State Farm Settles for $250M with Knoxville Attorney

Following up on our story from Bulletin Volume 18-18, State Farm Mutual Automobile Insurance Company (State Farm) has agreed to pay $250 million to settle a Federal lawsuit co-lead by Knoxville attorney Gordon Ball.

The case revolved around the Hale litigation, which arose from an earlier class action lawsuit, Avery v. State Farm. It involved a challenge to the quoting or specification of aftermarket non-OEM vehicle parts in the 1980s and 1990s. The Avery case resulted in a jury verdict in 1999, amounting to a $1 billion judgement against State Farm.

That judgement was then reversed by the Illinois Supreme Court in August 2005. The Hale case alleged that State Farm violated federal law by improperly influencing the Illinois high court's decision. Filed in 2012, the insurer faced charges in the case under the Racketeer Influenced and Corrupt Organizations Act (RICO) that it secretly backed a judge's campaign for Illinois Supreme Court in order to help mitigate the $1B judgment.

The plaintiffs in the class action suit agreed to settle with State Farm just as a lengthy trial was about to begin. An agreement of $250 million was reached to avoid "protracted litigation and appeals that could continue for several more years." The settlement will provide benefits to over 4 million current and former State Farm policyholders who were members of the class action suit.

As part of the settlement, the plaintiffs have agreed to dismiss their RICO and unjust enrichment claims. The settlement will also affirm that State Farm denies liability, that it considers the claims to be without merit, that it is settling under the unjust enrichment claim and that the settlement is being made simply to bring an end to the litigation.

The Illinois Court has now set a December 13, 2018 hearing date in order to take up final approval of the settlement details.