Plaintiffs’ attorneys alleging that State Farm Mutual Automobile Insurance Co. bought off an Illinois Supreme Court justice to evade a $1.05 billion award have cleared a major hurdle in their long-running litigation against the insurer.
In an order Friday, U.S. District Judge David Herndon of the Southern District of Illinois granted a motion certifying a class of roughly 4.7 million auto insurance policyholders who were allegedly deprived of their 1999 trial court victory against State Farm.
Herndon found that the alleged fixing of the state Supreme Court decision affected all the proposed class members uniformly, and that the named plaintiffs and their attorneys otherwise satisfied court rules around class actions.
“[T]he injury in this case is based on the interest the plaintiffs and the proposed class members had in a neutral forum and the damages correspond with the undivided interest in the judgment each lost as a result of the tainted tribunal,” the judge wrote. “This issue is identical for all plaintiffs and class members.”
The suit alleges violations of the Racketeering Influenced and Corrupt Organizations (RICO) Act and could put State Farm on the hook for more than $7.6 billion because of interest that has accrued on the original jury award, according to plaintiffs’ lawyers.
|State Farm plans appeal
Justin Tomczak, a State Farm spokesman, said the company plans to appeal the ruling “in the very near future.” He said, “Plaintiffs have unsuccessfully asserted and reasserted these allegations for many years and should not be permitted to do so any longer.”
The newly certified class is backed by a squadron of attorneys, led by Charles Barrett of Nashville-based Neal & Harwell, who couldn’t immediately be reached by email on Monday. Other firms involved include Lieff Cabraser Heimann & Bernstein; Hausfeld; Clifford Law Offices; and Ball & Scott.
State Farm is represented by Riley Safer Holmes & Cancila of Chicago; Heyl, Royster, Voelker & Allen of Peoria, Illinois; and Schiff Hardin. Also on the defense side are Sidley Austin and Greensfelder, Hemker & Gale of St. Louis.
The suit stems from a 2005 decision by the Illinois Supreme Court that upended the billion-dollar judgement against State Farm. A jury had found the company defrauded policy holders by requiring the use of cheaper, non-manufacturer parts when repairs were made to covered vehicles after a crash, handing plaintiffs $1.18 billion in damages. An appeals court affirmed but reduced the amount of the award.
|Unfair influence?
According to the complaint, filed in 2012, the state high court’s decision reversing the judgment was unfairly influenced by Justice Lloyd Karmeier, who State Farm and its agents worked to elect during a campaign in 2003 and 2004. Karmeier’s campaign received at least $4 million from the insurer and individuals connected to it, plaintiffs allege.
Illinois’ Supreme Court has seven justices, and the decision at issue was not authored by Karmeier. It won the support of four justices, with two issuing a dissent that still concurred on key holdings, and another abstaining. The court reversed the award against State Farm on the grounds that certification of a nationwide class of policyholders was improper, among other things.
On Monday, Karmeier was named Illinois chief justice, after being unanimously elected to that post by his fellow state supreme court justices, the court said in a press release.
Ben Hancock is a reporter for The Recorder, an ALM business. He can be reached at [email protected].
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Ben Hancock
Ben Hancock is the Data Editor for ALM Media and Law.com. He is based in San Francisco.
