In Lewellen v. Franklin (Lewellen),1 the Missouri Supreme Court unanimously held that a mandatory cap on punitive damages,2 enacted by the Missouri Legislature in 2005 as part of its comprehensive legislative tort reform, violated a plaintiff’s right to a jury trial under the Missouri Constitution.  Holding the punitive damages cap unconstitutional as to a fraudulent-misrepresentation claim, the Lewellen court unanimously followed the controversial 4-3 split decision in Watts ex rel. Watts v. Lester E. Cox Medical Centers (Watts),3  in which the Missouri Supreme Court held a statutory cap on noneconomic damages in medical-negligence cases constitutionally infirm under a plaintiff’s constitutional right to a jury trial.

I. Facts

In Lewellen, the plaintiff alleged that the defendants’ advertisements for the sale of vehicles constituted fraudulent misrepresentations and violated the Missouri Merchandising Practice Act (MMPA), Mo. Rev. Stat. §§ 407.010 et seq.4   In addition to awarding the plaintiff $25,000 in actual damages, the jury awarded her $1,000,000 in punitive damages on each of her claims.5  Upon the defendants’ motions to cap the punitive damage awards pursuant to Mo. Rev. Stat. § 510.265, the trial court reduced the punitive awards to $500,000 and $539,050.6  The plaintiff appealed, asserting multiple state constitutional challenges to § 510.265’s cap on punitive damages, including that it violated the Missouri Constitution’s right to a jury trial.7  Specifically, the plaintiff argued that the statutory cap on punitive damages strips the jury of its function in determining damages.8 

II. Constitutional Right to Jury Trial

Article I, section 22(a) of the Missouri Constitution provides, “[t]hat the right of trial by jury as heretofore enjoyed shall remain inviolate . . . .”  Relying on its 2012 split decision in Watts,9 in which it struck down a statutory cap on noneconomic damages in medical negligence cases under article I, section 22(a)’s right to a jury trial, the Missouri Supreme Court explained that the phrase “shall remain inviolate” “means that any change in the right to a jury determination of damages as it existed in 1820 is unconstitutional.”10  In other words, the Lewellen court found its controversial Watts decision controlling on the issue of whether application of § 510.265’s statutory cap on punitive damages to a cause of action that existed in 1820 violates the right to a jury trial (as it existed in 1820 when the right to a jury trial became a state constitutional right).

Reviewing established cases, the Missouri Supreme Court determined that “there existed a right to a jury determination of the amount of punitive damages in a fraud cause of action in 1820” and that  “imposing punitive damages [has been] a peculiar function of the jury” since at least 1820.11  The Lewellen court concluded that § 510.265’s cap on punitive damages “necessarily changes and impairs the right of a trial by jury ‘as heretofore enjoyed.’”12  Accordingly, the court held that “because section 510.265 changes the right to a jury determination of punitive damages as it existed in 1820, it unconstitutionally infringes on [a plaintiff’s] right to a trial by jury protected by article I, section 22(a) of the Missouri Constitution.”13

In finding the constitutional infirmity of § 510.265’s punitive damages cap, the Missouri Supreme Court rejected the defendant’s argument that because the Due Process Clause of the United States Constitution limits punitive damages (by prohibiting “the imposition of grossly excessive or arbitrary punishments on a tortfeasor”),14 the state legislature may also limit punitive damages via a statutory cap.15  Noting that due-process limitations require a punitive damages award to “be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff,”16 the Missouri Supreme Court explained that “[S]ection 510.265 is not based on the facts or circumstances of the case; it caps the punitive damages award at $500,000 or five times the judgment regardless of the facts and circumstances of the particular case.”17              “Bound by Watts,” the Missouri Supreme Court held that § 510.265’s punitive damages cap “curtails the jury’s determination of damages and, as a result, necessarily infringes on the right to a trial by jury when applied to a cause of action to which the right to jury trial attaches at common law.”18 “Because  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 [the plaintiff’s] punitive damages award against [the defendant] . . . was unconstitutional. “19

III. Implications of the Case

In making its ruling, the court rejected the reasoning of other state supreme courts.  As Mark Behrens points out, “[t]his ruling is an extreme outlier.  Virtually every other state that has considered the constitutionality of punitive damages caps has held that such laws do not violate the jury trial right because the jury’s fact-finding function is preserved.”20  These states include Alaska, Kansas North Carolina, Ohio, Texas, and Virginia. 

Unlike its recent Watts decision, which was split 4-3 with a swing vote, the Missouri Supreme Court reached an undivided decision in Lewellen.  Although the composition of the Watts court differs from that of the Lewellen court, that difference does not explain the shift from a 4-3 split decision to a unanimous decision regarding statutory caps on damages. 

For the Watts decision, Judge Zel Fischer recused himself for unknown reasons. How Watts would have come out had Judge Fischer not recused himself remains an open question.  While his joining in the Lewellen majority may signal he would have voted with the Watts majority, it may also signal that stare decisis bound him to vote with the majority in Lewellen, regardless of how he would have voted in Watts.

Having invalidated statutory caps on both noneconomic damages (in Watts) and punitive damages (in Lewellen), the Missouri Supreme Court has called into question whether the Missouri Constitution permits any legislative attempt to reign in damage awards in common-law causes of action, despite public support for such tort-reform measures.

 

* Mr. Clark is founding principal of Clark & Sauer, LLC, in St. Louis, Missouri, concentrating in complex commercial litigation and constitutional litigation.  

** Ms. Weinberg is an associate attorney with Clark & Sauer, LLC.  The authors extend their gratitude to Clark & Sauer, LLC associate Michael Martinich-Sauter for his assistance with this article.

 

Endnotes

1 Lewellen v. Franklin, No. SC 92871, 2014 Mo. LEXIS 211 (Mo. banc Sept. 9, 2014).

2  Mo. Rev. Stat. § 510.265.1 states:  “No award of punitive damages against any defendant shall exceed the greater of:  (1) Five hundred thousand dollars; or (2) Five times the net amount of the judgment awarded to the plaintiff against the defendant.”

3  376 S.W.3d 633 (Mo. banc 2012).

4  Lewellen, slip op. at 3-5.

5  Id. at 1.

6  Id. at 7. The plaintiff did not challenge the application of the punitive-damages cap to the punitive award on her MMPA claim ($539,050.00), likely because the Missouri Supreme Court previously held that § 510.265’s cap on punitive damages was constitutionally valid as to MMPA claims.  See Estate of Overbey v. Chad Franklin Nat’l Auto Sales N., LLC, 361 S.W.3d 364, 375-81 (Mo. banc 2012).  In Estate of Overbey, the court reasoned that because MMPA claims did not exist in 1820 when the Missouri Constitution first provided a right to a jury trial, the MMPA damages cap did not diminish any rights existing at that time.  Id.

7  Lewellen, slip op. at 7-8.

8  Id. at 8.

9  In Watts, the plaintiff alleged that the defendants’ medical negligence caused brain injuries to a newborn, and the plaintiff received an award of $1,450,000.00 in noneconomic damages, which the trial court reduced pursuant to Mo. Rev. Stat. § 538.210’s $350,000.00 cap on noneconomic damages.  The Watts Court, in a split decision, held that the noneconomic-damages cap violated a plaintiff’s right to a jury trial because a plaintiff had a cause of action for non-economic damages in medical negligence cases in 1820.  See Watts, 376 S.W.3d at 640-41.

10  Lewellen, slip op. at 9 (citing Watts ex rel. v. Lester E. Cox Medical Centers, 376 S.W.3d 633, 638 (Mo. banc 2012)).

11  Id. at 10.

12  Id. at 11 (quoting Watts, 376 S.W.3d at 640).

13  Id. at 11.

14  Id. at 11 (quoting State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 409 (2003)).

15  Id. at 12.

16  Id. (quoting State Farm, 538 U.S. at 425).

17  Id. (emphasis added).

18  Id. at 13 (quoting Watts, 376 S.W.3d at 640).

19  Id.

20  Mark A. Behrens, Missouri Supreme Court Invalidates State’s Legislative Cap on Punitive Damages, The Legal Pulse (Sept. 11, 2014), http://wlflegalpulse.com/2014/09/11/missouri-supreme-court-invalidates-states-legislative-cap-on-punitive-damages/