The Missouri Supreme Court is once again weighing statutory restrictions on punitive damages.
On Dec. 8, the high court will hear arguments for All-Star Awards & Ad Specialties Inc. v. Halo Branded Solutions Inc., in which the jury awarded more than $5.5 million in punitive damages against Halo and former All-Star employee Doug Ford.
Post-trial motions led the trial court to apply Section 510.265 of a statute that imposed limitations on the award, which lowered punitive damages against Halo to $2.6 million. Plaintiffs allege that the imposition violated their rights to a jury trial.
“The defendants are looking to limit rather large damages verdicts against them but what's really at stake for corporate defendants in Missouri is how broadly these limitations on damages caps can be applied and whether they will be stricken down in certain circumstances,” said attorney David Eisenberg of Baker Sterchi Cowden & Rice and editor of the firm's Missouri Law Blog. “Companies in Missouri are very concerned that they can end up having enormous awards against them where the state legislature thinks that damages caps are appropriate, but the courts in Missouri are taking a minority position when you look at the whole nation.”
On Appeal, the Western District Court of Appeals ruled against capping punitive damages.
“Finding error in the trial court’s reduction of the punitive damages award on the basis of section 510.265, we reverse, in part, and remand for the trial court to determine whether the jury’s $5.5-million punitive-damages award must be reduced as a matter of due process or remittitur,” wrote Judge Thomas Newton in the Jan. 12 opinion. “We find no error in the court’s submission of the tortious-interference and punitive-damages claims to the jury, and no evidentiary errors, therefore we affirm in part.”
510.265 RSMo limits an award of punitive damages to $500,000 or five times the net amount of the judgment awarded to the plaintiff against the defendant.
“The decision of the Court of Appeals basically said in their ruling that the damages cap could not be applied in this case and they asked the trial court to re-examine some of the other issues in the case about the propriety of damages,” Eisenberg told the St. Louis Record.
In their opening brief to the Missouri Supreme Court, counsel for All-Star Awards & Ad Specialties accuses the trial court of misstating 510.265 RSMo, which was used to apply punitive damages.
“The trial court misstated the test for determining whether the punitive damages cap in section 510.265.1 applies,” wrote Attorney Brent Coverdale in the Sept. 20 pleading. “Using the proper test, articulated in well-settled case law, application of section 510.265.1 violated All Star’s right to trial by jury.”
The justices will determine whether or not All-Star can collect the larger amount of punitive damages unreduced by the damages cap.
“There are other issues in the case that will be examined before the case is over, assuming it's not settled, that have to do with whether punitive damages were excessive under due process grounds,” Eisenberg added. "The Missouri Supreme Court has had a series of cases about statutory damages caps and when they can and can't apply. So, that's why I think the case was accepted. It will be yet another in a series of decisions about the breadth and scope of some earlier Supreme Court decisions, which said that, in some circumstances, the damages cap can be unconstitutional.”