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

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interest because “the representatives herein and Class members share common objectives and legal and factual positions.” A. 33. That conclusory ruling, however, ignored the clear conflict of interest between class members who are currently insured by State Farm and those who are not. State Farm is a mutual insurance company, which means that its policyholders are its owners. Because of that fact, any payment of damages directly impacts its current insureds through either higher premiums, decreased dividends, or decreased reserves for the payment of claims. Moreover, current insureds have a strong interest in ensuring that State Farm continues to follow practices that are designed to hold costs down — like the specification of non-OEM parts. As a consequence of these undeniable economic facts, current insureds and former insureds have diametrically opposed interests in this litigation. Former insureds have every incentive to seek the maximum amount of damages, including punitive damages, no matter what such an award might do to State Farm’s premiums and claims practices on an ongoing basis. By contrast, current insureds have an interest in making sure that State Farm is required to pay only the amount necessary to cure any defects and that it is not discouraged from continuing to specify non-OEM parts in order to control costs. The only proper remedy for the conflict of interest apparent in this case is to reverse the judgment and decertify the class. That is what the Fourth Circuit ordered in Meineke. Like the former insureds here, former franchisees in Meineke had a “backward-looking interest” in “maximizing any damages Meineke would have to pay,” while current franchisees, like the current insureds, had a “forward-looking interest” in ensuring -70-
Meineke’s continued financial viability. 155 F.3d at 338. The court concluded that this conflict of interest precluded the certification of the class and reversed the judgment. Id. at 338-39; see also E & V Slack, Inc. v. Shell Oil Co., 969 S.W.2d 565, 568 (Tex. App. 1<strong>99</strong>8) (certification improper in class of current and former franchisees). The virtually identical conflict of interest exists here between current and former insureds, and, for the same reason, this judgment must be reversed and the class decertified. E. The Circuit Court’s Failure To Provide The Class With Proper <strong>No</strong>tice Also Requires Reversal Of The Judgment. The circuit court’s refusal to give individual notice to the 1.8 million class members whose names and addresses could be identified from State Farm’s records also requires reversal of the judgment in favor of the class. As a matter of Illinois law and federal due process, absent class members were entitled to the best notice practicable. That is particularly true in light of the conflict between class members described above. See Frank v. Teachers Ins. & Annuity Ass’n, 71 Ill.2d 583, 596 (1978) (individual notice required where names and addresses are available and where potential conflict of interest among class members exists); Client Follow-Up Co. v. Hynes, 105 Ill.App.3d 619, 626 (1st Dist. 1982) (same); see also Miner, 87 Ill.2d at 15 (individual notice required where names and addresses are available); Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173 (1974). That the publication-only notice given in this case was insufficient is apparent from the fact that only fifteen of the almost 5 million class members opted out. Compare Shutts, 472 U.S. at 813 (that 3,400 out of 28,000 putative class members opted out demonstrated that the individual notice given was effective). Even if all of the other formidable obstacles to class certification outlined above could somehow be overcome, the inadequacy of the -71-
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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
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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
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
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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
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: Litig., 182 F.R.D. at 225. Basic fa
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
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state’s law when it is not within
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headquartered in Michigan); Endo, 1
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for this Court to alter that author
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y using parts of like kind and qual
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plaintiffs’ failure to identify a
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percentage of the class (New York a
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committing fraud: if all non-OEM pa
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specification damages they had soug
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A. It Is Unconstitutional To Punish
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that will subject him to punishment
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fact benefitted from access to non-
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deterrence and therefore must be va
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517 U.S. at 576. This case is not i
Page 169 and 170:
either higher premiums or the incre
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