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

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specify non-OEM parts, see DX 1244 at 16; the estimate indicated that State Farm had done so; and the Guarantee provided a remedy for people who were dissatisfied with the non- OEM parts they received. Although some policyholders expressed skepticism before non- OEM parts were put on their cars, virtually none complained afterward to State Farm, to insurance regulators, or to consumer advocates. R. 8339, 9442-63. If all non-OEM parts were “inferior,” and if using them was outrageous and evil, more consumers undoubtedly would have complained. State Farm acted reasonably when it interpreted the lack of complaints as confirmation that its policy of saving money for policyholders by specifying non-OEM parts was satisfying consumers. R. 10158-59 (specifying non-OEM parts did not lower renewal rates). Under no stretch of the imagination did it act with “evil motive.” D. The Punitive Award Is Grossly Excessive And Must Be Vacated Entirely Or Drastically Reduced. The circuit court’s entire explanation for its decision to impose a $600 million punitive damages award on State Farm is as follows: A court, in determining the amount of a punitive damage award, should consider the nature and enormity of the wrong, the defendant’s financial status and the defendant’s potential liability in other cases. The court has considered these factors and determines that $600,000,000.00 in punitive damages is appropriate. A. 13 (citation omitted). The court went on to mention that State Farm could afford to pay the award, id., but did not explain why a lesser award would have been too low. Thus, a single sentence was all the court deemed necessary to justify the largest punitive damages award (by several orders of magnitude) ever levied in Illinois. Even if this Court were to conclude that punitive damages may lawfully be imposed in this case, the unprecedented $600 million award is grossly excessive in relation to Illinois’ interests in retribution and -142-
deterrence and therefore must be vacated entirely or, at minimum, drastically reduced. Punitive damages “are not intended to act as a windfall for the party to whom the punitive damages are awarded,” Malooley, 251 Ill.App.3d at 57-58; rather, they “are intended to punish and deter,” Black v. Iovino, 219 Ill.App.3d 378, 393 (1st Dist. 1<strong>99</strong>1). While deterrence and retribution are legitimate interests, courts will not uncritically uphold large punitive awards on the mere assertion that the amount awarded furthered those interests. Rather, Illinois courts will deem a punitive award excessive “when it is so large that it no longer serves those purposes.” Hazelwood v. Illinois C.G.R.R., 114 Ill.App.3d 703, 711 (4th Dist. 1983); see also TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 456 (1<strong>99</strong>3) (plurality opinion) (rejecting notion that “any award that would serve the legitimate state interest in deterring or punishing wrongful conduct, no matter how large, would be acceptable”). Similarly, an award greater than necessary to deter future misconduct violates the federal Due Process Clause. BMW, 517 U.S. at 584. Thus, courts must consider “whether less drastic remedies could be expected to achieve” the state’s legitimate goals. Id. The $600 million exaction here is far greater than necessary to serve Illinois’ interest in punishment and deterrence. First, the $585 million in total compensatory and disgorgement damages (which are themselves duplicative and therefore punitive) more than fully achieve whatever interest in punishment and deterrence Illinois could have, rendering a substantial punitive award unnecessary. As a number of courts around the country have recognized, compensatory damages have a significant deterrent effect. See Memphis Community Sch. Dist. v. Stachura, -143-
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No. 5-99-0830 IN THE APPELLATE COUR
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Charles Hester Enters. v. Illinois
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In re Fibreboard Corp., 893 F.2d 70
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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
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VPHI, Inc. v. National Educ. Traini
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Okada v. MGIC Indem. Corp., 823 F.2
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Zekman v. Direct Am. Marketers, Inc
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Malooley v. Alice, 251 Ill.App.3d 5
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NATURE OF THE CASE This is an appea
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STATUTES INVOLVED Relevant portions
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to its “pre-loss condition.” DX
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OEM parts. 5/ At least two states
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paid the difference in cost out of
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epair estimate specified only OEM p
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potential class members whose names
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member’s vehicle other than those
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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
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loss condition. Instead of requirin
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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
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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
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have been the overwhelming predomin
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some class members and the issue of
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not sooner, that plaintiffs could n
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explained above, class members who
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Even if the court had been right in
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value” of “parts at the time of
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page 7, supra. All of these statute
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(7th Cir. 1995) (decertifying class
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As the circuit court itself recogni
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the same shortcut, arguing — just
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epresentatives who appeared at tria
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— was injured by the alleged dece
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Litig., 182 F.R.D. at 225. Basic fa
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Meineke’s continued financial via
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this decision, plaintiffs were excu
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corresponding OEM part. R. 7169. In
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Mathur’s testimony was particular
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end of the day, Mathur conceded tha
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Zimny, 256 Ill.App.3d 386, 390-91 (
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the jury was focused on the wrong i
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to its pre-loss condition.” R. 12
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quality of non-OEM parts. See Baltu
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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 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: fact benefitted from access to non-
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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