State Farm agreed to pay $250 million on the brink of a trial to customers who claimed the company tried to rig the Illinois justice system to wipe out a $1 billion jury verdict from 19 years ago.
The customers were seeking as much as $8.5 billion in damages in a civil racketeering trial that was set to start Tuesday in federal court in East St. Louis, Illinois. A judge granted preliminary approval to the accord and set a final fairness hearing for December.
The biggest U.S. auto insurer was accused in the case of leading an effort to recruit a judge friendly to its cause for the Illinois Supreme Court, secretly funding Judge LLoyd Karmeier’s 2004 election campaign by funneling money through advocacy groups that didn’t disclose donors. Under the federal Racketeer Influenced and Corrupt Organizations Act, any damages would have been tripled.
The company denied any wrongdoing in settling the claim. The settlement “is made simply to bring an end to the entire litigation,” and “to avoid protracted litigation and appeals that could continue for several more years,” said company spokesman Jim Camoriano.
State Farm “has consistently denied participating in a RICO scheme and to this day denies any role in electing Judge Karmeier,” Bob Clifford, attorney for the plaintiffs, said in an interview Tuesday. “Now they agree to pay a quarter of a billion dollars, and I think that speaks for itself.”
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