American Family Mutual Insurance Company will contest a Missouri jury's $17 million class-action award over the company's insistence that customers use aftermarket parts for auto collision repairs.

“We will not accept this verdict,” said Steve Witmer, speaking for the Madison, Wis.-based insurer.

At this point, he said, the form and timing of an appeal is not clear. The verdict was delivered in Jackson County State Court in Kansas City after a nearly month-long trial.

In 1999, State Farm lost a $1.05 billion aftermarket parts class-action case brought on behalf of 4.7 million policyholders in 48 states. The company successfully appealed it to the Illinois Supreme Court, which vacated the verdict in 2005.

The Illinois high court found that policyholder claims in the suit differed too much and did not qualify for class-action treatment.

Michael E. Waldeck, one of the plaintiff attorneys in the Missouri case, said the way in which the case was presented there did not involve the same errors claimed in the Illinois suit, adding, “We're optimistic it [the verdict] will prevail on appeal.”

Mr. Witmer said the company will pay for parts produced by a car's manufacturer in 2005 or later. However, for vehicles from 2004 or older, it requires the use of cheaper aftermarket parts.

“The specification of aftermarket parts has been legal in Missouri since 1980. American Family routinely explains to customers that we specify these parts. We hand out a brochure that explains our specification of aftermarket parts and that their satisfaction is guaranteed,” he said.

Mr. Waldeck said plaintiffs had produced witnesses and other evidence at trial to make the case that the aftermarket parts being used were “inferior to the parts the car had on it prior to the collision.”

He said expert testimony had come from metallurgists and a witness had headed parts production for Ford, Chrysler and Chevrolet.

Mr. Waldeck said that if the verdict is upheld, it would likely open up the carrier to similar class actions in the 17 other states where it does business.

According to Mr. Witmer, American Family in Missouri is the second-largest private passenger auto insurer, with an 18.7 percent share of the market.

He said the insurer presented evidence that once auto manufacturers' supplies of spare parts for a model are expended, they produce more by “scanning parts and recreating them to the best of their ability.”

The process essentially is what aftermarket parts makers do, and “there isn't much or any difference,” he said.

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American Family Loses Auto Parts Verdict

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