[00:00:05] Speaker 04:
Okay thank you and welcome back and we'll now hear argument in the second case set for this morning Ambrosio versus Progressive Preferred Insurance Company case number 24-2708 and we'll hear from Mr. Louther.

[00:00:24] Speaker 03:
Good morning your honor.

[00:00:25] Speaker 03:
Lee Louther on behalf of the plaintiffs and appellants.

[00:00:28] Speaker 03:
I'd like to reserve two minutes of my time in rebuttal.

[00:00:32] Speaker 03:
The district court abused this discretion by finding that this court's decision in LERA precluded class certification on materially distinguishable claims and a materially distinguishable class definition to that presented here.

[00:00:47] Speaker 03:
In the district court below, we argued that LERA was correctly decided but inapplicable to the claims and class definition in the record presented to you.

[00:00:56] Speaker 03:
We made the same arguments in our 23f petition.

[00:00:59] Speaker 03:
We made the same arguments in an entire section of our opening brief.

[00:01:03] Speaker 03:
And after we filed that, this court and its JAMA decision held that the distinctions that we drew were right.

[00:01:10] Speaker 04:
Well, maybe we can drill down on that because it seems like the distinctions in JAMA were different.

[00:01:17] Speaker 04:
If I read JAMA, I mean, first of all, JAMA followed

[00:01:22] Speaker 04:
Lara on the first issue, on the condition of the car.

[00:01:27] Speaker 04:
And then it said, but as to negotiation, that was against the regulation, and so we're going to take that out.

[00:01:37] Speaker 04:
If I read JAMA and try to make sense of it, it was saying, we can just delete this one column on each of these numbers.

[00:01:47] Speaker 04:
We don't have to go back to any individualized claim.

[00:01:50] Speaker 04:
That doesn't seem to be, I mean, is there, is there a similar procedure here?

[00:01:54] Speaker 04:
I mean, I know, I know these are all different, but you're not just saying, Hey, here's one number.

[00:01:58] Speaker 04:
We can delete this.

[00:01:59] Speaker 04:
You're actually saying you used a different calculation of fair market value.

[00:02:05] Speaker 04:
You may be right.

[00:02:06] Speaker 04:
You may be wrong, but isn't that by definition individualized?

[00:02:11] Speaker 03:
So your honor, the claim that we are bringing is exactly like the claim in JAMA.

[00:02:16] Speaker 03:
that a negotiation deduction is a categorically improper deduction and it has no place in an appraisal of market value as... You're saying here's one category and we can deduct.

[00:02:28] Speaker 02:
Sir, I'm sorry, I didn't hear that.

[00:02:31] Speaker 02:
You're saying here's one category and we can deduct that category and use everything else.

[00:02:38] Speaker 03:
That's exactly what we're saying.

[00:02:39] Speaker 03:
So just like in JAMA,

[00:02:41] Speaker 03:
we will be asking the jury to credit the whole of the Mitchell report that progressive chose and actually used to value each of my client's claims as well as each member of the period of class.

[00:02:52] Speaker 03:
And the district court below found that we had in fact presented common evidence that the legitimacy of the projected sole adjustment, the negotiation deduction in progressive parlance, that the legitimacy of that was a common issue.

[00:03:08] Speaker 03:
and that our common evidence that that deduction is categorically improper showed that each class member suffered the injury of being paid less than what the policy required progressive to pay.

[00:03:20] Speaker 04:
Well, I don't think it's OK.

[00:03:23] Speaker 04:
So you're saying that everybody I mean, there's two questions here.

[00:03:26] Speaker 04:
Number one is every class member harmed because that was also an issue in Laura was that some at least there was some evidence that some were

[00:03:35] Speaker 04:
overpaid is so, you know, it's going to get impossible to decide now.

[00:03:40] Speaker 04:
The Supreme court has, well, they're whole, as I understand it, they're holding John.

[00:03:44] Speaker 04:
Well, we don't know whether they're holding John, I guess, but there's the, the, the Supreme court's taken the Davis case.

[00:03:50] Speaker 04:
Have you, are you following that?

[00:03:53] Speaker 04:
Yeah.

[00:03:54] Speaker 04:
And that w what's your take on whether that could have some impact on this case?

[00:04:00] Speaker 03:
So our case, our, our positions at the Davis case will have, have no impact.

[00:04:04] Speaker 03:
So unlike in LERA, and every record is distinct and the class definition in LERA is materially different from that here.

[00:04:13] Speaker 03:
As your honor noted in LERA, the class definition there included people who had their vehicles valued by an appraisal process.

[00:04:23] Speaker 03:
They were never actually paid an amount that was the value affected by the anonymized adjustment that they were challenging.

[00:04:31] Speaker 03:
in our class includes only people who were paid the amount of a Mitchell report with the categorically improper deduction that were challenging.

[00:04:40] Speaker 02:
Leaving aside that as I read the record until 2021, it was always down.

[00:04:47] Speaker 02:
Aren't you in effect saying, yeah, well, too bad progressive.

[00:04:52] Speaker 02:
If some of our clients, some of the class were overpaid, they weren't overpaid enough.

[00:05:00] Speaker 02:
Because we get to deduct this entire category.

[00:05:06] Speaker 02:
So, your honor, there's no member in effect.

[00:05:09] Speaker 03:
You're saying that we are not saying that your honor, because unlike the condition adjustment in JAMA, which could increase the value or decrease the value, the negotiation deduction here is just that is a deduction.

[00:05:23] Speaker 03:
And based on our common evidence.

[00:05:25] Speaker 03:
And it was always a deduction until 2021.

[00:05:27] Speaker 03:
It remains a deduction still.

[00:05:29] Speaker 03:
It only works downward.

[00:05:32] Speaker 03:
So that's a material distinction from Lara.

[00:05:36] Speaker 04:
In JAMA, the court said that the deduction, the negotiation deduction was prohibited by, I guess, regulation, which was sort of incorporated into the statute.

[00:05:46] Speaker 04:
It was contrary to law.

[00:05:48] Speaker 04:
Do you have a similar argument with regard to the PSA or are you just relying on that as part of a definition of fair market value that you can't use it?

[00:05:58] Speaker 03:
We are arguing that the contract, the way that you determine market value based on our common evidence is that the norm in the modern internet driven market is for dealers to price to market.

[00:06:11] Speaker 03:
And so the list price is the proper reflection of market value at the time you are determining

[00:06:17] Speaker 03:
the value of a vehicle.

[00:06:18] Speaker 03:
And what language in the contract are you relying on to make that?

[00:06:21] Speaker 04:
So in answer to my first question, there's not a regulation that prohibits it as there arguably was or the court found that there was in JAMA.

[00:06:31] Speaker 04:
So you're not relying on regulation, you're relying solely on the contract.

[00:06:34] Speaker 04:
What language in the contract are you relying on?

[00:06:37] Speaker 03:
That actual cash value is determined by market value, age and condition of the vehicle.

[00:06:42] Speaker 04:
Isn't that the problem here though that, you know,

[00:06:45] Speaker 04:
actual cash value.

[00:06:46] Speaker 04:
Is there a definition in the contract of that?

[00:06:49] Speaker 03:
Uh market value age and condition of the vehicle at the time the loss occurs.

[00:06:53] Speaker 04:
That that that is the the definition and so why I understand but why I mean that's the same definition we were dealing with in in uh in Lara effectively.

[00:07:04] Speaker 03:
Your honor I didn't see a definition a contractual definition at issue in Lara and my understanding of the case based on the opinion that this court issued

[00:07:13] Speaker 03:
is that the plaintiffs had not identified any particular provision of their contract that had been violated.

[00:07:19] Speaker 03:
Rather, they were relying on a regulation saying, you have to tell us more about this so we can determine is this right or wrong.

[00:07:26] Speaker 03:
Here, we are challenging the substance of these negotiation deductions.

[00:07:31] Speaker 03:
Progressive could say nothing at all about them, or they could explain them ad nauseam, and our claim would be the same.

[00:07:37] Speaker 03:
You can't do it.

[00:07:38] Speaker 03:
That's a breach of contract.

[00:07:39] Speaker 03:
The district court below found that we had common evidence

[00:07:42] Speaker 03:
from which a jury could determine that the application of negotiation deduction breached my client's contracts and breached every other member of the period of classes contracts.

[00:07:53] Speaker 02:
Your friends on the other side say that you didn't plead for nominal damages.

[00:07:59] Speaker 02:
I'd like you to just touch on that.

[00:08:02] Speaker 03:
Sure, Your Honor.

[00:08:02] Speaker 03:
So we did not plead for nominal damages, but under Arizona law, if there were to, if a jury were to return a such other damages as the court may award

[00:08:12] Speaker 03:
We do have an allegation that such other damages and if a jury were to return a verdict that said progressives conduct here breach the contract, but for whatever reason did not award damages then we would move the court at that time to make that the verdict conform.

[00:08:31] Speaker 03:
And Arizona, my understanding of the law there based on the appellate decisions that my friend on the other side cited, is if you don't ask the judge to do that, then the court of appeals is not going to reverse and tell you to go back and give a dollar.

[00:08:45] Speaker 03:
That'd be harmless error at that point.

[00:08:47] Speaker 03:
But if you move for that at the time that the verdict is rendered, then you are entitled to that relief from the court.

[00:08:55] Speaker 04:
I mean, one other problem, it seems to me,

[00:08:59] Speaker 04:
that makes this case different than JAMA is JAMA there were two subclasses.

[00:09:05] Speaker 04:
And I mean, you would agree that as to the condition of the vehicle, those claims would be precluded under Lara, correct?

[00:09:16] Speaker 03:
Yes, Your Honor.

[00:09:17] Speaker 03:
Even before Lara was issued, we never took issue with a condition adjustment.

[00:09:23] Speaker 04:
A condition adjustment... So what's the definition?

[00:09:26] Speaker 04:
What was the class?

[00:09:28] Speaker 04:
What was the proposed class that you proposed below that was... Sure.

[00:09:34] Speaker 03:
All Arizona progressive insureds who within the applicable statute of limitations had their vehicles valued by a Mitchell report that was reduced by a projected sole adjustment.

[00:09:47] Speaker 03:
If they were not paid that amount, they're not a member of the class.

[00:09:50] Speaker 03:
If they went through an appraisal, like in LERA, they are not a member of the class.

[00:09:55] Speaker 03:
If they negotiated some different amount, they're not a member of the class.

[00:09:59] Speaker 04:
That was the other thing I wanted to look at.

[00:10:01] Speaker 04:
The contract says that it provides for a challenge, right?

[00:10:07] Speaker 04:
If you don't like the amount that's provided, you can challenge it?

[00:10:11] Speaker 03:
You can.

[00:10:12] Speaker 03:
There's no obligation to do so.

[00:10:14] Speaker 04:
Well, but if you don't, doesn't that, I mean, that doesn't really make a lot of sense to say you haven't, I mean, if Progressive is looking at these, if you say, hey, I mean, Progressive has a contract that says like, or I shouldn't say a contract, they've got a process they're using to try and come up with fair market value.

[00:10:36] Speaker 04:
If the potential plaintiff or the insurer doesn't think that that's correct,

[00:10:42] Speaker 04:
and they can challenge it, Progressive takes a closer look at it.

[00:10:46] Speaker 04:
How is that fair to say, well, we're not going to go through the provision that the contract provides.

[00:10:51] Speaker 04:
We're just going to sue and say, you could never do this in the first place.

[00:10:55] Speaker 03:
So it's fair, Your Honor.

[00:10:56] Speaker 03:
We're challenging a single rigged line on deduction that never should be applied in the first place.

[00:11:03] Speaker 03:
And to make it insured, dip further into their pocket and pay for their own appraiser and pay for half of an additional appraiser, you know, amounts that would dwarf

[00:11:13] Speaker 03:
the amount of the rig deduction we're challenging here.

[00:11:16] Speaker 03:
That is not a fair process.

[00:11:18] Speaker 03:
We are challenging systemic conduct that can only be effectively addressed through a class action.

[00:11:25] Speaker 03:
Just like in JAMA.

[00:11:26] Speaker 00:
Your proposed class would only include those insureds who are disappointed in the determinant, progressive determination as to value.

[00:11:38] Speaker 03:
Our class would only include those insureds who were paid the amount of a Mitchell report that included a negotiation, a negotiation deduction.

[00:11:48] Speaker 03:
So if they went through some of the process, then they would not be a member of the class.

[00:11:53] Speaker 00:
And would that preclude at trial progressive from pointing to Mitchell reports, which showed the values up, down, sideways?

[00:12:03] Speaker 03:
Well, Your Honor, each of the... Start with a yes or no.

[00:12:07] Speaker 03:
So the answer is no, but to dig deeply into the record or to back up.

[00:12:16] Speaker 03:
member of the class, my clients included, were paid the amount as determined by a Mitchell report.

[00:12:24] Speaker 03:
And so the actual conduct that we're challenging here is at a particular point in time, progressive, tendered performance of their contract.

[00:12:31] Speaker 03:
They said, here is the actual cash value of your vehicle as determined by the method we are required to use in contract.

[00:12:39] Speaker 03:
That's their performance.

[00:12:40] Speaker 03:
And each of those valuation reports,

[00:12:42] Speaker 03:
has what we contend is the proper method that would comply with the contract back out the one categorically improper deduction and you have evaluation that complies with their contract.

[00:12:55] Speaker 00:
The class as you propose it would not include satisfied progressive customers who suffered a loss.

[00:13:05] Speaker 03:
Your honor it would include

[00:13:08] Speaker 03:
It would include people whose insurers who received a valuation that included a projected sold adjustment.

[00:13:16] Speaker 03:
So I don't know, satisfied or not, under our common evidence and our theory of liability, their contracts were breached and they did not receive the amount that they were entitled to, which is actual cash values determined by market value, age and condition at the time of loss.

[00:13:33] Speaker 00:
If that's the class and it proceeds to trial,

[00:13:36] Speaker 00:
Would progressive be precluded from showing to the contrary?

[00:13:42] Speaker 03:
Progressive would not be concluded from introducing any kind of evidence that they otherwise would be entitled to present under the rules of evidence.

[00:13:50] Speaker 03:
But our common question of liability, whether or not their actual conduct is a breach of their uniform contract, is common to the class.

[00:13:59] Speaker 03:
And our evidence will show that they either breached or did not breach by applying the projected sold deduction

[00:14:06] Speaker 03:
And the district court agreed with that, as have 10 other district courts on this very record, as did this court in JAMA, and as have the fifth, sixth, and eighth circuits in Mitchell, Hicks, and Stewart, respectively, in cases challenging the substance of a single line item deduction in the methodology the insurer chose and actually used to value actual cash value under the contract.

[00:14:32] Speaker 00:
My questions have eaten into your time.

[00:14:36] Speaker 04:
Oh, I reserve.

[00:14:37] Speaker 04:
We'll give you time for rebuttal.

[00:14:39] Speaker 04:
All right.

[00:14:39] Speaker 04:
Thank you.

[00:14:39] Speaker 04:
Thank you, Your Honor.

[00:14:40] Speaker 00:
Thank you.

[00:14:40] Speaker 00:
Appreciate it.

[00:14:50] Speaker 01:
May it please the court.

[00:14:51] Speaker 01:
My name's Jeff Cashton of King and Spaulding.

[00:14:53] Speaker 01:
I represent the Progressive Respondents' Defendants.

[00:14:57] Speaker 01:
I want to jump right to, I think, the heart of the issue that the

[00:15:01] Speaker 01:
court has been asking about which is this Laura, JAMA, and understanding them.

[00:15:05] Speaker 01:
And I think JAMA, while we would say that Judge Rollinson may have had the right of it, candidly, we understand that we have to make sense of both of those cases and figure out how to apply them.

[00:15:17] Speaker 01:
And I think JAMA gives you the instructions of how to do it when it says you have to look at the nature of the claim.

[00:15:23] Speaker 01:
This is not about

[00:15:24] Speaker 01:
tagging names, it's about the nature of the claim.

[00:15:27] Speaker 01:
So let's think about the nature of the claim for the moment.

[00:15:30] Speaker 02:
In the record... Most of the nature of the contract?

[00:15:32] Speaker 01:
No, I mean the nature of the claims, Your Honor.

[00:15:34] Speaker 01:
And so if you take a look at, in the record, at the supplemental appendix, starting at 309, is the plaintiff's complaint in this case, the operative complaint, the second amended complaint.

[00:15:45] Speaker 01:
And at page 323 of the supplemental

[00:15:48] Speaker 01:
excerpt of records, they have their breach of contract claim.

[00:15:51] Speaker 01:
And they say, quote, defendants purported to pay plaintiffs and each of their class members the ACV or actual cash value of their total vehicles.

[00:16:00] Speaker 01:
Defendants, however, failed to pay the actual cash value of plaintiffs' and members' vehicles because they applied this PSA.

[00:16:07] Speaker 01:
Thus, defendants failed to pay plaintiffs and each of the other class members the promised ACV of their total loss vehicles and thereby breach their contracts with plaintiffs and the other class members.

[00:16:18] Speaker 01:
So this is a classic case of parties suing an insurance company saying, you owed us a certain amount, actual cash value.

[00:16:26] Speaker 01:
You didn't pay us actual cash value.

[00:16:28] Speaker 01:
That's Laura.

[00:16:30] Speaker 01:
And your honor asked earlier if Laura

[00:16:32] Speaker 01:
used market value as a reference.

[00:16:35] Speaker 01:
And in fact it did, and you don't even have to look at Laura for that.

[00:16:38] Speaker 01:
You can look at the decision in JAMA.

[00:16:41] Speaker 01:
And if you look at page 929 through 930 in JAMA, the JAMA court explains that in Laura, there was a claim that it required showing an element of injury.

[00:16:50] Speaker 01:
And according to the court in JAMA, quote, this meant each plaintiff in Laura had to show that they received less money than they were owed.

[00:17:00] Speaker 01:
In other words, that they received less than the vehicle's pre-cash actual cash value, which in turn was defined as, quote, fair market value.

[00:17:10] Speaker 02:
The district court says that plaintiffs now seek certifications for the breach of contract and breach of good faith and fair dealing claims.

[00:17:19] Speaker 01:
Yes.

[00:17:20] Speaker 02:
How do you respond to the action for breach of the covenant of good faith and fair dealing?

[00:17:24] Speaker 01:
Well, the parties have all agreed, Your Honor, that the issues for class certification rise and fall together with the breach of contract claim.

[00:17:30] Speaker 01:
And so once again, what that claim will turn on is whether progressive paid actual cash value or not.

[00:17:38] Speaker 02:
Is the Mitchell value minus PSA the actual cash value or the market value?

[00:17:44] Speaker 01:
So it's both, and it's one measure of it.

[00:17:46] Speaker 01:
And the testimony in the record explains, Your Honor, that actual cash value is market value, and it is an estimate of the value of a vehicle pre-crash.

[00:17:55] Speaker 01:
And there's lots of different ways to calculate actual cash value.

[00:17:58] Speaker 01:
The record shows the plaintiff's experts agree with our experts, that it's essentially a range, all right?

[00:18:04] Speaker 01:
There's different methodologies that can be used, and as this court has noted in other cases, and as the district court here noted, you can use different methodologies, and our contract doesn't require

[00:18:14] Speaker 01:
They particular methodology to estimate the value.

[00:18:17] Speaker 01:
And the point is this.

[00:18:18] Speaker 02:
Within your methodology, you have a step that always reduces the value.

[00:18:23] Speaker 02:
How does that square?

[00:18:24] Speaker 01:
Well, it doesn't, Your Honor.

[00:18:25] Speaker 01:
It always reduces.

[00:18:27] Speaker 01:
What it does, Your Honor, is it is trying to estimate the market value of comparable vehicles.

[00:18:33] Speaker 01:
And so it's trying to figure out under Arizona law.

[00:18:36] Speaker 02:
It only goes down.

[00:18:37] Speaker 01:
It only goes accurate, is the way to say it, Your Honor.

[00:18:41] Speaker 01:
What the plaintiffs would prefer that we have to use is the list price.

[00:18:44] Speaker 01:
They think comparable vehicles that are offered for sale, the list price needs to be used, and our view is that the market value of comparable vehicles

[00:18:53] Speaker 01:
is the value that Arizona law says, that a willing seller and a willing buyer would pay for the vehicle.

[00:19:00] Speaker 01:
And that's what Arizona law says is market value.

[00:19:02] Speaker 01:
And the projected sold adjustment is a way to estimate the market value of a comparable vehicle that has been offered but not actually sold.

[00:19:11] Speaker 04:
Does it take into account the condition of the vehicle?

[00:19:14] Speaker 04:
What is encompassed within this deduction?

[00:19:16] Speaker 04:
Is the condition part of that?

[00:19:18] Speaker 01:
So condition is not part of the projected sold adjustment.

[00:19:21] Speaker 01:
The condition adjustment is another adjustment that is made to the comparable vehicles.

[00:19:26] Speaker 01:
And so there's a methodology that Progressive uses, this Mitchell methodology, which estimates values of comparable vehicles, taking into account what's the market value of the vehicle,

[00:19:36] Speaker 01:
So if it's been actually sold, that's the market value.

[00:19:40] Speaker 01:
If it's listed for sale, the projected sold adjustment is applied, as long as it's not a non-aggle dealership.

[00:19:46] Speaker 01:
Condition is taken into account.

[00:19:48] Speaker 01:
Different accessories, that gets you the comparable vehicle's values.

[00:19:52] Speaker 01:
Those are used to estimate a base value, and then the condition of the lost vehicle is also taken into account.

[00:19:59] Speaker 01:
As the court below observed, this is one methodology that's being used by progressive.

[00:20:04] Speaker 01:
There are other methodologies.

[00:20:06] Speaker 01:
You can use the NADA guide, the Kelly Blue Book guide.

[00:20:09] Speaker 01:
You can do an appraisal and take into account what dealers say the value of the vehicle's worth.

[00:20:15] Speaker 01:
And what the record shows, for the name plaintiffs, for example.

[00:20:19] Speaker 02:
Counsel.

[00:20:19] Speaker 01:
Yes, sir.

[00:20:20] Speaker 02:
Were those used, Kelly?

[00:20:23] Speaker 01:
Well, we used Mitchell's methodology for these vehicles, but the name plaintiffs, at least one of them, introduced those methodologies in negotiations with Progressive to try to get a greater amount.

[00:20:37] Speaker 01:
So, for example, plaintiff Trenholm introduced a valuation from Kelley Blue Book that was several hundred dollars lower than what Progressive ultimately paid.

[00:20:47] Speaker 01:
The record also contains evidence that plaintiff Trenholm had actually purchased her vehicle about a year before her accident and paid less than Progressive gave her.

[00:20:58] Speaker 01:
And the point, Your Honor, is that the jury is entitled to take this evidence of market value of different valuations and to make a factual finding.

[00:21:07] Speaker 01:
Did Progressive pay the actual cash value or not when it settled these claims?

[00:21:13] Speaker 01:
Even though it applied the PSA that the plaintiffs challenged.

[00:21:16] Speaker 01:
And that's an individualized issue.

[00:21:18] Speaker 01:
If you think about this as an individual trial, imagine for a moment this wasn't a class action and Plaintiff Trenholm was going to go to trial on her claim that she wasn't paid actual cash value because of the PSA.

[00:21:32] Speaker 01:
The question the jury would ultimately be asked to decide to breach a contract is, how much were you paid and was that the actual cash value of your vehicle or not?

[00:21:42] Speaker 01:
Now multiply that times what, 10, 20,000?

[00:21:45] Speaker 01:
Those are the factual questions you have to ask in this case.

[00:21:50] Speaker 01:
Compare this to JAMA now.

[00:21:52] Speaker 01:
JAMA was a case where, as the court said, the deduction at issue, the negotiation deduction, was flatly barred by state law.

[00:22:03] Speaker 01:
Washington law, the district court had held, barred that deduction.

[00:22:07] Speaker 01:
That's not our case.

[00:22:08] Speaker 02:
In the red brief at 39, progressive

[00:22:12] Speaker 02:
discusses JAMA and SAMSON, which JAMA cited, to suggest that when a challenge adjustment is, I'm quoting you, is not prohibited by state law, JAMA reaffirmed that determining actual cast value requires the fact finder to examine different legally permissive methods of determining actual cast value.

[00:22:38] Speaker 02:
I don't think that's the holding of JAMA.

[00:22:42] Speaker 02:
JAMA distinguished Samson by explaining that the unlawful conduct challenged by the negotiation class is applying one specific deduction.

[00:22:55] Speaker 02:
That the conduct was prohibited by statute in JAMA while it's prohibited by contract here, contract versus statute, isn't a distinction, is it?

[00:23:05] Speaker 01:
Well, Your Honor, in JAMA, the court affirmed the district court's decertification of the condition adjustment class.

[00:23:11] Speaker 01:
And it did so by saying that you would

[00:23:15] Speaker 01:
that Laura would apply because that would be the case, for example, where the payouts were not actually based on the challenge adjustment or where even if the payouts were based on the challenge adjustment, they still exceeded actual cash value.

[00:23:29] Speaker 01:
That is JAMA at 936.

[00:23:31] Speaker 01:
And the point the JAMA court was making is if you look at the nature of the claim, if the claim is the factual challenge to whether they were paid market value or not,

[00:23:42] Speaker 01:
Then you have to take into account individualized evidence of what is the value of the car.

[00:23:47] Speaker 01:
If instead the challenge is based on the flatly barred application of an adjustment, where it's barred by statute or regulation,

[00:23:58] Speaker 01:
In those instances, the breach that's being argued is not you didn't value the car properly.

[00:24:04] Speaker 01:
It's that you used an adjustment that is unlawful as a matter of law, not as a matter of fact.

[00:24:10] Speaker 01:
And that's the distinction JAMA presses.

[00:24:13] Speaker 04:
And in fact, and so to put a finer point on it, I mean, the real distinction here is that in JAMA, it was barred by law.

[00:24:21] Speaker 04:
And here,

[00:24:22] Speaker 04:
They're saying, well, it's not barred by law, but it is barred by the contract.

[00:24:26] Speaker 04:
And the problem is once you roll it back into the contract, you bring in the whole fair market value issue, and you have to evaluate whether this represents fair market value or not.

[00:24:36] Speaker 04:
It might in some circumstances, and it might not in others.

[00:24:39] Speaker 01:
That's exactly right, Your Honor.

[00:24:41] Speaker 01:
If we had a contract that had a specific methodology spelled out, if it said you can't use a PSA, this would be more like JAMA.

[00:24:48] Speaker 01:
But we don't.

[00:24:49] Speaker 02:
Does the contract actually say

[00:24:51] Speaker 02:
You can use whatever methodology you choose.

[00:24:54] Speaker 01:
It does.

[00:24:55] Speaker 02:
Where does it say that?

[00:24:56] Speaker 01:
I'd have to get that for you, Your Honor.

[00:24:58] Speaker 01:
It's in the record.

[00:24:59] Speaker 01:
It does say that we can use whatever methodology we want.

[00:25:03] Speaker 01:
And I'll try to locate that for you, and I can submit it.

[00:25:05] Speaker 01:
But it is in the contract.

[00:25:07] Speaker 01:
With the contract, the only obligation is to pay.

[00:25:09] Speaker 01:
And I think it might be in our brief, and I just don't have my finger on it.

[00:25:13] Speaker 01:
I did want to note one other thing, Your Honor.

[00:25:15] Speaker 01:
To try to make sense of JAMA and Laura, I did go back and actually look in the record.

[00:25:26] Speaker 04:
kind of being facetious, but it is hard to parse out the difference.

[00:25:29] Speaker 04:
I mean, that's, I think, what we're struggling with here.

[00:25:31] Speaker 01:
It is very hard.

[00:25:32] Speaker 01:
That's why I think Judge, in a sense, Judge Olson had it right, but we, we practitioners have to know that they both apply.

[00:25:38] Speaker 01:
JAMA doesn't replace Lora.

[00:25:39] Speaker 01:
And this is, and this is the island needle I think you can thread.

[00:25:42] Speaker 01:
And I did go back and look at the arguments that the parties and the district court made in JAMA.

[00:25:46] Speaker 01:
So if you look at the plaintiff's motion for class certification in JAMA, their reply brief, and this is in the docket, it's docket number 58 of the lower court decision in JAMA, at page six, they say, quote, thus the plaintiff is not so much alleging that State Farm failed to pay the actual cash value of total loss vehicles, but rather the distinct components of State Farm's valuation procedure breached its statutory and contractual duties.

[00:26:12] Speaker 01:
And the district court in JAMA then picked up on that.

[00:26:16] Speaker 01:
And this is in the record.

[00:26:17] Speaker 01:
And actually, it's in the JAMA record for your honors at Documentary 21-6, page 275 of your docket for the Court of Appeals.

[00:26:31] Speaker 01:
But what the District Court said is here, plaintiffs challenge, this is again JAMA,

[00:26:37] Speaker 01:
plaintiffs challenges only the legality of the deduction of the typical negotiation discount or condition deductions, not the appropriateness of the dollar amount of the comparable vehicles.

[00:26:51] Speaker 01:
Contrast that with this case.

[00:26:53] Speaker 01:
This case, what the plaintiffs allege is, the dollar amount of the comparable vehicles that Progressive used was wrong.

[00:27:02] Speaker 01:
They say it's not consistent with the market because their theory is nobody negotiates the price of a used car.

[00:27:10] Speaker 01:
That's their theory.

[00:27:11] Speaker 01:
They have a right to prove it.

[00:27:13] Speaker 01:
But what it requires is them proving we didn't pay actual cash value.

[00:27:17] Speaker 01:
And in order to decide that, we're going to have to look at each individual plaintiff.

[00:27:21] Speaker 01:
I'm sorry, Ron.

[00:27:22] Speaker 02:
If a breach entitled all the plaintiffs' phenomenal value, the question I raised with you, would a common question exist

[00:27:30] Speaker 01:
Well, we do argue below that there was no common question.

[00:27:33] Speaker 01:
But the question really here, Your Honor, is predominance.

[00:27:35] Speaker 01:
So even if they were entitled to nominal damages, which they have implicated, and which as an aside, because they didn't plead it, we did not have an opportunity to brief the issue below about whether they would have federal court jurisdiction if all they sought was nominal damages.

[00:27:50] Speaker 01:
But putting that aside.

[00:27:52] Speaker 02:
Well, let me answer.

[00:27:52] Speaker 02:
You argued Drummond.

[00:27:54] Speaker 01:
Excuse me?

[00:27:54] Speaker 02:
You argued Drummond.

[00:27:56] Speaker 02:
Yes, Your Honor.

[00:27:58] Speaker 02:
Yeah.

[00:27:58] Speaker 02:
And that's on appeal, of course.

[00:28:01] Speaker 02:
Yes, Your Honor.

[00:28:02] Speaker 02:
But Drummond holds that a common question would apply in that circumstance.

[00:28:06] Speaker 01:
Drummond did hold that a common question would apply, but it doesn't answer the question of whether common issues predominate over individualized issues.

[00:28:12] Speaker 01:
And you still have to address the question of was there an injury?

[00:28:16] Speaker 01:
You may want to award nominal damages for a breach, but there's only a breach.

[00:28:19] Speaker 01:
And as Laura said, this is a merits issue, not a damages issue, as their opening brief suggests.

[00:28:25] Speaker 01:
It's a merits issue if there is injury.

[00:28:27] Speaker 01:
And you only are entitled to even nominal damages if you prove an injury.

[00:28:31] Speaker 01:
And the injury in this case is not applying a statutorily barred adjustment.

[00:28:38] Speaker 01:
But that's JAMA.

[00:28:39] Speaker 01:
The injury alleged in this case is we didn't get paid actual cash value, and we should have.

[00:28:45] Speaker 01:
And that question will require an individual trial.

[00:28:48] Speaker 01:
Again, go back to thinking about what Ms.

[00:28:51] Speaker 01:
Ambrosio's individual trial would look like.

[00:28:53] Speaker 02:
Isn't the injury, you applied a cross the board downward deduction, which we want to eliminate.

[00:29:01] Speaker 01:
But that's not an injury, Your Honor, if they were actually paid the amount they're owed under the contract.

[00:29:06] Speaker 01:
Assume a hypothetical if we decided that every single time somebody was injured.

[00:29:10] Speaker 02:
I can think of lots of hypotheticals.

[00:29:12] Speaker 01:
But let me give you one to consider.

[00:29:14] Speaker 01:
Assume that progressive applied a methodology where we did our approach and then we would multiply by 10 the amount we're paying.

[00:29:21] Speaker 01:
So that everyone had a PSA as part of their analysis, but for your Toyota Camry, we paid you $100,000.

[00:29:27] Speaker 01:
You might have had a PSA applied, but you weren't injured because you received the amount the contract requires.

[00:29:32] Speaker 01:
So just because a PSA was applied doesn't tell us anything about whether someone was injured until we know how much was their car worth and how much did they get paid.

[00:29:42] Speaker 04:
I mean, effectively, wouldn't they have to show that the PSA

[00:29:48] Speaker 04:
It's almost like a facial challenge that we would look at in constitutional law.

[00:29:54] Speaker 04:
Say there's this group of 10,000, you'd have to say all 10,000 of these, the PSA was wrongly applied.

[00:30:01] Speaker 04:
Now in JAMA, supposedly that was easier to do because you had a statute, the argument was it's just unlawful.

[00:30:09] Speaker 04:
You know, they have to do that one by one.

[00:30:12] Speaker 01:
They've got to show it as to all 10,000.

[00:30:13] Speaker 01:
Yes, your honor.

[00:30:15] Speaker 01:
And I think it's not that in our case, I think it's not that it was unlawfully applied.

[00:30:18] Speaker 01:
I think in our case, they have to show that in applying it, the result was actual cash value wasn't paid.

[00:30:23] Speaker 04:
Yeah.

[00:30:23] Speaker 04:
But I guess their argument is that it would have been inconsistent with the contract.

[00:30:30] Speaker 01:
Only because they think it's not market.

[00:30:32] Speaker 02:
So in effect, you're saying, even if we concede a breach, no harm.

[00:30:38] Speaker 01:
No, Your Honor, we're saying that the only way you determine if there's a breach is whether there was injury.

[00:30:42] Speaker 01:
So the liability question of breach requires proof of injury.

[00:30:46] Speaker 01:
You can only prove injury in a case where you're challenging the valuation amount by determining were they paid the right amount.

[00:30:53] Speaker 01:
And that's an individual question, as opposed to were they paid using a methodology that is unlawful under state law.

[00:31:01] Speaker 01:
For these reasons, we do think that the case is wrong.

[00:31:03] Speaker 04:
Can I ask one more question?

[00:31:05] Speaker 04:
The Davis case, is there value in holding this?

[00:31:07] Speaker 04:
for the Supreme Court's decision in Davis and what that, I mean, theoretically the Supreme Court could rule in Davis and then GVR, JAMA.

[00:31:16] Speaker 04:
I don't know if that's on the table.

[00:31:18] Speaker 04:
Should we wait or you think we have enough to go forward now?

[00:31:22] Speaker 01:
I absolutely think you're able to affirm the court below without waiting for the LabCorp Davis decision because I think that the district court below got it right that under Laura, I think Laura governs here.

[00:31:32] Speaker 01:
I don't think JAMA is applicable.

[00:31:34] Speaker 01:
And I think if you decide that,

[00:31:35] Speaker 01:
you can affirm on the basis that the individual issues predominate.

[00:31:40] Speaker 01:
If you think that JAMA controls, I do think you then need to wait for LabCorp because the issue about when you have to determine standing, can you have a class if there are members who have

[00:31:51] Speaker 01:
no standing, and will those issues predominate, might complicate things.

[00:31:56] Speaker 01:
So I think it's a two-part answer.

[00:31:57] Speaker 01:
I don't think you have to wait to affirm, but I think if your intention, if your thought was, this is really a JAMA case, you probably need to wait to hear from LabCorp.

[00:32:06] Speaker 04:
Okay, thank you.

[00:32:07] Speaker 04:
Thank you, Your Honors.

[00:32:14] Speaker 04:
Mark it up to a minute, and we may let you go over.

[00:32:16] Speaker 04:
Thank you, Your Honor.

[00:32:20] Speaker 03:
This case is materially indistinguishable from the JAMA decision.

[00:32:24] Speaker 03:
And the issue here is that we do challenge the substance as improper of one line item deduction in the methodology they actually chose.

[00:32:35] Speaker 03:
And our common evidence, which the district court credited as common, will show in one stroke whether or not the projected sold adjustments, the deductions that were applied, breached the contract.

[00:32:47] Speaker 03:
Your Honor and Lara, you raised

[00:32:50] Speaker 03:
You raised the hypothetical, what about a white car deduction that would be a non-starter?

[00:32:57] Speaker 03:
Here, our common evidence shows that the projected sole deduction is just such a categorical non-starter.

[00:33:04] Speaker 03:
I can think of any number.

[00:33:05] Speaker 03:
There could be a white car deduction, a $500 because we say so deduction.

[00:33:10] Speaker 04:
Yeah, but the problem is ultimately, it all comes back to the fair market valuation.

[00:33:17] Speaker 04:
It seems to me, I mean, you've been very crafty in how you've said this because you say, well, it's only if you got more, then you're out of the class.

[00:33:28] Speaker 04:
But we don't know whether they're in or out of the class because you could theoretically have a Mitchell report that overvalues the car by a thousand dollars and a PSA that then deducts $500.

[00:33:44] Speaker 04:
They wouldn't be harmed.

[00:33:46] Speaker 04:
But under your theory, they would still be a member of the class because you're saying the PSA deduction shouldn't have been applied.

[00:33:51] Speaker 04:
And it doesn't really bear back to whether they were getting a fair market value in the overall valuation.

[00:34:01] Speaker 03:
It does, Your Honor, because the market value is determined at a specific point in time.

[00:34:06] Speaker 03:
There is no member of our class who was not paid the amount determined by a Mitchell report that was reduced by a categorically improper projected sole deduction.

[00:34:19] Speaker 03:
The fifth, sixth, and eighth circuits have said what you are looking at is the time of performance.

[00:34:25] Speaker 03:
An insurance company chose this methodology.

[00:34:27] Speaker 03:
It applied one deduction.

[00:34:29] Speaker 03:
And whether or not that deduction was proper or not is a common question.

[00:34:34] Speaker 03:
And so insurance companies, these arguments are not new.

[00:34:37] Speaker 03:
They said, well, maybe we overestimated something else.

[00:34:39] Speaker 03:
Maybe we made an error in some other deductions.

[00:34:42] Speaker 03:
And the circuit courts have been quite clear that we're challenging a line item deduction.

[00:34:47] Speaker 03:
Those questions are separate from, does this one line item breach the contract?

[00:34:52] Speaker 00:
What's the, I'm sorry, what's the size of the proposed class?

[00:34:59] Speaker 03:
At the time we briefed approximately 55,000 Arizona insureds.

[00:35:03] Speaker 03:
This is their default methodology.

[00:35:05] Speaker 03:
It's the way they determine actual cash value.

[00:35:08] Speaker 04:
Okay.

[00:35:09] Speaker 04:
Thank you for your arguments.

[00:35:11] Speaker 04:
Thank you to both counsel for your arguments in this case.

[00:35:13] Speaker 04:
The case is now submitted and that concludes our arguments for the day.

[00:35:16] Speaker 03:
Thank you, your honor.