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State Farm asks Seventh Circuit for review of $7.6 billion certification out of Herndon court

By Record News | Oct 12, 2016

CHICAGO – State Farm has asked Seventh Circuit appellate judges to review certification of a $7.6 billion class action over its role in the election of Illinois Supreme Court Justice Lloyd Karmeier 12 years ago.  

State Farm petitioned the Seventh Circuit for permission to appeal on Sept. 30, two weeks after District Judge David Herndon of East St. Louis certified a class.  

Plaintiffs claim State Farm secretly supported Karmeier in order to overturn a $1 billion verdict that their class had won in Williamson County.  


State Farm’s petition challenges federal jurisdiction, calling the case an attack on the state judiciary.  

“This is the same class that the Illinois Supreme Court unanimously held was not certifiable as a matter of law,” Ronald Safer of Chicago wrote.  

Safer wrote that the damages are the exact amount of a judgment that the Illinois Supreme Court vacated, with interest and tripling of damages.  

“The only way that plaintiffs were injured by exactly that amount is if the Illinois Supreme Court’s decision to decertify the class was wrong,” he wrote.   

“That the requested remedy is the same is a clear demonstration that the federal suit would effectively overturn the Illinois Supreme Court decision.  

“The claims thus directly question the integrity of Justice Karmeier, soon to be Chief Justice, and the Illinois Supreme Court.”  

The original case started in 1997, on behalf of policyholders claiming they received inferior parts for crash repairs.  

Lead plaintiff Michael Avery prevailed at jury trial in 1999, and associate judge John Speroni awarded more than $1 billion to almost five million individuals.  

Fifth District appellate judges in Mount Vernon affirmed Speroni in 2003.  

Fifth District voters elected Karmeier in 2004.  

In 2005, the Illinois Supreme Court reversed Speroni.  

All seven Justices held that he shouldn’t have certified a class, although two would have remanded the case to Speroni for possible creation of subclasses.  

Avery asked the U.S. Supreme Court for review, and the Court denied it.  

In 2011, Avery’s lawyers asked the Illinois Supreme Court to recall the mandate, claiming they possessed new evidence of improper activity by State Farm in 2004.  

The Justices denied the motion, and Karmeier did not participate in the decision.  

In 2012, Mark Hale of New York state filed a racketeering suit against State Farm in U.S. district court, as a member of the Avery class.  

He also sued State Farm employee William Shepherd and Illinois Civil Justice League director Ed Murnane.  

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

State Farm moved for reconsideration, and Herndon denied it.  

State Farm petitioned the Seventh Circuit for a writ of mandamus to halt the proceedings, and the Seventh Circuit denied the petition.  

Last year, Herndon ruled that plaintiffs could depose Karmeier.  

No trace of the deposition has reached public record, not even the date.  

Karmeier didn’t appeal Herndon’s authority but now State Farm does.  

Safer wrote that plaintiffs raised the issue of Karmeier’s recusal four times at the Illinois Supreme Court and once at the U.S. Supreme Court, without success.  

“Plaintiffs treat causation as a common issue only by effectively eliminating the causation requirement entirely, arguing instead that the alleged tainting of the tribunal suffices,” Safer wrote.  

“But this theory has no legal basis.  

“Review is warranted now because the astronomical damages sought and the need for individual assessment of injury and damages make it possible that the case will never reach a final judgment.  

“Moreover, this case is an attack on the integrity of the Illinois Supreme Court, and it should not proceed when lack of jurisdiction and errors on class certification are so apparent.”  

On the day State Farm filed the petition at the Seventh Circuit, it asked Herndon to stay discovery on the class notice and to stay the notice itself.  

On Oct. 10, class counsel Elizabeth Cabraser of San Francisco told Herndon that Hale didn’t oppose a stay if it expired at least six months before trial.  

She wrote that fact discovery is not complete, expert discovery has not started, and a trial date has not been set.

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Organizations in this Story

Illinois Supreme Court Lieff Cabraser Heimann & Bernstein, LLP Robert A. Clifford Ronald S. Safer State Farm Insurance Co.