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On May 12, 2020, the Missouri Senate formally sent Senate Bill 591 to the desk of Governor Mike Parson for signature. Senate Bill 591 seeks to implement tort reform with respect to claims under the Missouri Merchandising Practices Act (MMPA) and claims for punitive damages in all tort cases.

Changes to the MMPA

Senate Bill 591 makes several changes to the MMPA–a law that permits a person who purchases or leases merchandise primarily for personal, family, or household purposes and suffers a loss as the result of an “unlawful” practice as defined by § 407.020, RSMo. The definition of “unlawful” practices is varied and includes the act, use or employment of “any 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 ….” § 407.020.1, RSMo.

Senate Bill 591 requires an additional element of proof from a plaintiff seeking relief under the MMPA. Senate Bill 591 amends the MMPA to require a plaintiff to establish that the plaintiff acted as a “reasonable consumer would in light of all circumstances” and that the unlawful practice “would cause a reasonable person to enter into the transaction that resulted in damages.” Finally, Senate Bill 591 requires a plaintiff to show individual damages with “sufficiently definitive and objective evidence to allow the loss to be calculated with a reasonable degree of certainty.”

In addition to this new element of proof for plaintiffs, Senate Bill 591 specifically amends the MMPA to permit a court to dismiss a claim as a matter of law where “the claim fails to show a likelihood that the method, act, or practice alleged to be unlawful would mislead a reasonable consumer.”

The current and future versions of the MMPA permits a person to seek actual damages as well as attorneys’ fees. However, Senate Bill 591 places limitations on the recovery of attorneys’ fees in class action litigation brought pursuant to the MMPA. The prior version of the MMPA permitted the recovery of “reasonable” attorneys’ fees in class action lawsuits brought under the MMPA. The new version of the MMPA still permits the recovery of “reasonable” attorneys’ fees, but now states that an award of attorneys’ fees must “bear a reasonable relationship to the amount of the judgment.” Based on the text of Senate Bill 591, it appears this change to the recovery of attorneys’ fees only applies to class action lawsuits, but not individual lawsuits filed under the MMPA.

Evaluation of Changes to MMPA

The biggest change to the MMPA is the inclusion of a new element of proof for plaintiffs seeking damages and the requirement that a plaintiff show the “unlawful practices” would have misled a “reasonable consumer.” The new language imposes an objective standard and permits a reviewing court to consider whether the alleged “unlawful practices” would have misled a reasonable person.

Changes to Punitive Damages

Senate Bill 591 also makes sweeping changes to the recovery of punitive damages in Missouri. Per the text of Senate Bill 591, punitive damages may now only be awarded if the claimant “proves by clear and convincing evidence the defendant intentionally harmed the plaintiff without just cause or acted with a deliberate and flagrant disregard for the safety of others.”

Senate Bill 591 also provides that punitive damages can only be awarded against an employer or other principal for the act of its agent/employee under certain circumstances:

  1. The principal or a managerial agent of the principal authorized the doing and the manner of the act;
  2. The agent was unfit and the principal or a managerial agent of the principal was reckless in employing or retaining him or her;
  3. The agent was employed in a managerial capacity and was acting in the scope of employment; or
  4. The principal or a managerial agent of the principal ratified or approved the act.

Senate Bill 591 also provides that when an employer admits respondeat superior for a claim of compensatory damages, the court shall grant limited discovery consisting “only of employment records and documents or information related to the agent’s qualifications.”

Evaluation of Changes to Punitive Damages

Senate Bill 591 completely overhauls the prior common law pertaining to the recovery of punitive damages and appears to impose a more stringent standard to recover the same. In addition to changing the required showing to recover punitive damages, Senate Bill 591 places significant hurdles in front of plaintiffs to plead a claim for punitive damages in the first place.

After being signed into law, Senate Bill 591 will preclude plaintiffs from simply “claiming” punitive damages at the outset of a lawsuit. Instead, a plaintiff will need to obtain leave of court to include such a claim and support the claim for punitive damages will specific evidence that establishes a reasonable basis for the recovery of punitive damages. These changes may ultimately deter plaintiffs from claiming punitive damages in borderline cases or otherwise result in the denial of claims for punitive damages.

Article by GOT attorney, Jim Ribaudo.

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