State Farm Class Alleging RICO in IL Supreme Court Election Certified
IL Federal Court certifies class alleging State Farm colluded to tilt balance on Supreme Court in its favor.
Judge David R. Herndon of the U.S. District Court for the Southern District of Illinois certified a class of 4.7M policyholders who had filed a Racketeer Influenced and Corrupt Organizations Act (“RICO”) suit against State Farm Mutual Automobile Insurance Co. (“State Farm”) and others who are alleged to have defrauded the policyholders of a $1.05B judgment by using their financial resources to elect Lloyd A. Karmeier to the Illinois Supreme Court in 2004. Judge Karmeier then cast the deciding vote to reverse the $1.05B judgment a year later. Edward Murnane, the president of Illinois Civil Justice League, and William G. Shepherd, the leader of Citizens for Karmeier, are the other defendants in the suit.
The underlying $1.05B judgment was from a state court action which alleged that State Farm policyholders were damaged when the insurer did not use original manufacturers’ parts in repairing their damaged vehicles. The underlying complaint contained causes of action for breach of contract and violations of the Illinois Consumer Fraud Act. The Illinois Appellate Court for the Fifth District upheld the judgment in 2001. Then, in 2004, after Justice Karmeier was elected, the Illinois Supreme Court reversed.
After conducting an investigation of the circumstances surrounding Judge Karmeier’s election, the plaintiffs from the underlying action petitioned the Illinois Supreme Court to vacate its decision overturning the $1.05B judgement. In November 2011, the court denied the petition, without comment.
The RICO plaintiffs assert that, in 2003, the defendants acted to “recruit, finance, direct and elect a candidate to the Illinois Supreme Court who, once elected, would vote to overturn the $1.05 billion judgment.” They allege that the defendants were responsible for approximately 80% or $4M of Judge Karmeier’s campaign contributions. The RICO plaintiffs allege that the defendants used the US mail throughout every stage of their scheme: “to solicit, receive and direct contributions, to conduct conferences and disseminate communications and campaign strategies, and to conceal State Farm’s role in Karmeier’s campaign.”
In certifying the class, Judge Herndon found that the plaintiffs had presented common questions of law or fact and met their burden with respect to numerosity, commonality, typicality and adequate representation. He appointed the following firms as class counsel: Leif Cabraser Heimann & Bernstein, LLP; Barrett Law Group, P. A.; Hausfeld, LLP; Clifford Law Offices LLP; Much Shelist, P.C.; Thrash Law Firm, P. A.; Law Offices of Gordon Ball; Pendley, Baudin & Coffin, L.L.P; and Edwin Chemerinsky, Esq.
He disregarded as irrelevant State Farm’s argument that certain class counsel had conflicts of interest because they had contributed to the campaign of Judge Karmeier’s rival, Judge Gordon Maag, in the 2004 election. He reasoned that their “campaign contributions were transparent and fully disclosed and do not create a conflict of interest with the proposed class.” Hale v. State Farm Mut. Auto Ins. Co., No. 3:12-cv-0660 (S.D. Ill. Sept. 16, 2016).