Lawyers pursuing an $8 billion claim against State Farm may depose Illinois Supreme Court Justice Lloyd Karmeier about his 2004 campaign, U.S. District Judge David Herndon ruled on Feb. 26.
He overturned an order that Magistrate Judge Stephen Williams signed last year, quashing a deposition notice that lead plaintiff Mark Hale served on Karmeier.
Herndon also allowed a deposition of State Farm vice president Robert Shultz, who in private practice won Supreme Court reversal of a judgment against State Farm.
Lead plaintiff Mark Hale claims Shultz rigged an Illinois State Bar Association committee’s evaluations of Karmeier and opponent Gordon Maag, in a conspiracy to reverse the judgment.
Maag, as appellate court judge, had written an opinion affirming the judgment.
Hale claims Shultz should have recused himself from the evaluation committee.
Herndon’s order carried the tone of a criminal indictment. He used hypothetical language to paint a picture of corruption.
For Karmeier, he offered a hypothetical that, “one of the candidates standing for election is indeed favored by the committee member’s client.”
“In fact, that a principal employee of that client was part of a task force of ‘concerned citizens’ who sought out viable candidates and actually interviewed the person who ultimately became this favored candidate," Herndon wrote.
“This group of citizens not only recruits the candidates but is primarily responsible for raising campaign funds and takes a principle role in the management of the campaign.
“That candidate ultimately would be able to connect the dots, so to say, if he were elected and takes a seat on the state’s highest court and learns that the screening committee member is one of the principal lawyers of that client in a case that generates a great deal of publicity and interest because it has a high stakes economic value to the parties in interest."
Herndon covered all this with a disclaimer.
He wrote that, “there is no intent to predict what will be learned only a suggestion that what has been pleaded in this complaint, whether it can ever be proven, must be accorded a fair opportunity for both sides to explore the facts and for the public, in the face of such allegations, to learn the truth.”
“Without allowing the inquiry, there will never be light on the facts of this case and the federal rules will be thwarted,” Herndon wrote.
He held that Karmeier must answer questions about his decision to run, persons he consulted in the decision, how the campaign was managed and financed, and who was involved in decisions and strategy.
If persons in the campaign had any connection to State Farm, or if State Farm had any role in the campaign, “plaintiffs will be allowed to exhaustively explore the relationships,” Herndon wrote.
“The line of questioning that the Court intends to allow does not implicate Justice Karmeier’s deliberative process while on the Illinois Supreme Court as the information that plaintiffs seek preceded his election to the Illinois Supreme Court,” he wrote.
“The information that plaintiffs seek is not relevant, is not privileged and is not related to his duties as a sitting judge, thus, plaintiffs are entitled to depose Justice Karmeier on these topics.”
He ruled that Williams incorrectly ordered plaintiffs to serve interrogatories on Karmeier rather than depose him.
“It is entirely appropriate that the parties be able to listen to his answers, observe his demeanor, and ask follow up questions,” Herndon wrote.
If he spared Karmeier any scorn out of respect for the Illinois Supreme Court, he spared none for Shultz.
“Consider the following hypothetical," Herndon wrote. "Assume for the moment that a lawyer representing a large corporation in a case that is quite clearly destined for a decision before the state supreme court is serving on that state’s bar association’s screening committee for candidates standing for election to that high court.
“Assume further that the lawyer is mindful of his obligation to recuse in the deliberations of that screening committee should he feel his duty for impartiality is either actually challenged or appears that way to an observing public.
“He then makes the decision, or, at least, is in the process of formulating his decision whether he should recuse from the upcoming screening process for the slate of supreme court candidates because he knows the case he is working on will be a significant one on the docket of either of the candidates he is asked to investigate on behalf of the Bar.
“Further assume that one of the candidates to be screened was the author of the opinion in the intermediate appellate court that affirmed the judgment of the trial court setting up the need for this high court appeal, a decision quite distressing to this client as well as to this lawyer who represented has represented (sic) this client at every stage.
“Further assume a principal corporate officer of his client in the case somehow becomes aware of this decision or the process the lawyer is pursuing and discusses it with him via phone and email, thereby inserting himself into his decision and impresses upon him the subtle or not so subtle advantage that could result from his advocacy on the committee on behalf of a favored candidate.
“As a result of the discussion, the committee member decides not to recuse and advocates for the client’s favored candidate in the screening process.
“At the same time, he is advocating against the appellate justice who authored an opinion which he professionally and his client economically found to be distressing at the very least.
“That discussion has nothing whatsoever to do with attorney client privilege. It is a conspiracy between two individuals that is quite likely a violation of the RICO Act.
“The discovery and uncovering of it does not violate the judicial evaluation process or, if it does, the federal interest of discovering it and its content far outweigh the state interest of keeping it secret.”
Williams had ruled that he couldn’t override Shultz’s privilege under Illinois law.
Herndon covered all this with a disclaimer of suspicion.
“This undersigned judge is not saying that a deposition will uncover facts such as these in Hale v. State Farm, and it is just these kinds of allegations that have been made by the plaintiffs, but if a deposition does not occur it is certain that such facts or anything close to it will never be uncovered or disproven," Herndon wrote.
“If a party is not allowed to pursue in discovery the facts that may support its theory because the assertion of privilege is allowed to hide those facts from that party and the public, then the federal rules are rendered useless.”
He held that Shultz must answer questions about conversations with anyone from State Farm or acting on its behalf, or with conspiracy defendants William Shepherd and Ed Murnane.
“He further may be asked questions regarding his decision making process regarding the issue of the recusal and why he chose not to recuse from the screening of Karmeier and Maag and whether he consulted anyone on that issue,” Herndon wrote.
“A fair area of inquiry may include whether he made any attempt to persuade his fellow committee members in any way and if so what his motives in doing so were and whether he was encouraged to do so by anyone acting on behalf of State Farm or any of the named defendants or unnamed co-conspirators.
“He may not be asked about the positions taken by the other screening committee members unless it is necessary to show that because he was motivated by assisting State Farm or any of the named defendants or unnamed co-conspirators, he was compelled to attempt to change the vote of a certain member or other and so the positions of other members can only be developed if the ill-motive of Mr. Shultz has first been developed.”
The original case began in 1997, in Williamson County. Lead plaintiff Michael Avery claimed State Farm supplied inferior parts for crash repair.
In 1999, after a jury trial, associate judge John Speroni entered judgment against State Farm in excess of $1 billion.
Maag and other Fifth District appellate judges affirmed the judgment in 2001.
In 2005, after Karmeier’s election, the Supreme Court reversed the judgment.
Avery sought to reopen the case in 2011, claiming State Farm concealed from the Supreme Court the extent of its role in Karmeier’s campaign.
The Supreme Court denied review.
Hale, on behalf of the same class, sued State Farm in federal court in 2012.
He claimed State Farm misled the Supreme Court in 2005 and 2011.
He seeks triple damages and interest, for a total near $8 billion.