Soon, Governor Mike Parson is expected to sign into law significant reforms regarding the treatment of punitive damages in civil lawsuits in Missouri. The legislature included these reforms in a package of initiatives to improve the state’s civil justice system. The changes in S.B. 591 are welcome. Missouri’s courts are often criticized as among the most unpredictable and unfair in the nation for civil cases. It is now up to the state’s judiciary to fulfill the new law’s promise of greater predictability in this important area of civil litigation.
For those unfamiliar with punitive damages, they are unlike other damage awards. The purpose of punitive damages is to punish wrongdoers for egregious misconduct that may be comparable to criminal offenses and to deter future wrongful acts. Punitive damages are not awarded to compensate someone for an injury. That objective is accomplished by compensatory damages that include economic losses (e.g. lost wages) and noneconomic losses (e.g. pain and suffering).
Nearly three decades ago, former U.S. Supreme Court Justice Sandra Day O’Conner expressed concern over punitive damages that “run wild.” Most states around the country took action by adopting legislative reforms to curb the havoc caused by large, unpredictable punitive awards. For instance, many states placed a reasonable upper limit on the amount of punitive damages that may be awarded in a case or adopted other reforms such as a heightened burden of proof to support a punitive damages award. Missouri joined these states in 2005, enacting a cap on punitive damages. The Missouri Supreme Court struck down the cap in 2014, finding that the cap interfered with the jury’s determination as to the amount of punitive damages to be awarded.
The new legislation responds to the absence of meaningful restraints on punitive damage awards. It also takes the Court’s 2014 decision into account, leaving juries to decide whether to award punitive damages and the amount to be awarded.
First, the new law codifies a clear standard for liability for punitive damages. Punitive damages will be reserved for cases in which it is shown 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 standard returns punitive damages to their intentional tort origins.
Second, the new law changes the procedure for pleading punitive damages. Instead of including a punitive damage claim in an initial pleading, perhaps as a means to generate greater media attention to drive settlement discussions, plaintiff lawyers will have to wait until 120 days before a final pretrial conference or trial. They must file a written motion to add a punitive damage claim that is supported by evidence demonstrating a reasonable basis for recovery under the new law’s punitive damages liability standard and burden of proof. This provision will help judges weed out meritless punitive damage claims.
Third, the new law protects employers from punitive damages liability for acts by rogue employees. Punitive damages can be awarded against an employer or other principal for an agent’s acts only if a managerial agent authorized, participated in, or ratified the outrageous conduct, or the agent was “unfit” for the job, making it “reckless” for the principal to employ the person.
Missouri’s trial judges have the important responsibility for ensuring that these reforms have the positive effect intended by policymakers. All Missourians should expect judges to fulfill their new role as “gatekeepers” against unsound punitive damage claims.
If judges ignore the sound and fair reforms in the new law, and predictability is lost again in Missouri, the result will be unfair punishment inflicted on many businesses and other entities in the state. Unfairness would also not be limited to defendants. Large, unsupported punitive damage awards could adversely impact the compensatory recoveries of injured plaintiffs by pushing otherwise solvent defendants into bankruptcy. This has happened in some industries.
The Missouri Legislature and Governor worked hard to position the state closer to the mainstream with respect to the treatment of punitive damages. It is now incumbent on Missouri’s judges to make that goal a reality.
Victor E. Schwartz co-chairs the Public Policy Group of Shook, Hardy & Bacon L.L.P. He co-authors the most widely used torts casebook in U.S. law schools, Prosser, Wade & Schwartz’s Torts: Cases & Materials (14th ed. 2020).