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Missouri Law BlogLegal updates, news, and commentary from the attorneys of Baker Sterchi Cowden & Rice LLC

Missouri enacts significant changes affecting punitive damages and consumer protection claims

October 26, 2020 | Douglas Hill

Missouri defendants will welcome several recently enacted changes to the manner in which punitive damages can be sought and awarded in most civil actions. SB 591 raises the bar for both pleading and proving punitive damages and provides additional protections to employers who might otherwise have been exposed to punitive damages for the unlawful conduct of low-level employees.

Most damages in civil lawsuits are intended to compensate plaintiffs for their losses, whether economic or noneconomic. But punitive damages, also called “exemplary damages” in Missouri, are different in that they are intended to punish civil wrongdoing and to serve as a deterrent to others who may be tempted to engage in similar conduct. SB 591, which became law on August 28, 2020, significantly changes how these damages can be awarded in Missouri.

Most notably, punitive damages in most cases now must be based on “clear and convincing evidence that the defendant intentionally harmed the plaintiff without just cause or acted with a deliberate and flagrant disregard for the safety of others.” This is a heightened standard from previously existing Missouri law, which required a showing of “complete indifference or conscious disregard for the safety of others.” Under the new standard, punitive damages are appropriate only if the defendant intentionally injured the plaintiff or did so by deliberately and flagrantly disregarding risk of injury.

The new law also bars plaintiffs from seeking punitive damages in their initial pleadings, a change intended to curb premature or frivolous punitive damages allegations.  Instead, a party seeking to assert a claim for punitive damages now must first file a motion for leave to do so, which will be granted only if the judge finds that admissible evidence exists upon which a jury could reasonably conclude that the punitive damages standard has been met. This roughly mirrors the procedures for asserting punitive damages in Kansas and Illinois state courts.

Employers are also protected under the bill from liability for punitive damages arising out of the conduct of their employees. Where plaintiff seeks to hold an employer vicariously liable for the wrongful acts of an employee or other agent, punitive damages will be awarded against the employer only if: (1) the employer authorized both the wrongful act and the manner in which it was done; (2) the employee was unfit to such a degree that it was reckless for the employer to hire and/or retain the employee; (3) the employee alleged to have committed the wrongful act held a management position and was acting within the scope of his or her managerial duties; or (4) the employer ratified or approved the wrongful act after it was committed.

MMPA Reform

The Missouri Merchandising Practices Act was originally intended to protect Missouri consumers from businesses that employ unfair and deceptive commercial practices. But thanks to Missouri courts’ expansive interpretation of statutory language that was often vague to begin with, the MMPA has been misused and stretched far beyond its original purpose. SB 591 makes a number of changes designed to reverse those trends.

Some of the changes are simple. For example, to prevail on MMPA claims, plaintiffs now must prove that they acted “as a reasonable consumer” would have acted under similar circumstances. Additionally, all MMPA claimants (or, in the case of class actions, all class representatives) must support their claimed damages with evidence that is “sufficiently definitive and objective” to allow their losses to be calculated to a reasonable degree of certainty. These changes—which should be part of any consumer protection statute—should provide at least some level of protection to businesses by deterring the assertion of frivolous claims and by offering a path to dismissal when those claims are filed.

The amendments also provide that any award of attorneys’ fees must “bear a reasonable relationship to the amount of the judgment” awarded to an MMPA claimant. Prior to SB 591, the act allowed prevailing plaintiffs to recover their attorneys’ fees, even where their recovery was nominal and any actual harm suffered was trivial. This allowed MMPA claimants to use the threat of ballooning attorney fees to deter defendants from litigating in earnest and to extract settlements wildly disproportionate to their actual losses (if any).   This change looks to curb those abuses of the MMPA.

The amendments also expressly exclude certain types of claims that are intended to be governed by other bodies of law. For example, the amended MMPA excludes claims arising out of the rendering or failure to render healthcare services, a change intended to stop the assertion of medical malpractice claims under the guise of this consumer protection statute. Similarly, a new provision in the law excludes certain new home warranties from the definition of “merchandise,” so long as the warranty documents contain and prominently display specified disclaimer language.

The changes enacted under SB 591—both to punitive damages claims and to the MMPA—will apply only to cases governed by Missouri law and filed after August 28, 2020. Any case filed before that date will be subject to the previously existing standards. We will continue to monitor how these important changes are implemented and interpreted by Missouri courts.

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About Missouri Law Blog

The BSCR Missouri Law Blog examines significant developments, trends and changes in Missouri law on a broad range of topics of interest to Missouri practitioners and attorneys and businesses with disputes subject to Missouri law. Learn more about the editor, David Eisenberg.

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