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February 17, 2005
Avery Revisited
As always, the RiskProf brings to the fore an important point about Avery: It's a mutual fund insurer, so the $600 Million award of punitive damages to insureds simply comes out of their own pockets. The Avery court, however, appears to have made a distinction between management and employees as opposed to insured/shareholders. Not that such a distinction would affect who ultimately pays the judgment, but there clearly seems to be a distinction in the court's mind between these two groups on the propriety of the company's behavior. Interestingly, the court's distinction is echoed by State Farm's own behavior when it treated employees and special friends of SF executives better than it treated its insured/owners.
If anyone wants to delve into the specifics of the case, you can read actual discovery documents produced on the Princeton Auto Body website. Some of my favorites:
The December 5, 1990 SF memo on the aftermarket parts guarantee;
July 2, 1992 letter from SCRS to Ford on lack of quality in replacement parts;
the February 3, 1993 letter to CAPA from the Automotive Body Parts Association;
the September 11, 1990 Detroit Testing Labs "It Ain't Working" memo;
the June 25, 1997 letter from ASA to CAPA on bodyshops tired of being the guinea pigs; and
Discovery can be so entertaining.
Posted by E L Eversman at February 17, 2005 08:07 AM
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» Avery v. State Farm discussed from PointOfLaw Forum
The much-criticized 1999 verdict in a consumer class action over the insurer's use of generic aftermarket parts, in which an Illinois state court returned a $1.2 billion verdict (later reduced to $1 billion and now on appeal to the Illinois... [Read More]
Tracked on February 21, 2005 03:11 PM