Years before Avery decision, Geico urges Byron to hold off

By Steve Korris | Nov 24, 2005

Circuit Judge Nicholas Byron

Jeffrey Millar

Thomas Maag

Three years ago, auto insurer Geico urged Madison County Circuit Judge Nicholas Byron not to certify a policyholder’s lawsuit as a national class action until the Illinois Supreme Court decided the similar case of Avery vs. State Farm.

Byron certified a national class action anyway.

Now Geico, relying on the Supreme Court’s decision in Avery, wants Byron to decertify the class.

Attorney Sheila Carmody, of Phoenix, wrote in an Oct. 31 motion that according to the Avery decision, no common injury could exist to justify class action against Geico.

“This type of certification order plainly violates Avery,” Carmody wrote.

Byron will hear Geico's motion to dismiss on Dec. 9.

The Supreme Court on Aug. 18 threw out Avery’s $1.2 billion verdict. The Court ruled that Williamson County Circuit Judge John Speroni erred in interpreting all State Farm policies as a uniform contract.

It also ruled that the plaintiffs did not prove any damages.

The dispute in Avery related to replacement parts for damaged vehicles. The Geico case relates to “total loss” accidents.

In 2000, Geico paid Myron Billups $1,796.30, for the total loss of a 1988 Pontiac Grand Am, and it let him keep the car.

Total loss does not mean a vehicle has lost all value. An insurer can sell it as salvage or let the owner keep it as part of a settlement. Geico valued Billups’s Grand Am at $316.

Billups signed the settlement. He did not object to it until someone at the Lakin Law Firm in Wood River called to tell him he could sue Geico.

He could not find his policy, but that did not deter the attorneys. Jeffrey Millar of the Lakin firm filed suit in 2001, identifying Billups as a St. Clair County resident.

Millar accused Geico of obtaining biased valuations of wrecked vehicles from CCC Information Services. He named CCC as a defendant.

He moved to certify Billups as representative of everyone in the nation who had settled a total loss with GEICO since 1991. He estimated damage at less than $500 per person.

He wrote that he would attach a policy after he obtained a copy from Geico.

Thomas Lakin and Brad Lakin added their names to the complaint. So did Patricia Murphy and Randy Patchett of Marion, and six attorneys from three Chicago firms.

Geico did not give Millar a copy of Billups’s policy, but the company gave him a “specimen.” Millar sent it to the court.

Geico moved to dismiss the complaint for failure to state a claim. In the alternative Geico moved for summary judgment under the doctrine of accord and satisfaction.

Millar responded that courts must set aside settlements on a showing of fraud. He wrote that Geico knew it offered less than fair market value.

By then, Billups regretted that he authorized the suit. In a deposition at the Lakin firm, he griped about how his attorneys bothered him.

“I didn’t want to do it in the first place,” he said, “but it got so every night or every day somebody was calling, calling.”

A Geico attorney asked if he was in any other lawsuits. Billups said, “Geico’s going to go away, you know.” He emphasized: “The Geico thing will be dropped.”

When asked if he knew where his suit was pending, Billups said, “I think my attorney here would tell you.”

“I don’t even open the envelopes," he said. "I’m sorry to admit that but I’m just – I’m at a point in my life where, you know, I don’t want to be bothered.”

Soon after that, his attorneys renewed his spirit to carry on. In his next deposition, Billups would declare his commitment to the case.

At a hearing, Gerard Schneller of the Lakin firm opposed Geico’s motion to dismiss. He told Byron, “This is just like the medpay cases that you have heard before.”

Geico attorney Kevin Parker, of Phoenix, said Billups showed no evidence that he was defrauded in any way. Parker said Billups did not even sign an affidavit to that effect.

Schneller said, “We have one prepared.” He said he could file it within two hours.

Parker said policyholders could preclude fraud by taking disputes to arbitration under terms of the policy.

"I am not going to buy that argument,” Byron said. “I am not going to make him go through that process if he is alleging fraud. He is going to stand on it or fail on it. It is as simple as that.”

Byron denied the motion. He also ordered Geico to give Millar copies of claims manuals, training manuals and policies from each state where it did business.

Meanwhile, CCC Information Services never answered the complaint. Billups moved to dismiss CCC as defendant, and Byron so ordered.

In 2002, Geico renewed its motion for summary judgment. Carmody wrote that the proposed class representative did not even read the pleadings.

Next, Geico moved to stay briefings on class certification, pending a decision on summary judgment. Parker wrote that the notion of class action was moot because the claim was without merit.

At a hearing, Parker told Byron that plaintiff’s counsel postponed summary judgment by representing that they would file an affidavit in two hours.

Byron said to Brad Lakin, “Did you supply that?” Lakin said, “I am not aware whether we did or not.”

It did not matter to Byron. He took a pen and wrote that he would not hear a motion for summary judgment until after class certification or upon agreement of the parties.

It looked like he had already made up his mind about certifying a class. To fix his slip, he scratched out the part about agreement and wrote “hearing” after “class certification.”

Next, Billups lost a lawyer. Patricia Murphy withdrew from the case after her husband, Patrick Murphy, became a U.S. District Court judge. She moved to strike her name from the record as proposed class counsel.

The Lakins then shook up the case. They found two more plaintiffs, and they placed primary responsibility for the litigation on attorney Thomas Maag.

Maag amended the complaint to add St. Clair County resident Patricia Singleton and Madison County resident Paula Ross as plaintiffs.

Geico moved to dismiss. In a supplemental memorandum of October 2002, Geico noted that the Illinois Supreme Court had agreed to hear Avery vs. State Farm.

Geico urged Byron to postpone a decision on class certification until the Supreme Court decided Avery.

Maag amended the complaint again, and again Geico moved to dismiss.

Plaintiff Singleton, in a deposition, said she had not read the complaint and played no role in the course of the suit. Geico moved in 2003 for summary judgment as to her.

Geico also moved for summary judgment as to Ross, arguing that she failed to disclose her claim against Geico in a bankruptcy petition.

Geico also renewed its motion for summary judgment as to Billups.

Maag answered by citing case law requiring vigorous prosecution of class actions.

He wrote that, “…the vigorous prosecution test goes to the adequacy of class counsel, not the class representatives.”

Maag amended the complaint again, and again Geico moved to dismiss.

Byron heard arguments on class certification in September 2004. On Nov. 12, 2004, he certified the plaintiffs to represent a national class.

The case moved slowly after that, but attorney Carmody shifted into high gear after the Supreme Court threw out the Avery verdict. Her motion to decertify filled 20 pages.

“Avery requires that all class members have suffered a common injury through a breach of contract that caused a common economic impact on the class,” Carmody wrote. “No such common injury occurred here.”

She wrote, “Avery requires this Court to consider differences in policies…

“Avery dictates that consumer fraud cannot be predicated on a breach of a promise in an insurance policy.

“Avery demands proof of actual deception and actual damages for each individual class member.

She wrote that neither Billups nor Singleton alleged deception and neither suffered any actual damages. And that when plaintiffs identify the benchmark they believe Geico should have used – “Blue Book, Red Book, Black Book” – it will produce some values lower than the values CCC produced.

In such a case, she wrote, “that insured will have been paid at least as much as they were entitled to.”

She wrote that a National Automobile Dealers Association valuation of Billups's car would have been $18 less than the loss as CCC measured it.

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