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Plaintiffs in RICO suit over Avery v. State Farm claim defendants ‘jumped the gun’

By Bethany Krajelis | Jul 26, 2013

The plaintiffs in a lawsuit alleging fraudulent activity in Avery v. State Farm claim the defendants “jumped the gun” when they filed an opposition earlier this month to a motion seeking class certification.

In a motion filed Monday, the plaintiffs –Mark Shale, Todd Shadle and Carly Vickey Morse – asked a federal judge to strike the defendants’ opposition to their June request for class certification or in the alternative, to postpone the motion pending discovery and further briefing.

The plaintiffs, all of whom were plaintiffs in the 1997 class action suit Avery v. State Farm, sued State Farm, William Shepherd, an attorney at the insurance company, and Ed Murnane, president of the Illinois Civil Justice League (ICJL) in May in southern Illinois’ federal court.

Their suit accuses the trio of defendants of violating the Racketeer Influenced and Corruption Organizations (RICO) Act by creating an enterprise “to enable State Farm to evade payment of a $1.05 billion judgment affirmed in favor of approximately 4.7 million State Farm policyholders” in Avery.

It claims this was implemented in two phases, the first of which was getting a justice elected to the Supreme Court who would vote to overturn the judgment and the second came when State Farm filed alleged misrepresentations to the high court.

In June, the plaintiffs filed a motion for class certification, asserting that their suit “satisfies the numerosity, commonality, typicality, adequacy, predominance and superiority requirements of Rule 23 of the Federal Rules of Civil Procedure.”

They also contend members of the proposed class “share a community of interest in common questions of law and fact” The proposed class would include all members of the certified class in Avery v. State Farm.

The class in Avery included about 4.7 million State Farm policyholders who made a claim for vehicle repairs and had non-Original Equipment Manufacturer (OEM) parts installed or received monetary compensation in relation to the cost of such parts.

The defendants earlier this month filed a memorandum of law in opposition to the motion seeking class certification, saying that the plaintiffs’ claims would require re-litigation of the underlying issues in an already resolved case.

They further argue that the plaintiffs’ RICO theory would not only “require re-litigation” of the issues in Avery v. State Farm,  but “would necessitate individual evidence for each class member that a non-OEM [Original Equipment Manufacturer] part was installed on his or her car and that the use of that part resulted in injury in damages.”

“Plaintiffs’ RICO theories do not change the fact that the same transactions at issue in Avery are at issue here,” the defendants assert in their memo. “Accordingly, State Farm respectfully requests as a preliminary matter that the Court reexamine the threshold issue of subject matter jurisdiction under” the Rooker-Feldman doctrine.

They claim that this doctrine – which basically says that federal courts don’t have jurisdiction to review state court decisions or claims intertwined with previous state court rulings – prevents the federal court from reviewing Justice Lloyd Karmeier’s participation in Avery or the court’s rulings in the case.

The defendants further argue that even if the Rooker-Feldman doctrine doesn’t apply, the plaintiffs’ claims are barred by collateral estoppel and res judicata.

In their recently-filed motion, the plaintiffs claim the defendants “seem to have misunderstood the purpose” of their motion.

They contend they submitted the motion for class certification “as a simple placeholder, consistent with local practice, to ensure that Defendants would not be able to buy off individual named plaintiffs with full settlement offers and thereby moot the entire case.”

They further argue that their attorneys informed the defendants of this purpose on more than one occasion and told them “that no opposition was warranted and that additional class certification would be necessary later in the litigation.”

“Defendants nevertheless filed a full-blown opposition to the placeholder motion,” the plaintiffs assert. “The Court should strike Defendants’ class certification opposition as premature.”

The plaintiffs add, “No discovery has occurred to date. This Court should have the benefit of a factual record in determining the propriety of class certification in this large and complex action.

The plaintiffs are represented by several attorneys including Mississippi attorney Don Barrett and Tennessee attorneys W. Gordon Ball and Charles Barrett, among others.

State Farm is represented by Edwardsville attorney Patrick D. Cloud and Chicago attorneys J. Timothy Eaton, Joseph A. Cancila, Jr. and James P. Gaughan.

Belleville attorneys Russell Scott and Laura Oberkfell represent Shepherd. Chicago attorneys Richard J. O’Brien, Scott M. Berliant and David Gavin Jorgensen represent Murnane.

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