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Tuesday, 11 September 2018 17:59

Like a Good Neighbor... State Farm Settles

Written by Bruce L. Roistacher, Esq. NY, FL and DC Bar



A brief history of this very long case is in order.


Back in 1999 in Avery v. State Farm, a class action lawsuit was filed claiming State Farm was using non-OEM parts. The class included more than 4 million State Farm policyholders. The jury found that the non-OEM parts were inferior to OEM and that State Farm breached its contract in failing to return the damaged vehicles to “pre-loss condition.” It also found that State Farm concealed known problems with the non-OEM parts.


The jury returned a $1.2 billion judgment against State Farm.


In 2001, State Farm appealed and an appellate court affirmed the decision but lowered that award to $1.05 billion. State Farm then filed an appeal to the Illinois Supreme Court.


This is where it gets really interesting.


In 2004, Judge Lloyd Karmeier was elected to the Illinois Supreme Court. The Avery judgment was eventually overturned. The Illinois Supreme Court ruled that there was no breach of contract by State Farm, no damages were proven and that the “class” was not legally shown based on a legal technicality. The plaintiffs appealed to the U.S. Supreme Court and they denied hearing it. THE CASE SEEMED DEAD at this point.


The plaintiffs continued to investigate and in 2012 filed a new lawsuit in federal court (Hale v. State Farm) claiming, among other issues, that they had newly discovered evidence that State Farm recruited Judge Karmeier as a judicial candidate and heavily financed his campaign that led to his election to the Illinois Supreme Court. (A record $9 million was spent on the election that Judge Karmeier ultimately won.)


Further, it was alleged that a State Farm attorney actually was the individual who recruited Karmeier and had discussions about the case with his campaign manager. This new evidence persuaded the federal judge to agree with the plaintiffs, and despite State Farm’s objection, the federal case was allowed to continue to a jury trial.


The federal case included civil racketeering claims and claims of fraud.


Essentially, plaintiffs alleged that State Farm recruited and funded Justice Karmeier’s 2004 campaign to be elected to the Illinois Supreme Court without revealing it. Further, the plaintiffs alleged that this was done for the purpose of getting a favorable ruling in favor of State Farm in the appeal of Avery.

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