State Farm Agrees to Pay $250 Million in “Dark Money” Lawsuit

If you are injured and forced to go to court, the justice you receive may often depend upon the judge presiding over the case.

State Farm has reportedly agreed to pay $250 million to settle a lawsuit that accused the company of breaking federal racketeering laws.

The Hale v. State Farm litigation arose from a previous class action lawsuit from 1999, Avery v. State Farm. Millions of State Farm customers alleged that the insurer instructed body shops to fix their vehicles with generic car parts of lower quality than the original equipment, thus violating the terms of their insurance policies. The jury awarded $456 million against State Farm for breach of contract and the judge added $730 million for fraud.

Shortly afterward, Illinois Supreme Court Justice Lloyd Karmeier was elected to the Illinois Supreme Court and threw out the award. The plaintiffs sued again, this time under the Racketeer Influenced and Corrupt Organization Act (RICO). With Hale v. State Farm, the plaintiffs are alleging that $4.2 of Karmeier’s $4.8 million in campaign funds came from State Farm. The claim states that State Farm violated RICO when it filed court briefs denying its financial support of Karmeier so that he wouldn’t be disqualified from re-hearing Avery v. State Farm.

A settlement was reached right before opening statements of the trial, however, State Farm denies any allegations of wrongdoing, specifically including a violation of RICO, and further states that it only settled to bring an end to the litigation.

Despite being nominated by political parties and conventions, judicial candidates are supposed to be “nonpartisan;” but seven-figure campaign contributions surely go a long way in determining how that judge would decide a case.

According to the Supreme Court’s ruling in Citizens United vs. Federal Election Commission, corporations can give indirectly in support of or against certain candidates. Through advertisements, volunteers, PAC contributions, and other means, corporations now seek to influence elections and, in my view, wrongfully lobby the judiciary. Often, the contributor must not even have to openly declare or display their involvement. As a result, the average citizen appearing before a particular judge may remain unaware of contribution-based biases of that judge. They may have no idea that rich and partisan special interests’ groups will have tipped the scales of justice in their opponent’s favor.

Corporations and lobbyists don’t spend $4.2 million on a whim; they expect something in return. They expect that these investments will pay off. This is a large component of what I have called “hidden tort reform.” If wealthy corporations can’t sway citizens and politicians through their dastardly issue-based rhetoric, instead, they believe that they can now “buy” the justice they want.

You might be wondering how this differs from bribery. Technically, bribery is illegal and campaign contributions are not, but the effects are the same. Such businesses that have adopted lying, cheating and stealing as their business plan. Unless and until this system is fixed, state judicial systems will continue to sell justice to the highest bidder.  Civil justice advocates have been taking this kind of stuff on the chin, for a long time. Seriously injured citizens are often left with no remedy as a result and, unfortunately, when it comes time to vote; the voting public, by and large, ignores these issues. This decision pushes back on these ‘bribery-like’ activities and people who are advocates of citizen justice finally have a decision to applaud. Finally, one court, for a change, had the guts to say, “enough is enough.” Congratulations to the Hale Court.