Lawsuit Settlement Leads State Farm to Pay $250 Million

The Hale v. State Farm mutual automobile insurance company (State Farm) lawsuit has come to an end. Last month the auto insurance company agreed to pay $250 million to settle the Illinois lawsuit. According to court documents, both parties agreed to the settlement because both sides believe it is in their best interest. In addition, the settlement will avoid continuing the litigation.

The lawsuit is separated into two amended class action complaints. In the first complaint, State Farm was accused of violating the racketeer influenced and corrupt organizations act (RICO). The second complaint, Hale added a claim for unjust enrichment.

“From 2003 to the present, State Farm …created and conducted the RICO enterprise … to enable State Farm to evade payment of a $1.05 billion judgement affirmed in favor of approximately 4.7 million State Farm policyholders by the Illinois Appellate court,” reads a court document referring to the second complaint.

Some of the controversy in the Hale v. State Farm case comes from plaintiff Hale’s allegations that the auto insurance company improperly influenced the Illinois Supreme Court’s decision to reverse the ruling in the Avery v. State Farm case, and would therefore have violated federal laws. The earlier case, Avery v. State Farm, dealt with aftermarket vehicle repair crash parts used in the 1980s and 90s, which resulted in the jury finding the company responsible. 

The court has deemed those who are included in the settlement as follows: “The Class includes: All persons in the United States, except those residing in Arkansas and Tennessee, who, in between July 28, 1987, and February 24, 1998, (1) were insured by a vehicle casualty insurance policy issued by defendant State Farm and (2) made a claim for vehicle repairs pursuant to their policy and had non-factory authorized and/or non-OEM (Original Equipment Manufacturer) “crash parts” installed on or specified for their vehicles or else received monetary compensation determined in relation to the cost of such parts,” reads an excerpt from court documents.

Some of the crash parts included:

  • Fenders;
  • Doors;
  • Grilles;
  • Head lamp mounting panels/brackets/housings/lenses;
  • Tail lamp mounting panels/brackets/housings/lenses;
  • Cutter body mouldings;
  • Door body side moulding;
  • Front wheel opening mouldings; and
  • Side mouldings.

The court has scheduled a Fairness Hearing on December 13, 2018 at 9 a.m., at the United States District Court Southern District of Illinois. During the hearing the court will deliberate on whether or not the agreed upon settlement is fair, reasonable and adequate as well as answer any objections.

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