RICO Case Against State Farm Set for Trial in Illinois Federal Court

August 31, 2018

A class action lawsuit against insurance giant, State Farm, alleging the company recruited a judge to run for an opening on the Illinois Supreme Court and funded, without disclosing it, his 2004 election campaign is set to go to trial in federal court next month.

In Hale, et al. v. State Farm Mut. Auto. Ins. Co., et al., originally filed in 2012, the insurer faces a charges under the Racketeer Influenced and Corrupt Organizations Act (RICO) alleging that it secretly tried to buy the vote of Illinois Supreme Court Judge Lloyd A. Karmeier.

The class action, which includes nearly five million plaintiffs, alleges State Farm backed the judge in order squelch a more than $1 billion judgment against the company in Avery v. State Farm Mutual Automobile Insurance Co., which involves the use and insurer approval of non-original equipment manufacturer (non-OEM) automotive parts for repairs of policyholders’ vehicles, according to the law firm that litigated the non-OEM case, Lieff Cabrase Heimann and Bernstein (LCHB). Policyholder-plaintiffs in that case alleged that they were harmed by State Farm’s approved use of non-OEM parts.

In Avery in 1998, a Williamson County, Illinois, judge awarded a total of $1.18 billion in damages: $456 million for breach of contract, $600 million for punitive damages under the consumer fraud law and $130 million for disgorgement damages. An intermediate appellate court later reversed the award of disgorgement damages and upheld the rest, for a total judgment of $1.06 billion.

In a couple of orders filed on Aug. 21 in the U.S. District Court for the Southern District of Illinois, Judge David R. Herndon recognized that the case involves RICO allegations against State Farm. Plaintiffs have alleged that State Farm violated RICO by secretly scheming not only to get Judge Karmeier seated but to cover up the company’s actions in order get a favorable ruling in the appeal of Avery.

The Avery judgment, with Karmeier’s vote, was overturned in 2005.

According to the law firm LCHB, Judge Herndon certified the class in October 2016. The insurer’s petition to appeal the ruling were denied in December 2016 and May 2017 by the Seventh Circuit Court of Appeals, the law firm said.

The website for the Hale class action, http://www.halevstatefarmclassaction.com/, states that the trial is set to begin on Sept. 4.

Attempts to contact State Farm for comment have so far been unsuccessful.

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