Today in Avery v. State Farm Mutual Automobile Insurance Co., the Illinois Supreme Court reversed a $1 billion judgment against State Farm. This was a class action against State Farm, its nature summarized by plaintiffs as follows:
In this case, plaintiffs have placed at issue the propriety of State Farm's uniform practice of specifying the use of non-OEM crash parts to repair its policyholders' car[s] in every instance in which such cheaper parts are available. *** Plaintiffs contend that this policy breaches State Farm's standard contract because it is not designed to restore policyholders' cars to their pre-loss condition by using parts of like kind and quality. Plaintiffs further contend that this practice violates Illinois' consumer law because the practice itself and its economic ramifications constitute a violation of Illinois consumer statutes, which prohibit[] misrepresentations as to the 'standard, quality, or grade' of the goods and services provided under State Farm's policies. [Citation.] At trial, the Court and jury must resolve the classwide question of whether State Farm, by requiring the uniform use of non-OEM crash parts, and through the course of conduct it designed to conceal the true import of this practice from its policyholders, breached its contractual obligations and committed consumer fraud.
The trial court certified a nationwide plaintiff class and entered judgment on a jury verdict for over $1 billion. The intermediate court shaved $130 million off the award (which still left it at over $1 billion), but otherwise affirmed. The Illinois Supreme Court reversed, accepting State Farm's argument that the case never should have been certified as a class action. The Court found no support for the conclusion that all State Farm policies were identical, such that adjudication of one policy could apply to all policyholders. For the same reason, the jury's verdict as to various subclasses could not be sustained.
Hat tip to DRI, whose email Case Law Update brought news of this decision.
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