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New Limits on Missouri Punitive Damage Requests Go Into Effect

September 9, 2020

By: Thaddeus "Tad" W. Juilfs

As of August 28, 2020, the state of Missouri will begin moving into a new era of tort reform by way of updates to requests for punitive damages. The passing of Senate Bill 591 (codified as RSMo § 510.261) only applies to actions filed on or after August 28, but the new law includes various significant modifications to requests for punitive damages which could greatly reduce the exposure of those doing business in Missouri who find themselves in the crosshairs of local juries and their infamously high verdicts.

 

Standard of Proof

 

The new law attempts to codify the standard of proof for punitive damages. Plaintiffs will be required to prove “by 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.” The clear and convincing standard was already the requirement in Missouri, but the “intentional” and “deliberate and flagrant disregard” language codifies a standard which otherwise included “willful, wanton, malicious or so reckless [conduct] as to be in utter disregard of the consequences.” Schroeder v. Lester E. Cox Medical Ctr., Inc., 833 S.W.2d 411, 420 (Mo. Ct. App. S.D. 1992) (The court also added “[s]uch acts are clearly distinguished from negligence.”)

 

What remains to be determined in this language is the effect “deliberate and flagrant disregard” will be given. Over the years, Missouri courts have consistently blurred the line between reckless conduct and negligent or “grossly” negligent conduct. Even though reckless conduct would seem to encompass the scienter presupposed in the “deliberate and flagrant disregard” conduct, Missouri continues to push the limits. See Hoover’s Dairy, inc. v. Mid-America Dairyman, 700 S.W. 426, 436 (Mo. banc 1985) (“[P]unitive damages can be awarded in a negligence action, but only when the defendant knew or had reason to know that there was a high degree of probability that the action would result in injury.”); Peters v. General Motors Corp., 200 S.W.3d 1, 24 (Mo. Ct. App. W.D. 2006) (“Ordinarily exemplary damages are not recoverable in actions for negligence, because negligence, a mere omission of the duty to exercise care, is the antithesis of willful or intentional conduct.”); Elliot v. Kesler, 799 S.W.2d 97, 103 (Mo. Ct. App. W.D. 1990) (“In a negligence action, punitive damages may be awarded if the defendant ‘showed complete indifference to or conscious disregard for the safety of others.’”).

 

For those handling wrongful death cases, Missouri also sees a slew of cases which request “aggravating circumstances” or “exemplary” damages, but SB 591 has codified those terms to be equivalent. These damages have been used interchangeably with “punitive damages” in Missouri and the courts treat them as the same, despite some differences in the damages available to a plaintiff via a statutory claim (i.e. the Wrongful Death Act) and those tort claims at common law. See Poage v. Crane Co., 523 S.W.3d 496, 525-27 (Mo. Ct. App. E.D. 2017); Mansfield v. Horner, 443 S.W.3d 627, 659-61 (Mo. Ct. App. W.D. 2014).

 

Timing

 

SB 591 changes the timing of pleadings relative to a claim for punitive damages. The changes could greatly reduce whether punitive damages are even submitted to a jury and could reduce expensive discovery against defendants.

 

Until now, Plaintiffs have typically pled punitive damages in initial pleadings with little to no specific support in favor of those damages. The goal was to have those facts come out during discovery after the initial pleadings, but this also allowed plaintiffs to use fishing expedition discovery against a defendant when plaintiffs own facts showed no support for punitive damages.

 

The new law provides that plaintiffs seeking punitive damages must submit a motion to the court supported by evidence “establishing a reasonable basis for recovery of punitive damages.” A motion for punitive damages must come no later than 120 days before the final pretrial conference or trial, if no pretrial conference is scheduled. The motion should be supported by “affidavits, exhibits, or discovery materials establishing a reasonable basis for recovery of punitive damages.” The court is required to rule on the motion no later than 45 days after a hearing on the motion, or if no hearing, after the defendant has filed a response to the motion. It is not clear whether the motion would be automatically defeated or granted if the court fails to make a ruling in 45 days.

 

The term “reasonable basis” is certainly up for interpretation and certain jurisdictions may review such requests for punitive damage pleadings quite liberally. For example, it is quite possible that even though a plaintiff has testified to having no information that a defendant sought to intentionally harm plaintiff or acted with any disregard to safety, a judge could order that discovery be granted against the defendant to see what actions can be proven absent plaintiffs’ knowledge.

 

If such a liberal interpretation should become the standard practice or allowable standard by the appeals courts, this provision would become essentially useless. However, on the other hand, a strict interpretation for what is “reasonable” could significantly limit punitive damages since they could not be requested from the jury and expensive, time consuming discovery could be limited.

 

Nonparty Harm

 

SB 591 has specifically instructed that the amount of punitive damages awarded shall not be based on harm to nonparties. This modification specifically addresses juries which give large punitive damages awards because nonparties (e.g. family members, coworkers) were also harmed by a defendant’s conduct, but those nonparties will not receive direct compensation from the suit at hand. This is a codification of the standard indicated from the U.S. Supreme Court. See Philip Morris USA v. Williams, 549 U.S. 346 (2007).

Note that this does not necessarily instruct a jury to disregard the harm to nonparties in general, but this prohibition may result in limited testimony or evidence if that testimony/evidence of nonparty harm is only being provided for punitive damages. This instruction may be more effective on paper than in practice as juries are not require to rationalize or provide a statement for any punitive damage award amount.

 

Nominal Damages

 

Missouri will now prohibit punitive damages when there has been only an award of nominal compensatory damages, unless the nominal damages come solely from a privacy rights violation, property rights violation, or rights protected by the US Constitution or Missouri Constitution. In effect, this limitation seeks to address frivolous lawsuits where a plaintiff is not seriously injured, as shown by the nominal compensation. Thus, the limitation seeks to limit windfalls on the punitive damage award.

 

Employer Complicity

 

Finally, SB 591 modifies plaintiff punitive damage recovery from employers based on an employee’s conduct. Punitive damages become available when (1) the employer or its managerial agent authorized the commission of the act and the manner of the act, (2) the employee was unfit and it was reckless to employ/retain the employee, and (3) the employee was employed in a managerial capacity and acting within the scope of employment, or the employer ratified/approved the act.

 

The codification of this standard for punitive damages against an employer makes a strong statement on vicarious liability. Punitive damages would not be available when the employer is not complicity in the wrongdoing of the employee and this is evident as an employer would not have the same culpability. Note that compensatory damages against the employer for vicarious liability are still available.

 

For more guidance on Missouri tort reform and punitive damages, contact an MMBAT attorney to discuss your options in defending these claims.

 

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