State Farm wins appeal
CHICAGO (Bloomberg) ? The Illinois Supreme Court reversed a $1 billion verdict against State Farm Mutual Automobile Insurance Co. over use of generic parts for repairs, a decision that could have an impact on other cases before the court, including a $10.1 billion award against Altria Group Inc.?s Philip Morris USA.
Philip Morris is appealing the judgment, in a class-action suit that accused the company of deceiving customers into believing its ?light? cigarettes were safer than regular brands. The appeal is also pending before Illinois? highest court.
In the State Farm case, the court said the lawsuit, which claimed the insurer committed fraud and breach of contract, shouldn?t have been certified as a nationwide class action. The court said the claims of State Farm customers weren?t similar enough to be grouped together and sent the case back to the trial court.
?If similar principles are applied, it?s difficult to see how the judgment against Altria can be sustained,? said attorney Victor Schwartz, of Shook Hardy & Bacon in Washington. While Schwartz?s firm represents Altria in other litigation, he doesn?t represent State Farm or Altria.
?The court made it crystal clear that individual questions of fact are not to be mowed down by overly broad class action principles,? Schwartz said.
?On tobacco I think this tells us the court is not going to bend over backwards to help marginal or weak consumer class action claims,? said Anthony J. Sebok, a professor at Brooklyn Law School.
Lawyers for the State Farm customers said they hadn?t determined the next step yet.
?We?re still reviewing it,? said attorney Michael Hyman of Much Shelist Freed & Ament in Chicago. ?It?s a bleak day for insureds in Illinois and across the country. The court is putting down challenges that will have to be addressed by class actions in the future and that?s troubling.?