Judgement reversal awards State Farm $1 billion

Regarding the case, Michael Avery et al vs. State Farm Mutual Automobile Insurance Co., the Illinois Supreme Course recently ruled that the lower court made an error upon granting a group of State Farm policyholder’s class action status.
Representing over 40 states seeking relief under Illinois consumer fraud claim, the policyholders alleged that the insurer used inferior replacement parts to repair damaged autos.
State Farm responded saying that the generic parts were not poor quality nor unsafe, and that using them saved policyholders hundreds of millions of dollars.
The 1998 suit initiated the case against State Farm, which involved a total of about 4.7 million claims from policyholders.
The main challenge against State Farm was the insurers repaired crash damaged autos using "aftermarket" parts instead of original manufacturer’s parts. Policyholders cried consumer fraud and breach of contract, to which a lower court certified the class in a suit that lead to a $1.18 billion judgment against State Farm. That award was later reduced to slightly more than $1 billion.
In response to State Farm’s appeal, the state’s high court ruled Thursday the class should not have been certified. The insurance policies involved were different based on the state the individual policyholder resided in, which means the class members were different and could thus court ruled that they did not constitute a class. Additionally, the court held that the Illinois Consumer Fraud Act did not apply to plaintiffs whose vehicles were “not assessed and repaired in Illinois.”
The National Chamber Litigation Center Inc. in Washington identifies this suit as a prime example of class action abuse in part because policyholders had applied to Illinois consumer fraud law beyond the state borders.