On May 12, 2020, the Missouri legislature passed Senate Bill 591 (SB 591), which provides major changes related to how punitive damages are assessed in civil and medical malpractice actions and brings significant reform to the Missouri Merchandising Practices Act (MMPA), Missouri’s consumer protection law. Missouri Governor Mike Parsons is expected to sign the bill shortly.
For civil defendants, SB 591 brings welcome reform to the state’s punitive damages system. The bill provides that punitive damages shall only be awarded in the most egregious cases where the plaintiff proves by “clear and convincing evidence” that defendant intentionally harmed plaintiff or acted with deliberate and flagrant disregard for the safety of others. Providing clearer guidance to juries on the standard for punitive damages is certainly a benefit to defendants facing such claims, despite the continued void of a cap for punitive damage awards since the 2014 Missouri Supreme Court decision of Lewellen v. Franklin. In general, the trier of fact will be prohibited from awarding punitive damages where actual damages are nominal. The constitutionality of exceptions to this rule—violations of privacy, property, and constitutional rights—will likely be addressed in the future.
SB 591 also adds vicarious liability protections from punitive damages where the acts of employees might otherwise have subjected an employer to punitive damages. Under SB 591 vicarious liability for punitive damages against an employer due to an employee’s conduct is limited to certain circumstances—where a principal authorized or ratified the act, the principal acted recklessly in employing or retaining the unfit agent, and the agent was acting in a managerial capacity. The bill provides that the scope of discovery is limited to employment records and information related to the agent’s qualifications where a principal admits liability for the actions of agents for compensatory damages. Additionally, a defendant may now be credited for punitive damages paid in a federal court. This provision acts as a safeguard against repeated punitive damage awards for conduct that has already been punished in past litigation.
Perhaps most important under the new legislation, Plaintiffs may not seek punitive damages in initial pleadings. Rather, punitive damages can only be sought upon an evidentiary showing of a reasonable basis for recovery of such damages and shall not be based on harm to nonparties. Punitive damage claims must be made no later than 120 days prior to the final pretrial conference or trial date. As required by other states, this particular provision acts as a meaningful safeguard in affording defendants with ample protection from unwarranted claims.
SB 591 also modifies the definition of “punitive damages” as it relates to medical malpractice claims, where a jury must find by clear and convincing evidence that the health care provider intentionally caused damage or demonstrated malicious misconduct. Evidence of negligence, including indifference or conscious disregard for the safety of others, fails to meet this standard.
Last, SB 591 brings needed reform to the MMPA that has plagued defendants in the state since its passage. The MMPA was intended to provide a means of recovery for consumers allegedly harmed by a business’ unlawful business practices, but reform advocates have argued the MMPA has been widely used as a catch-all cause of action against Missouri businesses. The new law sets forth a new procedure for unlawful merchandising practices claims, where plaintiffs must now prove that they acted as a reasonable consumer and that the alleged violation of the MMPA would cause a reasonable person to enter the transaction that caused damages (i.e. reasonable reliance, which was absent from the prior iteration of the Act).
Additionally, MMPA claimants must now also establish that they suffered actual damages – which again was a requirement missing under the prior version of the Act. MMPA claimants must show individual damages with sufficiently definitive and objective evidence to allow the loss to be calculated with a reasonable degree of certainty. The bill provides that in a class action, the named plaintiff must make these showings, while unnamed members must establish their damages in a manner determined by the trial court. Further, claims under the MMPA against health care providers are excluded. Any award of attorney’s fees under the MMPA, must bear a reasonable relationship to the amount of the judgment. If the relief is equitable, the fee award must rest on time reasonably expended. These provisions are to be applied prospectively, not applying to causes of actions that accrued by August 28, 2020.
The new law is applicable to all cases filed on or after August 28, 2020 and defendants may see an influx of MMPA claims and civil filings seeking punitive damages prior to the August 2020 effective date in effort to defeat the heightened standards created by the bill. SB 591 should be considered a significant win for defendants in MMPA claims and those facing punitive damages claims. The new legislation serves as a shield against both unwarranted claims at filing and claims that fail the clean burden at trial. A full text of the bill can be found here.