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

More documents

Recommendations

Info

ISSUES PRESENTED 1. Whether the circuit court abused its discretion and deprived State Farm of its due process right to a fair trial by certifying, and then refusing to decertify, a nationwide class challenging State Farm’s conduct with respect to millions of highly individualized repair transactions. 2. Whether State Farm is entitled, at the very least, to a new trial on plaintiffs’ breach of contract claim because of instructional, evidentiary, and other errors committed by the circuit court in a misguided effort to make the trial manageable as a class action. 3. Whether the judgment against State Farm under ICFA must be reversed because the circuit court erred as a matter of Illinois and federal constitutional law by applying ICFA to the claims of all class members nationwide and misapplied ICFA both in finding liability and in imposing $130 million of duplicative “disgorgement” damages. 4. Whether the $600 million punitive award must be vacated or, at a minimum, greatly reduced, because it constitutes unconstitutional extraterritorial punishment and because it was imposed in violation of Illinois law and of Illinois and federal principles of due process. STATEMENT OF JURISDICTION Jurisdiction in this Court is proper under Supreme Court Rules 303 and 304(a). The circuit court entered judgment on all counts on October 8, 1999, A. 1, 6, State Farm filed timely post-trial motions on November 8, 1999, C. 30717, and the court denied them on November 19, 1999, A. 50. The court entered a Rule 304(a) finding on December 9, 1999, A. 19, and State Farm filed a timely notice of appeal on December 17, 1999, A. 20. -2-
STATUTES INVOLVED Relevant portions of the Illinois Consumer Fraud Act, 815 ILCS 505/1 et seq., and class action statute, 735 ILCS 5/2-801 et seq., are set out at pages A. 145-55 of State Farm’s appendix. Statutes and regulations governing the specification of non-OEM parts in 42 states are set out at pages A. 156-267 of the appendix. STATEMENT OF FACTS 1. State Farm’s Practices with Respect to Non-OEM Replacement Parts. For many years, State Farm has sought to contain the cost of automobile insurance by managing repair expenses. Because State Farm is a mutual company, which has no shareholders or outside investors, the benefits of reduced repair costs belong entirely to its policyholder members and are passed on to them in the form of reduced premiums or increased dividends. See, e.g., R. 11039, 11041-42, 11474-76. A large component of automobile repair expenses is the cost of replacing damaged parts. Prior to the verdict in this case, State Farm reduced repair costs and hence premiums by choosing or “specifying” non-OEM parts on repair estimates when such parts met its selection criteria and were less expensive than competing OEM parts. R. 9287-89. “OEM” parts are replacement parts that are made by or for the “original equipment manufacturer” — such as Ford or General Motors. Non-OEM replacement parts are manufactured and sold by companies that are not affiliated with the car makers. The great majority of parts specified on State Farm repair estimates during the class period (from 1987-1998) were OEM parts. R. 706. During that period, however, State Farm saved more than $366 million by specifying non-OEM parts, rather than more expensive -3-
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: NATURE OF THE CASE This is an appea
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 and 168:
517 U.S. at 576. This case is not i
Page 169 and 170:
either higher premiums or the incre
show all

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

Create successful ePaper yourself

Delete template?

Save as template?