Appellate Court Upholds Verdict That State Farm Committed Consumer Fraud and Breach of Contract in Using After-Market Parts

Business Wire, April 5, 2001

Business Editors/Legal Writers

SAN FRANCISCO--(BUSINESS WIRE)--April 5, 2001

Upholds Historic $1.05 Billion Class Action Verdict

In a class action lawsuit pitting 4.7 million auto insurance policyholders across the United States against the nation's largest insurer, State Farm Mutual Automobile Insurance Company, the Illinois Court of Appeal, in a unanimous opinion, upheld a $1.05 billion award for consumer fraud and breach of contract involving State Farm's practice of specifying imitation crash parts in auto repairs.

Upholding the verdict issued in October of 1999 on behalf of the class, the court's 40-page opinion found no error in either the trial of the action as a class action or the conduct of the trial. The court, however, reduced the original $1.18 billion judgment entered by the trial court by $130 million to subtract an overlapping award on the two separate counts. The total remaining award of $1,050,000,000 is one of the largest verdicts every upheld on appeal. The award is on average approximately $223.40 for each of the 4.7 million members of the class.

Elizabeth J. Cabraser of Lieff, Cabraser, Heimann & Bernstein, LLP, one of the trial and appellate counsel for the class, noted that "the appeals court opinion was a victory for consumers who are unable to obtain meaningful relief from large corporations on their own and a vindication of the class action device."

The team of attorneys involved in the appeal included lead trial counsel Don Barrett of the Barrett Law Offices of Lexington, Mississippi; and Tom Thrash of Little Rock, Arkansas. Plaintiff counsel at trial, and on appeal, also included Patricia Littleton of Marion, Illinois; Elizabeth Cabraser, Morris A. Ratner and Scott P. Nealey of Lieff, Cabraser, Heimann & Bernstein, LLP of San Francisco, California; Michael Hyman, William H. London and Melinda J. Morales of Much, Shelist, Freed, Denenberg, Ament & Rubenstein of Chicago, Illinois, and Ted Kionka of Carbondale, Illinois.

If any further appeals by State Farm are unsuccessful, consumers will be notified by the Court of the claims process by which the monetary award will be distributed, and allowed to participate in that process.

The affected members of the class who can share in the consumer fraud verdict are U.S. residents (except people residing in Arkansas and Tennessee) who were insured by a vehicle casualty insurance policy issued by State Farm and who made a claim for vehicle repairs under their policy and had non-factory-authorized and/or non-OEM "crash parts" installed on their vehicles, or received monetary compensation determined in relation to the cost of such parts. "Crash parts" are vehicle components typically repaired or replaced as a result of crash damage, rather than as a result of normal vehicle usage. Excluded from sharing in the award are employees of State Farm, its officers, its directors, its subsidiaries, or its affiliates, and persons who resided in California when these policies were issued/executed prior to September 26, 1996. The class period for purposes of the consumer fraud award starts on July 28, 1994 and ends on February 23, 1998. Individuals who received estimates containing non-OEM crash parts during this period of time will be eligible to participate in any eventual award. The Avery team will follow up to attempt to obtain damages for more recent policyholders affected by State Farm's fraudulent practices. Members of the class need take no action at this time, as no claim process will be established until any appeal in State Farm has been decided.

SOURCE: Lieff, Cabraser, Heimann & Bernstein, LLP

A copy of the court's opinion can be found at http://www.lchb.com.