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State Farm Strikes $250 Million Deal to Settle Racketeering Class Action Lawsuit

By: Allan M. Siegel

On Tuesday, September 11, 2018, State Farm reached a deal to settle a federal class action lawsuit which claimed the insurance giant funneled money to the campaign of an Illinois Supreme Court candidate who later voted to overturn a $1 billion judgment against the company. The deal will require State Farm to pay $250 million, but will not require the insurance company, which continues to deny the allegations, to admit fault or wrongdoing. A hearing for final approval of the settlement is set for December.

According to the amended complaint, State Farm is alleged to have installed a hand-picked judge on the Illinois Supreme Court by using its influence over and contributions to non-profit organizations such as the Illinois Civil Justice League and the U.S. Chamber of Commerce, to fund the election of Lloyd Karmeier in 2004. The following year, Karmeier voted in favor of State Farm to overturn a more than $1 billion judgment against the company in a consumer fraud case over State Farm’s alleged use of aftermarket parts in vehicle repairs.

As argued by the complaint and many critics, State Farm’s contributions to Karmeier created a quid pro quo (a Latin phrase meaning “a favor for a favor”) between the Illinois Supreme Court Justice and the insurance company. Here are a few important facts about the case and the allegations against State Farm:

  • The complaint claimed that State Farm orchestrated as much as $4 million in campaign contributions to Karmeier during his election bid.
  • Those campaign contributions allegedly came from non-profit organizations which State Farm had tremendous influence over, including the Illinois Civil Justice League (ICJL), which was created by a State Farm attorney who also hired the organization’s president.
  • After the 2005 decision to overturn the $1 billion judgment against State Farm was issued, the class hired a former FBI agent to investigate links between the insurance company and Justice Karmeier. However their request for the court to reconsider the decision to vacate the judgment was denied, prompting some of the plaintiffs from the original class action to bring new claims alleging State Farm, the ICJL, and executives with both company engaged in a conspiracy to conceal the insurance company’s role in Karmeier’s election and committed RICO violations.
  • As part of the settlement, Racketeer Influenced and Corrupt Organizations (RICO) and unjust enrichment claims against State Farm will be dropped and the company will admit no wrongdoing.

A Case that Calls for Change

The case against State Farm has garnered widespread attention throughout the country, and is of particular importance during a time when the nation is focused on issues involving campaign financing, and the role of judicial review in our legal system amid the confirmation of a new Supreme Court justice (though justices for the U.S. Supreme Court are appointed by the President rather than elected like those in state courts). In fact, the case has exposed important issues and questions about how significant corporate influence is in public elections, and how it often operates in secret and through the guise of organizations that appear to be advocating for reasons many would support.

As plaintiffs’ attorneys in the case note, the lawsuit sheds a great deal of light on dark money in America, as well as the need for meaningful campaign finance reform. On another level, it also speaks to the self-serving motives of corporate powers that prioritize their financial interests above all else – whether that be supporting the rollback of important trucking safety regulations, supporting legislation to place caps on damages in medical malpractice cases, minimizing payouts to injured victims harmed by their policy holders, or even supporting the election of important judicial and political figures whose plans, or pocketbooks, align with their own.

Having handled cases against major corporations and insurance companies for decades, our legal team at Chaikin, Sherman, Cammarata & Siegel, P.C. is well aware of the power corporations yield and their continued focus on profits over people. It is why we are passionate about our role as advocates for justice, and why we are committed to raising support and awareness for important issues.