Williams v. State Farm Mutual Automobile Insurance Company

THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

BERNADETTE WILLIAMS, et al., on behalf of )

themselves and all others similarly situated, )

) No. 22 C 1422

Plaintiffs, )

v. ) Judge Virginia M. Kendall

)

STATE FARM MUTUAL AUTOMOBILE )

INSURANCE COMPANY, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

On December 21, 2023, the Court addressed Defendant State Farm Mutual Automobile

Insurance Company’s motion to dismiss (1) Plaintiffs’ common-law and statutory fraud claims for

failure to state a claim, and (2) Plaintiff Sabrina Capers’s breach-of-contract claims for improper

venue. (Dkt. 126). The Court found that Capers must arbitrate her breach-of-contract claims and

therefore, stayed her case pending arbitration. As for State Farm’s remaining arguments, the Court

denied them on procedural grounds, noting that absent an intervening amended complaint, a

defendant cannot raise new arguments in a successive Rule 12(b)(6) motion when he could have

raised them earlier. State Farm now moves for reconsideration, stating that this Court previously

permitted State Farm to file a successive Rule 12(b)(6) motion that raises new arguments. Upon a

review of the record, the Court did err in denying State Farm’s arguments on procedural grounds

and now reconsiders State Farm’s fraud arguments [129]. But even upon their merits, State Farm’s

motion to dismiss [94] is still denied.

BACKGROUND

I. Factual Background

The Court assumes familiarity with the facts of this case from its prior opinions. See, e.g.,

Williams v. State Farm Mut. Auto. Ins. Co., 678 F. Supp. 3d 980, 987 (N.D. Ill. 2023). In short,

State Farm provided car insurance coverage for Plaintiffs and, between 2017 and 2021, deemed

their vehicles as total losses. (Dkt. 58 ¶¶ 12–44). Under State Farm’s Comprehensive and Collision

Coverage, when repair of an insured vehicle is impossible or uneconomical—rendering it a “total

loss”—State Farm may settle the claim by paying the insured the actual cash value of the vehicle.

(Id. at ¶ 2; see generally Dkt. 58-1). To determine the actual cash values of Plaintiffs’ vehicles,

State Farm used Autosource Market-Driven Valuation, a system which aggregated prices from

online sales and listings of comparable vehicles. (Dkt. 58 ¶ 51; see generally Dkt. 58-3–58-35). At

State Farm’s directive, Autosource applied a typical-negotiation adjustment to the market-value

price of comparable vehicles to decide the total-loss payments—an adjustment reflecting the

average difference between the listed price and a lower theoretical price that a dealer would accept.

(Dkt. 58 ¶¶ 51–52). But actual negotiations did not factor into the typical-negotiation adjustment.

(Id. at ¶ 53). Nor did State Farm consult with any dealers or consider that “no-haggle” pricing

predominates in the used-car market, especially online. (Id.) At the time State Farm determined

the actual cash values of Plaintiffs’ vehicles, due to car-parts supply-chain issues during the

COVID-19 pandemic, used cars often sold at or above listed prices. (Id.) Furthermore, no state or

local insurance regulations permitted State Farm to make such an adjustment. (Id.) Nonetheless,

in calculating Plaintiffs’ vehicles’ actual cash values, the typical-negotiation adjustment took 4–

11% off the prices of comparable vehicles—in turn, reducing the total-loss payments Plaintiffs

received. (Id. at ¶¶ 12–44, 53–55).

State Farm did not tell insureds about the typical-negotiation adjustment before they bought

their policies. (Id. at ¶ 52). Rather, in the policy—which was consistent across all of Plaintiffs’

states, (id. at ¶ 2)—State Farm shall “[p]ay the actual cash value of the covered vehicle minus any

applicable deductible.” (See, e.g., Dkt. 58-1 at 39) (emphasis and bolding in original). For example,

Plaintiff Diane Newkirk, a New York citizen, owned a 2015 Subaru Impreza sedan insured by

State Farm. (Dkt. 58 ¶ 34). Around January 23, 2021, State Farm deemed Newkirk’s vehicle a total

loss and she filed a claim for its actual cash value. (Id.) On September 9, 2021, Newkirk received

a letter from Julie Hicks, a claim specialist at State Farm, stating that “the actual cash value of

[her] vehicle, less any applicable deductible” was $10,544 and paid her $10,887.52.1 (Id.; Dkt. 58-

25 at 2–5). Hicks went on to state that “[a]ctual cash value is generally determined by the age,

condition, equipment, and mileage of your vehicle at the time the loss occurred.” (Dkt. 58-25 at

2). Yet, on the market valuation report, dated February 1, 2021, State Farm, through Autosource,

applied a typical-negotiation adjustment of approximately 4–6% across comparable vehicles to

arrive at a lower valuation. (Dkt. 58 ¶ 34; Dkt. 58-25 at 8–9 (“The advertised price…was adjusted

to account for typical negotiation.”)). Specifically, State Farm looked at four comparable vehicles

with advertised prices of: $12,850; $9,922; $11,900; and $11,995. (Dkt. 58-25 at 8–9). Those

advertised prices were then “adjusted to account for typical negotiation” respectively: $12,079;

$9,227; $11,186; and $10,695. (Id.)

II. Procedural Background

Plaintiffs bring 33 claims: breach of contract (Count 2); breach of the covenant of good faith

and fair dealing (Count 3); fraudulent concealment (Count 4); fraud in the inducement (Count 5);

unjust enrichment (Count 6); declaratory judgment (Count 7); violation of the Illinois Consumer

1 The amount Newkirk received was adjusted to add a sales tax and subtract a deductible. (Dkt. 58-25 at 2).

Fraud and Deceptive Business Practices Act (“ICFA”) (Count 1); and violation of 25 other

consumer-protection statutes (Counts 8–33). (Dkt. 58 ¶¶ 75–637).

In a previous opinion, the Court denied State Farm’s motion to dismiss “headless” claims2

and motion to compel appraisal, or in the alternative, dismiss or grant summary judgment, but

granted State Farm’s motion to transfer six Plaintiffs and denied it for four. See generally Williams,

678 F. Supp. 3d. In a subsequent opinion, the Court rejected State Farm’s fraud arguments on

procedural grounds and stayed Plaintiff Sabrina Capers’s case pending arbitration of her breach-

of-contract claims. See generally Williams v. State Farm Mut. Auto. Ins. Co., 2023 WL 8827946

(N.D. Ill. Dec. 21, 2023).

There are several concurrent lawsuits challenging State Farm’s use of the typical-

negotiation adjustment to determine total-loss payments.3 Some of these cases have advanced to

the class-certification stage.

DISCUSSION

“Motions for reconsideration serve a limited purpose and are ‘only appropriate where the

court has misunderstood a party, where a court has made a decision outside the adversarial issues

presented to the court by the parties, where the court has made an error of apprehension (not of

reasoning), where a significant change in the law has occurred, or where significant new facts have

2 “Headless” claims are Plaintiffs’ claims under the laws of states where no named Plaintiff is a citizen. Williams, 678

F. Supp. 3d at 1012–14. The Court denied State Farm’s motion to dismiss Plaintiffs’ headless claims, stating that the

question of whether Plaintiffs can adequately represent unnamed class members from other states is a question better

saved for class certification. Id.

3 See, e.g., Complaint, Shields v. State Farm Mut. Auto. Ins. Co., No. 6:19-cv-01359 (W.D. La. Oct. 16, 2019), ECF

No. 1; Notice of Removal, Clippinger v. State Farm Mut. Auto. Ins. Co., No. 2:20-cv-02482 (W.D. Tenn. July 2,

2020), ECF No. 1 (filed in state court on May 8, 2020); Notice of Removal, Wiggins v. State Farm Mut. Auto. Ins.

Co., No. 8:21-cv-03803 (D.S.C. Nov. 19, 2021), ECF No. 1 (filed in state court on October 15, 2020); Class Action

Complaint, Chadwick v. State Farm Mut. Auto. Ins. Co., No. 4:21-cv-01161 (E.D. Ark. Nov. 29, 2021); Class Action

Complaint, Nichols v. State Farm Mut. Auto. Ins. Co., No. 2:22-cv-00016 (S.D. Ohio Jan. 4, 2022), ECF No. 1;

Complaint, Varela v. State Farm Mut. Auto. Ins. Co., No. 22-cv-00970 (D. Minn. Apr. 15, 2022), ECF No. 1;

Complaint, Muhammad v. State Farm Indem. Co., No. 2:22-cv-06149 (D.N.J. Oct. 18, 2022), ECF No. 1.

been discovered.’ ” Nat’l Sur. Corp. v. Bedivere Ins. Co., 2020 WL 6277335, at *1 (N.D. Ill. Jan.

28, 2020) (quoting Broaddus v. Shields, 665 F.3d 846, 860 (7th Cir. 2011)). When State Farm filed

its second motion to dismiss under Rule 12(b)(6), the Court declined to address the merits of its

fraud arguments, and instead, denied it on procedural grounds. The Court reasoned that in the

absence of an intervening amended complaint, if State Farm could have raised its present failure-

to-state-a-claim arguments in a previous motion and did not, then it forfeited its ability to do so.

See Fed. R. Civ. P. 12(g); see also Kramer v. Am. Bank & Tr. Co., 2014 WL 3638852, at *2 (N.D.

Ill. July 23, 2024) (Lee, J.). After all, the spirit of Rule 12(g) is to prevent piecemeal litigation and

delays. In response, State Farm argues that during a status hearing on June 21, 2023, the Court

gave State Farm permission to file a successive motion to dismiss under Rule 12(b)(6). (Dkt. 82).

Upon a review of the record, the Court did allow State Farm to file a successive motion to

dismiss pursuant to Rule 12(b)(6). As a general matter, the Court still finds that successive motions

to dismiss, absent an intervening amended complaint, offend Rule 12(g). But, as prior permission

was granted, the Court will address the merits of State Farm’s fraud arguments.

I. Legal Standard

To survive a motion to dismiss for failure to state a claim, the complaint must contain “a

short and plain statement of the claim showing that the pleader is entitled to relief.” Kaminski v.

Elite Staffing, Inc., 23 F.4th 774, 776 (7th Cir. 2022) (quoting Fed. R. Civ. P. 8(a)(2)). Thus, “a

plaintiff must allege ‘enough facts to state a claim that is plausible on its face.’ ” Allen v. Brown

Advisory, LLC, 41 F.4th 843, 850 (7th Cir. 2022) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.

544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Id. (quoting Ashcroft v. Iqbal, 566 U.S. 662, 678 (2009)). The Court accepts the well-

pleaded factual allegations in Plaintiffs’ Complaint as true, “drawing all reasonable inferences in

[their] favor.” Id. (citing W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670, 675 (7th Cir. 2016));

Forrest v. Universal Savings Bank, F.A., 507 F.3d 540, 542 (7th Cir. 2007) (“Taking all facts

pleaded in the complaint as true and construing all inferences in the plaintiff’s favor, we review

the complaint and all exhibits attached to the complaint.”).

II. Illinois Consumer Fraud and Deceptive Business Practices Act (Count 1)

In Count 1, all 27 remaining Plaintiffs allege that State Farm violated ICFA. State Farm

now seeks to dismiss the ICFA claims by 26 Plaintiffs who are non-Illinois residents, arguing that

it does not “apply to fraudulent transactions which take place outside of Illinois.” Avery v. State

Farm Mut. Auto. Ins. Co., 835 N.E.2d 801, 853 (Ill. 2005); (see Dkt. 94 at 5–9). In other words,

State Farm is asking this Court to perform a choice-of-law analysis. Although State Farm insists

otherwise, the Seventh Circuit’s decision in Morrison v. YTB International, Inc. stops the argument

in its tracks. There, the defendant moved to dismiss non-Illinois class members under Rule

12(b)(6) because “the Illinois Consumer Fraud Act does not apply to its customers outside

Illinois.” Morrison v. YTB Int’l, Inc., 649 F.3d 533, 535 (7th Cir. 2011). The Seventh Circuit held

that if ICFA did not apply to events outside of Illinois, then plaintiffs must rely on another state’s

law—that is a choice-of law question that affects class certification and does not lend itself to

resolution under Rule 12(b)(6). Id. at 535–38. Indeed, relying on Morrison and rejecting a similar

argument in State Farm’s motion to dismiss the headless claims, this Court explained: the “choice-

of-law issues implicit in State Farm’s challenge are best resolved at the class-certification stage.”

Williams, 678 F. Supp. 3d. at 1012–14.

Resisting the Court’s prior ruling, State Farm presents a strained interpretation of the Rules

Enabling Act. It argues that declining to rule on a 12(b)(6) motion because there are class

allegations violates the Rules Enabling Act by “permitting a putative representative plaintiff to

avoid a dismissal that a plaintiff in an individual case could not.” (Dkt. 94 at 9). The argument is

underdeveloped and without merit.

The Rules Enabling Act “forbids interpreting Rule 23,” or any rule of procedure, “to

‘abridge, enlarge, or modify any substantive right.’ ” Wal-Mart Stores, Inc. v. Dukes, 564 U.S.

338, 367 (2011) (citing 28 U.S.C. § 2072(b)). “The test is not whether the rule affects a litigant’s

substantive rights; most procedural rules do.” Shady Grove Orthopedic Assocs., P.A. v. Allstate

Ins. Co., 559 U.S. 393, 407 (2010) (citing Miss. Publ’g Corp. v. Murphree, 326 U.S. 438, 445

(1946)). “What matters is what the rule itself regulates: If it governs only the manner and the means

by which the litigants’ rights are enforced, it is valid; if it alters the rules of decision by which the

court will adjudicate those rights, it is not.” Id. (cleaned up).

Underlying State Farm’s argument is the faulty premise that Rule 12(b)(6) somehow gives

State Farm a substantive right. Yet, State Farm musters no caselaw, law review articles, or any

support for this position. Rule 12(b)(6) is a procedural tool that allows courts to weed out factually

deficient claims and facilitate judicial economy. Rule 12(b)(6) does not create any substantive

rights. By extension, interpreting Rule 23 to require different treatment of Rule 12(b)(6) motions

in the putative class context in no way alters any substantive right. By kicking the choice-of-law

can down the road to the class-certification stage, the Court leaves no footprint on the merits.

Rather, the decision is procedural, and it finds support in Morrison: the class-certification stage—

not the Rule 12(b)(6) stage—is the appropriate time to address Count I’s choice-of-law question.

Thus, the Court denies the motion to dismiss the non-Illinois Plaintiffs’ ICFA claims.

III. Fraud Allegations (Counts 1, 4–6, 8–33)

State Farm next moves to dismiss all the fraud claims because they were not pleaded with

particularity. See Fed. R. Civ. P. 9(b). According to State Farm, Plaintiffs allege a total of 33

counts, 30 of which are fraud related. (Dkt. 94 at 9). State Farm categorizes Plaintiffs’ allegations

into two buckets: (1) fraudulent misrepresentation and (2) fraudulent omission. But State Farm

does not take aim at any specific fraud statute or its elements. Rather, it asserts that under the

general theory of pleading fraud, Plaintiffs have not met the particularity requirement to satisfy

Rule 9(b). Or otherwise put, Plaintiffs have failed to describe the “who, what, when, where, and

how” of the fraud—“the first paragraph of any newspaper story.” Pirelli Armstrong Tire Corp.

Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436, 441–42 (7th Cir. 2011) (quotation

omitted). State Farm argues that Plaintiffs, at best, have only provided vague allegations of fraud

without any factual support to answer the five basic questions describing it. In response, Plaintiffs

clarify that their fraud theory is premised on a fraudulent omission and argue that they have pleaded

with sufficient particularity.

State Farm is correct that Rule 9(b) requires the plaintiff to plead fraud with particularity,

often shorthanded to the “who, what, when, where, and how.” Id. But Rule 9(b) does not demand

“form for form’s sake”: “although ‘plaintiffs are not absolutely required to plead the specific date,

place, or time of the fraudulent acts,’ they still must ‘use some alternative means of injecting

precision and some measure of substantiation into their allegations of fraud.’ ” Id. at 442 (internal

quotation omitted). Thus, the requisite level of detail to support a fraud claim varies from case to

case. Id. (citing Emery v. Am. Gen. Fin., Inc., 134 F.3d 1321, 1324 (7th Cir. 1998)). The purpose

behind Rule 9(b) is “to force the plaintiff to do more than the usual investigation before filing his

complaint,” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 737 (7th Cir. 2014) (quotation

omitted), so to give fair notice to the defendant of his role in the fraud, Rocha v. Rudd, 826 F.3d

905, 911 (7th Cir. 2016). Moreover, the heightened standards of Rule 9(b) are relaxed where the

plaintiff pleads a claim of fraud by omission rather than misrepresentation. See, e.g., Fed. Deposit

Ins. Corp. v. Patel, 2020 WL 6681348, at *2 (N.D. Ill. Nov. 12, 2020) (collecting cases).

As State Farm does not argue that Plaintiffs failed to state a claim for any specific fraud

statute, the Court will test if Plaintiffs’ allegations state a claim by assuming, without deciding,

that ICFA applies because both parties predominantly cite Illinois substantive law. See, e.g.,

NuWave, LLC v. Cincinnati Specialty Underwriter Ins. Co., 2016 WL 11708238, at *1 n.1 (N.D.

Ill. Oct. 11, 2016) (assuming Illinois law applied because both parties cited to Illinois law);

Platinum tech., inc. v. Fed. Ins. Co., 2000 WL 875881, at *2 n.1 (N.D. Ill. June 28, 2000) (same).4

To plead an ICFA claim, a plaintiff must allege: “(1) “that the defendant committed a deceptive or

unfair act”; (2) “with the intent that others rely on the deception”; (3) that the act occurred in the

course of trade or commerce”; and (4) actual damages; (5) proximately caused by the deception.

Benson v. Fannie May Confections Brands, Inc., 944 F.3d 639, 646 (7th Cir. 2019) (quotation

4 The Court recognizes that the elements of each state’s consumer-protection statute vary from one another. Compare

Volino v. Progressive Cas. Ins. Co., 2022 WL 5242894, at *4 (S.D.N.Y. Oct. 6, 2022) (“To state a claim under GBL

§ 349, a plaintiff must allege that: (1) the defendant’s conduct was consumer-oriented; (2) the defendant’s act or

practice was deceptive or misleading in a material way; and (3) the plaintiff suffered an injury as a result of the

deception.” (cleaned up)) with Williams v. Progressive Direct Ins. Co., 631 F. Supp. 3d 202, 207 (D. Del. 2022)

(“Delaware’s General Assembly defines an unlawful fraudulent practice through: The act, use, or employment by any

person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice, or the concealment,

suppression, or omission of any material fact with intent that others rely upon such concealment, suppression, or

omission, in connection with the sale, lease, receipt, or advertisement of any merchandise, whether or not any person

has in fact been misled, deceived, or damaged thereby.” (emphasis in original)); see also O’Connor v. Ford Motor

Co., 567 F. Supp. 3d 915, 961 (N.D. Ill. 2021) (noting that “some state consumer protection statutes may allow claims

to proceed on the grounds of ‘unfair’…that may not rise to the level of being fraudulent”). But as discussed, the Court

will not rule on the choice-of-law question until the class-certification stage. See Morrison, 649 F.3d at 536–38.

omitted). “Malice, intent, knowledge, and other conditions of a person’s mind may be alleged

generally.” Fed. R. Civ. P. 9(b).

Taking the Complaint and its exhibits together, Plaintiffs have pleaded a fraudulent act

with sufficient particularity. Plaintiffs allege that the injury from State Farm’s fraud occurred

between 2017 and 2021, when State Farm underpaid the actual cash value of Plaintiffs’ vehicles

by applying a 4–11% typical-negotiation adjustment across all comparable vehicles. (See, e.g.,

Dkts. 58-3–58-35). Plaintiffs included market valuation reports that contain the dates of when State

Farm deemed the vehicles as total losses and the advertised prices of comparable vehicles. (Id.)

Those prices were then “adjusted to account for typical negotiation.” (Id.) Taking Plaintiff Diane

Newkirk’s vehicle as an example, State Farm deemed her 2015 Subaru Impreza a total loss on or

around January 23, 2021. (Dkt. 58 ¶ 34). According to the market valuation report for her vehicle,

State Farm looked at the advertised prices for four comparable vehicles and then adjusted them

downward by 4–6% to account for typical negotiation. And the report then used the adjusted

numbers to calculate the 2015 Subaru’s Impreza’s adjusted market value.

The problem, however, is that State Farm never disclosed this adjustment when Plaintiffs

purchased State Farm’s coverage, and the policy—which was consistent across all Plaintiffs’

states—is silent on typical-negotiation adjustments. See, e.g., Holmes v. Progressive Universal

Ins. Co., 2023 WL 130477, at *4 (N.D. Ill. Jan. 9, 2023) (finding that plaintiffs sufficiently pleaded

a deceptive act where the insurance company failed to disclose the application of a projected sold

adjustment in the insurance policy or vehicle valuation). The policies state that, in the event a

covered vehicle is damaged, State Farm would “[p]ay the actual cash value of the covered vehicle

minus any applicable deductible.” (See, e.g., Dkt. 58-1 at 39). But Plaintiffs assert the typical-

negotiation adjustment is not applicable. In fact, there seems to be no basis rooted in practice or

law, as Plaintiffs allege, for employing such an adjustment. Based on the example letter sent by

State Farm’s claim specialist, the actual cash value is generally determined by “the age, condition,

equipment and mileage” of the total-loss vehicle, (Dkt. 58-25 at 2)—again, silent on any

negotiation practice that affects the final value. State Farm allegedly never contacted any used-car

dealerships or sellers to negotiate down any prices. Citing to several used-car sellers, the

predominant practice in the used-car market is to avoid any negotiation or haggling on prices,

particularly those posted on the internet. (See Dkt. 58 ¶ 53 n.1). As Plaintiffs remarked, during

COVID-19, the actual cash values of used vehicles were sold at or above the listed internet prices.

(See Dkt. 58 ¶ 53). And no state insurance laws or regulations permit State Farm to take a deduction

of this kind. (See id.) Neither the market valuation report nor insurance policy details the origin of

the typical-negotiation adjustments or its methodology, like why some comparable vehicles have

greater typical-negotiation adjustments than others. So to that end, Plaintiffs argue that they never

received the actual cash value of their vehicles. Interpreting Plaintiffs’ allegations liberally, the

typical-negotiation adjustment appears to be arbitrary.

Although Plaintiffs did not provide precise dates as to when each Plaintiff purchased their

car policies, they were all insured by State Farm under substantively similar insurance policies

prior to their accidents. See Ridings v. Am. Fam. Ins. Co., 2021 WL 722856, at *3 (N.D. Ill. Feb.

24, 2021). Thus, the question of who sold Plaintiffs the policies seems less important when the

alleged fraudulent omission is nationwide and over an extended period of time. See, e.g., Smith-

Brown v. Ulta Beauty, Inc., 2019 WL 932022, at *7 (N.D. Ill. Feb. 26, 2019) (noting that Rule

9(b)’s requirements of particularity do “not fit well in dealing with extended fraudulent schemes

involving a large volume of transactions” (quoting U.S. ex rel. Salmeron v. Enter. Recovery Sys.,

Inc., 464 F. Supp. 2d 766, 768 (N.D. Ill. 2006))).

To bolster the plausibility of their fraud claim, Plaintiffs point to a settlement agreement

between California policyholders and State Farm where State Farm agreed not to use a “projected

sold” or “age of ad” adjustment when calculating the total loss comparable vehicle valuation

reports. See Final Order and Judgment, Garner, et al. v. State Farm Mut. Auto. Ins. Co., No. 4:08-

cv-01365 (N.D. Cal. Apr. 22, 2010), ECF No. 282; Est. of Brown v. Arc Music Grp., 523 F. App’x

407, 410 (7th Cir. 2013) (explaining that courts can take judicial notice of public records, like a

settlement agreement). Plaintiffs argue that the “projected sold” or “age of ad” adjustment is

effectively the same as the typical-negotiation adjustment here. Of course, that settlement

agreement is not indicative of any wrongdoing by State Farm. Rather, the Court simply notes that

State Farm previously employed a similar adjustment when calculating comparable vehicle

valuations for California policyholders. Garner, et al., No. 4:08-cv-01365, ECF No. 282 at 4. So

it is reasonable to infer that State Farm uses some adjustment in other states too. In the same vein,

it is worth noting that State Farm faces several concurrent lawsuits involving similar, if not the

same, allegations across various federal districts. Taken together, they give Plaintiffs’ claim an

additional plausibility boost. See Pirelli, 631 F.3d at 443 (“It is appropriate to accord limited

corroborative weight to allegations in another’s lawsuit.”).

With a holistic view, the Court can reasonably infer that failing to disclose the typical-

negotiation adjustment in the policy is a deceptive conduct. See, e.g., Fleury v. Gen. Motors LLC,

2023 WL 3792411, at *6 (N.D. Ill. June 2, 2023) (finding fraudulent concealment for failing to

disclose warning in owner’s manual). Plaintiffs have alleged sufficient facts with particularity to

show that State Farm routinely undervalued and underpaid the insureds’ vehicles. The Court finds

that the omission could plausibly mislead a reasonable consumer to purchase inadequate coverage.

See id. (“A fact is material if the ‘buyer would have acted differently knowing the information.’ ”

(quoting Lipinski v. Martin J. Kelly Oldsmobile, Inc., 759 N.E.2d 66, 70 (Ill. App. Ct. 2001))). As

Plaintiffs allege, they would not have purchased the insurance coverage or would have paid less

premiums had they known that they would not be fully compensated with the actual cash value of

their vehicles. (Dkt. 58 ¶ 90); Holmes, 2023 WL 130477, at *4; Fleury, 2023 WL 3792411, at *6.

That makes the omission of the typical-negotiation adjustment from the policies material. And

State Farm does not dispute that the alleged deception “occurred in the course of trade or

commerce.” Benson, 944 F.3d at 646 (quotation omitted); see Fleury, 2023 WL 3792411, at *6

(commenting that ICFA employs a sweeping definition of “trade or commerce”). Moreover, the

omission proximately caused Plaintiffs’ injuries—but for the typical-negotiation adjustments,

Plaintiffs would have received a greater payout from State Farm. See Benson, 944 F.3d at 647

(holding that a private plaintiff suing under ICFA must show that they suffered “actual damages,

meaning pecuniary loss”).

State Farm rebuts by citing to several out-of-circuit decisions where courts have held that

the plaintiffs have failed to allege similar types of adjustment-based fraud with particularity. See,

e.g., Grady v. Progressive Direct Ins. Co., 643 F. Supp. 3d 929, 935 (D. Minn. 2022); Williams v.

Progressive Direct Ins. Co., 631 F. Supp. 3d 202, 212 (D. Del. 2022). But for every case that goes

State Farm’s way, Plaintiffs point to cases where such allegations have survived motions to

dismiss. See, e.g., Varela v. State Farm Mut. Auto. Ins. Co., 2023 WL 5021182, at *4 (D. Minn.

Aug. 7, 2023)5; Holmes, 2023 WL 130477, at *4. As discussed, a Rule 9(b) analysis is case

5 State Farm comments on how Varela v. State Farm Mutual Automobile Insurance Company is distinguishable

because the case involved the Minnesota Consumer Fraud Act (“MCFA”) and not the common law or other state

statutory causes of actions here. But in its motion to dismiss, State Farm never challenged the elements of any common

law or statutory causes of actions. Rather, it argues that under the general theory of fraud, Plaintiffs failed to allege

specific, and the Court does not know the exact materials or allegations presented in those cases’

complaints. But faced with this Complaint’s allegations, the exhibits containing Plaintiffs’

insurance policies and market valuation reports, and judicial notice of the 2010 settlement and

several concurrent lawsuits against the same defendant challenging the same actions, the Court

finds that Plaintiffs have pleaded their fraud cause of action with sufficient particularity.° Thus,

State Farm’s motion to dismiss for failure to comply with Rule 9(b) is denied.

CONCLUSION

The Court admits error when it denied State Farm’s fraud arguments on procedural grounds

and grants reconsideration [129]. But even upon the merits, the Court finds that State Farm’s fraud

arguments fail. Thus, the motion to dismiss [94] remains denied.

cD oo

Jy (pe Agen ppt

Pe pore

foAnid M. Kendall

United/States District Judge

Date: August 21, 2024

particular facts. At this stage, the Court does not know how similar the MCFA is to the ICFA or any other states’

statutory causes of actions because State Farm has not argued for any similarities or dissimilarities among the various

statutes.

6 Since the Court finds that Plaintiffs have alleged its fraud allegations with sufficient particularity, Plaintiffs’ other

claims that hinge on those fraud allegations survive for now.

14