Herndon 'remains convinced' allowing Avery v. State Farm to go forward; Damages could exceed $3 billion

EAST ST. LOUIS – Chief U.S. District Judge David Herndon stands by his decision to hear a claim that State Farm Insurance cheated to win a seat for Lloyd Karmeier on the Illinois Supreme Court in 2004.

On Dec. 4, Herndon denied reconsideration of an order rejecting State Farm’s motion to dismiss a civil fraud and racketeering suit seeking billions in damages.

“The court remains convinced of the correctness of its position,” he wrote.

He wrote that he agreed with plaintiffs that State Farm mischaracterized its theories and factual allegations, and that he agreed with plaintiffs that State Farm repeated and rehashed previous arguments he rejected.

Plaintiffs want Herndon to void Avery v. State Farm, a Supreme Court decision that overturned a $1.05 billion class action judgment.

Plaintiff lawyer Patrick Murphy of Marion, who would serve as federal judge from 1998 until this Dec. 1, filed the suit in Williamson County in 1997.

He alleged that State Farm supplied inferior parts for millions of automobile repairs.

Williamson County Associate Judge John Speroni entered judgment after trial in 1999, and Fifth District appellate judges affirmed him in 2001.

The Supreme Court struck down the judgment in 2005, ruling that individual issues predominated over class issues.

The Justices held that Speroni improperly instructed jurors to read different individual policies as a single contract.

They held that he improperly applied Illinois consumer fraud law to transactions in other states.

The decision sharply curtailed class action litigation in Illinois.

State Farm lawyers have found Avery citations in 11 Illinois Supreme Court decisions, 105 Illinois appellate court decisions, and 148 decisions of federal courts in Illinois.

Lawyers on the losing end of Avery revived it in federal court last year on behalf of Avery class members Mark Hale, Todd Shadle and Carly Morse.

They claimed the Supreme Court decision resulted from State Farm’s secret support of Karmeier in 2004.

Their claim would triple the damages to $3.15 billion, with 14 years of interest.

State Farm moved to dismiss the suit, and Herndon denied the motion in March.

State Farm moved for reconsideration, and Herndon temporarily stayed discovery.

In June, plaintiffs moved to certify a class identical to the one in Avery.

In August, State Farm told Herndon that plaintiffs intended to depose Karmeier.

Plaintiff lawyer Robert Nelson of San Francisco told Herndon he did not intend to depose Karmeier immediately upon the lifting of the temporary stay of discovery.

He wrote that plaintiffs would pursue discovery first through documents and depositions of individuals who knew about the fraud or helped to orchestrate it.