State Farm appeals the aftermarket-parts verdict
State Farm Mutual Automobile Insurance Co. is asking the Illinois Supreme Court to hear its appeal of the judgment for $1.2 billion against it for failing to disclose the inferiority of aftermarket auto parts.
In October 1999, a Marion, Ill., jury and judge found that State Farm failed to disclose that aftermarket crash parts (like hoods and fenders) — also known as non-Original Equipment Manufacturer (OEM) parts — used in repairs were not as high in quality as OEM parts. State Farm is now looking to bypass the Illinois Appeals Court in its motion for an expedited appeal in the Illinois Supreme Court.
"We're continuing to follow the normal appeals process, but we're pointing out to the Supreme Court that the decision is already hurting consumers," says State Farm's Chairman and CEO Edward Rust. "State Farm wants a reversal of this court decision as soon as possible."
"It's the same old song State Farm has been singing since day one," says Michael Hyman, an attorney from Chicago-based Much Shelist Freed Denenberg Ahment Bell & Rubenstein, one of the law firms representing the plaintiffs. "What State Farm is saying is, 'Because there's so much money involved, the case is more important.' But this is not a case that should go directly to the Supreme Court because it's not that complex."
Costs are mounting
The nation's No. 1 auto insurer, State Farm outlined three specific reasons for its appeal. First, the company's auto crash-parts costs were $4.8 million more than it expected in November 1999, which was the first full month after State Farm announced it was suspending the use of aftermarket crash parts. State Farm claims that costs will go even higher in the future.
Second, State Farm alleges that the judgment tramples the ability of individual states to regulate insurance. The judgment, State Farm says, "dictate[s] policy for the entire insurance-buying public nationwide."
State Farm was not ordered to stop using aftermarket auto parts as part of the October 1999 court judgment, but the company voluntarily suspended use.
Finally, State Farm says "the extraordinary billion-dollar verdict will act like a magnet, attracting lawyers from all over the country to file 'nationwide' class actions in what they perceive to be a plaintiff-friendly forum in southern Illinois."
Hyman says the plaintiff lawyers will file their response with the Illinois Supreme Court within the next few weeks.