Complaint resolution service publishes case studies, recall information and consumer news.

Avery vs. State Farm is one of the most famous automotive lawsuits ever filed. The class action suit essentially claims that State Farm encouraged the use of third party “aftermarket” parts when repairing vehicles damaged in collisions.

After the plaintiffs won a stunning $1.2 billion verdict by claiming the parts were less safe than auto manufacturer’s official parts, the company and industry associations swung into action. On August 18, their hard work carried the day when the Illinois Supreme Court reversed the lower court’s decision. The Supreme Court not only found that the plaintiffs had failed to adequately show damages, but the Court also ruled 6-0 that the case should not have been certified as a class action.

The original $1.2 billion verdict was reduced once by a higher court after the initial verdict, but the reversal meant the end of a journey of more than six years for the participants. While some observers believe the case could signal the beginning of tort reform, consumer advocates were outraged.

“You can hold a typical aftermarket part in your hand and compare its weight and shape to the manufacturer’s original part,” said Consumer Help Web President Joan Bounacos. “The aftermarket part made by an independent third party is usually lighter and doesn’t fit as well. State Farm’s assertion that they have saved consumers money is moot if they have also agreed to put non-standard parts on the vehicle. I am hopeful that this case will again have its day in court and be heard on its merits.”

“Only one vote separated the key consumer issue from being a deadlock,” Bounacos said. “That is too close for future consumers to ignore.”

Posted under Customer Service

Insurance giant State Farm announced that an internal audit has discovered that the company improperly titled tens of thousand of vehicles now driven by consumers. At issue is the company’s failure to identify vehicles as a “salvage” or similar designation before reselling the vehicle, typically through a closed auto dealer-only auction.

To its credit, State Farm approached the departments of motor vehicles throughout the United States and disclosed its error. Early estimates project that 30,000 consumers throughout the country may be affected. Consumer advocates including Michigan Attorney General Mike Cox praised the company, saying, “I commend State Farm for proactively entering this settlement and I am confident it will encourage other companies to double check their internal procedures to ensure consumers receive all vital information.”

Under the terms of the settlement, State Farm will pay $40 million to consumers with payments ranging from $400 to $10,000. The reaction by government and consumer officials is far different from the public relations blackeye suffered by the company in 1999 when an Illinois jury awarded $456 million to consumers in a class action suit that found that the company was using less safe non-factory parts when repairing their insured vehicles involved in collisions.

Each state is responsible for setting its own threshhold for salvage vehicles. Most states use a formula that compares the amount of damage to the value of the vehicle, but the rates vary from state to state. The vehicle owner, in this case State Farm, is required to report damage exceeding those threshholds to the state’s department of motor vehicles so the title can be “branded” or marked with a salvage or junk designation.

That designation is supposed to follow the car throughout its remaining life on the roads, but vehicle history companies such as CARFAX routinely find that a vehicle with a salvage title in one state may later get a title without that same designation in another state.

Consumers who believe that their vehicle is one of the State Farm vehicles not properly titled can call toll-free 866-858-1142. Payments to consumers are expected to begin late this year and continue through 2006.

Posted under Automotive, Customer Service