Law firm says all eyes on Missouri’s punitive damages cap – Are Damage Caps Unconstitutional?

November
11, 2011, St. Louis, Missouri…The Supreme Court of Missouri may soon decide the
fate of Missouri’s punitive damages cap, § 510.265 RSMo, observes Jessica J.
Hulting, a litigator at the Gallop law firm here.
On November 2, 2011, the Court heard oral arguments in Estate of Max E. Overbey and Glenna J. Overbey v.
Franklin, SC91369, wherein the Overbeys contend that a $1 million dollar
punitive award against former car dealer Chad Franklin, which was decreased to
$500,000.00 pursuant to the state’s punitive damages cap, should be reinstated
because the statute is unconstitutional.

Missouri law currently limits punitive awards to the greater of five times the actual damages or $500,000,
whichever is greater. However, in 2010, a jury in Clay County, Missouri,
awarded plaintiffs Max and Glenna Overbey $1.3 million in their suit against
National Auto Sales and its former owner Chad Franklin in North Kansas City
where the Overbeys had bought a car. Punitive damages comprised the largest
portion of that verdict: $1 million against Franklin and $250,000 against the
dealership for violating the Missouri Merchandising Practice Act (“MMPA”). The
jury awarded actual damages against Franklin of $4,500. Franklin’s punitive
award was later reduced by the trial judge to $500,000 pursuant to the cap and
the Overbeys appealed directly to the Supreme Court of Missouri.

Ms. Hulting, in summarizing key aspects of the case, observes, “The broad and ultimate question now in front of
the Missouri Supreme Court appears to be whether a low actual damage award
against a defendant could ever, statutory cap or not, support a large punitive
award even considering the reprehensibility of the defendant’s conduct.”

The Overbeys’ counsel contended before the Supreme Court of Missouri that § 510.265 is unconstitutional and
that the $1 million punitive award should be reinstated. Their counsel argued
that the cap violates the constitutional separation of powers; the Overbeys’
right to trial by jury; the Overbeys’ right to equal protection; the
prohibition against special legislation; the due process clause; and the
Overbeys’ right to open courts.

Ms. Hulting says, “The oral argument before the Missouri Supreme Court principally focused on whether §
510.265 violates the separation of powers doctrine and the Overbeys’ right to a
jury trial. Plaintiffs’ counsel argued that the statute usurps the judiciary’s
power by permitting the legislature to enact a procedural statute that
contravenes the constitution by depriving a plaintiff his/her right to a jury
trial. The arguments also focused on the fact that the actual damages awarded
stemmed from a legislatively created cause of action –MMPA — and that the cap
was also legislatively created.”

When considering the “check and balances” aspects of the matter, members of the Court inquired about what would
take place in the future if, without a statutory cap, the Court approved a very
high punitive damages award. Which branch would be the check on the judiciary?

Ms. Hulting observes, “Accordingly, the Missouri Supreme Court has an interesting opportunity to
decide the fate of the Missouri statutory punitive damages cap. The oral
argument elicited intelligent and balanced questions from the Court, which did
not suggest any clear consensus or direction on the outcome. Of course, the
Court has many options,” she says, including:

- It could decide to avoid the constitutional punitive damages issue altogether and find that Franklin did not
violate the MMPA.

- It could affirm the trial court’s rulings and reduced award under the cap.

- Alternatively, it could find that any one of the seven constitutional
arguments presented by the plaintiffs should prevail.

- Again avoiding the constitutional issue, the court could order the trial
court to consider further reduction of the punitive award.

More details on Overbey and Ms. Hulting’s further comments can be seen on the Gallop website www.GallopLaw.com.
Ms. Hulting can be reached at 314.615.6000.

Gallop, Johnson & Neuman,
L.C., a full service law firm of more than 65 attorneys, has provided legal
services to clients in diverse industries since its founding in 1976 and is one
of the largest law firms in St. Louis. The firm serves public corporations;
privately-held companies; entrepreneurs and start-up enterprises; individuals
and families; trustees and trust beneficiaries; charities; and non-profit
entities. For more information, contact Laura Callahan at 314.615.6000 or see
the website www.GallopLaw.com. Media contact: Jeff Dunlap at 314.993.6925.

The commentary above was
neither written nor intended by Gallop, Johnson & Neuman, L.C. to be
considered or interpreted as legal advice. It does not intend to predict any
outcome, or to contradict any outcome, in the case referenced above that may be
decided by the Supreme Court of Missouri. The choice of a lawyer is an
important decision and should not be based solely upon advertisements

 

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