BSCR Firm News/Blogs Feedhttps://www.bscr-law.com/?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10en-us22 Feb 2019 00:00:00 -0800firmwisehttps://blogs.law.harvard.edu/tech/rssMissouri Court of Appeals Rules Venue Proper Only in County Where Decedent First Ingested Opioid Pain Medication and Not Where Drug Prescribedhttps://www.bscr-law.com/?t=40&an=88924&format=xml&p=5258&stylesheet=blog21 Feb 2019Missouri Law Blog<p>In <i>State ex rel. Mylan Bertek Pharmaceuticals, Inc. v. Vincent</i>, the Missouri Court of Appeals, Eastern District, <a href="https://www.courts.mo.gov/file/ED/Opinion_ED106945.pdf ">held </a>that, in a case alleging wrongful death, medical malpractice, and pharmaceutical liability, venue was proper only in the county where the decedent first ingested opioid pain medication, rather than the county where a defendant prescribed it. &nbsp;</p> <p>Decedent&rsquo;s widow filed suit in St. Louis County, alleging that defendants&rsquo; negligence caused her husband to become addicted to opioid pain medication, leading to unbearable withdrawal symptoms that caused him to commit suicide.&nbsp;The defendants were the physician who prescribed the medication for a back injury and several pharmaceutical companies that manufactured it. &nbsp;The plaintiff alleged the physician defendant first prescribed opioids at his medical office located in St. Louis County and continued to do so over a period of twelve years.&nbsp;Later, while travelling in Florida, the decedent ran out of medication and could not refill it.&nbsp;Plaintiff alleged the decedent suffered intense withdrawal symptoms and, as a result, shot himself in the chest and died.&nbsp;</p> <p>One of the pharmaceutical company defendants filed a motion to transfer venue asserting that venue was proper only in St. Charles County because that was the county where the decedent lived and first ingested the medication. &nbsp;Plaintiff successfully opposed the motion, arguing that St. Louis County was the proper venue because that was where he was first exposed to the physician defendant&rsquo;s negligent prescribing practices in his medical office.&nbsp;</p> <p>The appellate court analyzed &sect; 508.010, RSMo, which sets venue in the county where the plaintiff was &ldquo;first injured.&rdquo;&nbsp;Section 508.010.14 provides that a plaintiff is &ldquo;considered first injured where the trauma or exposure occurred rather than where the symptoms are first manifested.&rdquo;&nbsp;</p> <p>The court explained the alleged bodily injury to the decedent &ndash; opioid addiction, resulting pain and suffering, and ultimately death &ndash; could only have occurred when he ingested the medication.&nbsp;In other words, no bodily injury could have occurred at the time of prescribing, and it was not until the decedent ingested the medication that he exposed his body to the ill-effects of the drug.&nbsp;Under that analysis, venue was proper only in St. Charles County (where decedent first ingested the drug) and not in St. Louis County (where the physician prescribed the drug).&nbsp;&nbsp;</p> <p>Accordingly, the appellate court reversed the trial court&rsquo;s order, issued a writ of prohibition directing the St. Louis County judge not to proceed with the case, and remanded with instructions to transfer to St. Charles County.&nbsp;The court&rsquo;s analysis demonstrates that: (1) under Missouri venue law, the key inquiry is the location where the injury occurred, rather than where the allegedly negligent conduct occurred; and, (2) the alleged injury and alleged negligence do not necessarily occur in the same location.&nbsp;</p> <p class="MsoNormal">The opinion does not reference Section 538.232, which states that, in any action against a health care provider, &ldquo;the plaintiff shall be considered injured by the health care provider only in the county where the plaintiff first received treatment by a defendant for a medical condition at issue in the case.&rdquo;&nbsp; It is unclear what effect that section, if discussed, would have had on the court&rsquo;s analysis.&nbsp; &nbsp; &nbsp;<o:p></o:p></p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Jury trials in the Kansas City area slightly increase in number, but jury verdicts decline in amounthttps://www.bscr-law.com/?t=40&an=87604&format=xml&p=5258&stylesheet=blog06 Feb 2019Missouri Law Blog<p>Data from the Greater Kansas City Jury Verdict Service shows that while there were slightly more jury trials in 2018 than in 2017, the average monetary awards for Plaintiffs declined significantly. Every year, the Greater Kansas City Jury Verdict Service issues a &ldquo;Summary and Statistics of Jury Verdicts&rdquo; for the greater Kansas City area. The report includes verdicts from the Kansas City division of the U.S. District Court for the Western District of Missouri; the Kansas City branch of the U.S. District Court for the District of Kansas; and state courts in Jackson, Clay and Platte counties in Missouri; and Johnson and Wyandotte counties in Kansas.&nbsp;The statistics in 2018 indicate various shifts from 2017.</p> <p><b>More Trials, with a Lower Percentage of Plaintiffs&rsquo; Verdicts</b></p> <p>The Jury Verdict Service&rsquo;s annual summary reported on 104 trials in 2018, compared to 97 in 2017.&nbsp; Previously, there were 113 trials in 2016, 110 trials in 2015, and 133 trials in 2014.&nbsp;</p> <p>Because trials often involve multiple claims and multiple verdicts, the verdict statistics are based on the claims adjudicated, rather than simply the number of cases.&nbsp;The 104 trials in 2018 resulted in 168 verdicts; and the 97 trials in 2017 resulted in 193 verdicts.&nbsp;</p> <p style="text-align: left;"><img src="https://www.bscr-law.com/B07AF5/assets/images/Number of Trials and Verdicts_2018.png" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="450" height="200" /></p> <p>While the number of jury trials slightly increased in 2018, the percentage of Plaintiffs&rsquo; verdicts decreased very slightly.&nbsp;In 2018, 48% of the verdicts were for Plaintiffs compared to 49% for Plaintiffs in 2017.&nbsp;These figures go against what had been a trend of increases in the percentage of Plaintiffs&rsquo; verdicts dating back to 2014.</p> <p style="text-align: left;"><img src="https://www.bscr-law.com/B07AF5/assets/images//Percentage of Plaintiffs Verdicts_2018.png" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="450" height="200" /></p> <p><b>Decrease in Average Monetary Awards for Plaintiffs</b>&nbsp;</p> <p>The overall average of monetary awards for Plaintiffs experienced a significant decrease in 2018 from 2017, but was still higher than in earlier years.&nbsp;In 2018, the overall average monetary award was $1,810,693, down from $4,204,501 in 2017.&nbsp;However, first appearances are somewhat deceiving, since the Jury Verdict Service reported that the average in 2017 was greatly inflated by two verdicts of $217.7 million and $139.8 million.&nbsp;In 2018, in contrast, there was only one very large verdict for $76 million.&nbsp;Additionally, the 2018 figure of $1,810,693 represents an increase from the figures from the years prior to 2017.&nbsp;In 2016, the average Plaintiff&rsquo;s verdicts was $1,383,549, while the average in 2015 was $1,376,323.&nbsp;</p> <p><b>Slight Increase in Number of Million-Dollar Verdicts</b>&nbsp;</p> <p>In 2018, there were 14 verdicts of $1 million or more, compared to 11 such verdicts in 2017.&nbsp;But the 14 verdicts figure is slightly lower than in 2016, when there were 16 verdicts of $1 million or more.&nbsp;Of the 14 verdicts of $1 million or more in 2018, 6 were in Jackson County, MO Circuit Court (1 in Kansas City and 5 in Independence), 4 were in the Circuit Court of Clay County, MO, 2 were in the Circuit Court of Platte County, MO, and 2 were in the U.S. District Court for the Western District of MO.&nbsp;Finally, the number of verdicts between $100,000 and $999,999 decreased slightly in 2018 (29 verdicts) from 2017 (36 verdicts).</p> <p style="text-align: left;"><img src="https://www.bscr-law.com/B07AF5/assets/images//Average Monetary Awards for Plfs Verdicts_2018.png" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="450" height="200" /></p> <p><b>Key Observations and Conclusion</b>&nbsp;</p> <p>While the percentage of Plaintiffs&rsquo; verdicts decreased ever-so-slightly in 2018, the 48% figure still remains much higher than where it stood 4 years earlier (38%).&nbsp;Additionally, the average Plaintiff&rsquo;s verdicts ($1,810,693) &ndash; while down from the inflated figures of 2017 &ndash; continues to trend upward from the $1.3 million range of 2016 and 2015 and the low point figure of $350,730 in 2014.&nbsp;Almost half of the verdicts awarded in 2018 that were $1 million or more were in Jackson County, MO, which was again consistent with the view that this can be a Plaintiff-friendly forum.&nbsp;As we have stated in our previous Jury Verdict roundups, clients and national counsel should work with local counsel to carefully consider the forum when assessing the value of a case.</p> <p><u>_____</u></p> <p><img src="https://www.bscr-law.com/B07AF5/assets/images//Jury Verdict Data_2018.png" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="450" height="150" /><br /> <span style="font-size: smaller;">Source: Greater Kansas City Jury Verdict Service Year-End Reports 2014 -2018</span></p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Despite 2017 Amendment to Statute, Court of Appeals Holds Section 490.715 Fails to Preclude Evidence of "Charged" Amounts of Medical Expenses at Trialhttps://www.bscr-law.com/?t=40&an=87400&format=xml&p=5258&stylesheet=blog29 Jan 2019Missouri Law Blog<p style="text-align: left;"><o:p></o:p></p> <p style="text-align: left;">In what was widely seen as an attempt to prevent plaintiffs from introducing evidence at trial of the full, undiscounted &ldquo;amounts charged&rdquo; for medical treatment, a revised version of &sect; 490.715 was signed into law in 2017. It provides that &ldquo;parties may introduce evidence of the <b><i>actual cost</i></b> of the medical care or treatment rendered to a plaintiff or a patient whose care is at issue.&rdquo;&nbsp;<i>See </i>&sect; 490.715(5)(1), RSMo. (emphasis added).&nbsp;&ldquo;Actual cost&rdquo; is defined as:</p> <p style="margin-left: 40px;">&ldquo;a sum of money not to exceed the dollar amounts paid by or on behalf of a plaintiff or a patient whose care is at issue plus any remaining dollar amount necessary to satisfy the financial obligation for medical care or treatment by a health care provider <b><i>after adjustment for any contractual discounts, price reduction, or write-offs by any person or entity</i></b>.&nbsp;<i>See</i> &sect; 490.715(5)(2) (emphasis added).</p> <p>But in the recent case of <i>Brancati v. Bi-State Development Agency</i>, the Eastern District Court of Appeals <a href="https://www.courts.mo.gov/file/ED/Opinion_ED106359.pd">held</a> that evidence of the &ldquo;amount charged&rdquo; could still be introduced at trial, effectively rendering the revised version of &sect; 490.715 meaningless.&nbsp;<i>Brancati</i> was a general liability case with stipulations that the &ldquo;amount charged&rdquo; for medical treatment totaled $77,515.48 while the actual &ldquo;amount paid&rdquo; to satisfy the financial obligation was $40,842.95.&nbsp;Before trial, Brancati filed a pre-trial Motion, arguing that the revised version of &sect; 490.715 did not apply retroactively to this case. The trial court ruled that &sect; 490.715.5, as amended, did not apply and that the parties could offer evidence of the value of medical treatment by allowing both the &ldquo;amount charged&rdquo; as well as the &ldquo;amount paid&rdquo; into evidence.</p> <p>After a $625,000 adverse jury verdict, Bi-State appealed and argued, in part, that the revised version of &sect; 490.715 applied retroactively to limit the evidence admissible regarding the cost of Brancati&rsquo;s medical care to the &ldquo;amount paid&rdquo; and not the &ldquo;amount charged.&rdquo;&nbsp;</p> <p>The Eastern District affirmed the trial court and held that the revised version of &sect; 490.715 did not eliminate the ability to introduce evidence of the &ldquo;amount charged&rdquo; for medical bills.&nbsp;The Court ruled that the statute did not expressly prohibit the introduction of &ldquo;amounts charged&rdquo; and merely permitted parties to introduce the &ldquo;actual costs&rdquo; of medical treatment.&nbsp;It also relied on Subsection 4, which provides that evidence admissible for &ldquo;another purpose&rdquo; may be introduced.&nbsp;Notably, the decision is devoid of any discussion about what other purpose was at issue to support the admission during trial of the &ldquo;amount charged.&rdquo;&nbsp;</p> <p>There are two other fundamental problems with the Eastern District&rsquo;s decision, one dealing with legal and logical relevance, and the other with maxims of statutory construction.&nbsp;First, legal relevance requires a trial court to weigh the probative value of proffered evidence against its costs, such as unfair prejudice, confusion of the issues, misleading the jury, or wasting time.&nbsp;<i>Reed v. Kansas City Missouri School District</i>, 504 S.W.3d 235, 242 (Mo. App. W.D. 2016).&nbsp;Missouri courts have long held that a plaintiff may recover only those medical treatment expenses that he was liable to pay for the medical treatment, and actually incurred.&nbsp;<i>See Cordray v. City of Brookfield</i>, 88 S.W.2d 161, 164 (Mo. 1935); <i>Zachary v. Korger, Inc.</i>, 332 S.W.2d 471, 475 (Mo. App. W.D. 1960).&nbsp;To allow the introduction of the full, undiscounted &ldquo;amount charged&rdquo; for medical expenses defies both basic principles of logical relevance (the evidence tends to make the existence of any material fact more or less probable than it would be without the evidence) and legal relevance.&nbsp;Evidence of the &ldquo;amount charged&rdquo; does not meet the litmus test of logical relevance because its introduction does not affect a plaintiff&rsquo;s ability to recover the &ldquo;amount paid&rdquo; for medical treatment. Nor does it meet the litmus test of legal relevance because its probative value is far outweighed by the dangers of confusing the issue and misleading the jury.&nbsp;</p> <p>Second, this decision disregards the most basic canons of statutory construction.&nbsp;A fundamental principle of statutory construction is that a primary role of the courts in construing statutes is to &ldquo;ascertain the legislature&rsquo;s intent from the language used in the statute and, if possible, give effect to that intent.&rdquo;&nbsp;<i>State ex rel. Koehler v. Lewis,</i> 844 S.W.2d 483, 487 (Mo. App. W.D. 1992).&nbsp;Under the &ldquo;Reenactment Canon,&rdquo; &ldquo;when the Legislature amends a statute, it is presumed that the legislature intended to effect some change in the existing law.&rdquo;&nbsp;<i>State v. Liberty</i>, 370 S.W.3d 537, 561 (Mo. banc 2012).&nbsp;This is because &ldquo;to amend a statute and accomplish nothing from the amendment would be a meaningless act, and the legislature is presumed not to undertaken meaningless acts.&rdquo;&nbsp;<i>Id.</i>&nbsp;By continuing to allow plaintiffs to introduce evidence of the &ldquo;amount charged&rdquo; for medical expenses, the <i>Brancati</i> court appears have rendered this legislative amendment meaningless.&nbsp;Further, in considering the landscape prior to the 2017 amendment, specifically that both the Eastern District and Missouri Supreme Court held that the &ldquo;amount charged&rdquo; for medical expenses could be introduced at trial, the language used in the 2017 statute clearly evinces an attempt to eliminate this practice.&nbsp;<i>See Berra v. Danter</i>, 299 S.W.3d 690 (Mo. App. E.D. 2009); <i>Deck v. Teasley</i>, 322 S.W.3d 536 (Mo. banc 2010).&nbsp;Likewise, this decision violates the canon that courts &ldquo;must examine the language of the statutes as they are written [and] cannot simply insert terms that the legislature has omitted.&rdquo;&nbsp;<i>Loren Cook Co. v. Director of Revenue</i>, 414 S.W.3d 451, 454 (Mo. banc 2013).&nbsp;</p> <p>A request&nbsp;that&nbsp;the <i>Brancati </i>case be transferred&nbsp;to the Missouri Supreme Court for review is presently pending.&nbsp; Whether or not the Supreme Court takes the <i>Brancati&nbsp;</i>case, we are confident that we&nbsp;have not seen the last of litigation on this issue.&nbsp;</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10When it Comes to Nonconforming Goods, is the Customer Always Right?https://www.bscr-law.com/?t=40&an=87345&format=xml&p=5258&stylesheet=blog23 Jan 2019Missouri Law Blog<p>There are two important lessons to be learned from <i>Williams v. Medalist Golf</i>, a recent case from the Eighth Circuit Court of Appeals, applying Missouri law. First, when a company guarantees customer satisfaction, only to leave the customer unsatisfied, it risks not only its business reputation, but also its legal right to collect payment.&nbsp;Second, when giving testimony about the meaning of a contract, it is almost always best to let the written document speak for itself.</p> <p>Plaintiff Cane Creek Sod submitted a bid to provide almost a million square feet of grass for the construction of a new golf course at Big Cedar Lodge in Branson, Missouri.&nbsp;Cane Creek promised to provide premium Meyer Zoysia grass, and it offered a lower price than any other bidder.&nbsp;Defendant Medalist Golf, Inc., accepted the bid and provided a &ldquo;Grass Supplier Agreement&rdquo; for Cane Creek to sign.</p> <p>The Grass Supplier Agreement provided that the seller &ldquo;guarantees the quality and specification of the materials provided.&rdquo;&nbsp;Supplier Cane Creek&rsquo;s owner testified that he understood this to mean he &ldquo;was guaranteeing that they were going to get Meyer Zoysia and that it would be the quality that satisfied the customer [or Cane Creek] would fix it.&rdquo;&nbsp;The contract set a fixed price per square foot and provided an estimate of the quantity that would be need.&nbsp;But it also cautioned that this was &ldquo;a target and not a guaranteed amount&rdquo; and affirmed the parties&rsquo; understanding that the project &ldquo;may use more or less than estimated quantities.&rdquo;</p> <p>Over the following months, Cane Creek devoted considerable time and resources to growing dozens of acres of Meyer Zoysia.&nbsp;Shortly before the sod was to be harvested, the golf course&rsquo;s developer asked Medalist Golf to visit the sod farm to inspect the quality of the grass.&nbsp;After inspecting and photographing the sod, the developer decided the quality of the grass was unacceptable for the course and instructed Medalist Golf to reject it.&nbsp;Medalist did so, and then purchased the required grass from another bidder.&nbsp;Cane Creek was able to find alternative buyers for some, but not all, of what it had grown for Medalist.</p> <p>The supplier sued Medalist for breach of contract, arguing that Medalist had been contractually obligated to purchase all of the grass needed for this golf course exclusively from Cane Creek.&nbsp;Medalist moved for summary judgment, arguing that: (1) no enforceable contract existed, and (2) even if a contract did exist, Medalist was relieved of any obligations, because Cane Creek&rsquo;s sod failed to conform to the contract.&nbsp;The trial court granted Medalist&rsquo;s motion, and Cane Creek appealed.&nbsp;The Eighth Circuit <a href="http://media.ca8.uscourts.gov/opndir/18/12/181652P.pdf">affirmed</a> the summary judgment in Medalist&rsquo;s favor.</p> <p>The Eighth Circuit rejected Medalist&rsquo;s first argument&mdash;that no enforceable contract ever existed between Medalist and Cane Creek.&nbsp;The &ldquo;Grass Supplier Agreement&rdquo; was an enforceable &ldquo;requirements contract.&rdquo;&nbsp;A requirements contract is one in which &ldquo;one party promises to supply all the specific goods or services which the other party may need during a certain period at an agreed price, and the other party promises that he will obtain his required goods or services from the first party exclusively.&rdquo;&nbsp;</p> <p>The court held that imprecise estimates of the quantity to be purchased were sufficient to support such a contract, and it saw ample evidence that the parties intended for Medalist to buy all of the grass needed for this golf course exclusively from Cane Creek, at an agreed-upon price.&nbsp;Thus, the court concluded, there was a valid agreement upon which Cane Creek could base its breach of contract claim.</p> <p>But the breach of contract claim still failed as a matter of law, because the court agreed with Medalist that the sod failed to conform to the contract.&nbsp;The Uniform Commercial Code as adopted in Missouri allows a buyer to reject tendered goods without payment, if they &ldquo;fail in any respect to conform to the contract.&rdquo;&nbsp;Mo. Rev. Stat. &sect; 400.2-601.&nbsp;Therefore, if the sod was not of the quality that was promised, Medalist had the right to reject it and no obligation to pay for it.</p> <p>The case ultimately turned on the contract&rsquo;s provision that Cane Creek would &ldquo;guarantee the quality and specification of the materials provided.&rdquo; This language, Medalist argued, required more than just sod that was acceptable to an expert or another golf course; it required that the sod be to the <b><i>customer&rsquo;s</i></b> satisfaction.</p> <p>Notably, though, the contractual language itself only required Cane Creek to &ldquo;guarantee the quality and standards&rdquo; of its product.&nbsp;It did not specify how the sod&rsquo;s &ldquo;quality and standards&rdquo; were to be judged.&nbsp;Although it conceded that Medalist did not act in bad faith, Cane Creek tried to present other evidence that the grass lived up to the &ldquo;quality and standards&rdquo; required by the contract, including: (1) expert testimony that the sod was high quality, (2) the results of a test finding the sod to be free of &ldquo;noxious weed contaminates,&rdquo; and (3) the fact that some of the same sod was subsequently sold to and used by another golf course.&nbsp;Cane Creek argued that this evidence at least created a genuine factual dispute as to whether Medalist wrongfully rejected the sod.&nbsp;</p> <p>But Cane Creeks&rsquo; position was seriously undermined at its owner&rsquo;s deposition, where he testified that he understood the &ldquo;guarantee&rdquo; to mean that he &ldquo;was guaranteeing that they were going to get Meyer Zoysia <b><i>and that it would be the quality</i></b> <b><i>that satisfied the customer</i></b>, [or Cane Creek] would fix it.&rdquo;&nbsp;This testimony arguably broadened Cane Creek&rsquo;s duties under the contract.&nbsp;It made the customer&rsquo;s judgment as to the sod&rsquo;s quality&mdash;as subjective as that may be&mdash;the ultimate and final measuring stick for compliance with the contract.&nbsp;Unfortunately for Cane Creek, this rendered irrelevant all of its expert opinions, test results, and other evidence about the high quality of the sod.&nbsp;If Medalist was unsatisfied, the sod was nonconforming and could be rejected.&nbsp;Full stop. &nbsp;(Had there been evidence that Medalist rejected the goods purely out of bad faith, the court would have been obliged to consider it; but concededly, this was not the case.)&nbsp;&nbsp;</p> <p>Customer satisfaction is always the goal, of course.&nbsp;But it is also an inherently subjective and often unpredictable concept.&nbsp;A customer may be dissatisfied simply because he or she is persnickety, capricious, or just misinformed.&nbsp;As tempting as it is to &ldquo;guarantee&rdquo; that a customer will be satisfied, businesses must understand the legal implications of doing so.&nbsp;Courts will enforce quality guarantees, and they will usually leave it to the parties to decide how quality should be measured. &nbsp;A guarantee of customer satisfaction may make for a good sales pitch, but it is a poor legal standard.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10City of St. Louis – Still A Judicial Hellholehttps://www.bscr-law.com/?t=40&an=86892&format=xml&p=5258&stylesheet=blog26 Dec 2018Missouri Law Blog<p>The <a href="http://www.judicialhellholes.org/wp-content/uploads/2018/11/judicial-hellholes-report-2018-2019.pdf">2018-2019 ATRF Judicial Hellholes Report</a> is out, and, surprise, surprise, the &ldquo;Show Me Your Lawsuit&rdquo; state, specifically the City of St. Louis, landed fourth on the list&mdash;only behind California, Florida, and New York City. While it must be noted that St. Louis has moved down in the ATRF Judicial Hellhole rankings (St. Louis was ranked No. 3 in 2017-2018 and No. 1 in 2016-2017), St. Louis is still considered by many to be one of the most plaintiff-friendly courts in the nation, making it an inhospitable venue for corporate defendants, or any defendants for that matter. &nbsp;While the term &ldquo;hellhole&rdquo; may be a bit over the top, defense counsel must nonetheless be wary of this venue and advise their clients accordingly.&nbsp;And in-house counsel should pay particular heed when drafting jurisdiction and venue clauses in corporate agreements.</p> <p>There was initial optimism from 2017 that political changes in the executive branch would aid business interests and result in certain statutory reforms.&nbsp;The ATRF Report bursts that balloon, reporting that optimism &ldquo;quickly evaporated in 2018 as massive verdicts, blatant forum shopping, and legislative ineptitude plagued the &lsquo;Show Me Your Lawsuit&rsquo; state.&rdquo;&nbsp;</p> <p>The ATRF Report also attributes St. Louis&rsquo; inability to become a more balanced venue to its &ldquo;loose&rdquo; application of procedural rules, and an unwillingness to consistently follow Missouri appellate court and U.S. Supreme Court precedent, especially as it applies to a court&rsquo;s exercise of jurisdiction over out-of-state defendants.&nbsp;A combination of these two elements is what generally encourages forum shopping and out-of-state plaintiffs to seek out this jurisdiction, which gained national recognition in recent substantial toxic exposure verdicts.</p> <p>Looking ahead to the 2019 Missouri General Assembly legislative session, the Missouri Chamber of Commerce President and CEO, Daniel P. Mehan, recently vowed to address this state&rsquo;s litigious climate which he describes as a &ldquo;black eye for Missouri.&rdquo;&nbsp;He intends to push for new legislation to make Missouri&rsquo;s courtrooms more balanced when the Missouri General Assembly convenes for their legislative session in January 2019.&nbsp;More recently, the Missouri Chamber Board of Directors has approved the organization&rsquo;s 2019 Legislative Agenda which include several modifications that are aimed specifically at curtailing Missouri&rsquo;s Judicial Hellhole status.&nbsp;These reforms contain measures that would:</p> <p>1.&nbsp;&nbsp;&nbsp; Clarify venue and joinder laws in an effort to curb venue/forum shopping;</p> <p>2.&nbsp;&nbsp;&nbsp; Strengthen the Missouri Merchandising Practices Act to reduce frivolous class action lawsuits;</p> <p>3.&nbsp;&nbsp;&nbsp; Increase transparency in toxic exposure litigation to curtail fraudulent claims and ensure compensation for future claimants;</p> <p>4.&nbsp;&nbsp;&nbsp; Strengthen Missouri&rsquo;s employment arbitration climate in an effort to avoid costly litigation and resolve disputes rapidly;</p> <p>5.&nbsp;&nbsp;&nbsp; Establish a statute of repose to stop new regulations from opening additional paths to litigation; and</p> <p>6.&nbsp;&nbsp;&nbsp; Reforming the statutes regarding punitive damages to clarify the standard and define when an employer can be held liable for such damages.</p> <p>Whether or not all of these reforms will make it to committee is still yet to be determined, especially since several of these reforms were attempted in 2018 but failed.&nbsp;Nonetheless, 2019 is a new year!</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10A Passive Website Is Insufficient to Confer Personal Jurisdiction in Missourihttps://www.bscr-law.com/?t=40&an=86849&format=xml&p=5258&stylesheet=blog20 Dec 2018Missouri Law Blog<p>Over the years &ndash; and to the dismay of out-of-state defendants &ndash; state trial courts have often taken an expansive view of when they may exercise personal jurisdiction over companies with limited ties to Missouri. Recently, however, the Missouri Supreme Court made permanent a preliminary writ of prohibition in the case of <i>State of Missouri ex rel PPG Industries, Inc. v. The Honorable Maura McShane, Case No. SC97006</i>.&nbsp;Advertisement on a passive website by an out of state company is not conduct sufficient to confer personal jurisdiction under the Missouri long arm statute.&nbsp;</p> <p><u>Facts</u></p> <p>Hilboldt Curtainwall, Inc. provided materials for a Missouri construction project.&nbsp;Some of these materials were to be coated with a product made by PPG Industries, Inc., a Pennsylvania corporation.&nbsp;Hildboldt reviewed PPG&rsquo;s website and identified Finishing Dynamics, LLC as an &ldquo;approved applicator&rdquo; of the coating product manufactured by PPG.&nbsp;Finishing Dynamics failed to properly apply the coating product, rendering useless the products which were coated.&nbsp;Hilboldt subsequently filed suit in the Circuit Court of St. Louis County, Missouri against Finishing Dynamics for breach of contract and implied warranty of merchantability.&nbsp;Hilboldt also sued PPG under a negligent misrepresentation theory stemming from the information obtained by Hilblodt from PPG&rsquo;s website.</p> <p>PPG filed a motion to dismiss Hilboldt&rsquo;s negligent misrepresentation claim for lack of personal jurisdiction.&nbsp;PPG argued that its website advertising was insufficient conduct to confer personal jurisdiction, stating that representations on its passive website, which were not aimed specifically to Missouri consumers, were insufficient to confer personal jurisdiction.&nbsp;PPG had no other ties to Missouri.</p> <p>Hilboldt argued that, under its negligent misrepresentation theory, PPG committed a tortious act in the state of Missouri.&nbsp;Hilboldt believed conduct sufficient to confer personal jurisdiction in Missouri existed because the representations on PPG&rsquo;s website were received by Hilboldt in Missouri, relied upon by Hilboldt in Missouri, and caused injury to Hilboldt in Missouri.</p> <p>The Circuit Court denied PPG&rsquo;s motion to dismiss, and PPG filed a petition for a writ of prohibition in the Missouri Supreme Court to prevent the circuit court from taking any further action other than to dismiss PPG from the case.&nbsp;The Supreme Court issued a preliminary writ, and this decision followed.</p> <p><u>PPG&rsquo;s Conduct Was Insufficient to Confer Personal Jurisdiction</u>.</p> <p>The Supreme Court agreed with PPG that the passive website, visible within Missouri but not used for direct communication or negotiation, was not conduct falling under the Missouri long arm statute.&nbsp;The Court stated that, in light of &ldquo;the broad and general nature of PPG&rsquo;s website, PPG&rsquo;s suit-related contacts with Missouri are not sufficient to be considered tortious acts in Missouri.&rdquo;</p> <p>Missouri courts apply a two part test to determine whether personal jurisdiction exists over a nonresident defendant.&nbsp;First, the nonresident&rsquo;s conduct must fall within the Missouri long arm statute.&nbsp;That statute, RSMo. &sect;506.500(3), confers personal jurisdiction upon foreign persons and firms who commit a tortious act within the state. Secondly, once it is determined that the conduct does fall under the statute, the Court must determine whether the defendant has sufficient minimum contacts with Missouri to satisfy due process.</p> <p>The Court emphasized that no direct or individual communications occurred between Hilboldt and PPG, PPG did not contact any Hilboldt representative through the website and Hilboldt did not interact with any PPG representative using the website.&nbsp;The website was not used to complete any transaction, facilitate communication or conduct any interactions between Hilboldt and PPG.&nbsp;The website was merely accessible by Missouri residents, as well as residents of every other state, but PPG did not specifically target or solicit web traffic from Missouri.</p> <p>Furthermore, the Court noted that the information from PPG&rsquo;s website, even if false, was used by Hilboldt to enter into a contract with third-party Finishing Dynamics.&nbsp;The true basis for Hilboldt&rsquo;s underlying claim was the mistakes made by the third-party in failing to appropriately apply PPG&rsquo;s coating product, further &ldquo;muddling&rdquo; any connection between Hilboldt and PPG.</p> <p>Because PPG&rsquo;s limited conduct was found not to fall under the first prong of the Missouri personal jurisdiction analysis, the Court did not determine whether PPG&rsquo;s contacts with Missouri were sufficient to satisfy due process under the second prong of the analysis.</p> <p><u>Conclusion</u></p> <p>The Supreme Court <a href="https://www.courts.mo.gov/file.jsp?id=133515">ruling</a> establishes that a &ldquo;passive website&rdquo; which is used only for advertising and is not used to facilitate communication or negotiations will not provide the basis for conduct sufficient to confer personal jurisdiction against nonresident parties under the Missouri long arm statute.&nbsp;</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Who May Challenge an Allegedly Discriminatory Property Tax Assessment? And What is the Burden of Proof?https://www.bscr-law.com/?t=40&an=86074&format=xml&p=5258&stylesheet=blog17 Dec 2018Missouri Law Blog<p>In <i>Crowell v. David Cox, Assessor, </i> Missouri&rsquo;s Western District Court of Appeals <a href="https://www.courts.mo.gov/file.jsp?id=132334">reaffirmed</a> that a taxpayer lacks standing to protest a property assessment made before the taxpayer owned the property.&nbsp;It also held that a taxpayer asserting a discrimination claim carries the burden of proving that other similarly situated properties were undervalued compared to their property, including presenting evidence of the fair market value of the similarly situated properties.</p> <p>In 2014, the Crowells bought residential property in Parkville, Platte County, Missouri.&nbsp;As of 2006, the property had an appraised value of $48,832 (the value the assessor determined was the property&rsquo;s fair market value) and an assessed value of $9,278 (a percentage of the appraised value which serves as the basis for calculating real estate tax liability).&nbsp;After extensive repairs and renovations, the property sold in December 2007 for $234,000.&nbsp;Based upon the sale, the appraised value increased in 2008 to $230,660, with the assessed value increasing to $43,825.&nbsp;These valuations were applied to the property for tax years 2008 through 2014 with no protests of the valuations.&nbsp;In October 2014, the Crowells purchased the property for $230,000.</p> <p>After the purchase and after doing some research into the assessment and sales history, the Crowells engaged in informal negotiations with the assessor to have the appraised and assessed values of the property reduced.&nbsp;In 2015, the assessor reduced the appraised/assessed values to $210,660/$40,025.&nbsp;Dissatisfied with the reduction, the Crowells pursued formal review and appeal through the Platte County Board of Equalization, which affirmed, and the State Tax Commission.&nbsp;</p> <p>Before the State Tax Commission, the Crowells argued discrimination in that their property was appraised at a higher ratio of its sale price than five other comparable properties.&nbsp;The five other properties were all recent sales and, unlike the Crowells&rsquo; property, none of them received an increase in assessed value based upon the sale.&nbsp;The Crowells also presented a chart comparing 41 other Platte County properties, as to square footage, appraised/assessed values, tax amount, and tax amount per square foot.&nbsp;Based on this comparison, the Crowells argued their property was assessed at a higher rate per square foot than all 41 comparison properties.&nbsp;The Crowells did not dispute, however, that the fair market value of their property was $210,660.&nbsp;Nor did they present any evidence of the fair market value of the comparison properties.&nbsp;</p> <p>The State Tax Commission concluded the Crowells lacked standing to challenge the 2008 assessment because they did not own the property until 2014.&nbsp;It also found no discrimination because the Crowells failed to show that other properties in the same general class, i.e. residential, were undervalued.&nbsp;The Commission found the Crowells presented no evidence from which a comparison could be made between the median level of assessment of residential property in the county and the actual level of assessment of their property.&nbsp;</p> <p>The Crowells filed a petition for review in the Circuit Court asserting disparate and discriminatory treatment because the 2008 assessment increase was based on the property&rsquo;s sale price whereas none of the other properties sold in the Crowell&rsquo;s neighborhood between 2008 and 2015 received an assessment increase based on the sale price.&nbsp;The Circuit Court affirmed the Commission&rsquo;s decision and order.</p> <p>On appeal, the Crowells argued two points: (1) the 2008 assessment violated Missouri law and was thus void <i>ab initio</i>, even if the Crowell lacked standing to challenge the assessment at the time it was imposed; and (2) the Commission had erroneously concluded that the Crowells were required to prove all other property in the same class was undervalued.</p> <p>As to the challenge to the 2008 assessment, the Western District reaffirmed the long-standing rule that individual taxpayer plaintiffs lack standing to challenge other taxpayers&rsquo; property tax assessments, as they are not injured personally by others&rsquo; assessment calculations.&nbsp;This is true even though the allegedly legally faulty 2008 assessment in this case set in motion a chain of events which was directly and causally connected to the performance of the Crowells&rsquo; 2015 appraisal and assessment.&nbsp;According to the Court, a taxpayer lacks standing to challenge another taxpayer&rsquo;s assessment even if the assessment results in a tax increase for the complaining taxpayer.&nbsp;</p> <p>As to the Crowells&rsquo; discrimination claim, the Western District found the Crowells failed to meet their burden of showing that disparate treatment caused them to bear an unfair share of the property tax burden compared to the other properties. &nbsp;Even had the Crowells&rsquo; property been the only one reassessed based on its sale price that alone, would be insufficient.&nbsp;The Crowells failed to prove that the other recently sold properties were not assessed at their fair market values, and that failure was fatal to their claim.&nbsp;</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Employees: An affirmative and purposeful reminder that the safety of your co-workers may also be your dutyhttps://www.bscr-law.com/?t=40&an=86075&format=xml&p=5258&stylesheet=blog07 Dec 2018Missouri Law Blog<p>Recently, in <i>Brock v. Dunne</i>, the Missouri Court of Appeals for the Eastern District <a href="https://www.courts.mo.gov/file/ED/Opinion_ED105739.pdf">affirmed</a> a trial court judgment assessing liability against a co-employee pursuant to the 2012 Amendment to &sect; 287.120.1 of the Missouri Workers&rsquo; Compensation Act. The appellate court held that the defendant co-employee (1) owed the injured plaintiff a personal duty of care, separate and distinct from his employer&rsquo;s non-delegable duties, and (2) engaged in an affirmative negligent act that purposefully and dangerously caused or increased the risk of injury, which prevented him from claiming immunity under the statute.</p> <p>The Missouri Worker&rsquo;s Compensation Act immunizes employers from their employees&rsquo; tort claims for injuries that arise from workplace accidents.&nbsp;Generally, this immunity extends to the injured employee&rsquo;s <i>fellow employees</i> where such co-employee&rsquo;s negligence is based upon a general non-delegable duty of the employer. &nbsp;But a fellow employee does not have immunity where he commits an affirmative act causing or increasing the risk of injury.&nbsp;Specifically, the 2012 Amendment to &sect; 287.120.1 grants immunity to co-employees except when &ldquo;<b><i>the employee engaged in an affirmative negligent act that purposefully and dangerously caused or increased the risk of injury</i></b>.&rdquo;</p> <p>Here, plaintiff Brock sued his supervisor at the time of his injury, claiming the supervisor&rsquo;s actions of removing a safety guard from a laminating machine and ordering plaintiff to clean the machine &mdash; while it was still running and without the safety guard equipped &mdash; constituted negligence and invoked the co-employee exception to immunity for workplace injuries under &sect; 287.120.1.&nbsp;The jury returned a verdict against the supervisor co-employee, and assessed over a million dollars in damages.</p> <p><u>Independent Duty</u></p> <p>Before the Missouri legislature&rsquo;s 2012 modification, &sect; 287.120.1 did not mention co-employee liability and such persons were liable to the full extent they would otherwise be under the common law.&nbsp;At common law, an employee is liable to a third person, including a co-employee, when he or she breaches a duty owed independently of any master-servant relationship &ndash; that is, a duty separate and distinct from the employer&rsquo;s non-delegable duties.&nbsp;In 1982, closely following the common law, the Missouri Court of Appeals for the Eastern District initially articulated what is frequently referred to as the &lsquo;something more&rsquo; doctrine. <i>State ex. rel Badami v. Gaertner</i>, 630 S.W.2d 175, 180 (Mo. Ct. App. E.D. 1982) (en banc).&nbsp;Under the &lsquo;something more&rsquo; test, an employee may sue a fellow employee only for (1) affirmative negligent acts which are (2) outside the scope of an employer&rsquo;s responsibility to provide a safe workplace.</p> <p>While the 2012 Amendment does not expressly state that such acts must be committed outside the scope of an employer&rsquo;s responsibility to provide a safe workplace for co-employee liability to attach, the appellate court in <i>Brock v. Dunne</i> found the Amendment did not abrogate the common law. Rather, the Amendment must be interpreted in conjunction with the common law requirement that an employee owes a duty to fellow co-employees if it is beyond the scope of an employer&rsquo;s non-delegable duties.</p> <p>The Supreme Court of Missouri has held that, as is the case with most common law duties, an employer&rsquo;s non-delegable duties are not unlimited, but instead, are limited to those risks that are reasonably foreseeable to the employer. <i>Conner v. Ogletree</i>, 542 S.W.3d 315, 322 (Mo. banc 2018).&nbsp;Notably, one example of reasonably foreseeable actions is a co-employee&rsquo;s failure to follow employer-created rules.&nbsp;It has also repeatedly been held that a co-employee&rsquo;s creation of a hazard or danger does not fall within the employer&rsquo;s duty to provide a safe workplace.</p> <p>In <i>Brock v. Dunne</i>, not only did the supervisor violate specific safety rules created by the employer; his actions also affirmatively created the hazardous condition that resulted in plaintiff&rsquo;s injury.&nbsp;The appellate court thus held the supervisor&rsquo;s actions were not reasonably foreseeable to the employer and fell outside the scope of the employer&rsquo;s non-delegable duties, because he purposefully performed affirmative negligent acts that created an additional danger which would not have been otherwise present in the workplace.</p> <p><u>Affirmative Negligent Act</u></p> <p>An affirmative negligent act can best be described as an act that <b><i>creates additional danger </i></b>beyond that normally faced in the job-specific work environment.&nbsp;These actions create a separate and extreme risk of injury and death, far beyond that anticipated or contemplated by the ordinary duties and responsibilities of the plaintiff&rsquo;s position of employment.&nbsp;Affirmative negligent acts are not required to be physical acts, and, as was evident here, can be as simple as a superior directing a co-employee to perform a task.</p> <p>Further, while &sect; 287.120.1 requires that the act&ldquo;<u>purposefully</u> and dangerously caused or increased the risk of injury[,]&rdquo; the statute does not require proof the co-employee &ldquo;had a conscious plan to dangerously cause or increase the risk of injury, and that he did so with awareness of the probable consequences[,]&rdquo; as the defendant suggested in this case.&nbsp;Rather, the statute merely requires that the negligent act be conducted purposefully and intentionally (rather that inadvertently or by mistake).</p> <p><u>The Bottom Line</u></p> <p>For a co-employee to be liable in Missouri for a workplace injury, the plaintiff has to show BOTH:</p> <p>(1)&nbsp;&nbsp; That the defendant co-employee owed a personal duty beyond the employer&rsquo;s non-delegable duty to provide a safe workplace (defendant&rsquo;s conduct created a job hazard beyond the <i><u>foreseeable</u></i> risks of the tasks assigned to the plaintiff by the employer); AND,</p> <p>(2)&nbsp;&nbsp; That, in so doing, the defendant co-employee committed an &ldquo;affirmative negligent act&rdquo; (<i>i.e.</i>, not a mere omission) that was purposeful and put the plaintiff in danger.</p> <p>While employers are immune from civil suits due to the exclusivity of Missouri&rsquo;s Worker&rsquo;s Compensation Act, the same cannot be said for all <b>employees</b>.&nbsp;The duty to provide a safe workplace and safe appliances, tools and equipment for the work belongs to the employer, but employees must stay mindful that their own actions may endanger their co-workers and subject them to personal liability.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Missouri Court of Appeals Declines to Adopt a Parking-Lot Right-of-Way Rulehttps://www.bscr-law.com/?t=40&an=86076&format=xml&p=5258&stylesheet=blog04 Dec 2018Missouri Law Blog<p>The Missouri Court of Appeals for the Eastern District recently rejected an invitation to recognize a common-law right-of-way rule for vehicles operating within a private parking lot. By operation of the fundamental principle that the law should impose tort liability on the party better able to alter their behavior to avoid harm, the court held concurrent duties of drivers to keep a careful lookout and to slow, stop, or swerve to avoid a collision better conform to Missouri&rsquo;s principles of tort law.</p> <p><i>Barth v. St. Jude Medical, Inc.</i>, involved an automobile collision on the parking lot of Mercy Hospital in St. Louis County.&nbsp;Defendant&rsquo;s employee, who was backing out of a parking space, relied primarily upon her back-up camera because a vehicle parked to her right obscured her vision of any vehicles coming down the parking lane.&nbsp;Plaintiff, who was traveling down that parking lane, did not see defendant&rsquo;s taillights or reverse lights.&nbsp;Defendant collided with the passenger side of plaintiff&rsquo;s vehicle, causing plaintiff personal injury.&nbsp;</p> <p>At trial, plaintiff tendered a disjunctive comparative-fault jury instruction which included the defendant&rsquo;s failure to yield the right-of-way and an instruction defining the phrase &ldquo;yield the right-of-way.&rdquo;&nbsp;The trial court refused to submit these tendered instructions and instead submitted two comparative-fault instructions: one for assessing fault to plaintiff and the other to defendant with neither instruction hypothesizing a failure to yield the right-of-way.&nbsp;The jury returned a verdict for defendant.&nbsp;</p> <p>On appeal, plaintiff asserted that the trial court erred by failing to instruct the jury on failure to yield the right-of-way.&nbsp;Plaintiff argued his proposed comparative fault instruction properly hypothesized a failure to yield the right-of-way under Missouri Approved Instruction 17.08, and his proposed definitional instruction was consistent with and required by the Notes on Use for that approved instruction.&nbsp;</p> <p>The Court of Appeals found no error because the proposed definitional instruction, which it agreed was a necessary addition to any instruction hypothesizing a failure to yield the right-of-way <i>on a public thoroughfare</i>, did not pass muster.&nbsp;The Missouri pattern instructions provide eight different definitions for the phrase &ldquo;yield the right-of-way.&rdquo;&nbsp;All are patterned after statutory rules of the road, but notably, none of those statutory rules of road, applies to this case because the collision occurred <i>on a private parking lot</i>.&nbsp;</p> <p>Plaintiff&rsquo;s counsel argued that the statutory-based definitional instruction could be based upon a common-law right-of-way rule, even if the statutory rules did not apply.&nbsp;Toward this end, plaintiff proposed a definitional instruction hypothesizing &ldquo;yield the right-of-way&rdquo; in the context of this case means a driver backing out of a parking spot on a parking lot is required to yield to another vehicle approaching in the lane adjacent to the parking spot.&nbsp;As support, plaintiff cited to a statutory rule of the road setting out the definition of &ldquo;yield the right-of-way&rdquo; for when a vehicle enters a roadway from an alley, private road, or driveway.&nbsp;The court found, however, that since the statutory rules of the road did not apply to the private parking lot, it would have been error to submit a statutory right-of-way instruction for a private parking-lot accident.</p> <p>Alternatively, plaintiff urged the court to recognize his proposed common-law right-of-way rule requiring vehicles backing out of parking spaces to yield to vehicles approaching in the traffic lane adjacent to the parking spot.&nbsp;The court declined to do so as such a rule would conflict with a fundamental principle of Missouri tort law: &nbsp;liability should be imposed on the party better able to alter his or her behavior to avoid the harm.&nbsp;Plaintiff&rsquo;s proposed rule assumed that in every situation the party better able to avoid the harm is the party backing out of the parking space.&nbsp;This, however, may not always be the case.&nbsp;The court <a href="https://www.courts.mo.gov/file.jsp?id=132356 ">concluded</a> that concurrent duties of the drivers to keep a careful lookout while in the parking lot and to slow, stop, or swerve to avoid a collision, consistent with the instruction the trial court gave in this case, conform to this basic principles of tort law.&nbsp;Any deviation from this basic principle under the circumstances of this case would have to come from the Missouri legislature.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10Missouri Supreme Court Opinion Calls Into Question Many Consumer Arbitration Agreementshttps://www.bscr-law.com/?t=40&an=85878&format=xml&p=5258&stylesheet=blog20 Nov 2018Missouri Law Blog<p>The Missouri Supreme Court recently issued an opinion that could undercut the arbitration clauses found in many existing commercial contracts. In <i>A-1 Premium Acceptance, Inc. v. Hunter</i>, the court refused to name a substitute arbitration forum when the parties&rsquo; agreed-upon arbitrator&mdash;the National Arbitration Forum&mdash;suddenly and unexpectedly stopped providing arbitration services in consumer claims nationwide.</p> <p>By way of background, the National Arbitration Forum was one of the nation&rsquo;s largest providers of arbitration services for consumer debt collection claims.&nbsp;In 2008, NAF administered over 200,000 cases.&nbsp;But a series of lawsuits alleged unfair practices and hidden ties to the debt collection industry, culminating in a July 2009 action by Minnesota&rsquo;s attorney general.&nbsp;Just three days after the Minnesota case was filed, NAF entered into a consent judgment compelling it to immediately stop administering consumer credit arbitrations nationwide.&nbsp;(NAF has since re-branded as Forum and now focuses on internet domain-name disputes.)</p> <p>Meanwhile, many existing consumer credit contracts were written with language requiring binding arbitration of consumer protection claims by the borrower and expressly naming NAF as the forum for arbitration.&nbsp;Several such agreements existed between A-1 Premium Acceptance, a payday lender operating as &ldquo;King of Kash,&rdquo; and borrower Meeka Hunter.&nbsp;Ms. Hunter had originally taken out four loans in 2006, totaling $800.&nbsp;When she defaulted almost nine years later, interest had grown the total debt to over $7,000.&nbsp;A-1 sued on the debt, and when Ms. Hunter filed a counterclaim alleging violations of the Missouri Merchandising Practices Act, A-1 sought to enforce the arbitration clauses from the original loan agreements.</p> <p>Unfortunately, those clauses provided that that consumer claims &ldquo;shall be resolved by binding arbitration by the National Arbitration Forum, under the Code of Procedure then in effect.&rdquo;&nbsp;Conceding that NAF was no longer available to arbitrate the claims, A-1 asked the circuit court to appoint a substitute arbitrator, as authorized by the Federal Arbitration Act in the event of &ldquo;a lapse in the naming of an arbitrator.&rdquo;&nbsp;The circuit court refused to do so, and A-1 appealed.</p> <p>The Missouri Supreme Court affirmed the lower court&rsquo;s decision on the grounds that the language from the subject arbitration clauses stated an intent to arbitrate <b><i>only</i></b> before NAF.&nbsp;The opinion distinguished this type of agreement from those that express an agreement to arbitrate generally, regardless of the availability of a named arbitrator.&nbsp;Noting that A-1 drafted the agreement and chose to &ldquo;insist upon NAF&mdash;and only NAF&mdash;as the arbitration forum,&rdquo; the Court refused to &ldquo;expand the arbitration promise [A-1] extracted from Hunter&rdquo; by naming someone else as a replacement arbitrator.&nbsp;Since arbitration before NAF was not possible, the Court held, Ms. Hunter was free to pursue her claims in Missouri state court, a much more receptive forum for consumer protection claims like these.</p> <p>Notably, the arbitration clauses at issue never expressly stated that arbitration could proceed &ldquo;only&rdquo; or &ldquo;exclusively&rdquo; before NAF.&nbsp;Instead, the court relied primarily on three factors to conclude that the parties had agreed to arbitrate <b><i>only</i></b> before NAF: (1) the language mandating that claims &ldquo;<b><i>shall be</i></b> resolved by arbitration <b><i>by the National Arbitration Forum</i></b>&rdquo; (emphasis added by the court); (2) the fact that A-1 drafted the contract and could have included language contemplating the unavailability of its preferred arbitrator, noting that many contracts do just that; and (3) language mentioning the &ldquo;Code of Procedure then in effect,&rdquo; a reference to the 2006 NAF Code of Procedure, which includes a rule that only NAF can administer the Code.&nbsp;Combined, the court concluded, these provisions showed that the parties agreed to arbitrate &ldquo;before NAF and no other arbitrator.&rdquo;</p> <p>The Court finished, however, by cautioning that &ldquo;merely identifying an arbitrator in an arbitration agreement&mdash;without more&mdash;cannot justify refusing to name a substitute.&rdquo;&nbsp;A substitute should still be named unless there is &ldquo;a basis to conclude the parties&rsquo; arbitration agreement was limited to the specified arbitrator,&rdquo; which the Court determined existed in this case.</p> <p>This decision adds to a wild profusion of existing case law addressing the numerous and diverse arbitration agreements that name NAF as arbitrator.&nbsp;Although the result invariably depends on the language of the particular contract at issue, courts across the nation that have taken the same approach as the Missouri Supreme Court and denied applications to compel arbitration include the Second, Fifth, and Eleventh Circuit Courts of Appeals, and the New Mexico Supreme Court.&nbsp;But the Third and Seventh Circuits and the Supreme Courts of Arkansas and South Dakota have reached the opposite result, appointing substitute arbitrators in place of NAF.&nbsp;Federal district courts across the country have come down on both sides.&nbsp;A-1&rsquo;s attorneys have expressed an intent to appeal this Missouri decision to the United States Supreme Court, hoping to bring some clarity to this recurring and divisive issue.</p> <p>This case demonstrates the importance, especially in Missouri, of exercising caution when drafting arbitration clauses.&nbsp;This is particularly true in the context of consumer transactions, where one side typically sets the terms of the transaction.&nbsp;If the intent is to ensure that disputes end up in private arbitration instead of state court litigation&mdash;then naming a preferred arbitrator is fine, but it is also essential to plan for the possibility that the arbitrator is unavailable.&nbsp;Otherwise, as A-1 experienced here, the agreement to arbitrate may be for naught.</p> <p>The Missouri Supreme Court&rsquo;s opinion is available <a href="https://www.courts.mo.gov/file.jsp?id=131973">here</a>.</p>https://www.bscr-law.com?t=39&anc=370&format=xml&directive=0&stylesheet=rss&records=10