The Plaintiffs in this putative national class action are insureds who filed “total loss” claims for the actual cash value (“ACV”) of their totaled vehicles under their automobile insurance policies sold by State Farm Mutual Automobile Insurance Company or State Farm Fire and Casualty Company (collectively, “Defendants” or “State Farm”). Plaintiffs challenged State Farm’s application of a “typical-negotiation adjustment” (“TNA”) in the calculation of the ACV of Plaintiffs’ vehicles, which reduced Plaintiffs’ total loss payments based on the average difference between the list price and a lower price that a dealer would theoretically accept.
Alleging that this methodology resulted in undervalued payments, Plaintiffs brought various claims, including breach of contract, breach of the covenant of good faith and fair dealing, fraudulent concealment, fraudulent inducement, unjust enrichment, and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”) and various other state consumer protection statutes.
Defendants filed a motion to exclude the proposed testimony of Jason Merritt, Plaintiffs’ expert on personal property appraisal.
Appraisal Expert Witness
Jason W. Merritt has appraised over a thousand vehicles to determine their fair market, or actual cash, value. He is certified through the Bureau of Certified Auto Appraisers to appraise vehicles, including total losses.
Discussion by the Court
Plaintiffs retained Merritt to testify about “what an appraisal is,” “how to use the comparable methodology to appraise a vehicle’s [ACV],” and whether State Farm’s (via the company Audatex) application of a TNA in the calculation of the ACV of Plaintiffs’ vehicles is “appropriate when appraising a vehicle using a comparable [“comp”] methodology.”
A. Merritt’s Qualifications
State Farm did not challenge Merritt’s experience with appraisals. Rather, State Farm suggested that Merritt is unqualified to opine on Audatex’s methodology for lack of knowledge about the technical inputs on which the Autosource valuation actually runs.
Merritt’s extensive background in ACV appraisals made him appropriately qualified to opine on how Audatex’s methodology compares to other industry practice even without first-hand experience in the Defendants’ technical systems. State Farm’s grievances with how Merritt applies his experience to the facts of this case are better suited for cross-examination.
The same cannot be said for State Farm’s arguments about any opinions Merritt may attempt to offer regarding State Farm’s alleged deceptiveness or deceitfulness in this case. Experts generally cannot offer legal opinions or conclusions, and the exceptions to that rule are not applicable here.
Merritt is free to testify to his view that there must be a specific evidence-based reason for making value deductions in a proper comp appraisal, and that Audatex’s TNA deviates from that standard.
The same goes for his emphasis on the TNA being “baked in” rather than “explicitly applied to the valuation of the insured vehicle” in a visible way, which may make it hard for a consumer to identify the use of the TNA on their vehicle’s ACV determination. That, however, must be the end of the road for his testimony.
Merritt cannot veer into legal conclusions, including but not limited to observations about deception. Any opinions that do so should be excluded under Rule 702. The Court thus granted State Farm’s motion to exclude Merritt’s testimony to the extent that it speaks to legal conclusions such as deception.
B. Reliability of Merritt’s Testimony and Methodology
i. Merritt’s First Opinion
Defendants argued that Merritt’s opinion that Audatex’s typical negotiation adjustment conflicts with typical appraisal standards is unreliable for three reasons: that Merritt 1) compares Audatex’s work to general principles and not specific appraisal standards, 2) has insufficient knowledge about how Audatex calculates its TNAs, and 3) operates from the false premise that a used vehicle’s advertised cash price always equals its ACV.
State Farm’s second contention amounts to a recycled version of its arguments about Merritt’s qualifications, addressed above, and can be disposed of accordingly. Further, State Farm did not suggest that Merritt’s actual report—which thoroughly addresses all aspects of the Audatex methodology it intended to dispute—actually gets anything wrong about how Audatex operates, instead primarily taking issue with his lack of internal company knowledge about how the TNA “was developed or is calculated.”
State Farm’s third contention also missed the mark: nowhere did Merritt’s report indicate that he believes “a used vehicle’s advertised price always equals its actual cash value,” as State Farm puts it. Merritt espouses advertised internet prices as “an objective criterion for determining what the comparable vehicle would sell for on a particular day to a buyer purchasing a vehicle outright, without providing a trade in, financing the purchase through the dealership, or buying optional warranties or service plans.”
That leaves State Farm’s first argument: that Merritt should be excluded because he compared Audatex’s work to general principles and not specific appraisal standards. Merritt, however, clearly outlined the comp appraisal methodology against which he is comparing Audatex’s methodology—moreover, he found that Audatex is “consistent with” his general methodology aside from the application of the TNA.
ii. Merritt’s Second Opinion
Defendants also argued that Merritt’s opinion that Audatex’s methodology, absent the TNA, produces a sound estimate of a vehicle’s ACV is unreliable for three reasons: Merritt 1) once again operated from the false premise that a used vehicle’s advertised cash price always equals its ACV, 2) utilized insufficient intellectual rigor because he is litigation-driven, and 3) incorrectly assumed that he can remove the TNAs without impacting other variables in the Audatex Reports.
The first of these contentions was addressed and disposed of in this Court’s earlier analysis. The second argument incorrectly aims to merge two distinct practices of Merritt’s: his work as an individual appraiser, and his testimony as to how insurance companies will often appraise cars. In his individual practice, Merritt has been called upon to perform vehicle-specific appraisal verification after an insurance company uses third-party software to determine ACV.
The lack of individualized inquiry in his report does not derive from that methodology’s likeliness to “sound a death knell to certification,” but rather the fact that insurance companies themselves do not utilize it, presumably believing it would be a death knell to their own bottom lines. It is not impermissibly “litigation-driven” for Merritt to compare and contrast his individualized inquiry approach with the standardized algorithmic approach common to insurance companies.
Finally, State Farm’s argument that Merritt incorrectly assumed that he can remove the TNAs without impacting other variables in the Audatex Reports is best suited for cross-examination. Merritt permissibly made reasonable inferences to reach his conclusions and ultimately “stayed within reliable . . . bounds” in so doing. The Court has found that Merritt’s application of his methodology to the circumstances of the case have met that threshold, in accordance with the 2023 amendments.
Held
The Court granted in part and denied in part Defendants’ motion to exclude the testimony of Jason Merritt.
Key Takeaway
From the outset, it is clear that Merritt familiarized himself with—and relied upon—the relevant facts of this case. Among other things, he highlighted the way Audatex comes to its ACV calculations and compares that to the “take-price” adjustment that some appraisers utilize, ultimately finding that Audatex’s approach is insufficiently specific compared to that approach. His explanation about a generally accepted vehicle valuation methodology will help a trier of fact decide a central issue in this case—whether it is appropriate to apply a TNA while appraising a used vehicle.
Case Details:
| Case Caption: | Williams V. State Farm Mutual Automobile Insurance Company |
| Docket Number: | 1:22cv1422 |
| Court Name: | United States District Court, Illinois Northern |
| Order Date: | March 09, 2026 |
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