Thursday, August 22nd, 2013
Money can’t buy you love. At least that’s what a famous song tells us. However, citizens of Illinois are claiming that money can buy a seat on the Illinois Supreme Court, and along with that seat comes justice…or injustice. An Illinois Supreme Court Justice may soon be required to answer questions under oath about allegations that he voted to overturn a $1 billion verdict against a powerful corporation that secretly spent millions of dollars to help him get elected. A lawsuit now pending in an Illinois federal court alleges that State Farm, the insurance giant, essentially funded and ran a multimillion-dollar campaign to elect Justice Lloyd A. Karmeier to the state supreme court in 2004. This case is being followed by legal experts who are concerned that judges (trial level and appeals court judges) can be hand-picked by giant corporations or political action committees that have a particular agenda. The information is this column is derived from the allegations set forth in the lawsuit, as well as a recent report issued by the Center for American Progress, authored by Billy Corriher and Brent DeBeaumont.
On August 5, 2013, the plaintiffs in the federal lawsuit (Hale v. State Farm) informed the judge hearing the case that their intention is to ask Justice Karmeier to answer questions, at a deposition, regarding the allegations. The plaintiffs contend that State Farm violated the Racketeer Influenced and Corrupt Organizations Act, better known as RICO, by using the U.S. Chamber of Commerce, the Illinois Republican Party, and other entities as conduits to hide its role in funding and operating the justice’s campaign. RICO allows plaintiffs to sue persons or businesses involved in a conspiracy to engage in improper activities such as bribery, fraud, or violent crimes. In May 2013, the federal court judge denied State Farm’s motion to dismiss the lawsuit and ruled that the plaintiffs can continue with depositions. The trial could disclose details about the extent of State Farm’s involvement in Justice Karmeier’s 2004 campaign.
Hale v. State Farm is a lawsuit that arises out of an insurance scam (by the insurance company, not someone trying to deceive an insurer into paying money). In 1997, more than 4 million policyholders filed a class-action lawsuit in an Illinois state court against State Farm. The 1997 lawsuit—Avery v. State Farm—concerned a clause in State Farm’s automobile insurance contract that stated the company would pay for replacement parts of “like kind and quality” to restore a vehicle to its pre-loss condition after an accident. State Farm was accused of breaching this promise by installing inferior replacement parts. A jury in Williamson County, Illinois, agreed with the plaintiffs in Avery v. State Farm and awarded the 4 million policy holders approximately $300.00 each for their losses. Given the large number of policy holders that State Farm had ripped off, the total verdict ($1.18 billion) sounded high, and it received a fair amount of media coverage. Most of the award ($1.05 billion) was affirmed on appeal by the Illinois Court of Appeals.
State Farm then appealed to the Illinois Supreme Court. That court heard oral arguments in the case in 2003, but it left the verdict pending for more than two years. (Justice delayed is justice denied). In the meantime, a seat on the Illinois Supreme Court opened up. The two candidates were then-Judge Karmeier, a Republican trial court judge from Washington County, and Judge Gordon Maag, a Court of Appeals judge. The 2004 Illinois Supreme Court race turned out to be the most expensive campaign for a judicial position in the history of the United States. More than $9 million was spent by (or on behalf of) the two candidates. Judge Karmeier’s campaign received more than $4.8 million in campaign contributions, and Judge Maag received almost $4.6 million. A 2008 Chicago Tribune article reported that Justice Karmeier won “with the heavy financial assistance of business and insurance interests hoping to obtain a reversal of” the $1 billion-plus verdict against State Farm.
On Election Day 2004, Justice Karmeier defeated Judge Maag, and soon thereafter, he joined the Illinois Supreme Court. Following Justice Karmeier’s victory, the plaintiffs in the Avery v. State Farm case asked the Illinois Supreme Court to bar his participation in the case’s final decision, citing State Farm’s financial contributions to Justice Karmeier’s campaign. The plaintiffs were aware that State Farm and its employees had made direct contributions amounting to $350,000 to Justice Karmeier’s campaign and that more than $1 million had come from groups that included State Farm as a member or to which the insurance company was a financial contributor. The Illinois Supreme Court issued an order stating that Justice Karmeier’s recusal decision was one that he alone should make. The state’s code of judicial conduct instructs Illinois judges to recuse themselves from any “proceeding in which the judge’s impartiality might reasonably be questioned.” The Code does not mention campaign contributions as a source of questions about a judge’s impartiality. Justice Karmeier refused to recuse himself from the decision in Avery v. State Farm, and nine months after taking office, he voted to reverse the judgment against the insurer. His was the deciding vote on a portion of the ruling.
The plaintiffs in the new case hired retired FBI Special Agent Daniel Reece to investigate the source of Justice Karmeier’s campaign funding. The plaintiffs contend that as much as $4 million given to Justice Karmeier’s campaign came from State Farm or entities strongly influenced by State Farm executives. According to the plaintiffs, the evidence supports the assertion that State Farm deliberately concealed the extent of its financial support for Justice Karmeier’s 2004 campaign by funneling money through a trade association, a political action committee, and a political party—all with the goal of reversing the $1 billion verdict against the company.
In 2004 State Farm gave the pro-business lobbying organization, the U.S. Chamber of Commerce, $1 million. The chamber then contributed $2.05 million to the Illinois Republican Party. Justice Karmeier’s campaign and the Illinois Republican Party received the majority of the chamber’s judicial-campaign contributions in 2004 - 73 percent of all contributions given to judicial campaigns on behalf of the U.S. Chamber of Commerce that year. The Illinois Republican Party gave a series of contributions totaling $1.9 million to Justice Karmeier’s campaign. Of particular significance, according to the plaintiffs, on the same day that the Chamber of Commerce gave the state Republican Party $950,000, the party donated $911,282 to Justice Karmeier’s campaign.
State Farm’s $1 million donation to the U.S. Chamber of Commerce was public information in 2004. However, the role of State Farm’s CEO, Edward B. Rust Jr., in directing chamber funds to Justice Karmeier’s campaign has only recently come to light. The plaintiffs have found evidence that Rust was part of the chamber’s task force that selected judicial races to target in 2004. As a result, the plaintiffs now contend that the $2.05 million given by the U.S. Chamber of Commerce to the Illinois Republican Party was specifically designated by Rust for use in the 2004 Illinois Supreme Court race. The plaintiffs say that under Rust’s guidance, almost 95 percent of the money given by the U.S. Chamber of Commerce to the Illinois Republican Party was eventually used in support of Justice Karmeier’s election efforts. Investigator Reece also claims that he has uncovered evidence that prior to the 2004 election, and while Avery v. State Farm was pending in the Illinois Supreme Court, the Illinois Civil Justice League, a pro-business, anti-consumer organization, spent $718,965 to help Justice Karmeier’s campaign. The head of the organization in 2004 was Ed Murnane. Reece’s investigation concluded that Mr. Murnane was chosen by State Farm lawyer and lobbyist William Shepherd to head the Illinois Civil Justice League in 1993.
With their additional evidence of State Farm’s financial influence on Justice Karmeier’s campaign—adding up to more than $4 million, substantially more than the $350,000 that State Farm’s attorneys originally acknowledged—the plaintiffs brought the current lawsuit in federal court. The remedy the plaintiffs seek is a new review of the appeal, this time by a supreme court that is impartial. Regardless of whether the plaintiffs prevail, the larger lesson is clear: If the allegations are true, and State Farm truly did secretly funnel $4 million into the winning campaign, ultimately allowing it to avoid paying a billion dollar verdict, the justice system is not quite as just as we may think.
Posted By David Lefkowitz on: 22-Aug-13 at 4:34 pm  |  Send comment to David Lefkowitz