An Illinois District Court has denied State Farm’s June request for an indefinite stay on discovery and proceedings in a lawsuit against it regarding allegations of undervalued total loss claims and reduced payments to claimants.

On behalf of a proposed nationwide class, the suit accuses Illinois-based State Farm of breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment, and violations of Illinois’ Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2.

The request was made because of the pending appeal of a similar case against Progressive that would review the court’s certification of a class of policyholders, according to State Farm. The plaintiffs’ total loss payments were allegedly decreased by Progressive’s use of a projected-sold adjustment in the calculation of the ACV of their totaled vehicles.

In the State Farm case, the plaintiffs allege State Farm paid out 4-11% less than what was owed by applying a discount, or “typical negotiation adjustment,” to the actual cash value (ACV) of aggregated used vehicle internet prices similar to the ones involved in claims.

“Early in this case, Plaintiffs stated broadly that the typical-negotiation adjustment at issue here is ‘effectively the same’ as the projected-sold adjustment at issue in Schroeder… but they now contend that projected-sold adjustment is not arbitrary to the same degree as the typical-negotiation adjustment is,” the Oct. 31 District Court opinion and order states.

“State Farm argues a stay pending the Seventh Circuit’s decision in Schroeder will (1) simplify the court’s decision addressing the prospective class certification issues in this case and (2) reduce the burden of conducting discovery and briefing class certification issues on the parties and the court.”

Plaintiffs contend that a stay would unduly prejudice them. They also believe that a stay wouldn’t reduce the burden of litigation because the case isn’t yet at the class certification stage and involves different issues and claims than the Schroeder case, according to court documents.

Chief Judge Virginia M. Kendall agreed.

“While the Seventh Circuit’s decision in Schroeder may eventually streamline the court’s analysis of some of the eventual class certification issues in this case, a stay pending the Seventh Circuit’s decision in Schroeder is inappropriate during the discovery phase,” she wrote in her order. “By delaying discovery, a stay would complicate the case and unduly prejudice Plaintiffs. Having survived State Farm’s motion to dismiss, Plaintiffs are entitled to engage in continued discovery… And review of discovery materials, including any expert testimony, may very well be necessary for the Court to resolve the issue of class certification.”

Kendall added that the District Court handling the Schroeder case reviewed expert testimony in deciding the class certification issue, meaning “a full factual record in this case, then, may very well be necessary for the court to apply the Seventh Circuit’s eventual decision in Schroeder to the issue of class certification.”

“[E]specially given the additional claims presented in this case and the potential differences between the typical-negotiation adjustment and the projected-sold adjustment,” she wrote. “Given the likely utility of discovery materials for the resolution of the class certification issue, a stay would not streamline the case but delay it.”

The court also granted the plaintiffs’ motion for leave to file a second-amended class action complaint. Plaintiffs’ attorneys state in court documents that they will add and replace named plaintiffs “to preserve the claims of state subclass members insured by State Farm in Nevada, Texas, Oregon, New Mexico, Pennsylvania, and Illinois, where the named Plaintiff may have one or more of their claims dismissed.”

State Farm’s subsidiary, State Farm Fire and Casualty Co., will also be added to the suit as a co-defendant “to preserve the claims of state subclass members in Hawaii, Utah, and Illinois insured by this subsidiary,” according to court documents.

The basis for the proposed amendment is new information the plaintiffs said they received on Feb. 27 when State Farm notified them of the basis for the summary judgment motion State Farm intends to file.

“State Farm argues that plaintiffs’ motion is unduly delayed and, as a result, the proposed amendment would be highly prejudicial because it would require State Farm to investigate the additional named plaintiffs,” Kendall wrote. “Specifically, State Farm asserts that Plaintiffs ‘have known for years that some of the named plaintiffs were third-party claimants or not State Farm insureds and that many of their claims were time-barred.'”

State Farm alleges that it let the plaintiffs’ counsel know they couldn’t find policies for two of the plaintiffs, in 2022 and earlier this year, noting that two weren’t first-party policyholders. Also, in March 2023, State Farm informed plaintiffs that several of their claims were time-barred, according to State Farm. The insurance company argued that if the complaint is amended again the discovery already completed would be irrelevant.

Kendall ruled that since three of the referenced plaintiffs denied making third-party claims during written discovery last year “despite State Farm’s notice, plaintiffs’ counsel had reason to believe they may be first-party insureds.”

“State Farm provides no detailed account of why the additional discovery necessary for the investigation of the proposed seven new plaintiffs would be unduly burdensome, especially where the proposed amendment complaint also removes several named Plaintiffs as well as the Florida and New Jersey subclasses,” the order states.

“[W]hile State Farm asserts that the proposed amendment would require another round of briefing on dismissal… the substance of the proposed new plaintiffs’ claims is not materially different from that of the existing named plaintiffs’ claims, which suggests that any additional briefing will not be unduly burdensome.”

Kendall also states that State Farm didn’t show how the proposed amendment would meaningfully render completed discovery irrelevant

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