# Williams v. State Farm Mutual Automobile Insurance Company

> District Court, N.D. Illinois · August 21, 2024

URL: https://www.frixlaw.com/law-library/cases/10645583

## Case

- **Court:** District Court, N.D. Illinois
- **Decided:** August 21, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10645583

## How later opinions describe it (automated extraction)

- explaining that courts can take judicial notice of public records, like a settlement agreement
- holding that a private plaintiff suing under ICFA must show that they suffered “actual damages, meaning pecuniary loss”

## Opinion text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10645583. Public record. Not legal advice.