Did State Farm Buy Parts Case Ruling?

BY ARTHUR D. POSTAL
National Underwriter News
Posted January 19, 2006


Washington----Did a judge who took a huge contribution from State Farm act properly when he voted on a judicial panel to toss out a billion-dollar verdict against the insurer?

Plaintiffs in the billion-dollar State Farm aftermarket parts case are asking that question in papers requesting the U.S. Supreme Court review the decision of the Illinois Supreme Court to throw out the award against the company.

State Farm was accused in the case of improperly requiring the use of inferior generic parts rather than original manufacturer's equipment for repair of policyholders' damaged vehicles.

In their petition, lawyers for the plaintiffs allege State Farm unconstitutionally bought the verdict by financing the successful election campaign of Lloyd Karmeir, the state justice who cast the deciding vote to vacate the jury verdict, which was ultimately reduced by the trial court judge.

"May a judge who receives more than $1 million in direct and indirect campaign contribution from a party [to the case] and its supporters, while that party's case is pending, cast the deciding vote in that party's favor, consistent with the due process clause of the 14th Amendment to the U.S. Constitution?" the plaintiffs in Avery v. State Farm ask the High Court in their petition for review.

Lawyers from firms in San Francisco and Chicago, as well as a faculty member of Stanford Law School, are representing the plaintiffs in the petition for certiorari. The petition was filed by the court Jan. 3 and assigned Case No. 05-842.

Lawyers for the plaintiffs were unavailable for comment. A spokesman for State Farm said the company "intends to respond to the filing in due course."

Judge Karmeir's office said he could not comment on a pending case.

The plaintiffs are appealing the Illinois Supreme Court decision made on August 2005 vacating a $1.05 billion award by an Illinois jury in 1999 to 4,762,000 State Farm policyholders in 48 states whose first-party comprehensive and collision claims had been repaired through use of non-original equipment manufacturer crash parts.

The Illinois Supreme Court said in reversing the judgment that the claims of the class were too diverse to meet the definition of a class-action lawsuit.

Differences in customers' insurance policies meant they did not share the same conditions necessary to sue as a group, the justices found.

Furthermore, the court found, it was a mistake for an Illinois trial court to grant national class-action status when there was only one named plaintiff from Illinois and he failed to prove he had suffered actual damages.

In a friend of the court brief to the Illinois Supreme Court, the United States Chamber of Commerce had noted the case was originally filed in Williams County, which ranked as one of the worst jurisdictions in the country for class action abuse, dubbed by some anti-plaintiff's lawyer groups as a "judicial hellhole".

The suit was filed as part of consumer dissatisfaction with 'personal lines auto insurance underwriters' efforts to use the parts in question, modeled after the manufacturers' original equipment but not made to manufacturer specifications. The lawsuit contends they are inferior and fail to deliver the same level of quality, fit and, in come cases, safety as factory-made parts.

A State Court jury ordered State Farm to pay nearly $1.2 billion for failing to provide top-quality parts when paying for auto repairs. At the time, it was the largest judgment in Illinois history. The judgment was later reduced to $1.05 billion.

In their petition for review, the lawyers for the plaintiffs argue that the case---which dates to 1997---was argued before and submitted to the Supreme Court of Illinois in May 2003.

But the case was not decided until August 2005. In the interim, in November 2004, a regularly scheduled election was held to fill a vacant seat on the court.

"The winner of this election, then trial Judge Lloyd Karmeir, directly received over $350,000 of donations" from [State Farm] and its lawyers, and from supporters of State Farm who submitted friends of the court briefs and their lawyers," the petition said. "Over $1 million in additional funds came indirectly from groups with which State Farm was affiliated and a member," the petition said.

"After his election, Justice Karmeir declined to recuse himself from this matter, and then cast the deciding fourth vote overturning the verdict against State Farm," the petition said.

Copyright © 2006 by National Underwriter



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