No. 5-99-0830 IN THE APPELLATE COURT OF ... - Appellate.net

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sovereignty embodied in the Constitution as a whole, the Supreme Court has repeatedly rejected states’ attempts to “control conduct beyond the boundaries of the State” and regulate “commercial activity occurring wholly outside” their borders. Healy v. Beer Inst., 491 U.S. 324, 336-37 (1989); Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 582-83 (1986) (rejecting New York’s attempt to “project its legislation” into other states). The Supreme Court’s most recent case on the subject — BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) — is controlling here. In BMW, the defendant automobile distributor had a policy of not disclosing post-manufacturing repairs it had made to vehicles if the cost of the repairs was less than 3% of the vehicle’s suggested retail price. Id. at 563- 64. The 3% threshold comported with the statutes and regulations of every state that had affirmatively addressed the subject. Id. at 565. The plaintiff, an Alabama consumer, brought suit under Alabama’s general fraud law, and urged the jury to punish BMW $4,000 for each of the roughly 1,000 vehicles it had sold nationwide without disclosure of repairs. The jury agreed, returning a punitive award of $4 million. Id. at 564-65. In reviewing the punitive award, the Supreme Court held that an Alabama jury could not punish the defendant under Alabama law for transactions that occurred outside of Alabama. The Court explained: [B]y attempting to alter BMW’s nationwide policy, Alabama would be infringing on the policy choices of other States. . . . Alabama may insist that BMW adhere to a particular disclosure policy in that State. Alabama does not have the power, however, to punish BMW for conduct that was lawful where it occurred and that had no impact on Alabama or its residents. Id. at 572-73 (emphasis added). BMW is dispositive here. Just as Alabama was not entitled to apply its fraud law nationwide to punish BMW for transactions that occurred entirely in -118-
other states, Illinois cannot apply its consumer fraud statute to regulate State Farm’s specification of non-OEM parts in 47 other states and the District of Columbia. Indeed, the prohibition against extraterritorial regulation applies with even greater force in the context of insurance transactions, because in enacting the McCarran-Ferguson Act Congress expressly left insurance regulation to the discretion of each of the “several States.” 15 U.S.C. §§ 1011, 1012. As the Supreme Court has observed, “[i]t is clear [from the legislative history of the Act] that Congress viewed state regulation of insurance solely in terms of regulation by the law of the State where occurred the activity sought to be regulated. There was no indication of any thought that a State could regulate activities carried on beyond its own borders.” FTC v. Travelers Health Ass’n, 362 U.S. 293, 300 (1960) (emphasis added). In fact, even before enactment of the McCarran-Ferguson Act, the Supreme Court had repeatedly held that states may not apply their own insurance statutes to insurance policies that were entered into in other states. See, e.g., Aetna Life Ins. Co. v. Dunken, 266 U.S. 389, 399 (1924) (Texas statute cannot govern Tennessee insurance policy); New York Life Ins. Co. v. Head, 234 U.S. 149, 161 (1914) (Missouri statute cannot govern New York insurance policy). Cf. Robertson v. California, 328 U.S. 440, 459-61 (1946) (holding that California has strong interest in regulating local activities of foreign insurer, and rejecting extraterritoriality challenge because California had not tried to regulate the insurer’s conduct outside California). Notwithstanding this settled law, plaintiffs convinced the circuit court to assure “uniformity of treatment” for a “classwide practice” by applying ICFA to all class members’ claims. C. 17051. But, as the Supreme Court made clear in BMW, no state has the power -119-
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No. 5-99-0830 IN THE APPELLATE COUR
Page 3 and 4:
Charles Hester Enters. v. Illinois
Page 5 and 6:
In re Fibreboard Corp., 893 F.2d 70
Page 7 and 8:
State v. Piedmont Funding Corp., 38
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Hansberry v. Lee, 311 U.S. 32 (1940
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1. Plaintiffs’ Body Shop Witnesse
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People v. Clayton, 302 Ill.App.3d 2
Page 15 and 16:
VPHI, Inc. v. National Educ. Traini
Page 17 and 18:
Okada v. MGIC Indem. Corp., 823 F.2
Page 19 and 20:
Zekman v. Direct Am. Marketers, Inc
Page 21 and 22:
Malooley v. Alice, 251 Ill.App.3d 5
Page 23 and 24:
NATURE OF THE CASE This is an appea
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STATUTES INVOLVED Relevant portions
Page 27 and 28:
to its “pre-loss condition.” DX
Page 29 and 30:
OEM parts. 5/ At least two states
Page 31 and 32:
paid the difference in cost out of
Page 33 and 34:
epair estimate specified only OEM p
Page 35 and 36:
potential class members whose names
Page 37 and 38:
member’s vehicle other than those
Page 39 and 40:
William Anderton, who had previousl
Page 41 and 42:
categorically inferior and, in fact
Page 43 and 44:
specified on their repair estimates
Page 45 and 46:
Second, plaintiffs sought “instal
Page 47 and 48:
parts] are inferior.” R. 12539 (
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had an adequate remedy at law if St
Page 51 and 52:
loss condition. Instead of requirin
Page 53 and 54:
ARGUMENT I. Class Certification Vio
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members.” Slimack v. Country Life
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of evidence State Farm would be ent
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that are incongruous with the effic
Page 61 and 62:
fenders to its pre-loss condition.
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a result of Allstate’s specificat
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insurance regulators and consumer a
Page 67 and 68:
have been the overwhelming predomin
Page 69 and 70:
some class members and the issue of
Page 71 and 72:
not sooner, that plaintiffs could n
Page 73 and 74:
explained above, class members who
Page 75 and 76:
Even if the court had been right in
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value” of “parts at the time of
Page 79 and 80:
page 7, supra. All of these statute
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(7th Cir. 1995) (decertifying class
Page 83 and 84:
As the circuit court itself recogni
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the same shortcut, arguing — just
Page 87 and 88:
epresentatives who appeared at tria
Page 89 and 90: — was injured by the alleged dece
Page 91 and 92: Litig., 182 F.R.D. at 225. Basic fa
Page 93 and 94: Meineke’s continued financial via
Page 95 and 96: this decision, plaintiffs were excu
Page 97 and 98: corresponding OEM part. R. 7169. In
Page 99 and 100: Mathur’s testimony was particular
Page 101 and 102: end of the day, Mathur conceded tha
Page 103 and 104: Zimny, 256 Ill.App.3d 386, 390-91 (
Page 105 and 106: the jury was focused on the wrong i
Page 107 and 108: to its pre-loss condition.” R. 12
Page 109 and 110: quality of non-OEM parts. See Baltu
Page 111 and 112: which is not surprising because the
Page 113 and 114: In this case, plaintiffs’ experts
Page 115 and 116: Bender could not swear that the non
Page 117 and 118: OEM part construction “had some d
Page 119 and 120: theory, even non-OEM parts that are
Page 121 and 122: of his training or expertise”). P
Page 123 and 124: eflected a policy of “discriminat
Page 125 and 126: “speak up for justice.” R. 1301
Page 127 and 128: 12984-85. The perversion of ostensi
Page 129 and 130: Polywheels company makes both the O
Page 131 and 132: parts — was simply a made-for-lit
Page 133 and 134: In contrast, each of the 47 other s
Page 135 and 136: occurred outside Illinois. 51/ In t
Page 137 and 138: laws of the State where the policy
Page 139: This Court should follow the weight
Page 143 and 144: state’s law when it is not within
Page 145 and 146: headquartered in Michigan); Endo, 1
Page 147 and 148: for this Court to alter that author
Page 149 and 150: y using parts of like kind and qual
Page 151 and 152: plaintiffs’ failure to identify a
Page 153 and 154: percentage of the class (New York a
Page 155 and 156: committing fraud: if all non-OEM pa
Page 157 and 158: specification damages they had soug
Page 159 and 160: A. It Is Unconstitutional To Punish
Page 161 and 162: that will subject him to punishment
Page 163 and 164: fact benefitted from access to non-
Page 165 and 166: deterrence and therefore must be va
Page 167 and 168: 517 U.S. at 576. This case is not i
Page 169 and 170: either higher premiums or the incre
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