RICO Lawsuit Against State Farm to Proceed

RICO Lawsuit Against State Farm to Proceed

Judge denies State Farm motion to dismiss case seeking reinstatement of $1.18 billion aftermarket collision repair parts verdict.

U.S. District Judge David R. Herndon denied a motion last week by State Farm attorney seeking a summary judgement to have a 2012 lawsuit dismissed that alleges the auto insurer recruited and secretly bankrolled Illinois Supreme Court Justice Lloyd Karmeier’s 2004 election campaign to avoid a billion dollar judgment against the company over its specification of non-OEM parts in the 1990s.

The suit, Hale et al v. State Farm Mutual Automobile Insurance Company et al, was filed in May 2012 alleging violations of the Racketeer Influenced and Corrupt Organizations Act. The plaintiffs allege that State Farm secretly recruited Judge Karmeier to run for an open seat on the Illinois Supreme Court, where an appeal by State Farm the $1.18 billion ruling in Avery v. State Farm Mutual Automobile Insurance Co. was pending.

The complaint in the Hale case alleges that defendants organized and managed his campaign behind the scenes; that defendants covertly funneled millions of dollars to support his campaign through intermediary organizations over which State Farm exerted considerable influence and concealed their efforts to do so.

In 1999, the Avery v. State Farm ruling awarded $1.18 billion to plaintiffs who argued they were damaged by State Farm’s use of non-OEM parts in the repair of their vehicles. State Farm appealed the decision only to have the Appellate Court affirm the decision in 2001. In 2002, State Farm appealed the case to the Illinois Supreme Court.

On November 4, 2004, in the most expensive judicial election in United States history to that point, Justice Karmeier won the open seat on the Illinois Supreme Court. He beat Appellate Judge Gordon Maag who wrote the Avery Appellate Court opinion against State Farm.

On August 18, 2005, the Illinois Supreme Court overturned the verdict in the Avery case, voting 4-2 to overturn the Appellate Court decision in favor of State Farm.

The Hale suit alleges that after being elected with the financial support from State Farm, Justice Karmeier chose not to recuse himself from the decision to reverse the $1 billion verdict in the Avery v. State Farm aftermarket parts case. An outcome plaintiffs allege State Farm planned from the beginning.

In 2014, Karmeier was again at the center of a controversy during his reelection when two attorney employed by a firm involved in a case brought against tobacco firm Philip Morris donated $500,000 to campaign committee seeking to keep Justice Karmeier from being reelected. In 2005, Karmeier also participated in the Illinois Supreme Court decision to overturn a $10 billion verdict in a case against Philip Morris that plaintiff have also been trying to get reinstated. Karmeier won his relection campaign in 2014.

The Hale suit, which was granted class action status in 2016, is scheduled for a jury trial beginning May 7.

Written by triciasauls

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