State Farm claims to be the nation’s number one insurer. According to its website, the company promises to deliver the value customer’s expect from the industry’s leader. Evidently, that bar is quite low. In 1999, a trial court ruled against State Farm and ordered the insurance giant to cough up $1.18 billion in damages for allegedly using cheaper, non OEM (original equipment) parts for crash repairs.
17 years later and policy holders are still hoping to collect damages. With interest and triple damages, that amount is now estimated to be $7.6 billion.
Immediately after losing to policy owners, State Farm began filing appeals. Ultimately they were successful in getting the damage award reduced and then overturned. In 2005, a deeply divided Illinois Supreme Court tossed the award. Part of the reason for that reversal was a decision that the nationwide certification of a RICO class action was improper.
By tossing the class, the Illinois Supreme Court said that each of State Farm’s 4.7 million policy holders would have to file separate lawsuits. State Farm knew that very few policy holders would waste tens of thousands of dollars in legal fees to fight over a part that might be worth far less.
After losing in state court, the policy holders developed a new strategy and filed a RICO class action in federal claiming State Farm poured $4 million into an election to get a sympathetic judge.
The RICO claim wasn’t filed immediately. It was several years later when the policyholders say they discovered that State Farm allegedly lied in court papers about backing the judge in question.
Once again, State Farm was back in the court room trying to fight the newest class action attempt. Earlier this month, however, the insurer lost. The federal court can’t reopen the state court decision tossing the policyholders’ claims. But if a jury finds that State Farm conspired to fix an election of an Illinois Supreme Court Justice, the original policy holders could still win… And this time with triple damages.
To be certified as a class, the court must find that each of the proposed class members has similar claims and injuries. Here, the claims are identical. In the words of U.S. District Court Judge David Herndon, "[T]he injury in this case is based on the interest the plaintiffs and the proposed class members had in a neutral forum and the damages correspond with the undivided interest in the judgment each lost as a result of the tainted tribunal. This issue is identical for all plaintiffs and class members."
The judge also ruled that a RICO class action could be used as a vehicle to determine if the company worked to “secretly subvert the judicial process and deprive plaintiffs of an impartial forum.”
This month’s ruling clears the way for the case to proceed. State Farm, of course, has promised it will appeal again. And the policy holders must still prove that State Farm actually illegally conspired to buy the election.
RICO – The Racketeer Influenced and Corrupt Organizations Act
RICO class actions are relatively rare. The two biggest liabilities a company can face in court are usually a class action lawsuit or a RICO lawsuit. Combine them both and you have the equivalent of a category 5 superstorm. Because RICO provides for triple damages and legal fees, an embattled company could face enormous challenges by thousands or millions of customers and all with huge damage claims.
Until a U.S. Supreme Court decision in 2008, most lower courts would not consider class RICO action cases. That has all changed and the present State Farm case is one of the largest of the new super claims to be filed.
If State Farm isn’t able to secure another appellate victory, there will be tremendous pressure on the company to settle. To proceed to trial and lose could cost the insurer billions.
MahanyLaw and Judge Lang & Katers – RICO Lawyers
There are very few lawyers who know about RICO. Most of those that do represent banks, big corporations or insurers like State Farm. Those same lawyers also charge huge hourly fees.
The lawyers at Judge, Lang & Katers and MahanyLaw are different. We are two national boutique law firms that have joined forces to take on the largest and most powerful of banks, mortgage companies, fiduciaries, loan servicers, insurers and other financial institutions. Attorney Brian Mahany was one of the lead counsels in the historic $16.65 billion prosecution in 2014 against Bank of America.
If you need someone strong, experienced and committed to representing the victims in RICO actions or suing banks, call us. For more information, contact attorney Chris Katers at firstname.lastname@example.org or by telephone at 877-858-8018. The author of this post, attorney Brian Mahany can be reached email@example.com.
MahanyLaw and Judge, Lang and Katers – We Sue Banks!
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