Lieff Cabraser Civil Justice Blog
State Farm Will Have to Face Campaign Funding Racketeering Claims

State Farm Will Have to Face Campaign Funding Racketeering Claims

In a victory for 4.7 million policyholders, a federal judge in Illinois has ruled that State Farm must face a class action lawsuit alleging the company entered into a secret scheme to seat a sympathetic judge to overturn a $1.05 billion judgment against the company for approving the use of lower-quality non-original equipment manufacturer (non-OEM) automotive parts for repairs to policyholder vehicles. The judge rejected State Farm’s argument that the suit over racketeering claims are an improper effort to relitigate claims already reviewed in the related state court case.

As reported by Law360, the policyholders “allege that State Farm schemed to defraud them of their $1.05 billion judgment from that state court case by seeking out Judge Karmeier, covertly funneling nearly $4 million into his campaign, and then lying about its support for the judge in written communications to the Illinois Supreme Court and the class’ counsel in 2005 and 2011.” Nine months after Karmeier won his seat on the Illinois Supreme Court, he voted to overturn a previous ruling that State Farm had failed to provide the vehicles of policyholders with “proper” replacement parts.

U.S. District Court Judge David Herndon rejected State Farm’s argument that the racketeering claims against it had already been litigated, as well as the insurer’s claims that cited case law restricts federal courts from reviewing decisions made by state courts in a decision seen as wholly favorable to the plaintiffs.

Learn more about the State Farm RICO Litigation.