Missouri punitive damages cap ruled unconstitutional

by Eric Pearson

In 2012, the Supreme Court of Missouri held that a state law imposing a cap on non-economic damages in medical negligence suits violates the right to trial by jury set forth in the Missouri State Constitution. Watts v. Lester E. Cox Medical Centers, 376 S.W.3d 633, 638 (Mo. 2012). That court has now ruled the state’s statutory cap on punitive damages is also unconstitutional. Lewellen v. Franklin, — S.W.3d —-, 2014 WL 4425202 (Mo. September 9, 2014).

The Missouri Constitution was adopted in 1820. Article I, section 22(a) of the Missouri Constitution provides that “the right of trial by jury as heretofore enjoyed shall remain inviolate….” To determine the nature of the right to trial by jury as “heretofore enjoyed,” a court must assess the state of the common law in 1820.

In Watts, the court recognized that, in 1820, the jury determined the amount of damages at common law (including cases for medical negligence) and there were no legislative limits on damages. Watts, 376 S.W.3d at 638-640. The court construed the phrase “shall remain inviolate” to mean that any change in the right to a jury determination of damages as it existed in 1820 is unconstitutional. Thus, in Watts, the court concluded that application of a statutory cap to damages awarded by a jury in a cause of action that existed in 1820 was unconstitutional:

Statutory damage caps were not permissible in 1820 and, pursuant to the plain language of article I, section 22(a), remain impermissible today. Statutory caps on damages in cases in which the right to trial by jury applies necessarily changes and impairs the right of trial by jury “as heretofore enjoyed.” The individual right to trial by jury cannot “remain inviolate” when an injured party is deprived of the jury’s constitutionally assigned role of determining damages according to the particular facts of the case.

Id., at 640.

Lewellen involved a fraud claim, not a medical negligence claim, and a cap on punitive damages rather than compensatory damages. The court reached the same result, for the same reasons: “[b]ecause a party seeking punitive damages for fraud in 1820 would have had the right to have a jury try the issue of punitive damages, the statutory reduction of Ms. Lewellen’s punitive damages award against Mr. Franklin pursuant to [the state law cap] was unconstitutional.” Lewellen, supra.

The plaintiff in Lewellen was a 77-year-old widow with less than $1,000 of monthly income tricked into buying a car she could not afford. The defendants had implemented an aggressive advertising scheme targeting financially vulnerable customers like the plaintiff that allowed them to purchase a vehicle for only $49, $69, or $89 per month.

Based on this ad, the plaintiff chose a 2002 Lincoln but emphasized to the defendants that she could only afford a $49 monthly payment. Defendants’ employees assured her that she would only be responsible for $49 per month even though the total sales price was $19,940.45 and the monthly payment was $387.45. Defendants agreed to reimburse the plaintiff for the difference. Defendants failed to provide the promised reimbursement. After the plaintiff contacted the dealership multiple times, the defendants sent her reimbursement for only nine months. The plaintiff eventually defaulted on her loan, and the vehicle was repossessed.

The plaintiff sued the defendants for fraudulent misrepresentation and for unlawful merchandising practices under the Missouri Merchandising Practices Act. A jury awarded $25,000 in actual damages assessed jointly and severally against Franklin and National and separate $1 million punitive damage verdicts against each. Although the amount of punitive damages was reduced by the trial court pursuant to the state law cap, the Supreme Court’s ruling that the state law is unconstitutional means that the jury’s verdict stands.

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* Michael Heygood, James Craig Orr, Jr. and Eric Pearson were selected to the Super Lawyers List, a Thomson Reuters publication, for the years 2003 through 2014.

by Eric Pearson

Eric Pearson is a licensed attorney and a partner at HO&P who handles commercial and personal injury lawsuits. Eric has been selected to the Super Lawyers List, a Thomson Reuters publication.