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 testimony of Kirk Felix, Plaintiffs’ expert on used car pricing trends.
Automotive Industry Expert Witness
Kirk Felix spent the first 13 years of his career managing the service and parts departments of Honda, Acura, and Toyota dealerships; from 1999 until his 2022 retirement, Felix served as a moderator and consultant at NCM Associates, Inc., where he facilitated meetings—called 20 Groups—for cohorts of non-competing dealerships to “discuss industry trends and best practices for operating efficient, profitable dealerships.”
Over the course of those two decades, those discussions included over 300 dealerships across 45 states, including Chevrolet, Chrysler, Ford, Nissan, and Honda dealers, two fixed operations director groups, and an Independent Auto Auction group.
Discussion by the Court
A. Felix’s Qualifications
State Farm first argued that Felix is unqualified to “opine on the pricing and selling of used vehicles, including topics like dealerships’ pricing strategies, consumers’ negotiating behavior, and the Autosource methodology at issue in this case.”
Felix has never sold a used car, and he admitted that he has never been involved in the used car business. Though Felix occasionally gave information about a car’s reconditioning costs to those individuals at dealerships in charge of used car pricing (during his work from 1986 to 1999), he has never been involved in pricing used vehicles for sale, nor has he managed those who do.
Here, Felix’s experience comes from the conversations he facilitated at NCM. Yet Felix’s experience with NCM involved meetings only three times a year. Felix’s involvement included putting together the agenda for the meeting after consulting with the group’s executive committee, and then running the meetings alongside the chairman, but he did not take notes at the meetings. It is hard to square this experience with the scope of Plaintiffs’ proposed testimony, which seeks to authoritatively describe the process for pricing and selling used automobiles.
Basically, Felix admitted to not knowing the number of car dealerships in any state, what percentage of used car dealerships in any state market themselves as no haggle dealerships, what percentage of dealerships in any state will negotiate on the price of a used car, or how many car dealerships have eliminated negotiation.
Felix never conducted a survey of dealers regarding their pricing practices ahead of this litigation, though he says a survey probably happened during his time at NCM, even if he cannot recall when or what the results were.
Upon a review of the full record, the Court agreed that Felix has not demonstrated the requisite qualifications.
B. Reliability of Felix’s Testimony
Here, Felix has freely admitted that his methodology for opining on the used car pricing and sales market consists of reflecting upon memories of his experiences with NCM.
Yet NCM’s moderation topics were not even specific to used cars. Rather, the business model involved gathering approximately 20 dealers representing the same manufacturer (i.e. Toyota), compiling 5-7-page financial statements from each of them, and then consolidating the information into a 30-plus page financial comparison document to then discuss in a meeting.
Even if used cars were discussed at every meeting as a “critical part” of the car business, as Felix testifies, general reference to thrice-annual meetings does not demonstrate the “soundness and care” expected of experts on the facts of the case at hand.
Felix’s planned testimony is that “vehicles are priced to market and used car dealers do not deviate down from the advertised cash price with limited exceptions.” In depositions, he has estimated that this is the case around 90 percent of the time. This, however, is not a view he can back up by data but rather, it is a product of the information he heard “over 23 years with NCM clients.”
While it is true, as Plaintiffs contended, that Felix need not commission a study himself to testify to how often vehicles are sold for less than listed price, Felix must still explain how he reaches his conclusions.
The same goes for Felix’s assertion that Autosource and used car dealers use the same methods to assess the value of used automobiles other than State Farm’s use of the TNA. The fact that these inputs share labels, however, does not necessarily equate to the inputs themselves mirroring one another.
With an eye for sufficiency and application of methodology, the Court found that Felix’s testimony misses the mark.
Held
The Court granted Defendants’ motion to exclude the testimony of Kirk Felix.
Key Takeaway
Plaintiffs have not shown by a preponderance of the evidence that Felix’s testimony is “based on sufficient facts or data” and “the product of reliable principles and methods.” In other words, the Court found that Felix’s application of his methodology to the circumstances of the case have not met the Rule 702 threshold, in accordance with the 2023 amendments.
Please refer to the blog previously published about this case:
Appraisal Expert’s Testimony on Deceptiveness Excluded
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 10, 2026 |
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