State Farm: $250 Million Agreement to Settle Federal Lawsuit

State Farm settlement

September 4, 2018. Insurance giant, State Farm, agreed to pay $250 million to settle a federal lawsuit alleging that the company broke federal racketeering laws by secretly funneling money to help elect an Illinois high court justice [Supreme Court Chief Justice Lloyd A. Karmeier who was a candidate for the high court in 2004] to help overturn a billion-dollar judgment against the company.

Class Action Against State Farm

In the 2005 case of Avery vs. State Farm, Karmeier allegedly worked to overturn a $1.06 billion judgment against State Farm for its use of aftermarket car parts in repairs. The court ruled in State Farm’s favor, saying that the nationwide plaintiff class was improperly certified by a Williamson County trial judge and that using aftermarket parts was not a breach of State Farm policyholders’ contracts.

In a 2012 class action suit, State Farm was accused of collaborating with advocacy groups to handpick Lloyd Karmeier to run for this high court seat, covertly supporting his campaign to help him win and ultimately gain a reversal of the Avery lawsuit decision.

The $250 million settlement, announced on Tuesday, September 4th in the US District Court for the Southern District of Illinois, is, however, believed to be in the best interest of all parties and will avoid a lengthy litigation and appeals process.

As part of the settlement, plaintiffs agreed to dismiss their Racketeer Influenced and Corrupt Organizations claims and unjust enrichment claims.

“The settlement agreement will include recitals that State Farm denies liability [and] that it considers the claims to be without merit,” reported in a statement provided to Law360. State Farm spokesman Jim Camoriano further told Law360, “There was a lot of negotiation back and forth, a lot of discussion” before the final settlement amount was agreed upon.

A final fairness and approval hearing is set for December 13.

The case is Hale et al. v. State Farm Mutual Automobile Insurance Co. et al., case number 3:12-cv-00660 in the US District Court for the Southern District of Illinois.


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