The Third Circuit recently reversed a district court’s decision to certify two classes against a defendant insurance company, holding that individualized issues predominated over common ones. See Drummond v. Progressive Specialty Ins. Co, 2025 WL 1860993 (3d Cir. July 7, 2025). The Drummond plaintiffs represented a class of drivers who brought breach of contract claims against an auto insurer, alleging that the insurer systematically underestimated the actual cash value of plaintiffs’ cars when seeking coverage for totaled vehicles. The Drummond Court determined that proving whether the insurer undercompensated each class member is an individual issue, and thus, the classes failed to satisfy Rule 23(b)(3)’s requirement that common issues predominate over individual ones.  

In reasoning that the issue of the insurer’s underpayment was incapable of proof on a class-wide basis, the Third Circuit focused on the methodologies that the insurer used to determine settlement values. According to the appellate court, the lower court erred in broadly characterizing the class as challenging the insurer’s application of one component of its settlement valuation methodology. Instead, plaintiffs’ claim depended on proving that the insurer breached its agreement by underpaying plaintiffs (requiring individual proof), and also did not consider that some class members may have actually received a settlement payment equal to or greater than their vehicle’s actual cash value (despite the application of the methodology component).   

The decision relied on a recent Ninth Circuit case involving a similar claim against a different auto insurer. See Jama v. State Farm Mutual Auto. Ins. Co., 113 F.4th 924 (9th Cir. 2024). In Jama, the Ninth Circuit upheld denial of class certification for a class alleging that the auto insurer’s adjustment led to underpayment of totaled vehicles, finding that the adjustment did not always lead to downward and uniform values, and thus did not lend itself to common proof. However, Jama reversed denial of a separate class alleging that state law prohibited a certain adjustment, as proving damages for that statutory claim would be straightforward and uniform. In distinguishing the latter Jama class, the Third Circuit observed: “Here, by contrast, plaintiffs brought a contract claim, so they must show that proving whether Progressive breached its insurance agreement with each class member does not require a plaintiff-by-plaintiff determination as to underpayment.” Drummond, 2025 WL 1860993, at *9. Because the Drummond plaintiffs could not make that showing, the Third Circuit reversed the district court’s order certifying the classes. Id.

This decision along with Jama demonstrate that courts are closely scrutinizing class definitions with an eye towards whether such definitions satisfy Rule 23(b)(3)’s predominance requirement.