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

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or better than, OEM parts” and that this statement was deceptive. A. 11. The court did not — and could not — identify these “various” documents because none exist during the ICFA class period, which began on July 28, 1994. Although the record contains two State Farm newsletters describing non-OEM parts as being as good as or better than OEM parts, both pre-date the ICFA class period. One was sent in 1990, and the other in 1993. PX 390A, PX 425A. State Farm provided other, more recent materials to policyholders, but none contained similar statements. See, e.g., DX 320; DX 397A; DX 859A. By definition, the ICFA class members received their repair estimates on or after July 28, 1994. There is no proof that any, much less all, of these class members received or knew about newsletters published in 1990 and 1993. Moreover, the 1990 newsletter was not even sent to policyholders; it went to State Farm agents. R. 6891. Causation is thus doubly attenuated: policyholders never received the document, which in any event was sent four years before the class period started and seven years before it ended. No amount of deference to the circuit court can gloss over such disregard for the basic principles of causation embedded in ICFA. Zekman, 182 Ill.2d at 374-76. Finally, the circuit court concluded that State Farm violated ICFA by offering policyholders a satisfaction Guarantee under which State Farm will repair or replace a non- OEM part it specified, free of charge, if the customer is dissatisfied with it. See, e.g., R. 8464-68; DX 859A. The circuit court concluded that offering this Guarantee was deceptive because it “improperly and unfairly placed the burden of securing a quality repair on the policyholder, not State Farm.” A. 11. This basis for liability is also utterly untenable. At least two states whose residents would no doubt account for a significant -130-
percentage of the class (New York and California) require State Farm to warrant the non- OEM parts that it specifies. See Cal. Code Regs. tit. 10, § 2695.8(g)(3); N.Y. Comp. Codes R. & Regs. tit. 11, § 216.7(b)(5)(vii). State Farm cannot commit fraud by doing what is mandated by controlling state law; to hold otherwise is a flagrant violation of due process. See BMW, 517 U.S. at 573 & n.19; Bordenkircher v. Hayes, 434 U.S. 357, 363 (1978). In addition, the court’s apparent conclusion that consumers would be better off without the Guarantee turns consumer protection law on its head. Warranties benefit consumers by creating incentives for providers of goods and services to prevent problems before they occur (so as to avoid the added expense of paying to replace warranted items), and by obligating providers to correct problems after they occur. No rational insurer would conclude that, because it warranted parts, it had no burden to monitor quality. To the contrary, legislatures frequently mandate warranties to protect consumers from companies that might not otherwise have an economic incentive to accommodate consumer interests. The circuit court’s finding that State Farm’s Guarantee shifted a “burden” to policyholders therefore makes no sense. Regardless of whether the Guarantee could provide a defense to a fraud claim, there is no way that the mere fact of offering a Guarantee could itself be the basis for a finding of fraud. The court’s inexplicable contrary conclusion is wrong as a matter of law. 4. The Circuit Court’s Finding Of Classwide Fraud Ignores The Numerous State Laws That Authorize Specification Of Non- OEM Parts And Improperly Punishes State Farm For Conduct That Is Legal In Every State. Most states have held hearings about non-OEM parts and have considered the same generalized testimony about their alleged defects that the circuit court heard. No state has -131-
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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
Page 9 and 10:
Hansberry v. Lee, 311 U.S. 32 (1940
Page 11 and 12:
1. Plaintiffs’ Body Shop Witnesse
Page 13 and 14:
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
Page 25 and 26:
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 (
Page 49 and 50:
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
Page 59 and 60:
that are incongruous with the effic
Page 61 and 62:
fenders to its pre-loss condition.
Page 63 and 64:
a result of Allstate’s specificat
Page 65 and 66:
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
Page 77 and 78:
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
Page 85 and 86:
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
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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 and 140: This Court should follow the weight
Page 141 and 142: other states, Illinois cannot apply
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: plaintiffs’ failure to identify 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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No. 5-99-0830 IN THE APPELLATE COURT OF ... - Appellate.net

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