BSCR Firm News/Blogs Feedhttps://www.bscr-law.com/?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10en-us13 May 2021 00:00:00 -0800firmwisehttps://blogs.law.harvard.edu/tech/rssDoes an Arbitration Clause Have to Provide for Equivalent Rights and Remedies to Both Sides, in Order to Be Enforceable?https://www.bscr-law.com/?t=40&an=116036&format=xml&p=5258&stylesheet=blog30 Apr 2021Missouri Law Blog<p>The Missouri Court of Appeals for the Southern District recently reversed a Circuit Court decision that denied a corporate defendant&rsquo;s motion to compel arbitration, in <a href="https://www.courts.mo.gov/fv/s/fileviewer.do?courtCode=1S&amp;ci=SD36713&amp;di=169027&amp;so=D"><i>Keeling v. Preferred Poultry Supply, LLC</i></a><i>. </i> Plaintiff Brandon Keeling sued Preferred Poultry Supply, alleging breach of contract, fraudulent misrepresentation, and negligent misrepresentation. Preferred Poultry and Keeling entered into a written contract in May of 2016. Preferred Poultry agreed to construct six broiler chicken buildings on Keeling&rsquo;s poultry farm in Newton, Missouri in exchange for a payment of $2,048,321.00.</p> <p>Following construction of the buildings, Keeling sued Preferred Poultry. Keeling alleged that he discovered defects related to the construction and repairs would cost in excess of $745,516.00. Keeling also alleged Preferred Poultry made false and misleading representations to Keeling. In response, Preferred Poultry filed a combined dispositive motion: a motion to dismiss, or in the alternative, motion to order arbitration. Preferred Poultry attached the contract between Keeling and Preferred Poultry to its motion and highlighted the arbitration clause of the contract, titled &ldquo;<b><u>BINDING ARBITRATION</u></b>&rdquo;:</p> <p style="margin-left: 40px;">All claims, disputes and matters in question arising out of or relating to this Contract or any claimed breach of this Contract shall be decided by binding arbitration in accordance with the Uniform Arbitration Act in force in Arkansas . . . . This agreement to arbitrate shall be specifically enforceable under the Federal Arbitration Act since this Contract involves interstate commerce. . . . The location of the arbitration proceedings shall be in Fayetteville, Arkansas. . . . Any award of arbitration may be entered in the Circuit Court for Washington County, Arkansas and will have the force of a judgment from that court.</p> <p>The contract provided that Arkansas law would govern disputes between Keeling and Preferred Poultry. The trial court denied Preferred Poultry&rsquo;s motion to compel arbitration. Preferred Poultry appealed that denial. Missouri law allows the right to an immediate appeal of an order denying a stay of proceedings relating to a matter that may be arbitrable. &nbsp;If Preferred Poultry had not appealed, the case would have continued in Newton County Circuit Court through the completion of a trial.</p> <p>On appeal, Keeling first challenged Preferred Poultry&rsquo;s appeal as premature. Typically, a party may only appeal a final judgment which disposes of all issues in a case. But Missouri law (&sect; 435.440.1(1), RSMo.), federal law (9 U.S.C.A. &sect; 16(a)(1)(C)), and Arkansas law (Ark. Code Ann. &sect; 16-108-228(a)(1)) all specifically allow an appeal from an order denying an application to compel arbitration. The appellate Court applied Missouri law and deemed the appeal timely.</p> <p>Keeling also argued that his tort claims for negligent misrepresentation and fraudulent misrepresentation should not be arbitrated because under Arkansas law, tort claims are not subject to arbitration. The appellate Court disagreed. The Court cited <i>Riley v. Lucas Lofts Investors, LLC</i>, 412 S.W. 3d 285, 290 (Mo. App. E.D. 2013), as well as Arkansas case law, and concluded that Keeling&rsquo;s claims all related to the contract with Preferred Poultry.</p> <p>Even though Keeling characterized his some of his claims as tort claims, the Court determined that he could not avoid the arbitration provision. The Court noted that Keeling&rsquo;s tort claims both sought damages, as opposed to rescission of the contract. Under Missouri law, when damages are sought for claims of poor workmanship, those claims are typically subject to arbitration.</p> <p>Finally, the Court reviewed the arbitration clause in the contract to determine whether it was enforceable. Keeling argued that the arbitration agreement was invalid because the arbitration clause allowed Preferred Poultry to pursue all available rights under any state law, including filing a lien upon Keeling&rsquo;s property. Keeling, however, was limited to arbitration as a remedy. Keeling argued this clause created a non-mutual obligation.</p> <p>The appellate Court rejected this argument. The appellate Court noted that the Federal Arbitration Act does not require mutual obligations to arbitrate. Furthermore, the Court reviewed both Arkansas law and Missouri law, and noted that both states allow non-identical obligations in contracts as a whole, as long as the contract contains sufficient consideration. The appellate Court cited <i>Eaton v. CMH Homes, Inc.</i>, 461 S.W.3d 426, 431 (Mo. banc 2015), where the Missouri Supreme Court found that the trial court erred in denying the defendant&rsquo;s motion to compel arbitration. The appellate Court noted that the arbitration clause in <i>Eaton</i> similarly allowed only the contractor the option to pursue other remedies beyond arbitration, including foreclosure. In <i>Eaton</i>, as here, there was sufficient consideration on both sides: the contractor in <i>Eaton</i> (and Preferred Poultry) agreed to provide a building, and the buyer (and Keeling) agreed to pay a set amount for the building.</p> <p>Accordingly, the appellate Court reversed and remanded the case to the trial court, with directions to refer the case to arbitration, because the parties&rsquo; arbitration agreement was valid and enforceable.</p> <p>The key takeaway from the Court&rsquo;s decision is that arbitration clauses are enforceable under Missouri law, even where they are more favorable to one party, provided there is consideration on both sides. Arbitration is often less expensive than a trial because the rules of evidence are more informal and there is no jury panel. A party in arbitration can spend less time preparing for trial and navigating written discovery. The appellate Court&rsquo;s decision here emphasizes that when both parties agree to arbitration as the forum for resolving their disputes, that contractual agreement will ordinarily be enforced. Keeling and Preferred Poultry agreed to arbitration, and Preferred Poultry was able to successfully enforce arbitration.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10What is Open and Obvious? Time to Ask the Jury.https://www.bscr-law.com/?t=40&an=115783&format=xml&p=5258&stylesheet=blog14 Apr 2021Missouri Law Blog<p><i>Open and obvious:</i> &quot;both the condition and the risk are apparent to and would be recognized by a reasonable man . . . exercising ordinary perception, intelligence, and judgment.&quot;</p> <p>The Missouri Court of Appeals for the Western District reversed and remanded <a href="https://law.justia.com/cases/missouri/court-of-appeals/2021/wd83644.html"><i>Michael Lee v. Missouri Department of Transportation</i></a>, a wrongful death lawsuit, back to the Circuit Court of Boone County, Missouri. Michael Lee appealed a dismissal by the trial court of his Third Amended Petition, alleging wrongful death claims for the death of his daughter against the Missouri Highway and Transportation Commission (MHTC).&nbsp;</p> <p>The claims arose from a tragic accident involving Mr. Lee&rsquo;s daughter and his grandchild who were ultimately unable to escape a flooded area on a road where they were driving one early morning. Mr. Lee&rsquo;s granddaughter was following another vehicle just before the tragic incident, she stopped, just as the other vehicle did, to examine the flooded portion of the road, before unsuccessfully attempting to drive through the flooded area.</p> <p>Mr. Lee alleged that the portion of the roadway at issue was known to MHTC as a flood hazard, that MHTC failed to provide adequate barriers or guardrails to keep vehicles from being swept off the roadway, and failed to provide adequate warnings that the road would flood.&nbsp;</p> <p>The Court dismissed Plaintiff&rsquo;s Petition, after MHTC filed a combined dispositive motion, seeking alternative forms of relief (Motion for Judgment on the Pleadings; Motion to Dismiss; Motion to Strike), arguing that that the flooded roadway was an open and obvious condition and that Mr. Lee&rsquo;s daughter had a duty to exercise reasonable care for her own safety. The trial court ruled that dismissal was proper due to Plaintiff&rsquo;s own pleadings and the reasonable inferences therefrom indicating that Mr. Lee&rsquo;s daughter &ldquo;saw the danger, examined the danger and decided to proceed anyway.&rdquo;</p> <p>On appeal, Mr. Lee first asserted the trial court failed to consider the facts pleaded and the reasonable inferences from the Petition in the light most favorable to Mr. Lee, as the non-moving party. &nbsp;&nbsp;The appellate Court focused on whether the Petition adequately set forth the elements to support a claim of imposing liability on a possessor of land (MHTC) for injuries sustained by an invitee (Mr. Lee&rsquo;s daughter) due to conditions on that land, i.e.:</p> <p>(a) MHTC knows or by the exercise of reasonable care would discover the condition, and should realize that it involves an unreasonable risk of harm to such invitees, and</p> <p>(b) MHTC should expect that they will not discover or realize the danger or will fail to protect themselves against it, and</p> <p>(c) Invitee (Mr. Lee&rsquo;s daughter) fails to exercise reasonable care to protect them against the danger.&nbsp;</p> <p>The ultimate question for the Court thus became whether Mr. Lee&rsquo;s daughter should have realized the danger posed by the flooded condition of the roadway. The trial court ultimately concluded the cause of action fell under a case called <a href="https://scholar.google.com/scholar_case?case=3529871542967406659&amp;hl=en&amp;as_sdt=6,26"><i>Harris v. Niehaus</i>, 857 S.W.2d at 224</a>, which involved another tragic accident in which a mother lost her three children to drowning after her vehicle, parked on a sloped roadway, rolled down the street and into a lake that was plainly visible (aka open and obvious) to the mother.</p> <p>The appellate Court in <i>Lee</i>, however, found the case to be distinguishable from <i>Harris</i>, concluding that evidence that needed to be considered could be presented at trial and a juror could infer whether it was reasonable or safe to cross the roadway. In other words, the Court ruled in favor of Mr. Lee on Point 1, finding that what is reasonable is for a jury to decide.</p> <p>Mr. Lee&rsquo;s second point on appeal focused on the trial court failing to properly construe and apply the meaning of section 343A of the Second Restatement of Torts.&nbsp;Specifically, he argued the Petition properly alleged that MHTC should have anticipated the harm despite any knowledge or obviousness that may have existed on the part of his daughter.</p> <p>As explained by the Court, even if the flooded roadway was open and obvious, if the jury determined that MHTC should have anticipated the harm, then it would still be liable. The Court found that the Petition adequately alleged that MHTC was aware of certain issues of flooding with the roadway, as well as ingress and egress of local residents on that roadway.&nbsp;Agreeing with the Plaintiff, the Court found reasonable minds could differ on the facts surrounding roadway flooding, and it was up to the jury to determine whether the possessor of land should have anticipated harm to an invitee despite the open and obvious hazard.</p> <p>So what does this all mean?</p> <p>As defense lawyers, we are generally pleased to see successful trial court outcomes in cases of this type.&nbsp;Frankly, however, the Court of Appeals ruling in this case did not come as much of a surprise.</p> <p>When considering a motion to dismiss in Missouri, the trial court reviews the Petition and the facts stated within its four corners in a light most favorable to the non-moving party (typically the Plaintiff), also giving all reasonable inferences in favor of the non-moving party.&nbsp;However, in this case, the trial court appeared to give the inferences to the defendant, ultimately finding that the open and obvious doctrine supported dismissal at the pleading stage.&nbsp;While we are aware of cases that were ultimately resolved in favor of the defendant based on the open and obvious doctrine, including the appellate case the trial court relied on to support dismissal, such cases typically have a greater developed factual record that has been before the Court and/or the jury.</p> <p>The procedural posture of this case was somewhat unusual.&nbsp;The Plaintiff, Michael Lee, appears to have had two separate cases &ndash; one for his grandchild and the present case for his daughter.&nbsp;The case brought for the death of Michael Lee&rsquo;s grandchild was dismissed (affirmed on appeal) for various reasons. Curiously, however, in this case, MHTC did not raise the open and obvious issue as an affirmative defense to prior amended Petitions, which made the same allegations.&nbsp;It was only when Mr. Lee amended to fix another problem with his prior Petitions that MHTC raised this argument along with other defenses.&nbsp;In addition, there appears to have been discovery, depositions, and more motions, but none of that was part of this appellate record, because the defendant sought to have the case disposed of via a Motion to Dismiss, rather than a Motion for Summary Judgment (which focuses on undisputed facts elicited in discovery, rather than the legal sufficiency of Plaintiff&rsquo;s Petition).</p> <p>In any event, <i>Michael Lee v. Mo. Dept. of Transp.</i> is back before the trial court, and it remains to be seen what will happen next.&nbsp;Unless the case is settled, a jury may well get to decide what is &ldquo;open and obvious&rdquo; and reasonable.&nbsp;</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Should you Shovel that Snow? The Massachusetts Rule is still the Rule in Missouri.https://www.bscr-law.com/?t=40&an=115699&format=xml&p=5258&stylesheet=blog06 Apr 2021Missouri Law Blog<p>The Missouri Court of Appeals has <a href="http://www.courts.mo.gov/file/ED/Opinion_ED108986.pdf ">ruled</a> that although abandoned by Massachusetts in 2010, the &ldquo;Massachusetts Rule&rdquo; is still the general rule in Missouri. So what is the Massachusetts Rule?&nbsp;First applied in Missouri in 1954, the Massachusetts Rule is actually an exception to the general premises liability principles that apply to owners or occupiers of property.&nbsp;Until 1954, the rule had only applied to municipalities.&nbsp;Under the Massachusetts Rule, an owner or possessor of property has &ldquo;no duty to remove snow or ice that accumulates naturally and is a condition general to the community.&rdquo; <i>Richey v. DP Props., LP</i>, 252 S.W.3d 249, 251-52 (Mo. App. E.D. 2008).&nbsp;This is especially true when snow or ice is actively falling.&nbsp;That is not to say the Massachusetts Rule is absolute.&nbsp;As with any rule, there are exceptions and even exceptions to the exceptions.&nbsp;Missouri courts have recognized two exceptions to the Massachusetts Rule: 1) where the property owner or operator assumed a duty through its course of conduct or 2) assumed a duty by agreement.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>The plaintiff in <i>Colleen O&rsquo;Donnell v. PNK (River City), LLC, et al.</i> slipped and fell on a patch of ice on the sidewalk of the River City Casino during a winter ice storm.&nbsp;The plaintiff had arrived at the Casino before the ice storm began and fell as she was leaving.&nbsp;The ice on the sidewalk had not been shoveled, scraped, salted, or altered in any way by the Casino.&nbsp;Shortly before plaintiff fell, the Casino had been monitoring the freezing rain and had requested Total Lot Maintenance, who the Casino had a contract with for snow removal, to treat and remove the ice.&nbsp;The Casino even warned some customers of the ice, helped some customers to their vehicles and tried to protect others from falling before plaintiff&rsquo;s fall.&nbsp;</p> <p>The Casino filed a motion for summary judgment asserting they had no duty to remove the ice that had accumulated on its property under the Massachusetts Rule, which the trial court granted.&nbsp;In affirming the trial court&rsquo;s ruling, the Missouri Court of Appeals revisited the Massachusetts Rule and the recognized exceptions to it.&nbsp;Plaintiff argued that both exceptions to the Massachusetts Rule applied to the Casino.&nbsp;</p> <p>Plaintiff first argued that the Casino assumed a duty based on its conduct leading up to her fall, pointing to the fact that the Casino was aware of the accumulating ice and was monitoring the conditions, that they specifically warned other customers of the ice, even assisted some patrons to their vehicles, and also requested Total Lot Maintenance treat the ice.&nbsp;However, the Casino&rsquo;s knowledge of the condition and warning and assisting its customers was not enough to trigger the exception.&nbsp;For the exception to apply in Missouri, the condition must be altered in some way by the landowner (or occupier), such as by shoveling, spreading salt or by some other means.&nbsp;</p> <p>As a practical matter, although Missouri courts require willful action to alter the condition of the snow or ice to trigger the exception, Missouri courts have found that active removal of snow or ice in a different area of the premises from where an incident occurred is at least enough to preclude summary judgment and may be enough to trigger the exception. <i>Otterman v. Harold&rsquo;s Supermarkets, Inc.</i>, 65 S.W.3d 553, 555 (Mo. App. W.D. 2001).&nbsp;The take away is, if the snow or ice has changed in some way since it first accumulated naturally, the exception is likely triggered and the landowner (or occupier) must then exercise ordinary care to remove the snow or ice and make the area reasonably safe. <i>Willis v. Springfield General Osteopathic Hosp.</i>, 804 S.W.2d 416, 419 (Mo. App. S.D. 1991).&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>The Court of Appeals also rejected plaintiff O&rsquo;Donnell&rsquo;s argument that the Casino assumed the duty to remove the ice by virtue of its agreement with Total Lot Maintenance because plaintiff did not put forth evidence of the contract or its terms.&nbsp;Of note, the Court of Appeals did confirm that the mere existence of a snow removal policy is not enough to trigger the exception. &nbsp;&nbsp;</p> <p>The trial court granted a similar motion for summary judgment filed by Total Lot Maintenance.&nbsp;However, the Court of Appeals reversed, noting an issue of fact existed as to whether the assumed by agreement exception was triggered.&nbsp;The agreement required Total Lot Maintenance to clear snow and ice at the Casino after a certain amount of accumulation and the Court of Appeals found that this, coupled with the fact that the Casino had contacted them twice to remove the ice called into question whether their duty had been triggered.&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>Importantly, the Missouri Court of Appeals rejected plaintiff&rsquo;s argument that the Massachusetts Rule should be abrogated entirely or, at a minimum, should not apply to hotel owners and operators.&nbsp;In Missouri, while hotel owners and operators may owe a heightened duty of care to its guests to warn of dangerous conditions in certain circumstances, this does not allow for circumvention of the Massachusetts Rule.&nbsp;The Rule is applied broadly and encompasses hotel owners and operators. <i>Richey</i>, 252 S.W.3d at 251.&nbsp;</p> <p>The Court of Appeals did acknowledge that the Massachusetts Rule in certain circumstances could incentivize owners and occupiers of property to not address dangerous conditions of snow or ice. &nbsp;However, they declined to void the rule, stating that is for the Missouri Supreme Court to decide.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10U.S. Supreme Court Asked to Review Issue of Jurisdiction for Non-Resident Plaintiffs in Products Caseshttps://www.bscr-law.com/?t=40&an=115338&format=xml&p=5258&stylesheet=blog12 Mar 2021Missouri Law Blog<p>Johnson and Johnson (&ldquo;J&amp;J&rdquo;) has asked the United States Supreme Court to overturn the $2.1 billion verdict entered against it in <em>Ingham, et al. v. Johnson &amp; Johnson, et al.</em>, a talcum powder class action filed in Missouri that included numerous non-resident plaintiffs. If review is granted, the Supreme Court will rule on just how far the &ldquo;arise out of or relate to&rdquo; prong of the test for specific jurisdiction extends with respect to the claims of a nonresident plaintiff.&nbsp;</p> <p>The inconsistent way differing jurisdictions determine the existence of specific jurisdiction for non-resident plaintiffs is readily apparent.&nbsp; And the litigation involving the talcum powder products at issue in this case is a perfect example of this type of inconsistency.&nbsp; Two courts, one in Missouri and the other in New Jersey, reached two very different conclusions regarding the exercise of personal jurisdiction over the same claims involving non-resident plaintiffs.&nbsp; Missouri found that its exercise of jurisdiction was proper, while New Jersey did not.&nbsp; This did not come as a shock to Missouri practitioners, because Missouri courts have long welcomed and been a favorite for out-of-state plaintiffs.&nbsp; &nbsp;</p> <p>Following the United States Supreme Court&rsquo;s decision in <em>Bristol-Myers Squibb Co. v. Superior Court,</em>137 S.Ct. 1773 (2017), this practice of forum shopping was curtailed.&nbsp; However, the Missouri Court of Appeals for the Eastern District re-opened the door for a non-resident plaintiff to bring a cause of action in Missouri for alleged damages based upon the use of a product that he did not purchase or use in Missouri, nor suffer damages in Missouri. &nbsp;<em>See Ingham, et al. v. Johnson &amp; Johnson, et al.</em>, 608 S.W.3d 663 (Mo.App. E.D.&nbsp; 2020), trans. denied, 2020 Mo. LEXIS (Nov. 3, 2020).&nbsp; However, the holding in Ingham regarding the exercise of specific jurisdiction is the diametric opposite of the decision of the United States District Court for the District of New Jersey deciding the same jurisdictional issue on the very same facts in the same week.&nbsp; <em>See Hannah v. Johnson &amp; Johnson Inc</em>., 2020 U.S. Dist. LEXIS 113284 (D.N.J. June 29, 2020).&nbsp; &nbsp;</p> <p><b>Background</b></p> <p>In <em>Ingham, </em>plaintiffs sought recovery against two defendants:&nbsp;Johnson &amp; Johnson Consumer Companies Inc. (&ldquo;JJCI&rdquo;) and its parent company, J&amp;J. Twenty-two plaintiffs alleged they developed ovarian cancer after continued use of two of the defendants&rsquo; products:&nbsp;Johnson&rsquo;s Baby Powder and Shower to Shower Shimmer Effects (&ldquo;Shimmer&rdquo;). &nbsp;The parties agreed that defendants were not subject to general jurisdiction in Missouri because they are incorporated and headquartered in New Jersey.&nbsp;Five plaintiffs lived, purchased and used Johnson&rsquo;s Baby Powder and/or Shimmer, and developed ovarian cancer in Missouri (&ldquo;Missouri Plaintiffs&rdquo;).&nbsp;Jurisdiction over JJCI with respect to the Missouri Plaintiffs was not disputed.&nbsp;</p> <p>Jurisdiction was disputed with respect to the other seventeen plaintiffs who lived, purchased and used Johnson&rsquo;s Baby Powder and/or Shimmer and developed ovarian cancer outside Missouri (the &ldquo;Non-Resident Plaintiffs&rdquo;).&nbsp;Two of these Non-Resident Plaintiffs only used Baby Powder, while the remaining Non-Resident Plaintiffs used Shimmer or used both Shimmer and Baby Powder.&nbsp;</p> <p>The Non-Resident Plaintiffs alleged that defendants were subject to specific jurisdiction in Missouri because JJCI had two long-term contractual relationships with Pharma Tech Industries, a Missouri corporation for the manufacturing, packaging and supply of Shimmer and Johnson&rsquo;s Baby Powder.&nbsp;&nbsp; Fifteen of the Non-Resident Plaintiffs asserted that jurisdiction was proper in Missouri because they used Shimmer, which was manufactured, labeled and packaged by Pharma Tech Industries&rsquo; sister company, Pharma Tech Union, located in Union, Missouri, under defendants&rsquo; direction and control.&nbsp;The other two Non-Resident Plaintiffs claimed the defendants were subject to specific jurisdiction in Missouri because they used Johnson&rsquo;s Baby Powder that was manufactured, labeled and packaged by Pharma Tech Industries&rsquo; sister company, Pharma Tech Royston, located in Royston, Georgia, under Pharma Tech Industries&rsquo; direction and control.&nbsp;</p> <p><b>Trial Court&rsquo;s Findings on Jurisdiction</b></p> <p>The trial court held that it could exercise specific jurisdiction over defendants on the Non-Resident Plaintiffs&rsquo; claims because their alleged conduct satisfied the Missouri long-arm statute.&nbsp;Specifically, the court opined that defendants transacted business in Missouri, allegedly committed a tortious act in Missouri, owned real estate in Missouri, and contracted with Pharma Tech Industries in Missouri to manufacture packaging materials and to manufacture, label and package both products.&nbsp;The trial court further found that these activities constituted sufficient minimum contacts to subject defendants to specific jurisdiction in Missouri.&nbsp;</p> <p><b>The Appeal</b></p> <p>On appeal, the defendants did not challenge the trial court&rsquo;s finding that the long-arm statute extended to them.&nbsp;Instead, with respect to jurisdiction, the defendants only appealed whether they established sufficient minimum contacts with Missouri that enabled the trial court to exercise specific jurisdiction over them.</p> <p>The Missouri Court of Appeals recognized that it can only assert specific personal jurisdiction over the defendants if the defendants had certain minimum contacts with Missouri <u>and</u> if plaintiffs&rsquo; cause of action arose from those alleged minimum contacts.&nbsp;&nbsp;Because of this requirement, the question of whether specific jurisdiction exists must be determined separately for each individual plaintiff&rsquo;s claims.&nbsp;</p> <p><b>The Missouri Court of Appeals&rsquo; Holding Regarding Jurisdiction over the Non-Residents&rsquo; Claims Related to the Use of Shimmer</b></p> <p>Citing the United States Supreme Court decision in <i>Bristol-Myers Squibb Co. (&ldquo;BMS&rdquo;), </i>the Missouri Court of Appeals held that the trial court properly exercised specific jurisdiction over JJCI for the claims of the Non-Resident Plaintiffs associated with Shimmer because JJCI &ldquo;engaged in a host of significant activities in Missouri related to the Non-Resident Plaintiffs&rsquo; use of Shimmer.&rdquo;&nbsp;Specifically, JJCI contracted with Missouri-based Pharma Tech to manufacture, package and label Shimmer pursuant to JJCI&rsquo;s specification at Pharma Tech&rsquo;s facility in Missouri.&nbsp;</p> <p>Defendants argued that its contract with a Missouri corporation alone was insufficient to subject defendants to personal jurisdiction in Missouri.&nbsp;For as the United States Supreme Court&rsquo;s held in <i>BMS</i>, &ldquo;[a] defendant&rsquo;s relationship with a third party, standing alone, is an insufficient basis for jurisdiction&hellip; The bare fact that BSM contracted with a California distributor is not enough to establish personal jurisdiction in this State.&rdquo;&nbsp;137 S.Ct. at 1783. (citations omitted.)&nbsp;</p> <p>However, the Missouri Court of Appeals, apparently realizing that JJCI&rsquo;s contract with Pharma Tech was insufficient to confer jurisdiction over JJCI, stretched further to justify its exercise of personal jurisdiction over JJCI in Missouri.&nbsp;To do this, the appellate court held that JJCI&rsquo;s contacts constituted more than a &ldquo;mere contractual relationship with a third party.&rdquo;&nbsp;&nbsp; Because JJCI engaged in activities related to the manufacture, packaging and labeling of Shimmer in Missouri, the Court of Appeals found that it was reasonable to require JJCI &ldquo;to submit to the burdens of litigation&rdquo; in Missouri.&nbsp;Instrumental in this finding is that the Non-Resident Plaintiffs&rsquo; claims alleged negligent manufacture, production, packaging and labeling of Shimmer.&nbsp;&nbsp; Therefore, according to the Court of Appeals, JJCI&rsquo;s activities with Pharma Tech in Missouri were a &ldquo;direct link in the production chain of Shimmer&rsquo;s eventual sale to the public &hellip; [and] &hellip; firmly connect JJCI&rsquo;s activities in Missouri to the specific claims of the Non-Resident Plaintiffs&rdquo; related to Shimmer.</p> <p>This decision is in stark contrast to holding in <i>Hannah.</i>&nbsp;In <i>Hannah, </i>the United States District Court for the District of New Jersey held that it could not exercise jurisdiction over the J&amp;J defendants for the claims of the non-Missouri residents because J&amp;J&rsquo;s contracts with Pharma Tech &ldquo;to produce some of its products does not confer jurisdiction.&rdquo;&nbsp;2020 U.S. Dist. LEXIS 113284, at * 103 (D.N.J. June 29, 2020).&nbsp;As the District Court explained:</p> <p style="margin-left: 40px;">While those contacts might well constitute purposeful availment of the benefits and protections of the State of Missouri in a contract action, these contacts are irrelevant in this products liability action.&nbsp;Indeed, Plaintiffs have not demonstrated that their injuries in any way arise out of those specific agreements.&nbsp;In other words they neglect to allege a connection between their injuries and those specific distribution agreements.</p> <p><i>Id. </i>(citations omitted).</p> <p><b>The Missouri Court of Appeals&rsquo; Holding Regarding Jurisdiction over the Non-Residents&rsquo; Claims Related to the Use of Johnson&rsquo;s Baby Powder</b></p> <p>The Court of Appeals, however, found that the trial court erred in exercising specific jurisdiction over JJCI on the claims of the two Non-Resident Plaintiffs who only used Johnson&rsquo;s Baby Powder because the Petition &ldquo;did not sufficiently allege JJCI engaged in significant activities in Missouri related to their use [of] Johnson&rsquo;s Baby Powder.&rdquo;&nbsp;Non-Resident Plaintiffs argued that because Pharma Tech in Missouri controlled and directed the manufacturing, processing, bottling, labeling and distribution of Johnson&rsquo;s Baby Powder in Georgia from its headquarters in Union, Missouri, JJCI was subject to jurisdiction in Missouri for the claims involving Johnson&rsquo;s Baby Powder.&nbsp;</p> <p>The court rejected the Non-Resident Plaintiffs&rsquo; claims.&nbsp;Specifically, the Court of Appeals explained that the &ldquo;record is devoid of evidence that JJCI engaged in any activities related to Johnson&rsquo;s Baby Powder, beyond the executing of &hellip; [the contracts] with a Missouri-based corporation, in Missouri.&rdquo;&nbsp;Therefore, the contract JJCI executed with Pharma Tech in Missouri regarding Johnson&rsquo;s Baby Powder was not sufficient to confer jurisdiction over JJCI in Missouri for the claims solely related to Johnson&rsquo;s Baby Powder.&nbsp;This part of the decision by the Missouri Court of Appeals is in line with the Supreme Court&rsquo;s holding in <i>BMS</i> because &ldquo;contracting with an out-of-state party alone cannot automatically establish sufficient minimum contacts in the out-of-state party&rsquo;s forum.&rdquo;&nbsp;</p> <p><b>Conclusion</b></p> <p>To the surprise of many observers, the Missouri Supreme Court declined to review the Court of Appeals ruling, which upheld an historically large verdict, in a case that seemed to collide rather sharply with the U.S. Supreme Court decision in <i>Bristol-Myers Squibb. </i>The Missouri Court of Appeals holding in <i>Ingham </i>allows a court to exercise jurisdiction over a company that contracts with a third party to make a product according to the company&rsquo;s specifications.&nbsp;According to the <i>Ingham </i>court, jurisdiction in this situation is based on more than a mere contractual relationship.&nbsp;However, this reasoning was squarely rejected by the United States District Court for the District on New Jersey in <i>Hannah.</i>&nbsp;Should the United States Supreme Court grant review, it should follow the sound reasoning of <i>BMS </i>and <i>Hannah </i>and hold that Missouri courts cannot exercise jurisdiction over the claims of non-resident plaintiffs when they did not purchase, use or suffer injury in the State of Missouri.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Missouri Debates Adding a Statute of Reposehttps://www.bscr-law.com/?t=40&an=114984&format=xml&p=5258&stylesheet=blog22 Feb 2021Missouri Law Blog<p>A statute of repose is a law that cuts off a right of action after a specified time period has elapsed, regardless of when the cause of action accrues. Most states have such statutes, but they vary widely as to limitation periods, what is covered, and whom the statute protects. A statute of repose differs from a statute of limitation in that a time period specified in a statute of limitations usually does not begin to run until the injury or damage actually occurs, irrespective of when the product was sold.</p> <p>Missouri took an important first step in creating a statute of repose for product liability claims by debating Senate Bill #7 in committee at the end of January. If it passes the Legislature and is signed by the governor, Senate Bill # 7 would place Missouri among the many states with some type of statute of repose for product liability claims.&nbsp;<br /> <br /> The proposed bill sets a statute of repose of fifteen years and would bar claims for personal injury, property damage, wrongful death, or economic loss.&nbsp;The time period would begin to run when the product is first sold or leased to any person or otherwise placed in the stream of commerce.&nbsp;The catchall of &ldquo;otherwise placed into the stream of commerce&rdquo; will be an important for component parts manufacturers and suppliers along with those who sell their products to distributors as it could cut off claims at an earlier date than when the plaintiff first purchased the product.</p> <p>There are some significant exceptions built into the proposed bill.&nbsp;First, it would not apply to any product that is real property or an improvement to real property.&nbsp;However, Section 516.097, which has a shorter statute of repose, may bar some of those claims.&nbsp;The proposed statute would also not bar any claims for negligent servicing or negligent maintenance of a product.</p> <p>Second, if the defective or unsafe condition was knowingly concealed or negligence in the construction, manufacture, sale or distribution was knowingly concealed, those claims are not barred.&nbsp;However, the concealed defective or unsafe condition or the concealed negligence must directly result in the claims asserted.&nbsp;Similarly, if the product was subject to a government mandated product recall related to consumer safety, the statute of repose would not bar those claims if the reason for the recall and the subject of the claims are the same.&nbsp;</p> <p>The bill would also exempt any product that has an expected useful life exceeding fifteen years.&nbsp;This exception would only apply if the useful life is stated by the manufacturer, seller or lessor in a written warranty or in an advertisement to the public.&nbsp;However, the bill would cut off claims two years after the stated useful life.&nbsp;If a claim arose during the potential useful life of a product, a jury may, in determining whether the product&rsquo;s useful safe life has expired, consider the amount of wear and tear, deterioration from natural causes including storing conditions, normal practices regarding the product&rsquo;s use, repairs, renewals and replacements, any stated useful safe life by the manufacturer or modifications made to the product.&nbsp;</p> <p>Finally, the statute would impact toxic tort claims. The statute would not apply to any claims where a defective or unsafe condition allegedly caused a respiratory or malignant disease with a latency of more than fifteen years.&nbsp;However, it does bar claims against the sellers of any such products unless the seller is also the manufacturer.&nbsp;</p> <p>The proposed bill would have a significant impact on product liability claims in Missouri.&nbsp;The bill would apply to all civil actions commenced on or after August 28, 2021, or to any new causes of action asserted in civil actions pending on or after that date.&nbsp;The proposal also provides a safe harbor provision that any claims that would be barred by the statute that accrued on or before August 28, 2021, must be brought no later than August 21, 2022.</p> <p>The bill recently passed the Government Accountability and Fiscal Oversight Committee.&nbsp;If the bill passes the full Senate, it will then be sent to the Missouri House of Representatives for potential amendment. If the bill passes both chambers, it will be sent to the governor for signature.&nbsp;We will continue monitoring the bill&rsquo;s progress through the legislative process and provide updates.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10The Kansas City Area Saw Trials Plummet in 2020 Due to the Pandemichttps://www.bscr-law.com/?t=40&an=114726&format=xml&p=5258&stylesheet=blog08 Feb 2021Missouri Law Blog<p>Little about 2020 was normal, and the number of trials in the Kansas City area was no exception. Data released by the Greater Kansas City Jury Verdict Service shows that the total number of jury trials in the Kansas City area was down over 65% in 2020 when compared to 2019.</p> <p>In 2020, 29 trials were reported, compared to 86 trials in 2019, and 104 in 2018. The numbers were significantly impacted by the fact that many Kansas City area courts, especially state courts, had to postpone civil jury trials due to the Coronavirus.<br /> <br /> <img src="https://www.bscr-law.com/B07AF5/assets/images//Image 1 - Total Number of Trials.JPG" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="400" height="225" /></p> <p><b>The Percentage of Jury Verdicts Favoring Defendants Remained Constant from 2019</b></p> <p>In the Kansas City area, juries decided a total of 29 cases in 2020. Within those 29 cases, the Jury Verdict Service reports on the number of claims in each case which totaled 73 overall claims. Of the verdicts reported on the 73 claims, 41% (30 out of 73 claims) resulted in some amount of recovery to the plaintiff(s), while 59% (43 out of 73 claims) were defense verdicts. Similarly, in 2019 41% (75 out of 181 claims) of claims resulted in some amount of recovery for the plaintiff, while 59% (106 out of 181 claims) were defense verdicts. This put an end to a recent upward trend in defense verdicts, from 51% in 2017, to 52% in 2018, to 59% in 2019.<br /> <br /> <img src="https://www.bscr-law.com/B07AF5/assets/images/Image 2 - Percent of Verdicts in Favor of Defendants.JPG" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="400" height="225" /></p> <p><b>The Overall Average Monetary Award for Plaintiff Verdicts Drastically Decreased </b></p> <p>In 2020, when plaintiffs were awarded damages by juries, the awards were significantly smaller than in recent years.&nbsp;The overall average of plaintiff verdicts in the Kansas City area in 2020 was $502,261, which included two outlier trials resulting in larger verdicts of $4.9 million and $7 million. In 2019 the average Plaintiff verdict was $2,255,380; however, this was due to one outlier verdict of $117,921,154. 2018&rsquo;s average Plaintiff&rsquo;s verdict was $1,810,693; however, there was an outlier verdict that year of $76,000,000.&nbsp;</p> <p>When the outliers from each year were set aside the average jury award for 2018 was $882,500. 2019&rsquo;s average was $692,000. &nbsp;And 2020&rsquo;s average was $45,000. In 2020, 77% of jury awards were below $100,000, with an average jury award of approximately $45,000. Despite this, the proportion of six-figure jury awards to plaintiffs held steady at about 16% (12 out of 73 claims in 2020, compared to 31 out of 181 claims in 2019, and 29 out of 168 claims in 2018). Nonetheless, the average jury verdict awarded in 2020 decreased sharply from the previous years.<br /> <br /> <img src="https://www.bscr-law.com/B07AF5/assets/images/Image 3 - Average Award for Plaintiff Verdicts Excluding Outlier Verdicts.JPG" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="400" height="225" /></p> <p><b>Juries in Missouri Federal Courts Prove Most Generous in 2020 </b></p> <p>To add to the anomalies of 2020, juries in Federal Courts accounted for all five of the jury verdicts in excess of $1,000,000 in 2020. The U.S. District Court for the Western District was responsible for one of these verdicts, and the other four came out of U.S. District Court for the District of Kansas. In 2019 there were 10 verdicts that exceeded $1 million, 30% of which originated in federal courts. In 2018 there were 14 verdicts over $1 million, 14% of which originated in federal courts.</p> <p>The number of state court trials fell dramatically in 2020 while the percentage of federal court trials greatly increased. &nbsp;In 2020 state court verdicts accounted for 53% of claims, whereas federal court verdicts accounted for 47% of claims. This was a stark change from 2019 and 2018 where state court claims accounted for 83% of verdicts, and federal court claims accounted for 17% of verdicts in both years.</p> <p>The likely explanation is that federal courts continued conducting civil trials throughout most of the year, while state courts postponed numerous trials due to the ongoing pandemic. Once state courts begin to conduct civil jury trials again that will likely reverse the current trend, and restore the old adage that federal courts are better for Defendants, and state courts more hospitable toward Plaintiffs.<br /> <br /> <img src="https://www.bscr-law.com/B07AF5/assets/images//Image 4 - Percentage of State vs. Federal Court Verdicts.JPG" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="400" height="225" /></p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10City of St. Louis and Multiple Illinois Counties Again Distinguish Themselves as "Judicial Hellholes"https://www.bscr-law.com/?t=40&an=114325&format=xml&p=5258&stylesheet=blog20 Jan 2021Missouri Law Blog<p>The 2020/2021 &ldquo;Judicial Hellholes Report&rdquo; from the American Tort Reform Foundation has arrived and certain Missouri and Illinois jurisdictions again find themselves on this infamous list. The City of St. Louis comes in at #7 on the list while the trio of Cook, Madison, and St. Clair Counties in Illinois wins the #8 spot. The silver lining? Both of these rankings are down from the previous slots of #5 and #7 held by these counties, respectively, in the previous Judicial Hellholes Report.</p> <p>Since 2002, the American Tort Reform Foundation has identified and documented places &ldquo;where judges in civil cases systematically apply laws and court procedures in an unfair and unbalanced manner, generally to the disadvantage of defendants.&rdquo; The stated goal of the Foundation&rsquo;s program is &ldquo;to shine a light on imbalances in the courts and thereby encourage positive changes by the judges themselves and, when needed, through legislative action or popular referenda.&rdquo;</p> <p>Coming in at #7 on the list, the City of St. Louis, Missouri, is singled out as being notorious for blatant forum shopping and excessive punitive damage awards, helping to earn Missouri the &ldquo;Show-Me-Your-Lawsuit&rdquo; nickname. The report also asserts that the court fails to ensure that cases are guided by sound science, citing instances where Plaintiff&rsquo;s experts, whose testimony has been determined to not be based in science by other state court, have been permitted to testify in City of St. Louis courts. The report does see some hope for the City and the State of Missouri in general with the 2020 legislative enactment of several reforms intended to curb unreliable expert testimony and reduce litigation tourism, but cautions that true future success is contingent on the City of St. Louis Court&rsquo;s compliance with the new statutes. The report notes that &ldquo;some St. Louis judges have a history of ignoring both state law and U.S. Supreme Court precedent with regard to expert evidence standards, personal jurisdiction and venue, and damage awards.&rdquo;</p> <p>Number 8 on the list is the grouping of Cook, Madison and St. Clair Counties in Illinois. The report singles out these three counties as continuing to be preferred jurisdictions for plaintiffs&rsquo; lawyers &ldquo;thanks to no-injury lawsuits, plaintiff-friendly rulings in asbestos litigation, and the promise of a liability-expanding legislative agenda each and every year.&rdquo; The report calls Illinois ground zero for no-injury lawsuits, thanks in large part to the Biometric Information Privacy Act and the numerous expansive judicial interpretations of that law. The report finds some encouraging news in the Illinois Supreme Court&rsquo;s June 2020 ruling in <i>Rios v. Bayer Corp</i>., where the court dismissed the claims of out-of-state plaintiffs for lack of jurisdiction because Bayer is not located in Illinois and does limited business there, the product was not manufactured in Illinois, and the plaintiffs experienced their injuries outside of Illinois.<br /> <br /> The report also gives a dishonorable mention to the Missouri Court of Appeal thanks to a recent opinion addressing Section 537.065. This section permits a defendant to allow a plaintiff to obtain a judgment against it in court so long as the plaintiff agrees to only seek to collect the award from the defendant&rsquo;s insurer. The Missouri legislature amended Section 537.065 in 2017 to require that parties give notice to the insurer that they have entered such an agreement so that the insurer can intervene and protect its interests, if needed. The report interprets a Missouri appellate court decision from 2020 as limiting an insurer&rsquo;s ability to contest the policyholder&rsquo;s liability or the plaintiff&rsquo;s damages when it intervenes after the entry of arbitration award.</p> While there are some potential future bright spots for these Missouri and Illinois jurisdictions and their individual rankings are moving in the right direction, there seems to be a long way to go before we no longer see these local courts on the &ldquo;Judicial Hellholes&rdquo; list.https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Parson's Pandemic Protections for Providers - Governor Parson Encourages Tort Liability Legislation During COVID-19 State of Emergencyhttps://www.bscr-law.com/?t=40&an=114089&format=xml&p=5258&stylesheet=blog21 Dec 2020Missouri Law Blog<p><u>Introduction</u></p> <p>On November 12, Governor Parson issued a written proclamation encouraging lawmakers to author new tort liability legislation insulating defendants from lawsuits arising out of the COVID-19 state of emergency that has existed since March. This effort is designed to allow these individuals and entities to continue to serve the public without threat of unnecessary and frivolous litigation.&nbsp;We have since learned that the Missouri legislature is not likely to address this issue until early 2021.&nbsp;Governor Parson seems to have reconsidered the timing for the agenda and directed the legislature to address this, not during the ongoing special session, but during the regular January session.&nbsp;The bill will be titled SB1.&nbsp;&nbsp;&nbsp;</p> <p>In the statement, the Governor explained one of the main purposes of this action is to assist healthcare providers who have gone well beyond normal duty to provide exceptional care to Missourians despite great personal risk to their own health and well-being by amending and expanding upon &sect; 44.045, RSMo, to afford liability protections for healthcare workers who provide necessary care during a declared state of emergency. &nbsp;Though not dealt with here, the Governor&rsquo;s proclamation also identifies other organizations instrumental to COVID-19 response efforts, including product manufacturers and premises owners like schools and churches that provide fundamental societal functions.&nbsp;This potentially includes a new Section in Chapter 537, RSMo, to provide products liability protection for product manufacturers, designers, distributors, and sellers involved in bringing products to market in direct response to a state of emergency.&nbsp;It also potentially includes a new section to provide premises liability protection for exposure claims arising from a declared state of emergency.&nbsp;</p> <p><u>Why Is This Necessary?</u></p> <p>The threat of COVID litigation is real.&nbsp;There have been an estimated 10,000 COVID-related lawsuits filed nationally.&nbsp;This includes hundreds of healthcare specific suits and is almost certain to continue well into the next year and beyond.&nbsp;&nbsp; &nbsp;</p> <p>The risk to healthcare workers is real too.&nbsp;As of December 21, there were almost 17.8 million COVID cases and more than 315,000 deaths in the U.S.&nbsp;Healthcare workers make up a significant portion of nationwide COVID-19 infections.&nbsp;As of July, there were 100,000 cases of COVID-19 infecting healthcare workers.&nbsp;By September 2020, more than 1,700 U.S. healthcare workers had died from COVID-19.&nbsp;Per the CDC, healthcare workers make up approximately 6% of adults hospitalized with COVID-19.&nbsp;Among those, 36% were in the nursing field, and 28% were admitted to an ICU.&nbsp;Sixteen percent required invasive mechanical ventilation, and 4% died.&nbsp;</p> <p>None of this is surprising considering healthcare workers are on the frontline of battling this global pandemic and, in doing so, expose themselves to great personal risk each shift providing exceptional care for their communities.&nbsp;They must deal with the challenge not only of exposing themselves to the virus, but also observing terrible suffering and outcomes of their patients, and doing this with limited resources, equipment and healthcare staff.&nbsp;The author of this blog believes prudent legislative action is necessary under the circumstances and likely to be helpful in mitigating some litigation risk for healthcare professionals.&nbsp;</p> <p><u>A National Approach to Liability Protections</u></p> <p>Missouri is not the only state to consider such liability protections.&nbsp;Other states have provided this through executive order and/or legislative action.&nbsp;For example, the neighboring states of Arkansas, Iowa, Illinois, Kansas, Kentucky, and Oklahoma have already passed COVID liability protections.&nbsp;Many of these states&rsquo; protections afford immunity from civil damages for licensed healthcare providers but carve out exceptions for injuries or death caused by gross negligence, willful and criminal misconduct and intentional infliction of harm, and fraud.&nbsp;</p> <p>Although there was much discussion during negotiations for a federal COVID-19 relief package as to whether it would include liability protections for healthcare providers and other businesses, in the end, no such provision was included in the $900 billion program.&nbsp;Though not dealt with in detail here, federal liability protections are already available under the 2005 Public Readiness Emergency Preparedness (PREP) Act, which authorizes the Secretary of the US Department of Health and Human Services to issue a declaration in response to a public health emergency.&nbsp;On March 10, 2020, Secretary of HHS Alex Azar issued such a declaration, effective February 4, 2020, which provides immunity to &ldquo;covered persons,&rdquo; such as healthcare providers, using certain &ldquo;covered countermeasures,&rdquo; including masks, respirators, and vaccines, that are necessary to combat the public health emergency.&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;</p> <p>The Missouri Chamber of Commerce and industry stakeholders overwhelmingly support these protections.&nbsp;The American Medical Association has pushed for states to pursue liability protections for healthcare professionals during the COVID-19 emergency.&nbsp;However, this is not without criticism, with some suggesting such policies would protect irresponsible businesses from accountability and fail to protect the public.&nbsp;&nbsp;&nbsp;</p> <p>It is important to note that the anticipated liability protections parallel &ldquo;good Samaritan&rdquo; laws that have existed throughout the country for decades and afford qualified immunity from civil liability for healthcare professionals who volunteer their services as a generous compassionate act unless they engage in willful or intentional misconduct.&nbsp;</p> <p>We will continue to follow this issue and look for activity during the January 2021 general legislative session.&nbsp;</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Missouri enacts significant changes affecting punitive damages and consumer protection claimshttps://www.bscr-law.com/?t=40&an=113439&format=xml&p=5258&stylesheet=blog26 Oct 2020Missouri Law Blog<p>Missouri defendants will welcome several recently enacted changes to the manner in which punitive damages can be sought and awarded in most civil actions. <a href="https://www.senate.mo.gov/20info/pdf-bill/tat/SB591.pdf">SB 591</a> raises the bar for both pleading and proving punitive damages and provides additional protections to employers who might otherwise have been exposed to punitive damages for the unlawful conduct of low-level employees.</p> <p>Most damages in civil lawsuits are intended to compensate plaintiffs for their losses, whether economic or noneconomic.&nbsp;But punitive damages, also called &ldquo;exemplary damages&rdquo; in Missouri, are different in that they are intended to punish civil wrongdoing and to serve as a deterrent to others who may be tempted to engage in similar conduct.&nbsp;SB 591, which became law on August 28, 2020, significantly changes how these damages can be awarded in Missouri.</p> <p>Most notably, punitive damages in most cases now must be based on &ldquo;clear and convincing evidence that the defendant intentionally harmed the plaintiff without just cause or acted with a deliberate and flagrant disregard for the safety of others.&rdquo;&nbsp;This is a heightened standard from previously existing Missouri law, which required a showing of &ldquo;complete indifference or conscious disregard for the safety of others.&rdquo;&nbsp;Under the new standard, punitive damages are appropriate only if the defendant <i>intentionally</i> injured the plaintiff or did so by <i>deliberately and flagrantly</i> disregarding risk of injury.</p> <p>The new law also bars plaintiffs from seeking punitive damages in their initial pleadings, a change intended to curb premature or frivolous punitive damages allegations. &nbsp;Instead, a party seeking to assert a claim for punitive damages now must first file a motion for leave to do so, which will be granted only if the judge finds that admissible evidence exists upon which a jury could reasonably conclude that the punitive damages standard has been met.&nbsp;This roughly mirrors the procedures for asserting punitive damages in Kansas and Illinois state courts.</p> <p>Employers are also protected under the bill from liability for punitive damages arising out of the conduct of their employees.&nbsp;Where plaintiff seeks to hold an employer vicariously liable for the wrongful acts of an employee or other agent, punitive damages will be awarded against the employer only if: (1) the employer authorized both the wrongful act and the manner in which it was done; (2) the employee was unfit to such a degree that it was reckless for the employer to hire and/or retain the employee; (3) the employee alleged to have committed the wrongful act held a management position and was acting within the scope of his or her managerial duties; or (4) the employer ratified or approved the wrongful act after it was committed.</p> <p><b><u>MMPA Reform</u></b></p> <p>The Missouri Merchandising Practices Act was originally intended to protect Missouri consumers from businesses that employ unfair and deceptive commercial practices.&nbsp;But thanks to Missouri courts&rsquo; expansive interpretation of statutory language that was often vague to begin with, the MMPA has been misused and stretched far beyond its original purpose.&nbsp;SB 591 makes a number of changes designed to reverse those trends.</p> <p>Some of the changes are simple.&nbsp;For example, to prevail on MMPA claims, plaintiffs now must prove that they acted &ldquo;as a reasonable consumer&rdquo; would have acted under similar circumstances.&nbsp;Additionally, all MMPA claimants (or, in the case of class actions, all class representatives) must support their claimed damages with evidence that is &ldquo;sufficiently definitive and objective&rdquo; to allow their losses to be calculated to a reasonable degree of certainty.&nbsp;These changes&mdash;which should be part of any consumer protection statute&mdash;should provide at least some level of protection to businesses by deterring the assertion of frivolous claims and by offering a path to dismissal when those claims are filed.</p> <p>The amendments also provide that any award of attorneys&rsquo; fees must &ldquo;bear a reasonable relationship to the amount of the judgment&rdquo; awarded to an MMPA claimant.&nbsp;Prior to SB 591, the act allowed prevailing plaintiffs to recover their attorneys&rsquo; fees, even where their recovery was nominal and any actual harm suffered was trivial.&nbsp;This allowed MMPA claimants to use the threat of ballooning attorney fees to deter defendants from litigating in earnest and to extract settlements wildly disproportionate to their actual losses (if any).&nbsp;&nbsp; This change looks to curb those abuses of the MMPA.</p> <p>The amendments also expressly exclude certain types of claims that are intended to be governed by other bodies of law.&nbsp;For example, the amended MMPA excludes claims arising out of the rendering or failure to render healthcare services, a change intended to stop the assertion of medical malpractice claims under the guise of this consumer protection statute.&nbsp;Similarly, a new provision in the law excludes certain new home warranties from the definition of &ldquo;merchandise,&rdquo; so long as the warranty documents contain and prominently display specified disclaimer language.</p> <p>The changes enacted under SB 591&mdash;both to punitive damages claims and to the MMPA&mdash;will apply only to cases governed by Missouri law and filed after August 28, 2020.&nbsp;Any case filed before that date will be subject to the previously existing standards.&nbsp;We will continue to monitor how these important changes are implemented and interpreted by Missouri courts.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Where There Has Been No Genuine Opportunity to Conduct Relevant Discovery, a Motion for Summary Judgment is Prematurehttps://www.bscr-law.com/?t=40&an=111907&format=xml&p=5258&stylesheet=blog08 Oct 2020Missouri Law Blog<p>The Missouri Court of Appeals recently <a href="https://www.courts.mo.gov/file/WD/Opinion_WD83291.pdf">held</a> that a trial court abused its discretion when it granted summary judgment to the defendants before the plaintiff deposed a witness whose testimony could not be secured by affidavit. The appeals court in <i>Traweek v. Smith </i>disagreed with a trial court&rsquo;s dismissal of the plaintiff&rsquo;s amended petition only two weeks after leave had been granted to add a claim for reformation, and before the plaintiff could present evidence to oppose the defendants&rsquo; motion for summary judgment. Having complied with Rule 74.04(f)&rsquo;s requirement of presenting an affidavit specifying the discovery that was needed and why it was needed, the appeals court held that two weeks was not enough time for the plaintiff to conduct the discovery specified in the affidavit and reversed the trial court&rsquo;s decision.</p> <p><i>Traweek </i>involved an automobile accident in which the plaintiff was injured while riding in a vehicle driven by someone else. The plaintiff spent two months in a coma and suffered severe head trauma, loss of memory, and loss of cognitive skills. The plaintiff entered an out-of-court policy limits settlement with the fault driver then filed suit against the driver and owner of the other vehicle involved in the accident. In exchange for a policy limits payment, the plaintiff executed a release prepared by the fault driver&rsquo;s insurer.</p> <p>The defendants moved for summary judgment on the basis of the release which contained language releasing the fault driver, its insurer, &ldquo;and all other persons, firms or corporations liable, or who might be claimed to be liable.&rdquo; The defendants argued that the plaintiff&rsquo;s claims against them were barred because she had already released them from any claims arising out of the accident. In opposition, the plaintiff invoked Rule 74.04(f) and argued that summary judgment would be premature because she had just been granted leave to amend the petition to add a claim for reformation of the release. The plaintiff presented evidence that she did not intend to release the defendants and that the fault driver&rsquo;s insurance adjuster had admitted to her lawyer that the insurer intended to release only the fault driver. On this basis, the plaintiff argued that there was a mutual mistake that warranted reformation of the release to reflect the parties&rsquo; true intent. However, because the adjuster was unwilling to sign an affidavit attesting to that, the plaintiff contended that she needed to take his deposition to elicit this information.</p> <p>The appeals court acknowledged that a trial court generally has discretion to either permit or deny additional time to conduct discovery before ruling on a pending summary judgment motion, but ruled that granting summary judgment only two weeks after allowing the plaintiff to add a claim for reformation of the settlement agreement was an abuse of discretion because the plaintiff had met Rule 74.04(f)&rsquo;s requirement.</p> <p>For a trial court to consider a request under Rule 74.04(f), the party requesting time to conduct discovery must present an affidavit specifying the additional evidence sought and explain how it will support the existence of a factual dispute. In <i>Traweek, </i>the plaintiff&rsquo;s lawyer filed an affidavit detailing his contacts with the insurance adjuster and the adjuster&rsquo;s unwillingness to cooperate to correct the release. The affidavit also stated that the plaintiff intended to depose the adjuster to elicit this information and how it pertained to the plaintiff&rsquo;s argument that there was a mutual mistake in the release. Also, the appeals court noted there was evidence in the record that the plaintiff did not intend to release the defendants from liability by entering a settlement with the fault driver. Taken together, the adjuster&rsquo;s testimony and the evidence already in the record would create a genuine dispute of fact on the existence of mutual mistake which would justify reformation of the release. Accordingly, the appeals court found that the trial court acted hastily in entering summary judgment, and the case was remanded to the trial court to allow the plaintiff enough time to depose the adjuster.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10