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Hale v. State Farm Mutual Automobile Insurance Co.

United States District Court, S.D. Illinois

February 6, 2018

MARK HALE, TODD SHADLE, and LAURIE LOGER, on behalf of themselves and all others similarly situated, Plaintiffs,



         Introduction and Background

         Now before the Court is defendants' motion for summary judgment on grounds of Rooker-Feldman, res judicata, and collateral estoppel (Docs. 646 & 669).[1] Plaintiffs vigorously oppose the motion (Doc. 661 & 662).[2]Based on the applicable case law, the extensive record before the Court and the following, the Court denies the motion.

         Back in 2012, plaintiffs Mark Hale, Todd Shadle and Carly Vickers Morse, on behalf of themselves and all others similarly situated, filed a two- count Racketeer Influenced and Corrupt Organizations Act (”RICO”), 18 U.S.C. § 1961 et seq., class action complaint against State Farm Mutual Automobile Insurance Company (“State Farm”), Edward Murnane, William G. Shepherd and Citizens for Karmeier (Doc. 2).[3] Count One alleged violations of 18 U.S.C. §1962(c) and Count Two alleged violations of 18 U.S.C. §1962(d) by conspiring to violate 18 U.S.C. §1962(c). On November 4, 2014, plaintiffs filed a first amended complaint containing the same counts as the original complaint (Doc. 289).[4] In essence, plaintiffs allege that defendants secretly recruited Judge Karmeier to run for an open seat on the Illinois Supreme Court, where the Avery v. State Farm Mutual Automobile Insurance Co. appeal against State Farm was pending; that defendants organized and managed his campaign behind the scenes; that defendants covertly funneled millions of dollars to support his campaign through intermediary organizations over which State Farm exerted considerable influence; and, after Justice Karmeier was elected to the Illinois Supreme Court, defendants obscured, concealed and misrepresented the degree and nature of their support of Justice Karmeier so that Justice Karmeier could participate in the Avery decisions. Further, Plaintiffs maintain that defendants' scheme deprived them of their constitutionally-guaranteed right to be judged by a tribunal uncontaminated by politics; that plaintiffs did not have an opportunity during the state court process to conduct the necessary discovery to uncover State Farm's conduct and that their motions to recuse were summarily denied and as a result Justice Karmeier participated in the Avery decision and broke the “deadlock[]” when he voted to overturn the judgment.[5]

         At an attempt at brevity, the Court finds that it does not need to set forth in this Memorandum and Order the precise nature of the claims in this case, the lengthy procedural history of this case and the well known facts surrounding the underlying litigation of this case. These extensive details have been recited in the Court's previous Orders.

         Summary Judgment Standard

         Federal Rule of Civil Procedure 56 provides that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (citation omitted). “A genuine dispute as to any material fact exists if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Kvapil v. Chippewa Cty., 752 F.3d 708, 712 (7th Cir. 2014) (citation and internal quotation marks omitted). In deciding whether a dispute exists, the Court must “construe all facts and reasonable inferences in the light most favorable to the non-moving party.” Nat'l Am. Ins. Co. v. Artisan & Truckers Cas. Co., 796 F.3d 717, 723 (7th Cir. 2015) (citation omitted).

         Under Rule 56, the movant has the initial burden of establishing that a trial is not necessary. Sterk v. Redbox Automated Retail, LLC, 770 F.3d 618, 627 (7th Cir. 2014). “That burden may be discharged by showing ... that there is an absence of evidence to support the nonmoving party's case.” Id. (citation and internal quotation marks omitted). If the movant carries this burden, the nonmovant “must make a showing sufficient to establish the existence of an element essential to that party's case.” Id. (citation and internal quotation marks omitted). The nonmovant “must go beyond the pleadings (e.g., produce affidavits, depositions, answers to interrogatories, or admissions on file) to demonstrate that there is evidence upon which a jury could properly proceed to find a verdict in [their] favor.” Id. (alteration in original) (citation and internal quotation marks omitted). “The existence of a mere scintilla of evidence, however, is insufficient to fulfill this requirement.” Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). “[S]peculation and conjecture” also cannot defeat a motion for summary judgment. Cooney v. Casady, 735 F.3d 514, 519 (7th Cir. 2013). In addition, not all factual disputes will preclude the entry of summary judgment, only those that “could affect the outcome of the suit under governing law.” Outlaw v. Newkirk, 259 F.3d 833, 837 (7th Cir. 2001) (citation omitted).


         Defendants contend that the Court should grant summary judgment in their favor under the Rooker-Feldman doctrine, the doctrine of res judicata and collateral estoppel. Res judicata and collateral estoppel are affirmative defenses. By contrast, the Rooker-Feldman doctrine is not an affirmative defense; it is a limit on this Court's subject matter jurisdiction. If the Rooker-Feldman doctrine is applicable, the Court lacks jurisdiction over the plaintiffs' claims. “Where Rooker-Feldman applies, lower courts have no power to address other affirmative defenses, including res judicata.” Taylor v. Fed. Nat'l Mortg. Ass'n, 374 F.3d 529, 535 (7th Cir. 2004).

         The Rooker-Feldman doctrine derives from two Supreme Court cases in which plaintiffs “litigated and lost in state court ... [then] essentially invited federal courts of first instance to review and reverse [the] unfavorable state court judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 283, 125 S.Ct. 1517 (2005), discussing Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149 (1923) and D.C. Ct. of App. v. Feldman, 460 U.S. 462, 103 S.Ct. 1303 (1983). Because Congress empowered only the Supreme Court to exercise appellate authority to reverse and modify state court judgments, see 28 U.S.C. § 1257, such suits were declared “out of bounds, i.e., properly dismissed for want of subject-matter jurisdiction.” Saudi Basic Indus., 544 U.S. at 283-84, 125 S.Ct. 1517. The doctrine is a limitation on the subject matter jurisdiction of lower federal courts that prohibits them from exercising appellate review over state court decisions. Arnold v. KJD Real Estate, 752 F.3d 700, 704 (7th Cir. 2014); Kamilewicz v. Bank of Boston Corp., 92 F.3d 506, 509 (7th Cir. 1996).

         There is a fine distinction between the Rooker-Feldman doctrine and res judicata. See Nesses v. Shepard , 68 F.3d 1003, 1004 (7th Cir. 2005). The Rook er-Feldman doctrine is narrowly confined to “cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Saudi Basic Indus., 544 U.S. at 284, 125 S.Ct. 1517. Cases requiring dismissal under Rooker-Feldman involve plaintiffs who are “attacking the judgment itself.” GASH Assocs. v. Vill. of Rosemont, Ill., 995 F.2d 726, 728 (7th Cir. 1993)(The Rooker-Feldman doctrine applies when the state court's judgment is the source of the injury of which plaintiffs complain in federal court). Rooker-Feldman comes into play only when the federal court assesses the propriety of a state court judgment. Claims that directly seek to set aside a state-court judgment are de facto appeals that trigger the doctrine. Sykes v. Cook Cnty, Cir. Cit. Prob. Div., 837 F.3d 736, 742 (7th Cir. 2016). “But even federal claims that were not raised in state court, or that do not on their face require review of a state court's decision, may be subject to Rooker-Feldman if those claims are closely related to a state-court judgment.” Mains v. Citibank, N.A., 852 F.3d 669, 675 (7th Cir. 2017). “‘In other words, [for Rooker-Feldman to apply] there must be no way for the injury complained of by a plaintiff to be separated from a state court judgment.'” Id. (quoting Sykes, 873 F.3d at 742). “Rooker-Feldman thus applies where the plaintiff seeks relief that is tantamount to vacating the state judgment.” Id. (citing Taylor v. Fannie Mae, 374 F.3d 529, 533 (7th Cir. 2004)). “If the suit does not seek to vacate the judgment of the state court and instead seeks damages for independently unlawful conduct, it is not barred by Rooker-Feldman.” Id. (citing Johnson v. Pushpin Holdings, LLC, 748 F.3d 769, 773 (7th Cir. 2014)); Saudi Basic Indus., 544 U.S. at 293, 125 S.Ct. 1517 (citing GASH, 995 F.2d at 728) (“If a federal plaintiff presents some independent claim, albeit one that denies a legal conclusion that a state court has reached, ” then Rooker-Feldman does not bar the court's jurisdiction.).

         Res judicata and collateral estoppel, on the other hand, are affirmative defenses that require federal courts to give a state court judgment the same preclusive effect it would have in state court. Long v. Shorebank Dev. Corp., 182 F.3d 548, 560 (7th Cir. 1999). “[W]hen considering whether a claim has preclusive effect, the Court must apply the res judicata doctrine of the state from which the decision occurred. Long, 182 F.3d at 560. The distinction between the two concepts is that the Rooker-Feldman doctrine addresses whether a federal district court has subject matter jurisdiction over a particular matter, while res judicata and collateral estoppel are affirmative defenses that depend on the Full Faith and Credit Statute. Id.; 28 U.S.C. § 1738.

         First, defendants maintain that plaintiffs' claims should be dismissed for lack of jurisdiction under Rooker-Feldman as plaintiffs' asserted injuries are not separate and independent from the decisions and judgments of the Illinois Supreme Court in Avery. Defendants contend that plaintiffs are attempting to use this case to seek redress for the Illinois Supreme Court's reversal of the $1.05 billion judgment in Avery. Defendants state that plaintiffs' purported injuries were directly caused by the Illinois Supreme Court's decisions and orders in Avery, including the court's decision reversing the $1.05 billion judgment on the merits in Avery, but also that the court's rulings rejecting plaintiffs' challenges to Justice Karmeier's participation in Avery. Defendants argue that the “‘tainting' of the tribunal by Justice Karmeier's participation in the Avery merits decision occurred through the Illinois Supreme Court's denial of Plaintiffs' motions for Justice Karmeier's recusal and Plaintiffs' petitions for rehearing and recall of the mandate. All of these motions and petitions were based on the supposed impropriety, constitutional or otherwise, of Justice Karmeier's participation and the source of the allegedly ‘tainted tribunal' of which Plaintiffs complain in this federal lawsuit.” Thus, according to defendants, there can be no factual dispute that the source of plaintiffs' alleged injuries and claims squarely fall within the ambit of Rooker-Feldman. Additionally, defendants argue that plaintiffs had a reasonable opportunity to litigate in the Illinois Supreme ...

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