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Consumers will pay and 'lawyer barons' will get pay day; Stakes are high in Karmeier retention, professor observes

By Ann Maher | Nov 3, 2014

EDWARDSVILLE, Ill. (Legal Newsline) - A law professor who studies the effects of lawyer contingency fees on the civil justice system said the real focus of the movement to oust Justice Lloyd Karmeier from the Illinois Supreme Court is to restore a $1.1 billion judgment against State Farm Insurance.

And if that happens, consumers will pay and the lawyers will get a pay day, according to Lester Brickman, professor at the Benjamin N. Cardozo School of Law of the Yeshiva University in New York.

The case against State Farm is currently playing out in federal court in the Southern District of Illinois as a revival to a 1999 Williamson County verdict - Avery v. State Farm - which would have netted plaintiffs' attorneys about $300 million in fees.

The case came back as a racketeering lawsuit against State Farm and others, Hale v. State Farm, and now seeks triple damages plus interest for an amount approaching $8 billion. In Hale, plaintiffs allege State Farm contributed millions to Karmeier's campaign in 2004 so that he would rule favorably when deciding Avery.

Lawyers pursuing the Hale v. State Farm case now stand to reap triple in contingency fees - more than $1 billion.

"If Avery is revived and the decision upheld, automobile insurance rates throughout the U.S. will increase and lawyers will reap a billion plus payday," Brickman said.

Avery plaintiffs claimed that State Farm provided inferior parts for crash repairs, rather than original equipment from manufacturers (OEM).

Calling the case against State Farm a "scam," Brickman explained that auto insurances rates across the country would rise by "hundreds of millions of dollars" to reflect the cost to insurers of having to provide OEM parts when paying for repairs due to accidents, "even though OEM parts are no better than non-OEM parts."

"Many states mandate the use of non-OEM parts to keep auto insurance rates down," Brickman said.  "Avery would overrule dozens of laws and regulations in many states dealing with the use of non-OEM parts."

The lawyers in Hale, as well as another high stakes, revived class action, Price v. Philip Morris, have launched a last minute $2 million attack on Karmeier, who needs 60 percent voter approval to be retained Nov. 4 to a second 10-year term.

If he is not retained, the Illinois Supreme Court would appoint an interim justice to serve until voters in the Fifth Judicial District - the state's 37 southern most counties - elect a successor in the 2016 general election.

The balance of the court currently is four Democrats to three Republicans, one of whom is Karmeier. The court's majority would put their stamp on a replacement, which "puts Democrat Party Chairman Mike Madigan of Chicago in the driver’s seat," according to Karmeier's campaign manager Ron Deedrick.

Those with a stake in Hale v. State Farm, as well as another judgment plaintiff lawyers are aggressively trying to get reinstated - $10.1 billion in Price v. Philip Morris - would favor a more sympathetic, Democratic justice on the bench. They had heavily supported Karmeier's opponent in 2004 - Democrat Gordon Maag.

Regarding the Hale racketeering case, Brickman said, "It is a scam being perpetrated against State Farm policyholders who will be the big losers if Karmeier is replaced with a (Gordon) Maag or someone of his persuasion."

Lawyers investing in Karmeier's ouster are the ones who stand to earn billions if Avery and Price are restored.

Here is a rundown of $2 million in contributions made to Campaign for 2016 - the group seeking to oust Karmeier:

Those in line to share $1.1 billion in fees in Hale v. State Farm:

Clifford Law Offices of Chicago, lead counsel, $250,000

- Don Barrett of Lexington, Miss., $50,000

Lawyers or firms in line to share $1.8 billion in fees in Price v. Philip Morris:

Partners of Stephen Tillery, George Zelcs and Christine Moody, have contributed the most. Tillery is lead counsel in Price v. Philip Morris.

- Zelcs of Chicago, $600,000

- Moody of St. Louis, $600,000

- Richardson Patrick Westbrook and Brickman of Charleston, S.C., $300,000

- Power Rogers and Smith of Chicago, $200,000

Case backgrounds

In the State Farm case, Mark Hale of New York state and Todd Shadle of Texas claim the insurer and two other defendants conspired to violate racketeering law.

Fifteen years ago, Hale and Shadle belonged to a class of policy holders who won a jury verdict at Williamson County courthouse in Marion.

Jurors found State Farm supplied inferior parts for millions of crash repairs.

Fifth District appellate judges – Maag being one of them – upheld the verdict in 2001, and State Farm appealed to the Supreme Court.

While the case remained under review, Karmeier defeated Maag.

In 2005, the Supreme Court reversed the judgment. Karmeier was among the justices who voted to overturn Avery.

Avery moved to vacate the Supreme Court decision in 2011, claiming he found new evidence of State Farm’s secret support for Karmeier.

The Supreme Court denied his motion.

His lawyers sued State Farm in federal court in 2012, on behalf of Hale and Shadle, claiming the insurer concealed and misrepresented facts at the Supreme Court in 2005 and 2011.

Hale and Shadle also sued State Farm employee William Shepherd and Illinois Civil Justice League director Ed Murnane.

In 2005, Karmeier also participated in a decision overturning Price v. Philip Morris, a case arising from Madison County. There, Judge Nicholas Byron awarded a class that claimed consumer fraud over the marketing of "light" cigarettes $10.1 billion and awarded Tillery $1.8 billion in fees.

After a decade of legal maneuvering, Tillery again found success at the Fifth District, where a panel reinstated the Price judgment this year. It found that Supreme Court Justices would have affirmed Byron if they had seen evidence that came to light later.

When Philip Morris petitioned the Supreme Court for review, Tillery moved for Karmeier to recuse himself or for the other Justices to disqualify him.

Karmeier denied the motion.

He offered his colleagues an opportunity to review his decision, although no rule provided for that, and none of them called for disqualification.

The Court has granted Philip Morris leave to appeal and will schedule oral argument.

'Lawyer Barons'

In his book, "Lawyer Barons: What Their Contingency Fees Really Cost America," Brickman says that "Contingency fees have empowered lawyers to shape our civil justice system in ways that further their financial interests to our detriment."

"While the public senses that lawyers manipulate the justice system to serve their own ends, few are aware of the high costs that come with contingency fees," he wrote.

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