Court throws out $1 billion verdict in State Farm case

Thursday, August 18th 2005, 10:33 am

By: News On 6

SPRINGFIELD, Ill. (AP) _ The Illinois Supreme Court on Thursday reversed a $1 billion judgment against State Farm Insurance Co. in a class-action lawsuit alleging the company used substandard parts to repair damaged cars.

The court held that the lawsuit should never have been given class-action status. Differences in customers' insurance policies meant they did not share the same conditions necessary to sue as a group, justices found.

It was also a mistake for an Illinois trial court to grant national class-action status when there was only one named plaintiff from Illinois and he failed to prove he had suffered actual damages, the Supreme Court found.

In 1999, a Williamson County judge ordered Bloomington-based State Farm to pay nearly $1.2 billion for failing to provide top-quality parts when paying for auto repairs. At the time, it was the largest judgment in Illinois history.

The parts in question were modeled after the manufacturers' original equipment but made without factory specifications. The lawsuit contends they were inferior and failed to deliver the same level of quality, fit, and, in come cases, safety as factory-made parts.

The company estimated the case affected as many as 4.7 million State Farm policyholders around the nation.

The judgment against State Farm was later reduced to $1.05 billion.

Patricia Murphy, one of the lawyers representing State Farm's customers, called the ruling ``a loss for the consumer, no doubt.''

``It is a total pity for the consumer that somehow the court system would find that State Farm's cheating isn't uniform enough to be actionable,'' she said.

The State Farm case has been seen as an indicator of the approach the court may take to an even larger class-action case, a $10.1 billion ruling against Philip Morris USA. That lawsuit, which has been appealed to the high court, alleged that the company's marketing of light cigarettes improperly implied they were healthier than regular cigarettes.