th Cir. 2023) – supplied framework for dissecting claims into constituent elements when assessing predominance.
• Kartman v. State Farm, 634 F.3d 883 (7th Cir. 2011) – held that improper valuation methodology does not itself establish breach absent underpayment.
• Drummond v. Progressive Specialty Ins., 142 F.4th 149 (3d Cir. 2025) – found individualized issues precluded class certification over Progressive’s PSA practice in Pennsylvania; heavily relied upon by the Seventh Circuit.
• In re State Farm Fire & Casualty Co. (“LaBrier”), 872 F.3d 567 (8th Cir. 2017) – similar labor-depreciation valuation challenge; predominance failed.
• Jama v. State Farm, 113 F.4th 924 (9th Cir. 2024) – allowed certification based on assumption of policy-derived methodological duty; expressly distinguished and not followed.

The Seventh Circuit’s heavy reliance on Drummond and LaBrier signals a growing consensus (outside the Ninth) that valuation-method challenges typically require individual inquiry into each claim file.

3.2 Court’s Legal Reasoning

1. Policy Interpretation. The panel treated construction of insurance contracts as a question of law. It held that “actual cash value” is defined by Indiana precedent as the price at which property would change hands between willing parties. The policy’s clause (“market value, age and condition”) describes inputs to ACV, not a mandated formula. Therefore, no separate “methodological duty” exists.
2. Element-by-Element Claim Analysis. Indiana contract and bad-faith claims both require breach and damages. Without an independent methodological promise, plaintiffs had to prove underpayment—an individualized issue dependent on each vehicle’s unique characteristics.
3. Commonality & Predominance. Even if the plaintiffs could show PSAs are statistically biased, a fact-finder would still need to assess:
   • Whether other unique adjustments in each report offset any bias,
   • The specific market data underlying each PSA (make-model-year-region), and
   • Whether the ultimate offer equaled or exceeded the vehicle’s true ACV.
   These inquiries are inherently claim-specific and overwhelm any common evidence regarding PSAs’ general validity.
4. Rejection of Ninth-Circuit Approach. The Seventh Circuit expressly declined to follow Jama and Lara, finding their damages shortcut (“add back the discount”) incompatible with Indiana’s definition of ACV and Rule 23’s predominance test.

3.3 Potential Impact of the Decision

• Class-Action Strategy. Plaintiffs challenging total-loss valuations in the Seventh Circuit (and likely beyond) must now plead and prove concrete underpayments on an individual basis, greatly limiting class viability.
• Insurance Drafting. Insurers may rely on this precedent to defend their use of proprietary software or statistical adjustments, provided their policies do not expressly prescribe valuation formulas.
• Jurisdictional Split. The opinion deepens a circuit divide (Seventh/Third/Eighth vs. Ninth). The Supreme Court’s recent denial of cert in State Farm v. Jama leaves the split unresolved, but the likelihood of future petitions has increased.
• Regulatory Response. State Departments of Insurance that wish to curb certain adjustments may need explicit regulations; mere policy language referencing “market value” will not suffice.

4. Complex Concepts Simplified

• Actual Cash Value (ACV): In Indiana, ACV means what a willing buyer would pay a willing seller for the vehicle immediately before the loss, adjusted for age, mileage, and condition.
• Projected Sold Adjustment (PSA): A downward (or occasionally upward) statistical adjustment applied to a listed asking price to predict the eventual sale price after typical negotiation.
• Methodological Duty: A proposed contractual obligation to use a particular formula or process when valuing losses. The Seventh Circuit found none here.
• Commonality vs. Predominance: — Commonality (Rule 23(a)(2)) requires at least one shared question. — Predominance (Rule 23(b)(3)) demands that those shared questions outweigh individual ones in importance and number.
• Class Certification (Rule 23(f) Appeal): An interlocutory (mid-case) appeal permitted when the appellate court agrees to review the grant or denial of class treatment before final judgment.

5. Conclusion

Schroeder v. Progressive cements a key principle in Seventh Circuit jurisprudence: unless an insurance contract or governing regulation expressly prescribes a valuation formula, the insurer’s obligation is limited to paying the insured the actual cash value—not to employ any particular methodology. Because determining whether that single obligation has been breached turns on individual facts, broad class actions attacking valuation techniques like PSAs are unlikely to satisfy Rule 23’s predominance requirement. The decision offers insurers clearer litigation defenses and signals to policyholders that successful challenges must focus on concrete, claim-specific underpayments.