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

More documents

Recommendations

Info

78. In fact, as a result of the jury’s verdict, State Farm stopped specifying non-OEM parts pending resolution of this appeal. As the Supreme Court held in BMW, such responsiveness militates against any conclusion that the defendant is a recalcitrant wrongdoer that will respond only to a large punitive award. 517 U.S. at 579 n.31; see also id. at 584-85. Gauged by any relevant yardstick, State Farm’s conduct lies at the bottom of the reprehensibility spectrum and is patently undeserving of a substantial punitive award, let alone the unprecedented $600 million exaction imposed by the circuit court. Third, the punitive award is not merely unnecessary and excessive, it is against public policy. Excessive punishments, such as this one, threaten to raise consumer prices, chill innovation, and deter businesses from engaging in socially advantageous conduct that risks litigation. See Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 18 (Tex. 1994) (observing that “civil punishment can result in overdeterrence and overcompensation”). 67/ This case is a textbook example: after the punitive damages award was entered, other major insurers stopped specifying non-OEM parts. Car makers are back on the road to a new monopoly in replacement parts. The resulting increase in repair costs and premiums will hurt not just State Farm policyholders, but all consumers. To make matters worse, the impact is likely to be felt most severely by lower income consumers, who can ill afford 67/ See also Browning-Ferris Indus., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 282 (1989) (O’Connor, J., concurring in part and dissenting in part) (exemplary exactions that are greater than reasonably necessary for punishment or deterrence hurt society by discouraging socially desirable activity); Sunstein, Kahneman, & Schkade, Assessing Punitive Damages (with Notes on Cognition and Valuation in Law), 107 Yale L.J. 2071, 2077 & nn.22, 23 (1998) (observing that “a risk of extremely high awards is likely to produce excessive caution in risk-averse managers and companies”); Polinsky & Shavell, Punitive Damages: An Economic Analysis, 111 Harv. L. Rev. 869, 882-83 & n.29 (1998). -146-
either higher premiums or the increase in the cost of parts they purchase at retail. Fourth, the gargantuan award in this case would necessarily be paid out of increased premiums or a reduction in State Farm’s reserves, which means that State Farm would have $600 million less to cover policyholder claims in the event of a large disaster (such as a hurricane). Given that State Farm is a mutual company owned by its policyholders, the award is little more than a $600 million wealth transfer from all State Farm policyholders to those policyholders — and former policyholders — who are members of the class. Finally, comparison to other punitive awards in Illinois reveals the manifest excessiveness of this award. The $600 million award is 80 times the size of the next largest award ever upheld on appeal in Illinois in any type of case. See Pickering v. Owens-Corning Fiberglas Corp., 265 Ill.App.3d 806 (5th Dist. 1994) (upholding $7.5 million punitive award in personal injury case). Nothing about that decision (or any other) fairly apprised State Farm that its non-OEM parts policy could subject it to a multi-million dollar award, much less one in the high nine figures. Cf. BMW, 517 U.S. at 572 (due process requires fair notice of the severity of the punishment); Proctor v. Davis, 291 Ill.App.3d 265, 287 (1st Dist. 1997) (remitting excessive $35 million punitive award to $6.1 million). * * * * The $600 million award imposed here is truly unprecedented: It serves no deterrent purpose, is not tethered to any rational assessment of the reprehensibility of State Farm’s conduct, and would be paid by the very people — all State Farm policyholders nationwide — whom it is supposed to benefit. Both Illinois and federal law prohibit such irrational and excessive punitive exactions; the award must be vacated entirely or drastically reduced. -147-
Page 1 and 2:
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
Page 55 and 56:
members.” Slimack v. Country Life
Page 57 and 58:
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
Page 81 and 82:
(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
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 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 and 164: fact benefitted from access to non-
Page 165 and 166: deterrence and therefore must be va
Page 167: 517 U.S. at 576. This case is not i
show all

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

Create successful ePaper yourself

Delete template?

Save as template?