Supreme Court of Missouri Issues First-Of-Its-Kind Ruling Overturning a $2.3 Million Negligent Credentialing VerdictMarch 28, 2019 | John Mahon, Jr.
In Thomas E. Tharp, et al. v. St. Luke's Surgicenter – Lee's Summit, LLC, the Supreme Court of Missouri overturned a $2.3 million jury verdict in favor of a patient and his wife against a hospital, because there was no proof the hospital negligently granted staff privileges to a surgeon. The opinion is the first from the Supreme Court of Missouri to address the requirements of a negligent credentialing claim.
The plaintiff alleged injuries stemming from a surgical procedure to remove his gallbladder. The plaintiff and his wife settled their claims with the surgeon, but went to trial against the hospital alleging it negligently granted privileges to the surgeon. At trial, plaintiffs presented evidence that the surgeon failed to disclose to the hospital all prior malpractice suits.
The hospital filed a motion for directed verdict at the close of all evidence on two grounds: (1) There was insufficient evidence to establish it had been negligent; and (2) the act of granting privileges to the surgeon was not the proximate cause of the injury. The trial court denied this motion, and the jury returned a verdict in favor of the plaintiffs. The trial court also overruled the hospital’s post trial motion for judgment notwithstanding the verdict, asserting the same arguments set forth above.
In a 6-1 decision, the Supreme Court held that a breach of the hospital’s bylaws (requiring the surgeon to report all prior malpractice suits) was not enough to support a negligent credentialing claim, and found no evidence that the grant of staff privileges to the surgeon was the proximate cause of the injury.
Addressing the nature of the relationship between a modern healthcare facility and its medical staff, the Court observed that “Physicians working under staff privileges are typically independent contractors, not hospital employees,” and that “staff privileges allow physicians to utilize a healthcare facility to admit and treat patients as independent care providers rather than as employees of the facility.” Under appropriate circumstances, a negligent credentialing claim can provide an avenue for potential liability against a hospital for injury caused by an independent contractor. The focus is whether the hospital gathered pertinent information to make a reasonable decision as to whether to grant privileges. The proper inquiry is whether the physician was competent and possessed the necessary knowledge, skill and experience to perform his job without creating unreasonable risk of injury to others.
One of the requirements in the hospital’s bylaws was full disclosure of all prior malpractice suits, and the failure to do so was grounds to automatically remove a physician from staff privilege consideration. The evidence at trial showed the surgeon failed to list on his application each suit he had defended over his career, but there was no evidence that addressed the surgeon’s qualifications to perform surgery. The plaintiff’s own expert admitted there was no “magical number” of malpractice suits that shows a surgeon is unqualified. Further, plaintiff’s expert cited a statistical study showing physician malpractice claim rates vary widely depending, in large part, on the medical specialty involved. “Even acts of repeated negligence do not support a finding a surgeon is incompetent when there is no evidence that shows a surgeon generally lacks a professional ability.” Thus, the Court found the plaintiffs failed to make a submissible case of negligent credentialing.
The Court also found the plaintiffs failed to prove the credentialing of the surgeon was the proximate cause of the injury. It was not enough to prove that but for the credentialing, the surgeon could not have performed the surgery that produced the injury. Rather, the plaintiffs needed to prove the injury was the natural and probable consequence of the surgeon’s incompetence. “Even a supremely qualified, competent, and careful physician may nevertheless injure a patient through an isolated negligent act.” Because plaintiffs failed to show the surgeon was incompetent, they could not prove the injury was the result of the surgeon’s incompetence and thus failed to make a submissible case.
In this first ruling of its kind in Missouri, the Missouri Supreme Court has provided guidance to Missouri lower courts and practitioners prosecuting or defending a negligent credentialing claim. These claims are difficult to prove, as they require proof beyond that which is required to support a malpractice claim against a physician. Absent credible evidence of a physician’s incompetence generally, and the negligent failure of a hospital to discover the incompetence and act accordingly, courts should dispose of these claims via dispositive motion.
The opinion did not address whether the negligent credentialing theory conflicts with Mo.Rev.Stat. § 538.210.4, which provides, in part, that “[n]o health care provider whose liability is limited by the provisions of this chapter shall be liable to any plaintiff based on the actions or omissions of any other entity or individual who is not an employee of such health care provider . . . .” Negligent credentialing liability necessarily depends on the negligent act or omission of a non-employee physician. In the event this argument is raised, it is unclear how the Court would address the apparent conflict of law.
In an effort to overhaul Missouri’s current venue and joinder laws, Missouri lawmakers introduced Senate Bill 7, aimed at restricting non-Missouri plaintiffs from joining their claims in the same lawsuit, with those of a Missouri resident, even though the non-residents’ claims have no legal nexus to Missouri. The most immediate and prominent impact of the bill, if enacted, would be upon mass tort litigation. The bill also limits the use of joinder in product liability cases, prohibiting joining claims arising out of separate purchases or separate incidents related to the same product.
Following its introduction, Senate Bill 7 was revised to adopt the February 13, 2019 Missouri Supreme Court ruling in State ex rel. Johnson & Johnson v. Burlison. The Missouri Senate subsequently passed the revised version on March 4, 2019. The Johnson & Johnson case dealt with the talcum powder litigation filed in St. Louis City Circuit Courts, involving many plaintiffs with both non-Missouri and Missouri residents, and held that plaintiffs cannot use joinder rules to establish venue in a jurisdiction where it otherwise would not exist.
Proponents of the legislation say that it will help address “a crisis” in Missouri’s courts, where out of state plaintiffs have flocked to litigate their claims in perceived plaintiff-friendly venues, such as St. Louis City (which has been dubbed a “Judicial Hellhole” by the defense bar); and Jackson County, which includes the greater Kansas City area. The Senate bill’s sponsor, Ed Emery, notes that out of the 13,252 mass tort plaintiffs involved in cases being heard in St. Louis City, only 1,035 are Missouri residents.
Proponents of the bill say that its passage will also have significant economic benefits, because Missouri taxpayers are currently paying for out of state plaintiffs to clog the Missouri courts with claims that have nothing to do with Missouri, thus taking up precious judicial resources that would better be used to adjudicate the claims of Missouri citizens. Opponents of Senate Bill 7 primarily argue that it makes sense to have groups of plaintiffs, who all purportedly suffered similar injuries, to bring their claims together in the same court and lawsuit.
The current bill contains “grandfather” provisions, making the legislation inapplicable to any action that meets two criteria: (1) the action is pending as of February 13, 2019 (when the Supreme Court decided Johnson & Johnson), and (2) the action is set for trial on or before August 28, 2019 (the date on which the new legislation is scheduled to take effect.).If enacted, this legislation may significantly alter the landscape of tort litigation in Missouri, both for litigants, and for the judiciary (especially in St. Louis City and Jackson County). Companies that do business in Missouri should follow its progress closely.
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Attorneys: Megan Sterchi Lammert
A Jackson County, Missouri, Circuit Court Judge ordered the City of Raytown - specifically its City Clerk - to pay more than $42,000 in attorney fees and civil penalties after ruling in July 2018 that the city violated Missouri’s Sunshine Law. The City Clerk denied the release of records in an apparent attempt to shield the city from litigation involving the design of one of the city’s intersections.
Several months after Plaintiff Paula Wyrick’s mother died in a vehicle crash at an intersection in Raytown. Wyrick requested records from the City about the intersection, including its design, any traffic or other diagnostic studies conducted there, and any complaints about the safety of or accidents occurring at or around the intersection. On multiple occasions, the City Clerk refused to produce the requested records, asserting all requests fell within the Sunshine Law’s litigation exception. The litigation exception protects, in part, documents related to potential legal actions or litigation involving a public governmental body.
Wyrick filed suit seeking declaratory and injunctive relief against the City Clerk. Wyrick moved for summary judgment asserting that the City Clerk, on behalf of her office, “took a position completely unheard of under Sunshine Law, namely, that a specific category of records can be closed only to Plaintiff and her lawyers, but otherwise open to anyone else. Put another way, the City Clerk has admitted that she would search for and produce records responsive to Paula Wyrick’s requests, if only the requests would come from a different person.”
The City Clerk countered that Wyrick only sought the records to use in potential litigation against the City of Raytown as a result of her mother’s death. In the face of this clear and unequivocal threat of litigation in this matter, the City Clerk argued she was justified in closing and refusing to produce the records.
In July 2018, Jackson County Circuit Court Judge S. Margene Burnett granted Wyrick partial summary judgment and ordered production of the design records and traffic studies conducted at the intersection. She ruled that while Wyrick admitted she was contemplating litigation against the City, the City Clerk’s use of the Sunshine Law as a “shield to hide behind rather than shed light on potentially inappropriate governmental activity…is precisely why the Sunshine Law was enacted.”
Initially, Judge Burnett declined to order civil penalties against the City Clerk, finding that the refusal to comply was done under an incorrect reading of Missouri law. However, the Judge reconsidered in November 2018 after hearing additional arguments, which convinced her that the city clerk’s actions rose to a knowing and purposeful violation of the Sunshine Law. The Clerk had testified that she “implemented a policy to refuse the production of any requested documents to any citizen if that citizen has filed a notice of claim against the City of Raytown, regardless of the nature of the document requested.” The Court awarded $38,550.00 in attorney fees and assessed civil penalties of $4,000.00, representing $1,000.00 for each of the four distinct violations of the Sunshine Law established by the evidence. The City filed a Notice of Appeal on February 14, 2019.
This ruling is likely to encourage municipalities to take a closer look at their open-records policies to ensure they are encouraging the spirit of openness which is embodied in the state’s Sunshine Law.Paula Wyrick v. Teresa M. Henry, in her capacity as City Clerk of the City of Raytown, No. 1716-CV-24321, Circuit Court of Jackson County, Missouri.
Missouri Court of Appeals Rules Venue Proper Only in County Where Decedent First Ingested Opioid Pain Medication and Not Where Drug PrescribedFebruary 21, 2019 | John Mahon, Jr. and Katie Davies
In State ex rel. Mylan Bertek Pharmaceuticals, Inc. v. Vincent, the Missouri Court of Appeals, Eastern District, held 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.
Decedent’s widow filed suit in St. Louis County, alleging that defendants’ negligence caused her husband to become addicted to opioid pain medication, leading to unbearable withdrawal symptoms that caused him to commit suicide. The defendants were the physician who prescribed the medication for a back injury and several pharmaceutical companies that manufactured it. 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. Later, while travelling in Florida, the decedent ran out of medication and could not refill it. Plaintiff alleged the decedent suffered intense withdrawal symptoms and, as a result, shot himself in the chest and died.
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. 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’s negligent prescribing practices in his medical office.
The appellate court analyzed § 508.010, RSMo, which sets venue in the county where the plaintiff was “first injured.” Section 508.010.14 provides that a plaintiff is “considered first injured where the trauma or exposure occurred rather than where the symptoms are first manifested.”
The court explained the alleged bodily injury to the decedent – opioid addiction, resulting pain and suffering, and ultimately death – could only have occurred when he ingested the medication. 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. 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).
Accordingly, the appellate court reversed the trial court’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. The court’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.
The opinion does not reference Section 538.232, which states that, in any action against a health care provider, “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.” It is unclear what effect that section, if discussed, would have had on the court’s analysis.
Jury trials in the Kansas City area slightly increase in number, but jury verdicts decline in amountFebruary 6, 2019 | Dylan Murray
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 “Summary and Statistics of Jury Verdicts” 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. The statistics in 2018 indicate various shifts from 2017.
More Trials, with a Lower Percentage of Plaintiffs’ Verdicts
The Jury Verdict Service’s annual summary reported on 104 trials in 2018, compared to 97 in 2017. Previously, there were 113 trials in 2016, 110 trials in 2015, and 133 trials in 2014.
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. The 104 trials in 2018 resulted in 168 verdicts; and the 97 trials in 2017 resulted in 193 verdicts.
While the number of jury trials slightly increased in 2018, the percentage of Plaintiffs’ verdicts decreased very slightly. In 2018, 48% of the verdicts were for Plaintiffs compared to 49% for Plaintiffs in 2017. These figures go against what had been a trend of increases in the percentage of Plaintiffs’ verdicts dating back to 2014.
Decrease in Average Monetary Awards for Plaintiffs
The overall average of monetary awards for Plaintiffs experienced a significant decrease in 2018 from 2017, but was still higher than in earlier years. In 2018, the overall average monetary award was $1,810,693, down from $4,204,501 in 2017. 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. In 2018, in contrast, there was only one very large verdict for $76 million. Additionally, the 2018 figure of $1,810,693 represents an increase from the figures from the years prior to 2017. In 2016, the average Plaintiff’s verdicts was $1,383,549, while the average in 2015 was $1,376,323.
Slight Increase in Number of Million-Dollar Verdicts
In 2018, there were 14 verdicts of $1 million or more, compared to 11 such verdicts in 2017. But the 14 verdicts figure is slightly lower than in 2016, when there were 16 verdicts of $1 million or more. 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. Finally, the number of verdicts between $100,000 and $999,999 decreased slightly in 2018 (29 verdicts) from 2017 (36 verdicts).
Key Observations and Conclusion
While the percentage of Plaintiffs’ verdicts decreased ever-so-slightly in 2018, the 48% figure still remains much higher than where it stood 4 years earlier (38%). Additionally, the average Plaintiff’s verdicts ($1,810,693) – while down from the inflated figures of 2017 – continues to trend upward from the $1.3 million range of 2016 and 2015 and the low point figure of $350,730 in 2014. 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. 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.
Source: Greater Kansas City Jury Verdict Service Year-End Reports 2014 -2018
Despite 2017 Amendment to Statute, Court of Appeals Holds Section 490.715 Fails to Preclude Evidence of "Charged" Amounts of Medical Expenses at TrialJanuary 29, 2019 | Paul Venker and John Beard
In what was widely seen as an attempt to prevent plaintiffs from introducing evidence at trial of the full, undiscounted “amounts charged” for medical treatment, a revised version of § 490.715 was signed into law in 2017. It provides that “parties may introduce evidence of the actual cost of the medical care or treatment rendered to a plaintiff or a patient whose care is at issue.” See § 490.715(5)(1), RSMo. (emphasis added). “Actual cost” is defined as:
“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 after adjustment for any contractual discounts, price reduction, or write-offs by any person or entity. See § 490.715(5)(2) (emphasis added).
But in the recent case of Brancati v. Bi-State Development Agency, the Eastern District Court of Appeals held that evidence of the “amount charged” could still be introduced at trial, effectively rendering the revised version of § 490.715 meaningless. Brancati was a general liability case with stipulations that the “amount charged” for medical treatment totaled $77,515.48 while the actual “amount paid” to satisfy the financial obligation was $40,842.95. Before trial, Brancati filed a pre-trial Motion, arguing that the revised version of § 490.715 did not apply retroactively to this case. The trial court ruled that § 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 “amount charged” as well as the “amount paid” into evidence.
After a $625,000 adverse jury verdict, Bi-State appealed and argued, in part, that the revised version of § 490.715 applied retroactively to limit the evidence admissible regarding the cost of Brancati’s medical care to the “amount paid” and not the “amount charged.”
The Eastern District affirmed the trial court and held that the revised version of § 490.715 did not eliminate the ability to introduce evidence of the “amount charged” for medical bills. The Court ruled that the statute did not expressly prohibit the introduction of “amounts charged” and merely permitted parties to introduce the “actual costs” of medical treatment. It also relied on Subsection 4, which provides that evidence admissible for “another purpose” may be introduced. Notably, the decision is devoid of any discussion about what other purpose was at issue to support the admission during trial of the “amount charged.”
There are two other fundamental problems with the Eastern District’s decision, one dealing with legal and logical relevance, and the other with maxims of statutory construction. 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. Reed v. Kansas City Missouri School District, 504 S.W.3d 235, 242 (Mo. App. W.D. 2016). 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. See Cordray v. City of Brookfield, 88 S.W.2d 161, 164 (Mo. 1935); Zachary v. Korger, Inc., 332 S.W.2d 471, 475 (Mo. App. W.D. 1960). To allow the introduction of the full, undiscounted “amount charged” 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. Evidence of the “amount charged” does not meet the litmus test of logical relevance because its introduction does not affect a plaintiff’s ability to recover the “amount paid” 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.
Second, this decision disregards the most basic canons of statutory construction. A fundamental principle of statutory construction is that a primary role of the courts in construing statutes is to “ascertain the legislature’s intent from the language used in the statute and, if possible, give effect to that intent.” State ex rel. Koehler v. Lewis, 844 S.W.2d 483, 487 (Mo. App. W.D. 1992). Under the “Reenactment Canon,” “when the Legislature amends a statute, it is presumed that the legislature intended to effect some change in the existing law.” State v. Liberty, 370 S.W.3d 537, 561 (Mo. banc 2012). This is because “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.” Id. By continuing to allow plaintiffs to introduce evidence of the “amount charged” for medical expenses, the Brancati court appears have rendered this legislative amendment meaningless. Further, in considering the landscape prior to the 2017 amendment, specifically that both the Eastern District and Missouri Supreme Court held that the “amount charged” for medical expenses could be introduced at trial, the language used in the 2017 statute clearly evinces an attempt to eliminate this practice. See Berra v. Danter, 299 S.W.3d 690 (Mo. App. E.D. 2009); Deck v. Teasley, 322 S.W.3d 536 (Mo. banc 2010). Likewise, this decision violates the canon that courts “must examine the language of the statutes as they are written [and] cannot simply insert terms that the legislature has omitted.” Loren Cook Co. v. Director of Revenue, 414 S.W.3d 451, 454 (Mo. banc 2013).
A request that the Brancati case be transferred to the Missouri Supreme Court for review is presently pending. Whether or not the Supreme Court takes the Brancati case, we are confident that we have not seen the last of litigation on this issue.
There are two important lessons to be learned from Williams v. Medalist Golf, 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. Second, when giving testimony about the meaning of a contract, it is almost always best to let the written document speak for itself.
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. Cane Creek promised to provide premium Meyer Zoysia grass, and it offered a lower price than any other bidder. Defendant Medalist Golf, Inc., accepted the bid and provided a “Grass Supplier Agreement” for Cane Creek to sign.
The Grass Supplier Agreement provided that the seller “guarantees the quality and specification of the materials provided.” Supplier Cane Creek’s owner testified that he understood this to mean he “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.” The contract set a fixed price per square foot and provided an estimate of the quantity that would be need. But it also cautioned that this was “a target and not a guaranteed amount” and affirmed the parties’ understanding that the project “may use more or less than estimated quantities.”
Over the following months, Cane Creek devoted considerable time and resources to growing dozens of acres of Meyer Zoysia. Shortly before the sod was to be harvested, the golf course’s developer asked Medalist Golf to visit the sod farm to inspect the quality of the grass. 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. Medalist did so, and then purchased the required grass from another bidder. Cane Creek was able to find alternative buyers for some, but not all, of what it had grown for Medalist.
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. 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’s sod failed to conform to the contract. The trial court granted Medalist’s motion, and Cane Creek appealed. The Eighth Circuit affirmed the summary judgment in Medalist’s favor.
The Eighth Circuit rejected Medalist’s first argument—that no enforceable contract ever existed between Medalist and Cane Creek. The “Grass Supplier Agreement” was an enforceable “requirements contract.” A requirements contract is one in which “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.”
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. Thus, the court concluded, there was a valid agreement upon which Cane Creek could base its breach of contract claim.
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. The Uniform Commercial Code as adopted in Missouri allows a buyer to reject tendered goods without payment, if they “fail in any respect to conform to the contract.” Mo. Rev. Stat. § 400.2-601. 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.
The case ultimately turned on the contract’s provision that Cane Creek would “guarantee the quality and specification of the materials provided.” 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 customer’s satisfaction.
Notably, though, the contractual language itself only required Cane Creek to “guarantee the quality and standards” of its product. It did not specify how the sod’s “quality and standards” were to be judged. 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 “quality and standards” 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 “noxious weed contaminates,” and (3) the fact that some of the same sod was subsequently sold to and used by another golf course. Cane Creek argued that this evidence at least created a genuine factual dispute as to whether Medalist wrongfully rejected the sod.
But Cane Creeks’ position was seriously undermined at its owner’s deposition, where he testified that he understood the “guarantee” to mean that he “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.” This testimony arguably broadened Cane Creek’s duties under the contract. It made the customer’s judgment as to the sod’s quality—as subjective as that may be—the ultimate and final measuring stick for compliance with the contract. Unfortunately for Cane Creek, this rendered irrelevant all of its expert opinions, test results, and other evidence about the high quality of the sod. If Medalist was unsatisfied, the sod was nonconforming and could be rejected. Full stop. (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.)
Customer satisfaction is always the goal, of course. But it is also an inherently subjective and often unpredictable concept. A customer may be dissatisfied simply because he or she is persnickety, capricious, or just misinformed. As tempting as it is to “guarantee” that a customer will be satisfied, businesses must understand the legal implications of doing so. Courts will enforce quality guarantees, and they will usually leave it to the parties to decide how quality should be measured. A guarantee of customer satisfaction may make for a good sales pitch, but it is a poor legal standard.
The 2018-2019 ATRF Judicial Hellholes Report is out, and, surprise, surprise, the “Show Me Your Lawsuit” state, specifically the City of St. Louis, landed fourth on the list—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. While the term “hellhole” may be a bit over the top, defense counsel must nonetheless be wary of this venue and advise their clients accordingly. And in-house counsel should pay particular heed when drafting jurisdiction and venue clauses in corporate agreements.
There was initial optimism from 2017 that political changes in the executive branch would aid business interests and result in certain statutory reforms. The ATRF Report bursts that balloon, reporting that optimism “quickly evaporated in 2018 as massive verdicts, blatant forum shopping, and legislative ineptitude plagued the ‘Show Me Your Lawsuit’ state.”
The ATRF Report also attributes St. Louis’ inability to become a more balanced venue to its “loose” 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’s exercise of jurisdiction over out-of-state defendants. 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.
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’s litigious climate which he describes as a “black eye for Missouri.” He intends to push for new legislation to make Missouri’s courtrooms more balanced when the Missouri General Assembly convenes for their legislative session in January 2019. More recently, the Missouri Chamber Board of Directors has approved the organization’s 2019 Legislative Agenda which include several modifications that are aimed specifically at curtailing Missouri’s Judicial Hellhole status. These reforms contain measures that would:
1. Clarify venue and joinder laws in an effort to curb venue/forum shopping;
2. Strengthen the Missouri Merchandising Practices Act to reduce frivolous class action lawsuits;
3. Increase transparency in toxic exposure litigation to curtail fraudulent claims and ensure compensation for future claimants;
4. Strengthen Missouri’s employment arbitration climate in an effort to avoid costly litigation and resolve disputes rapidly;
5. Establish a statute of repose to stop new regulations from opening additional paths to litigation; and
6. Reforming the statutes regarding punitive damages to clarify the standard and define when an employer can be held liable for such damages.
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. Nonetheless, 2019 is a new year!
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Over the years – and to the dismay of out-of-state defendants – 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 State of Missouri ex rel PPG Industries, Inc. v. The Honorable Maura McShane, Case No. SC97006. 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.
Hilboldt Curtainwall, Inc. provided materials for a Missouri construction project. Some of these materials were to be coated with a product made by PPG Industries, Inc., a Pennsylvania corporation. Hildboldt reviewed PPG’s website and identified Finishing Dynamics, LLC as an “approved applicator” of the coating product manufactured by PPG. Finishing Dynamics failed to properly apply the coating product, rendering useless the products which were coated. 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. Hilboldt also sued PPG under a negligent misrepresentation theory stemming from the information obtained by Hilblodt from PPG’s website.
PPG filed a motion to dismiss Hilboldt’s negligent misrepresentation claim for lack of personal jurisdiction. 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. PPG had no other ties to Missouri.
Hilboldt argued that, under its negligent misrepresentation theory, PPG committed a tortious act in the state of Missouri. Hilboldt believed conduct sufficient to confer personal jurisdiction in Missouri existed because the representations on PPG’s website were received by Hilboldt in Missouri, relied upon by Hilboldt in Missouri, and caused injury to Hilboldt in Missouri.
The Circuit Court denied PPG’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. The Supreme Court issued a preliminary writ, and this decision followed.
PPG’s Conduct Was Insufficient to Confer Personal Jurisdiction.
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. The Court stated that, in light of “the broad and general nature of PPG’s website, PPG’s suit-related contacts with Missouri are not sufficient to be considered tortious acts in Missouri.”
Missouri courts apply a two part test to determine whether personal jurisdiction exists over a nonresident defendant. First, the nonresident’s conduct must fall within the Missouri long arm statute. That statute, RSMo. §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.
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. The website was not used to complete any transaction, facilitate communication or conduct any interactions between Hilboldt and PPG. 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.
Furthermore, the Court noted that the information from PPG’s website, even if false, was used by Hilboldt to enter into a contract with third-party Finishing Dynamics. The true basis for Hilboldt’s underlying claim was the mistakes made by the third-party in failing to appropriately apply PPG’s coating product, further “muddling” any connection between Hilboldt and PPG.
Because PPG’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’s contacts with Missouri were sufficient to satisfy due process under the second prong of the analysis.
The Supreme Court ruling establishes that a “passive website” 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.
Who May Challenge an Allegedly Discriminatory Property Tax Assessment? And What is the Burden of Proof?December 17, 2018 | Lisa Larkin
In Crowell v. David Cox, Assessor, Missouri’s Western District Court of Appeals reaffirmed that a taxpayer lacks standing to protest a property assessment made before the taxpayer owned the property. 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.
In 2014, the Crowells bought residential property in Parkville, Platte County, Missouri. As of 2006, the property had an appraised value of $48,832 (the value the assessor determined was the property’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). After extensive repairs and renovations, the property sold in December 2007 for $234,000. Based upon the sale, the appraised value increased in 2008 to $230,660, with the assessed value increasing to $43,825. These valuations were applied to the property for tax years 2008 through 2014 with no protests of the valuations. In October 2014, the Crowells purchased the property for $230,000.
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. In 2015, the assessor reduced the appraised/assessed values to $210,660/$40,025. 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.
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. The five other properties were all recent sales and, unlike the Crowells’ property, none of them received an increase in assessed value based upon the sale. 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. Based on this comparison, the Crowells argued their property was assessed at a higher rate per square foot than all 41 comparison properties. The Crowells did not dispute, however, that the fair market value of their property was $210,660. Nor did they present any evidence of the fair market value of the comparison properties.
The State Tax Commission concluded the Crowells lacked standing to challenge the 2008 assessment because they did not own the property until 2014. It also found no discrimination because the Crowells failed to show that other properties in the same general class, i.e. residential, were undervalued. 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.
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’s sale price whereas none of the other properties sold in the Crowell’s neighborhood between 2008 and 2015 received an assessment increase based on the sale price. The Circuit Court affirmed the Commission’s decision and order.
On appeal, the Crowells argued two points: (1) the 2008 assessment violated Missouri law and was thus void ab initio, 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.
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’ property tax assessments, as they are not injured personally by others’ assessment calculations. 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’ 2015 appraisal and assessment. According to the Court, a taxpayer lacks standing to challenge another taxpayer’s assessment even if the assessment results in a tax increase for the complaining taxpayer.
As to the Crowells’ 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. Even had the Crowells’ property been the only one reassessed based on its sale price that alone, would be insufficient. 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.
Employees: An affirmative and purposeful reminder that the safety of your co-workers may also be your dutyDecember 7, 2018 | Suzanne Billam
Recently, in Brock v. Dunne, the Missouri Court of Appeals for the Eastern District affirmed a trial court judgment assessing liability against a co-employee pursuant to the 2012 Amendment to § 287.120.1 of the Missouri Workers’ 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’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.
The Missouri Worker’s Compensation Act immunizes employers from their employees’ tort claims for injuries that arise from workplace accidents. Generally, this immunity extends to the injured employee’s fellow employees where such co-employee’s negligence is based upon a general non-delegable duty of the employer. But a fellow employee does not have immunity where he commits an affirmative act causing or increasing the risk of injury. Specifically, the 2012 Amendment to § 287.120.1 grants immunity to co-employees except when “the employee engaged in an affirmative negligent act that purposefully and dangerously caused or increased the risk of injury.”
Here, plaintiff Brock sued his supervisor at the time of his injury, claiming the supervisor’s actions of removing a safety guard from a laminating machine and ordering plaintiff to clean the machine — while it was still running and without the safety guard equipped — constituted negligence and invoked the co-employee exception to immunity for workplace injuries under § 287.120.1. The jury returned a verdict against the supervisor co-employee, and assessed over a million dollars in damages.
Before the Missouri legislature’s 2012 modification, § 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. 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 – that is, a duty separate and distinct from the employer’s non-delegable duties. 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 ‘something more’ doctrine. State ex. rel Badami v. Gaertner, 630 S.W.2d 175, 180 (Mo. Ct. App. E.D. 1982) (en banc). Under the ‘something more’ test, an employee may sue a fellow employee only for (1) affirmative negligent acts which are (2) outside the scope of an employer’s responsibility to provide a safe workplace.
While the 2012 Amendment does not expressly state that such acts must be committed outside the scope of an employer’s responsibility to provide a safe workplace for co-employee liability to attach, the appellate court in Brock v. Dunne 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’s non-delegable duties.
The Supreme Court of Missouri has held that, as is the case with most common law duties, an employer’s non-delegable duties are not unlimited, but instead, are limited to those risks that are reasonably foreseeable to the employer. Conner v. Ogletree, 542 S.W.3d 315, 322 (Mo. banc 2018). Notably, one example of reasonably foreseeable actions is a co-employee’s failure to follow employer-created rules. It has also repeatedly been held that a co-employee’s creation of a hazard or danger does not fall within the employer’s duty to provide a safe workplace.
In Brock v. Dunne, 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’s injury. The appellate court thus held the supervisor’s actions were not reasonably foreseeable to the employer and fell outside the scope of the employer’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.
Affirmative Negligent Act
An affirmative negligent act can best be described as an act that creates additional danger beyond that normally faced in the job-specific work environment. 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’s position of employment. 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.
Further, while § 287.120.1 requires that the act“purposefully and dangerously caused or increased the risk of injury[,]” the statute does not require proof the co-employee “had a conscious plan to dangerously cause or increase the risk of injury, and that he did so with awareness of the probable consequences[,]” as the defendant suggested in this case. Rather, the statute merely requires that the negligent act be conducted purposefully and intentionally (rather that inadvertently or by mistake).
The Bottom Line
For a co-employee to be liable in Missouri for a workplace injury, the plaintiff has to show BOTH:
(1) That the defendant co-employee owed a personal duty beyond the employer’s non-delegable duty to provide a safe workplace (defendant’s conduct created a job hazard beyond the foreseeable risks of the tasks assigned to the plaintiff by the employer); AND,
(2) That, in so doing, the defendant co-employee committed an “affirmative negligent act” (i.e., not a mere omission) that was purposeful and put the plaintiff in danger.
While employers are immune from civil suits due to the exclusivity of Missouri’s Worker’s Compensation Act, the same cannot be said for all employees. 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.
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’s principles of tort law.
Barth v. St. Jude Medical, Inc., involved an automobile collision on the parking lot of Mercy Hospital in St. Louis County. Defendant’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. Plaintiff, who was traveling down that parking lane, did not see defendant’s taillights or reverse lights. Defendant collided with the passenger side of plaintiff’s vehicle, causing plaintiff personal injury.
At trial, plaintiff tendered a disjunctive comparative-fault jury instruction which included the defendant’s failure to yield the right-of-way and an instruction defining the phrase “yield the right-of-way.” 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. The jury returned a verdict for defendant.
On appeal, plaintiff asserted that the trial court erred by failing to instruct the jury on failure to yield the right-of-way. 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.
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 on a public thoroughfare, did not pass muster. The Missouri pattern instructions provide eight different definitions for the phrase “yield the right-of-way.” 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 on a private parking lot.
Plaintiff’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. Toward this end, plaintiff proposed a definitional instruction hypothesizing “yield the right-of-way” 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. As support, plaintiff cited to a statutory rule of the road setting out the definition of “yield the right-of-way” for when a vehicle enters a roadway from an alley, private road, or driveway. 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.
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. The court declined to do so as such a rule would conflict with a fundamental principle of Missouri tort law: liability should be imposed on the party better able to alter his or her behavior to avoid the harm. Plaintiff’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. This, however, may not always be the case. The court concluded 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. Any deviation from this basic principle under the circumstances of this case would have to come from the Missouri legislature.
The Missouri Supreme Court recently issued an opinion that could undercut the arbitration clauses found in many existing commercial contracts. In A-1 Premium Acceptance, Inc. v. Hunter, the court refused to name a substitute arbitration forum when the parties’ agreed-upon arbitrator—the National Arbitration Forum—suddenly and unexpectedly stopped providing arbitration services in consumer claims nationwide.
By way of background, the National Arbitration Forum was one of the nation’s largest providers of arbitration services for consumer debt collection claims. In 2008, NAF administered over 200,000 cases. But a series of lawsuits alleged unfair practices and hidden ties to the debt collection industry, culminating in a July 2009 action by Minnesota’s attorney general. 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. (NAF has since re-branded as Forum and now focuses on internet domain-name disputes.)
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. Several such agreements existed between A-1 Premium Acceptance, a payday lender operating as “King of Kash,” and borrower Meeka Hunter. Ms. Hunter had originally taken out four loans in 2006, totaling $800. When she defaulted almost nine years later, interest had grown the total debt to over $7,000. 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.
Unfortunately, those clauses provided that that consumer claims “shall be resolved by binding arbitration by the National Arbitration Forum, under the Code of Procedure then in effect.” 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 “a lapse in the naming of an arbitrator.” The circuit court refused to do so, and A-1 appealed.
The Missouri Supreme Court affirmed the lower court’s decision on the grounds that the language from the subject arbitration clauses stated an intent to arbitrate only before NAF. The opinion distinguished this type of agreement from those that express an agreement to arbitrate generally, regardless of the availability of a named arbitrator. Noting that A-1 drafted the agreement and chose to “insist upon NAF—and only NAF—as the arbitration forum,” the Court refused to “expand the arbitration promise [A-1] extracted from Hunter” by naming someone else as a replacement arbitrator. 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.
Notably, the arbitration clauses at issue never expressly stated that arbitration could proceed “only” or “exclusively” before NAF. Instead, the court relied primarily on three factors to conclude that the parties had agreed to arbitrate only before NAF: (1) the language mandating that claims “shall be resolved by arbitration by the National Arbitration Forum” (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 “Code of Procedure then in effect,” a reference to the 2006 NAF Code of Procedure, which includes a rule that only NAF can administer the Code. Combined, the court concluded, these provisions showed that the parties agreed to arbitrate “before NAF and no other arbitrator.”
The Court finished, however, by cautioning that “merely identifying an arbitrator in an arbitration agreement—without more—cannot justify refusing to name a substitute.” A substitute should still be named unless there is “a basis to conclude the parties’ arbitration agreement was limited to the specified arbitrator,” which the Court determined existed in this case.
This decision adds to a wild profusion of existing case law addressing the numerous and diverse arbitration agreements that name NAF as arbitrator. 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. 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. Federal district courts across the country have come down on both sides. A-1’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.
This case demonstrates the importance, especially in Missouri, of exercising caution when drafting arbitration clauses. This is particularly true in the context of consumer transactions, where one side typically sets the terms of the transaction. If the intent is to ensure that disputes end up in private arbitration instead of state court litigation—then naming a preferred arbitrator is fine, but it is also essential to plan for the possibility that the arbitrator is unavailable. Otherwise, as A-1 experienced here, the agreement to arbitrate may be for naught.
The Missouri Supreme Court’s opinion is available here.
The Missouri Supreme Court has firmly upheld the right of a party to present multiple expert witnesses during the trial of a medical malpractice case. Shallow v. Follwell, 554 S.W.3d 878 (Mo. banc 2018). The Supreme Court disagreed with the Court of Appeals’ decision in the case, and instead affirmed the trial court’s overruling of plaintiff’s objections that the testimony of multiple defense experts was prejudicially cumulative. In doing so, the Supreme Court affirmed the jury verdict in favor of the physician defendant.
In this wrongful death, medical malpractice action, the three adult children of decedent Saundra Beaver claimed that Dr. Follwell negligently performed decedent’s bowel surgery and then failed to recognize post-surgical problems which developed into sepsis, which caused the patient’s death. During trial, plaintiff presented one medical expert (whose specialty was not described in the opinion), and also the testimony of a treating surgeon. Dr. Follwell presented four expert witnesses and also testified on his own behalf as a fact witness and an expert witness. The jury found for Dr. Follwell.
In post-trial Motions, plaintiffs alleged the trial court had erred in: 1) allowing prejudicially cumulative testimony from Dr. Follwell and his four expert witnesses; and, 2) permitting Dr. Follwell to testify at trial to a causation opinion different than that which he had offered at his own deposition. The trial court denied plaintiff’s post-trial Motions and plaintiffs appealed.
The Eastern District Court of Appeals had admonished the trial court for having ignored its duty to properly assess whether the testimony of all five defense expert witnesses was needed, and whether it was legally relevant. That court described the four retained experts as a “chorus of the same ultimate opinions…” which “posed a substantial risk of interfering” with the jury’s ability to properly decide the case.
After taking the case on transfer, the Missouri Supreme Court affirmed the jury’s verdict after analyzing the two main points which plaintiff/appellant had put before the trial court and the Court of Appeals.
I. Testimony of Multiple Experts Was Not Cumulative
One of Dr. Follwell’s defense theories was that the patient had a complex cardiac condition which caused her bowel injury. Dr. Follwell retained four experts, all with a separate specialty, which included: 1) cardiology; 2) general surgery and critical care; 3) colorectal surgery; and, 4) vascular surgery.
In finding that the trial court had not erred in denying plaintiffs’ objections that the defense experts’ testimony was prejudicially cumulative, the court stated it had carefully reviewed the trial transcripts, which showed that Dr. Follwell and his expert witnesses had “testified about the very root of the matter in controversy”, and so the evidence was not cumulative. The court also made clear that the rule against cumulative evidence remains intact, but that evidence is prejudicially cumulative only when it relates to a matter which is already so fully and properly proven by other testimony or evidence, that it removes it from the “area of serious dispute”. (The Supreme Court also noted that it appeared no sufficient trial record was made as to the objections to the purportedly cumulative nature of the challenged testimony.)
The court also made clear that evidence can be cumulative without necessarily being prejudicial. The Court observed that at trial, Dr. Follwell’s four experts testified contrary to the expansive testimony of plaintiff’s sole retained expert witness. However, in doing so, those four experts were testifying about issues – standard of care and causation – which were at the very core of the controversy. At the same time, the Supreme Court cautioned that a trial court should be alert to the risk of having jurors resolve differences in opposing expert witness testimony simply by the sheer number of witnesses called to testify, rather than giving due consideration to the quality and credibility of each expert’s opinions. Such a circumstance could well be prejudicial.
The Supreme Court also emphasized that the Circuit Court, “enjoys considerable discretion in the admission or exclusion of evidence and, absence clear abuse of discretion, its actions will not be grounds for reversal.” Whether to exclude evidence on ground of unfair prejudice rests in the discretion of the Circuit Court. The Circuit Court is uniquely positioned to evaluate the testimony of witnesses and to determine its prejudicial impact when prompted by a timely objection. The Court found that when considering the testimony of Follwell’s multiple expert witnesses, the trial court showed careful, deliberate consideration of plaintiff’s objections.
II. Dr. Follwell Did Not Offer a New Opinion at Trial
As to the claim that Dr. Follwell was improperly permitted to offer a different opinion at trial than at his deposition, the court pointed out that the purpose of preventing witnesses from offering new opinions at trial “is to relieve a party who is genuinely surprised at trial”. This can occur when an expert suddenly has an opinion where he had none before, renders a substantially different opinion than that earlier disclosed, and/or uses facts to support or newly bases that opinion on data or facts not earlier disclosed.
The court’s opinion contains pertinent portions of Dr. Follwell’s trial and deposition testimony to support its conclusion that the trial court did not err in overruling plaintiffs’ objections to Dr. Follwell testifying as he did at trial because he did not offer a substantially different opinion than what he offered at his deposition.
Here, the court found a central issue about which Dr. Follwell testified was the cause of the patient’s ischemic, and then necrotic, bowel. In both situations (deposition and trial), Dr. Follwell testified that vascular injury could cause bowel ischemia. He had also testified that he had not seen a surgical perforation of the bowel cause a vascular injury which then led to necrotic bowel.
Follwell is an important decision for a number of reasons, perhaps chiefly because it reaffirms the right of a party to defend itself with a sufficient number of expert witnesses, even where one’s adversary has chosen to use fewer expert witnesses. Follwell also demonstrates the crucial importance of making a proper and complete record at the trial court level, so an appellate court has the ability to fully examine that record, including the objections made by trial counsel.
At Baker Sterchi Cowden & Rice, we are committed to providing our attorneys with as full an education as possible in the fine art and science of trial work. We believe this is all the more important with the opportunities for jury trial experience diminishing, due to the shrinking number of jury trials across the country.
In a recent opinion, the United States Court of Appeals for the Eighth Circuit took a hardline position as to a plaintiff’s failure to disclose information required by Rule 26 of the Federal Rules of Civil Procedure, as to non-retained experts. Vanderberg v. Petco Animal Supplies Store, Inc., ---F.3d---, 2018 WL 4779017 (8th Cir., October 2, 2018). The result, though harsh, underscores the importance of strict compliance with not only the rules of discovery, but the rules regarding sanctions for non-compliance.
Plaintiff Vanderberg suffered injuries when making a delivery to a Petco store in Sioux City, Iowa, and sued Petco for negligence and premises liability. In his initial Rule 26 disclosures, plaintiff listed his medical provider, Fox Valley Orthopedic Institute, as likely to have discoverable information. In his interrogatory answers, plaintiff provided the name of Dr. Timothy Petsche as a treating physician from Fox Valley, as well as other medical professionals, and produced 573 pages of medical records. Several of those records reflected opinions held by Dr. Petsche, including that certain of plaintiff’s conditions were related to the injury at Petco. Plaintiff did not, however, designate Dr. Petsche or anyone else as an expert witness, or provide any summaries of the facts and opinions to which such experts would testify, as is required by Rule 26(a)(2).
After the deadline for plaintiff’s expert witness disclosures, Petco’s counsel asked plaintiff’s counsel about the failure to designate any experts. Plaintiff’s counsel responded that plaintiff had no retained experts but expected the treating physicians to provide testimony. Plaintiff’s counsel also indicated that if Petco’s position was that treating physicians must be identified through expert witness certification, then it should so advise.
After the close of discovery, Petco filed a Motion for Summary Judgment on the basis that plaintiff had no produced any expert medical opinion evidence, as required by Iowa law, to show that his injuries were caused by the Petco incident. In opposition, plaintiff relied, in part, on Dr. Petsche’s notes to in an attempt to establish causation. Petco moved for sanctions for plaintiff’s failure to make the required Rule 26(a) expert witness disclosures and requested the exclusion of Dr. Petsche’s testimony.
The district court found plaintiff violated Rule 26(a)(2), and ruled that exclusion of the doctor’s statements was the appropriate sanction. Allowing the evidence to be used would almost certainly require a continuance of trial so the doctor could be deposed, and plaintiff provided no valid reason for the failure to disclose. Having excluded the only expert opinion evidence plaintiff had to establish that his injuries were caused by the fall at the Petco store the district court granted summary judgment to Petco. (Plaintiff also attempted to rely upon a report from a second undisclosed physician, but at oral argument plaintiff’s counsel conceded that exclusion of this second physician’s report was not an abuse of discretion, thus removing that issue from the case.)
The Eighth Circuit affirmed. The civil procedure rules are very clear: absent stipulation of the parties or a court order, parties must disclose the identity of non-retained experts who may testify at trial and disclose “the subject matter on which the witness is expected to present” expert opinion testimony and “a summary of the facts and opinions to which the witness is expected to testify.” Rule 26(a)(2)(C).
Rule 26’s disclosure mandates are given teeth in Rule 37. Rule 37(c)(1) provides that when a party fails to comply with Rule 26(a), “the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” This is a self-executing sanction for failure to make a Rule 26(a) disclosure, without need for a motion for sanctions, unless the failure was substantially justified or harmless.
The Court ruled that neither the production of hundreds of pages of medical records, nor the disclosure by plaintiff that Dr. Petsche was a treating physician and potential fact witness, satisfied plaintiff’s duty to disclose experts under Rule 26(a)(2)(A). Nor could plaintiff’s counsel’s letter stating that he expected non-retained physicians to testify on various issues save his claim. The Eighth Circuit agreed with the district court that, “[i]n essence, [plaintiff’s] counsel asked Petco if the Rules of Procedure regarding expert disclosures mean what they say.”
The Eighth Circuit also accepted the trial court’s finding that plaintiff’s failure to comply with Rule 26(a)(2) was neither substantially justified nor harmless where, although the record contained no hint of bad faith, there also was no proffered reason for noncompliance. Allowing the evidence after the close of discovery and just two months before trial would almost certainly require a continuance of trial.
Finally, the Eighth Circuit rejected the notion, espoused by the opinion’s dissent, that since the exclusion of the evidence was tantamount to dismissal, the district court should have first considered the possibility of a lesser sanction. Plaintiff never asked for a lesser sanction. The text of Rule 37(c)(1) provides that where a party violates the disclosure requirements of Rule 26(a), an alternative sanction to exclusion may be imposed by the court “on motion.” It was plaintiff’s obligation, as the party facing sanctions, to show that its failure to comply with the Rule deserved a lesser sanction.
The Court explained:
The result of Vanderberg’s failure to comply with his … disclosure requirements may seem harsh. But the burdens on parties who are not adequately appraised of an opposing party’s experts’ identity and expected testimony are also real and costly. In any event, the balance between adequately incentivizing compliance with parties’ disclosure obligations and not unfairly punishing “insignificant, technical violations” has already been struck by the drafters of Rule 37(a)(1). It is our role to conform our analysis to the text of the rule, rather than strike our preferred balance.
Food Labeling Litigation Under the Missouri Merchandising Practices Act: When the Label's Impact on Consumer Choice Doesn't Really MatterOctober 22, 2018 | Martha Charepoo
In a potentially problematic decision for manufacturers and sellers of consumer packaged goods, a federal judge allowed a lawsuit against Atkins snack bars to proceed under the Missouri Merchandising Practices Act (“MMPA”). Johnson v. Atkins Nutritionals, Inc., 2:16-cv-04213. The MMPA is Missouri’s consumer protection statute that has attracted a steady rise in the filing of food labeling cases in Missouri over the past few years. The lawsuit arises from a local resident’s purchase of five different Atkins-brand “low carb” snack bars found in most grocery stores. The lawsuit alleges that Atkins misrepresented the carbohydrate content of its snack bars by making statements on the wrappers such as “Only [X]g Net Carbs” and “Counting Carbs?” Atkins asked the court to dismiss the lawsuit, and while the District Court dismissed some of Plaintiff’s state common law claims, and his implied warranty claim, it allowed Johnson’s MMPA claims to move forward.
The Court allowed Johnson to proceed on his MMPA claim, on the theory that labels stating that an Atkins bar contained “Only [X]g Net Carbs” were false, misleading or deceptive because such labels may be illegal under federal law. The court also allowed Johnson’s theory that a “Counting Carbs?” label is false, misleading or deceptive concerning the effects of sugar alcohols on blood sugar. Thus, even though the court decided that claims based on the calculation method for determining net carbs were preempted by federal law, evidence of the calculation method can be introduced because it relates to the assertion that sugar alcohols have energy content and impact blood sugar. The court also decided that evidence concerning the labels would be admissible to give context to the “Counting Carbs?” labels.
In its motion for summary judgment, Atkins had asked the court to dismiss the case because Johnson testified that he purchased the products for reasons other than what was stated on the wrappers. In fact, Johnson testified that he saw but did not read the “Counting Carbs?” label on one product, and did not even look at it on another one before purchasing it. He also testified that the word “only” in the “Only 2g Net Carbs” label was meaningless, but that he purchased the bars as a part of a zero-to-low carbohydrate diet plan to cut sugar and lose weight. Atkins argued that dismissal was warranted because the labels or their contents must have actually factored into Johnson’s purchasing decision for a violation of the MMPA to have occurred. In other words, Johnson must have relied on the labels, or their contents must have been material to his decision to purchase the bars.
The court rejected this argument, citing Missouri Court case law, statutes, and regulations, stating that nothing in the MMPA indicates that there must be proof that a consumer actually relied on the allegedly unlawful practice to pursue a claim under the MMPA. The court pointed out that the definition of the three unlawful acts alleged by Johnson under the Act are intentionally broad: “The MMPA is a consumer-friendly law that is specifically designed to enable consumers to obtain relief even in those circumstances where they cannot prove fraud.” According to the court, Missouri law is well-established that materiality is an element of an MMPA claim only when the consumer alleges concealment as an unlawful practice. The proof required is that “the fact so-concealed would have been material to their purchasing decision.”
Thus, Johnson’s MMPA claim survived, with the Court concluding there was a genuine dispute of fact as to whether or not the “Only [X]g Net Carbs” label and the claim made in the “Counting Carbs?” label concealed facts that would have been a part of Johnson’s decision to purchase had he known them at the time.
Johnson’s common law claims fared differently. The court examined two product labels on five of the bars, to determine if Johnson established the elements of breach of express warranty and unjust enrichment. Breach of express warranty requires a showing that Johnson was aware of the statement made by Atkins that he is now saying is a misrepresentation. To prove unjust enrichment, there must be proof that Johnson actually relied upon the misrepresentation in making his purchase. Atkins won on both claims as to the “Counting Carbs?” label on the Peanut Butter Fudge Crips Bar and the Chocolate Peanut Butter Bars because the court found that Johnson saw the label but did not read it. The court allowed these two claims to proceed on the other three products containing the “Counting Carbs?” label and the “Only Xg Net Carbs” label — the Chocolate Chip Cookie Dough Bar, the Caramel Nut Chew Bar, and Endulge Chocolate Candies —only because there was a question of fact about whether Johnson saw and/or read the statements on those wrappers.
At the end of the day, however, this partial “victory” was not much of a victory for Atkins, because Plaintiff can seek at least as expansive remedies under the MMPA as those available under the common law theories.
There should be little doubt after Johnson v. Atkins that the MMPA means what it says when it comes to proving unlawful practices in food labeling. Food merchandisers can face liability for violation of the statute even if the contents of the label had no impact on consumer choice.
The Missouri Court of Appeals for the Western District recently confirmed the long-standing principle that a party’s failure to plead even a valid affirmative defense constitutes a waiver of that defense. Missouri trial courts have no authority to step in and remedy a defendant’s pleading error by applying such a defense sua sponte (“of its own accord”).
The case of Templeton v. Cambiano involved a series of three promissory notes issued between 2003 and 2005. The plaintiff claimed that the defendant had executed the notes in order to borrow nearly $50,000 but had then failed to make a single payment. She filed suit for the principal, plus over $75,000 in interest and late fees, in December 2015, which was just shy of ten years after the final note had been signed. The defendant filed a responsive pleading that generally denied liability for the debt, but his answer did not separately allege that the plaintiff had failed to mitigate her damages by allowing interest and late fees to accumulate for almost a decade before filing suit.
After a bench trial, the trial judge entered judgment in favor of the plaintiff, but excluded from the award all of the claimed interest and late fees, on the grounds that the plaintiff had “failed to mitigate these damages by the delay in prosecuting this action for ten years.” In her sole point on appeal, the plaintiff argued that the trial court had overstepped its authority by applying the affirmative defense of failure to mitigate damages, which the defendant had failed to plead.
The Western District Court of Appeals reversed the trial court’s judgment and remanded the case with orders to amend the judgment to include the $75,927.12 claimed as interest and late fees. This holding was based on long-standing Missouri precedent that an affirmative defense is waived if it is not either: (1) properly pleaded, according to Missouri’s fact-pleading standard, or (2) tried by the parties’ express or implied consent. Failure to mitigate damages is an affirmative defense. Seeing no evidence in the record that the issue of failure to mitigate damages had been tried by the parties’ consent, the appellate court ruled that the defendant had waived the defense when he omitted it from his answer. Regardless of how meritorious the defense might have been, the appellate court concluded, “the circuit court could not breath life back into this extinguished claim sua sponte.”
The defendant also argued that even if the trial court had relied on “a wrong or insufficient reason,” its judgment should still be affirmed because the equitable doctrine of laches would have supported the same result. Laches is an equitable doctrine that precludes claims asserted after an unreasonable delay, which has prejudiced the opposing party. The Court of Appeals was wholly unconvinced, observing that here too, Defendant had failed to raise laches as an affirmative defense. (Laches is specifically listed in Missouri Rule 55.08 as one of the affirmative defenses that must be pleaded to avoid waiver.) For good measure, the Court also concluded that in any event, the doctrine of laches would not apply even had it been properly pleaded.
The significance of this opinion for defendants in Missouri state court is twofold. First, the case stands as a potent reminder of the importance of carefully pleading all legal defenses and their supporting facts or, in the event a defense is omitted, of promptly seeking leave to amend the answer. Second, it demonstrates how a party’s failure to preserve its own legal defenses can tie the court’s hands, preventing it from crafting the remedy that it deems fair and leading to potentially severe results. Here, the pleading error was costly, ultimately increasing the defendant’s liability by about 150%.
The court of appeals opinion is available online through this link.
Missouri Criminalizes the Word "Meat": Civil Liability for the Mislabeling of Meat Substitutes as MeatSeptember 27, 2018 | Martha Charepoo
On August 28, 2018, with the passing of Senate Bill 627, Missouri criminalized the use of the word “meat” on labels of food products that do not come from an animal and became the first state to do so. The bill states that “[n]o person advertising, offering the sale or selling all or part of a carcass or food plan shall engage in any misleading or deceptive practices, including, but not limited to, any one or more of the following . . . misrepresenting a product as meat that is not derived from harvested production livestock or poultry.” The prohibition has been codified in Missouri Revised Statutes § 265.494(7). Violation of the prohibition is punishable as a Class A misdemeanor. Mo. Rev. Stat. § 265.496. Missouri’s meat advertising law empowers the Department of Agriculture to inspect products and make referrals to the prosecutor in the county in which they are sold. Mo. Rev. Stat. § 265.497. This poses risks not only under the newly enacted statute, but under the Missouri Merchandising Practices Act, as well.
It can be argued that the plain meaning of the statute cannot be reasonably construed to apply to non-animal products. The statute explicitly states that it applies to “person[s] advertising, offering the sale or selling all or part of a carcass or food plan.” The word “carcass” is not specifically defined in the statute. The ordinary meaning of “carcass” is the dead body of an animal. “Food plan” is “any plan offering meat for sale or the offering of such product in combination with each other or with any other food or nonfood product or service for a single price.” Mo. Rev. Stat. § 265.490(3). “Meat” means “any edible portion of livestock, poultry, or captive cervid carcass or part thereof.” Mo. Rev. Stat. § 265.300(7). Arguably, plant-based and lab grown meat substitute products do not constitute a “carcass” or “food plan”. However,it is widely believed that the amended statute will govern the marketing, sale, and offer of sale of meat substitute products that utilize the word “meat” on their packaging.
The new law is being challenged by vegan brand Tofurky and food-advocacy group Good Food Institute (GFI) in the U.S. District Court of the Western District of Missouri, in a case titled Turtle Island Foods v. Richardson. The American Civil Liberties Union of Missouri and the Animal Legal Defense Fund are also participating in the lawsuit. The petition alleges that § 265.494(7) is unconstitutional because it violates the Free Speech Clause of the First Amendment, the Dormant Commerce Clause, and the Due Process Clause. Filed on August 27, 2018, the day before the law passed, the lawsuit seeks to halt enforcement of the statute until the constitutionality of the statute can be ruled upon by the court.
However, the threat of criminal prosecution is probably not imminent. On August 30, 2018, the Missouri Department of Agriculture (“MDA”) issued a memorandum providing guidance about when the MDA will make referrals to the county prosecutor and Attorney General. The memorandum states that products whose labels contain prominent statements on the front of the packaging immediately before or after the product name that the product is “plant based”, “veggie”, “lab grown”, “lab created” or something comparable, or prominent statements that the product is made from plants or grown in a lab, will not be referred for prosecution. The Department also states that it will refrain from making any referrals for prosecution until January 1, 2019 “[t]o allow for any necessary label changes to be made.” Thus, companies should move quickly to ensure that their product labels display the required language on the primary packaging.
An additional legal threat could come from meat-eating consumers seeking relief under the Missouri Merchandising Practices Act (“MMPA”), Missouri’s consumer protection statute that has spawned a recent rising of food labeling litigation in Missouri. See our prior posts on food labeling litigation here, here, and here. The MMPA bars three types of conduct: deception, unfair practices, and concealment. Mo. Rev. Stat. § 407.020.1. The regulations that provide the definition of “unfair practice” for the statute define it as “any practice which . . . [o]ffends any public policy as it has been established by the . . . statutes or common law of this state” that “[p]resents a risk of, or causes, substantial injury to consumers.” The Missouri Supreme Court has commented on the scope of the term “unfair practice”, describing it as “unrestricted, all-encompassing, and exceedingly broad. For better or for worse, the literal words cover every practice imagine able and every unfairness to whatever degree.”
Unlike a cause of action for fraud, a consumer does not need to plead that the producer intended to dupe the consumer into thinking the product is meat and that the consumer relied on the misrepresentation to state adequately an unfair practice claim under the MMPA.See the U.S. District Court of the Western District of Missouri's Order in Michael Johnson v. Atkins Nutritionals, Inc. In addition to encompassing a broad range of merchandising practices, the appeal of the MMPA as a vehicle for consumer grievances is the availability of damages and attorney’s fees. The statute also allows for class action lawsuits.
Food products such as meat substitutes are arguably “merchandise” within the scope of the Act. Thus, a meat purchaser could bring a claim under the MMPA that a product that was mislabeled “meat” in violation of the new law is an unfair practice in violation of the MMPA. Moreover, compliance with the MDA’s labeling guidelines might not be enough to shield companies because the MMPA does not contain an exemption for conduct that complies with the MDA’s memorandum. Other jurisdictions have language in their consumer protection acts that exempt from violation labels that comply with state product labeling regulations. Currently, there is nothing similar in the MMPA that would bar an unfair practice claim brought against a meat substitute product whose label complied with the MDA’s guidelines as a matter of law. Of course, a food industry supplier could argue that a label that meets the standard established by the MDA is by definition not “deceptive” or “unfair” but there is currently no case law in Missouri addressing the merits of this contention.
The Missouri long-arm statute provides that an out-of-state defendant can be subject to personal jurisdiction in Missouri when it commits a tortious act within Missouri. See R.S.Mo. §506.500.1(3). The issue of what constitutes a tortious act within Missouri is not always evident, especially when a defendant solely acted outside of the state. A recent case decided by the Missouri Court of Appeals for the Western District squarely addressed the issue of when alleged out-of-state tortious acts give rise to long-arm jurisdiction in Missouri. In Good World Deals, LLC v. Gallagher, et al., the court held that letters or telephone calls containing fraudulent representations from an out-of-state defendant to a Missouri resident are sufficient to subject the out-of-state defendant to long-arm jurisdiction in Missouri under its tortious act provision.
In Good World, the plaintiff appealed the trial court’s finding that defendant Xcess was not subject to personal jurisdiction in Missouri. Good World, a Missouri limited liability company located in Kansas City, received an email from Xcess, an Ohio limited liability company with its principal place of business in Wooster, Ohio, regarding merchandise that Xcess had for sale.
Following the email, defendant Gallagher, on behalf of Xcess, and Good World engaged in telephone communications and text messages regarding the merchandise. Xcess represented that it had approximately 1,500 Xbox games and 200 Fitbits to offer, among other items, and that the items were overstock and could have damaged boxes. Good World informed Xcess it was interested in the merchandise because of the Xbox games and Fitbits. Following an agreement on the price, Good World arranged its own shipping and picked up the merchandise in Ohio.
Upon receipt of the merchandise and after discovering that there were fewer than 700 Xbox games, no Fitbits and many boxes were empty or contained broken items, Good World notified Xcess that the goods were nonconforming and gave them the opportunity to cure. When Xcess refused, Good World filed suit, alleging misrepresentation and breach of contract.
Xcess moved to dismiss the lawsuit, claiming it was not subject to personal jurisdiction in Missouri. The circuit court agreed. The Missouri Court of Appeals, however, reversed and remanded after employing a two-step analysis to determine if personal jurisdiction existed over Xcess. First, it examined whether Xcess’ conduct satisfied the Missouri long-arm statute and, once it determined that it did, it examined whether Xcess had sufficient minimum contacts with Missouri such that asserting personal jurisdiction over it comports with the principles of due process.
The Missouri long-arm statute vests jurisdiction in the Missouri courts when a defendant personally transacts business, makes a contract, or commits a tortious act in the state. See R.S.Mo. §506.500.1(1)-(3). It provides in relevant part as follows:
Any person or firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this state;
(2) The making of any contract within this state;
(3) The commission of a tortious act within this state.
Plaintiff claimed that personal jurisdiction existed over Xcess because it transacted business within Missouri, it entered into a contract in Missouri and it committed a tortious act within Missouri. Because the conduct of Xcess only needed to satisfy one of these subdivisions, the appellate court found that Good World sufficiently alleged that Xcess committed a tortious act, i.e. making false and material misrepresentations about the conformity of the merchandise, within Missouri. Since it was dispositive, the court only addressed the tortious act provision of the long-arm statute.
While Xcess denied any tortious act, it also argued that if there were alleged misrepresentations, they occurred in Ohio and not in Missouri. The Good World court therefore was faced with the issue of what constitutes the commission of a tort “within the state” for purposes of the long-arm statute. In analyzing this issue, the Good World court rejected Xcess’ argument that any such acts did not occur in Missouri because of well-established precedent holding that “‘[e]xtraterritorial acts that produce consequences in the state’ such as fraud, are subsumed under the tortious act section of the long-arm statute.” Because Good World alleged fraudulent acts of Xcess that created consequences in Missouri, the long-arm statute was satisfied and Missouri courts could exercise jurisdiction over Xcess.
Having decided that the long-arm statute was satisfied, the court turned to the second prong of the analysis, which is whether Xcess had sufficient minimum contacts with Missouri such that asserting personal jurisdiction over it comports with due process. The court recognized that the focus of such an evaluation is “whether ‘there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.’” The Court of Appeals held that plaintiff established Xcess purposefully engaged plaintiff in Missouri through emails, text messages and phone calls which contained misrepresentations about the merchandise. Citing the Missouri Supreme Court’s earlier ruling in Bryant v. Smith Interior Design Grp., Inc. 310 S.W.3d 227, 235 (Mo. banc 2010), the Court reasoned that when the actual content of communications in a forum gives rise to intentional tort causes of action, i.e. when the communications contain fraudulent content, there is purposeful availment.
The Good World holding does not limit Missouri precedent holding that communications from an out-of-state defendant to a Missouri resident alone do not amount to transacting business in the state for purposes of the long-arm statute. To the contrary, the court did not address whether Xcess transacted business in Missouri. Instead, this holding is limited to cases in which a plaintiff alleges that an out-of-state defendant sent communications into Missouri that were false and misleading, therefore satisfying the tortious act section of the Missouri long-arm statute.
Governor Parson has signed Senate Bill 608, which enacts three new sections relating to civil liability due to criminal conduct. The Bill affords Missouri business owners greater protection against liability for criminal conduct that occurs on their property.
Senate Bill 608 repealed part of Section 537.349, RSMo, which provided that a person or business owner could not be found liable for the injury or death of a trespasser if the trespasser is substantially impaired by alcohol or an illegal controlled substance, unless the person or business owner acted with negligence or willful and wanton conduct. Under the revised law, negligence is no longer a basis for liability. Now, a person or business owner may only be liable if their willful and wanton misconduct was the proximate cause of the injury or death of the substantially impaired trespasser.
Senate Bill 608 also creates what is referred to as “The Business Premises Act”, which is comprised of Sections 537.785 and 537.787, RSMo. The Act creates safeguards to businesses for third-party crimes out of the business’s control. It provides that there is no duty to guard against unpreventable criminal and harmful acts of third parties that occur on the business premises unless the business knows or has reason to know that such acts are being committed or are reasonably likely to be committed. The Act codifies three affirmative defenses available to a premises owner, should a duty be found to exist under the Act. The business will not be liable:
- if the business has implemented reasonable security measures;
- the claimant was on the premises and was a trespasser, attempting to commit a felony, or engaged in the commission of a felony; or
- the criminal acts or harmful acts occurred while the business was closed to the public.
The Act also provides that evidence of subsequent action taken by a business to provide protection to persons shall not be admissible in evidence to show negligence or to establish feasibility of the security measure. This is consistent with a wide body of Missouri law on subsequent remedial measures. In addition, the Act expressly states that all immunities and defenses to liability available to a business under Missouri law are unaffected, and it shall not be construed to create of increase the liability of a business.
The safeguards created by Section 537.349, RSMo and the Act provide clarification of the duty of businesses when third-party crimes occur on business premises and the applicable affirmative defenses, neither of which was clear under Missouri case law. We will closely follow the body of case law that develops around this statutory framework, and are optimistic that the intent of Senate Bill 608 will be realized.
The full text of SB 608, and the cited statutory provisions may be found here.
Missouri Court of Appeals Eastern District Judges Disagree Regarding Substantial Compliance and Affidavit of Merit Statute in Med Mal CaseAugust 6, 2018 | John Mahon, Jr.
In Ferder v. Scott, the Missouri Court of Appeals, Eastern District (opinion authored by Judge Robert G. Dowd, Jr.), reversed a trial court’s dismissal of a medical malpractice lawsuit for failure to comply with the affidavit of merit requirement in § 538.225, RSMo. The appellate court held the plaintiff’s affidavit, which complied with the statute in every way except that it combined related defendants into a single affidavit, substantially complied with the statute and was sufficient to avoid dismissal.
The plaintiff sued three defendants (a doctor, the doctor’s practice group, and a hospital) but filed only a single affidavit as to all defendants. The plaintiff’s claims against the corporate defendants were premised solely on vicarious liability for the doctor’s conduct as an alleged employee. The plaintiff voluntarily dismissed her claim against the hospital. Later, the two remaining defendants moved to dismiss on the grounds that the single affidavit was deficient because it did not strictly comply with the mandatory language contained in § 538.225.4, RSMo, which states: “A separate affidavit shall be filed for each defendant named in the petition . . . .” The trial court agreed and dismissed the case, without prejudice, pursuant to § 538.225.6. The plaintiff appealed.
On appeal, the plaintiff conceded the affidavit was technically deficient and did not strictly comply with the statute because there was only one affidavit and not three separate affidavits. However, plaintiff argued she substantially complied with the statute because the affidavit was otherwise compliant and timely and verified her claims were not frivolous. She also argued that because the doctor was an employee of the practice group and because she alleged only a vicarious liability claim against the group, the substance of her single affidavit satisfied the purpose and intent of the statute with respect to both defendants. In other words, the affidavit complied in all substantive ways but not in form, and a separate affidavit for the group would have been nothing more than a duplicate of the one already filed with no additional information.
The appellate court reviewed Missouri case law analyzing § 538.225. The court acknowledged no Missouri court had ever found substantial compliance with the affidavit statute, but Missouri courts had not foreclosed the possibility that a plaintiff could survive a motion to dismiss through substantial compliance under a certain situation. The court found the plaintiff’s case, under its own unique set of facts, presented that situation. The court distinguished the various Missouri appellate decisions rejecting substantial compliance arguments as factually dissimilar in that the plaintiffs in those cases failed to file a timely affidavit. Thus, the court reversed and remanded to the trial court.
Judge Kurt Odenwald authored a dissent in which he expressed sympathy towards the plaintiff’s position, and agreed the affidavit substantially complied with the statute. But he did not believe the court had the discretion to disregard the express directive of the statute and make a finding of substantial compliance. That is because the language of the statute is clear and unambiguous, and Missouri law permits substantial compliance with a statute only under a statutory directive to construe a statute liberally or under a statute that expressly allows for substantial compliance, neither of which was present. Further, construing the statute to permit only one affidavit would necessarily render section 538.225.4 meaningless, and Missouri courts are not permitted to interpret a statute in a way that renders any portion meaningless. Without a direct mandate from the Supreme Court of Missouri, Judge Odenwald was unwilling to diverge from the express language of the statute and thus dissented.
On July 11, 2018, the defendants filed an Application for Transfer to the Supreme Court of Missouri asking the Court to address the conflict between the appellate court’s novel application of the substantial compliance theory to § 538.225 on the one hand, and the legislative intent of the statute, and all prior Missouri appellate decisions, including one Supreme Court decision, on the other. The defendants also argue that the ruling destroys the bright-line nature of the statute and creates a test that will inevitably lead to vastly different applications and inconsistent opinions that will cause confusion among the courts and parties. The application is currently pending.
Medical Malpractice: Missouri's Health Care Affidavit Statute is Constitutional - Comply or Face DismissalJune 22, 2018 | Suzanne Billam and Hal Meltzer
When will plaintiffs learn? In Hink v. Helfrich, the Missouri Supreme Court has recently added yet another to a long line of Missouri decisions upholding constitutional validity of the health care affidavit requirement for medical negligence actions, and strictly construing the mandatory statutory language. For more on this issue, see our prior post here.
Section 538.225.1 (Missouri Revised Statues) requires that a plaintiff or his counsel file an affidavit with the Court, stating that he has:
“… obtained the written opinion of a legally qualified health care provider which states that the defendant health care provider failed to use such care as a reasonably prudent and careful health care provider would have under similar circumstances and that such failure to use such reasonable care directly caused or directly contributed to cause the damages claimed in the petition.”
The Supreme Court in Hink held plaintiff’s medical malpractice case was properly dismissed for failure to file the required affidavit. In her Petition, the plaintiff challenged the constitutionality of this statute, as revised in 2005, arguing that it violated a plaintiff’s right to jury trial, Missouri’s open courts provision, and separation of powers. When the plaintiff failed to file any affidavit within the prescribed time limit (90 days, plus a 90-day extension as permitted by statute), the defendant physician filed a Motion to Dismiss. The trial court granted defendant's Motion, and plaintiff appealed.
The Supreme Court of Missouri endorsed its prior holding in Mahoney v. Doerhoff Surgical Services, Inc., 807 S.W.2d 503 (Mo. banc 1991), declaring that Section 538.225’s affidavit requirement does not violate the constitutional right of access to the courts under the Missouri Constitution, Article I, § 14, because access to the courts simply means “the right to pursue in the courts the causes of action the substantive law recognizes.” Missouri’s substantive medical malpractice law requires a plaintiff to prove by a qualified witness that the defendant deviated from an accepted standard of care. Without such testimony, the case can neither be submitted to the jury nor be allowed to proceed by the court.
The Court emphasized that Section 538.255’s affidavit requirement is consistent with this substantive law because the legislative purpose of requiring an “affidavit of merit” is to prevent frivolous medical malpractice lawsuits, when a plaintiff cannot put forth adequate expert testimony to support her claims. Thus, the requirement does not deny a fundamental right, or free access to the courts, and does not delay the pursuit of the cause in the courts. At most, it merely redesigns the framework of the substantive law to accomplish a rational legislative end of protecting the public and litigants from the cost of ungrounded medical malpractice claims.
Likewise, the Court once again (as in Mahoney) rejected the argument that Section 538.255’s affidavit requirement violates the right to trial by jury, because the statute simply reiterates existing requirements on plaintiffs: it does nothing more than “parallel” the requirement of Missouri Rule 55.03, that an attorney exercise a reasonable inquiry to ensure the suit is well grounded in fact and law. The affidavit of merit does nothing more than provide more specific guidance as to how medical malpractice plaintiffs must comply with existing pre-suit requirements rather than imposing any new requirement or other restrictions on his or her right to seek redress.
When first enacted, and at the time Mahoney was decided, Section 538.255 gave the trial court discretion on whether to dismiss, providing that if an affidavit was not filed within 90 days, “the court may, upon motion of any party, dismiss the action against such moving party without prejudice.” Mo. Rev. Stat. § 538.225.5, 1985 (emphasis added). In 2005, the statute was amended to provide the court “shall” dismiss the action if an affidavit is not filed, rather than the permissive “may.” This made it yet clear that the trial court had no option to dismiss, where no affidavit was timely filed.
Finally, the Court rebuffed plaintiff’s contention that the 2005 amendment to Section 538.255 defining “legally qualified healthcare providers” to include only those who practice in “substantially the same specialty” as the defendant, impermissibly imposes a stricter burden on the plaintiff than is required to prove a prima facie case of negligence at trial. As plaintiff Hink failed to file any affidavit, the Court held that she was not affected by the alleged deficits to Section 538.255, and therefore lacked standing to challenge its constitutionality. The Court did explain, however, that its interpretation of “substantially the same specialty” includes persons qualified by expertise rather than board certification, and that Section 538.255 does not require the affidavit to rely on only a single expert opinion for both breach of standard of care and causation.
Missouri courts could not be any clearer, Mo. Rev. Stat. § 538.225 is constitutional, mandatory, and here to stay.
The Missouri Legislature introduced bills during its most recent legislative session to curtail forum shopping of class action plaintiffs in Missouri. This anti-forum shopping legislation, while not ultimately enacted into law, would have limited out-of-state plaintiffs from joining lawsuits involving local claims against out-of-state defendants. Current statutes permit these out-of-state plaintiffs to join such claims for a nominal fee, thus allowing them to use Missouri’s court resources and taxpayer dollars to pursue out-of-state defendants for injuries that did not occur in Missouri. House Bill 1578 and Senate Bill 546 attempted to eliminate this problem by limiting both the joinder of plaintiffs and defendants in a single action.
Current Missouri law permits joinder of plaintiffs if they assert a joint right to relief or if their claims arise out of the same transaction or occurrence and if there is any question of law or fact common to all of the joined plaintiffs. Likewise, Missouri law permits joinder of defendants if a claim is asserted against the defendants jointly or if an asserted right to relief arises out of the same transaction or occurrence and there is a question of law of fact common to all of the defendants in the action. The proposed legislation sought to limit joinder by precluding joinder of out-of-state injury claims arising out of separate incidents, or purchases of the same product or service in a single action.
The bills further sought to limit joinder of two or more plaintiffs in an action to only those circumstances in which each plaintiff can establish proper venue independently, except that plaintiffs may be joined in actions in counties with populations below certain specified thresholds. Joinder of two or more defendants in a single action would likewise be prohibited under the proposed legislation unless the plaintiff could establish proper venue and personal jurisdiction as to each defendant, independent of plaintiff’s claims against other defendants. If personal jurisdiction and proper venue could not be independently established as to a particular defendant, that defendant would be deemed misjoined and could only be joined if each party to the action waived objection to the joinder. All claims against a misjoined plaintiff or defendant would have been severable from the action and either transferred to a county where proper venue exists, or if venue is not proper in any county in Missouri or personal jurisdiction does not exist, the claims would be dismissed without prejudice.
Ultimately, H.B. 1578 passed the House, but the similar Senate version, S.B. 546, after appearing on the Senate floor multiple times, failed to pass before the end of this year’s legislative session. While this legislation may be reintroduced next year, if it is enacted with the same provisions as the proposed legislation this session, it will not be retroactive and thus would not affect any lawsuits pending at the time of the legislation’s enactment.
In Jackson v. Barton, the Missouri Supreme Court was asked to decide whether unfair debt collection practices were sufficient to sustain a claim under the Missouri Merchandising Practices Act. To the surprise of many, the Court answered this question in the affirmative.
Specifically, the plaintiff received dental work and a series of oral contracts ensued in which the plaintiff was assured the amount he owed would be relatively small. Subsequently, collection efforts began for a much larger sum that had been agreed to orally. An attorney spearheaded the collection efforts, leaving a wake of collection “no-nos” in his trail. Among his many mistakes, the attorney failed to appear at trial in a collection suit he filed and later sent a demand letter for a much larger sum than was actually owed. Unsurprisingly, the Court was not impressed.
Clearly, these actions were sufficient to state a claim under the Fair Debt Collections Practices Act. There was, however, a question of whether a FDCPA claim was barred by the statute of limitations. Whether plaintiff possessed an actionable claim under the Missouri Merchandising Practices Act (MMPA) was significantly murkier. In essence, the question came down to whether the collection efforts qualified as an act “in connection with the sale” of merchandise as required under the MMPA.
The Court first compared the situation to Conway v. CitiMortgage, Inc., 438 S.W.3d 410, 414 (Mo. Banc 2014), a case in which the Court held that subsequent foreclosure proceedings are actions “in connection with the sale of merchandise” as contemplated by the MMPA. Moreover, the Court found that how a party enforces the terms of sale is in fact a continuation of the sale. With this precedent in mind, the Court turned its attention to how collections efforts should be viewed.
Collection efforts were ultimately held to be a part of or a continuation of the underlying sale of goods and services, in this case dental services. The Court found that because the dentist performed dental services while extending credit to the plaintiff, the sale of such dental services was not actually completed until final payment was received. As such, any collections efforts were made in connection with the sale of dental services in an effort to enforce the terms of the sale.
In sum, even actions that take place long after the bulk of a transaction is completed can still land a party on the wrong side of the MMPA. From a policy standpoint, the MMPA seems to be growing in scope, with Missouri courts willing to apply the Act to a wide array of situations and actions by defendants. In a world where debt collections can be a tricky area for businesses, and other statutes clearly regulate debt collection activities, the threat of running afoul of the MMPA only raises the stakes.
According to data from the Greater Kansas City Jury Verdict Service, courts in the metropolitan area experienced fewer jury trials in 2017, but the Plaintiffs’ Bar still managed to have a good year. Every year, the Greater Kansas City Jury Verdict Service issues a “Summary and Statistics of Jury Verdicts” 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. The statistics in 2017 indicate a shift in various respects from 2016.
Fewer Trials, with an increased percentage of Plaintiffs’ verdicts
The Jury Verdict Service’s annual summary reported on 97 trials in 2017, compared to 113 in 2016. These numbers are down from the preceding three-year period: there were 110 trials in 2015, 133 trials in 2014, and 122 trials in 2013.
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. The 97 trials in 2017 resulted in 193 verdicts; and the 113 trials in 2016 resulted in 199 verdicts.
While the number of trials has decreased from the preceding three-year period, the percentage of Plaintiffs’ verdicts has seen a slight increase. In 2017, 49% of the verdicts were for Plaintiffs compared to the 42% for Plaintiffs in 2016.
Increase in Average Monetary Awards for Plaintiffs
The overall average of the monetary awards for Plaintiffs experienced a significant increase from previous years. In 2016, the average of Plaintiffs’ verdicts was $1,383,549 while the average in 2015 was $1,376,323. In 2017, the average monetary award for Plaintiffs rose precipitously to $4,204,501. But most of this increase can be attributed to two hefty verdicts: $217.7 million awarded in the Syngenta Corn Litigation and $139.8 million the Time Warner Cable et al. litigation. (Friendly suggestion to Jury Verdict Service: how about reporting on the median jury verdict, as well as the average?)
Slight Decrease in Number of Large Verdicts
In 2017, the 11 verdicts that exceeded $1 million, compared to 16 such verdicts in 2016. However, both years show a large increase from the 6 verdicts in 2015 in the same monetary range. Of the eleven $1 million+ verdicts in 2017, 6 were in Jackson County, MO Circuit Court (evenly split between Kansas City and Independence), 2 were in the Circuit Court of Clay County, MO, and 3 were in the U.S. District Court for the District of Kansas. Finally, the amount of verdicts between $100,000 and $999,999 was virtually unchanged from 2016 (37 verdicts) to 2017 (36 verdicts).
Key Observations and Conclusion
Over the last four years, the percentage of Plaintiffs’ verdicts has increased. Additionally, the average amount of Plaintiffs’ verdicts has increased steadily from its low point in 2014. Over half of the verdicts awarded in 2017 that exceeded $1,000,000 were in Jackson County, MO Circuit Court, which is consistent with the view of many practitioners that this can be a Plaintiff-friendly forum. 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.
Source: Greater Kansas City Jury Verdict Service Year-End Reports 2013-2017
Premises liability update: Missouri Supreme Court affirms ruling on adequacy of negligence jury instructionMarch 23, 2018 | John Watt
We recently reported on a ruling of the Missouri Western District Court of Appeals that there was sufficient evidence to support the giving of the negligence instruction in a case where an employer was found liable for damages sustained when an employee was injured by a third party criminal act. The Missouri Supreme Court has now upheld that ruling. In Wieland v. Owner-Operator Services, Inc., Wieland was an employee of the Owner-Operator company when she alerted her employer that she felt threatened by an ex-boyfriend named Alan Lovelace. In response, the company undertook certain precautions, including disseminating a photograph of the ex-boyfriend to the reception area and informing the company’s safety team about the situation. Some two weeks later, Lovelace gained access to the employee parking lot and laid in wait in Wieland’s vehicle. After approximately an hour, Wieland and Lovelace had a confrontation and as Wieland walked away, Lovelace shot her in the back of the head. Wieland later sued the company.At trial, the circuit court judge approved a jury instruction which allowed liability for the criminal acts of a third party in instances where the defendant knew or by using ordinary care could have known that the third party was on its premises and posed a danger. In doing so, the trial court invoked an exception to the general rule that there is no duty to protect against criminal acts of third parties. Missouri courts have essentially adopted the rule established by § 344, Comment F, of the Restatement (Second) of Torts. That rule provides that since the possessor is not an insurer of the visitor safety, he is ordinarily under no duty to exercise any care until he knows or has reason to know that the acts of the third person are occurring, or are about to occur. The rule underscores that once the specter of harm to an invitee becomes apparent, the general rule insulating a premises owner from liability no longer applies. The evidence introduced at trial was that Owner-Operator had surveillance cameras that would have shown Mr. Lovelace gaining access to both parking lot and Wieland’s vehicle. However, the surveillance cameras were not monitored at the time the incident occurred.
In its appeal, the company argued the circuit court erred in submitting the jury instruction that allowed for this finding because there was not substantial evidence to let this issue go to the jury. The Supreme Court ruled that while a challenge to this verdict director was abandoned on appeal and was therefore not properly before the Court, in any event, the Plaintiff’s argument, as adopted by the trial court, did not misstate the law.
Missouri Court of Appeals Weighs in on the Breadth of Discoverable Prescription Records, Post-MortemJanuary 19, 2018
Decedent’s wife filed a lawsuit in Barton County, Missouri in 2016 after her husband was killed when a dump/bale bed manufactured by defendant Cannonball Engineering, which he was repairing at the time of the incident, crushed him. Plaintiff sued Cannonball on various negligence and product liability theories. A coroner’s two post-mortem blood samples, collected on the date of decedent’s death, revealed reportable amounts of opioid prescription pain medication.
Cannonball served discovery, seeking information on decedent’s prescription medications for about six years prior to his death. Plaintiff objected that the request was overbroad as to time and scope, and violated the decedent’s physician-patient privilege. Cannonball moved to compel the production of records.
Plaintiff argued that the only physical or medical condition identified in Plaintiff’s Petition was the crushing injury that killed decedent; that case law only entitles a defendant to medical records that relate to physical conditions put in issue by the Plaintiff’s pleading; and that any discovery in excess of this scope amounts also to a violation of the physician-patient privilege.
Cannonball argued that it was entitled the information because it was relevant to: (1) the impact the prescription pain medications may have had on decedent’s abilities around the time of his death; and (2) Cannonball’s affirmative defense of comparative fault (i.e., the decedent knew that it was unsafe to consume the medications and then operate heavy equipment, but negligently did so anyway). Cannonball also argued that the information was discoverable because Plaintiff alleged failure to warn and thereby impliedly asserted that decedent had the mental capacity to appreciate the warnings on the dump/bale at the time of the accident.
The trial judge sustained Cannonball’s Motion to Compel and ordered Plaintiff to execute the requested authorization for decedent’s prescription medications. Plaintiff applied for a writ of prohibition to block the trial court’s order.
The Missouri Court of Appeals for the Southern District granted the writ, concluding that the trial court had abused its discretion. The Court of Appeals noted that the physician-patient privilege remains intact until a plaintiff’s physical condition – as put in issue by the pleadings - is waived.The Court of Appeals held that Plaintiff’s allegations placed decedent’s cognitive function at the time of the incident at issue and waived his physician-patient privilege with respect to records that related to the issue of his mental capacity at or around the time of his death. On this basis, Cannonball, who alleged that decedent may have been cognitively impaired at the time of his death, was entitled to discover decedent’s prescription medication records at or near the event. But there was no justification for the trial court to allow discovery of nearly six years of prescription records, when decedent’s mental capacity only at or around the time of the incident was at issue.
"Reasonable Attorney's Fees" Awarded On a Missouri Merchandising Practices Act Claim May Not Be Limited By a Plaintiff's Contingency Fee Agreement With CounselJanuary 5, 2018 | Robert Chandler
In Selleck v. Keith M. Evans Insurance, Inc., the Missouri Court of Appeals for the Eastern District remanded a case back to the trial court for further consideration on the reasonableness of an award of attorney’s fees, under the Missouri Merchandising Practices Act. The trial court ruling limiting plaintiff’s fees based upon his contingency fee agreement with his attorney was overturned.
Plaintiff sued his former employer in state Circuit Court for wrongful discharge, unpaid commissions under the MMPA, unjust enrichment and breach of contract. The litigation was “contentious” and “antagonistic”, with numerous discovery disputes. At trial, plaintiff requested damages for wrongful discharge in the amount of $160,000 and lost commissions in the amount of $11,709. Plaintiff presented evidence at trial that he had hired counsel on a contingency fee basis. The jury ruled for Defendant on the wrongful discharge claim, but awarded Plaintiff $10,000 for lost commissions on his MMPA claim.
Plaintiff’s counsel filed a post-trial motion seeking attorney’s fees in the amount of $221,292 under § 407.193, which states that a trial court “may award reasonable attorney’s fees and costs to the prevailing party.” Plaintiff’s counsel represented that they billed 788 hours by attorneys with hourly billing rates of $280 and $450. Noting that Plaintiff has entered into a one-third contingency fee agreement with counsel, the Court ruled that Plaintiff was entitled to reasonable attorney’s fees and awarded $3,333.33, or one-third of the $10,000 recovery. The Court found that the $221,292 claimed by plaintiff’s counsel was not reasonable and extremely excessive for the type of case involved. Plaintiff appealed.
Contingency Fee Agreement Does Not Serve as a Cap on MMPA Attorney’s Fees
Plaintiff’s single point on appeal was that the trial court erred in utilizing the contingency fee agreement to determine the award of attorneys’ fees under the MMPA. The Court of Appeals agreed. Although Missouri law does not prohibit consideration of a contingency fee agreement in making a reasonable-fee determination, it is only one of many factors that must be considered. However, the agreement cannot be used to impose an automatic ceiling on reasonable fees to be awarded. The Court must also consider other factors, including a determination of a “lodestar” amount – determined by multiplying the reasonable number of hours for the type of case by a reasonable hourly rate determined by rates customarily charged by the attorneys involved as well as other attorneys in the community offering similar services.
Concluding that the Circuit Court had used the contingency fee agreement to determine a cap on reasonable fees for Plaintiff’s counsel, the Court of Appeals reversed, and remanded the matter to the trial court for a determination of a reasonable fee based upon not only the contingency fee agreement, but also:
-the number of hours reasonably expended on the case,
-the nature and character of the services rendered,
-the degree of professional ability required,
-the nature and importance of the matter,
-the amount involved or the results obtained, and
-the vigor of the opposition.
Conclusion - Guidance for the Future
Although a contingency fee agreement may be considered in determining reasonable attorney’s fees under the MMPA, it is but one of many factors for the trial court to assess. The contingency fee provided for in the agreement cannot be used as a “cap” on MMPA attorney’s fees.
In Shallow v. Follwell, the Missouri Court of Appeals for the Eastern District of Missouri reversed and remanded a jury’s verdict for defendant Dr. Follwell, holding the trial court improperly allowed cumulative expert witness testimony that imperiled the jury’s ability to fairly consider the quality and quantity of expert witness opinions.
The case involved a surgical mesh procedure to repair decedent’s hernia. After the doctor twice within 24 hours discharged the patient from the hospital, she returned to the hospital a third time, where she was diagnosed with a severe infection in her abdominal cavity, caused by leakage of toxic and infectious bowel contents into her abdomen. She died soon thereafter.
At trial, Dr. Follwell – designated as a fact and expert witness on his own behalf – did not dispute that decedent’s bowel was perforated, leaked, and caused the septic condition that led to her death. He denied that he caused the hole in her bowel, however, and presented his alternative theory that decedent suffered from undiagnosed atrial fibrillation, which caused a blood clot to form, restricted the blood flow to that section of decedent’s bowel, and ultimately weakened and perforated the bowel wall. Four other retained experts testified for Dr. Follwell: (1) a critical care specialist; (2) a cardiologist and internist; (3) a vascular surgeon; and (4) a colorectal surgeon.
While there is no “bright line” rule as to how many expert witnesses a party may utilize to prove or defend its case, Missouri trial courts are charged with admitting evidence that is both logically and legally relevant. The concept of legal relevance includes whether the evidence may, among other things, pose a danger of unfair prejudice, be a waste of time, and amount to the needless presentation of cumulative evidence. Missouri courts have expressed concern that excessive cumulative evidence risks invading the jury’s ability to resolve the case on the merits and evaluate the quality and credibility of expert opinions. Cumulative expert opinions may instead result in the jury simply “counting heads.” The Shallow v. Follwell court held that the trial court abused its discretion in failing to properly determine when cumulative evidence should stop.
It was not just the number of defendant’s experts that caused the Court of Appeals to reach its conclusion. Rejecting the defendant’s claim that each expert’s testimony was limited to his own area of medical expertise - cardiology, internal medicine, critical care, the vascular system, and the gastrointestinal system - the Court of Appeals ruled that what actually happened was that each expert presented his expert opinion in his own area of expertise, but also repeated the sum and substance of the defense’s alternative theory of causation, in testimony that extended beyond the expert’s specialty. The jury therefore heard the same opinions multiple times – essentially a “chorus of the same ultimate opinions” – which impeded its duty and ability to fairly weigh the evidence on each side.
In returning the case to the Circuit Court for a new trial, the Court of Appeals chastised the trial court for “ignoring its duty to properly assess whether the testimony was needed,” and reminded the trial court “to adhere to the principles and standards set forth in this opinion and elsewhere in Missouri law for determining the admissibility of cumulative evidence.”
Candy manufacturers nationwide are increasingly finding themselves in Missouri state court, facing class action allegations that their use of over-sized packaging misleads consumers into believing the package contains more product than is actually present. A recent Eighth Circuit decision in a “slack-fill” case suggests that when a corporate defendant removes to federal court under the Class Action Fairness Act (CAFA), it may face a stiff challenge when the plaintiffs move to remand the case to state court, on the grounds that the value of their claims total less than $5 million.
In Waters v. Ferrara Candy Co., people who bought Red Hot candies initiated claims against the candy company for violation of the Missouri Merchandising Practices Act (“MMPA”) based on under-filled or “slack-filled” cardboard boxes of the candies. The consumers filed suit in the City of St. Louis Circuit Court. Presumably seeking a less plaintiff-friendly venue, the candy company removed the case to the federal court for the Eastern District of Missouri, under CAFA, arguing that the total value of the consumers’ claims exceeded $5 million, the minimum amount required for the district court’s jurisdiction under that statute. The candy company based its calculation on what the consumers could potentially recover as compensatory damages (total sales in Missouri for the past five years), attorney’s fees (at 40% of compensatory damages), and punitive damages (at 5 times compensatory and punitive damages), and the cost of changing its packaging processes to eliminate slack-fill.
The consumers moved to remand the case back to the City of St. Louis, arguing that the $5 million threshold was not met. In opposition, the candy company submitted affidavits from executives attesting to the total retail sales of all Red Hots products for the previous five years and how much it would cost to change its packaging processes to eliminate slack-fill, if it were compelled to do so.
The district court considered each category of potential recovery by the consumers and concluded that taken together or separately, the value of the consumers’ claims did not meet the $5 million threshold and ordered the case back to the City of St. Louis. The court concluded that compensatory damages and attorney’s fees added up to less than $1 million, and that punitive damages should not be included in the calculation, because the consumers had not adequately pled punitive damages in their petition and, therefore, punitive damages would not be recoverable in this case. That left the value of injunctive relief. In deciding how to calculate the value of injunctive relief, the court followed “longstanding Eighth Circuit tradition” and looked at it from the consumers’ point of view, rejecting the “either viewpoint” test, which compares the value of injunctive relief to consumers to the cost to the manufacturer and taking the more expensive of the two. The candy company urged adoption of the “either viewpoint” test but presented no evidence of the value of injunctive relief from the consumers’ point of view, so the court disregarded this factor as well.
The court went on to criticize the efficacy of the candy company’s affidavits to establish the cost of injunctive relief from the manufacturer’s point of view. The CEO’s affidavit addressed the cost of changing its packaging to eliminate slack-fill based on an estimated cost to upgrade its packing equipment. The court found this to be speculative because it did not specify what injunctive relief would actually require the manufacturer to do -- add more candy to the existing package size, shrink the package size to more closely fit the current weight of actual candy, or modify every Red Hots candy production line. As a result, the court found the proposed cost to be too speculative to allow the consumers’ to rebut it.
The candy company appealed this decision, challenging (among other things) the district court’s adoption of the “plaintiff’s viewpoint” test. The Eighth Circuit Court of Appeals was unmoved. The appeals court found it unnecessary to rule on whether the district court should have applied the “plaintiff’s viewpoint” or the “either viewpoint” test, because it found that under either standard, the candy company failed to prove by a preponderance of the evidence that the amount in controversy exceeded $5 million. The appeals court agreed with the district court that the two affidavits did not adequately quantify what it would cost the company to comply with an injunction.
Given another chance, the Eighth Circuit might decide that the “plaintiff’s viewpoint” test determines the value of injunctive relief for establishing the jurisdictional amount under CAFA. Thus, a reasonable and conservative strategy to keep a slack-fill class action in federal court would be to present evidence from the consumers’ point of view and be as specific as possible about the method and cost of eliminating slack-fill. This is a calculus that can be accomplished before deciding to remove, and if neither of these amounts can be supported with specific evidence to establish a finding of at least $5 million, it might be more cost effective to just stay in state court.
Counsel should also keep in mind that in cases where plaintiffs have adequately pled punitive damages in their state court petition (which did not occur in the Waters case), it is not uncommon for punitive damages to total up to 10 times the amount of compensatory damages, and this can be a critically important factor in determining whether the CAFA threshold has been met.
Western District Court of Appeals Expounds on Attorney Duty of "Reasonable Investigation" of Juror Litigation HistoryOctober 24, 2017
Attorneys typically rejoice when courts provide further definition of previously established rules, standards, and legal terms; and that is exactly what the Western District Court of Appeals did in King v. Sorenson. We have previously chronicled Missouri’s adoption of Rule 69.025, which obligates a litigant to investigate the backgrounds of potential jurors. Specifically, if a litigant has failed to conduct a “reasonable investigation” of prospective jurors’ litigation history, he has waived the right to seek relief from an adverse judgment, based on juror non-disclosure. Before King v. Sorenson, lawyers knew that the definition of a “reasonable investigation” required review of Case.net before the jury is sworn, but there was no further guidance as to the required extent of a “reasonable search,” nor any accepted protocol to ensure that a search of venireperson’s litigation history is conducted properly.
King v. Sorenson was a wrongful death and lost chance of recovery case, in which the trial court provided both parties with a list of sixty-five randomly selected names of potential jurors. One of potential jurors was listed at “J. Paul Willis,” and this was confirmed by a separate juror questionnaire where the venireperson provided the name of “(John) Paul Willis.” At no time did the venireperson represent that Paul was his functional first name, and Plaintiff’s counsel solely conducted Case.net searches using “J” or “John” as the litigant’s first name, “P” or “Paul” as the middle name, and “Willis” as the last name. These searches revealed no collections cases involving the prospective juror.
In voir dire, Plaintiff’s counsel emphasized the importance of prospective juror honesty, candor, and how the lack thereof could cause the same issues to be re-tried and re-litigated. When the panel was questioned about collection cases that have been brought against them, Mr. Willis remained silent. Mr. Willis ultimately was seated on the jury, and participated in its defense verdict, signing the verdict form as “Paul Willis.”
Contrary to Willis’ representations on his juror questionnaire and during voir dire, it was later discovered that he was a defendant in a collection case where he was sued for an alleged breach of contract styled Champion Trim, Inc. v. Paul Willis, et al. Because Willis never provided “Paul” as his first name, Plaintiff’s counsel had not searched Case.net for matters involving a “Paul Willis.”
Plaintiff moved for a new trial based on the juror non-disclosure of litigation history. But the trial court denied the motion, and ruled that Plaintiff’s counsel “mistakenly used the incorrect first name” when conducting a Case.net search, and the search was therefore unreasonable. The Western District Court of Appeals disagreed and held that “where a litigant has performed a Case.net search by inserting the names as provided to counsel by the trial court, such a search simply cannot be deemed anything but ‘reasonable.’”
The appellate court remanded the case to the trial court, to determine if a new trial was warranted. It held that “if the trial court finds that Juror Willis’s nondisclosure was intentional, bias and prejudice must be presumed and a new trial ordered. If the trial court finds that the nondisclosure was unintentional, it must undertake an analysis as to whether Plaintiffs were prejudiced, in such a fashion necessitating a new trial, by Juror Willis’s nondisclosure of the 1991 lawsuit.”
Courts are often asked by plaintiffs’ counsel to admit evidence of other similar incidents (OSI) in order to show a defendant’s knowledge of an alleged defect, and/or causation. Plaintiffs have used this approach to tap into the power of strength in numbers and will typically seek to introduce evidence of as many “similar” incidents as a trial court will allow. Although the law allows for the introduction of this type of evidence, a trial court must carefully balance the relevancy of this evidence versus the prejudicial effect. The Eighth Circuit in Adams v. Toyota Motor Corp., recently examined the admissibility of evidence of other similar instances in an automotive “unintended acceleration” case. Plaintiff Koua Lee was driving his 1996 Toyota Camry on the highway. While exiting the highway, the car continued to accelerate, failing to stop as he pressed on the brake. Lee rear ended a car stopped at a red light, killing three of the five passengers in the stopped car and severely injuring others, including passengers in his own car. The Court of Appeals, in upholding the trial court’s decision to admit this evidence, affirmed that evidence of substantially similar incidents can be admitted in appropriate circumstances, and that the trial court is in the best position to determine whether or not this evidence is a distraction to jurors or is otherwise unduly prejudicial.
Weighing in favor of admissibility, OSI evidence can be relevant in that it can show a party had notice of defects. It may also be used to demonstrate the magnitude of the danger and the product’s lack of safety for its intended uses. But there are limitations to the use of OSI evidence. The prior incidents must be “substantially similar” to the incident in the case at hand. And the probative nature of the evidence must outweigh its potential for prejudice.
Here, the Court explained that there are no hard and fast rules to determine if the evidence is substantially similar. It is a case by case determination, and the court must focus on all the circumstances surrounding the OSI evidence and the facts of the case. When OSI evidence is admitted, a defendant is free to argue to the jury the evidence is not persuasive by pointing out the dissimilarities between the purported “similar” incident, and the incident presently being litigated.
In determining that there was no abuse of discretion in admitting this evidence, the Court stated the trial court properly looked at the circumstances surrounding the OSI evidence and that evidence was similar to what happened to plaintiff. Each witness drove a 1996 Camry with over 100,000 miles. Each witness testified that the Camry accelerated or maintained speed when his foot was removed from the gas pedal and the brakes were ineffective. Testimony from these three witnesses was very similar to testimony from the plaintiff. Additionally, an expert witness reviewed the OSI evidence and testified that he considered the three witnesses’ experiences to be similar to the plaintiff’s experience. The appellate court also approved of the trial court’s exercise of cautious discretion in limiting the OSI testimony to three witnesses.
There is a risk of admitting OSI evidence. As the Court noted, it can lead to a confusion of issues or be more prejudicial than useful. However, the trial court is in the best position to make sure that this does not occur. As long as the trial court does not abuse its discretion, the admittance of OSI evidence will be upheld.
“Dogs are not our whole life, but they make our lives whole.”
Animal-Welfare Advocate Roger Caras
(quoted by Court of Appeals Judge Lawrence E. Mooney)
I am an unabashed dog-person. Thus, a recent opinion out of Missouri’s Eastern District Court of Appeals, which entangled a dog’s adoption story with the law, immediately had me hooked.
Other than what I read in the Court’s opinion, I do not personally know Mack the Dog, nor the other dramatis personae in this case, and I am not here to provide commentary or an opinion on any of them. So I will limit my discussion to the Court’s legal analysis, and its potential implications for future cases.
If you are still reading, you likely are also a dog-person and/or would like to know more about the dog-gone contract at issue.
In Patterson v. Rough Road Rescue, Inc., the Court of Appeals affirmed a trial court’s decision to return a dog named Mack to, according to the Court, its rightful owner, plaintiff Patterson.
The trial court had found in favor of Plaintiff who made a claim for replevin, a civil remedy and “possessory action to obtain property that is in the defendant’s possession,” after Defendant Rough Road Rescue would not return the dog. Mack had previously been adopted from the rescue shelter by Patterson and had been picked up in town and returned to the shelter after wandering off from Plaintiff’s yard. To succeed on such a claim of replevin, a plaintiff must show:
- The plaintiff owned the property or was entitled to possess it;
- The defendant took possession of the property with the intent to exercise some control over it; and
- The defendant, by exercising such unauthorized control over the property, deprived the plaintiff of his right to possession.
On appeal, Defendants argued that the trial court erred in its decision because 1) the adoption was not governed by the UCC in that “the adoption was not a ‘sale’ and because they are not ‘sellers’ or ‘merchants’ as defined by the code, 2) the terms of the contract, under which Patterson adopted Mack, provide a reversionary interest in the dog permitting defendants to retake and retain the dog when the terms of the Animal Adoption Contract were breached, and 3) the $2500 bond posted, which was due to an individual defendant’s failure to comply with the trial court’s order to return Mack, was grossly excessive.
The Court of Appeals’ affirmation of the trial court’s decision, finding replevin was properly granted due to the adopter (Plaintiff) being the rightful owner, came after a de novo review of Plaintiff’s claim to possession of Mack based on Rough Road Rescue’s Animal Adoption Contract. Unlike the trial court, the Court of Appeals focused not on whether a dog was actually a “good” under the UCC and/or whether the adoption was a “sale” contemplated by the UCC, but rather on the interpretation of the Contract. Personally, as one who has always considered my dogs as family, I felt uneasy about the trial court’s label of the dog as a “good” and thought that there needed to be a discussion about that label and the law, but perhaps the Court wanted no dog in that fight, for now.
Plaintiff’s claim was based on the Contract; thus, the issue presented was of contract interpretation. “A cardinal principle of contract interpretation is to ascertain the intention of the parties and to give effect to that intent.” The Court honed in on five specific “conditions” set forth in the Contract. The first, third, and fourth addressed fairly standard conditions, setting a timeline for the adopted pet to be spayed/neutered, providing the adopted pet with humane care, and complying with all laws and ordinances applicable to the adopted pet where the adopter lives. The tenth was an additional, handwritten requirement that the adopter agreed to provide a fenced yard for the adopted pet by a certain date.
Where there is ambiguity within the four corners of a contract – i.e., the language used “is reasonably susceptible to two or more interpretations” - then the Court looks at such external factors as the relationship of the parties, circumstances of the execution of the contract and its subject matter, acts of the parties, and circumstances which may shed light on the intent of the parties. A court “construes the ambiguity and interpret the contract in the light most favorable to the party who did not draft the contract.”
In this case, the Court found at least some portions of the Contract ambiguous, largely within the language of the ninth condition, which stated:
9. Any noncompliance of this adoption contract by the above mentioned owner, may void this contract. And could immediately give a representative of Rough Road Rescue, Inc. the authority to take possession of said animal. (emphasis added)
Since the contract was drafted by Rough Road Rescue, the Court construed the contract, including the ninth provision above, against Rough Road Rescue and in favor of Plaintiff. Also, of note, is that Rough Road’s own personnel, who were involved in the drafting of the Contract, even disagreed about the meaning of many of its terms, such as adoption, providing further support of the Contract’s ambiguity.
The use of the words “may” and “could” were central to the Court’s analysis. In interpreting condition #9, the Court reasoned that “‘may’ and ‘could’ are conditional words as to what might occur, rather than what must result.” This repossession provision also clearly stated that the adopter was the owner, which implied that the adopter obtained ownership (full and exclusive rights), not just possession (which can be temporary and/or partial) of the adopted animal, therefore, the Court concluded that the Contract did in fact grant Plaintiff ownership of Mack and rejected what it found to be an unreasonable result if Rough Road Rescue was permitted to keep such a long leash on the potential repossession of Mack.
Lessons learned from this dog-gone contract? First, use assertive, mandatory language, such as “shall void” (not “may void”) and “must” (not “could”) if you want a stronger argument of a right to repossession of property. Second, make sure those who draft your contract are all in agreement with what those contractual terms mean (perhaps you want to get that agreement in writing too). Third, be cognizant and purposeful with the language that you use in your contracts, to avoid a “ruff” result.
"Slack Fill" Litigation under the Missouri Merchandising Practices Act: Save it for Summary JudgmentAugust 30, 2017 | Martha Charepoo
In two consecutive nearly identical opinions, a Missouri federal court ruling on food merchandisers’ motions to dismiss indicates that food labeling protections in Missouri strongly favor consumers, including in slack fill cases. (The term “slack fill” refers to the alleged use of over-sized packaging that could mislead a consumer into believing the package contains more product than is actually present.) In Bratton v. The Hershey Company and White v. Just Born, Inc., the Western District of Missouri refused to dismiss claims against candy manufacturers for selling under filled boxes of Reese’s Pieces and Whoppers (Hershey) and Hot Tamales and Mike and Ike’s (Just Born), thereby allowing both class actions to proceed to the discovery stage. Hershey and Just Born are among several food merchandisers that have recently found themselves in court over claims by consumers that they are being cheated by slack filling.
In both cases, the plaintiffs allege deceptive packaging in violation of the Missouri Merchandising Practices Act (MMPA), in that the candies they purchased came in opaque, rigid, cardboard boxes containing slack-filled space, making plaintiffs think that they were a better value than smaller packages. The plaintiffs argue that consumers spend an average of 13 seconds making purchasing decisions, and that such a decision is heavily based on the product’s packaging. The lawsuits allege that between 29 to 41 percent of the candy boxes are empty, but nothing prevents the candy companies from reducing the box size or adding more candy. The plaintiffs also contend that slack-filled space serves no practical purpose and that they would not have purchased the products or would have paid less for them had they known the boxes were under filled. The plaintiffs seek “benefit of the bargain” damages, measured by the difference between the actual value of the products versus their value as represented.
In each case, the candy company asked the court to dismiss the plaintiff’s MMPA claim, arguing that these allegations are not enough to show that they violated the MMPA or that the plaintiff suffered an “ascertainable loss”, as required by the statute. The candy companies contended that a reasonable consumer would readily realize the candy boxes are not filled to the top because their contents “audibly rattle.” The candy companies also said that it is common knowledge that most packaged goods contain some empty space, which is “necessary for efficient manufacturing and distribution.” The candy companies argued that consumers are not misled because information about the net weight of the contents, the number of pieces of candy per serving, and the number of servings in the box are clearly listed on the box.
These arguments did not persuade the court that the cases were subject to immediate dismissal. The court stated that whether a reasonable consumer would notice rattling in the 13 seconds it typically takes to make a purchase, and then be able to determine the amount of slack fill, are questions of fact that cannot be resolved before there has been fact discovery on these issues. In both opinions the court relied on the Missouri Court of Appeals decision in Murphy v. Stonewall Kitchen, LLC (see prior post) involving muffin mix labeled as “all natural” while disclosing in the ingredient list that it contained sodium acid pyrophosphate. There, the Missouri Court of Appeals said a reasonable consumer would expect the ingredient list to comport with the packaging. The court stated that the same reasoning could apply in both of these cases. Thus, the court decided that it cannot conclude at this stage of the litigation that the packaging is not misleading.
The message of these decisions is that reasonableness under the MMPA is an issue of fact that should be saved for summary judgment or trial.
In Caplinger v. Rahman, the Missouri Court of Appeals for the Southern District of Missouri reversed and remanded the trial court’s dismissal without prejudice of plaintiff’s medical malpractice action based upon its holding that plaintiff’s R.S.Mo. § 538.225 affidavit was insufficient.
The statute requires that, in a medical malpractice action, a plaintiff or plaintiff’s attorney file an affidavit stating that he or she has obtained the written opinion of a “legally qualified health care provider” who opines that the defendant failed to use such care that a reasonably prudent healthcare provider would have used under similar circumstances and that such failure caused or contributed to plaintiff’s damages. A “legally qualified health care provider” is one who is licensed in the same profession as the defendant and is either actively practicing, or is within five years of retirement from actively practicing, “substantially the same specialty as defendant.”
A defendant may challenge the plaintiff’s affidavit by requesting that the court conduct an in camera inspection of the written opinion. If the court determines that the written opinion does not meet the requirements of R.S.Mo. § 538.225, then the court shall conduct a probable cause hearing to determine whether there exists at least one competent health care professional to testify that plaintiff was injured due to defendant’s alleged medical negligence. If the court fails to find probable cause, plaintiff’s petition shall be dismissed.
In Caplinger, the defendant applied a biologic bone-growth stimulant during spinal surgery, which plaintiff alleged caused exacerbated bone growth, complications, and which was done in a non-approved manner and without plaintiff’s informed consent. Plaintiff’s counsel filed a § 538.225 affidavit, stating that he had obtained the written opinion of a Board Certified physician in General Surgery, who actively practices laparoscopic, general, and weight loss surgery.
The trial court’s in camera inspection left it unpersuaded that the physician practiced the same specialty or had the requisite experience to stand as a “legally qualified health care provider.” At the subsequent probable cause hearing, plaintiff provided the trial court with the additional testimony of a practicing neurosurgeon, who opined that defendant violated the standard of care and caused plaintiff’s injury. Plaintiff represented that this neurosurgeon would so testify at trial. But the trial court dismissed plaintiff’s petition on grounds that the first physician was not a legally qualified health care provider, and ruled that an expert identified and found qualified at a probable cause hearing must be the same person(s) identified in plaintiff’s § 538.225 affidavit.
On review, the Missouri Court of Appeals for the Southern District agreed that the first physician did not practice substantially the same specialty as defendant, but held that the probable cause hearing remedy provided for in Section 7 of R.S.Mo. § 538.225 was meant to allow a plaintiff to cure deficiencies in his affidavit, through subsequent testimony. The Court reasoned that every provision of a statute must be given some meaning, and if Section 6 (requiring dismissal without prejudice for the failure to file an affidavit containing the information mandated by Sections 1-5) were the end of the analysis, there would be no purpose for Section 7 (providing for a probable cause hearing if the court finds the affidavit to be insufficient).
Reversing the Greene County Circuit Court’s dismissal, the Court of Appeals held that the first physician’s failure to qualify as a “legally qualified health care provider” was not fatal to plaintiff’s case, where a fully qualified second physician testified at the probable cause hearing that defendant failed to exercise the appropriate level of care. The Court of Appeals also expressly rejected the trial court’s finding that at least one of the health care professionals who testifies at a probable cause hearing must be the same person previously identified in plaintiff’s R.S.Mo. § 538.225 health care affidavit.
U.S. Supreme Court Says it Again: Arbitration Agreements Should be Honored, and Not Singled Out for Negative Treatment by State CourtsAugust 10, 2017 | David Eisenberg
For years, the U.S. Supreme Court has made two fundamental principles crystal-clear:
- Under the Federal Arbitration Act, arbitration agreements are “valid, irrevocable, and enforceable”, except where grounds exist that could invalidate any type of contract (such as fraud, duress, or lack of consideration).
- As explained by the Supreme Court in its 2011 landmark Concepcion decision, though a court may invalidate an arbitration agreement based on “generally applicable contract defenses,” it may not do so based on legal rules that “apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” The FAA thus preempts any state rule that discriminates on its face against arbitration or that covertly accomplishes the same objective by disfavoring contracts that have the defining features of arbitration agreements. Arbitration agreements must stand on an “equal footing” with other contracts.
Unfortunately, some state courts have failed to get the message. And the Supreme Court’s recent 7-1 decision in Kindred Nursing Centers L.P. v Clark, 137 S. Ct. 1421 (2017),forcefully drives home the point that contrived state court attempts to explain why a rule is not impermissibly targeted at arbitration agreements will be viewed dimly
In Kindred, the Kentucky Supreme Court adopted a “clear statement” rule, under which a general power of attorney that was otherwise valid to authorize the execution of contracts in general, would not validly authorize execution of an arbitration agreement unless the power of attorney expressly addressed that topic. Thus, when family members holding a power of attorney agreed to arbitrate claims regarding the care of their loved ones in a Kindred nursing home, the arbitration agreement was deemed invalid, because the family members’ power of attorney did not “clearly state” that they had the power to waive the right to a jury trial. The state court opined that “the divine God-given right” to a jury trial could not be contractually waived, absent “an explicit statement before an attorney-in fact” that could “relinquish that right on another’s behalf.”
Justice Kagan, writing pointedly for the 7-member majority, would have none of that. She wrote that beyond the FAA “prohibiting outright the arbitration of a particular type of claim”, the law likewise prohibits “any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of an arbitration agreement.” To the Kentucky court’s suggestion that its rule “could also apply when an agent endeavored to waive other ‘fundamental constitutional rights held by a principal’,” the Court responded: “But what other rights, really? No Kentucky court, so far as we know, has ever before demanded that a power of attorney explicitly confer authority to enter into contracts implicating constitutional guarantees.” Justice Kagan further noted the absence in Kentucky law of explicit authorization requirements as to settlement agreements or consents to a bench trial, both of which relinquish the right to a jury trial.
The Court further rebuffed Plaintiffs’ argument that the FAA applied only to contract enforcement, and not to contract formation, which was at issue in this case, emphasizing that:
- This argument was squarely contrary to the FAA’s text and case law; and
- “Adopting the respondents’ view would make it trivially easy for States to undermine the Act—indeed, to wholly defeat it. As the respondents have acknowledged, their reasoning would allow States to pronounce any attorney-in-fact incapable of signing an arbitration agreement—even if a power of attorney specifically authorized her to do so. . . . (After all, such a rule would speak to only the contract’s formation.) And why stop there? If the respondents were right, States could just as easily declare everyone incompetent to sign arbitration agreements. (That rule too would address only formation.) The FAA would then mean nothing at all—its provisions rendered helpless to prevent even the most blatant discrimination against arbitration.”
The Supreme Court’s message in support of the enforceability of arbitration agreements seems unmistakable. But a number of states’ courts (including Missouri, California, and others), while routinely accepting arbitration agreements governing commercial disputes, still seem to bristle at enforcing arbitration agreements between consumers and manufacturers or retailers; or between employees and their employer. State courts that look for reasons not to place all arbitration agreements on an “equal footing” with other contracts in general, do so at their peril.
"Jurisdictional Discovery" Is Not a Magical Incantation to Ward Off Timely Dismissal of a Case Filed in the Wrong ForumJuly 14, 2017 | Angela Higgins
In the wake of Bristol-Myers-Squibb and other game-changing personal jurisdiction decisions from the U.S. Supreme Court and the Missouri courts this year, plaintiffs are chanting “jurisdictional discovery” as if it is a magical incantation to ward off the timely and necessary dismissal of claims improperly filed in the wrong forum. Few if any could even identify what information they believe they could obtain through such discovery that would save their doomed cases, and the courts should curtail the needless, expensive, and harassing discovery proposed by forum shoppers who should never have gained access to the forum in the first place.
Limited jurisdictional discovery” seems so enticing to judges, as if it is fair or proper to allow forum-shopping plaintiffs to continue to subject non-resident defendants to the burden and expense of discovery in the wrong forum. The “primary concern” in assessing personal jurisdiction, however, is “the burden on the defendant.” Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 198 L.Ed.2d 395, 403 (2017). Subjecting a non-resident defendant to futile discovery in a case filed in the wrong forum simply prolongs the burden on the defendant in a case in which the forum state lacks authority to act. Definitive rulings in BMS, BNSF v. Tyrrell, and Dolan should not permit months of pointless discovery in cases that must, under the law, be dismissed for lack of personal jurisdiction.
I. PLEADING JURISDICTION IS PLAINTIFF’S BURDEN, AND JURISDICTIONAL DISCOVERY IS UNNECESSARY IF ADEQUATE FACTS (NOT CONCLUSIONS) SUPPORTING JURISDICTION HAVE BEEN PLED
As an initial matter, it is plaintiff’s burden to plead personal jurisdiction. Conway v. Royalite Plastics, Ltd., 12 S.W.3d 314, 318 (Mo. banc 2000); Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004). In many instances, jurisdictional allegations in these cases are entirely lacking in any facts, whether pled with knowledge or upon information and belief, that would establish personal jurisdiction under the applicable legal standards, and these complaints and petitions are therefore subject to dismissal on the pleadings, without conducting any discovery.
A plaintiff who has failed to meet her pleading burden should certainly not be granted permission to conduct discovery, as she has not properly invoked the jurisdiction of the court. “In order to be entitled to discovery, plaintiff is required to have alleged facts in the petition which, if true, establish jurisdiction.” Mello v. Giliberto, 73 S.W.3d 669, 674 (Mo. App. E.D. 2002). “In the absence of such alleged facts, plaintiff is not entitled to discovery.” Id. Legal conclusions are not sufficient, actual facts are required. Id.
Furthermore, under Fed. R. Civ. P. 11 and the Missouri equivalent, Mo. R. Civ. P. 55.03, a plaintiff must have a factual basis, formed after reasonable inquiry, for all allegations in the complaint or petition, including her jurisdictional allegations. The allegations are required to have “evidentiary support,” or to be specifically identified as being made upon information and belief. See Fed. R. Civ. P. 11(b)(3); Mo. R. Civ. P. 55.03(c)(3). Moreover, the attorney is certifying that the claims “and other legal contentions” (including contentions as to the existence of personal jurisdiction) are warranted by existing law or a non-frivolous argument for the modification of existing law. Fed. R. Civ. P. 11(b)(2); Mo. R. Civ. P. 55.03(c)(2).
From the outset, then, a plaintiff who suggests the need to conduct “jurisdictional discovery” is generally admitting either that she failed to plead sufficient jurisdictional facts (in which case she is not entitled to discovery) or that she lacked a basis for making such allegations in the complaint or petition, in which case she has violated Rule 11. Plaintiffs should not be caught flat-footed and at a loss to defend their choice of forum, they should have had sufficient grounds to withstand a motion to dismiss for lack of jurisdiction before the petition or complaint was filed. Other jurisdictions have recognized this:
Complaints should not be filed in matters where plaintiffs intend to find out in discovery whether or not, and against whom, they have a cause of action. Absent exigent circumstances, plaintiffs’ counsel should not file a complaint until sufficient information is obtained, and plaintiffs’ counsel believes in good faith that each plaintiff has an appropriate cause of action to assert against a defendant in the jurisdiction where the complaint is to be filed. To do otherwise is an abuse of the system, and is sanctionable.
Harold’s Auto Parts, Inc. v. Mangialardi, 889 So.2d 493, 494 (Miss. 2004) (emphasis original).
A plaintiff does not need jurisdictional discovery if she has alleged sufficient facts, even upon information and belief, that, if true, would be sufficient to establish the jurisdiction of the trial court to proceed. See State ex rel. Deere & Co. v. Pinnell, 454 S.W.2d 889, 893 (Mo. 1970). In virtually every case, to establish personal jurisdiction a plaintiff must allege the occurrence of specific conduct by the defendant within the forum state that gives rise to the plaintiff’s cause of action. As discussed more fully below, it would be rare for the plaintiff to be unable to allege such conduct, even upon information and belief, if there were a good-faith basis under the established law to support personal jurisdiction. In actuality, plaintiffs seeking “jurisdictional discovery” are generally seeking to buy time to concoct a plausible theory for jurisdiction, or to leverage settlement.
This highlights the murky legal justification for “jurisdictional discovery” – if there are sufficient factual allegations that, if true, would establish jurisdiction, then a motion to dismiss must be denied, as there is no need for plaintiff to adduce evidence to meet her pleading burden. “[T]his court is limited to deciding whether the pleadings are sufficient to survive the motion to dismiss.” Hollinger v. Sifers, 122 S.W.3d 112, 115 (Mo. App. W.D. 2003). If, on the other hand, plaintiff has failed to plead sufficient factual allegations to establish personal jurisdiction, she has failed to meet her pleading burden and is not entitled to discovery. See Mello, 73 S.W.3d at 674. Discovery is not a panacea to cure pleading defects, particularly not where a party is expressly permitted to plead upon information and belief.
II. THE BASIS, IF ANY, FOR CONTACT-BASED SPECIFIC PERSONAL JURISDICTION IS ALMOST ALWAYS WITHIN THE KNOWLEDGE OF PLAINTIFF
In nearly all circumstances, personal jurisdiction must be founded upon some conduct by the defendant within the forum state that gave rise to the plaintiff’s cause of action. The exercise of personal jurisdiction over non-residents is called “long-arm” jurisdiction. The Missouri courts’ authority to exercise long-arm jurisdiction is constrained by the Missouri statutes and the U.S. Constitution. Missouri’s long-arm statute expressly affords contact-based specific jurisdiction over the person of non-resident defendants. See Shouse v. RFB Const. Co., Inc., 10 S.W.3d 189, 193 (Mo. App. W.D. 1999). Specific jurisdiction is called “contact-based” because such jurisdiction only exists for a cause of action “arising from” certain specified conduct by the defendant within the forum state. See Mo. Rev. Stat. § 506.500.1. “In order for a court to exercise specific jurisdiction over a claim, there must be an ‘affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.’” Bristol-Myers Squibb, 198 L.Ed.2d at 404. “For specific jurisdiction, a defendant’s general connections with the forum are not enough. As we have said, ‘[a] corporation’s ‘continuous activity of some sorts within a state . . . is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.’” Id.
Missouri’s long-arm jurisdiction statute provides:
Any person or firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this state;
(2) The making of any contract within this state;
(3) The commission of a tortious act within this state;
. . . .
Mo. Rev. Stat. § 506.500.1 (emphasis added). The three types of conduct listed here are the most common bases for asserting specific jurisdiction against a non-resident defendant.
When plaintiffs press for “jurisdictional discovery,” they should be required to identify specifically what information they seek that would tend to establish one of these bases for the exercise of specific personal jurisdiction. Moreover, plaintiffs should be required to plausibly establish that this information would be uniquely within the knowledge of the defendant – not public information, and not already known to the plaintiff. Otherwise, there is no need for the non-resident defendant to be subjected to the burden and expense of formal discovery.
The long-arm statute’s grant of personal jurisdiction based upon the “transaction of any business within the state” is intended to confer jurisdiction over nonresidents “who enter into various kinds of transactions with residents of Missouri.” Capitol Indemn. Corp. v. Citizens National Bank of Fort Scott, N.A., 8 S.W.3d 893, 904 (Mo. App. W.D. 2000) (emphasis added). That transaction must be “the transaction sued upon.” Id. (emphasis added). It is difficult to imagine how plaintiff would be unable, after reasonable inquiry prior to filing her complaint or petition, to identify the Missouri resident with whom the non-resident defendant was doing business in a transaction out of which the plaintiff’s own claim arises. If plaintiff has a theory of how the defendant engaged in wrongful conduct, she must have enough information to plausibly allege facts identifying the Missouri business partner with whom the defendant was engaging in such conduct.
Similarly, for the Court to exercise jurisdiction of the non-residents because of their contracting in the State of Missouri, plaintiff’s claims against the non-residents must arise out of a contract that was entered into in the State of Missouri. See Mo. Rev. Stat. § 506.500.1(2). The plaintiff’s claim must arise out of that specific contract. How can plaintiff not know enough to identity the contract, and the Missouri contracting party, if she alleges she was damaged as a direct result of the contract?
In order to rely upon the “tortious act” provision of the long-arm statute, a plaintiff is required to show that the non-resident defendant committed a tort in Missouri and that this specific tortious conduct caused the plaintiff’s injuries. Hollinger v. Sifers, 122 S.W.3d 112, 116 (Mo. App. W.D. 2003). To invoke personal jurisdiction under the “tortious conduct” prong of the Missouri long-arm statute, then, plaintiff is alleging that she was directly injured as a result of tortious conduct by the defendant within the forum state. Plaintiff knows where she was prescribed the medication. She knows where her treating physician is located. She knows where she purchased the product at issue. If the defendant has a manufacturing plant within the state, plaintiff can meet her pleading burden by alleging, even upon information and belief, that the product was defectively manufactured at that plant. Given the standards of Rule 11 and Missouri Rule 55.03, how can plaintiff be unable to allege, even upon information and belief, what allegedly wrongful conduct by the defendant occurred in Missouri? How could she, or her counsel, have conducted a minimally sufficient inquiry under Rule 11 or Missouri Rule 55.03 into the claim before filing it and not have some basis to allege facts identifying tortious conduct by the defendant within the forum state?
It is difficult to conceive of a circumstance in which a plaintiff would legitimately need “jurisdictional discovery” to establish contact-based specific personal jurisdiction, because her cause of action arises out of the defendant’s conduct within the forum state and should be known to plaintiff. Plaintiffs attempt to cloud these issues in an aura of mystery, when in fact there is rarely anything mysterious to the person who alleges that she was harmed by the conduct about where the conduct occurred.
In fact, in actual practice “jurisdictional discovery” is nearly always a fishing expedition directed at discovering corporate organization, sales, employees, office locations, and other matters that relate to general jurisdiction. As general jurisdiction almost never applies, discovery on these issues is rarely appropriate, and, therefore, “jurisdictional discovery” is rarely appropriate. At a minimum, under the Dolan and BMS tests, a plaintiff seeking such discovery should be required to identify whether she seeks to establish specific or general personal jurisdiction, and what colorable basis she has to believe that discovery would reveal facts that would establish one of these ground for personal jurisdiction.
III. GENERAL JURISDICTION IS EXCEPTIONALLY LIMITED AND RARELY APPLICABLE
As to individuals, “general jurisdiction” applies only to the state in which the individual is domiciled. Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014). Accordingly, allegations of general jurisdiction over non-resident individual defendants (often employees or other representatives of corporate defendants) are utterly frivolous under settled law.
“A court normally can exercise general jurisdiction over a corporation only when the corporation’s place of incorporation or its principal place of business is in the forum state.” State ex rel. Norfolk S. Ry. v. Dolan, 512 S.W.3d 41, 46 (Mo. banc 2017); Daimler, 134 S. Ct. at 760 & 761 n.19; see BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1554 (May 30, 2017). The U.S. Supreme Court just this term again held that the mere fact that a defendant conducts in-state business is not sufficient to permit the exercise of general jurisdiction over claims that are unrelated to the forum state. See Tyrrell, 137 S. Ct. 1549. Of course, Bristol-Myers-Squibb (
Only an “exceptional case” will escape this rule. Daimler, 134 S. Ct. at 760 & 761 n.19. This is where the corporate is “essentially at home” in a state where it is not incorporated and does not have a principal place of business. See id. To be a “home state,” the forum state must be a “nerve-center” of activities of the company. Dolan, 512 S.W.3d. at 48. Initially, it is difficult to imagine how a forum state could be a “nerve center” of a business and not be the business’s principal place of business, unless perhaps the business is a foreign-based company with a substantial U.S. presence in a particular state. At a minimum, “nerve center” suggests that something close to the majority of the business’s activities within the U.S. must occur within the forum state.
An allegation of “substantial, continuous and systematic contacts” with the forum state is facially insufficient to plead general jurisdiction.
The Supreme Court observed that finding a corporation at home wherever it does business would destroy the distinction between general and specific jurisdiction, for “[a] corporation that operates in many places can scarcely be deemed at home in all of them. Otherwise, ‘at home’ would be synonymous with ‘doing business’ tests framed before specific jurisdiction evolved in the United States.” Id. For this reason, when “a corporation is neither incorporated nor maintains its principal place of business in a state, mere contacts, no matter how ‘systematic and continuous,’ are extraordinarily unlikely to add up to an ‘exceptional case.’” Brown, 814 F.3d. at 629.
Dolan, 512 S.W.3d at 48 (emphasis added); see also Tyrrell, Slip Op. at 11.
Many of the reported cases show that the courts often accept, uncritically, incantations of the magic of “jurisdictional discovery.” “Discovery is often necessary because jurisdictional requirements rest on facts that can be disputed, for instance, the domicile of the parties.” Pudlowski v. St. Louis Rams, LLC, 829 F.3d 963, 964-65 (8th Cir. 2016). As to corporate defendants, it seems unlikely that there would be any legitimate factual dispute about domicile, however – the company’s state of incorporation is a matter of public record, and corporate registration records generally also reflect the company’s principal place of business, and a corporate defendant sophisticated enough to have multiple options for domicile will usually have a web presence identifying its headquarters. Courts that are authorizing jurisdictional discovery should take seriously their obligations to enforce Rule 11 or its local equivalent, and to the extent that any discovery is permitted, limit it to facts that are plausibly in dispute and that can only be proven through discovery of the defendant.
For a defendant that has raised an objection to the court’s personal jurisdiction, there are considerable expenses and burdens associated with discovery in a forum in which the action is, in all likelihood, improperly filed. A plaintiff seeking such discovery should be required to articulate what jurisdictional facts are “in dispute” before discovery can be permitted. Texas, at least nominally, applies this standard:
[A]ppellant’s counsel told the trial court, “I can’t plead specific facts until I have the facts. I can only get the facts through discovery.” However, appellant was required to provide the court with a colorable basis or reason to believe that discovery would reveal sufficient minimum contacts. Barron v. Vanier, 190 S.W.3d 841, 849-50 (Tex. App.—Fort Worth 2006, no pet.); Haferkamp v. Grunstein, No. 11-10-00194-CV, 2012 Tex. App. LEXIS 3706, at *25 (11th App. May 10, 2012).
For example, if the defendant has stated, by reference to public filings or by affidavit, that it maintains no offices within the state, then surely plaintiff must be required to make a non-frivolous showing that discovery would disprove this fact. It cannot be enough that defendant alleges or affirms that “x” is a fact, and plaintiff is permitted to engage in discovery merely to “ask about x” – the relevant, quite permissive standard set out by the Eighth Circuit still requires that the fact be subject to dispute, and, moreover, it must be subject to dispute under the Rule 11 standard. Courts that do police these standards recognize that a plaintiff seeking “jurisdictional discovery” should be required to identify what facts she seeks to establish in discovery, and some colorable basis to believe that such facts do exist.
IV. DEPOSING AFFIANTS IS RARELY WARRANTED
In some cases, particularly with respect to allegations of general jurisdiction, a defendant may supply an affidavit from a corporate representative regarding quantification of the defendant’s business within or other contacts with the forum state. This, predictably, triggers a plaintiff’s request to depose the affiant. These depositions are generally improper under Rule 11 and Missouri Rule 55.03, are usually futile, and tend to harass the defendant rather than provide plaintiff with any useful information to save her case.
Initially, a motion to dismiss for lack of personal jurisdiction may be decided upon affidavits supplied by the defendant. In ruling on a motion to dismiss for lack of personal jurisdiction, a trial court may consider affidavits. Chromalloy American v. Elyria Found, 955 S.W.2d 1, 3 n.3 (Mo. banc 1997); Mello, 73 S.W.3d at 674. “[T]he motion is not addressed to the merits of the underlying action, but only to the limited question of personal jurisdiction.” Mello, 73 S.W.3d at 674. An affidavit is not a self-serving attempt by a defendant to gain an unfair advantage, it is a valid procedural tool to support a motion to dismiss for lack of personal jurisdiction, and courts should not reflexively permit depositions of affiants without good cause to disbelieve the sworn testimony contained in the affidavit. This is particularly true where jurisdiction is in question, because the court is obligated to ensure that the defendant’s due process rights to be subject to only lawful authority are safeguarded and that any encroachment upon such rights is as minimally invasive as necessary to resolve a legitimate factual dispute as to jurisdiction.
Defendants supplying affidavits in support of a motion to dismiss for lack of general personal jurisdiction are often in an untenable, Catch-22 situation. Usually, plaintiff has failed to meet her pleading burden under the Daimler, BMS, and/or Dolan standards. She should not be permitted to even conduct jurisdictional discovery. Plaintiff is required to plead facts establishing that the defendant is incorporated in the forum state, has its principal place of business there, or is “essentially at home” in the forum. It is plaintiff’s burden to plead jurisdiction, not defendant’s burden to offer evidence to disprove jurisdiction. However, the case law entertains this “quantum of business in the forum state” mathematical analysis that invites defendants to submit affidavits to disprove general jurisdiction. And the supplying of such affidavits should be legally sufficient – a motion to dismiss may be decided upon affidavits.
But plaintiffs will seemingly always assert a supposed need to depose the affiant. Such depositions are improper and usually intended to harass and inconvenience the defendant. Plaintiffs, who have failed to meet their burden to plead jurisdiction, are suggesting that non-resident corporate defendants would lie in an affidavit regarding jurisdictional facts, and courts are indulging plaintiffs in this absurd and offensive innuendo. A plaintiff confronted with an affidavit from a corporation with an international presence, stating that its sales in Missouri comprise a single-digit share of its overall revenues, should not be permitted to subject the non-resident defendant to “jurisdictional discovery” without a colorable basis to dispute the affidavit as being a lie.
V. A MOTION OR MOTION RESPONSE SEEKING JURISDICTIONAL DISCOVERY IS SUBJECT TO RULE 11
Rule 11 provides that, by signing any pleading or motion or other paper presented to the court, an attorney “certifies” that “it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.” Fed. R. Civ. P. 11(b)(1). The Missouri rule is functionally identical, though by its terms more stringent even than the federal rule in encompassing “any argument” within the matters presented to the court that are certified not to be for any improper purpose. Mo. R. Civ. P. 55.03(c)(1).
It is impermissible for a plaintiff to file a motion or motion response seeking “jurisdictional discovery” as a means of treading water and keeping the case alive, where plaintiff’s position is not supported by evidentiary facts or justification under existing law. Where the highest courts have just, within the last few months, spoken on jurisdictional issues, it is difficult to imagine how a party could make a good-faith, non-frivolous argument to change the law on jurisdiction.
Although the 2017 session of the Missouri legislature was not geared to comprehensive tort reform, several key bills were passed that will bring significant changes to civil litigation in Missouri. These include changes to the collateral source rule and evidence of discounted medical bills, the adoption of the Daubert standard, and restraints on insurance bad faith claims.
I. COLLATERAL SOURCE RULE
On July 5, 2017, Governor Greitens signed Missouri Senate Bill 31, bringing needed changes to the collateral source rule. The collateral source rule generally prohibits a defendant from introducing evidence that part of a plaintiff’s loss was paid for by a party independent of the defendant, such as the plaintiff’s insurer or a public benefits program. Deck v. Teasley, 322 S.W.3d 536, 538 (Mo. banc 2010). However, this rule has been twisted to allow plaintiffs to offer evidence of full-price or “sticker price” medical bills, without regard to contractual adjustments for health insurance or limits on reimbursement established by public payors, on the premise that defendants should not benefit from discounting of the full-price medical bills. The counter-argument, of course, is that plaintiffs are then permitted to recover a windfall that far exceeds both their actual liability for medical care and the costs of health insurance premiums they have paid, and are permitted to present evidence of damages that is merely a legal fiction.
By way of background, older Missouri cases held that, if the evidence establishes that the plaintiff is not liable for payment, medical expenses have not been “incurred,” and plaintiff cannot recover for their value. See Morris v. Grand Ave. Ry. Co., 46 S.W.170 (Mo. 1898). In the workers’ compensation context, Missouri courts have determined that an employee is not entitled to compensation for healthcare provider write-offs. Mann v. Varney Construction, 23 S.W.3d 231, 233 (Mo. App. 2000) (employee not entitled to compensation for Medicaid write-off amounts when the total amount submitted to Medicaid will never be sought from claimant); accord, Lenzini v. Columbia Foods, 829 S.W.2d 482, 487 (Mo. App. 1992). “Implicit in both decisions is the requirement of actual liability [for the medical bills] on the part of the employee.” Farmer-Cummings v. Personnel Pool of Platte County, 110 S.W.3d 818, 821 (Mo. 2003). However, the Missouri courts have been reluctant to follow this approach outside the realm of workers’ compensation.
As part of the 2005 Missouri tort reform, Mo. Rev. Stat. § 490.715 was amended to include a new subsection 5 that addressed valuation of the medical expenses, including a provision that there was a rebuttable presumption that the “value” of medical treatment is “the dollar amount necessary to satisfy the financial obligation to the health care provider.” Plaintiffs were not permitted to introduce evidence of medical expenses that exceeded the reasonable “value” of medical care and treatment. See id.
Missouri cases, however, significantly undermined this statutory tort reform, by allowing evidence of “sticker price” bills to get to the jury upon a very low showing of the “reasonableness” of the full-price bills, which can be made by affidavits or the testimony of the health care providers. See Deck v. Teasley, 322 S.W.3d 536 (Mo. banc 2010). The bar to rebut the presumption was so low in practice that the statutory reform failed to have the desired effect.
With the passage of SB 31, laudable carve-outs from the collateral source rule have been made. As to payments by or on behalf of the defendant, the statute used to provide that the defendant could offer evidence that these medical expenses had been paid, but not by whom. The new law clearly provides that, where the defendant or the defendant’s insurer or representative have paid a portion of plaintiff’s medical expenses, these sums are “not recoverable from” the defendant. Although this statute should provide a basis for motions in limine to exclude evidence of medical expenses paid by defendant, the revised statute also provides that, if a claim for these expenses is made at trial, the defendant is entitled to a credit against the judgment.
Critically, SB 31 changes § 490.715’s reference to the “value” of medical expenses, using instead the “actual cost” of medical care and treatment. The “actual cost of the medical care or treatment” is now defined as “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 after adjustment for any contractual discounts, price reduction, or write-off by any person or entity.” SB 31 (emphasis added).
II. ADOPTION OF THE DAUBERT STANDARD
House Bill 153, signed by Governor Greitens on March 28, 2017, adopts the Daubert standard for admission of expert opinion testimony. In State Board of Reg. v. McDonagh, 123 S.W.3d 146 (Mo. banc 2003), the Missouri Supreme Court held that Mo. Rev. Stat. § 490.065, not Frye or Daubert, controlled the admission of expert opinion testimony in civil cases. The opinion does, however, hold that federal cases applying Daubert are relevant to interpreting the Missouri statute. Citing Missouri Church of Scientology v. State Tax Commission, 560 S.W.2d 837, 839 (Mo. banc. 1977), the McDonagh Court held that “to the extent that Section 490.065 mirrors FRE 702 and FRE 703 . . . the cases interpreting those federal rules provide relevant and useful guidance.” McDonagh, 123 S.W.3d at 155.
The Court also noted that Section 490.065 contains language not present in the analogous federal rules of evidence, most particularly Section 490.065.3, which requires that the facts or data on which an expert bases and opinion or inference “must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject” and that these facts and data “must be otherwise reasonably reliable.” Id. at 152-153 (emphasis added). The McDonagh court construed this slight language difference to require an expert in a state court proceeding to establish that the facts and data on which she relied are reasonably relied upon by experts in that particular field. The Court contrasted its holding with Daubert’s interpretation of the slightly different language in the federal rule that an expert testifying in federal court need not necessarily identify the relevant scientific community or field in which the data and facts were accepted.
Under the prior standard, “the circuit court is responsible for determining (1) whether the expert is qualified; (2) the expert’s testimony will assist the trier of fact; (3) the expert’s testimony is based upon facts or data that are reasonably relied upon by experts in the field; and (4) the facts or data on which the expert relies are otherwise reasonably reliable.” Kivland v. Columbia Orthopaedic Group, LLP, 331 S.W.3d 299, 311 (Mo. banc 2011). Whether an expert’s opinion is supported by sufficient facts and evidence is a question of law for the Court. Vittengl v. Fox, 967 S.W.2d 269, 280-82 (Mo. App. W.D. 1998).
The amended statute retains the stricter “in the field” language from the prior iteration, requiring that “experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject.” Where the amendment gives the statute teeth is in setting standards for the expert’s methodology.
III. INSURANCE BAD FAITH REFORMOn July 5, 2017, Governor Greitens signed the Senate Substitute for the Senate Committee Substitute for the House Committee Substitute for House Bills 339 and 714, enacting significant insurance bad faith reform. We previously blogged about these bills here.
In Kesler v. The Curators of the University of Missouri, et al., the Court of Appeals for the Western District of Missouri has provided a refresher course on the defense of res judicata.
Plaintiff was a former assistant professor at the University of Missouri. While he was in the process of tenure review, he simultaneously faced university disciplinary proceedings for “plagiarism and other misconduct.” Although he prevailed on the plagiarism charge, plaintiff was found to have engaged in “other unacceptable behavior.” Plaintiff was ultimately denied tenure, and given a one year terminal contract. In September 2014, he sued MU and various University officials (Kesler I), seeking writs of prohibition and mandamus compelling the University to provide various items of relief, including new tenure review proceedings. Kesler I was premised on the University officials’ alleged improper conduct during the tenure and disciplinary proceedings. After extensive litigation, the trial court ruled against plaintiff and in favor of the university.
Soon after losing Kesler I, plaintiff filed another lawsuit against MU and the same University officials (Kesler II). In Kesler II, plaintiff sought recovery on various tort theories which were not asserted in Kesler I. However, the factual basis for Kesler II was the same as before – once he again he complained of the University officials’ alleged improper conduct during the tenure and disciplinary proceedings. Defendants were granted summary judgment on the basis of collateral estoppel and res judicata. Plaintiff appealed, apparently arguing in part that res judicata did not apply because he sought to advance different legal theories in Kesler I and Kesler II.
The Western District affirmed, holding that for res judicata to apply, four “identities” must be present: identity of (1) the things sued for, (2) the cause of action, (3) the persons and parties to the action, and (4) the person for or against whom the claim is made. For res judicata purposes, “[s]eparate legal theories are not to be considered as separate claims[.]” Instead, analysis of the “identity of the things sued for” and “identity of the cause of action” must focus on the underlying facts, and “[f]or a subsequent claim on the same transaction to be considered separate, there must be new ultimate facts, as opposed to evidentiary details, that form a new claim for relief.” Citing Kesterson v. State Farm Fire & Cas. Co., 242 S.W.3d 712, 715 (Mo. banc 2008).
Kesler reminds practitioners that, when performing a res judicata analysis, a new legal spin on an old set of facts is generally insufficient to overcome the defense. If the facts are the same, then new labels will not resurrect a dead claim.
Missouri Court of Appeals Upholds Acceptance Doctrine to Absolve General Contractor of Premises LiabilityApril 21, 2017 | John Watt
In the case of Wilson v. Dura-Seal and Stripe, the Missouri Court of Appeals for the Eastern District held that the “acceptance doctrine” is still valid law in Missouri, and bars liability against a construction contractor for the injury of a third party after the owner of the premises has accepted the work. Citing prior case law, the Court explained the law as follows: “After an owner accepts a structure, the general rule is that a general contractor is not liable to persons with whom he did not contract....In the absence of formal acceptance, constructive or practical acceptance will suffice....Acceptance of the work is attended by the presumption of the owner … made a reasonably careful inspection of the work, knows of its defects, and so accepts the defects and the negligence that caused them as his own.”
In Wilson, plaintiff brought suit against general contractor Dura-Seal for injuries she sustained when she tripped and fell in the gutter area of new asphalt, which had been applied by Dura-Seal at a public school. Wilson claimed that she fell as a result of the height differential between the gutter area and the new asphalt installed by Dura-Seal. Wilson filed a premises liability claim against the owner of the premises who then in turn added Dura-Seal as a third party defendant. Dura-Seal moved for summary judgment, stating that the owner had accepted their work and therefore bore the premises liability due to the acceptance doctrine. The plaintiff argued that there was no evidence that the owner had accepted the work.
It was undisputed that Dura-Seal had not performed any work on the drive lane for at least two months before the plaintiff’s injury and that the owner had paid Dura-Seal for all of the work. It was undisputed that the owner also had exclusive possession and use of the premises rather than the contractor. The Court of Appeals affirmed summary judgment and found that the undisputed facts showed that Dura-Seal was neither in control of the premises, nor had the right to control the premises at the time of the plaintiff’s injury.
The Court of Appeals also analyzed the “imminently dangerous” exception to the acceptance doctrine. This exception operates to impose liability on a contractor, even after the owner has accepted the contractor’s work, under the following conditions: “Where the structure was so defectively constructed as to be essentially and imminently dangerous to the safety of others; the defects are so hidden and concealed that a reasonable and careful inspection would not have disclosed them, and these things are known to the defendants but not to those who accepted them.” Here, the undisputed facts showed that the drive lane and the gutter area where Dura-Seal worked were in plain view and therefore was easily discoverable by the owner. The Court thus declined to apply the exception, and ruled in Dura-Seal’s favor, holding that plaintiff had accepted the work when it was completed and payment in full was made.
Missouri construction contractors and their counsel should be well aware of the dimensions of the acceptance doctrine, and the “imminently dangerous” exception, when defending cases of this type.
Earlier this week, Governor Eric Greitens signed Missouri HB 153 into law. HB 153, which supplants Missouri’s existing expert witness standard with that set forth in Federal Rules of Evidence 702, 703, 704 and 705, effectively submits expert testimony in most civil and criminal case to the analysis set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
Until now, R.S.Mo. 490.065 has set forth the requirements for admission of expert testimony in Missouri state courts. In its present form, the language of the statute has varied significantly from the familiar expert witness standard set forth in the Federal Rules of Evidence and the rules of numerous sister states that track the federal rules. The standard for applying the requirements of R.S.Mo. 490.065 has been nebulously outlined in Missouri case law. Missouri appellate decisions have noted on occasion that Daubert and its progeny could provide “guidance” where the federal rules and the Missouri rules match up. See, e.g. State Bd. of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146, 155-156 (Mo. 2003) (Wolff, J, concurring in part and dissenting in part), and Goddard v. State, 144 S.W.3d 848, 852-853 (Mo. App. S.D. 2004) . On other occasions, however, Missouri courts have plainly stated that Daubert did not govern the admissibility of expert testimony in Missouri cases. See, e.g., McGuire v. Seltsam, 138 S.W.3d 718, at fn. 3 (Mo. 2004). As one Supreme Court Justice noted in a concurrence to McDonagh, supra:
“Forget Frye. Forget Daubert. Read the statute. Section 490.065 is written, conveniently, in English. It has 204 words. Those straightforward statutory words are all you really need to know about the admissibility of expert testimony in civil proceedings. Section 490.065 allows expert opinion testimony where "scientific, technical or other specialized knowledge will assist the trier of fact…" McDonagh, supra at 160.
Things have not proven so straightforward, and with no definitive standard, trial judges understandably have had a difficult time sorting the wheat from the chaff, allowing some questionable “expert” testimony to slip through the cracks and into the jury box. When HB 153 takes effect, in August 2017, and Daubert unquestionably sets the standard for admissible expert testimony, this risk will be considerably lessened. In federal courts, Daubert has for decades proven a fair and effective standard for assessing the admissibility of expert testimony. Its introduction into Missouri law will be a welcome change.
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Rule 55.27(a) Means What It Says: Summary Judgment Rules Apply to Motions to Dismiss That Rely on Matters Outside of the PleadingsMarch 14, 2017 | Martha Charepoo
In Schnurbusch v. West Plains Regional Animal Shelter et al., after a trial court had dismissed a case for failure to state a claim, the Court of Appeals reversed and remanded the case, because the trial court dismissed the case based on evidence outside of the pleadings without having before it a fully developed summary judgment-type record.
Schnurbusch initially arose from claims by a landscaping company and its owners against a city for failing to enforce its zoning laws against an animal shelter and the resulting alleged nuisance. The dispute with the city involved a protracted court battle spanning several years, a jury trial, and an appeal, and the filing of a separate lawsuit against the animal shelter. The parties filed many motions and cross-motions, including a motion to dismiss by the animal shelter which attached three exhibits. The trial court granted the motion and dismissed the petition, relying on the exhibits attached to the motion.
The plaintiffs appealed the trial court’s decision to dismiss their petition arguing that Rule 55.27(a) required that it treat the animal shelter’s motion like a summary judgment motion under Rule 74.04. The Court of Appeals agreed in clear and forceful terms, relying on well-established precedent that once a trial court considers materials outside of the pleadings in ruling on a motion to dismiss, it automatically gets converted into a motion for summary judgment. Thus, the trial court erred by failing to compel the parties to comply with the procedural requirements of Rule 74.04. The Court of Appeals also reiterated that the procedural requirements of Rule 74.04 are strict and must be followed, which was not done in this case. Here, there was no statement of uncontroverted material facts or legal memorandum explaining why summary judgment should be granted. Indeed, the Court of Appeals found no evidence that the trial court gave the plaintiffs a chance to present additional materials facts to controvert the exhibits presented by the animal shelter. Thus, the Court found there was no Rule 74.04 record for its review, and sent the case back to the trial court for further proceedings under Rule 74.04.
The lesson of Schnurbusch is clear: the procedure of Rule 55.27(a) for handling a motion to dismiss that brings in matters outside of the pleadings is not discretionary with the trial court, and a trial court’s failure to require the parties to comply with the procedure of Rule 74.04 as stated in that rule will result in reversal.
Jury Panel Investigation in Missouri Revisited: Waiver of the Issue of Juror Non-Disclosure Remains Limited to the Litigation HistoryMarch 6, 2017 | James Seigfreid
With the constant evolution of technology, the Missouri Constitution’s guarantee of the right to a fair and impartial jury of 12 has simultaneously become easier and more difficult to attain. As internet outlets and social media platforms rapidly multiply, prospective jurors have more opportunities to express or “post” beliefs and reveal biases on topics involved in litigation. In the best case scenario, this provides a litigant ample opportunity to corroborate or dispute the information provided by a prospective juror during voir dire. On the other hand, it has become increasingly difficult to uncover all of a prospective juror’s internet persona to discover whether a juror may, or may not, be impartial in a particular case.
As outlined in a blog post published in 2013, Missouri was one of the first states to obligate a litigant to investigate the backgrounds of potential jurors. In 2010, the Supreme Court of Missouri, in Johnson v. McCullough, affirmed a lower court’s grant of a new trial when plaintiff’s counsel, through research after trial, discovered that a juror failed to disclose their prior “litigation history.” Although the Supreme Court agreed that a new trial was appropriate, it also put litigants on notice that they should not expect to succeed on such motions in future if they wait until after a verdict is returned to perform juror research.
In 2011, the Missouri Supreme Court approved Rule 69.025 which codified the duty of litigants to research prospective jury members. Notably, it cautioned litigants that “a party waives the right to seek relief based on juror nondisclosure if the party fails to do either of the following before the jury is sworn: (1) Conduct a reasonable investigation; or (2) if the party has reasonable grounds to believe a prospective juror has failed to disclose that he or she has been a party to litigation, inform the court of the basis for the reasonable grounds. Mo. R. Civ. P. 69.025(e). For the purposes of the rule, “reasonable investigation” constitutes a search of Case.net, at minimum. Mo. R. Civ. P. 69.025(b).
The Southern District Court of Appeals recently addressed this rule in Spence v. BNSF Ry. Co. Despite the exponential growth of technology and online outlets in the past four years, the Court held the applicability of Rule 69.025 was limited to the subject of a venireperson’s “litigation history.” Spence involved a fatal car accident in which a BNSF train struck the decedent’s truck. Before the panel of potential jurors were seated, the parties conducted pretrial Case.net searches based on a list tendered by the Court. However, around the time the panelists were seated for voir dire, it was discovered that Juror Cornell’s last name was misspelled (“Carnell”). The parties did not conduct another Case.net search using Juror Cornell’s correctly spelled name before questioning.
As voir dire unfolded, BNSF’s counsel asked potential jurors whether or not they, or a close family member, had been involved in a motor vehicle accident. Counsel did not, however, question the panel about their “litigation history” involving motor vehicle accidents. Juror Cornell, whose son died in an auto accident, remained silent and said nothing in response to BNSF counsel’s question seeking information about those involved in motor vehicle accidents. Juror Cornell ultimately made the jury and assisted in awarding $19 million dollars to the decedent’s wife.
BNSF appealed the trial court’s rejection of their juror non-disclosure claim regarding Juror Cornell’s failure to truthfully answer the questions regarding her family’s history with automobile accidents. In response, plaintiff argued that another Case.net search using Juror Cornell’s correctly spelled name would have revealed the juror’s lawsuit for her son’s death and that Mo. R. Civ. P. 69.025 should operate to cause waiver of the complaint that the juror failed to disclose pertinent information.
The appellate court held that Mo.R.Civ.P. 69.025 pertained exclusively to juror non-disclosure of “litigation history.” In this case, Juror Cornell failed to advise the litigants that her son had died in an auto accident, not whether or not she had been involved in litigation relating to an accident. As a result, the majority was compelled to find that Mo.R.Civ.P. 69.025 could not be invoked to cause BNSF’s waiver of the right to complain about the disclosure. The Court ordered a new trial as a result.
In a well-reasoned dissent, Judge Rahmeyer argued that Rule 69.025 was much broader in its application than as narrowly construed by the majority. The judge believed that the claim by BNSF counsel relating to juror non-disclosure was “exactly the type of claim that Rule 69.025 was enacted to curtail, i.e. an after-trial complaint of juror non-disclosure of a matter that would have been discovered had defendant used due diligence by searching Case.net.” Plaintiff has asked the Missouri Supreme Court to review the case; the Court has not yet decided whether to do so.
However, reports that hail this decision as the death-knell to “litigation tourism” are likely premature. Parker does good things to curtail litigation tourism. Among these are rejection of the notion that out-of-state defendants consent to personal jurisdiction by maintaining a registered agent in Missouri, and adoption of the Daimler and Goodyear cases regarding general jurisdiction.
The rejection of the doctrine of consent jurisdiction is a significant and much-needed development. Missouri courts have long improperly conflated the ability to serve a defendant with obtaining personal jurisdiction over the defendant. Although Parker cites only out-of-state cases for this proposition, as a practical matter Missouri practitioners have found that designation of a registered agent for service in Missouri has been universally viewed by the state’s trial courts as consent to personal jurisdiction. The Missouri Supreme Court’s only prior opinion involving this issue ultimately declined to decide whether service upon an in-state registered agent was sufficient to confer personal jurisdiction over a non-resident defendant. See State ex rel. K-Mart Corp. v. Holliger, 986 S.W.2d 165, 167-68 (Mo. banc 1999). However, Holliger was frequently cited for the proposition that a registered agent, plus “sufficient” contacts with the state, was sufficient to confer personal jurisdiction. Id. at 168-69.
The lack of guidance afforded by Holliger has opened the door to some of the “litigation tourism” problem, allowing trial courts to rule that an out-of-state defendant has consented to personal jurisdiction by appointing a registered agent to accept service and registering to do business within the state. See, e.g., Order dated Sept. 6, 2016, Kologenski v. The Adel Wiggins Group, et al., Case No. 1622-CC00427 (22nd Judicial Circ., City of St. Louis, Div. 29); Gracey v. Janssen Pharmaceuticals, Inc., Case No. 4:15-CV-407 (CEJ), 2015 U.S. Dist. LEXIS 57990, 2015 WL 2066242 (E.D. Mo. May 4, 2015). In Kologenski, a City of St. Louis trial court found that it was unnecessary to perform a “minimum contacts” constitutional due process analysis where the defendant maintains a registered agent in the state, because it has consented to personal jurisdiction. Order at 3.
Parker holds that registration statutes, including designation of a registered agent for service, does not alone equal consent to personal jurisdiction over non-resident defendant companies. “[T]he registration statute does not provide an independent basis for broadening Missouri’s personal jurisdiction to include suits unrelated to the corporation’s forum activities when the usual bases for general jurisdiction are not present.” Slip. Op. at 18.
The explicit adoption of federal precedent regarding general jurisdiction, including Daimler and Goodyear, is also good, particularly the acknowledgement that these cases change Missouri law. The attempt to quantify how much contact a defendant must have with a forum before that contact is “systematic and continuous,” however, is likely a mixed blessing for defendants.
While Norfolk Southern can account for only approximately 2% of its track and employees within the state of Missouri, the mathematical formula approach in Parker will likely prove more frustrating for defendants whose Missouri contacts comprise a more significant portion of their overall business. We can foresee considerable post-Parker litigation over the location of the mathematical threshold for “continuous and systematic” contacts, which is not consistent with the intent of Daimler and Goodyear. Is the threshold crossed when a defendant’s Missouri contacts constitute a double-digit percentage of its overall business? Is it greater than 50%? Parker introduces what will likely prove to be an unwieldy math problem with little practical guidance as to where the line is drawn. By contrast, Daimler and Goodyear signaled that the very notion of general jurisdiction was of such dubious and exceptionally limited application that it would virtually never apply, and this essential premise was not well-adopted in Parker.
Furthermore, Parker does not address the multi-plaintiff problem that is at the core of litigation tourism in Missouri. In the “mini MDLs” proliferating in the state, particularly in the context of pharmaceutical, medical device, and asbestos cases, usually at least one plaintiff can establish personal jurisdiction over the defendants. Typically, a Missouri resident who sustained injury in Missouri is included, and who could establish jurisdiction under the long-arm statute for commission of a tort in the state or conducting business in the state.
The problem is allowing other non-resident plaintiffs to bootstrap their unrelated claims. Parker helps when there is a single forum-shopping plaintiff, but does not clearly address the problem of “pendent” or “supplemental” personal jurisdiction. The argument that numerous unrelated out-of-state plaintiffs may be joined under Missouri’s Rule 52.05 with one plaintiff who properly asserts personal jurisdiction is a type of “pendent” or “supplemental” theory of specific personal jurisdiction. See, e.g., Liggins v. Abbvie Inc. (In re Testosterone Replacement Therapy Prods. Liab. Litig.), 164 F. Supp. 3d 1040, 1048 (N.D. Ill. 2016).
Federal courts have plainly held that “[t]here is no such thing as supplemental specific personal jurisdiction; if separate claims are pled, specific personal jurisdiction must independently exist for each claim and the existence of personal jurisdiction for one claim will not provide the basis for another claim.” Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 275 n.6 (5th Cir. 2006). “Permitting the legitimate exercise of specific jurisdiction over one claim to justify the exercise of specific jurisdiction over a different claim that does not arise out of or relate to the defendant’s forum contacts  violate[s] the Due Process Clause.” Id.
This is the crux of the problem with “litigation tourism” in Missouri. Because Parker is a single plaintiff case, the pernicious misapplication of the law evidenced by the “supplemental personal jurisdiction” fallacy remains untested in Missouri. While it appears likely that the Missouri Supreme Court would be receptive to ruling that the theory is not viable, it has not done so in Parker. Multi-plaintiff litigation tourism likely lives to fight another day.
State ex rel. Norfolk Southern Railway Company v. The Honorable Colleen Dolan, 2017 WL 770977, No. SC95514 (February 28, 2017)
In a recent opinion, the Missouri Supreme Court continued the U.S. Supreme Court’s trend toward limiting personal jurisdiction over a non-resident defendant.1 In State ex rel. Norfolk Southern Railway Co. v. Dolan, the Court held Norfolk’s substantial and continuous business in the state of Missouri was insufficient to establish general personal jurisdiction over Norfolk.
Plaintiff Russell Parker, an Indiana resident, filed suit in St. Louis County against his employer, Norfolk, pursuant to the Federal Employer’s Liability Act. Norfolk is a Virginia corporation with its principal place of business in Virginia. Plaintiff alleged cumulative trauma injury sustained over the course of his years of employment with Norfolk, all occurring in Indiana. Plaintiff never worked for Norfolk in Missouri.
Noting there seems to be continued confusion regarding how personal jurisdiction may be established, the Supreme Court explained that personal jurisdiction over a corporation may be general (when a state exercises jurisdiction over a defendant in a suit not arising out of or related to the defendant’s contacts with the state) or specific (when the suit arises out of or relates to the defendant’s contacts with the forum).
The Court also explained that a court normally may exercise general jurisdiction over a corporation only when the corporation’s place of incorporation or its principal place of business is in the forum state. In “exceptional cases,” however, general jurisdiction may be found to exist if the corporation’s activities in that other state are “so substantial and of such a nature as to render the corporation at home in that State.”
In an effort to show Norfolk conducted continuous and systematic business in Missouri, the Plaintiff presented evidence that Norfolk owns or operates approximately 400 miles of track in the state of Missouri, generates approximately $232 million in revenue, employs approximately 590 people in Missouri, and has a registered agent in the state. However, these numbers represent only about 2% of its total tracks across the country, its total revenue, and its total workforce. Norfolk generates greater revenue in 11 other states, has track in 22 states and has more employees in 13 other states.
Based on this evidence, the Court held Norfolk’s contacts are insufficient to establish general jurisdiction over Norfolk in Missouri. While in “exceptional cases” a state may have general jurisdiction over a corporation neither incorporated nor operating its principal place of business there, such exceptional cases only exist where the forum state can be said to be a surrogate for the place of incorporation or the home office, such that the corporation is essentially at home in that state. Citing to cases from the U.S. Supreme Court, the Court noted this showing requires apprising in their entirety the corporation’s activities in the forum state and its activities in other states and countries. Being “essentially at home” in a state is not the same as “doing business” in a state, such that mere contacts, no matter how systematic and continuous, are unlikely to support an “exceptional case” in and of themselves.
As to specific jurisdiction, the Court emphasized that it requires consideration of the relationship between the defendant, the forum, and the litigation. The Court noted that, while Norfolk had purposefully availed itself of the opportunity to do business in Missouri, it would be subject to specific jurisdiction in Missouri on that basis only as to claims that are related to business contacts it has made in the state. The suit at issue, however, was unrelated to its Missouri contacts so it can be brought only if Missouri has general jurisdiction over Norfolk. That Norfolk engages in its railroad business in Missouri and the alleged injuries arose from the railroad business it conducts in Indiana is insufficient. There is no support for the notion that if a company is a national company that does the same “type” of business in the forum state, then essentially it can be used anywhere, otherwise the notion of specific versus general jurisdiction would be rendered meaningless.
Finally, the Court rejected the notion that Norfolk consented to personal jurisdiction over any case filed in Missouri by complying with Missouri’s foreign corporation registration statute. A broad inference of consent based on registration would allow national corporations to be sued in every state and, again, render the notion of specific versus general jurisdiction pointless.
1. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846 (2011); J. McIntyre Machinery Ltd. v. Nicastro, 131 S.Ct. 2780 (2011); Daimler AG v. Bauman, 1345 S.Ct. 746 (2014); and Walden v. Fiore, 134 S.Ct. 1115 (2014).
Premises Liability: The Responsibility of a Business Owner to Act When a Foreseeable Danger is Posed to an InviteeFebruary 13, 2017
In Missouri, business owners generally have no duty to protect invitees from criminal acts of third persons. But there is an important exception to this general rule known as the specific harm exception. As explained and applied in a recent Missouri Court of Appeals case titled Wieland v. Owner Operator Services, Inc., “a duty of care arises when a business owner realizes, or should realize, through special facts within his knowledge that criminal acts of a third party are occurring or about to occur on the premises.”
In Wieland, the jury returned a verdict in favor of plaintiff-employee for $3.25 million for an injury she sustained - inflicted by a third party - while she was on her employer’s premises. The employee had expressed safety concerns to her employer regarding a former domestic partner. Her employer had issued and implemented certain safety protocols to handle situations such as this. Just weeks after alerting her employer, the employee’s former partner entered company parking lot, hid in the employee’s car, and ultimately shot her in the back of her head when she tried to return to the company office building after discovering him in her car.
On appeal, the company argued that the trial court had improperly instructed the jury that it should find for plaintiff if “defendant knew or by using ordinary care could have known that [the assailant] was in the parking lot and posed a danger to plaintiff.” The company argued that the specific harm exception to the general premises liability rule does not apply unless the premises owner has actual knowledge of the third party’s entrance on its premises; and that it therefore had no duty to take action until it knew that the assailant was on its property. The Court of Appeals disagreed and sustained the jury verdict, holding that the “special facts and circumstances” exception is premised on foreseeability, not actual knowledge. It was therefore proper for the jury to consider the company’s pre-existing knowledge, and the actions it should have taken in the exercise of ordinary care, in determining when the company could have known of the third party criminal’s arrival. The evidence at trial, which the jury properly considered, included the company’s own security protocols, the presence of security cameras, and the availability of extra police patrols had they been requested.
This opinion emphasizes the need for an employer or other business owner to stay actively involved and abreast of its invitee’s safety concerns. Upon receiving information that may lead to the “foreseeability of harm” to an invitee, it is imperative that businesses follow internal safety protocol to assure the safety of its employees or customers. The foreseeability of a dangerous third-party’s presence triggers the duty to act; actual knowledge of a dangerous third-party’s presence is not required. Here, had the company offered the employee a closer parking spot, an escort to her car, and routinely checked the parking lot surveillance footage, the resulting injury might have been averted.
The calendars said the years were different, but data from the Greater Kansas City Jury Verdict Service shows that 2016 and 2015 were nearly the same in many respects. Every year, the Greater Kansas City Jury Verdict Service issues a “Summary and Statistics of Jury Verdicts” for the greater Kansas City area. The report includes verdicts from the U.S. District Courts in the Western District of Missouri as well as Jackson, Clay and Platte counties in Missouri and Johnson and Wyandotte counties in Kansas. The statistics in 2016 were remarkably similar to those in 2015.
Comparable Number of Trials and Plaintiffs’ Verdicts
The Jury Verdict Service’s annual summary reported on 113 trials in 2016 compared to 110 in 2015. These numbers are down from the preceding two-year period: there were 133 trials in 2014, and 122 trials in 2013.
Because trials may involve multiple claims and multiple verdicts, the verdict statistics are based on the claims and not the cases. For the 113 trials in 2016, there were 199 verdicts for claims and for the 110 cases in 2015, there were 178 verdicts for claims.
Although the number of trials has decreased from 2013 and 2014, the percentage of plaintiff verdicts is little changed. In both 2015 and 2016, 42% of the verdicts were for plaintiffs compared to 38% for plaintiffs in 2014 and 40% in 2013. These numbers are down from the 55% of the verdicts for plaintiffs in 2012.
Comparable Average Monetary Awards
The overall average of the monetary awards for plaintiffs’ verdicts also remained almost the same in 2016 as they were in 2015. In 2016, the average of plaintiffs’ verdicts was $1,383,549 while the average in 2015 was $1,376,323. Both of those averages are over $1 million more than the average plaintiffs’ verdict in 2014, which was $350,730. While each of these figures is far below the $5,577,689 average verdict in 2013 and somewhat lower than the $1,772,469 average in 2012, the 2013 numbers were skewed by a single $400 million verdict that inflated the 2013 average.
Fluctuating Number of Large Verdicts
Although the average plaintiff’s verdict was similar in 2016 compared to 2015, the number of verdicts exceeding $1 million more than doubled in 2016. There were 16 verdicts of $1 million or more in 2016 and only six such verdicts in 2015. The number of million dollar or more verdicts has fluctuated over the last five years. In 2012, there were 19 such verdicts but only five in 2013 and then ten in 2014, the recent year with the lowest average monetary award in plaintiffs’ verdict matters.
Juries in the following venues awarded million dollar or more verdicts over the last five years.
- Over the last four years, the percentage of defense verdicts on plaintiffs’ claims has consistently hovered around 60%.
- When money has been awarded, the average verdict amounts over the last two years were nearly identical.
- Half of the seven-figure jury awards over the last five years have occurred in Jackson County, Missouri state court .
Although every case is different, information regarding verdict percentages and jury award amounts in the specific venues can help assess the values of cases and claims. For instance, recent data confirms the received wisdom among experienced practitioners that juries in Jackson County, Missouri, are more likely to assess million dollar or more awards on plaintiffs’ claims than juries in Platte County, Missouri. As always, clients, as well as national counsel who are working with local counsel, should carefully consider the forum when assessing the value of a case.
Source: Greater Kansas City Jury Verdict Service Year-End Reports 2012-2016
Merchants Beware: Ingredient List Is Not Necessarily a Defense and Losing the Benefit-Of-The-Bargain Counts as an Ascertainable Loss Under the MMPANovember 16, 2016 | Martha Charepoo
In a recent decision, a unanimous three-judge panel of the Missouri Court of Appeals sided with consumers asserting deceptive labeling practice claims against merchants under the Missouri Merchandising Practices Act (MMPA). In Daniel Murphy v. Stonewall Kitchen, LLC, the Court rejected the notion that clearly identifying an ingredient on a product label automatically defeats a claim under the MMPA. In doing so, the Court settled a split of opinion about the efficacy of the so-called “ingredient list” defense used by food merchandisers to defeat a fraud claim under the MMPA. The Court also confirmed that consumers can establish damages by pleading that the deceptive labeling made it possible for the product to be sold for more than what it was really worth.
The “ingredient list” defense has arisen in the context of challenges to the integrity of food labels containing the words “all natural” where one or more ingredients are alleged to be anything but natural. The issue is whether a food label bearing the words “all natural” is deceptive even if the ingredient list clearly discloses all of the ingredients, including the “unnatural” ones. Federal district courts in Missouri considering the issue have rendered conflicting opinions which Murphy resolved. Murphy involved a class action against a high-end specialty foods merchandiser known for its homemade food items. The plaintiffs alleged that the label on Stonewall Kitchen’s cupcake mix was false, deceptive, and misleading because it stated “all natural” but listed sodium acid pyrophosphate (“SAPP”) as an ingredient. SAPP is an artificial chemical leavening agent found in commercial baking powders. The merchandiser moved to dismiss the petition for failure to state a claim because the label clearly disclosed SAPP as one of the ingredients, citing the Western District of Missouri’s decision in Kelly v. Cape Cod Potato Chip Co., 81 F. Supp. 3d 745 (W.D. Mo. 2015). The trial court adopted Kelly and dismissed the petition, reasoning that the disclosure of SAPP on the label made it unlikely that a consumer would be tricked into thinking that the cupcake mix was “all natural”, and that the terms “natural” and “all natural” were inherently ambiguous and not subject to a generally accepted meaning.
The Court of Appeals reversed the trial court, rejecting Kelly and instead adopting the Eastern District of Missouri’s decision in Thornton v. Pinnacle Foods Group LLC, No. 4:16-CV-00158 JAR, 206 WL 4073713 (E.D. Mo. Aug. 1, 2016). The Court acknowledged that the term “all natural” is subjective and ambiguous but decided that a deceptive labeling claim could not be dismissed before discovery could be conducted because a reasonable consumer’s understanding of whether a food label is misleading or deceptive is a question of fact and cannot be determined as a matter of law. The Court explained that the ingredient list could be relevant to the merchandiser’s defense, but its presence cannot automatically defeat an MMPA claim, especially since the FDA requires an ingredient list anyway, manufacturers are in a superior position to know the ingredients, and a reasonable consumer can expect that representations on the packaging accurately reflect the ingredients. Accordingly, an ingredient list will not prevent a deceptive labeling claim from moving forward through discovery to summary judgment or trial.
In reversing the trial court’s dismissal, the Court also upheld state court precedent suggesting that an MMPA claimant’s “actual damages” are not the purchase price paid for the item, but instead are a measure of diminished value. To satisfy the actual damages element under the MMPA, a plaintiff must show that it has suffered an “ascertainable loss” as a result of the defendant’s unlawful conduct. The Court recognized the applicability of the “benefit of the bargain rule” to assessing actual damages under the MMPA. The “benefit of the bargain” rule compares the value of the item received to its worth as represented at the time of the transaction. It is a measure of damages used in common law fraud cases which the Court found applicable to MMPA claims as well. The Court agreed with prior case law that the “benefit of the bargain” is an ascertainable loss under the MMPA. This means that a plaintiff adequately pleads the damages element of an MMPA claim by stating facts showing that the deceptive labelling made it possible for the product to be sold for more than its actual value at the time of sale.
In Walker v. Kelley, the Missouri Court of Appeals for the Western District recently upheld a jury verdict awarding $1.00 to a personal injury plaintiff.
The case involved a garden variety rear-end car accident which occurred in 2009. Following the accident, plaintiff received a few rounds of routine medical treatment, and did not receive any additional treatment until the eve of trial in September 2015. At trial, there was evidence that plaintiff had performed numerous physical jobs since the date of his injury, that he had a pre-existing back condition, and that he had visited a chiropractor for back pain prior to the accident. A joint trial exhibit set forth two different amounts of medical bills – the “amount incurred with a total sum of $25,895.97,” and the “amount necessary to satisfy plaintiff’s obligation for medical with a total sum of $11,279.62.”
During opening and closing, counsel for defendant argued to the jury that the $11,279.62 had been “incurred and resolved.” And on cross examination, defense counsel asked plaintiff if the $11,279.62 had been paid, to which plaintiff responded yes. Counsel for plaintiff never posed an objection to any of this, despite the obvious implications for collateral source issues.
During deliberations, the jury first asked the court how the medical bills were paid, to which the court responded with the standard admonition that it was to be guided by the evidence. Not long thereafter, the jury sent another question to the judge, this time asking whether it could “find for the plaintiff and not award money.” The court sent back another standard admonition, telling the jury that it must be guided by the instructions. After some further hiccups, including a finding of liability and an award of $0.00, the jury finally returned with a verdict in favor of plaintiff, assessing damages at $1.00. The court accepted the jury’s verdict and entered judgment. Plaintiff appealed, arguing that the award of $1.00 demonstrated juror bias, passion, misconduct or prejudice.
The court of appeals affirmed the circuit court’s judgment for two reasons. First, there was evidence from which the jury could find that plaintiff’s damages were “negligible,” i.e. that there was evidence from which the jury could conclude that plaintiff’s alleged injuries were due to pre-existing conditions, or simply weren’t that bad. Second, the jury could have found that plaintiff was “fairly and reasonably compensated,” i.e. that it had based its decision upon the un-objected to collateral source evidence.
There are two lessons to take from this case. First, if defense attorneys cover all of their bases and give the jury enough evidence to hang its hat on, a nominal award of damages can survive on appeal despite a finding of liability. Second, be careful to avoid collateral source issues when talking about the amount of medical billing under R.S.Mo. 490.715. It is clear that the appellate court thought this was a big issue. Had plaintiff’s counsel objected during trial, it seems likely that defense counsel’s good work would have been undone.
Missouri Court of Appeals Holds Plaintiff Cannot Use Savings Statute to Revive Dismissed Lawsuit Brought by Improper PlaintiffNovember 8, 2016 | John Mahon, Jr.
Love v. Piatchek, No. 103690 (November 8, 2016)
The Missouri Court of Appeals, Eastern District, affirmed a trial court’s dismissal of a lawsuit as being time-barred. The court held that the plaintiff could not rely on an earlier lawsuit and Missouri’s “savings” statute because the earlier suit was brought by an improper plaintiff who lacked standing.
In the first lawsuit, a grandmother sued for the wrongful death of her grandson. On the eve of trial, the grandmother dismissed the lawsuit, without prejudice. Four months later, the decedent’s mother filed a second wrongful death lawsuit. The defendant moved to dismiss the suit as being time-barred because it was filed after the expiration of the applicable statute of limitations. The mother argued the suit was timely filed, under the savings statute, because it was filed within one year of the voluntary dismissal of the first wrongful death suit. The trial court dismissed the case, and the mother appealed.
On appeal, the court noted that, as long as both lawsuits are brought by proper plaintiffs with standing, a suit may be timely re-filed within the one-year savings period allowed under the savings statute, and the second suit will relate back to the filing of the first suit. However, in this case, the first lawsuit was not legally viable because the grandmother was not eligible to bring a wrongful death lawsuit under Missouri law and therefore lacked standing. Thus, the mother could not file a second suit and have it relate back to the grandmother’s non-viable first suit under the savings statute.
Presiding Judge Lisa Van Amburg authored a concurring opinion pointing out the numerous unsuccessful attempts of the decedent’s father, an incarcerated felon, to join the lawsuit as a pro se plaintiff. Had the father been named a plaintiff, as was his right, the first lawsuit would have been viable, and the mother’s subsequent suit would have been timely under the savings statute.
Missouri Court of Appeals Holds Ingredient List Label on Product Not an Absolute Defense to Claim for Deceptive Merchandising PracticesNovember 8, 2016 | John Mahon, Jr.
Murphy v. Stonewall Kitchen, LLC, No. 104072 (November 8, 2016)
The Missouri Court of Appeals, Eastern District, reversed a trial court’s order dismissing an action on the grounds that an ingredient list label was a complete legal defense to a claim for deceptive merchandising practices because the consumer could not reasonably be deceived or misled by the packaging. The court held that the presence of an ingredient list label on a product is not an absolute defense, though it may be used as evidence in support of a defense at trial. This decision may be of interest to product manufacturers and their counsel, as well as to consumers.
The defendant sold a cupcake mix in a package that described the product as being “all-natural” when, in fact, it contained a certain chemical used in commercial baking. The plaintiff filed suit for false, deceptive, and misleading practices under the Missouri Merchandising Practices Act (MMPA). The defendant filed a motion to dismiss, arguing the packaging was not deceptive because the chemical was specifically listed as an ingredient on the package label (often referred to as the “ingredient list defense”). The trial court granted the motion, relying on Missouri federal court precedent and reasoning that the presence of the label identifying the chemical as an ingredient made it implausible a reasonable consumer would believe the “all-natural” representation on the product. The plaintiff appealed the dismissal.
On appeal, the court noted a second decision from another Missouri federal court reaching the opposite result and followed that rationale. The court found that how a reasonable consumer would interpret the term “all-natural”, whether a reasonable consumer would actually read the ingredient list, and whether the defendant’s labeling practice was deceptive were all fact questions for the jury. Though the presence of the ingredient list might be relevant to the defense at trial, the court held that the ingredient list cannot, as a matter of law, defeat an MMPA claim.
In Missouri, it has long been held that a party waives the protections of the work product doctrine by disclosing his expert’s opinions, analysis or conclusions. However, the mere act of designating an expert pursuant to Missouri Rule 56.01 “does not, standing alone, irrevocably waive the protections afforded by the work product doctrine,” according to a new decision of the Missouri Supreme Court.
In Malashock v. Jamison, the plaintiff sued for injuries allegedly resulting when his utility terrain vehicle (UTV) overturned. The plaintiff designated four expert witnesses to testify at trial. The designation for one of the experts stated that the expert would testify regarding the UTV’s “performance” at various speeds, the “forces” involved in the accident, and the “performance and factors impacting the performance” of the UTV. However, the designation did not disclose the expert’s analysis or conclusions regarding any issues in the case.
Not long after designating experts, the plaintiff “de-endorsed” one expert. Following the withdrawal of this expert, the defendant filed a motion to permit the deposition of the withdrawn expert. The trial court granted the motion to depose the withdrawn expert “on the grounds that Plaintiff had waived the protections afforded by the work product doctrine by designating” the expert.
The plaintiff filed a writ of prohibition, and the Missouri Supreme Court reversed the trial court’s decision. The Malashock court explained that the initial designation of an expert “begins a process of waiving privilege,” but that waiver is not complete “until there is a ‘disclosing event.’” The court then announced that the “disclosing event” is “the actual disclosure of the expert’s opinions and conclusions, not simply the designation of the expert as a trial witness.”
Because the waiver is not complete until the disclosure of the expert’s opinions and conclusions, the court reasoned that “when counsel rescinds the designation, the attorney can claim work product protection as to that retained expert, since the expert will not be called for trial.” Because the plaintiff in Malashock rescinded the designation before disclosing the expert’s opinions or conclusions, the Supreme Court held that the plaintiff did not waive the work product doctrine protections.
Experienced litigators know that cases evolve over time. A party may not need all of the experts originally designated. The Malashock decision stands for the proposition that parties can withdraw experts without the risk of waiving the attorney work product doctrine as to that expert as long as the party rescinds the designation of the expert before disclosing the expert’s “opinions and conclusions.”
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Supreme Court of Missouri Holds No Waiver of Work Product Privilege When Party Rescinds Designation of Expert Witness Without Disclosing the Expert's Analysis or ConclusionsNovember 1, 2016 | John Mahon, Jr.
State ex rel. Jason H. Malashock v. The Honorable Michael T. Jamison, SC 95606 (November 1, 2016)
The Supreme Court of Missouri reversed a trial court’s order permitting the deposition of a plaintiff expert witness on the grounds that, by designating the expert, the plaintiff had waived the work product privilege. The Court held that designating an expert witness pursuant to Rule 56.01 does not, standing alone, irrevocably waive the work product privilege. The case provides guidance to trial practitioners on the concept of waiving work product privilege protection of expert witness opinions.
The personal injury plaintiff was injured when his utility terrain vehicle overturned. Plaintiff filed suit, alleging the vehicle’s roof failed, causing his injuries. He designated four expert witnesses expected to testify at trial. The designation of one of the experts stated he would testify regarding the vehicle’s performance and the forces involved in the accident. The designation did not disclose the expert’s analysis or conclusions.
Approximately two weeks later, plaintiff’s counsel sent an e-mail to defense counsel stating “We have de-endorsed” the expert witness. In response, the defendant filed a Motion to allow a deposition of the expert. The trial court sustained the Motion on the grounds that, by designating the expert, the plaintiff had waived the work produce privilege. Plaintiff appealed this decision.
On appeal, the Supreme Court of Missouri discussed the nature of the protections afforded by the work product privilege and the concept of waiver. Because the plaintiff did not actually disclose the expert’s opinions and conclusions, the Court found the plaintiff did not waive the work product privilege, even though he had endorsed, and later dis-endorsed the expert.
The Court found support for its holding in Rule 56.01 and case law. Rule 56.01(b)(4)(b) authorizes discovery of expert witness opinions via deposition. Even though a designated expert is subject to discovery, it does not follow that the act of designation in and of itself irrevocably waives the work product privilege. Instead, the designation of an expert merely begins a process of waiving privilege that is not complete unless and until there is a disclosing event, which is the actual disclosure of the expert’s opinions and conclusions. Because the plaintiff withdrew the expert’s designation before disclosure of the expert’s opinions and conclusions, there was no disclosing event that waived the work product privilege.
On October 18, 2016, the Supreme Court held that when personal jurisdiction and subject matter jurisdiction are established, venue is proper in any county in Missouri in the absence of an express provision in RSMo § 508.010 restricting venue. In State of Missouri ex rel. Heartland Title Services, Inc., the Missouri Supreme Court was presented with an issue of first impression - does the absence of an express provision in the venue statute prescribing a specific venue dictate that venue is proper in (1) any county in Missouri or (2) no county in Missouri?
Plaintiff title company filed a two-count petition alleging professional malpractice claims against an attorney and his law firm. Defendants filed a motion to dismiss Count II of Plaintiff’s Petition for lack of venue, arguing that the tort alleged occurred outside of Missouri. Defendants further argued that RSMo § 508.010 limited venue to either the county in Missouri where a corporate defendant’s registered agent is located or where an individual defendant’s principal place of residence is located; and since neither was present in this case, the case could not be filed in any Missouri court.. The Circuit Court agreed with Defendants and dismissed Count II of Plaintiff’s Petition. Heartland sought relief by preliminary writ of prohibition, which was made permanent by the Missouri Supreme Court.
The Court found that RSMo § 508.010 was not intended to deny Missouri venue in all situations not provided for by the statute. Rather, the purpose is to provide a “convenient, logical, and orderly forum for resolution of disputes.” It rejected Defendant’s argument that this interpretation was likely to encourage forum shopping - citing (1) the reality that both subject matter and personal jurisdiction are prerequisites to proceeding in Missouri courts; (2) limited liability companies and corporations are required to register an agent in Missouri if conducting business in the state; and (3) the doctrine of interstate forum non conveniens is not abolished. And while the State does not recognize intrastate forum non conveniens, Missouri circuit courts have a “ministerial duty” to transfer a case to a county where venue is proper.
The Court held that without an express prescription of a particular venue, venue can be proper in any Missouri county.
On September 8, 2016 the U.S. Court of Appeals for the 8th Circuit affirmed a motion to dismiss granted by the U.S. District Court for the Eastern District of Missouri in the case of Alex Braitberg, on behalf of himself and others similarly situated, v. Charter Communications, Inc. No. 14-1737. The Court of Appeals applied a recent U.S. Supreme Court decision establishing that plaintiffs alleging a statutory violation must also establish a “concrete” injury, not just a statutory violation, to have standing.
Plaintiff filed the lawsuit against Charter in the U.S District Court for the Eastern District of Missouri, and sought class certification on behalf of himself and others similarly situated. The Complaint alleged that defendant Charter Communications, Inc. inappropriately retained personally identifiable customer information for too long a period of time, in violation of the Cable Communications Act, 47 U.S.C. § 551(e). Plaintiff alleged that Charter inappropriately retained his personal identifying information -- including his address, telephone number and social security number – after he canceled his services with Charter. Charter’s information retention policy was to retain identifying customer information “indefinitely.” There was apparently no evidence that Charter made any use or disclosure of the information, but was merely retaining the records.
Plaintiff claimed that Charter’s retention of the information damaged plaintiffs in two ways: first, via a “direct invasion of federally protected privacy rights,” and, secondly, by depriving plaintiffs of the “full value of the services they purchased from charter.” Charter’s motion to dismiss attacked Plaintiff’s standing under Article III of the Constitution, standing under the Cable Act and alleged that Plaintiff’s Complaint failed to state a claim because no damages were stated. Plaintiff’s claim was dismissed without prejudice, and the class certification was denied as moot.
Plaintiff Failed to Show an Injury in Fact.
The Court of Appeals agreed with the District Court and affirmed the ruling on Charter’s motion to dismiss, ruling that Plaintiff failed to properly allege an “injury in fact,” and therefore a controversy sufficient to establish jurisdiction did not exist for this matter. The Court noted that, to establish standing, a Plaintiff bears the burden at the pleading stage of alleging an injury adequate to establish jurisdiction. This injury must be both “concrete and particularized.”
Plaintiff argued, in line with prior 8th Circuit decisions, that the statutory violation by Charter in retaining his information constituted a sufficient injury in fact to establish standing under Article III, and that he need not allege an actual injury. During the pendency of Plaintiff’s appeal, the Supreme Court handed down a new decision in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016) superseding the 8th Circuit decisions. The Spokeo decision establishes that a mere statutory violation does not automatically establish the “injury in fact” requirement for a plaintiff by virtue of the violation. There must still be a “real,” “existing injury” that is not “abstract.”
Based upon the Supreme Court ruling, the 8th Circuit ruled that Plaintiff did not adequately establish standing, and hence jurisdiction, in this matter. The statutory violation alleged by Plaintiff established only that a “bare procedural violation” had occurred, and this violation was apparently “divorced from any concrete harm.” The Court indicated that Charter’s mere retention of the information, without evidence of any real harm (i.e. disclosure), was insufficient to establish an injury
In an attempt to get by the “concrete injury” requirement, Plaintiff argued that he suffered an economic injury stemming from a “diminution in the value of cable services” provided to him. Plaintiff asserted that he placed value on the protection of his private information from access and use by unauthorized parties, including retention of his information in violation of the act. The Court disregarded this argument stating that “without a plausible allegation that Charter’s mere retention of that information caused any concrete and particularized harm to the value of the information, Plaintiff has not adequately alleged that there was any effect on the value of the services that he purchased from Charter.”
Conclusion -- Guidance for the Future
The Supreme Court and 8th Circuit rulings establishing that plaintiffs must establish a “concrete and particularized injury” to have standing may help chill future lawsuits proposing damages for statutory violations with only abstract or hypothetical damages. Going forward, plaintiffs will need to meet this standard to establish standing for controversies involving statutory violations. Merely establishing that a statute has been violated may not suffice.
— S.W.3d —, 2016 WL 6090816 (Mo. banc October 18, 2016)
In a matter of first impression, the Missouri Supreme Court recently clarified that Missouri’s venue statute must be read to allow venue (referring to the locale where the trial in a case can be held) in any Missouri county when requirements for both subject matter and personal jurisdiction are met.
Plaintiffs filed a claim for legal malpractice against an attorney and his law firm in Jackson County, Missouri, arising from the provision of legal services in a case filed in Kansas. The defendants filed a motion to dismiss for lack of venue, arguing that since the alleged malpractice occurred in Kansas, no Missouri county was a proper venue for the action pursuant to Missouri’s general venue statute, § 508.010.5.
Section 508.010.5 RSMo NonCum. Supp. 2014, limits venue to either the Missouri county where a corporate defendant’s registered agent is located or the county of an individual’s principal residence. In this case, the defendant attorney did not live in Missouri and the law firm did not have a registered agent in Missouri. The defendants argued that the trial court must dismiss the claim because no Missouri county constitutes a proper venue under § 508.010.5. The plaintiffs argued that, since no specific Missouri county qualified under that section, then any Missouri county would be a proper venue. Thus, the question presented to the Missouri Supreme Court was whether absent an express provision in § 508.010.5 prescribing a specific venue, venue is proper in any Missouri county or no Missouri county.
In holding that the plaintiff could bring the claim in any Missouri county, the Supreme Court found it important that the Jackson County Circuit Court had both subject matter jurisdiction over the claim (referring to the court’s authority to render judgment in a particular category of cases) and personal jurisdiction over the defendants (referring to the power of a court to require a party to respond to a legal proceeding). The Court noted that to interpret § 508.010’s silence as barring venue in any Missouri county in which the circuit court’s jurisdiction is not contested would lead to the absurd result of precluding any forum to a party in which a Missouri court has subject matter jurisdiction of the case and personal jurisdiction of the defendant. Thus, if personal and subject matter jurisdiction are established, venue is proper in any county in Missouri in the absence of an express provision by the General Assembly restricting venue.
In June 2016, the Missouri Supreme Court issued its opinions in Peters v. Wady Indus., Inc. and Parr v. Breeden, holding that co-employees may be liable at common law for injuries caused to fellow co-employees by negligent actions if the plaintiff-employee shows that the defendant-employee breached a personal duty of care separate from the employer’s non-delegable duty to provide a safe workplace. In August 2016, the Missouri Court of Appeals for the Eastern District applied Peters and Parr to Fowler v. Phillips, a co-employee liability case involving plaintiff’s claim for injuries sustained as a result of defendant’s alleged reckless driving in the Avis Budget Group, Inc. car wash and parking lot.
An employer has non-delegable duties for which it always remains liable, including (1) the duty to provide a safe workplace; (2) the duty to provide safe appliances, tools, and equipment; (3) the duty warn of dangers for which an employee might reasonably be expected to remain in ignorance; (4) the duty to provide a sufficient number of suitable co-employees; and (5) the duty to promulgate and enforce rules for the conduct of employees to ensure workplace safety. If plaintiff establishes that a defendant/co-employee’s negligent or reckless act falls outside the employer’s non-delegable duties, the co-employee may be liable, regardless of whether he or she was performing his or her job when the injury occurred.
In Fowler, plaintiff, who was struck and seriously injured by an automobile, alleged co-employee liability for defendant Phillips, who acted recklessly when she failed to keep a careful lookout, failed to yield the right of way, and violated traffic signals while driving the employer’s car on the employer’s parking lot. Applying Peters and Parr, the Eastern District held that plaintiff’s allegations charged defendant with actions outside the employer’s non-delegable duties. Therefore, the trial court’s grant of summary judgment was improper. The case was remanded for a determination as to whether plaintiff’s allegations were supported by sufficient evidence for a finding of co-employee liability.
This case is currently on remand to the district court, and we will monitor to provide updates.
During the course of litigation, unfavorable interlocutory court rulings (i.e. rulings that are not final for purposes of an immediate appeal) may be temporary hiccups in the preparation of a party’s case or may threaten a party’s overall litigation strategy and chance of ultimate success. Until final resolution of all parties and issues, there may be nothing a party can do about those unfavorable rulings. In some instances, however, a party may have success with interlocutory appellate review of a court ruling. Not all unfavorable rulings can or should be considered for interlocutory review, but here are some factors to consider when deciding whether one can or should seek such review.
Perhaps the most obvious consideration is whether an interlocutory appeal of the ruling is permissible as of right. While some states permit interlocutory appeals in only the most limited of circumstances, other states and the federal courts allows them in more expansive and often well-defined ways. For example, the Illinois Supreme Court Rules provide for three categories of interlocutory appeals: those by permission of the appellate court, those as of right, and those upon certified question of the trial court. See Illinois Supreme Court Rules 306, 307 and 308. It may be, therefore, that your particular adverse ruling is one which falls into an “as of right” category and is worth a closer look on that basis alone.
Alternatively, an adverse ruling may fall into a permissive category which the appellate court may, for a number of reasons, believe merits closer look on an interlocutory basis. Using Illinois again as an example, interlocutory appeals by permission in that state include, among other things, orders granting a new trial, orders allowing or denying a motion to dismiss on the grounds of forum non conveniens, orders denying a motion to dismiss on the basis of lack of personal jurisdiction, and orders granting a motion to disqualify the attorney for any party. Illinois Supreme Court Rule 306.
Even if the adverse ruling does not fall into an “as of right” category or a recognized “permissive” category, interlocutory review on a purely discretionary basis may still be possible. It is useful if the issue is one which is of importance to not only the parties to the current litigation, but one which has general interest and importance to other litigants. It also may be useful if the ruling is one which, though interlocutory, may affect the future course of the litigation in a way that speeds its resolution. For example, rulings regarding venue or assertions that the trial court is acting in gross excess of its jurisdiction may, under the right factual circumstances, be attractive for interlocutory review. Cited factors for such discretionary review often include whether the ruling is one of first impression, whether irreparable harm to a party may result if interlocutory review is not allowed, and whether the trial court’s abuse of discretion is alleged to be particularly egregious. There may also be circumstances where the interlocutory order turns on a question of law where there is substantial ground for difference of opinion and where an immediate appeal may materially advance the ultimate termination of the litigation. See 28 U.S.C. § 1292(b).
Although review of non-final orders is rare, it is not impossible. This extraordinary relief may be available in some cases where review might not otherwise be available until entry of a final judgment. The place to start is with an examination of your jurisdiction’s laws as to interlocutory review, the facts of your particular case, and then with an assessment of whether pursuing interlocutory review will benefit your overall litigation strategy. Appellate counsel also may be of assistance in the determination of whether a particular case may benefit from seeking interlocutory review.
- A clause titled (in large bold capital letters) “RELEASE OF LIABILITY”:
- The ensuing paragraph, stating in large bold capitals:
Last month, I noted recent media reports raising patient privacy concerns due to health care providers’ use of social media in the workplace [The Potentially Dangerous Intersection of Healthcare and Social Media]. It appears the Centers for Medicare & Medicaid Services (“CMS”) has also taken note of media reports on this topic. CMS has issued new guidance to state survey agency directors in an effort to safeguard patient privacy and prevent abuse related to photos or audio/visual recordings by nursing home staff.
In S&C: 16-33-NH (August 5, 2016), CMS focuses on patients’ right to privacy and confidentiality, and to be free from abuse, including mental abuse. CMS is pushing for facilities to implement written policies and procedures prohibiting all forms of abuse, including the taking or using of photos or recordings in any manner that would humiliate a resident, or to distribute such materials on social media. According to CMS, facilities should provide training on abuse prevention policies, as well as oversight and supervision of staff in order to ensure compliance. The new CMS guidance also discusses the duties to report and investigate allegations of abuse, and to take corrective action when warranted. CMS has issued instructions to state survey agency surveyors to request and review facility policies and procedures for compliance.
This new CMS guidance shows that regulators are taking these new types of privacy concerns seriously. The abuse of patient privacy and confidentiality rights by healthcare providers is being increasingly scrutinized. Healthcare providers should be mindful of the recent CMS guidance, as well as other efforts by the healthcare industry to address the challenges posed by this important issue.
Lately, there have been numerous reports in the media raising patient privacy concerns due to healthcare providers’ use of social media in the workplace. A few examples include:
- An ER nurse posting to Instagram a photo of a bloodied trauma room taken just after treating a patient who had been hit by a subway train – causing the hospital to take action against the nurse and terminate her employment;
- A young St. Louis obstetrician who took to Facebook to air complaints about a chronically tardy patient, who had suffered a stillbirth – which was reposted and drew hundreds of angry comments and led to a reprimand of the physician by the hospital where she worked;
- A Northwestern University physician posting photos of a student admitted to a Chicago hospital for extreme intoxication – leading to a $1 million lawsuit for invasion of privacy and infliction of emotional distress;
- A Chicago ER nurse sharing information on Twitter about a gunshot patient, including insulting tweets and a photo of the bloodied trauma room where the medical staff tried to save him – leading to a lawsuit against the nurse and the hospital for negligence and emotional distress seeking more than $100,000;
- Reports of abuse of elderly residents of nursing homes and senior care facilities in California, Colorado and Iowa, including the posting of nude and other humiliating photos to Facebook, Instagram and Shapchat – leading to termination, license suspension, and even criminal prosecution.
These and other examples demonstrate that patients, employers, regulators and even law makers and law enforcement are taking very seriously these new types of privacy concerns spawned by emerging and evolving social media platforms, and they are becoming more aggressive in pursuing such cases. Some employers and industry groups are undertaking efforts to revamp internal policies and procedures and training methods to address issues unique to the ever-changing landscape of social media technology. There is no way to tell what the future might bring in terms of patient privacy issues and social media, but it seems likely that these challenges will continue to plague the healthcare industry.
In many ways, referring to a lawyer with extensive experience practicing in appellate courts as an “appellate” lawyer is misleading. An appellate lawyer is practiced generally in legal research, writing and analysis and is skilled at approaching matters from a detached, academic perspective. These are skill sets that can bring value to all stages of litigation.
Not all litigation will benefit from the early, pre-appeal involvement of an “appellate” lawyer. But, there are cases which may benefit from the insight which appellate counsel may bring to the table long before an appeal. Here are some things to consider as to when a matter may benefit from an appellate lawyer’s input and perspective.
- Perhaps the most obvious consideration is one of record preservation. Issues, arguments, and objections in the trial court generally are waived on appeal if not properly preserved in the court below. Appellate counsel could assist with proper preservation. Early insight into building and preserving the record could save time and money later when it comes to actually preparing and submitting the record on appeal.
- Appellate counsel could assist at the pleadings stage in evaluating whether the law supports the claims made and what evidence might need to be developed for a later dispositive motion. This might include early identification and analysis of issues for potential interlocutory review.
- Appellate counsel might also be a benefit in the actual drafting and presentation of dispositive motions, such as a Motion to Dismiss or a Motion for Summary Judgment or with other complex motions likely to be at issue in any eventual appeal. If such a dispositive motion is successful, the matter is likely to be appealed, and the early involvement of appellate counsel may go a long way toward putting matters in the best position for an appellate court to affirm a favorable result.
- Instructional error is a part of many appeals. Appellate counsel may assist in drafting and arguing the proposed jury instructions and in making a clear record for later review. This may prove especially important a party tenders a non-approved or non-pattern instruction.
- Post-trial, appellate counsel may assist in strategy for and preparation of a Motion for New Trial or other post-trial motions to preserve trial court errors and best posture the case for appeal. This is also, in most instances, the last chance to make sure the record below is complete and all arguments properly preserved.
Essentially, appellate counsel can assist at any stage of litigation – long before the notice of appeal is filed – with a focus on legal issues and with what can be a detached and objective legal analysis of the case.
On appeal, Defendants asserted both instructional error as to Jury Instruction No. 8, and juror misconduct – but the Supreme Court decided only the former issue. Defendants argued that Jury Instruction No. 8 was improperly submitted, because the instruction submitted alternative theories of recovery and there was not substantial evidence to support each theory of recovery. Jury Instruction No. 8 read:
First, [D]efendants discharged [Ross-Paige] or gave [her] a negative write up or assigned [her] with unfavorable shifts or denied [her] paid time off to attend training or failed to allow [her] to apply for the sergeant’s exam or unjustly refused or delayed [her] disability claim or created a severe and pervasive hostile work environment for [Ross-Paige], and
Second, [Ross-Paige’s] complaint of sexual harassment or refusal to submit to sexual advances was a contributing factor in such discriminatory acts, and
Third, as a direct result of such conduct, [Ross-Paige] sustained damage.
The Court held that Jury Instruction No. 8’s disjunctive verdict-directing nature - alleging seven different types of adverse employment actions - required that each alternative theory presented must be supported by substantial evidence, in order to go to the jury. Defendants argued that the instruction did not meet the substantial evidence standard.
The trial is over. Things did not go as had been hoped, and an adverse judgment has been entered. An appeal is a given, right? Not necessarily. Although in most civil cases, there is an automatic right to an appeal from an adverse judgment or other final order, that does not necessarily mean an appeal is the right choice in every case. Here are some points to consider.
- What is the realistic chance of success on appeal? This analysis should begin with a look at the applicable standard of review. For example, in Missouri evidentiary issues typically receive review only for abuse of the trial court’s discretion, and the trial court will be afforded considerable discretion in such matters. Review of an order granting summary judgment will be de novo, which essentially means the appellate court will look at the case with a fresh set of eyes. These are very different standards, and there are others which may apply to other issues in any given case. Knowing the standard of review to be applied will help in the assessment of chances of success.
- What fees and costs will likely be incurred? Like the amounts for fees and costs incurred in litigating a case through trial, fees and costs on appeal can vary widely depending on the facts of the case and its procedural posture. The preparation of a record on appeal for a case involving multiple days of trial testimony and thousands of pages of documentary evidence is likely to be considerably more expensive than preparation of a record on appeal of an order granting a Motion to Dismiss. Likewise, the complexity and number of issues to be raised in the appellate briefing are likely to affect the overall amount of fees and costs incurred. An appeal bond, if one is required, can be costly if a large verdict must be bonded. Having an estimate of likely fees and costs such as these will assist in making the determination if the appeal is worth the effort given whatever has been determined to be the realistic chance of success on appeal.
- What time and effort will be involved? Appeals can take a long time, even upwards of 9 to 12 months or more, to complete. Post-judgment interest may or may not be accruing. A party’s other interests may or may not be affected by either or both the diversion of time or of money. As with all phases of litigation, these considerations should be weighed in the decision on whether to proceed.
- Is the record on appeal solid? On appeal, the parties are pretty much stuck with the facts as they appear in the record. The time for development of facts or discovery on issues is, for the most part, over. This is both good news and bad news. The bad news is that, once on appeal, if certain evidence was not presented to the trial court, it is generally too late to do so. The good news is that this may also mean a more accurate assessment of the merits of the case can be made. At any rate, whether the trial court record contains all that might be needed for a successful appeal should be considered in an overall assessment of the appeal’s strength.
- Is there some strategic advantage to be gained with an appeal? If an appeal is otherwise justified and non-frivolous, a consideration may be whether or not filing an appeal provides some leverage toward settlement of the case.
For an aggrieved party, an appeal absolutely may be the right choice but should not be entered into blindly. An appellate practitioner, whether or not also involved at the trial court level, can assist in a thoughtful and reasoned evaluation of the case to make an informed decision on whether or not to pursue appellate review.
The Missouri Supreme Court recently issued an amended opinion for Dodson v. Ferrara, Mercy Clinic Heart and Vascular, LLC. BSCR’s first post discussing the Court’s original opinion can be found here.
In Dodson, the Missouri Supreme Court heard, en banc, an appeal by both Plaintiffs and Defendants from the circuit court of St. Louis County. The case originates from a wrongful death action, brought by the family of Shannon Dodson against Defendant health care providers Dr. Robert Ferrara and Mercy Clinic Heart and Vascular, LLC, after Shannon Dodson died from a dissection of her left main coronary artery during a cardiac catheterization. The original jury verdict totaled $1,831,155 for economic damages and $9 million for noneconomic damages, but the trial court reduced the noneconomic damages to $350,000 pursuant to Mo.Rev.Stat. §538.210. On appeal, Plaintiffs argued that the statutory cap on noneconomic damages does not apply in wrongful death cases per Watts v. Lester E. Cox Medical Ctr., 376 S.W. 3d 633 (Mo. banc 2012) and that the cap violated constitutional rights of the right to trial by jury, equal protection or separation of powers provisions under both the Missouri and United States Constitutions. The Missouri Supreme Court ultimately held that noneconomic damages cap in Mo.Rev.Stat. §538.210 is, in fact, constitutional as applied in wrongful death cases, discussing the distinction of a common law claim for personal injury as opposed to a statutory claim for wrongful death.
The Court’s original opinion held that the statutory cap in Mo.Rev.Stat. §538.210 does not violate those rights provided by equal protection. Plaintiffs argued that the statutory damages cap “impacts a fundamental right because it impermissibly restricts the right to a jury trial” or, alternatively, their claims must be placed under a rational basis review to determine if the law was justified inasmuch as it was rationally related to a legitimate state interest. The Court rejected plaintiff’s first argument and, analyzing their claims under a rational basis review, found that not only was the damages cap found to be rationally related to a legitimate state interest (i.e. “reduce perceived rising medical malpractice premiums and prevent physicians from leaving ‘high risk’ medical fields”; See also Adams v. Children’s Mercy Hospital, 832 S.W.2d 898 (Mo. banc 1992), but also that the equal protection concerns presented by the plaintiffs did not apply to the outcomes stemming from the Court’s rulings (“Plaintiffs cite no cases holding that equal protection analysis is appropriate in judicial determinations.”).
In the revised opinion, which was prompted by plaintiffs’ counsel’s attempted request for a rehearing (which was denied), while the outcome of the case remained the same, the Missouri Supreme Court slightly expanded upon its original equal protection discussion. It still recognized that plaintiffs had not actually challenged the Missouri constitutional provision itself (article I, section 22(a)), but rather plaintiffs had challenged the Court’s interpretation of the provision-an argument that does not properly raise an equal protection challenge.
However, the Court replaced an existing footnote (FN 12 on p. 24 of the revised opinion), elaborating on its previous footnote that had briefly discussed the concept that an analysis of equal protection could apply to a court functioning in its administrative capacity. The revised footnote further distinguishes between common law causes of action and those created by statute, while also supporting its decision that the Mo.Rev.Stat. §538.210 damages cap did not present an equal protection violation. The new footnote states as follows: “In any event, plaintiffs whose family member was killed by medical negligence are not similarly situated to plaintiffs who – themselves – were injured by medical negligence. The former have no common law cause of action, the latter do. It is this distinction which accounts for the differences between Watts, on one hand, and Sanders and the present case on the other. Because the two classes of plaintiffs are not similarly situated with respect to Missouri’s constitutional right to a jury trial, there can be no equal protection violation either in the constitutional provision or this Court’s application of it.”
While the Court’s revised opinion does not affect the outcome of the case, the further distinction between common law and statutory causes of action could have an effect on future court discussions on the constitutionality and applicability of caps on damages. Also unchanged is the possibility of more change to non-economic damages caps through the legislature in the future, which, for now, remain constitutional in the context of a claim for wrongful death.
Recent BSCR Blog Posts Related To Statutory Caps:
March 2015 - Possibility of statutory caps making a comeback through Senate Bill No. 239.
May 2015 - Both the Senate and House Bill had passed, which limited non-economic damages in medical negligence claims to $350,000, reflecting and supporting the later Dodson decision.
May 2016- Original Dodson opinion discussed.
A summary of the Dodson case can also be found here.
Missouri Appeals Court Rules "Continuing Duty Doctrine" Applies to Deposition Testimony of a Party's RepresentativeJune 1, 2016 | Martha Charepoo
Rule 56.01(e) of the Missouri Rules of Civil Procedure requires parties to a litigation to supplement responses to interrogatories, requests for production, and requests for admission “if the party learns that the response is in some material respect incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.” This has come to be known as the “continuing duty doctrine”.
The rule does not mention deposition testimony, and there is no other rule that creates a duty to supplement deposition testimony. But a recent decision of the Missouri Court of Appeals suggests that the “continuing duty doctrine” applies to the deposition testimony of a party’s representative.
In Burlison v. Dep’t of Public Safety, the Southern District considered an appeal and cross appeal from an award of the Labor and Industrial Relations Commission in a worker’s compensation case. 478 S.W.3d 577 (Mo. App. S.D. 2016). The cross appeal came from the employer who sought review of the Commission’s adoption of the Administrative Law Judge’s (ALJ) decision to exclude two surveillance videos of the former employee’s activities at the worker’s compensation hearing. During discovery, the former employee deposed the employer’s representative, and the deposition notice included a request for production, including any surveillance videos taken of her.
At his deposition, the employer’s representative testified that there had been no surveillance video taken of the former employee. However, sometime after the deposition, the employer hired an investigator to conduct surveillance of the former employee, and took video of her activities on two occasions. At the hearing, the employer attempted to cross examine the former employee using the two videos. The former employee objected on the grounds that the videos had not been disclosed prior to the hearing. The ALJ sustained the objection, finding that the videos were not admissible because the employer had a duty to supplement its representative’s testimony under Rule 56(e) but failed to do so. The Southern District affirmed the Commission’s award, agreeing that the employer had committed a discovery violation and that the surveillance videos were properly excluded by the ALJ.
The Court of Appeals relied on two older appellate decisions interpreting an earlier but similar version of Rule 56(e). One was Crompton v. Curtis-Toledo, Inc. in which the Eastern District Court of Appeals applied the continuing doctrine duty to preclude introduction of a fact witness at trial by a party who failed to supplement deposition testimony involving the identity of that witness. 661 S.W.2d 645, 650 (Mo. App. E.D. 1983). In Crompton, the court acknowledged that the rules say nothing about supplementation of deposition testimony, but cited to the spirit of the discovery rules “that the rules of discovery were designed to eliminate, as far as possible, concealment and surprise in the trial of law suits to the end that judgment therein be rested upon the real merits of the causes and not upon the skill and maneuvering of counsel.” The other case relied upon by the Southern District was Gassen v. Woy in which the Western District applied the continuing duty doctrine to the deposition testimony of an expert where the expert witness changed their opinion before trial. 785 S.W.2d 601, 603-04 (Mo. App. W.D. 1990).
The lesson of Burlison is that if you want to use something at trial, you have to disclose it during discovery, even if it means supplementing your client’s deposition testimony.
Missouri Court of Appeals Again Rules That Police Officer Testimony as to Fault of Party to Accident is InadmissibleMay 23, 2016 | John Watt
In Ritchie v. State Farm Mutual Automobile Insurance Co., the trial court had allowed an investigating officer to testify that the Plaintiff’s motorcycle had left the roadway in a straight line and that he had found no evidence of another vehicle forcing the Plaintiff off the road. Over objection, he was permitted to testify that, in his opinion, the cause of the accident was inattention by the Plaintiff. The jury then returned a verdict in favor of the Defendant and Plaintiff Ritchie appealed. The Court of Appeals reversed and held that “Missouri courts have uniformly held that a police officer, especially if he or she did not witness the accident, cannot offer an opinion as to the fault of the accident.” Khan v. Gutsgell, 55 S.W.3d 440, 443 (Mo. App. E.D. 2001). This is because a jury will likely give undue weight to an officer’s assessment of fault in a traffic accident. Id. This rule applies regardless of whether the officer is testifying as an expert witness or not. Stucker v. Chitwood, 841 S.W.2d 816, 819-20 (Mo. App. S.D. 1992). The appellate Court held that the officer’s opinions and conclusions were not fact testimony of what he personally observed at the scene. The Court also found that the testimony materially affected the outcome of the trial, as the case law recognizes an officer’s opinion testimony and fault in an accident will likely be given undue weight and to significantly influence the jury’s resolution on the issue of liability. Khan, 55 S.W.3d at 443; Stucker, 841 S.W.2d at 820.
Plaintiffs Valerie Hawkins and Janice Patterson brought suit against the Community Bank of Raymore, in the U.S. District Court for the Western District of Missouri. Both women were married to members of PHC Development, LLC, and they each were required to sign as personal guarantors in order for their husbands’ business to obtain approximately $2 million in commercial loans. PHC defaulted under the loans, and Community Bank of Raymore sought to enforce the terms of the agreements, including seeking remedies against the spousal guarantors. Hawkins and Patterson filed suit, alleging that the bank violated the Equal Credit Opportunity Act (ECOA), which makes it unlawful for a creditor to discriminate against a credit applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, gender, age, or marital status.
The bank required Hawkins and Patterson to sign as guarantors in order for PHC to obtain the loans. For that reason, Hawkins and Patterson claimed that the bank discriminated against them based upon their marital status, as they would not have been required to sign as guarantors had they not been married. The bank argued that the ECOA only protects credit applicants, and since the guarantors had not applied for credit in their individual capacities, they were not protected under the Act. The federal district court agreed with the Bank’s rationale, granting summary judgment in its favor. The 8th Circuit Court of Appeals upheld that decision, and the U.S. Supreme Court granted review.
Court observers expecting a definitive ruling on whether a spousal guarantor has standing to sue under the ECOA, and whether the definition of “applicant” under the ECOA should be broadened to include non-borrowing guarantors, were disappointed. With Justice Antonin Scalia’s chair still vacant, the even-numbered Supreme Court issued a concise, 4-4 split Opinion, thus affirming the Court of Appeals decision in favor of Community Bank of Raymore. Had the decision been reversed, Missouri lenders could have expected increased litigation under the ECOA, and credit may have become less accessible to small business owners without the lenders’ added protection and security through obtaining spousal guarantors for loans.
The decision issued by the Supreme Court may be found here.
In Dodson v. Ferrara, Mercy Clinic Heart and Vascular, LLC, the Missouri Supreme Court heard an appeal by both Plaintiffs and Defendants from the circuit court of St. Louis County. The wrongful death action was brought by the family of Shannon Dodson against defendant health care providers, Dr. Robert Ferrara and Mercy Clinic Heart and Vascular, LLC, after Shannon Dodson died from a dissection of her left main coronary artery during a cardiac catheterization. The original jury verdict totaled $1,831,155 for economic damages and $9 million for noneconomic damages. The trial court reduced the noneconomic damages to $350,000, pursuant to Mo.Rev.Stat. §538.210.
On appeal, Plaintiffs argued that the statutory cap on noneconomic damages does not apply in wrongful death cases under Watts v. Lester E. Cox Medical Ctr., 376 S.W. 3d 633 (Mo. banc 2012), and that the cap violated constitutional rights of the right to trial by jury, equal protection or separation of powers provisions under both the Missouri and United States Constitutions. In holding the noneconomic damages cap in Mo.Rev.Stat. §538.210 is constitutional, as applied in wrongful death cases, the Missouri Supreme Court discussed the distinction between a common law claim for personal injury and a statutory claim for wrongful death.
The Court majority reasoned that Watts was not controlling because the personal injury claim asserted by plaintiff in Watts was recognized at common law and “not subject to legislative limits on damages” in 1820. Thus, in Watts, the statutory cap did violate right to trial by jury in the medical malpractice actions alleging common law personal injury claims. But in Dodson, the Plaintiffs brought a claim for wrongful death, which was not a claim recognized at common law in 1820 in Missouri, but was instead a statutory creation subject to statutory caps and limitations. See Sanders v. Ahmed, 364 S.W.3d 195 (Mo. banc 2012).
The Missouri Supreme Court also held that the statutory cap does not violate equal protection, because the damages cap in Mo.Rev.Stat. §538.210 has been found to be rationally related a legitimate state interest (i.e. “reduce perceived rising medical malpractice premiums and prevent physicians from leaving ‘high risk’ medical fields”). See also Adams v. Children’s Mercy Hospital, 832 S.W.2d 898 (Mo. banc 1992). Moreover, the statutory cap does not violate the separation of powers as required by Article II, section 1 of the Missouri Constitution, because the legislature created and had the authority to create the wrongful death cause of action and the cap does not “impinge on the judicial power of remitter.”
The dissenting judges questioned whether the statutory damages cap was, in fact, rationally related to a legitimate interest, and would have held that the constitutional right to a jury trial includes statutory wrongful death actions, due to the analogous nature of a wrongful death claim to those recognized at common law.
In March of 2015, BSCR discussed the possibility of statutory caps making a comeback through Senate Bill No. 239. BSCR then informed readers, in May of 2015, that both the Senate and House Bill had passed, which limited non-economic damages in medical negligence claims to $350,000. This reflects and supports the Dodson Court’s decision. However, while non-economic damages for wrongful death claims may be capped and constitutional today, there is always the possibility that future legislation could once again alter the cap landscape.
A summary of the Dodson case can also be found here.
Supreme Court of Missouri Holds Patient's Family Could Not Sue Physician for Wrongful Death, but Patient's Personal Representative Could Have Brought Action for Medical NegligenceApril 19, 2016 | John Mahon, Jr.
Mickels, et al. v. Raman Danrad, M.D., 436 S.W.3d 327 (Mo.banc April 19, 2016)
The Supreme Court of Missouri vacated a trial court’s grant of summary judgment in favor of a physician and remanded the case, because the allegations in the petition stated a cause of action for medical negligence that would have been actionable under § 537.020, RSMo (Missouri’s “survivorship” statute) if brought by the patient’s personal representative.
The deceased patient’s family members brought a wrongful death action against Dr. Danrad, alleging Dr. Danrad failed to timely diagnose a brain tumor that was both terminal and incurable. After undergoing surgery, the patient died of the brain tumor on June 12, 2009, approximately four months after diagnosis. The plaintiffs alleged, had Dr. Danrad timely diagnosed the tumor two months sooner, the patient would not have died on June 12, 2009. The plaintiffs’ oncology expert testified at trial that the patient would have lived an additional six months on average had the tumor been diagnosed two months sooner.
Dr. Danrad moved for summary judgment on the ground that the plaintiffs had not pleaded, and could not prove, facts showing that his alleged negligence resulted in the patient’s death, as a required by § 537.080 (Missouri’s wrongful death statute). The trial court agreed, entering judgment dismissing the petition. The plaintiffs appealed.
On appeal, the Supreme Court of Missouri agreed that the patient’s death was not caused by Dr. Danrad’s negligence, and that the plaintiffs could not sue for wrongful death under § 537.080. After reviewing cases from several state supreme courts outside of Missouri, the Court found that every court to address the issue reached the same conclusion.
Despite finding the plaintiffs could not maintain an action for wrongful death, the Court found that Dr. Danrad’s alleged negligence may have injured the patient, and thus the alleged negligence was actionable under § 537.020 (Missouri’s “survivorship” statute). This statute provides that causes of action, other than those resulting in death, “survive” the decedent’s demise, and may be brought by the decedent’s personal representative. This is not to be confused with a claim for “lost chance of survival”, which the Court found did not apply because all parties conceded the patient would not have survived the brain tumor regardless of Dr. Danrad’s alleged negligent failure to timely diagnose.
In reaching its holding, the Court stated that its approach “keeps the question of the time and date of the decedent’s death out of the causation analysis, and confines it to the damages analysis where it belongs.” The Court vacated the trial court’s judgment and remanded the case.
In his dissent, Judge Richard Teitelman disagreed with the concept that a terminally ill person can never suffer a wrongful death. He found this concept inconsistent with the purpose of the wrongful death statute, which is to provide compensation to bereaved plaintiffs for their loss, ensure that tortfeasors pay for the consequences of their actions, and deter negligent acts that may lead to death. He found the result of the majority’s opinion is to effectively immunize tortfeasors from wrongful death liability when they kill the terminally ill. Judge Teitelman stated: “There is nothing in the plain language of the wrongful death statute that compels the conclusion that a physician who negligently causes the premature death of a patient is immunized from wrongful death liability because, by a stroke of perverse luck, the patient also suffers from a terminal illness.” Judge Teitleman also disagreed with the majority opinion’s reliance on cases from the states of Florida, Ohio and Iowa that were decided 30-83 years earlier.
This case provides potentially important considerations for medical negligence cases involving an alleged failure to timely diagnose disease in the terminally ill. The distinction between remedies (wrongful death statute vs. survivorship statute) is important because there are significant differences between the two in terms of who may sue, the applicable statute of limitations, the damages available, and possibly other considerations as well.
Appellate briefing requirements in Rule 84.04 are mandatory and any failure to follow them may lead to dismissal. Appellant Steele’s brief lacked any legal argument to support her claim of reversible error, as required by Rule 84.04(d)-(e). The brief failed to cite even a single case and “completely fail[ed] to show how the principles of law interact with the facts of the case.” As such, appellee was left to infer and guess as to what Steele’s legal claims actually were. Identifying this practice as “unacceptable,” the Court stated that it was unwilling to attempt to decipher and supplement her arguments; doing so would place the Court in the position of being Steele’s advocate. Steele’s appeal was therefore dismissed. Sharon E. Steele v. Schnuck Markets, Inc., Case No. ED102653 (Mo.App. April 12, 2016).
Bottom line: follow the Rules.
In Woods v. Cory, plaintiffs filed an action alleging injuries from an auto accident. Defendant moved for summary judgment and argued the motion on February 18, 2003. The court ordered that if the case was not settled by March 5, 2003, it would rule on the pending motion. Three days later, plaintiffs’ attorney asked for a settlement offer from Defendant. On February 25, 2003 Defendant faxed a written offer of $35,000 to settle. The letter contained no time limit for acceptance of the offer.
On February 28, 2003, the court entered summary judgment in favor of defendants on all claims. All parties received a copy of the court’s order on March 3, 2003. On March 12, 2003, plaintiffs’ attorney accepted the defendant’s settlement offer. Later that same day, defendant’s counsel faxed a letter stating defendant was no longer interested in settlement.
Plaintiffs’ counsel moved to enforce the settlement. In enforcing the settlement, the court explained the basics of contract law, as applied to settlements:
Inherent in the offeror's power as master of his offer is the power to insist that the offer may terminate upon the occurrence of a condition and that it may only be accepted in accordance with the conditions stated by it. When an offer is made and no time limit is specified as to the time to accept the offer and the duration of the power of acceptance is not stated, then it is deemed that the offer is open for a reasonable period of time. The resolution of what is a reasonable time is a question of fact to be determined by the trier of fact. There is no contract until acceptance of an offer is communicated to the offeror. An offeror may withdraw his offer at any time before acceptance and communication of that fact to him. To be effective, revocation of an offer must be communicated to the offeree before he has accepted.
Woods, 192 S.W.3d at 459 (internal citations omitted). The court held that because defendant’s offer to settle did not contain any condition that it be accepted before the trial court ruled on Defendant’s pending motion or that it be accepted within any particular period of time, acceptance occurred on March 12, 2003. Thus, the court enforced the parties’ settlement agreement.
 192 S.W.3d 450 (Mo.App.S.D. 2006).
In Lackey, the respondent learned this lesson the hard way. The trial court had granted summary judgment in favor of a school district and a teacher who were sued for negligence by a student who injured his wrist in gym class. The student appealed. The Court of Appeals affirmed the grant of summary judgment to the school district, agreeing with the trial court that the evidence presented by the student on summary judgment was not enough to establish waiver of sovereign immunity.
But the outcome was different for the teacher. In support of his summary judgment motion, the teacher submitted a two-page statement of uncontroverted facts pursuant to Rule 74.04(c), but cited facts found outside of that document to establish his immunity defense. The Court of Appeals found that these facts were not part of the summary judgment record, and, therefore refused to consider them. Thus, based on the limited record submitted by the teacher, the Court found inadequate support for the teacher’s immunity defense, and reversed the trial court’s grant of summary judgment.
The lesson for practitioners is clear: when filing a motion for summary judgment, open the rule book to Rule 74.04(c), and follow it explicitly.
Missouri Senator Ron Richard (R) has introduced Senate Bill 793 which, if passed, would heighten the requirements for a claimant under the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.025, et seq. (the MMPA). In its current text, the MMPA has allowed courts broad discretion in qualifying certain transactions under the act and in awarding seemingly excessive damages for MMPA claims. The proposed change to the law adds a heightened threshold for causation and proof of damages.
Currently, the MMPA states, in pertinent part:
“Any person who purchases or leases merchandise primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by section 407.020, may bring a private civil action in either the circuit court of the county in which the seller or lessor resides or in which the transaction complained of took place, to recover actual damages. The court may, in its discretion, award punitive damages and may award to the prevailing party attorney's fees, based on the amount of time reasonably expended [ . . . ].”
Among the most problematic aspects of the MMPA for companies doing business in Missouri are its lax causation requirements (e.g., a plaintiff need not show that he relied on a misrepresentation in order to state a claim), and the availability of punitive damages that are limited only by Missouri’s general tort cap on punitive damages and constitutional due process considerations.
SB793 adds the following requirements in order to assert a civil action for recovery under the MMPA:
“A person seeking to recover damages shall demonstrate that he or she acted reasonably in light of all the circumstances and establish his or her individual damages with sufficiently definitive and objective evidence to allow the loss to be calculated with a reasonable degree of certainty. The damages shall be measured by the person’s out-of-pocket loss, which shall be defined as an amount of money equal to the difference between the amount paid by the consumer for the good or service and the actual market value of the good or service that the consumer actually received. In order to recover damages under this section, each person shall be required to prove that the method, act, or practice declared unlawful by section 407.020 caused him or her to enter into the transaction that resulted in his or her damages.”
The revised statute would also set a more certain accrual date for a cause of action under the MMPA, which is significant, since a claimant under the MMPA enjoys a five year statute of limitations. The proposed legislation further sets forth that “a cause of action under this section accrues on the date of the purchase or lease described in the first sentence of this section.” Thus, the only actions taken by a business that would give rise to a claim under the MMPA would be actions taken during or before the initial purchase, agreement, or transaction.
Another significant aspect of the bill is that class action plaintiffs would no longer be able to assert a claim for punitive damages under the MMPA.
While, on its face, the bill does not appear drastically different than the current law, the legislation could significantly limit the scope of the MMPA as well as the prospective damages for such a claim. Financial institutions would no longer face a never-ending threat of MMPA litigation in connection with their continued servicing or collection of a loan, as any claim arising more than five years after the initial transaction would be time-barred. Further, the proposed legislation would add the “reasonable reliance” requirement of many jurisdictions’ comparable consumer protection laws, requiring a claimant to demonstrate a connection between the defendant’s purported misrepresentation or omission and some action on the claimant’s part, to his or her detriment.
Identical legislation was proposed in Missouri in 2015, but the bill never made it out of committee. Providers of consumer goods and services in Missouri, as well as their counsel, should stay tuned for updates in this proposed legislation, which would help protect such businesses from frivolous litigation and disproportionate verdicts. Missouri consumers may be held to a standard of reasonableness, once and for all.
On appeal, the Missouri Court of Appeals, Western District, first discussed the nature of third-party harassment claims and the MHRA. Under the MHRA, only an employer, which is defined as “any person employing six or more persons within the state, and any person directly acting in the interest of an employer,” can be held liable for an unlawful employment practice that discriminates on the basis of sex. An employer can be held liable under either a theory of vicarious liability (i.e. when the harasser is a supervisor of the harassed employee) or under a theory of negligence in allowing a hostile work environment to grow (i.e. a non-supervisory employee or third-party is the harasser).
In this case, Plaintiff sued on the second theory, negligence in allowing a hostile work environment to grow, which, as the Court pointed out, turns the analysis to “evaluating the adequacy of the employer’s response” once the employer is made aware of the harassment. The Court also recognized that an employer has a duty under both Title VII and the MHRA to maintain a discrimination-free work environment and breaches this duty if the employer knows or should have known of the discrimination and fails to take remedial action. When a plaintiff brings suit based on this second theory under the MHRA, punitive damages may also be assessed if he or she provides clear and convincing proof of a wanton, willful, or outrageous mental state or reckless disregard so that an evil motive may be inferred.
The Court agreed with Defendants that AutoZone, Inc. had no liability because it was not Plaintiff’s employer for purposes of the MHRA. The Court discussed Missouri’s multi-factor test, the modified economic realities test, which is used in the context of an MHRA claim to determine whether an entity may be properly considered an employer under the MHRA. The factors of this test are as follows:
- Who was responsible for establishing policies and training employees concerning harassment?
- Who was responsible for receiving, investigating, and responding to harassment complaints?
- Who had the power to discipline employees who may have failed to comply with anti-harassment policies?
However, the Court of Appeals did find that Plaintiff made a submissible case for sexual harassment, because she established that:
- She was a member of a protected class;
- She was subjected to unwelcome sexual harassment (at least two customers sexually harassed her);
- The harassment was based on her sex;
- This harassment affected a term, condition or privilege of employment in a manner sufficiently severe to create an abusive work environment; (i.e. the repeated harassment created an intimidating, hostile, or offensive working environment); and
- Defendant AutoZoners, LLC (the employer) knew or should have known of the harassment and failed to take proper remedial action (Plaintiff told two supervisors multiple times about the harassment, as well as HR, but to no avail).
- The trial court did not err in failing to submit vicarious liability as an element in jury instructions, because Plaintiff’s claim was under the second theory of negligence for allowing a hostile work environment to grow rather than the first theory of vicarious liability.
- The trial court did not err in refusing to reduce the award of compensatory damages, because the award was supported by ample and sufficient evidence of both tangible and intangible (i.e. emotional harm) damages.
- Punitive damages were appropriate against AutoZoners, LLC and did not violate Due Process, because Plaintiff met her burden of providing clear and convincing proof of a culpable mental state or reckless disregard evidencing evil motive on the part of the employer and the award was not “grossly excessive” under the BMW of N. Am., Inc. v. Gore factors. Furthermore, the punitive damages award did not exceed the statutory cap provided by Mo. Rev. Stat. 510.265.
Appeals Court Affirms Summary Judgment in Favor of Landowner on Premises Liability Claim, Allows Negligence Claim to go ForwardNovember 30, 2015 | John WattIn Woodall v. Christian Hospital N.E., the Missouri Court of Appeals for the Eastern District affirmed that a landowner does not owe a duty to prevent injury to invitees when the landowner relinquishes possession and control of the premises to an independent contractor during a period of construction. The court held (reaffirming the case of Matteuzzi v. Columbus Partnership L.P., 866 S.W.2d 128, 132(Mo. banc. 1993)) that under such circumstances where a landowner has permitted a contractor to take over the land/property, the landowner is no longer considered the possessor of the land and is therefore relived of potential liability for injuries caused to invitees.
However, the court allowed a traditional negligence claim to go forward against landowner Christian Hospital based on the theory that thy were negligent in allowing a handrail to be removed, causing Woodall to fall and become impaled on an exposed handrail support bracket. “Whether [Christian Hospital’s] conduct breached a duty of care to Woodall is a question of fact.” Thus, Woodall could pursue his claim against Christian Hospital for negligence, but the hospital was relieved of premises liability claims. The court stated that the claims of general negligence arose out of the hospital’s alleged negligent conduct in removing the handrail and thus summary judgment is inappropriate where there are unresolved issues of material fact affecting liability.
In Owens v. Missouri State Board of Nursing, the Missouri Court of Appeals for the Western District determined that the Missouri State Board of Nursing should not have revoked Jeannie Owens’ nursing license because driving while intoxicated was not a crime of moral turpitude or a crime reasonably related to her ability to practice as a nurse. Because no Missouri court had yet to answer this question, the Western District based its decision on rulings from courts in Alabama, Vermont, Tennessee, California, South Carolina, Texas and Indiana. After analyzing the reasoning of the courts in those other states, the Western District found “persuasive [those] cases holding that driving while intoxicated is not a crime of moral turpitude, especially when dealing with a first offense and a conviction as a misdemeanor.”
FACTS OF THE CASE
On May 14, 2009, contrary to the prescription instructions, Jeannie Owens took two muscle relaxer pills and an antibiotic before driving to work. When she pulled into the parking lot, she began to feel dizzy and hit another car. According to the police report, the responding officer found Ms. Owens’ car parked “on top of” the other vehicle and noted that Ms. Owens’ clothes were on inside out and backwards and that she was confused and unable to understand questions. On January 4, 2011, Ms. Owens pled guilty to one Class B misdemeanor count of “driving while intoxicated – drug intoxication.” Ms. Owens’ guilty plea was her first conviction for driving while intoxicated.
Over two-and-half years later, the Missouri State Board of Nursing filed a complaint against Ms. Owens. Following a hearing, the Board issued its Findings of Fact and Conclusions of Law. The Board determined that the guilty plea was sufficient cause to take disciplinary action and that “[a] nurse in an impaired condition is a danger to herself and her patients.” The Board concluded that the “appropriate level of discipline for Owens was revocation of her nursing license ‘in order to safeguard the health of the public.’” Shortly thereafter, Ms. Owens filed a petition for judicial review of the Board’s decision. The Circuit Court reversed the Board’s decision, and then the Board appealed that reversal.
REASONING OF THE COURT OF APPEALS
Under Missouri law, the Board is empowered to determine discipline for a licensed nurse if the Board possesses certified records for an offense involving the qualifications, functions, or duties of a nurse or for an offense involving moral turpitude. MO.REV.STAT. § 335.066.16(1)(a). In reaching the decision to revoke Ms. Owens’ license, the Board concluded that her DWI “was an offense involving moral turpitude and involving the qualifications, functions, and duties of a nurse.”
On appeal, the Western District noted that the definition of “moral turpitude” is “an act of baseness, vileness, or depravity in the private and social duties which a” person owes to society. After examining the definition of the phrase, the court concluded that “driving while intoxicated is irresponsible,” there was nothing “in this case that suggests that Owens committed an act of ‘baseness, vileness or depravity.” The court also determined that “nothing within the offense of driving while intoxicated relates to or is connected or linked to the qualifications, functions, or duties of a nurse.” Thus, the court concluded that the Board overstepped its authority when it revoked Ms. Owens’ license.
Although the Owens court declared that driving while intoxicated is not a crime of moral turpitude, it nonetheless left open the possibility that driving while intoxicated could still be grounds for the Board to revoke a nurse’s license. The court specifically noted that such an offense could implicate other provisions of MO.REV.STAT. § 335.066.2.
Additionally, the court noted that Ms. Owens was a first time offender and that hers was a misdemeanor conviction. The Owens court did not make any pronouncements about whether a felony conviction or repeated convictions could qualify as crimes of moral turpitude. Thus, the court left open the possibility that a felony conviction or a conviction for repeated DWI offenses might qualify as a crime of moral turpitude.
In 2005, the Missouri legislature revised Mo. Rev. Stat. § 538.225 in an effort to reform Missouri’s tort laws. Since 2005, the statute has required a court to dismiss a lawsuit if a plaintiff fails to file the required affidavit with his or her petition. Section 1 of the statute directs a plaintiff, who brings a medical malpractice lawsuit for damages for personal injury or death, to file an affidavit advising the court that the plaintiff has sought and obtained a written opinion from a qualified health care provider regarding the lawsuit. That affidavit must further contain an opinion from the legally qualified health care provider stating its belief that the defendant health care provider breached the applicable standard of care for a reasonably prudent and careful health care provider, resulting in the damage set forth in the plaintiff’s petition.
In their original lawsuit, Plaintiffs in Lang v. Goldsworthy previously filed the required health care affidavit, but they voluntarily dismissed that case after more than two years of litigation. But curiously, when the Plaintiffs later re-filed the same case in the same court, they failed to attach the health affidavit pursuant to Mo. Rev. Stat. § 538.225. In that second case, Plaintiffs acknowledged their failure to file the affidavit, but challenged the statute as an unconstitutional bar to their access to the courts, a violation of their right to a trial by jury, and as an impermissible special law. The trial court granted the Defendants’ motion to dismiss for failure to file the health care affidavit. Although the trial court dismissed the second case without prejudice, the Plaintiffs were barred from re-filing the case in a third lawsuit in that court due to the running of the three-year statute of limitations for wrongful death claims set forth in the savings provision of Mo. Rev. Stat. § 537.100. Plaintiffs therefore appealed.
On appeal, rather than assessing the constitutional validity of the statute, the Missouri Supreme Court in Lang v. Goldsworthy declined Plaintiffs’ invitation and instead honed in on the real issue before the court: Plaintiffs’ own failure to attach the required health care affidavit to their petition. In a 5-2 opinion, the Court made clear that Plaintiffs could have avoided a dismissal of their second lawsuit by diligently ensuring that they were complying with the law. Two dissenting judges argued that the majority should have addressed the plaintiffs’ constitutional arguments against the statute, in that it restricted their access to the courts to seek compensation for the alleged wrongful death of their family member.
The Supreme Court decision, on its face, appears to clearly put an end to plaintiffs’ claims in this matter. Yet, Plaintiffs’ attorney claims there is still an open door for Plaintiffs to refile the case, on the theory that neither Plaintiffs nor the Court, at the time of dismissal of the second case, knew of any authority preventing Plaintiffs from refiling the case. But it seems highly unlikely that the courts will allow these plaintiffs a third bite at the apple.
Lang v. Goldsworthy, 2015 WL 5936587 (Mo.banc. October 13, 2015)
The Supreme Court of Missouri affirmed a trial court’s decision to dismiss a wrongful death action premised on medical malpractice because the plaintiffs failed to file the health care affidavit required by § 538.225, RSMo.
The plaintiffs were several family members who filed a wrongful death action alleging the negligent chiropractic services of the health care provider defendants caused the death of their relative. In the first lawsuit, the plaintiffs timely filed a health care affidavit pursuant to § 538.225. After two and one half years of litigation, the plaintiffs voluntarily dismissed the case.
The plaintiffs timely re-filed an identical petition in the same court, but failed to attach the health care affidavit to their new petition. The defendants filed a motion to dismiss the second case for failure to file the health care affidavit. In response, the plaintiffs acknowledged they had not filed the health care affidavit in the second case, but argued that § 538.225 unconstitutionally barred their access to the courts, violated their right to a trial by jury, and constituted an impermissible special law. The trial court dismissed the action, without prejudice. Due to the passage of time and the three-year statute of limitations governing wrongful death claims, the plaintiffs were prohibited from re-filing their claims in a third suit. Therefore, they appealed.
On appeal, the plaintiffs asked the Supreme Court of Missouri to determine the constitutional validity of § 538.225. Interestingly, the Supreme Court side-stepped the constitutional challenge to § 538.225, because it found plaintiffs’ own inaction, rather than § 538.225, prevented the plaintiffs from re-filing a third petition.¹That is because the plaintiffs could have avoided dismissal had they stapled the affidavit already in their possession to their petition in the second case. Further, it was the one-year savings provision of § 537.100, rather than § 538.225, that was a procedural bar to the re-filing, and the plaintiffs did not challenge the constitutional validity of that section.
Section 538.225 requires plaintiffs to file a health care affidavit in every medical negligence action, without exception. Because the plaintiffs failed to re-file the affidavit in the second case, they failed to comply with the statute. Therefore, the Supreme Court affirmed the trial court’s dismissal.
This case is significant for health care provider defendants in Missouri because it demonstrates the mandatory nature of the statutory health care affidavit requirement for medical negligence actions and the courts’ willingness to uphold it.
¹The Supreme Court noted it previously upheld a prior version of § 538.225 against a constitutional challenge (the legislature amended the statute in 2005 to require mandatory dismissal for failure to file the health care affidavit).
Just a few short years ago, the Missouri Supreme Court upheld the wrongful death damage cap of $350,000 in noneconomic damages in medical malpractice cases. Sanders v. Ahmed, 364 S.W.3d 195 (Mo. 2012). The Court found that the Missouri legislature’s sweeping 2005 “Tort Reform” bill met constitutional muster in this context because it was modifying a statutory provision that was created in 1855, years after the Missouri constitution was adopted in 1820. As such, the legislature was free to change the scope of the statute as it saw fit.
Shortly after the Sanders ruling, the Missouri Supreme Court largely abrogated the medical malpractice damage cap in other medical negligence cases that were based on common law principles. Watts v. Cox Medical Centers, 376 S.W. 3d 633 (Mo. 2012). The court found its justification in the Missouri Constitution’s guarantee of a “right of trial by jury”. The court interpreted this guarantee to bar the legislature from imposing limits on common law claims that existed when the Missouri Constitution was adopted in 1820.
Although a cursory reading of these two cases, decided within months of each other, shows a logical basis for the seemingly inequitable results, yet another wrongful death case has been transferred to the Missouri Supreme Court for clarification. In Dodson et al. v. Mercy Hospitals East Community et al., ED100952, the Eastern District Court of Appeals transferred the appeal of a $10.8 million wrongful death verdict which contained a non-economic damages component of $9 million. Despite the Eastern District’s rejection of any argument that Watts somehow overruled Sanders, the court was concerned about possible violation of state and federal equal protection guarantees.
This transfer is even more intriguing in light of the new Missouri noneconomic damage caps that are set to begin on August 28, 2015. This bill was intended to “restore” a version of the 2005 caps, but with changes that would allow the bill to withstand judicial scrutiny. The new caps will have a two-tiered system. The first tier of damage caps is $400,000, which would apply to a typical medical negligence case. In cases that are either “catastrophic” or led to a patient’s death (wrongful death actions), the cap rises to $700,000. In addition, the caps would grow by 1.7% each year.
The Missouri Supreme Court’s decision in Dodson will soon provide additional clarity regarding the legislature’s right to modify causes of action created by statute. Although it may not give much guidance as to the constitutionality of the new damage caps, we can all be assured that a new case will come along that will again allow the court to tackle this hotly contested issue.
The Missouri Court of Appeals Upholds a Significant Award of Punitive Damages in an Employment Discrimination CaseJuly 28, 2015
In Ellison v. O’Reilly Automotive Stores, Inc., 2015 Mo. App. Lexis 318, the Missouri Court of Appeals, Western District, upheld a $2 million punitive damages award against an employer in a disability discrimination case brought under the Missouri Human Rights Act. Plaintiff sued O’Reilly Automotive Stores, Inc. as a result of a demotion from Store Manager to Parts Specialist. Plaintiff claimed his disability, myotonic dystrophy, was a contributing factor in the demotion.
After 11 years with O’Reilly, Plaintiff was promoted to Store Manager, a position he held for two years. During that time, Plaintiff’s store produced strong sales numbers and Plaintiff achieved a passing score on an annual audit geared towards evaluating a store manager’s operational leadership.
Nonetheless, Plaintiff received a performance review from his district manager with an overall rating of “needs improvement.” Plaintiff was subsequently disciplined several times including being issued a letter of concern and being placed on a 90-day probation period. The stated reasons for the negative review and subsequent disciplinary actions varied, but included concerns in areas like team member appearance, goal achievement, leadership, commercial sales, employee training compliance, customer service, and store appearance.
Among complaints that the District Manager made about perceived flaws in Plaintiff’s job performance, he also discussed Plaintiff’s disability. He noted that Plaintiff has been falling down in the store and customers have complained that they cannot understand Plaintiff’s speech. Thereafter, Plaintiff’s performance and “medical issues” were discussed between upper-level managers and with human resource personnel.
Plaintiff was ultimately demoted to a parts specialist position in October 2010. After the demotion, Plaintiff took a Fitness for Duty medical test and was cleared to perform any tasks that needed to be done in the store. Plaintiff filed suit and was awarded $200,000 in compensatory damages and $2 million in punitive damages. O’Reilly appealed.
The first issue on appeal was whether Plaintiff made a submissible case for punitive damages. Noting that to make a submissible case for punitive damages, a claimant is required to establish clear and convincing evidence of an intentional act with wanton, willful, or outrageous conduct, or with reckless disregard for the consequences of the act, the court found that Plaintiff met his burden. The court found it persuasive that each O’Reilly representative involved in the decision to demote Plaintiff knew of Plaintiff’s disability and considered it during discussions surrounding Plaintiff’s discipline and subsequent demotion. During trial, representatives of O’Reilly testified that they knew it was illegal to treat disabled employees differently regarding the terms or condition of their employment and that Plaintiff’s disability did not prevent him from performing his job duties as store manager. In fact, the position of a parts specialist was more physically demanding than the position of a store manager.
The court further held that O’Reilly’s stated reason for demotion being performance related was pretext, citing the employer’s changing reasons for taking action almost each time Plaintiff was disciplined, his store’s good sales results, and the fact that Plaintiff’s performance reviews were similar to the reviews of other store managers who were not demoted.
The second issue on appeal was whether the trial court erred in denying O’Reilly’s motion for a new trial. The trial in this case was bifurcated. In the first stage, the jury was to determine the liability for and amount of compensatory damages as well as whether liability existed for punitive damages. If the jury determined that liability existed for punitive damages in the first stage, then in the second stage, the jury would have to determine the amount of punitive damages.
The trial court instructed the jury that nine or more jurors must agree to return a verdict. Verdict A awarding compensatory damages and finding liability for punitive damages was signed by ten of the twelve jurors. Verdict B assessing the amount of punitive damages was signed by nine of the twelve jurors. However, two of the nine jurors who signed Verdict B did not sign Verdict A. O’Reilly argued that only seven of the jurors agreed both on the whether liability for punitive damages existed and the amount. For that reason, O’Reilly moved for a new trial arguing that nine jurors did not agree on both liability and damages.
The court rejected this contention, holding that in a bifurcated trial, if at least nine jurors agree on the liability and amount of compensatory damages as well as the existence of punitive damages, then in the second stage, any nine jurors can agree on the amount of the punitive damages. If this were not the rule, a juror who did not agree with liability cannot deliberate on the amount of damages, which would deprive litigants the right to a jury of twelve on all issues.
The last issue on appeal was the amount of punitive damages. O’Reilly argued that $2 million in punitive damages, which was 10 times the compensatory damages award, was excessive. The Court disagreed, citing the “outrageous” nature of the employer’s conduct.
Conclusion: This case serves as a reminder to employers that their exposure in employment cases can be remarkably high. Here, the court upheld a punitive damages verdict of 10 times the actual damages (the rule-of-thumb outer limit set by the U.S. Supreme Court in the State Farm and Gore v. BMW cases), in a case that involved a demotion, not a discharge. And in addition, prevailing plaintiffs in MHRA cases are entitled to an award of attorney’s fees.
"Top-level" employee protection from unreasonable discovery is extended to public employees in MissouriJuly 23, 2015 | Paul Penticuff
Counsel representing large companies and institutions in Missouri are quite familiar with the prospect that opposing counsel may attempt to gain leverage by threatening to depose, or subpoena to testify at trial, one or more high-level corporate officials. In most cases, however, high-level corporate officials’ knowledge is clearly lacking as to the pertinent facts and issues and thus protected from discovery (or trial testimony), for good cause shown. Considering the scope of discovery and the modern realities of litigation, this is a significant protection that shields top-level executives from harassing and unnecessary interrogation. Now, for the first time, a Missouri appellate Court has extended this protection to the public sector. Wilkins v. Koster, et al., 2015 Mo. App. LEXIS 639.
By way of background, the Missouri Supreme Court, in State ex rel. Ford Motor Co. v. Messina, has held that although litigants are permitted to depose top-level executives who have discoverable information, alternate methods of discovery may make a top-level deposition unnecessary if the purpose is outweighed by the annoyance, burden, and expense to take such a deposition.71 S.W.3d 602, 606 (Mo. banc 2002). Even if a top-level employee has discoverable information, the organization or its top-level employee may seek a protective order. The Messina Court held that a party seeking a protective order for top-level employee depositions has the burden of establishing good cause, and directed trial courts to consider: whether other methods of discovery have been pursued; the proponent's need for discovery by top-level deposition; and the burden, expense, annoyance, and oppression to the organization and the proposed deponent.
In June 2015, the Missouri Court of Appeals for the Eastern District extended these limitations on subpoenaing top-level executives for deposition to subpoenas for trial. Wilkins v. Koster, et al., 2015 Mo. App. LEXIS 639. In Wilkins, the plaintiff was terminated from his previous employment as an enforcement investigator in the Office of the Missouri Attorney General. He filed suit against the Office of the Missouri Attorney General and Attorney General Chris Koster, alleging discrimination and wrongful discharge. During pre-trial discovery, the plaintiff sought to depose Attorney General Koster. Defendants refused, and instead suggested plaintiff request a corporate designee deposition pursuant to Missouri Rule of Civil Procedure 57.03(b)(4). Plaintiff filed his Rule 57.03(b)(4) deposition notice, and defendants produced Attorney General Koster’s deputy chief of staff, who testified that Koster had no direct involvement in or firsthand knowledge of the events leading to plaintiff’s termination. Plaintiff then subsequently dismissed his claims against Attorney General Koster. Prior to trial, plaintiff subpoenaed Attorney General Koster to testify, and defendants filed a motion for protective order and to quash the subpoena, pursuant to Missouri Rule 56.01, which provides the trial court may quash a subpoena for a deposition “if it is unreasonable or oppressive.” The trial court granted the protective order, the case was tried, and plaintiff appealed.
The Court in Wilkins held that the limitations upon a litigant’s right to subpoena top-level executives for deposition logically extended to subpoenas for trial, particularly when the scope of admissible evidence at trial is narrower than the scope of discoverable information. The Missouri Supreme Court has recognized that rank-and-file employees perform most tasks, while top-level employees are responsible for coordination and oversight. Thus, persons in lower positions within an organization often have more or better information. The Court reasoned that upon an appropriate showing, it served the interest of both the public and the litigants to shield top-level public employees from testifying in situations that are burdensome and largely unhelpful in deciding the issues in the lawsuit.
After Wilkins, top-level public employees can rest a little easier knowing that they will be afforded the same protections as their private sector peers. Attorneys representing public entities should be prepared to limit unnecessary inquiry of top-level civil servants and politicians, for good cause shown. Although most attorneys would not wish to waste time and money on witnesses who know nothing of the case at hand, this ruling limits the gamesmanship available in threatening busy top-level public employees with lengthy and unnecessary testimony. While the court has yet to completely define the scope of “top-level” employees in the public context, it is no longer an argument over whether the protection applies, it is only whether or not it applies to this particular public sector employee. The nuances of convincing the trial judge are well within the talents of most attorneys who are prepared to make their pitch.
The Eastern District of Missouri continues the trend of invalidating employee-employer arbitration agreementsJuly 14, 2015
In Bowers v. Asbury St. Louis Lex, LLC d/b/a Plaza Lexus, et al., the Missouri Court of Appeals for the Eastern District, in a race discrimination lawsuit, issued its latest ruling on employer-employee arbitration agreements. The court held that where an arbitration agreement gave the employer the sole right to modify its arbitration rules upon 30 days’ notice, the promise to arbitrate was illusory. As a result, the employer’s promise to arbitrate did not constitute valid consideration to support the Agreement.
In Bowers, Plaintiff signed an Agreement to Arbitrate and an Acknowledgement of Arbitration Rules upon being hired. The Arbitration Rules stated that Defendants could change the Rules to “reflect developments in the law and to ensure the continued efficiency of the arbitration process.” If a rule change was made, the Company was required to provide at least 30 days’ notice of the proposed change to all employees. The Rules provided that the employee could opt out of the proposed change, but failure to opt out was deemed acceptance of the change. Employees were not given the right to modify the Rules.
Plaintiff filed a Petition against Defendants in August of 2013 alleging race discrimination. Defendants filed a motion to stay the proceedings and compel arbitration requesting that the trial court enforce the Agreement to Arbitrate. The trial court denied Defendants’ motion to stay the proceedings and compel arbitration. Defendants’ appeal followed.
The Eastern District looked to the Missouri Supreme Court’s 2014 decision in Baker v. Bristol Care, Inc., for guidance. In Baker, the Supreme Court held that the employer’s promise to arbitrate was illusory because the arbitration agreement provided that the employer “reserves the right to amend, modify, or revoke this agreement upon (30) days’ prior written notice to the Employee.” Defendants asserted that Baker was distinguishable because, unlike the employer in Baker, Defendants did not retain the unilateral right to modify the Agreement. However, Defendants did retain the right to modify the Arbitration Rules. In line with the Baker decision, the court held that the Defendants’ right to modify the Rules rendered Defendants’ promise to arbitrate illusory.
Ultimately, the Bowers decision sends yet another strong message to employers seeking to implement and enforce employee arbitration agreements, that a unilateral right to modify any portion of the arbitration process will be heavily scrutinized and will most likely lead to a finding of lack of consideration, thereby invalidating the arbitration agreement.
View the full opinion here.
On June 17, 2015 a Jackson County, Missouri jury handed down a verdict exonerating both the Kansas City Royals, for alleged actions of their mascot Sluggerrr, and also baseball fan John Coomer of any liability for injuries sustained by Coomer in a September 2009 incident at Kauffman Stadium in Kansas City. The jury found that both parties had 0% fault for the incident.
Coomer alleged he suffered a detached retina when Sluggerrr allegedly tossed a foil-wrapped hot dog into the stands, striking Coomer in the eye. Coomer initially saw Sluggerrr throwing hot dogs, but briefly turned away before being struck in the face by a flying frankfurter, and could not definitively identify the source of the flying sausage.
The matter was first tried in 2010 and resulted in a defense verdict in which the jury found Coomer to be 100% at fault. On appeal, the matter eventually made its way to the Missouri Supreme Court where Coomer was granted a new trial. The Court ruled that being hit in the eye with a foil-wrapped hot dog was not the kind of “inherent risk” to attending a major-league baseball game that would bring the incident under the coverage of the so-called “baseball rule.” In instances where fans are injured at the ballpark by hazards outside the scope of the game, like a flying foil-wrapped hot dog, whether the case may proceed to trial will be considered on a case-by-case basis.
Unfortunately, Mr. Coomer apparently continues to experience problems. However, it does not appear that he intends to pursue a second appeal.
Some Inequality between the Parties to an Arbitration Agreement Does Not Render it Unconscionable When the Contract as a Whole Is Supported by Sufficient Mutual ConsiderationJune 16, 2015 | Robert Chandler
On May 26, 2015, the Missouri Supreme Court overturned a denial by the Circuit Court of Lincoln County, Missouri of an employer’s motion to dismiss or to stay and to compel arbitration in the case of Robert S. Eaton v. CMH Homes, Inc. No. SC94374. The Court ruled that the trial court erred in refusing to compel arbitration, because when determining whether consideration is adequate to support an arbitration agreement the trial court must look at the consideration given for the contract as a whole.
Robert Eaton entered into a contract with CMH Homes Inc. for the purchase of a manufactured home in 2009. The Eaton-CMH contract included an arbitration agreement. The arbitration agreement required Eaton to arbitrate all claims but gave CMH the option to bring suit in court for certain specified claims. The arbitration clause included an “anti-waiver” provision stating that CMH’s right to bring suit in court for the specifically identified claims did not constitute a waiver by either party to compel arbitration regarding any other dispute or remedy subject to arbitration in the contract.
CMH, pursuant to the contract, provided and installed the mobile home. In 2012, Eaton sued CMH over the sale of the manufactured home. CMH moved to dismiss or stay the court action and to compel arbitration based upon the arbitration provisions in the contract. The trial court overruled CMH’s motion, and CMH appealed.
Lack of Mutuality in an Agreement to Arbitrate Does Not Render an Agreement to Arbitrate Unconscionable.
On Appeal, Eaton argued that the differences between Eaton and CMH regarding the obligation to arbitrate rendered the agreement unconscionable. The U.S. Supreme Court has held that while the mere fact that a large company has utilized an arbitration provision in a consumer contract does not make it “unconscionable”, unconscionability is an allowed common law contract defense that state courts may recognize in determining whether an arbitration clause is valid. See AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1746, 1750 (2011).
Under Missouri law, an agreement is unconscionable where there is “an inequality so strong, gross, and manifest that it must be impossible to state it to one with common sense without producing an exclamation at the inequality of it.” Missouri courts will look at procedural and substantive aspects of the contract provisions in question as a whole to determine unconscionability. Noting that courts will look to a contract as a whole to determine whether adequate consideration is given for an agreement to arbitrate,, the Court held that, since both parties exchanged consideration for the entire contract as a whole, the “lack of mutuality” between the parties vis-a-vis the ability to bring suit rather than resort solely to arbitration did not render the arbitration provision void. Noting that an agreement to arbitrate lacks consideration when it is subject to unilateral change and the return promise purportedly made is effectively illusory, the fact that both parties exchanged consideration for the entire contract – Eaton paid the purchase price and CMS provided the mobile home – clearly placed this matter squarely outside the realm of unconscionability despite the lack of mutuality regarding the arbitration clause.
Although the Contract’s Waiver of Defenses Provision Is Unconscionable, This Does Not Void the Arbitration Provision Because the Unconscionable Provision Is Severable.
The Court additionally ruled that, although the “anti-waiver” provision in the contract was unconscionable, this did not void the arbitration agreement because it was severable. The Court ruled that the “anti-waiver” provision was unconscionable because it potentially placed Eaton into the untenable position, if CMH were to make claims against Eaton in Court, of submitting all claims, including counterclaims and affirmative defenses, to arbitration while CMH proceeded with claims against Eaton in Court, risking inconsistent results and precluding Eaton from asserting defenses to claims made in Court.
Severability of a contract clause depends upon the facts and circumstances of each case and depends largely upon the intent of the parties. The agreement at issue in this matter contained a severability clause, and Missouri courts will enforce these clauses when the provision at issue is “not a necessary part of the contract.”
The Court Also Disregarded Eaton’s Arguments That a Choice of Arbitrator Provision and The Contract, as a Contract of Adhesion, Voided the Arbitration Provision.
Arbitration agreements are not required to give both sides in equal roles in selecting an arbitrator. As long as the arbitrator selection process in the agreement protects against the selection of a biased arbitrator and does not prevent the parties from actually entering into the arbitration, it will not be disturbed by the Court.
Also, a contract with an “adhesive” or “take-it-or-leave-it” nature does not necessarily render an arbitration provision therein void. As long as adequate consideration is evident, as noted herein, the agreement will not be invalidated.
This ruling is notable in that, as long as an agreement to arbitrate is supported by sufficient mutual consideration as a whole, the imposition of different or unequal burdens and responsibilities under the agreement will not render it void.
You can read a previous post on arbitrability cases here.
In the case of Katina Piatt, et al. v. Indiana Lumberman’s Mutual Insurance Company, et al., SC 94364, the Supreme Court of Missouri affirmed summary judgment in favor of Indiana Lumberman’s Mutual Insurance Company, based on a policy exclusion that the plaintiffs unsuccessfully alleged was ambiguous, and should have been interpreted in their favor.
In a 6 – 1 decision handed down in April 2015, the Court held that the Commercial General Liability Policy unambiguously excluded coverage for injuries to an “employee” and that the underlying wrongful death suit against the company’s owner, its director and executive officer in the case could have only been brought against the employer. Accordingly, the Commercial General Liability insurer owed no duty to defend or indemnify the company owner for the claim.
In the underlying action, the survivors of a company employee brought a lawsuit following the death of their relative when a large steel door from a charcoal kiln blew over and crushed her to death. The plaintiffs alleged that the owner-director of the company was negligent in instructing his employees to lean the kiln doors upright despite knowing it was unsafe. The defendants asked Indiana Lumberman’s Mutual Insurance Company for indemnification and to provide a defense; the insurer declined to so. Following a trial the jury returned a verdict in the amount of seven million dollars against the company, the claim for coverage was assigned to the survivors and they brought a suit for breach under the commercial general liability and umbrella policies.
The Circuit Court applied the policy’s employee exclusions, which excluded from coverage work related injuries to employees, and granted summary judgment in favor of Indiana Lumberman’s. The opinion was affirmed by the Supreme Court, which held that the two insurance policies were intended to insure the company and its executive officer against liability for accidental injuries to the public, while specifically and unambiguously excluding liability coverage for employees.
Missouri Court of Appeals - Western District Upholds Missouri Statute Requiring Plaintiff to Submit a Health Care Affidavit of Merit in Support of a Medical Malpractice ActionMay 26, 2015 | John Mahon, Jr.
Austin v. Schiro, Slip Opinion, WD78085 (Mo.App. W.D. May 26, 2015)
The Missouri Court of Appeals, Western District, affirmed a trial court decision dismissing a plaintiff’s medical negligence action, without prejudice, for failure to comply with §538.225, RSMo, the statute requiring a medical malpractice plaintiff to file an affidavit stating plaintiff has obtained a written opinion from a qualified health care provider in support of the claim’s merit.
The plaintiff filed a medical negligence action in 2009 in the Clay County Circuit Court. In 2010, the defendant filed a motion to dismiss based on the plaintiff’s failure to file an affidavit of merit as required by §538.225. Before the court ruled on the motion, plaintiff voluntarily dismissed the lawsuit.
Nearly one year later, in 2011, plaintiff filed a second lawsuit with essentially the same allegations. Ninety days after the second petition was filed, plaintiff’s counsel filed a motion to extend the time for filing a health care affidavit. The motion was never brought before the trial court for a hearing, and the court never entered an order granting an extension of time. Plaintiff later filed a health care affidavit more than 90 days (but less than 180 days) after suit was filed.
The defendant filed a motion to dismiss the petition on the basis that plaintiff did not comply with §538.225, for plaintiff’s failure to timely file the health care affidavit. The court sustained the motion, dismissing the second lawsuit, without prejudice. Plaintiff appealed.
On appeal, plaintiff argued, despite the trial court’s failure to rule on his motion for an extension of time, he nevertheless timely filed the motion, established good cause for doing so, and then filed his health care affidavit within 90 days of the filing of the motion. The appellate court disagreed; finding plaintiff failed to obtain an extension of time from the trial court and failed to file the required affidavit within 90 days of filing the petition. The court noted the language of §538.225 to be unambiguous and mandatory, and the statute states that the court “shall” dismiss the action if a plaintiff fails to timely file an affidavit. So, absent an order granting an extension of time to file the affidavit, the plaintiff was required to file the affidavit within 90 days after the suit was filed. For that reason, the appellate court affirmed the trial court’s order dismissing the petition, without prejudice.
This case is one in a long line of Missouri appellate decisions upholding the health care affidavit requirement for medical negligence actions and strictly construing the unambiguous and mandatory statutory language.
On March 27, 2015, we informed our readers of the possibility that caps in medical malpractice damages might return to Missouri. As of May 7, 2015, caps are back in play. Recently, the House of Representatives passed the Senate damage cap bill by 125 to 27 vote, and sent it to Governor Jay Nixon for signature.
Because the Senate bill represented a compromise among the vast majority of interested parties, the Governor signed the bill into law, remarking on its bipartisan nature and the fairness in restitution to individuals injured by medical negligence in Missouri.
The bill limits non-economic damages in medical negligence claims to $400,000 unless the underlying injury meets the criteria of a “catastrophic case” including paralysis, brain injury, loss of two or more limbs, irreversible failure of one or more organ systems, and vision loss.
The new caps continue the previous legislation in that a claim for loss of consortium is melded into the plaintiff’s claim such that they are considered the same plaintiff, and only one cap applies. Likewise, the new law continues the limitation of one cap irrespective of the number of defendants limiting any medical negligence case to a maximum of $700,000 in non-economic damages irrespective of the existence of a loss of consortium claim or the existence of multiple defendants.
Also in this bill is an increase in the wrongful death cap on damages from $350,000 to $700,000, recognizing the catastrophic nature of death as a result of medical negligence.
Untouched are economic damages and they remain uncapped. This bill ends an anomaly that has existed in Missouri’s medical jurisprudence, whereby damages for an individual’s death were capped at $350,000, while negligence not leading to death remained uncapped. As a result, this bill will go a long way to giving some certainty to business entities dealing in medical care in Missouri while at the same time providing ample restitution for individuals and their families harmed by acts of medical negligence.
Supreme Court of Missouri Upholds 10-Year Statute of Repose for Foreign-Object Medical Malpractice ClaimsApril 28, 2015 | John Mahon, Jr.
Ambers-Phillips v. SSM DePaul Health Center, 2015 WL 1926012 (Mo.banc. April 28, 2015)
The Supreme Court of Missouri affirmed a trial court’s decision to dismiss a plaintiff’s foreign-object medical malpractice claim against a health care provider for leaving foreign objects in the patient’s abdomen during surgery almost 14 years earlier.
In 1999, the plaintiff was in a car accident and underwent an exploratory laparotomy at SSM DePaul Hospital. Nearly 14 years later, in 2013, she underwent another exploratory laparotomy at a different St. Louis-area hospital because she was having pain in her side. During the surgery, her physicians found four foreign objects that had been left inside her abdomen during the 1999 surgery. Plaintiff sued SSM DePaul in 2013, alleging medical malpractice.
The trial court dismissed plaintiff’s claims on several grounds, including that they were barred by §516.105, RSMo, the 10-year statute of repose for claims of medical negligence involving the leaving of foreign objects in the body. Plaintiff raised a constitutional challenge that the statute violated due process, equal protection, and the Missouri Constitution’s open courts and special legislation provisions, which the trial court denied. Plaintiff appealed directly to the Supreme Court of Missouri in light of the constitutional challenge to the validity of §516.105.
On appeal, plaintiff argued the trial court erred in not holding the 10-year statute of repose for foreign-object medical malpractice claims was equitably tolled until plaintiff discovered the wrong, analogizing to the tolling of certain statutes of limitations until the wrong has been discovered. The Supreme Court of Missouri disagreed, pointing out the differences between statutes of limitations, which may be subject to equitable tolling in certain circumstances, and statutes of repose, which are not. Statutes of repose begin to run on the date of the allegedly tortious act and provide an absolute deadline beyond which suit may not be brought. The court found that to toll a statute of repose would disregard its basic purpose – that of providing a final time limit beyond which suit is foreclosed.
The Supreme Court of Missouri reaffirmed its prior cases rejecting the plaintiff’s alternative argument that statutes of repose are unconstitutional if not subject to equitable tolling.
This case is significant for health care provider defendants because it confirms Missouri’s firm statute of repose for foreign-object medical negligence claims, regardless of the date of discovery of the wrong. The court’s analysis is also instructive on the legal differences between the purposes and characteristics of statutes of limitations vs. statutes of repose.
The Missouri Court of Appeals clarifies who will be considered a "sophisticated commercial entity", for purposes of enforcing contract language limiting liabilityApril 9, 2015
It has long been the general rule in Missouri that for a party to contractually release itself from or limit liability for its own future negligence, the language in the contract must be clear, unequivocal, conspicuous and must explicitly include the word “negligence” or “fault.” However, when the contract is negotiated at arm’s length between “sophisticated commercial entities”, a party can release itself from or limit liability with less precise language.
In National Information Solutions, Inc. (NISC) v. Cord Moving & Storage Co., NISC, a technology solutions company, entered into an agreement with Cord, a moving company, to move the contents of NISC’s warehouse. The contract limited Cord’s liability to $.30 cents per pound, per article and stated that if NISC wanted additional insurance, they should consult with their insurance carrier. During the move, an expensive copier was damaged and Cord paid NISC $450.00, which represented $.30 per pound for the damaged copier. NISC later sued Cord for the full amount of the copier. Cord argued that their liability was limited to $.30 cents per pound as stated in the contract. Furthermore, Cord went on to argue that because the agreement was between “sophisticated commercial entities”, the words “negligence” or “fault” did not have to be present in the contract to effectively limit future liability.
On appeal, NISC cited Village of Big Lake v. BNSF Railway Company, Inc., a 2014 Court of Appeals (Western District) decision, for the proposition that the critical issue is whether the parties “were sophisticated in the type of transaction” involved in the case, and argued that Cord had to prove NISC is sophisticated in the subject matter of the contact (, i.e., moving office equipment) to be considered a sophisticated commercial entity. Under this proffered rationale, NISC, a technology company, clearly was not experienced in moving office equipment and thus Cord could not limit its future liability without including the words “negligence” or “fault” in the contract.
However, the Court of Appeals for the Eastern District ruled that “type of transaction” could not be read so narrowly. After reviewing NSIC’s business practices, number of employees, revenues and the content of the negotiations, the Court held that NISC was experienced in this type of transaction with outside vendors, and thus properly considered a sophisticated commercial entity. NISC was a commercial business experienced in negotiating vendor agreements, and could not escape enforcement of the limitation on liability merely because it was “unfamiliar with moving contracts.”
This case is important in clarifying who will and will not be considered a “sophisticated commercial entity”, in determining the enforceability of language limiting a party’s liability for negligence. To be considered a sophisticated commercial entity, a party need not be sophisticated in the precise subject matter of the underlying transaction, only experienced in entering into transactions of that kind (e.g., vendor contracts).
For purposes of drafting a contract clause limiting future liability for negligence, even among sophisticated businesses, the most prudent course of action is always to include clear, unequivocal, conspicuous language that explicitly includes the word “negligence” or “fault.” This avoids ever having to get into a debate about whether the contract was between “sophisticated commercial entities”. But in business agreements where this has not occurred, it is comforting to know that the Missouri courts are taking a reasoned, common-sense approach as to whether the contracting parties meet this standard.
View the full opinion here.
In 2012, the Missouri Supreme Court ruled in the case of Watts v. Cox Medical Center that the previously enacted tort reform statutory cap on medical malpractice damages was unconstitutional as it violated a plaintiff’s right to trial by jury. In its explanation, the Court noted the existence of a common law claim for medical negligence prior to the State Constitution’s adoption in 1820. As a result, language in the Missouri Constitution rendered those claims “inviolate” and damages could not be limited by the legislature. From time to time, bills have been brought before the State bodies in an attempt to try and reinstate caps; however, no effort has been successful or serious until now.
Senate Bill No. 239 recently passed the Senate on a 28 to 2 vote setting up the real possibility that medical malpractice caps are coming back to Missouri. In an attempt to get around the reasoning set forth in the Watts, the legislators specifically set forth medical malpractice as a statutory cause of action replacing any common law cause of action. Based on the language of the Court’s interpretation of the Wrongful Death statute and the continuing application of caps to those cases, this should be enough to pass judicial review, at least on that issue.
A Jefferson City source informs us that the contents of the Senate Bill have been negotiated among all interested parties and that the Senate Bill represents a compromise either directly or tacitly agreed to by the major players on the issue. As a result, if the Bill should pass the House and land on the Governor’s desk, it will arrive there as a fully negotiated and compromised legislation. Because it has this support, the Bill has as good a chance as any for becoming law. At this point the Governor’s position on signing such a Bill is unknown.
Unlike the previous attempt at setting forth a cap in medical malpractice cases, Senate Bill No. 239 takes a different approach more along the lines of a worker’s compensation in that injuries are stratified and paid different amounts depending on their seriousness. For example a catastrophic personal injury defined as “quadriplegic, paraplegia, loss of two or more limbs, brain injury, failure of a major organ system or vision loss” is capped at $700,000 in non-economic damages. A “non-catastrophic” injury is capped at $400,000 in non-economic damages. Economic damages remain uncapped.
One of the primary concerns of the original tort reform bill was that the cap stayed at $350,000 without any mechanism for cost of living or CPI increases. In answer to this criticism, Senate Bill No. 239 is not a static, unchanging cap. The Bill allows for an increase in the amount of the cap by 1.7% per year.
As a side note, a bill attempting to reinstate caps was passed by the House about a week prior to Senate Bill No. 239. That bill’s only difference from the original tort reform bill was to set forth medical malpractice as a statutory cause of action. In the House version of the bill, the cap was set at $350,000 and no provision for increase or stratification of award was considered. There is no doubt that the House’s version of the Bill would not pass in the Senate.
At this point it is not clear what will happen next with the Senate Bill. However, it does show some promise for practitioners and their clients who are looking for caps on medical negligence damages.
Missouri Court of Appeals Weighs in on the Stringent Requirements of the Pre-Judgment Interest Statute, and Whether Partial Payment of a Judgment Waives the Right of AppealJanuary 27, 2015 | Peter Hoffman
For a defendant’s attorney in a personal injury case, it is not pleasant to contemplate issues of post-judgment interest and pre-judgment interest on a judgment entered against his client, when the amount of the judgment is Fourteen Million Dollars. In the recent case of Hawley v Tseona, before the Missouri Court of Appeals Western District, a defense counsel confronting these issues made some decisions that saved his client some money.
Hawley arose out of a two car accident on Interstate 70 in which the defendant had been engaged in racing with another driver at over 90 miles an hour, when he struck a vehicle driven by Greg Hawley, resulting in severe injuries to Hawley which led to his death a few hours later. Approximately one year after the accident, an attorney for several of the family members sent a settlement demand letter to the attorney for the defendant making settlement demands totaling $2 million. The settlement demands were not accepted.
By agreement, the case was tried to the court without a jury on July 30, 2012 at least in part because liability was admitted by the defendant. On December 18, 2012, the circuit court rendered its judgment of $14 million plus aggravating circumstances damages in the amount of $100,000. The Court also awarded prejudgment interest in the amount of $946,465.20 and also awarded post judgment interest which, in light of the amount of the judgment, amounted to an additional $718,000 per year in post judgment interest.
After the judgment by the trial court, but before he requested any post-judgment relief, defense counsel made a partial payment to the plaintiffs’ counsel, the amount of which payment as well as the circumstances surrounding it were not specified in the opinion. On appeal, defense counsel challenged the award of prejudgment interest because he contended plaintiffs did not comply with the prejudgment interest statute. Defendant also contended that the amount of the judgment by the trial court was excessive.
Plaintiff’s counsel contended on appeal that the partial payment by defendant’s counsel amounted to a waiver of the challenge of the prejudgment interest award. While it is possible to estop oneself from appealing a judgment by performing acts inconsistent with the appeal, defense counsel’s payment did not constitute such action according to the Court. Instead, such payment by the defendant was deemed to be applied only to pay off part of the judgment of actual damages, rather than paying any of the prejudgment interest. The Court of Appeals specifically ruled that payments to avoid post-judgment interest are considered involuntary and do not render an appeal moot. (Opinion at page 5).
Turning to the merits of the prejudgment interest challenge, it was admitted by both sides that the settlement demand letter did not include a list of the names and addresses of medical providers that had treated the decedent for his injuries and did not include written authorizations to allow defense counsel to obtain copies of those records. As such, Defendant contended that these failures violated the express terms of R.S. Mo. § 408.040. Plaintiffs contended that even though they did not strictly comply with the statute, the facts of the claim were such that it was obvious that a judgment for the plaintiffs could exceed the settlement demands. The Court of Appeals relied upon two earlier Missouri Supreme Court decisions for the propositions that 1) there must be strict compliance with the requirements of the prejudgment interest statute; and 2) that compliance was required even in the absence of a showing of prejudice to the defendant by failure to comply with the statutory requirements.
As a result, the Court of Appeals reversed that portion of the judgment awarding prejudgment interest to the tune of $946,465.20.
Practice Pointer: Although not a part of the decision, counsel faced with the dilemma encountered by the attorney for the defendant should make explicit to the plaintiff and to the court that any payment to cut off or reduce post-judgment interest is for that purpose and that purpose alone.
The Missouri Supreme Court upholds another pre-activity waiver, but factually-supported allegations of recklessness might defeat such waivers in other cases.December 29, 2014 | Peter Hoffman
The Missouri Supreme Court recently issued a new opinion which has significance to both proper summary judgment procedure and whether or not a pre-activity waiver of negligence is enforceable in the face of allegations of gross negligence or recklessness.
In De Cormier v. Harley–Davidson Motor Co. Group et al., the plaintiff participated in a course for new motorcycle riders, conducted by employees of codefendant Gateway Harley-Davidson. Before participating in the class, she signed a “Release and Waiver,” waiving any claims she might have in the future against any Harley-Davidson entity or dealer for injuries sustained in connection with her participation in the course, including any claims for negligence of Harley-Davidson or its dealers.
While she was on the course, plaintiff sustained injuries to her leg. She filed suit against both Harley-Davidson and Gateway alleging in Count One, Negligence and in Count Two, Premises Liability. Both defendants moved for summary judgment on the affirmative defense of release, based on the signed waiver. Plaintiff contended that Count II asserted claims of gross negligence and recklessness of the Defendants and therefore, as a matter of law, the release could not waive liability for gross negligence or recklessness.
The plaintiff supported her opposition to the motion for summary judgment with some evidence, but also by citing to allegations within the Petition. The Trial Court entered Summary Judgment on both Counts in a favor of both Defendants.
On appeal, the Supreme Court ruled that:
While exculpatory agreements will be strictly construed, such agreements are enforceable to protect a party from liability for its own negligence.
A claim of gross negligence does not defeat the release because Missouri does not recognize degrees of negligence at common law.
A party cannot rely on its own Petition to provide the evidentiary support to create a genuine dispute of material fact in response to a motion for summary judgment.
After disregarding plaintiffs reliance upon the allegations in her own petition, her evidence in opposition to the motion for summary judgment was inadequate to establish a genuine dispute whether the Defendants acted recklessly. Id.
As a result, in a 5-2 ruling, the Supreme Court affirmed the summary judgment issued by the trial court.
In DeCormier, the Missouri Supreme Court has again signaled the need for strict compliance with the procedural requirements of the summary judgment rule(74.04). Although the waiver in this case was upheld, it appears that a properly pleaded and factually supported claim of recklessness might still overcome such a waiver. Stay tuned.
On July 30, 2014, the U.S. Court of Appeals for the Eighth Circuit analyzed Missouri law and held that Missouri’s “one recovery rule” barred decedent’s widow and children from recovering for the death of the decedent because the decedent recovered for the same wrong during his lifetime.
Michael Thompson, a 28-year smoker, developed lung cancer in 1997. At that time, Michael and his wife, Christi Thompson, sued cigarette manufacturers, distributors, and sellers.The Thompsons alleged that Michael Thompson’s throat cancer was a result of smoking cigarettes and that the manufacturers, distributors, and sellers were liable for concealment, negligence, product defect, and failure to warn. A jury found the cigarette manufacturers liable for product defect and negligence. The Thompsons recovered $1,046,754.00 and the state appellate court affirmed.
When Michael Thompson passed away in 2009, his wife and children brought suit against the same cigarette manufacturers, distributors, and sellers. They alleged that Michael Thompson died of injuries caused by cigarettes manufactured, distributed, and sold by the same defendants named in the Thompson’s earlier personal injury action. The case was removed to federal court following the dismissal of fraudulently joined defendants. The remaining defendants moved to dismiss plaintiffs claims, arguing that the claims were barred by Missouri Statutes § 537.080 and § 537.085 because Michael Thompson had fully and fairly litigated the issues and received full satisfaction during his lifetime.
Under Missouri’s wrongful death statute, a decedent’s spouse or child may sue for damages when the death of the decedent results from any act, conduct, occurrence, transaction, or circumstance which, if death had not ensued, would have entitled such person to recover damages in respect thereof. Mo. Rev. Stat. § 537.080.1.
The Eighth Circuit reviewed the century-old Missouri Supreme Court decision of Strode v. St. Louis Transit Co., 95 S.W. 851, 853 (Mo. banc 1906), which directly addressed the question of whether a widow or child could maintain an action for a death and accrued damage in the situation where a person is injured through the negligence of another, and before death, made a settlement with the wrongdoer. The Strode Court held that “the gist and foundation of the right in all cases is the wrongful act, and that for such wrongful act but one recovery should be had…”. Strode, 95 S.W. at 856. If a decedent received satisfaction in his or her lifetime, either by settlement, adjustment, or adjudication, no further right of action existed in the courts.
The Eighth Circuit swiftly dismissed Plaintiffs’ argument that the statute creates a wholly distinct and independent cause of action in a decedent’s survivors, finding that that argument simply ignored the plain language of Strode. Again, “the gist and foundation of the right in all cases is the wrongful act, and that for such wrongful act but one recovery should be had.” Id.
Thus, the Eighth Circuit held that Missouri’s “one recovery” rule prohibits a wrongful death claim under § 537.080 if the decedent received satisfaction for the same wrongful conduct – whether by adjudication, adjustment, or settlement – during his or her lifetime.
The Missouri Supreme Court continued its trend of reversing damages caps as unconstitutional in a decision handed down September 9, 2014. The court struck down the R.S.Mo. § 520.365 cap on punitive damages as it relates to common law claims in the case of Lillian Lewellen v. Chad Franklin and Chad Franklin Auto Sales North, LLC (SC92871).
The suit centered on Ms. Lewellan’s purchase of a vehicle from defendants. Defendants engaged in widespread and aggressive print and television advertising campaign offering vehicles for $49, $69, and $89 per month. Ms. Lewellen, a 77 year old widow on a fixed income of $920.00 per month, needed a new car and went to defendants’ dealership asking for the $49 per month vehicle she had seen in the advertisements. Ms. Lewellen repeatedly told defendants she could not pay any more than $49 per month. Defendants sold Ms. Lewellen a 2002 Lincoln (for $19,950.00) from the section of the lot labeled $49/month and explained that they would send Ms. Lewellen a check to pay the difference between her financed car payment of $387.43 and the $49.00 she “actually” owed.
Ms. Lewellen did not receive the promised checks from defendants. After making numerous phone calls, defendants ultimately sent her a check allowing her to pay the first 9 months of her car payment as agreed but thereafter, defendants refused to pay the difference. The bank repossessed Ms. Lewellen’s vehicle when she could not pay the full amount of the payment and filed suit against her for breach of contract.
Ms. Lewellen brought suit against defendants alleging one count of fraudulent misrepresentation and one count pursuant to the Missouri Merchandising Practices Act (MMPA). The jury awarded Ms. Lewellen actual damages of $25,000.00 and punitive damages on each count of $1,000,000.00. Upon motion by defendants, the Court reduced the punitive damages award to $500,000.00 pursuant to R.S.Mo. § 510.265.
The Missouri Supreme Court overturned the reduction in punitive damages as to the fraudulent misrepresentation claim. The court held R.S.Mo. § 510.265 unconstitutional as it applies to common law claims because application of the cap infringes upon plaintiff’s right to trial by jury. The court found that since the Missouri Constitution provides that the right to a jury trial “shall remain inviolate,” any change to the rights of a jury determination of damages existing when Missouri adopted its constitution in 1820, is unconstitutional. Here, the court held plaintiff’s fraudulent misrepresentation claim was a common law claim in 1820, and therefore, the damages cap could not be applied. The court upheld the application of the punitive damages cap to the statutorily created cause of action under the MMPA. Finally, the court upheld the amount of damages awarded to Ms. Lewellen under a due process analysis even though the punitive damages amounted to a 40:1 and 22:1 ratio (actual damages to punitive damages).
The Missouri Supreme Court’s analysis is contrary to most other jurisdictions faced with similar constitutional claims. Nearly every state court considering the constitutionality of punitive damages caps in conjunction with the right to trial by jury, have found the caps constitutional. Generally, these jurisdictions reasoned that there is no “right” to punitive damages and therefore, the legislature can limit or even abolish punitive damages without infringing upon the right to a trial by jury. Additionally, while it is the exclusive province of the jury to determine the facts of the case, it is within the legislature’s province to alter the legal remedies available for the jury to award. This line of cases is further legitimized by Justice Scalia, who, in writing a concurring opinion stated: “State legislatures and courts have the power to restrict or abolish the common-law practice of punitive damages, and in recent years have increasingly done so.” Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 39 (1991) (Scalia, J., concurring). See for example, the analysis in the following jurisdictions: 4th Circuit (Boyd v. Bulala, 877 F.2d 1191, 1196 (4th Cir., 1989)); Alabama Supreme Court (Ex. Parte Apicella, 809 So. 2d 865 (Ala. 2001)); Alaska Supreme Court (Evans ex rel. Kutch v. State, 56 P.3d 1046 (Alaska 2002)); Kansas Supreme Court (Smith v. Printup, 866 P.2d 985 (Kan. 1993)); North Carolina Supreme Court (Rhyne v. K-Mart Corp., 594 S.E.2d 1 (N.C. 2004)); Ohio Supreme Court (Arbino v. Johnson & Johnson, 880 N.E.2d 420 (Ohio 2007)); Texas Court of Appeals (Seminole Pipeline Co. v. Broad Leaf Partners, Inc., 979 S.W.2d 730, 758 Tex. Ct. App. Hous. 1998)); Virginia Supreme Court (Pulliam v. Coastal Emergency Services of Richmond, Inc., 509 S.E.2d 307 (Va. 1999)).
Regardless of the majority of jurisdictions’ analysis, the Missouri Supreme Court determined the cap to be unconstitutional. In 2012, the court found a similar cap on non-economic damages in medical malpractice unconstitutional and violative of the right to trial by jury. See Watts v. Lester E. Cox Medical Centers, 376 S.W.3d 633 (Mo. banc 2012). Given the similarity between Watts and Lewellen, it is clear Watts was not an anomaly, but represents a Missouri trend toward invalidating any damages cap applied to common law claims.
The take away from this case and the line of cases preceding it is that there is a two step process for determining the constitutionality of a punitive damages award on a claim in Missouri. First, the court must determine if the cause of action was one that existed prior to 1820. If the cause of action existed in 1820, then the Court cannot constitutionally apply a statutory cap to limit the punitive damages. If the cause of action did not exist prior to 1820 – for example, as in the Lewellen case, a statutorily created cause of action such as the MMPA – then a punitive damages cap can be constitutionally applied.
Whether a cap applies or not, the defendant is further entitled to an analysis of the constitutionality of the resulting punitive damages award under the due process clause of the U. S. Constitution. The court held “[m]erely because an award is within the bounds of section 510-265 does not relieve a court from its duty to review it in light of the particular facts of the case when a party claims the award violates due process.” Lewellen, at *13, fn 14. In order to determine the constitutionality under due process, the United States Supreme Court requires courts to consider three factors (1) the reprehensibility of the defendant’s misconduct; (2) the disparity between the harm and the punitive damages award; and (3) the difference between the punitive damages award and penalties authorized or imposed in similar cases. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574-75 (1996).
Numerous jurisdictions have interpreted United State Supreme Court guidance on due process to generally preclude damages in excess of single digit ratios. Nevertheless, the Missouri Supreme Court upheld double digit ratios (22:1 and 40:1 ratios) in the Lewellen case, and even triple digit ratios (more than 100:1 ratio in Estate of Overbey v. Chad Franklin National Auto Sales North, LLC, 361 S.W. 3d 364 (Mo. banc 2012) –the same defendant in the Lewellen case). The court held that such a large award was justified in this case because defendants were preying upon financially vulnerable individuals and engaging in “intentional and flagrant trickery and deceit.” This may be a classic example of the axiom that “bad facts make bad law”, and accordingly, it is wise for defendants to beware of the risk of large punitive damages awards when defending actions in Missouri.
In Blanks v. Fluor Corp., 2014 WL 4589815 (Mo. App. E.D. Sept 16, 2014), the Missouri Court of Appeals reversed a jury verdict against Fluor Corporation, because it was improperly based on the conduct of its affiliate which was separately incorporated.
This case involved a class action for personal injuries to minors due to exposure to lead from a southeastern Missouri mine which was operated by a partnership of multiple entities, at least one of which was an affiliate of Fluor Corporation. One of the theories of recovery was that Fluor had controlled and dominated its subsidiaries DRH and Leadco such that they were mere conduits for Fluor. Despite relying on this total domination and control theory, plaintiffs made it clear they did not rely on a piercing the corporate veil theory. Rather, they argued they relied on Ritter v. BJC Barnes Jewish Christian Health System, 987 S.W.2d 377 (Mo. App. 1997) for their inter-corporate liability theory. The jury found in plaintiffs’ favor in the overall amount of $358,527,186. Defendants appealed, raising numerous issues, including that plaintiffs failed to properly plead and prove a viable claim against the Fluor Corporation based on its affiliate’s conduct.
The Court of Appeals reversed the jury verdict for punitive damages against the Fluor parent entity and thoroughly discussed the two basic theories of inter-corporate common law tort liability: 1) piercing the corporate veil; and, 2) inter-corporate agency. In its attempt to clear up apparent confusion in Missouri law between these two theories, the court undertook a scholarly review of decisions from as far back as 1932 and as recent as 2013. Its didactic mission clearly caused it to recite the basics. For example, it observed that a corporation is an artificial entity recognized by the Missouri Constitution. Among a corporation’s principal attributes is its legal existence separate and apart from its shareholders. As a corollary, two separate corporations are regarded as wholly distinct legal entities, even if one partly or totally owns the other. “In the eyes of the law, two different corporations are two different persons. …even if one …is the sole shareholder of the other.” Id., at 47. The Blanks court also stated that “in certain instances, courts will make an exception and hold a parent corporation liable for the acts of a subsidiary.” Id. For the most part such an exception to insulation from liability is based one of two theories: 1) piercing the so-called corporate veil, where the corporations have ignored the separateness for an improper purpose; and, 2) agency, where one corporation specifically directs another corporation (usually an affiliate) to act, which conduct then causes injury to a third party.
The court observed that the history of Missouri court’s experiences and articulation of both the piercing the corporate veil theory and the agency theory may have led to a conceptual blurring of the two. It found that more than one court merged the concept and application of piercing the corporate veil with an agency analysis, even though the two are distinctly different. Blanks, at 49 – 50.
In concluding that plaintiffs here failed to make a case against the Fluor parent corporation for the conduct of its subsidiary, the appellate court held that plaintiffs did not prove an agency relationship existed between the Fluor parent corporation and its subsidiary. Therefore, plaintiffs could not recover against the parent entity. Id., at 55. Complete domination and control is not required under the agency theory, but the conduct at issue must be directed by the principal and must be the proximate cause of the injury. One of the essential elements of the agency relationship is that “the principal has the right to control the conduct of the agent with respect to matters entrusted to him. Id., at 52. “Only the precise conduct instigated by the parent is attributed to the parent.” Id., at 51. Moreover, the court made clear that the Missouri Supreme Court’s decision in State ex Rel. Ford Motor Company v. Bacon, 63 S.W.3d 641 (Mo. Banc 2002), with its specific reliance on Restatement (Second) of Agency, section 1, controls as to what is needed to show an inter-corporate agency relationship. Blanks, at 54 – 55.
As to the theory of piercing the corporate veil, the Blanks court observed at one point that the Missouri Supreme Court has recently reaffirmed its previous admonition that the parent-subsidiary separation should be ignored “with caution and only when the circumstances clearly justify it.” Id., at 49. To make a submissible case on this theory, a plaintiff must plead and prove three basic components: a) complete domination of the other corporation, such that it has no will or mind of its own and is a mere conduit; b) such control must have been used to commit a fraud or wrong, to perpetrate the violation of a statute or other positive legal duty; and, c) the control and breach of the duty must proximately cause the injury or unjust loss complained of. Id., at 48. Ultimately, the court repeated what plaintiffs themselves had been asserting – that they had not pled the piercing the corporate veil theory and did not rely on it.
In sum, Blanks v. Fluor, provides a candid assessment of the judicial history of the confusion between theories of piercing-the-corporate-veil and inter-corporate agency. More importantly, the Blanks court steps up to provide a strong reminder that the general rule is that corporations are not liable for each other’s conduct, and that only through two narrow exceptions can inter-corporate liability be imposed.
Lewellen v. Franklin, — S.W.3d —, 2014 WL 4425202, (Mo. banc September 9, 2014)
On September 9, 2014, in a unanimous opinion authored by the Honorable Patricia Breckenridge, the Missouri Supreme Court struck down as unconstitutional a Missouri statute which imposed a cap on the amount of punitive damages awarded to the greater of $500,000 or five times the net amount of the judgment awarded a plaintiff against a defendant. The punitive damages cap had been part of Missouri’s 2005 tort reform legislation.
Plaintiff Lillian Lewellen filed an action alleging fraudulent misrepresentation and unlawful merchandising practices against a motor vehicle dealership and its owner. The jury awarded Ms. Lewellen actual damages on each of the two claims and $1,000,000 in punitive damages against each defendant. Post-verdict, the trial court reduced the actual damages award and reduced the two punitive damage awards to the statutory limit of $500,000 pursuant to Section 510.265, RSMo (Supp. 2013). All parties appealed.
On appeal, Ms. Lewellen claimed the statutory cap on punitive damages was unconstitutional because it violated her rights to trial by jury, due process, and equal protection, as well as the separation of powers doctrine. In a somewhat summary fashion, the Supreme Court held its 2012 decision in Watts v. Lester E. Cox Medical Centers, 376 S.W.3d 633 (Mo. banc 2012), is controlling as to the constitutionality of the statutory caps. The Watts court held applying a statutory cap on noneconomic damages in a medical negligence case violated Missouri’s constitutional right to jury trial. Id. at 638. According to the Watts court, the phrase “shall remain inviolate” in article I, section 229(a) of the Missouri Constitutional means that any change in the right to a jury determination of damages as it existed in 1820 (the adoption date for the Missouri Constitution) is unconstitutional.
Here, the Court noted that in 1820 there existed a right to a jury determination of the amount of punitive damages in a fraud case. Thus, the punitive damages cap of Section 510.265 “necessarily changes and impairs the right of a trial by jury ‘as heretofore enjoyed.’” 2014 WL 4425202, *5 (citing Watts, 376 S.W.3d at 640). “Because section 510.265 changes the right to a jury determination of punitive damages as it existed in 1820, it unconstitutionally infringes on Ms. Lewellen’s right to a trial by jury protected by article I, section 22(a) of the Missouri Constitution.” Id. Since the Court found the statute violative of the right to jury trial, it did not address Ms. Lewellen’s other constitutional challenges.
In a similarly truncated fashion, the Court rejected the defendants’ attempt to distinguish this case from Watts. Defendants argued that, unlike the noneconomic damages at issue in Watts, punitive damages are subject to due process limitations, and as a result, the legislature may also impose legal limits upon them through a statutory cap. The Court disagreed, noting the limitations imposed by Section 510.265 are not of the same species as those required by the Due Process Clause of the United States Constitution. Importantly, the United States Supreme Court has explicitly refused to establish a bright-line ratio that a punitive damages award cannot and has been reluctant to recognize concrete limits imposed by due process. State Farm Mut. Auto. Inc. Co. v. Campbell, 538 U.S.408, 425 (2003). Rather, under State Farm, the precise award in any case must be based upon the facts and circumstances of the plaintiff’s injury and the defendant’s conduct. Id. Section 510.265, rather than being based on the facts or circumstances of a case, caps the punitive damages award at a certain level regardless of the facts and circumstances of the particular case. Due process requires a court to review a punitive damages award under the considerations articulated by the United States Supreme Court to prevent grossly excessive or arbitrary awards, but Section 510.265 is not a codification of due process in that it operates wholly independent of the facts of the case. Thus, according to the Court, while Section 510.265 is unconstitutional as violative of the right to trial by jury and should no longer be applied, trial courts remain bound to review a punitive damages award under the Due Process Clause.
Missouri Supreme Court Clarifies When Deceptive Practices Occuring After the Sale May Still be Within Coverage of the Merchandising Practices ActSeptember 4, 2014
The Missouri Merchandising Practices Act (MMPA), enacted in 1967, was meant to expand the common law definition of fraud to protect consumers from unfair or deceptive practices done “in connection with the sale or advertisement of any merchandise.” 407.020.1 RSMo 2013. Two new decisions from the Missouri Supreme Court have clarified the reach of the phrase “in connection with”, in section 407.020.
In Conway v. CitiMortgage, Inc. and Watson v. Wells Fargo, the plaintiffs alleged that certain acts committed by the defendants relating to loan transactions were unlawful under the MMPA. In Conway, the plaintiffs purchased a renovation property with the assistance of a mortgage loan from Pulaski Bank, who then assigned the loan to Fannie Mae. CitiMortgage serviced the loan. The property was damaged in a fire which occurred during renovations, and the plaintiffs obtained settlement funds from their insurance company to apply to the damages. The funds were then put into an escrow account held by CitiMortgage, and as the Conways submitted bills, CitiMortgage sent payments to the address of the home. However, additional construction was required which the Conways were unable to fully pay for, and the Conways fell behind on their mortgage payments. Though there were still sufficient settlement funds to pay their mortgage, CitiMortgage declined to apply the funds to the loan balance and sent a foreclosure notice to the Conway’s home address. CitiMortgage foreclosed on the property and the Conways filed suit under the MMPA. In its motion to dismiss, CitiMortgage argued that because the alleged unlawful acts concerned post-sale activity with regard to the original loan, the acts were not done “in connection with” the loan and the MMPA did not apply. The trial court agreed with CitiMortgage and granted its motion to dismiss.
Watson v. Wells Fargo similarly involved activity that occurred after the original loan transaction, in that it involved a loan modification from Wells Fargo. Watson became unable to make monthly payments on the loan, and requested a loan modification. She alleged that the parties reached a modification agreement, yet according to Wells Fargo, the modification was never ratified by the parties. Wells Fargo then foreclosed on the property. In her petition, Watson alleged that Wells Fargo violated the MMPA by: (1) negotiating the loan modification in bad faith; (2) unfairly using its superior bargaining power to obtain Watson’s signature on the modification agreement; (3) falsely stating she had rescinded the modification agreement after accepting it to justify proceeding with the foreclosure sale; (4) foreclosing on the property despite promising to postpone foreclosure proceedings during the modification discussions; and (5) failing to provide notice of the foreclosure sale in violation of section 443.325.
The Missouri Supreme Court ruled unanimously in Conway that when the operative transaction is the sale of the loan, the “sale” is not complete when the lender extends credit, but continues throughout the time the borrower makes payments. The enforcement of the terms of the loan is “in connection with” the sale of the loan, because the sale continues for the life of the loan. In Watson, however, the court ruled in a 4-3 decision that loan modification negotiations were not “in connection with” the sale of the loan because that was not a service the parties agreed to under the original loan. As a result, the court upheld summary judgment against Watson’s allegations relating to the loan modification, although it reversed as to Watson’s wrongful foreclosure allegations.
The lesson from Conway and Watson, as stated by the court, is that for the purposes of the MMPA a sale of a loan includes a “bundle of services” that are not limited to the initial sale. Thus, lenders should be wary that the MMPA’s expanded common law definition of fraud extends to activity throughout the life the loan.
Missouri Supreme Court Abandons Exclusive Causation Requirement for Worker's Compensation Retaliatory Discharge ClaimsAugust 7, 2014 | Paul Venker
Templemire v. W&M Welding, Inc., — S.W.3d — , (Mo. 2014), No. SC93132, 2014 WL 1464574\
In Templemire v. W&M Welding, Inc., — S.W.3d — , (Mo. 2014), No. SC93132, 2014 WL 1464574, the Missouri Supreme Court threw out its long-held interpretation of section 287.780, RSMo requiring a plaintiff in a worker’s compensation retaliatory discharge claim to prove their filing a claim under Chapter 287 was the exclusive cause for the discharge. The Court now holds the employee must demonstrate his or her filing of a workers’ compensation claim was merely a “contributing factor” to the employer’s discrimination or the employee’s discharge.
The Court accepted plaintiff-employee’s argument that it should construe this statute consistently with its recent holdings on causation for MHRA claims and for public policy retaliatory discharge claims, which utilize a “contributing factor” causation burden. As part of this sea change in Missouri law, the Court specifically overruled its two foundational cases of Hansome and Crabtree, which (respectively) adopted (in 1984) and then affirmed (in 1998) the exclusive causation standard for worker’s compensation retaliatory discharge claims.
Judge Zel Fischer dissented (joined in by Judge Paul Wilson), pointing out that the Court’s earlier decisions declaring the “exclusive” causation standard was later embraced by the General Assembly in sections of Chapter 287. Judge Fischer also pointed out the distinction between the Court ruling on legal causation standards in common law actions, in contrast to statutory causes of action. He wrote that the judiciary’s latitude in the latter is essentially limited to implementing the intent of the legislative branch.
Employers will certainly need to be aware of this significant change in retaliatory discharge claims for worker’s compensation claims. The practical impact is that employers will now, in a very functional sense, have the burden to prove that employee’s filing of a worker’s compensation claim had no causative role in the employee’s discharge. Given the foundation event of the claim having been filed, though, this issue will be in play throughout a trial and would be considered by the jury, which needs only find it was a “contributing factor”.
In recent years, plaintiff’s lawyers have increasingly pursued claims alleging physician malpractice in the delivery of an infant. In many of those cases, plaintiff’s attorneys and their hired experts would argue that the very nature of the injury was in and of itself the evidence of negligence – in effect, a quasi claim of res ipsa loquitor. At the beginning of this wave of litigation, plaintiffs found some success in claiming that any injury to the brachial plexus, whether permanent or transient, had to have resulted from negligence.
Over time, as a result of numerous studies performed by the obstetrical and gynecological community, the tide has begun to turn. In the case of transient injury fewer plaintiffs’ attorneys attempt to make a claim that injury of itself is the evidence of negligence. Unfortunately, much in the same way mesothelioma is seen as absolute evidence of asbestos exposure and causation, the existence of permanent brachial plexus palsy is still offered to juries across the United States as absolute evidence of physician error.
After mostly sitting on the sidelines for decades in the debate over whether permanent brachial plexus injuries were evidence of negligence per se, The American College of Obstetrics and Gynecology has very recently published a summation of relevant studies regarding brachial plexus injuries in the birth process, concluding that the injury in and of itself is not sufficient evidence to assume negligence in cases of permanent brachial plexus injury.
In a recent case tried by this office, an executive summary, drafted by the American College of Obstetrics and Gynecology task force on Neonatal Brachial Plexus Palsy, regarding the risks, causes and outcomes of this phenomenon was offered into evidence by the defense in support of a physician in a shoulder dystocia case. The document was properly supported, out of the hearing of the jury, by two defense experts, both of whom referred to the summary as an authoritative document setting forth succinctly the opinions regarding those issues by the relevant medical community. The judge denied the evidentiary offering due to the fact that the executive summary was only a summary and was not in and of itself the final document. (At the time of the trial in March of 2014, the final document had not yet been published.) Fortunately, we were able to obtain a defense verdict, even absent this testimony, and in the face of Plaintiff’s main argument at closing that the existence of permanent injury can only mean negligence.
Since that trial, the American College of Obstetricians and Gynecologists has published the full document entitled Neonatal Brachial Plexus Palsy. This document is exceedingly important and, if not the first, is certainly the most definitive statement by the American College of Obstetricians and Gynecologists regarding this issue. This paper sets forth the most comprehensive, retrospective review of the medical studies and opinions regarding this incredibly difficult medical emergency. The medical community has provided lawyers defending these cases with a strong tool to combat expert testimony that the existence of injury in and of itself defines negligence.
The article is published in several chapters, the most important of which for purposes of defense of these cases is Chapter 4. There, the authors address head-on plaintiffs’ theories regarding causation. In short, the American College of Obstetricians and Gynecologists has determined there is strong evidence that maternal forces alone, or in conjunction with physician applied forces, cause injuries of this type. They have concluded that each case must be reviewed in its totality, and claims proffered by plaintiffs’ counsel that permanent injury in and of itself means negligence are illegitimate and not supported by the medicine.
A copy of Neonatal Brachial Plexus Palsy can be ordered from ACOG by calling 800-762-2264 or by going on their website www.acog.org.
In a procedurally convoluted case entitled Mayes v. St. Luke’s Hospital of Kansas City, the Missouri Supreme Court has issued a straightforward warning to medical malpractice plaintiffs: strict compliance with the health care affidavit requirement of Mo.Rev.Stat. § 538.225 is mandatory. “Substantial compliance” will not suffice.
Section 538.225(1) of the Missouri Revised Statutes provides: “In any action against a health care provider for damages for personal injury or death on account of the rendering of or failure to render health care services, the plaintiff or the plaintiff's attorney shall file an affidavit with the court stating that he or she has obtained the written opinion of a legally qualified health care provider which states that the defendant health care provider failed to use such care as a reasonably prudent and careful health care provider would have under similar circumstances and that such failure to use such reasonable care directly caused or directly contributed to cause the damages claimed in the petition.”
In Mayes, the surviving family members of a man who died after a procedure to remove a sternal wire from a prior aortic valve replacement surgery sued the surgeon, the hospital, and the surgeon’s employer, claiming wrongful death and lost chance of recovery. In addition to these claims, the plaintiffs raised “constitutional objections” to various statutes relating to medical malpractice cases, including asserting that the requirements in section 538.225 violated their rights under the “open courts” and trial by jury provisions of the Missouri Constitution. Despite their objections, they filed the affidavits required by section 538.225. The affidavits stated that they had obtained a written opinion from an expert witness, and their expert witness was later deposed.
Plaintiffs voluntarily dismissed their first case without prejudice, and filed a second case five days later. They asserted the same claims and constitutional objections, but did not file health care affidavits. The defendants moved to dismiss case #2 for the plaintiffs’ failure to file the affidavits. The plaintiffs argued that they had complied with 538.225 by filing the required affidavits within 90 days of the filing of the petition in case #1 because defense counsel had agreed “to carry forth the original suit into this refiled suit.” The trial court found that a dismissal without prejudice was required due to the failure to provide health care affidavits. Plaintiffs filed a motion to reconsider, asserting for the first time that they had substantially complied with 538.225. The trial court overruled the motion, and the plaintiffs appealed.
Before filing the notice of appeal in case #2, the plaintiffs filed case #3 with the same allegations as the previous cases. In case #3, they did file the requisite health care affidavits. The defendants moved to dismiss case #3 on the ground that it was barred by the applicable statutes of limitations. The trial court sustained their motions and dismissed case #3. Plaintiffs appealed, and the Supreme Court consolidated cases #2 and #3 for opinion. The Supreme Court held that case #3 was properly dismissed based on the statutes of limitations (three years for wrongful death claims and two years for lost chance of recovery). The most interesting discussion relates to case #2:
Plaintiffs did not preserve their constitutional claims:
In response to the defendants’ motion to dismiss, the plaintiffs argued that they had complied with section 538.225 and that the motion to dismiss was untimely. Plaintiffs did not assert their constitutional objections, and, therefore, failed to preserve for appeal the issues of whether section 538.225 violates their rights to access to open courts and to a trial by jury.
Substantial Compliance is not sufficient:
Plaintiffs also argued that the trial court erred in dismissing case #2 because they had substantially complied with 538.225 by filing the affidavits in case #1, producing the expert disclosed in those affidavits for case #1, and agreeing to transfer discovery conducted during case #1 to case #2. The Supreme Court noted that on occasion, it has construed certain procedural statutes and rules to find that substantial compliance with the requirements is sufficient. The issue of whether substantial compliance can satisfy 538.225 had never been addressed. The Court looked to the statutory language, which directs a plaintiff to file an affidavit and directs the court to dismiss the action if an affidavit is not filed, and held that the language demonstrates that the legislature intended the requirement to be mandatory.
Furthermore, even if the statute allowed for substantial compliance, the plaintiffs’ actions were not sufficient. The plaintiffs argued that they attempted to comply by filing the affidavits in case #1 and transferring the deposition testimony of their expert to case #2. However, the affidavits in case #1 could not constitute an attempt to comply with the affidavit requirements for case #2 because case #1 had been dismissed voluntarily. When a case is voluntarily dismissed, it is as if the case had never been filed. Therefore, any filings in a voluntarily dismissed case are treated as if they had never been filed. Similarly, the deposition testimony of plaintiffs’ expert does not amount to substantial compliance because it was never filed with the trial court, nor was anything filed with the court within the required time period referencing the existence of the deposition.
The trial court was correct in dismissing plaintiffs’ case for failure to comply with 538.225. The statute requires strict compliance, not substantial compliance.
The lesson of the Mayes case is clear. A plaintiff who fails to follow the exact letter of section 538.225 does so at his peril. Defendants should be alert to a malpractice plaintiff’s failure to strictly comply with the statute, and should be prepared to move to dismiss in the event of non-compliance.
Missouri Appellate Court Holds Timing Requirements for Requests for Admissions are Not Mere SuggestionsApril 8, 2014 | Lisa Larkin
Lane House Construction, Inc. v. Doris Ogrowsky, — S.W.3d —, No. ED99897, April 8, 2014
Requests for admissions propounded pursuant to Missouri Rule of Civil Procedure 59.01 are likely to get any litigant’s attention, if only due to the potential consequences for failing to timely respond. The rule says such failure shall result in each matter being admitted. To underscore the point, the rule requires the proponent to include a warning in capital, boldface type that a failure to timely respond “shall result in each matter being admitted by you and not subject to further dispute.” Missouri courts have consistently required strict compliance with Rule 59.01 when responding to requests for admissions, but what about when propounding them?
In the recent Lane House opinion, the Eastern District addressed, in a matter of first impression, the effect of requests for admissions where the propounding party did not comply strictly with Rule 59.01. Essentially, the court found that, since the rule requires strict compliance when responding to requests for admissions, fairness dictates the rule requires strict compliance when a party issues the requests.
Under Rule 59.01(c), requests for admissions may be served on a defendant upon the expiration of 30 days after defendant enters an appearance or is served with process. Plaintiff Lane served requests for admissions only 23 days after service of process. Plaintiff then filed a Motion for Summary Judgment upon defendant’s failure to respond. Thereafter, defendant did answer the requests, but not until almost four months after plaintiff served them. The trial court granted plaintiff summary judgment on the basis that the requests were deemed admitted for failure to timely file a response.
On appeal, defendant argued plaintiff’s failure to abide by the timing dictates of Rule 59.01 nullified plaintiff’s requests ab initio. Plaintiff argued the court was free to deem the requests for admissions as having been propounded on the 31st day after service, and even with this “extra time,” defendant’s responses were untimely.
While noting that plaintiff’s argument is not entirely implausible (and, in fact, the rules in other areas allow for certain premature filings to be deemed filed as of a later date), the court held the plain, unambiguous, and simple directives of Rule 59.01 control, and a plaintiff’s premature propounding of requests for admissions are deemed invalid. Nothing in Rule 59.01 can be read to permit a trial court to treat premature requests as being issued in accordance with the time parameters of the rule. According to the court, it is as if the plaintiff never propounded the requests for admissions. “[If] a plaintiff prematurely propounds requests for admissions, a defendant is under no obligation to respond to those requests.”
Pick your poison: Plaintiffs Must Choose Either Respondeat Superior or Direct Negligence Against Employers after a Commercial Motor Vehicle CollisionMarch 27, 2014
When a motor vehicle collision involves a commercial vehicle, plaintiffs often sue the commercial driver’s employer through respondeat superior, whereby employers are strictly liable for the negligence of their employers. Some plaintiffs attempt to assert direct negligence claims in addition to respondeat superior, alleging claims such as negligent hiring, negligent retention, negligent supervision, and/or negligent entrustment.
Respondeat Superior and Direct Negligence Claims in Missouri
In Missouri, plaintiffs must pick their poison. The employer may be held liable through respondeat superior or negligent hiring, retention, entrustment, et cetera. Plaintiffs are prohibited from asserting all these claims at once. Respondeat superior, negligent hiring and retention, negligent supervision, and negligent entrustment are all forms of imputed liability in a motor vehicle collision case, because the employer’s liability is completely dependent on the employee’s misconduct.
When the Missouri Supreme Court examined this issue in McHaffie v. Bunch, it held that once an employer/employee relationship is admitted, admitting evidence of other imputed liability theories is a reversible error. Employers are strictly liable for the negligence of their employees through respondeat superior, therefore evidence supporting the other theories serves no purpose. Evidence about hiring practices, corporate structure, log books, training, et cetera is irrelevant and likely inflammatory. Once agency is admitted, the other claims are improper.
Case Law: McHaffie and Coomer
In McHaffie, the plaintiff was a passenger in a car that crashed into a large commercial truck. The plaintiff alleged that the truck driver was vicariously liable for the driver’s negligence, and that the driver’s employer was negligent in its hiring and supervision of the driver. The jury apportioned a percentage of fault directly against the employer as a result. However, the plaintiff’s injuries were solely caused by the motor vehicle collision, therefore the negligent hiring and supervision claims were irrelevant. The Court held that the submission of the negligent hiring and supervision claims was a reversible error.
The McHaffie holding was recently upheld in the Court of Appeals in Coomer v. Kansas City Royals Baseball, outside of the motor vehicle context. In Coomer, the plaintiff asserted claims against the Royals for negligent supervision, negligent training, and respondeat superior after Sluggerrr, the team mascot, threw a hot dog that allegedly hit the plaintiff in the face. The trial court required that the plaintiff elect either respondeat superior or another theory of imputed liability because the McHaffie opinion barred the submission of all of them. The Court of Appeals held that the trial court did not err in requiring the plaintiff to elect one theory.
The McHaffie Court did leave open a few possibilities for the co-existence of respondeat superior and other negligence claims: (a) when the negligence of the employer is not dependent on the negligence of the employee/entrustee; (b) when punitive damages could be assessed against the employer. See our earlier post on the punitive damages issue here. In essence, there must be some allegation or evidence that directly ties the employer’s conduct to the plaintiff’s injury. titled If the employee’s conduct was the only true cause of the harm (like in must motor vehicle collision), then respondeat superior is the only proper method of holding the employer liable.
When a plaintiff attempts to assert respondeat superior and direct claims of negligence, consider admitting an employer/employee relationship in the Answer. With the employer/employee relationship, the direct claims of negligence may be defeated with a motion for summary judgment based on the McHaffie ruling.
Defeating the direct negligence claims early in litigation may lead to significant savings. Corporate representative depositions, requests for production on medical evaluations and training records, and interrogatories regarding the hiring process all become unnecessary. A McHaffie motion is the best course of action when the employee was clearly acting within the course and scope of employment during the collision.
Who is the "Insured" in a UM Wrongful Death Claim: UM Exclusions Limiting Stacking Following Floyd-Tunnell v. Shelter Mut. Ins. Co.March 13, 2014
In October 2011, Jerry Floyd, father and husband to the plaintiffs, died from injuries sustained in an automobile collision with a car driven by an uninsured driver, Eric Krugler. Floyd was a named insured (along with his wife Doris, one of the plaintiffs) on three policies issued by Shelter Mutual Insurance Company on the Chevrolet Cavalier Floyd was driving at the time of the accident and two other cars owned by the Floyd family. The policies each provided for uninsured motor vehicle coverage of uncompensated damages up to $100,000: "If the owner or operator of an uninsured motor vehicle is legally obligated to pay damages, we will pay the uncompensated damages; but this agreement is subject to all conditions, exclusions, and limitations of our liability, stated in this policy."
A number of facts were undisputed by Shelter: that plaintiffs had sustained damages of at least $400,000 as a result of Floyd’s wrongful death, that Krugler’s negligence caused the damages, and that Krugler’s vehicle was an “uninsured motor vehicle” under the Shelter policy definitions. However, Shelter argued that a partial exclusion contained in each policy limited the amount it was required to pay out to the plaintiffs. The partial exclusion stated:
PARTIAL EXCLUSIONS FROM COVERAGE E
In claims involving the situations listed below, our limit of liability under Coverage E [UM coverage] is the minimum dollar amount required by the uninsured motorist insurance law and financial responsibility law of the state of Missouri:
. . . .
(3) If any part of the damages are sustained while the insured is occupying a motor vehicle owned by any insured, the spouse of any insured, or a resident of any insured's household; unless it is the described auto.
As a result, Shelter only paid out $150,000 – the max policy limit of $100,000 from the Cavalier policy, and the Missouri statutory minimum of $25,000 from each of the other two vehicle policies. Plaintiffs filed suit seeking the full $100,000 on each policy. Defendant Shelter moved for summary judgment, and the circuit court found for Shelter and granted the motion. Plaintiffs appealed, and on appeal, the Western District Court of Appeals, sitting en banc, split and narrowly affirmed the circuit court’s opinion in a 6-5 decision. See Floyd-Tunnell v. Shelter Mut. Ins. Co., 2013 Mo. App. LEXIS 1346, 2013 WL 5978452 (Mo. App. W.D. Nov. 12, 2013).
The majority found that the plain language of the partial exclusion limited UM coverage where any part of the damages (specifically, the money owed to an insured for a death sustained by that insured and caused by the ownership or use of an uninsured motor vehicle), was sustained while the insured was in a vehicle owned by any insured but not the vehicle listed on the declarations page. See Id.at 12-13. The majority rejected appellants’ argument that Doris Floyd was the “insured” for the purposes of determining application of the partial exclusion, holding “[t]hat Doris Floyd is among the class of persons authorized by statute to assert a cause of action for Jerry Floyd's wrongful death does not transform her into ‘the insured’ for purposes of determining the extent of the UM coverage for his wrongful death.” Id.at 10. Jerry Floyd’s status as “the insured” and his presence in occupying a car owned by an insured at the time damages were sustained thus resulted in application of the partial exclusion for the policies held on the two cars Jerry Floyd was not driving at the time of the injury.
The majority also rejected the argument that the policy was ambiguous, holding that, when the policies were read as a whole, the language of the policy discussing UM coverage, the existence of exclusions and limitations, and the partial exclusion all indicate that the partial exclusion was not susceptible to any different interpretations.
The dissent disagreed with these two primary issues. The primary dissenting opinion opined that the Shelter insurance policies were irreconcilable with the application of Missouri’s wrongful death laws because the damages contemplated in the insuring agreement and partial exclusion only compensate physical injury losses owed to the decedent and do not address the pecuniary damages owed to the statutory death beneficiaries under R.S. Mo. 537.080 and 537.090. In addition, both the primary dissenting opinion and the concurring dissenting opinion cite the partial exclusion clause’s alleged ambiguity as a reason for rejecting the circuit court’s opinion.
Given the 6-5 split at the appellate level, this case seems to be a likely candidate for appeal to the Missouri Supreme Court. Insurers should closely monitor the progress of this case. Even if the case is not appealed or the Missouri Supreme Court affirms the appellate court’s decision, the narrow margin by which the appellate court affirmed the circuit court should serve as notice to insurers to be aware of a potential shift in position in the near future.
Some major changes are coming soon to Missouri’s Workers’ Compensation Law. Earlier this year, the Missouri General Assembly passed what began as a legislative effort to address issues in the coverage of occupational diseases created by the switch in 2005 to strict construction of the Law. In the end, this effort resulted in a much broader set of amendments, though the changes are still heavily focused on occupational diseases. The new law takes effect January 1, 2014. Below are some highlights.
For purposes of the Workers’ Compensation Law, the phrase “occupational diseases due to toxic exposure” shall only include the following: mesothelioma, asbestosis, berylliosis, coal worker’s pneumoconiosis, bronchiolitis obliterans, silicosis, silicotuberculosis, manganism, acute myelogenous leukemia, and myelodysplastic syndrome. Sec. 287.020.11. This is an entirely new definition as the previous version of the Law did not seek to define in any way “occupational diseases due to toxic exposure.” The phrase “occupational disease,” in general, remains defined as in the previous version of the Law as “an identifiable disease arising with or without human fault out of and in the course of the employment.”
The Law’s exclusive remedy provision – i.e., the provision which gives the employer and co-employees general immunity from civil suits for work-related injuries and accidents – is modified to specifically include “occupational diseases.” Sec. 287.120.1 and 287.120.2. This reaffirms that occupational diseases are a part of the Law and that the Law is intended to be the employee’s exclusive remedy for work-related occupational diseases otherwise qualifying under the Law.
In the case of an “occupational disease due to toxic exposure,” the employer no longer has a right of subrogation in any wrongful death case. Sec. 287.150.7. The newly added section provides, “[W]hen a third person or party is liable to the employee, to the dependents of an employee, or to any person eligible to sue for the employer’s (sic) wrongful death as provided is (sic) section 537.080 in a case where the employee suffers or suffered from an occupational disease due to toxic exposure and the employee, dependents, or persons eligible to sue for wrongful death are compensated under this chapter, in no case shall the employer then be subrogated to the rights of an employee, dependents, or persons eligible to sue for wrongful death against such third person or party when the occupational disease due to toxic exposure arose from the employee’s work for employer.”
For all claims filed on or after January 1, 2014, for “occupational diseases due to toxic exposure” which result in permanent total disability or death, benefits will be provided as outlined in Sec. 287.200.4. For all “occupational diseases due to toxic exposure” except mesothelioma, this section provides for extra compensation in addition to the normal benefits paid for total disability or death equal to 100 weeks of compensation at a rate equal to 200% of the average state’s average weekly wage as of the date of diagnosis. Sec. 287.200.4(2). For mesothelioma, this section basically allows the employer to either accept or reject mesothelioma liability under this subsection. If accepted, extra compensation in addition to normal benefits will be paid for total disability or death equal to 300% of the state’s average weekly wage for 200 hundred weeks.
If an employer rejects mesothelioma liability under this subsection, then the exclusive remedy provisions under Sec. 287.120 shall not apply and the employer can be sued in civil court. Sec. 287.200.4(3). The section further limits recovery in the case of an employee who first obtains benefits for asbestosis and later seeks benefits for mesothelioma. Such an employee shall not receive more benefits than he or she would have received if only obtaining benefits for mesothelioma under this section. Sec. 287.200.5.
Sec. 287.223 creates a specific fund to be called the “Missouri Mesothelioma Risk Management Fund.” It provides that any employer may participate in the Mesothelioma Risk Management Fund and use those funds to pay mesothelioma awards made against the employer member pursuant to the opt-in provisions of Sec. 287.200.4(3)(a), as described in the previous paragraph. Participating employers must make annual contributions in amounts to be determined by the board of trustee for the fund.
For all claims against the Second Injury Fund for accidental injuries occurring after January 1, 2014, and for occupational disease claims filed after January 1, 2014, the fund will no longer make payments for permanent partial disability. Further, claims for permanent total disability will only be compensable from the fund when it is either: (1) a medically documented disability due to military duty or (2) a preexisting disability of at least 50 weeks that is either (a) due to active military duty, (b) was the result of a compensable injury, or (c) was not compensable but aggravated a subsequent injury or involves preexisting permanent partial disability of an extremity, the loss of eyesight in one eye, or the loss of hearing in one ear, where the subsequent injury is to the opposing extremity, eye or ear. Sec. 287.220.3(1). The employer at the time of the last work-related injury shall only be liable for the disability resulting from the subsequent workrelated injury considered alone and of itself. Sec. 287.220.3(2). Further, no compensation will be payable from the fund if the employee files a claim for compensation under the workers’ compensation law of another state having jurisdiction over the employee’s injury, accident, or occupational disease. Sec. 287.220.12. Finally, life payments to an injured employee made from the fund will be suspended when the employee is able to obtain suitable gainful employment or be self-employed in view of the nature and severity of the injury. Sec. 287.220.13.
The new Law also adds a new statute of limitations for applications for additional reimbursement by medical providers. All applications for additional reimbursement must be filed within two years of the date the first notice of dispute of the medical charge was received by the health care provider if the services were rendered before July 1, 2013. If the services were rendered after July 1, 2013, then within one year from the date of the first notice of dispute of the medical charge. Sec. 287.140.4. It should be noted that this section does not address or change the procedure for applications for direct payment. It remains the case that the employee cannot be made a party to any dispute over medical charges and that the employee’s recovery cannot in any way be jeopardized because of such a dispute. Sec. 287.140.4.
Effective December 1, 2013, Federal Rule of Civil Procedure 45 saw its first substantive changes in more than two decades. The principal amendments are discussed below.
Under Rule 45(a)(2), a subpoena “must issue from the court where the action is pending.” This simplifies the previous version of the rule where a subpoena for attendance at trial or hearing had to issue from the court for the district where the hearing or trial was to be held, a subpoena for attendance at a deposition had to issue from the court for the district where the deposition was to be taken, and a subpoena for production or inspection only had to issue from the district where the production or inspection was to be made.
Newly added subsection (a)(4) mandates notice and a copy of the subpoena must be given to all other parties before serving a subpoena for the production of documents, for electronically stored information, or for tangible things or the inspection of premises before trial. This requirement will enable other parties to review the substance of the actual subpoena before it is served on the person to whom it is directed.
Pursuant to Rule 45(b)(2), a subpoena may be served at any place within the United States, eliminating the previous version’s so-called “100-mile rule.” This now conforms to service of process in federal criminal cases.
New subsection (c) clarifies the place of compliance for each subpoena type. Subpoenas may require attendance at a trial, hearing, or deposition only (1) if within 100 miles of where the person resides, is employed, or regularly transacts business in person; or (2) within the state where the person resides, is employed, or regularly transacts business in person, if the person is a party or a party’s officer or if the person is commanded to attend a trial and would not incur substantial expense. For all other subpoenas, production of documents, electronically stored information, or tangible things can be commanded at a place within 100 miles of where the person resides, is employed, or regularly transacts business in person.
Finally, pursuant to subsection (d)(2)(B)(i), the party serving the subpoena may, upon an objection to the subpoena lodged by the person served, move the court for the district where compliance is required for an order compelling production or inspection. Under new subsection (f), when that court, i.e., the court for the district where compliance is required, did not also issue the subpoena, it may transfer the subpoena-related motion to the issuing court, i.e., the court where the action is pending, if the person subject to the subpoena consents or if the court “finds exceptional circumstances.” If the attorney for the person subject to the subpoena is authorized to practice in the court where the motion was originally made, i.e., the court for the district where compliance is required, then the attorney may file papers and appear on the motion as an officer of the issuing court, even if not formally a member of that court. To enforce its order, the issuing court may then re-transfer the order to the court where the motion was originally made. In other words, it may transfer the order back to the court for the district where compliance is required. Subsection (g) provides that the court for the district where compliance is required and also, after a motion is transferred, the issuing court may hold in contempt any person who, having been served, fails without adequate excuse to obey the subpoena or an order related to it.
In products liability and other complex cases, the deposition of testifying experts for each side often plays a key role. Integral to these depositions is the ability to adequately prepare for the questioning of the opposing expert.
Traditionally, Missouri has neither required testifying experts to prepare reports nor required detailed listing of anticipated opinions from each expert in an interrogatory answer. As a result, a Missouri defendant’s attorney might only learn the facts and analysis of the plaintiff at the deposition of the opposing expert, which sometimes occurs only a few weeks before trial. This ability to keep opposing counsel in the dark until the time of the deposition departs sharply from the approach taken in federal court, and has created challenges for counsel in their preparation for and conduct of the deposition of the opposing expert.
But a recent revision to Missouri’s Rules of Civil Procedure, which became effective January 1, 2013, may make this task a little easier. The revision appears in Rule 62.01 of the Missouri Rules of Civil Procedure, on Case Management Conferences. As a result, five new potential subjects may be raised at a Case Management Conference, i.e.
. . .
(6) The sequence and timing of any discovery; (7) The time for disclosure of experts; (8) When documents prepared, reviewed, or received by a retained expert must be disclosed; (9) Whether and to what extent any retained expert must disclose his or her publications; (10) Whether and to what extent any retained expert must disclose prior deposition or trial testimony or expert reports prepared under either Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure or an equivalent state rule;
These changes reflect the input of both the standing Supreme Court Civil Rules Committee and a temporary Ad Hoc Expert Discovery Committee established by the Missouri Supreme Court in February of 2010. It was my privilege to be one of the eleven attorney members appointed to this committee by the Supreme Court. Our Committee reviewed the scope of expert discovery in Missouri and was asked to recommend any changes to the existing scheme.
The final rule change reflects a balancing of interests. The Supreme Court did not want to impose the costs and complexities of more comprehensive expert discovery on every Missouri civil case. On the other hand, the Court empowered trial judges in appropriate cases, in consultation with counsel for the parties, to mandate more extensive expert discovery when warranted in a particular case.
The Case Management Conference may be requested by motion of any party or of the court. As the by-product of such a conference, a trial judge may now order that the sequencing and timing of discovery may be altered if needed. Moreover, the trial judge may require that retained (testifying) experts be disclosed at an earlier time in the progression of the case. In addition, the contents of an expert’s file may now be required to be disclosed in advance of the date of the deposition of the expert. Lastly, the expert’s previous deposition and trial testimony and even prior expert reports may be required to be disclosed by the retained expert.
On September 22, 2013, the Missouri General Assembly took up and overrode Govern Jay Nixon’s veto of House Bill No. 339. According to the new law – Section 303.390 of the Missouri Revised Statutes – an uninsured motorist forfeits his right to recover non-economic damages against an insured driver where the insured driver is alleged to be at fault. In other words, Section 303.390 states that if an uninsured driver is negligently hit by an insured driver, the uninsured driver, even with zero percent fault for the accident, cannot obtain an award for non-economic damages, which include: pain and suffering, mental anguish, inconvenience, physical impairment, disfigurement, loss of consortium, and loss of capacity to enjoy life.
Section 303.390 does not apply, however, where the insured tortfeasor is under the influence of drugs or alcohol or is subsequently convicted of involuntary manslaughter or assault in the second degree as a result of the accident. Additionally, the limitation for non-economic damage award does not apply to passengers in an uninsured driver’s vehicle and does not limit the recovery of benefits provided for economic losses. Even with these limitations, this new law significantly changes the landscape of automotive negligence cases in Missouri, as it eliminates an entire category of damages available to an uninsured plaintiff.
Governor Jay Nixon had previously vetoed House Bill No. 339 on July 3, 2013. In a letter drafted to the Missouri Secretary of State, Governor Nixon stated that he vetoed the bill because it lacked adequate definition of key terms – particularly the term “uninsured” was left without any definition. The Governor’s critique was echoed by The Missouri Bar Association, which noted that the bill was inconsistent when referring certain key terms like “insured drivers”, sometimes calling them “persons in compliance with the financial responsibility laws”. Governor Nixon also said the bill lacked clarity as to whether it would bar an uninsured motorist from a cause of action in its entirety or simply recovery from a category of damages.
The Governor also stated that it was unclear how the exceptions to the waiver would apply under Section 303.390.1. He argued that the waiver of non-economic damages does not apply if it is proven the insured motorist was under the influence of drugs or alcohol or was convicted of involuntary manslaughter or assault in the second degree as a result of the accident. However, the foregoing are questions of fact which normally are posed to the juries, yet under Section 303.390.3(2), the trier of fact is prohibited from being informed of such waivers. Thus, in the Governor’s view, the Bill lacked significant clarity as to whether the application of the waiver provision is a factual determination for the jury or a legal determination for the judge.
However, the Missouri General Assembly disagreed with the Governor, and sided with proponents of the newly enacted statute who viewed it as necessary because approximately 22 percent of Missouri drivers are uninsured, and the law will incentivize the purchase of the legally required insurance.
From a litigation standpoint, Section 303.390 is likely to become the subject of state constitutional challenge, based on the July 2012 Missouri Supreme Court in Watts v. Lester E. Cox Medical Centers. There, the Court ruled that a non-economic statutory damages cap on medical negligence actions was unconstitutional, holding in a 4-3 ruling that such a statute infringed on the jury’s constitutionally-defined purpose of determining the amount of damages sustained by an injured party. However, unless and until the newly enacted statute is overturned, defense counsel must be aware of the law’s ramifications. As with any statute that bars or limits recovery, it is now incumbent on defense counsel in any automotive negligence case to include Section 303.390 as an affirmative defense. Furthermore, defense counsel will need to draft and serve specific discovery relating to plaintiff’s automobile insurance coverage to determine if they meet the requirements set forth in Section 303.390.
The full impact of Missouri’s new uninsured motorist law has yet to be seen. However, it is safe to assume that this law could severely limit a plaintiff’s recovery in automotive litigation in Missouri. As such, all Missouri drivers need to be certain their automobile insurance is valid before getting behind the wheel and all Missouri attorneys need to be aware of this law prior to instituting or defending an automotive case in Missouri.
When parties are considering settlement of a claim in which Medicare has a lien, or potential lien, it is incumbent on the defense to take a pro-active aggressive position ensuring Medicare’s lien is properly satisfied. The MSPRC (www.msprc.info) is the company which has been hired by Medicare to review the medical bills and provide the parties with the final Medicare lien. When considering your settlements, there are four possible ways to satisfy the obligations of all the parties to Medicare.
Method 1. Defendant, when tendering its checks and payment of the settlement amount, includes MSPRC as a payee on the check. This will put the onus on the claimant/plaintiff to contact the agency to ensure that the amounts necessary to satisfy any liens are satisfied. In fact the plaintiff will be unable to cash the settlement check without MSRPC’s endorsement.
Example: The plaintiff and defendant have settled a claim for $100,000.00 and the plaintiff has a conditional Medicare lien letter of $20,000.00. One check is written to the plaintiff, his attorney and MSRPC for $100,000.
Method 2. Defendant drafts two checks. It is substantially similar to option number one in that the defendant will send a check to claimant/plaintiff’s attorney that includes MSPRC on the check. Unlike method number one, however, here defendant must estimate the amount of the lien. One of the two checks is made out to plaintiff, plaintiff’s attorney and MSRCP is for an amount slightly higher than the lien. This has the same effect as option number one in that the claimant/plaintiff will be unable to cash or deposit the second check until the MSRPC has received and endorsed it. The prudent practitioner will draft the second check, including the MSPRC, for an amount in excess of the conditional to ensure, that if Medicare makes a higher claim as a final, the amount will be sufficient to cover the payment.
Example: The plaintiff and defendant have settled a claim for $100,000.00 and the plaintiff has a conditional Medicare lien letter of $20,000.00. One check is written to the plaintiff and his attorney for $60,000 and the second is written to the plaintiff his attorney and MSRPC for $40,000.
Method 3. The “holdback” approach. Similar to option number two, defendant here will utilize the conditional payment letter. The amount of holdback will need to be sufficient to cover the Medicare lien based upon the conditional letter. In this case, however, in lieu of actually sending a check to claimant/plaintiff, the defendant will negotiate in its settlement agreement a portion of the settlement that will be held back from the proceeds to cover the final determination. Once a final determination is issued by MSRCP, the defendant will send a check to MSRCP for the lien and the remainder to plaintiff and plaintiff’s counsel.
Example: The plaintiff and defendant have settled a claim for $100,000.00 and the plaintiff has a conditional Medicare lien letter of $20,000.00. The settlement documents will set forth that the plaintiff and plaintiff’s attorney will receive a check in the amount of $60,000.00 and the defendant will hold back $40,000.00 of the settlement and pay the final determination directly to the MSRPC upon receipt of the same. Any funds that remain after the final determination is paid are sent directly to plaintiff and plaintiff’s attorney.
Method 4. The “wait and see” approach. The method is preferred if, for some reason, the amount of the final Medicare lien is impossible to determine at the time of settlement. Here, the defendant and the plaintiffs will enter into a settlement agreement and no funds will be tendered to the plaintiff until after the final determination is received for Medicare. Once Medicare makes its final determination, the defendant pasy the MSPRC directly with the remaining funds going to plaintiff and plaintiff’s counsel.
Example: The plaintiff and defendant have settled a claim for $100,000.00 and the parties are unsure of the Medicare lien amount. A settlement is reached but no checks are issued until Medicare issues its final ruling. At that time a check is written to MSRPC for the lien amount and the remainder is sent to the plaintiff and his attorney.
In the past, defendants have only been moderately concerned regarding outstanding medical liens. It has typically been sufficient for defendants to provide in the settlement agreement that all liens would be covered by the plaintiff and that plaintiff would indemnify the defendants for payment of the same.
With the onset of the recent Medicare reimbursement laws, it is now absolutely essential for defendants to ensure that Medicare’s liens are covered in any settlement. The risk of failure includes payment to Medicare, irrespective of any previously paid settlement proceeds, possibly including fines for the failure to preserve Medicare’s liens. If defendants and plaintiffs can agree and follow one of the four methods set forth above, the parties should be protected from any problems related to the payment of Medicare liens.
Changes in Missouri Procedural Requirements for Preservation of Error on Appeal Have Potential PitfallsOctober 15, 2013 | Robert Chandler
All Missouri attorneys guiding a matter through trial are concerned with procedurally preserving the client’s claims and/or defenses. Fairly recent changes to the Missouri Rules of Civil Procedure significantly alter the requirements for making a challenge to the factual sufficiency of pleadings on appeal. Attorneys challenging the sufficiency of a pleading at the appeal must now properly challenge this issue at the trial court level to preserve the issue for appeal.
Change to Rule 84.13(a)
Prior to the July 1, 2012 change, Rule 84.13(a) allowed an exception to the general rule that allegations of error not presented at trial were waived for subject matter jurisdiction and sufficiency of pleading questions:
“Rule 84.13 (2000) Allegations of Error Considered Reversible Error
(a) Preservation of Error in Civil Cases. Apart from questions of jurisdiction of the trial court over the subject matter and questions as to the sufficiency of pleadings to state a claim upon which relief can be granted (emphasis added) or a legal defense to a claim, … (ellipsis added) allegations of error not presented to or expressly decided by the trial court shall not be considered in any civil appeal from a jury tried case.”
The 2012 amendment removes this exception for sufficiency of pleading questions:
“Rule 84.13 (2012) Allegations of Error Considered - Reversible Error - Review in Cases Tried Without a Jury or With an Advisory Jury
(a) Preservation of Error in Civil Cases. Apart from questions of jurisdiction of the trial court over the subject matter, … (ellipsis added) allegations of error not presented to or expressly decided by the trial court shall not be considered in any civil appeal from a jury tried case.”
Change to Rule 55.27(g)(2)
Changes to Rule 55.27(g)(2) also affect the issue of properly timing a challenge to the sufficiency of pleadings to preserve the issue for appeal. Prior to a January 1, 2012 amendment, the Rule 55.27(g)(2) specifically allowed parties to raise the issue of improperly stating a claim or defense on appeal:
“Rule 55.27(g) (2009) Waiver or Preservation of Certain Defenses.
(2) A defense of failure to state a claim upon which relief can be granted, a defense of failure to join a party indispensable under Rule 52.04, and an objection of failure to state a legal defense to a claim may be made in any pleading permitted or ordered under Rule 55.01, or by motion for judgment on the pleadings, or at the trial on the merits, or on appeal (emphasis added).”
The rule was changed, effective January 1, 2012, effectively removing the option of raising these issues for the first time upon appeal:
“Rule 55.27(g) (2012) Waiver or Preservation of Certain Defenses.
(2) A defense of failure to state a claim upon which relief can be granted, a defense of failure to join a party indispensable under Rule 52.04, and an objection of failure to state a legal defense to a claim may be made in any pleading permitted or ordered under Rule 55.01 or by motion for judgment on the pleadings.”
The language allowing parties to raise the issue on appeal has been cut from the new rule.
Change to Rule 78.07(a)
Changes to Missouri Rule 78.07(a), paralleling the changes to Rule 55.27(g)(2) and Rule 84.13(a), also eliminate the ability to raise the issue of challenging the sufficiency of pleadings on appeal. Prior to January 1, 2012, challenges to the sufficiency of pleadings were excluded from the issues required to be raised in a motion for new trial to be preserved for appellate review:
“Rule 78.07 (2005) After-Trial Motion--Allegations of Error Required
(a) In jury tried cases, except as otherwise provided in this Rule 78.07, allegations of error must be included in a motion for a new trial in order to be preserved for appellate review.
The following matters need not be included in such motion to preserve the allegations of error:
(1) Questions of jurisdiction over the subject matter;
(2) Questions as to the sufficiency of the pleadings to state a claim or defense;
(3) Questions presented in motions for judgment under Rule 72.01(b); and
(4) Questions relating to motions for directed verdict that are granted at trial.”
The January 1, 2012 amendment to Rule 78.07(a), in relevant part, eliminates the language excluding challenges to the sufficiency of pleadings to state a claim or defense from those issues that must be raised in a post-trial motion for new trial to be preserved for appeal:
“78.07 (2012) After-Trial Motion - Allegations of Error Required
a) In jury tried cases, except as otherwise provided in this Rule 78.07, allegations of error must be included in a motion for a new trial in order to be preserved for appellate review.
The following matters need not be included in such motion to preserve the allegations of error:
(1) Questions of jurisdiction over the subject matter;
(2) Questions presented in motions for judgment under Rule 72.01(b); and
(3) Questions relating to motions for directed verdict that are granted at trial.”
Effectively, challenges to the sufficiency of a pleading to state a claim or defense MUST now be addressed in an appropriate post-trial motion for new trial to be preserved for appellate review. The combination of the changes to Rule 84.13(a), Rule 55.27(g)(2) and Rule 78.07(a) conclusively eliminates the option of raising this issue for the first time upon appeal.
The import of the changes to these rules has gone unnoticed by some, resulting in some unfortunate circumstances. On June 11, 2013 the Western District of Missouri ruled on the matter of Stander v. Szabados, WD 75697 (Mo.App. WD 2013). At appeal, Stander asserted for the first time, pursuant to the pre-amendment reading of Rule 55.27(g)(2), that Szabados failed to state a claim for fraud, having failed to plead essential elements of the claim. The Court, noting the January 1, 2012 amendment to Rule 55.27(g)(2), ruled that the deletion of the key language allowing raising the defense upon appeal “indicates that the defense may no longer be raised for the first time on appeal.” Id. at 8. Because the defense was not properly raised pursuant to the amendments to the rule, the Court ruled that the defense was waived. Id.
Counsel for Stander may have been misguided by language in the Missouri Approved Jury Instructions, Seventh Edition which was out of conformity with the amendments to the rules. The Supreme Court of Missouri, on August 16, 2013 issued its Order making appropriate changes to page LXI of the Missouri Approved Jury Instructions, Seventh Edition. Prior to the change, the paragraph, contradicting the herein-discussed changes in the Missouri Rules, stated:
“Don't forget!! Your failure to plead the ultimate facts necessary to state a claim may be raised defensively for the first time on appeal. Rule 55.27(g)(2).”
The Supreme Court ordered this line deleted and replaced with a malpractice warning:
“CAUTION: MALPRACTICE ALERT. Amendments to Rules 55.27(g)(2) and 78.07(a) (both effective January 1, 2012) and Rule 84.13(a) (effective July 1, 2012), when read together, require that allegations of error (including sufficiency or deficiency of pleadings) be presented to and expressly decided by the trial court in order to preserve those issues for appellate review. Such issues may no longer be raised for the first time on appeal and must be raised in a post-trial motion (and possibly earlier if so required by the rules). THIS IS A MAJOR CHANGE IN THE MISSOURI PROCEDURAL REQUIREMENTS FOR PRESERVATION OF ERROR ON APPEAL.”
The text of this Order may be found here.
In the final analysis all Missouri practitioners should be aware that a challenge to the sufficiency of an opponent’s claims or defenses may no longer be raised for the first time on appeal. These challenges need to be appropriately raised at the trial court level and in any post-trial motion for new trial.
On August 16, 2013, the Missouri Supreme Court adopted jury instructions for Missouri Merchandising Practices Act (MMPA) actions, which take effect on January 1, 2014. Until now, there were no MAI instructions for submitting an MMPA violation, and it was incumbent upon counsel to draft either a modified MAI or non-MAI instruction setting forth the elements of the cause of action. See Peel v. Credit Acceptance Corp., No. WD75409, 2013 Mo. App. LEXIS 655, at *9 (Mo. Ct. App. May 28, 2013).
Missouri courts have held that the purpose of the MMPA is “to preserve fundamental honesty, fair play and right dealings in public transactions.” Schuchmann v. Air Services Heating & Air Conditioning, Inc., 199 S.W.3d 228, 233 (Mo. Ct. App. S.D. 2006) (internal quotations omitted). As such, the prohibitions of the MMPA are meant to be construed more broadly than common-law fraud in order to reach any deception or unfair practice. “[T]he MMPA supplements the definition of common law fraud, eliminating the need to prove an intent to defraud or reliance. . . . The statute and the regulation paint in broad strokes to prevent evasion thereof due to overly meticulous definitions.” Id.
As discussed in the Committee Comments, the new MAI instruction focuses on the four elements of an MMPA claim, i.e.: plaintiffs must demonstrate that they (1) purchased merchandise (which includes services) from defendants; (2) for personal, family or household purposes; and (3) suffered an ascertainable loss of money or property; (4) as a result of an act declared unlawful under the Merchandising Practices Act. Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 773 (Mo. banc 2007); Edmonds v. Hough, 344 S.W.3d 219 (Mo. App.2011). The Committee also notes that the MMPA “prohibits ‘deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce,’ by defining such activity as an unlawful practice. Section 407.020.1.”
The Commentary also emphasizes that “[t]he statute does not contain a scienter requirement for civil liability for actual damages. It is the defendant's conduct, not his intent, which determines whether a violation has occurred. State ex rel. Webster v. Areaco Inv. Co., 756 S.W.2d 633, 635 (Mo.App.1988).” (internal quotations omitted). Moreover, “[a] consumer’s reliance on an unlawful practice is not required under the MMPA. Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 774 (Mo. banc 2007).” Finally, the Committee also warns that “[t]he Supreme Court of Missouri has cautioned that terms used in the MMPA may have a broader meaning than similar terms used in common law. The court noted that MMPA regulations define ‘material fact’ as ‘any fact which a reasonable consumer would likely consider to be important in making a purchasing decision . . . .’ 15 C.S.R. 60-9.010(1)(C). This definition of material is broader than the materiality requirement of common law fraud.’ See Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d at 773.”
Although the new MMPA jury instruction—MAI 39.01—does not take effect until January 1, 2014, any attorney who has an MMPA case that is likely to go to a jury before the end of calendar year 2013 would be well-advised to take the Supreme Court’s new guidance to heart, in propounding proposed jury instructions.
The full Missouri Supreme Court Order adopting jury instructions for MMPA actions, may be found here.
Court of Appeals Holds No Recognized Cause of Action Exists Under Missouri Law Against Gun Shop Owners for Sale of a Non-Defective Lawful ProductJuly 16, 2013 | Lisa Larkin
CAROLEE NOBLE, ET AL., AND JO ANN K. NIGLES, ET AL V. SHAWNEE GUN SHOP, INC., — S.W.3D —, 2013 WL 3661312 (MO.APP. W.D., JULY 16, 2013)
In an opinion issued July 16, 2013, the Western District of the Missouri Court of Appeals declined to extend what would have amounted to dram shop-type liability to a gun shop that sold ammunition and magazines to a purchaser who used a stolen credit card and later shot and killed two individuals.
This was a consolidated appeal of two separate wrongful death suits which were dismissed for identical reasons by the Jackson County Circuit Court. In both cases, the plaintiffs alleged the defendant gun shop was negligent in selling ammunition and magazines to an individual named David Logsdon who used a stolen credit card for the purchase. The credit card belonged to Logsdon’s neighbor, who was found dead in her home and who Logsdon is suspected of killing. It was alleged that five days after purchasing the ammunition and magazines, Logsdon used those items in a shooting spree in a Kansas City parking lot, resulting in two deaths and several other injured persons. Logsdon was later shot and killed by police.
In both suits, the plaintiffs alleged that Logsdon’s use of the neighbor’s stolen credit card to purchase the ammunition and/or magazines should have alerted the gun shop that Logsdon’s purchase presented a risk of serious injury to others. The plaintiffs both relied on the “negligent entrustment” exception to the Protection of Lawful Commerce in Arms Act, 15 U.S.C. §§ 7901-7903, to circumvent the law’s general prohibition against civil lawsuits directed to a manufacturer or seller of firearms and related products based on the criminal misuse of those items. The “negligent entrustment” exception, which is one of six possible exceptions to the law’s civil lawsuit prohibitions, holds a seller can be held liable “when the seller knows, or reasonably should know, the person to whom the product is supplied is likely to, and does, use the product in a manner involving unreasonable risk of physical injury to the person or others.” 15 U.S.C. § 7903(5)(B). The Jackson County Circuit Court dismissed all claims for failure to state a claim upon which relief may be granted.
On appeal, the Western District found that the allegations of the petitions, in fact, did fall within the Commerce in Arms Act’s definition of a “negligent entrustment” claim. Yet, it held the dismissals nevertheless must be affirmed because the allegations did not state a viable cause of action under Missouri law. The Commerce in Arms Act does not itself provide a private cause of action, thus not only were the plaintiffs required to qualify for one of the Act’s six exceptions, but it was also necessary for them to state a claim under some recognized Missouri cause of action. “While the Act may exempt ‘negligent entrustment’ claims from mandatory dismissal under federal law, it does not affirmatively authorize or establish such claims – it simply does not extinguish them.”
The plaintiffs admitted – and the Western District agreed – that Missouri law does recognize a negligent entrustment claim against a product seller. Instead, plaintiffs argued the appellate court should recognize a claim against the gun shop based on general negligence principles for its “negligent sale” of the ammunition and/or magazines to Logsdon. The court, however, declined to recognize this “novel claim” for two reasons.
First, though they tried to paint it as something else, plaintiffs were actually espousing a negligent entrustment claim for sale of a lawful product and, as plaintiffs had already admitted, such a cause of action does not exist under Missouri law. Plaintiff did not argue for a modification of the existing “negligent entrustment” law.
Second, plaintiffs’ attempt to cast this case as analogous to a dram shop case fails. Plaintiffs argued that, in a dram shop case, “an action may be brought against a bar owner if the bar owner serves alcohol to an underage or visibly intoxicated person, where the bar owner knew or should have known of the same and the patron leaves the bar and causes personal injury or death to a third person.” The Western District, however, noted dram shop liability as currently recognized in Missouri is purely statutory and thus of no application in this case. But, even if some semblance of a common-law basis for dram shop liability remains under Missouri law, it cannot be extended to a gun shop owner who does not sell any product for use or consumption on its premises. According to the court, dram shop liability is imposed in circumstances where the tavern operator has an opportunity to observe the patron’s behavior and consumption, thereby maintaining significant oversight and control over the patron’s use of liquor. A gun shop, by contrast, has no similar opportunity to observe and control a purchaser, and in this way, may be more analogous to a seller of packaged liquor for consumption off premises, for which Missouri courts have held no liability can be ascribed to the seller.
Finally, the court rejected plaintiffs’ contention that the ammunition and/or magazines sold were designed solely to cause significant human injuries, thereby making them defective in their intended use. The court noted that, while firearms are susceptible to unlawful use which can cause severe injuries, the sale of firearms and related products is legal and those products are capable of being used lawfully and safely. Thus, although a cause of action was not prohibited by the Commerce in Arms Act, the plaintiffs cannot state a cause of action against the gun shop based on a sale of a non-defective, lawful product for injuries causes by an unlawful action of a third party.
Missouri Supreme Court Decision Where Majority and Dissent Sharply Disagree Over the Nature of Lower Court's Ruling Underscores Importance of Clear Trial Court Rulings for Purposes of AppealJuly 16, 2013 | Lisa Larkin
SHANNON L. BAIR V. WILLIAM M. FAUST, — S.W.3D —, 2013 WL 3716435 (MO. BANC, JULY 16, 2013)
A recent opinion from the Missouri Supreme Court is notable not so much for its conclusion, but for the stark contrast in how the majority and dissenting opinions viewed and interpreted a lower court ruling. The opinion serves to highlight the importance of building a clear record of trial court rulings for purposes of appeal.
During voir dire of this automobile accident case, plaintiff’s counsel informed the court and defendant’s counsel that his client would not be appearing or testifying, but did not give an explanation as to why, simply asserting that an explanation would be forthcoming in the evidence. On the second day of trial, when plaintiff again failed to appear, defendant’s counsel expressed a concern that plaintiff would try to make a “grand entrance” at trial later in the proceedings. At that point, plaintiff’s counsel explained that plaintiff’s husband would later testify that plaintiff did not want to be in the same room with the defendant because she felt defendant had ruined her life for reasons having to do with the accident itself and certain events which occurred during the ensuing litigation.
Upon defendant’s motion, the trial court ruled that, while it is any party’s prerogative not to appear and testify, Missouri law allows the opposing party to argue an adverse inference from the party’s absence and defendant here would be allowed to so argue. The trial court also ruled that plaintiff’s husband would not be allowed to testify to why plaintiff herself was not present in that his explanation for why was hearsay. After these adverse rulings, plaintiff’s counsel indicated he wanted the opportunity to speak with his client about changing her mind as to whether to appear and testify. The trial court gave plaintiff’s counsel some period of time to get plaintiff to the courtroom, if she so chose, but ruled plaintiff would not be allowed to be present in the courtroom later if she did not appear in court before opening statements began. Plaintiff, in fact, did not appear before opening statements and the trial court excluded her from the courtroom for the remainder of the trial. Ultimately, the trial court allowed defendant to argue an adverse inference from plaintiff’s absence. Defendant took full advantage of this ruling, including referring to plaintiff’s absence 15 times in opening statements, arguing an adverse inference multiple times, consistently referring to plaintiff as the “non-present plaintiff” and arguing to the jury that the “non-present plaintiff was at fault for this accident[, and] [s]he’s not here for a reason.” The jury returned a verdict for plaintiff for $60,000, but attributed plaintiff 85% of the fault.
On appeal, the Supreme Court reversed and remanded for a new trial. The majority opinion, while assuming but not deciding that it was not an abuse of discretion to exclude plaintiff entirely from the courtroom, held it was an abuse of discretion to both exclude plaintiff from the courtroom and allow an adverse inference about her absence. According to the majority opinion, “[t]he two actions taken together resulted in Plaintiff suffering manifest injustice.”
The lengthy dissenting opinion disagreed with the majority’s characterization of the trial court’s initial ruling as being one where the trial court excluded plaintiff from the courtroom, as opposed to plaintiff’s absence being an event of her own choosing. According to the dissent, the court’s ruling was not to exclude the plaintiff from trial, but rather only that she would be prevented from coming in later and thereby disrupting the proceedings. Plaintiff freely chose not to attend her own trial and freely chose not to testify on her own behalf, and, after warning plaintiff’s counsel that she would not be allowed to come and go as she pleased, the trial court barred her from entering the courtroom once trial began. Thus, according to the dissent, the trial court’s initial ruling was not one of excluding plaintiff from testifying, but of enforcing plaintiff’s freely made choice not to testify. As a result, the dissent would have found no abuse of discretion in also allowing an adverse inference.
Both the majority and the dissent agreed that if the trial court had both excluded plaintiff from testifying (as opposed to plaintiff’s absence being of her own choosing) and then allowed defendant to argue that the jury should draw an adverse inference from plaintiff’s failure to testify, it would have abused its discretion. However, they disagreed on whether the trial court had in fact excluded plaintiff from the courtroom. Each characterized it as a different type of ruling, and, as it turned out, the nature of this initial ruling was ultimately outcome determinative. The opinion, therefore, serves to underscore the importance of building and maintaining a clear record as to trial court rulings, especially those made from the bench without the benefit of written orders.
The Digital Age presents several issues when it comes to an attorney’s investigation of a jury panel. Jurors today are likely to have some sort of internet presence, leaving their views, beliefs, and previous activity at the fingertips of trial counsel. Internet research of jurors has become an accepted practice, but with no specific guidance from the courts or the law, trial counsel must be wary of ethical considerations and other obligations when conducting research on potential or sitting jurors.
Missouri, notably, was one of the first states to adopt a position on a litigant’s obligation to investigate the backgrounds of potential jurors. In Johnson v. McCullough, 306 S.W.3d 551 (Mo. banc 2010), the Supreme Court affirmed the trial court’s granting of a new trial based on juror nondisclosure during voir dire. Plaintiff’s counsel asked the venire whether anyone had ever been a party to a lawsuit. One juror, Mims, remained silent.
After the jury returned a verdict in favor for Defendant, Plaintiff’s counsel conducted internet research on the jury. He discovered through Missouri’s automated case record service, Case.net, that Juror Mims had not only been involved in very recent litigation, but that she was even a defendant in a personal injury matter. The trial court granted Plaintiff’s motion for a new trial based on the juror’s intentional nondisclosure of prior litigation, despite Defendant’s challenge of the Plaintiff’s lack of timeliness in bringing the matter to the trial court’s attention.
Although the Supreme Court affirmed the trial court’s granting of a new trial, it put litigants on notice that they should not expect to succeed in such motions in the future if they wait until after a verdict is returned to perform juror research:
Litigants should not be allowed to wait until a verdict has been rendered to perform a Case.net search for jurors’ prior litigation history when, in many instances, the search also could have been done in the final stages of jury selection or after the jury was selected but prior to the jury being empanelled. Litigants should endeavor to prevent retrials by completing an early investigation. Until a Supreme Court rule can be promulgated to provide specific direction, to preserve the issue of a juror’s nondisclosure, a party must use reasonable efforts to examine the litigation history on Case.net of those jurors selected but not empanelled and present to the trial court any relevant information prior to trial. To facilitate this search, the trial courts are directed to ensure the parties have an opportunity to make a timely search prior to the jury being empanelled and shall provide the means to do so, if counsel indicates that such means are not reasonably otherwise available.
Johnson v. McCullough, 306 S.W.3d at 559.
In 2011, the Supreme Court approved new Rule 69.025 related to juror nondisclosure of litigation history:
69.025. Juror Nondisclosure
(a) Proposed Questions. A party seeking to inquire as to the litigation history of potential jurors shall make a record of the proposed initial questions before voir dire. Failure to follow this procedure shall result in waiver of the right to inquire as to litigation history.
(b) Reasonable Investigation. For purposes of this Rule 69.025, a "reasonable investigation" means review of Case.net before the jury is sworn.
(c) Opportunity to Investigate. The court shall give all parties an opportunity to conduct a reasonable investigation as to whether a prospective juror has been a party to litigation.
(d) Procedure When Nondisclosure is Suspected. A party who has reasonable grounds to believe that a prospective juror has failed to disclose that he or she has been a party to litigation must so inform the court before the jury is sworn. The court shall then question the prospective juror or jurors outside the presence of the other prospective jurors.
(e) Waiver. A party waives the right to seek relief based on juror nondisclosure if the party fails to do either of the following before the jury is sworn:
(1) Conduct a reasonable investigation; or
(2) If the party has reasonable grounds to believe a prospective juror has failed to disclose that he or she has been a party to litigation, inform the court of the basis for the reasonable grounds.
(f) Post-Trial Proceedings. A party seeking post-trail relief based on juror nondisclosure has the burden of demonstrating compliance with Rule 69.025(d) and Rule 69.025(e) and may satisfy that burden by affidavit. The court shall then conduct an evidentiary hearing to determine if relief should be granted.
Rule 69.025 and Johnson v. McCullough expressly apply only to a potential juror’s litigation history. See also Khoury v. Conagra Foods, Inc., 368 S.W.3d 189, 202 (Mo. App. W.D. 2012). In Khoury, the court upheld the striking of a juror after he was empanelled, but before evidence was presented, on the grounds of the juror’s potential bias, where the juror had posted anti-corporate sentiments on his Facebook page and blog. While it was appropriate to remove the juror, the Court of Appeals noted that Rule 69.025 was expressly limited to litigation history and, therefore, that the requirement that such challenges be made before the jury was empanelled did not apply in this case. Id. at 202 n.12. The court did note, however, that it has previously encouraged litigants to make challenges to a juror for nondisclosure in voir dire “before submission of the case whenever practicable.” Id. at 203.
Failure to conduct a search of Case.net before the jury is impaneled will likely deprive a party of a basis for seeking a new trial or appealing the judgment. While the courts have not yet created an obligation to conduct more extensive internet research on prospective or seated jurors, it certainly would appear to be a best practice to do so. Litigants should be aware that any broader internet research should be performed as soon as possible, and Khoury strongly implies that any challenge based upon that research must be made prior to submission of the case or it is waived. Attorneys should also be sensitive to potential exposure to professional liability from failing to undertake a reasonable internet investigation of potential jurors.
Any such broad internet research on potential or actual jurors must be undertaken with caution, however, and with a clear understanding of the “digital footprint” that the researcher might leave upon the prospective or seated juror’s social media accounts or websites. Missouri Rule of Professional Conduct 4-3.5 prohibits a lawyer from communicating ex parte with a juror or prospective juror unless authorized to do so by law or court order. This certainly prohibits any research of a juror that would require an attorney (or an agent or employee of an attorney) to “friend” or otherwise connect with that that juror.
While a mere Internet search of a juror or potential juror may seem innocent enough, an attorney has to be aware of social networking and other sites that alert a user that someone—such as the attorney or his or her employee—has viewed the juror’s page or profile. Although the attorney may not actively send the communication to the juror, if viewing the page causes the communication to be sent, many jurisdictions (including, for example, New York) conclude that this is a prohibited ex parte communication from the attorney. If an attorney is not certain whether a communication will be sent to the person he or she is investigating, he or she should enlist the assistance of IT professionals or refrain from such research until further guidance is provided by the courts or the law.
The U.S. Supreme Court recently held that the federal Medicaid statute’s anti-lien provision preempted a North Carolina state statute that required a Medicaid beneficiary to release up to one-third of any damages recovered for a tortious injury to the State as reimbursement for payments it made for the beneficiary’s medical treatment, up to the amount actually paid by the state. We take a look at how the ruling in Wos v. E.M.A., 133 S.Ct. 1391 (2013) could potentially affect Missouri and Kansas Medicaid lien statutes.
The federal Medicaid statute’s anti-lien provision, 42 U.S.C. § 1396p(a)(1) prohibits any state from attaching a lien on a Medicaid beneficiary’s property to recover payments made by the state on behalf of the beneficiary. In 2006, the Supreme Court held that this provision prohibits a state from taking “any portion of a Medicaid beneficiary's tort judgment or settlement not ‘designated as payments for medical care.’” Wos, 133 S.Ct. at 1395 (citing Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U.S. 268, 284 (2006)). Accordingly, a State has the power to attach a lien only to the portion designated as payments for medical care.
In Wos, the parties’ $2.8 million settlement did not designate any portion for medical claims, so the district court, following the statutory scheme, ordered one-third of the settlement placed in escrow for payment of the Medicaid lien. On appeal, the Fourth Circuit overturned the trial court. E.M.A. ex rel. Plyler v. Cansler, 674 F.3d 290, 312 (4th Cir. 2012). The Fourth Circuit held that “[i]n the event of an unallocated lump-sum settlement exceeding the amount of the state's Medicaid expenditures, as in this case, the sum certain allocable to medical expenses must be determined by way of a fair and impartial adversarial procedure.” Id. Accordingly the Fourth Circuit remanded the case “for an evidentiary hearing at which the district court shall determine the proper amount of DHHS's Medicaid lien.” Id.
The Supreme Court affirmed the Fourth Circuit holding and held that the North Carolina statutory scheme, which created an “irrebuttable, one-size-fits-all statutory presumption, [was] incompatible with the Medicaid Act’s clear mandate that a State may not demand any portion of a beneficiary’s tort recovery except the share that is attributable to medical expenses.” Wos, 133 S.Ct. at 1399. The Supreme Court likewise remanded the matter for an evidentiary hearing. Id. The problems with the North Carolina statutory scheme were twofold: (1) it allowed the state to take a portion of settlement or judgment funds that were not expressly designated as being for medical payments, in violation of 42 U.S.C. § 1396p(a)(1), and (2) it established an arbitrary percentage of funds as the presumptive amount of the settlement or judgment that should be attributable to medical payments.
So, what does Wos mean for Missouri and Kansas Medicaid lien laws? Due to the newness of the Wos decision and minor differences in these states’ laws versus the North Carolina statute at issue, it is not entirely clear at this time. Both states’ lien laws provide for a lien up to the amount of the medical expenses paid by the state. Both states’ laws permit the states to recover funds that have not been expressly “designated as payments for medical care,” the first problem in Wos.
Missouri’s Medicaid lien statute favorably incorporates one aspect of the Wos ruling – it provides for a judicial or administrative determination of the amount of the settlement or judgment that should be attributable to medical payments when there is no specific allocation for medical payments. Mo. Rev. Stat. § 208.215(4). The potentially problematic provision, however, is that the statute creates a lien against the settlement or judgment funds in the full amount of the medical payments made by MO HealthNet, and requires that the full amount of the third-party benefit be placed into a trust account until the amount of the state’s recovery is determined, which impairs the beneficiary’s right to that portion of the funds that should not be encumbered. It is not presently clear whether this would comport with Wos or not. As a practice tip, a defendant should seek an evidentiary hearing to determine the amount of the Medicaid lien before disbursing any proceeds. See § 208.15(9).
Kansas’ Medicaid program, now known as KanCare, is governed by K.S.A. 39-719a. The Kansas statute also runs afoul of the first problem in Wos, in that it allows the state to claim reimbursement of any money paid without regard to the “share that is attributable to medical expenses.” Because there is no statutory procedure for holding a hearing or for weighing any of the evidentiary factors set forth in Wos, it appears the Kansas statutory scheme also runs afoul of the second problem in Wos, and that this state’s Medicaid lien statute is probably preempted by 42 U.S.C. § 1396p(a)(1). However, no court has interpreted the bounds of K.S.A. 39-719a in 25 years, providing little guidance to practitioners with respect to how the Kansas courts might adopt to Wos. In practice, KanCare liens are usually negotiated and compromised in advance of any disbursement of proceeds.
BOWMAN V. MONSANTO CO., — S.CT. —, 2013 WL 1942397 ARGUED FEBRUARY 19, 2013, DECIDED MAY 13, 2013
The U.S. Supreme Court, in a unanimous opinion, has held in favor of Monsanto on a patent infringement suit arising from the St. Louis-based company’s Roundup Ready soybean seeds. Monsanto invented and patented a genetic modification that enables soybean plants to survive exposure to glyphosate, which is the active ingredient in many herbicides (including another Monsanto product, Roundup). According to the opinion, Monsanto sells Roundup Ready soybean seeds to farmers through a special licensing agreement, which permits a grower to use the seeds in one and only one growing season and then consume the resulting crop or sell it as a commodity. The agreement prohibits the grower saving any of the harvested soybeans for replanting or supplying them to anyone else for replanting. This is because each harvested soybean produced from a Roundup Ready seed itself produces a new generation of Roundup Ready seed.
Plaintiff Bowman is an Indiana farmer who, for the first crop of each season, purchased Roundup Ready soybean seeds, planted them all, and then sold the crop to a grain elevator. For his second crop of each season, however, he purchased soybeans meant for consumption from a grain elevator, most of which had come from other local farmers who had used Roundup Ready seed, and planted those seeds. Thus, when he applied a glyphosate-based herbicide to his fields, a significant portion of this second crop survived. Bowman then saved seed from that crop to use in his late-season planting the next year and for several years thereafter.
After discovering Bowman’s practice, Monsanto sued him for infringing on the Roundup Ready seed patents. Bowman argued there had been no infringement because the seeds were the subject of the prior authorized sale from local farmers to the grain elevator. The District Court rejected Bowman’s argument and awarded Monsanto damages of $84,456. The United States Court of Appeals for the Federal Circuit affirmed, holding Bowman could not “replicate” Monsanto’s patented technology by planting it in the ground to create newly infringing genetic material and seeds. The Supreme Court granted certiorari and has now affirmed. According to the Court, while the initial authorized sale of a patented article terminates all patent rights to that item (known as the patent exhaustion doctrine), the patentee retains the right to prevent a buyer from making new copies of the patented item. By planting and harvesting (and re-planting and re-harvesting) Monsanto’s patented seeds, Bowman made additional copies of the patented invention without paying for it, thus falling outside the protection of the patent exhaustion doctrine. According to the Court, “[t]he exhaustion doctrine is limited to the ‘particular item’ sold to avoid just such a mismatch between invention and reward.”
Missouri Court of Appeals Joins Majority of Federal Courts in Holding the Prohibition Against Evidence of Subsequent Remedial Measures Does Not Extend to Measures Taken by Non-PartiesApril 23, 2013 | Lisa Larkin
JUNE EMERSON V. THE GARVIN GROUP, LLC, — S.W.3D —, 2013 WL 1739723 (MO.APP. E.D. APRIL 23, 2013)
In a matter of first impression, the Missouri Court of Appeals for the Eastern District has held the exclusionary rule barring evidence of subsequent remedial measures does not apply when the remedial measure was implemented by a non-party. According to the Court, because evidence of remedial measures taken by a non-party will not expose that party to liability, the non-party will not be discouraged from taking the remedial measure and the public policy in favor of safety improvements – which is the policy driving the subsequent remedial measures exclusionary rule – will be satisfied.
Plaintiff June Emerson worked for Raven Industries at its electronics manufacturing plant. Raven Industries contracted with The Garvin Group to strip, wax, and buffer designated areas of the plant floor. On the night of the accident, Plaintiff slipped on a portion of the floor being treated by Garvin. Garvin had not marked the area with warning signs, cones, or tape. At trial, Plaintiff sought to introduce evidence that, subsequent to her fall, Raven Industries directed Garvin to begin marking the areas of the floor to be treated with caution signs or tape. The trial court excluded the evidence as a subsequent remedial measure. The jury assessed Garvin’s fault at 20% and Plaintiff’s at 80%.
On appeal, Plaintiff argued, as a matter of first impression in Missouri, that because evidence of remedial measures taken by a non-party cannot expose that person or entity to liability, the non-party will not be deterred from implementing the remedial measure. Thus, the prohibition on evidence of subsequent remedial measures should be limited to the exclusion of evidence relating to measures taken by the defendant.
The Court of Appeals, noting that all federal circuits to have addressed the issue have concluded the prohibition on evidence of subsequent remedial measures does not apply to measures taken by non-parties, agreed with Plaintiff and reversed and remanded for a new trial. “The principal reason for the prohibition lies in the public policy favoring safety improvements and the fear that if safety improvements could be used as evidence of previous improper conditions, no one, after an accident, would make improvements.” This public policy is satisfied when admitting evidence of remedial measures taken by a non-party since admitting such evidence will not act to discourage non-parties from taking the remedial measure for fear of exposure to liability.
Interestingly, the dissent focused on the fact that the remedial measure at issue in the case – the placing of caution signs or tape – was performed by defendant Garvin itself (though at the request of Raven Industries), while in the federal cases relied upon by the majority opinion, the remedial measures were actually performed by the nonparties. According to the dissent, because Raven Industries directed Garvin to use the caution tape, such evidence is arguably even more prejudicial to Garvin then if he had corrected his practice voluntarily. “As such, the public policy rationale supporting the general rule is equally compelling here,” and the dissent would have affirmed the judgment.
In Hope’s Window, Inc. v. McClain, - S.W.3d - , case no. WD75137 (Mo.App. W.D. March 19, 2013), a New York based window company entered into a contract with a Missouri customer for the sale and purchase of windows, doors, doorframes, and hardware for the customer’s Missouri residence. After the customer had made a down payment of $66,915 to Hope’s Windows, a dispute arose, and the customer refused to make further payments under the contract. The contract, executed by the customer in Missouri, contained a choice-of-law and forum-selection clause that provided, in pertinent part: “Any dispute arising under this agreement shall be under the jurisdiction and governed by the laws of the State of New York. The venue for any litigation under this agreement, if commenced by SELLER or BUYER, shall be in a court of competent jurisdiction in Chautauqua County in the State of New York.”
The customer failed to appear in a New York action filed against him by Hope’s Windows, and when Hope’s Windows sought to register a New York default judgment for $85,244 in Missouri state court, the customer moved to vacate the petition to register the judgment, on the grounds that the New York court lacked personal jurisdiction over him. The trial court refused to register the judgment, after having “extensively evaluated” the customer’s contacts with New York, to determine whether the New York court had personal jurisdiction over him under New York’s long-arm statute and whether the New York court complied with Due Process in rendering its judgment.
The Court of Appeals reversed, observing that “[w]hile this analysis would have been proper in the face of a simple choice-of-law clause, it was wholly unnecessary in light of the forum-selection clause contained in the contract”, which required not only that any dispute be governed by New York law, but that any lawsuit be filed in Chautauqua County, New York.
Under the U.S. Supreme Court decision in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), a forum-selection clause should be enforced specifically, unless the challenging party can clearly show that enforcement would be unreasonable and unjust, or that the clause is invalid for such reasons as fraud or overreaching, or that enforcement would contravene a strong public policy of the forum in which lawsuit was brought. A forum-selection clause is prima facie valid, and here, the circuit court erred by engaging in a “minimum contacts” analysis, before determining whether the forum selection clause was in fact enforceable.
Here, rather than arguing that the forum-selection clause was somehow invalid or unenforceable as contrary to public policy, the customer’s principal argument was that despite his signature and partial performance under the contract, he was not a party to the contract. Because he failed to meet his burden of showing that the forum selection clause was unenforceable, the Court of Appeals held that he had waived his right to challenge the New York court’s assertion of personal jurisdiction over him by agreeing to that clause, and remanded the case to the trial court, to address his other challenges to the petition to register the foreign judgment.
The Hope’s Window case should serve as a clear reminder to parties who enter into contracts that if you agree to a “forum selection” clause, you should expect to have to live with it. Absent unusual circumstances, you will be held to have consented to personal jurisdiction in the designated forum, and if you allow a default judgment to be taken against you in that forum, the judgment will likely be found enforceable against you in your home state.
"Probability" of Having Contracted Communicable Disease at Work Held Sufficient to Assert an Occupational Disease Claim Even in the Absence of Evidence of Actual ExposureMarch 26, 2013 | Lisa Larkin
STEPHEN SMITH V. CAPITAL REGION MEDICAL CENTER, — S.W.3D —, 2013 WL 1197499 (MO.APP. W.D. MARCH 26, 2013)
In a recent opinion, the Missouri Court of Appeals for the Western District held a workers’ compensation claimant had sufficiently proven her husband sustained an occupational disease arising out of and in the course of his employment with Capital Region Medical Center with evidence that his hepatitis C was “probably” caused by his employment. This, despite the fact that claimant presented no evidence that anyone with hepatitis C was ever present in the workplace.
Stephen Smith, a long-time laboratory technologist for Capital Region Medical Center, was diagnosed with hepatitis in 1991 and ultimately died from the disease in 2007. Claimant established that Smith contracted hepatitis C while working for Capital Region, but did not present evidence of any specific exposure to hepatitis C. The evidence showed Smith worked for the hospital for a number of years before the implementation of safety measures, which are commonplace today. For several years, Smith worked without gloves and without a face shield. The needles used were not of the type with automatic caps. He also often used a pipette to suction blood with his mouth from vials. There was no evidence, however, that Smith was ever stuck with a needle, that he ever had lesions on his hands into which bodily fluids could have seeped, that he ever sucked any blood products into his mouth, or that fluids ever splashed into his face. There was also evidence that in 1970 Smith suffered a gunshot wound and underwent surgery. During the surgery, he was given blood transfusions, with six units of blood.
At the hearing before the Division of Worker’s Compensation Administrative Law Judge, Claimant presented testimony from a physician who opined Smith’s work for Capital Region was the “likely cause” of his having contracted hepatitis C. Although Claimant’s expert acknowledged that receiving a blood transfusion in 1970 was a major risk factor for contracting hepatitis C, he found the daily exposure to blood and body products at work was the largest risk factor and “most probable” source of Smith’s hepatitis C, either through a needle stick or otherwise handling blood or body products.
Based on this evidence, the Administrative Law Judge determined Smith did not sustain an occupational disease arising out of and in the course of his employment. The Labor and Industrial Relations Commission affirmed. The Commission found that Claimant failed to meet her burden of proof that Smith sustained an occupational disease arising out of and in the course of his employment with Capital Region, concluding that no evidence had been presented showing exposure to hepatitis C in the workplace. According to the Commission:
Employee did work for employer for many years (from 1969 until 2006) so it would certainly seem that one or more patients with [hepatitis C] must have [been], at some point, treated at the hospital. But we cannot speculate as to these pivotal facts, nor can we fill in the gaps in the evidence with our own conjecture. As it stands, we are faced with a claim for occupational disease where there is no evidence that the disease was ever present in the workplace. We conclude that, absent such evidence, the case for exposure fails.
The Western District disagreed and reversed. Relying on one of its own opinions from 2009, the Court held Claimant’s medical expert’s testimony was sufficient to establish a probability that working conditions caused the hepatitis C, which, according to the Court, is all that is required by Missouri’s workers’ compensation law.
Interestingly, the case upon which the Court principally relied, Vickers v. Mo. Dep’t of Pub. Safety, 283 S.W.3d 287 (Mo.App. W.D. 2009), had slightly different facts. In that case, the claimant sought compensation for an occupationally-related bacterial infection she allegedly contracted through her work doing laundry for a nursing home. The claimant there presented evidence that, although she could not point to an exact incidence of exposure to the bacteria, there were four to six patients at the nursing home treated for infections with the same type of bacteria during the period of her employment.
While acknowledging the factual differences in Vickers, the Western District found them to be insignificant in that, according to the Court, Missouri workers’ compensation law does not require medical certainty that an injury was caused by occupational disease, but only a probability that working conditions caused the disease. Here, Claimant put forth sufficient evidence of that probability through her medical expert’s testimony.