State Farm seeks mandamus relief at Seventh Circuit; Insurer wants appeals court to stop Avery revival attempt

CHICAGO – Automobile insurer State Farm has petitioned a federal appeals court to stop a suit claiming it corrupted the Illinois Supreme Court.

Attorney Timothy Eaton of Chicago sought mandamus relief for State Farm on Dec. 17 at the U.S. Court of Appeals for the Seventh Circuit, 13 days after Chief District Judge David Herndon of East St. Louis ruled that the suit could proceed.

Eaton wrote that a determination on later appeal that jurisdiction is lacking would not repair harm to State Farm’s reputation.

He wrote that allegations of tainted deliberations unfairly impugn the integrity of the Illinois Supreme Court and the Illinois justice system.

“Plaintiffs have announced that they may depose Justice Karmeier, a sitting justice on that Court,” he wrote.

“Justice Karmeier faces a retention election in 2014. Thus, the destructive effects of this lawsuit will likely extend to the judicial election process as well.”

Also on Dec. 17, State Farm asked Herndon to stay proceedings in his court while awaiting a decision from the Seventh Circuit.

In that filing, attorney Patrick Cloud of Edwardsville wrote, “Defendants should not be required to proceed with discovery in a matter where it is clear that plaintiffs have no valid claim for relief.

“Staying proceedings is also appropriate in light of the extraordinarily inflammatory nature of plaintiffs’ allegations.”

Lead plaintiff Mark Hale claims the Supreme Court improperly overturned a $1.05 billion judgment in a consumer class action, Avery v. State Farm, in 2005.

He seeks triple damages under racketeering law on behalf of a class identical to the one Williamson County Associate Judge John Speroni certified for Avery in 1998.

In 1999, Speroni entered judgment that State Farm breached a uniform contract and violated consumer fraud law by supplying inferior parts for crash repairs.

Fifth District appellate judges affirmed the judgment in 2001.

The Supreme Court heard oral argument in 2003, but had not reached a decision when Southern Illinois voters elected Karmeier.

Avery moved to recuse Karmeier, due to State Farm’s support of his campaign.

The Justices denied the motion in March 2005, with Karmeier not participating.

Avery sought reconsideration, and the Justices vacated the decision so they could enter a stronger one.

They held that disqualification was “a decision exclusively within the determination of the individual judge.”

They wrote that Karmeier’s decision not to recuse himself made the motion moot.

On Aug. 18, 2005, the Justices unanimously ruled that Speroni erred in certifying a national class under state law.

They ruled that he erred in defining different individual policies as a single contract.

They ruled that class action could not work even with subclasses.

Two Justices separately wrote that certifying subclasses might have worked.

Avery moved for rehearing and the Justices denied it.

Avery petitioned the U.S. Supreme Court for review, and the Court denied the petition in March 2006.

Avery returned to the Illinois Supreme Court in 2011, claiming new evidence of State Farm’s “extraordinary efforts and substantial funding” in Karmeier’s campaign.

The Justices rejected the new evidence as old and decided against reopening the case, with Karmeier not participating.

Lawyers on the losing end filed the federal racketeering suit against State Farm last year, on behalf of Hale, Todd Shadle and Carly Morse.

They also named campaign figures Ed Murnane and William Shepherd as defendants.

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

State Farm moved for reconsideration and Herndon denied it

He wrote that he agreed with plaintiffs that State Farm mischaracterized their theories and factual allegations.

He wrote that he agreed with plaintiffs that State Farm repeated and rehashed previous arguments he rejected.

State Farm’s petition at the Seventh Circuit argues that Hale’s allegations don’t bridge the gap between Karmeier’s participation and the overturning of the judgment.

“Whether the other justices might have voted differently if Justice Karmeier had not participated is a matter of sheer speculation,” Eaton wrote.

“Between the purported cause and the alleged effect are the individual thought processes of the Justices of the Illinois Supreme Court.

“Those Justices have an absolute deliberative privilege and cannot be compelled to disclose intra court communications made in the course of the judicial decision making process and concerning the court’s official business.”

He wrote that plaintiffs failed to allege facts indicating that campaign contributions influenced Karmeier’s vote.

He wrote that emails retrieved from trash, referenced in the complaint, mentioned many donors but didn’t mention State Farm.

Cloud’s motion to stay proceedings in Herndon’s court states that the parties have made no initial disclosures or discovery requests.

He wrote that no scheduling conference has been set and no discovery order issued.

He wrote that the suit would undoubtedly give rise to discovery requests and subpoenas that would implicate First Amendment privileges.

He wrote that it might give rise to discovery that implicates attorney client privilege and work product confidentiality.

“Given the slow pace at which plaintiffs have pursued their purported claims, and the lengthy pretrial discovery period they have sought in any event, plaintiffs cannot legitimately complain of unfair prejudice if these proceedings are stayed,” he wrote.

He wrote that if Herndon doesn’t wish to stay the proceedings, he might wish to rule on class certification.

“Discovery is not needed at this time because the court already has before it all the information necessary to dispose of the pending class certification motion.”

The Illinois Supreme Court decision overturning Avery 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.

Update

Plaintiffs answered State Farm on Dec. 31, asking Herndon to reject the insurer’s motion to stay proceedings while the Seventh Circuit considers its appeal to stop the lawsuit.

“Defendants have not proven that a stay fulfills the interests of judicial economy and is necessary to avoid prejudice or hardship,” attorney Gordon Ball of Knoxville, Tenn. wrote in response to State Farm’s motion to stay.

Ball argues that the District Court has twice rejected State Farm’s arguments for dismissal in the 19 months since the case was first filed.

“In that time, no initial disclosures have been made, no documents have been exchanged, no depositions have been taken, no scheduling conference has been conducted, and no scheduling order has been entered, all due to Defendants’ incessant attempts to either gain a dismissal of Plaintiffs’ action or stall discovery before producing information on Plaintiffs’ specific allegations,” Ball wrote.

Ball argues that the District Court has twice rejected State Farm’s arguments for dismissal in the 19 months since the case was first filed.

“In that time, no initial disclosures have been made, no documents have been exchanged, no depositions have been taken, no scheduling conference has been conducted, and no scheduling order has been entered, all due to Defendants’ incessant attempts to either gain a dismissal of Plaintiffs’ action or stall discovery before producing information on Plaintiffs’ specific allegations,” Ball wrote.