Bethany Krajelis Jun. 6, 2013, 2:28pm

A lawsuit alleging fraudulent activity in Avery v. State Farm is moving forward as a federal judge last month denied the defendants’ motion to stay to discovery.

And it appears that the plaintiffs – Mark Hale, Todd Shale and Carly Vickers Morse— are preparing for a battle as court records show more than 20 attorneys are now representing them.

The trio of plaintiffs, all of whom were plaintiffs in the 1997 nationwide class action Avery v. State Farm, filed a federal lawsuit in May 2012 against State Farm, William Shepherd, an attorney at the insurance company, and Ed Murnane, president of the Illinois Civil Justice League (ICJL).

They accuse the defendants of violating the Racketeer Influenced and Corruption Organizations (RICO) Act by creating an enterprise “to enable State Farm to evade payment of a $1.05 billion judgment affirmed in favor of approximately 4.7 million State Farm policyholders.”

The plaintiffs assert that the defendants implemented their scheme in two phases, the first of which involved recruiting, financing and electing a candidate to the Illinois Supreme Court who would vote to overturn the judgment against State Farm once elected.

That phase, the suit contends, was completed when Lloyd Karmeier won the 2004 race for the Fifth District seat on the state high court and nine months later, voted in favor of overturning the billion-dollar judgment against State Farm.

The suit goes on to claim that the second phase took place in 2005 and 2011, when State Farm filed alleged misrepresentations to the Supreme Court in response to the plaintiffs’ requests for the justices to vacate their decision overturning judgment.

The defendants asked U.S. Chief Judge David Hernon to dismiss the suit, arguing that federal courts don’t have jurisdiction to review civil judgments of state courts under the Rooker-Feldman doctrine and that the plaintiffs failed to prove their RICO claims in a timely matter.

Herndon in a March 28 order denied the motion, determining that he did have subject-matter jurisdiction, the Rooker-Feldman doctrine didn’t apply and that the RICO claims were brought before the statute of limitations expired.

In April, the defendants asked Herndon to alter or amend his order and sought a stay of discovery until that motion was resolved, arguing that they presented strong arguments for Herndon to think about in their motion to reconsider.

Magistrate Judge Stephen Williams in a May 21 order denied the defendants’ motion to stay discovery.

“Although Defendants contend that they have strong arguments which will likely convince the District Court to reconsider its findings on the motion to dismiss, Defendants have failed to offer any new arguments or insight to suggest that Chief Judge Herndon will grant their motion to reconsider,” Williams wrote.

Although the defendants argued that Herndon failed to consider their exhibits, take notice of certain documents and overlooked Seventh Circuit precedent, Williams wrote in his order that they offered nothing in support of their arguments.

“Instead,” Williams wrote, “it appears to the undersigned that Chief Judge Herndon gave substantial consideration, in his forty-three page opinion, to the arguments presented in the briefs, and rejected Defendants’ position.”

He added, “Nothing the Defendants present now gives the undersigned any confidence that the District Court will reconsider its prior ruling, especially given the high bar that Defendants must meet in seeking to overturn the Court’s prior ruling.”

On Monday, State Farm filed an appeal over Williams’ order, saying that it is “clearly erroneous and should be overturned.” Murnane and Shepherd joined that appeal.

State Farm asserts in its Monday appeal that it “ordinarily would be reluctant to seek review of a discovery-related ruling by the Magistrate.”

“However,” it contends, “this is not a typical case, and State Farm will be significantly prejudiced by the denial of the stay motion.”

State Farm also argues that its pending motion to alter or amend Herndon’s March order “presents an extraordinarily compelling case for interlocutory review now of the Court’s denial of the dismissal motions.”

It further asserts that Williams did not address privilege issues it previously raised, issues State Farm contends “may be better framed or avoided altogether if interlocutory review of this Court’s dismissal order is allowed to run its course before discovery is permitted to begin.”

These privilege issues, State Farm claims, are “of a scale and variety unlike those found in nearly any other litigation.”

In addition to the privilege issues that State Farm claims would arise in discovery, the insurance company argues that staying discovery “is particularly appropriate in light of the inflammatory nature of Plaintiffs’ allegations.”

The lawsuit, State Farm states in its appeal, “impugns the integrity of a Justice of the Illinois Supreme Court, asserts that the Avery rulings of the entire Illinois Supreme Court were tainted and makes baseless allegations that State Farm and the other Defendants have engaged in mail and wire fraud as part of an alleged RICO enterprise.”

“There is no question that this case ultimately will be resolved on appeal, regardless of which side prevails in motion practice and/or trial,” State Farm asserts.

The plaintiffs on Tuesday, the day after State Farm appealed, asked the federal court to certify a class in the suit that would include all persons who were members of the certified class in Avery v. State Farm.

In their motion for class certification, the plaintiffs state their proposed class consists of about 4.7 million State Farm policyholders across the nation.

They assert that class certification is appropriate in this case because the suit satisfies the numerosity, commonality, typicality, adequacy, predominance and superiority requirements under the Federal Rules of Civil Procedure.

The plaintiffs’ motion was submitted by Mississippi attorney Don Barrett, Tennessee attorneys W. Gordon Ball and Charles Barrett, Louisiana attorneys Patrick Pendley and Nicholas Rockforte and Alabama attorneys Tom Thrash, Steven Martino, Richard Taylor and Lloyd Copeland.

Court records show Herndon last month appointed Ball as interim lead counsel for the plaintiffs and proposed class.

State Farm’s appeal was submitted by Edwardsville attorney Patrick Cloud and Chicago attorneys Joseph Cancila Jr., J. Timothy Eaton and James Gaughan.

Chicago attorneys Richard O’Brien and David Greenfield represent Murnane and Belleville attorneys Russell Scott and Laura Oberkfell represent Shepherd. Both joined State Farm’s appeal.

Records also show that several attorneys last month filed notices of appearance in the case and filed motions to appear pro hac vice, both of which have brought the total number of attorneys representing the plaintiffs to more than 20.

Chicago attorneys Robert Clifford and Michael Krzak, both of Clifford Law Offices, filed notices of appearances and Herndon granted at least 10 attorneys’ motions to appear pro hac vice.

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