Hale v. State Farm settles for $250 million

By Ann Maher | Sep 4, 2018

State Farm and a class of plaintiffs agreed to settle protracted RICO litigation for $250 million on the opening day of what was expected to be a long-running trial at federal court in East St. Louis. 

Settlement was announced by U.S. District Judge David Herndon after 2:30 p.m. Tuesday. 

Claims against co-defendants William Shepherd, counsel for State Farm, and Ed Murnane, former president of the Illinois Civil Justice League, also have been dismissed. They will not bear any settlement costs, according to the proposed agreement. 

The vehicle for settlement came by plaintiffs' filing of a second amended complaint that added a count of unjust enrichment "to end the entire litigation with the class," wrote State Farm attorney Ronald Safer of Chicago in support of the settlement.

"State Farm firmly believes that all claims that have been or are asserted against it and the other defendants...to be factually and legally without merit," Safer wrote.

"That is why it has defended so vigorously against this litigation. State Farm likewise believes that, in view of its strong factual and legal defenses in this case, it would prevail at trial, upon appeal... or at both stages.

"But this case has already gone on for over six years... There are uncertainties in any litigation, especially class litigation."

Plaintiffs' counsel Robert Nelson of Lieff Cabraser in San Francisco wrote in support of the agreement that aside from attorney fees and costs, and costs of notice and settlement administration, all of the monies would go to class members.

"This settlement represents a substantial achievement for Class Members, all of whom are eligible for monetary payments, and many of whom will receive those payments automatically, meaning without having to submit a claim form.

"As the Court knows, Plaintiffs were prepared and ready and willing and able to try this case to verdict. But this proposed settlement provides significant relief to class members now, and avoids the risk of any further delay associated with the inevitable appeals of any successful verdict, the loss of a successful verdict on appeal or an unsuccessful trial verdict."

The proposal doesn't define how much class counsel will receive in fees, rather it states that defendants are leaving the award amount to the discretion of the court. If plaintiff attorneys were to receive 30 percent of the settlement value, $82.5 million would be divided among roughly 15 plaintiff law firms.

The Hale litigation arose from the earlier class action Avery v State Farm, which involved a challenge to the quoting or specification of aftermarket non-original equipment manufacturer vehicle repair parts in the 1980s and 1990s. 

In Avery, a Williamson County jury arrived at a $1.05 billion verdict in 1999. That judgment was reversed by the Illinois Supreme Court in August 2005 after Lloyd Karmeier was elected to the high court. 

Filed in 2012, Hale plaintiffs claimed that State Farm fraudulently secured Karmeier’s election in 2004, in order to overturn the Williamson County judgment. Hale contended that Karmeier should have recused himself from review of the judgment. 

The class had sought to recover the judgment with 19 years of interest and triple damages under civil provisions of federal racketeering law, an amount approaching $10 billion leading up to the trial.

After the approximate 15 minute proceeding in Herndon's court ended Tuesday afternoon, lead plaintiff attorney Robert Clifford of Chicago told reporters that Karmeier had been set to testify at trial as early as Wednesday. He said that he could not disclose in advance when he would have testified due to a confidentiality agreement.

According to a joint press release, the settlement was reached because both sides “believe it is in the best interest of all the parties and to avoid protracted litigation and appeals that could continue for several more years.”

It goes on to state that the settlement provides benefits to more than 4 million current and former State Farm policy holders who were members of the Avery class. It states that plaintiffs have agreed to dismiss RICO and unjust enrichment claims. The agreement will further stipulate that State Farm denies liability, that it consider claims to be without merit and it is settling under the unjust enrichment claims. 

Herndon has set a final fairness hearing for Dec. 13. 

Tuesday's trial had been set to begin at 8:30 a.m. At 9 a.m., a clerk told those assembled in a courtroom lacking sufficient air conditioning that proceedings would be recessed until 1 p.m. 

At approximately 1 p.m., a clerk announced a new 1:30 p.m. start to the gallery, which waited another hour for the announcement. 

Before Herndon entered the courtroom, attorneys Sheila Birnbaum of New York - for State Farm - and Elizabeth Cabraser of San Francisco - for plaintiffs - preceded him from chambers. They had apparently been engaged during the day with mediator Randi Ellis of Baton Rouge, La, according to trial minutes posted this afternoon.

Herndon thanked Cabraser and Birnbaum for their efforts in reaching settlement. 

He said the case was complex, and that lawyers on both sides were as knowledgeable and prepared as they could be, "short of knowing what a jury would do."

Belleville attorney Russell Scott, who represented Shepherd, said it was a good day for his client.

"I'm happy for him," he said. "Mr. Shepherd can now enjoy the next month."

Want to get notified whenever we write about any of these organizations ?

Sign-up Next time we write about any of these organizations, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Clifford Law Illinois Supreme Court Lieff, Cabraser, Heimann & Bernstein,

More News

The Record Network