July 8, 2007

The outrageous $1.2 billion Avery v. State Farm class action verdict, it will be recalled, penalized the insurer for its supposed fraud in using generic rather than original-manufacturer parts in fixing crash damage to cars, even though such a practice was widely endorsed by consumer advocates and state insurance commissions. The Illinois Supreme Court eventually reversed the verdict, but, as readers of this website know, that has hardly put an end to the litigation: lawyers could continue trying their luck against other carriers since the practice has been so common across the auto insurance field. In the latest of these, a Missouri state judge last month threw out (Associated Press; K.C. Star reprinted at U.S. Chamber) a jury's award of $17 million in a class action filed in that state against American Family Insurance. Trial lawyers continue to roll the dice elsewhere.

Incidentally, this article reports on a curious addendum to the Avery verdict: small businesses that distribute aftermarket parts were said to be "devastated" by insurers' reluctance to go on using them because of the courtroom hazards, and one of them in Fresno, Calif. reportedly tried to involve itself in the Avery litigation.