RICO plaintiffs say State Farm should not get 'third bite of apple'

Plaintiffs in a billion dollar proposed racketeering class action say State Farm should not be given “a third bite of the apple.”

They want U.S. District Judge David 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 a Dec. 31 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.

State Farm sought mandamus relief at the federal appeals court on Dec. 17 to stop the lawsuit – Hale v. State Farm.

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.

Hale, represented by Ball and more than a dozen other attorneys across the country, 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.

Ball wrote that Herndon has already denied an immediate appeal and motion for reconsideration of the denial order.

“On December 4, 2013, the Court denied Defendants’ motions to reconsider the Denial Order, noting that Defendants were ‘merely repeating and rehashing previous arguments that have been rejected,’” Ball wrote.

He wrote that State Farm’s “unwarranted” appeal to the Seventh Circuit “should not be rewarded with another stay.”

“While Defendants have taken what they concede is the ‘rare step’ of seeking a writ of mandamus, the Seventh Circuit is under no timetable to rule on the Petition,” Ball wrote. “Defendants thus seek an indefinite stay of all proceedings. It is time for this case to proceed.”

Plaintiffs have indicated they will seek to depose Illinois Supreme Court Justice Lloyd Karmeier over State Farm’s funding of his 2004 campaign.

The alleged racketeering occurred when State Farm and Karmeier’s campaign committee basically worked together to recruit, finance and elect Karmeier to the Supreme Court so he would vote to overturn the judgment against State Farm once elected.

Background

In 1999, Williamson County Judge William 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.

(Steve Korris contributed to this report).