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Missouri Law Blog Legal updates, news, and commentary from the attorneys of Baker Sterchi Cowden & Rice LLC

"Judicial Hellholes" - A trio of Illinois Counties Move Up the List while the City of St. Louis Remains an Honoree

December 28, 2021 | Meghan Kane and Laura Beasley

Yet again, Cook, Madison and St. Clair Counties in Illinois and the City of St. Louis are included in the 2021/2022 “Judicial Hellholes Report” from the American Tort Reform Foundation. This year, the trio of Illinois counties moves up from 8th place on last year’s list to 5th place, and the City of St. Louis remains in 7th place. The list is rounded out with California (#1), New York (#2), the Georgia Supreme Court (#3), the Philadelphia Court of Common Pleas & the Supreme Court of Pennsylvania (#4), Louisiana (#6), and South Carolina asbestos litigation (#8). The trio of Illinois Counties lay across the Mississippi River from the City of St. Louis and are all plaintiff-friendly venues, with a mass influx of product liability litigation (including talc and asbestos lawsuits), highlighting the need for liability reform.

While asbestos cases decreased nationwide by 11% in 2020, both Madison and St. Clair Counties in Illinois have seen an increase in filings in asbestos litigation in the last year. Plaintiffs’ firms continue to seek out these venues for their overall low evidentiary standards, plaintiff-friendly judges, and persistent ability to find new and unique defendants, despite the increase in defendant bankruptcy filings over the last few years. Additionally, Cook County remains a hotbed for asbestos litigation. Despite limited resources due to the Covid-19 pandemic, Cook County has hosted 3 asbestos trials to verdict since October 2021, with more on the horizon for early 2022.

Illinois is also flooded with “no-injury” Biometric Information Privacy Act (“BIPA”) lawsuits, a majority of which are brought by employees against their employers, due to the fact that a 2019 Illinois Supreme Court decision held that a plaintiff does not need to show any harm in order to collect damages under the Act, which requires companies to inform an individual in writing and receive a written release prior to obtaining or retaining his or her biometric data. This has triggered a slew of litigation for any company that uses fingerprints, voiceprints, hand or facial scanning as identifiers for specific access to its systems or for clocking in and clocking out. Unsurprisingly, this has been further complicated by a September 2021 Illinois appellate court decision that found that a five-year statute of limitations applies to most BIPA claims, so long as there is no dispute that the person’s information was publicized (in which case a one-year statute of limitations would apply).

Other factors pushing Illinois Counties back up in the rankings include various legislative enactments, including the Prejudgment Interest Act and S.B. 2406 which will break up the 20th Judicial Circuit Court and redraw the supreme court districts for the first time since 1964.

The City of St. Louis, similar to the Illinois Counties described above, continues to draw a product liability litigation crowd, including in cases involving talc, Roundup® weed killer, and asbestos. This summer, the United States Supreme Court got in on the action, when in June 2021, it announced that it would not review a landmark Johnson & Johnson cosmetic talcum powder case which resulted in a $4.69 billion verdict ($550 million in actual damages and $4.14 billion in punitive damages) in the St. Louis Circuit Court but was reduced by the Missouri Court of Appeals for the Eastern District to $2.12 billion ($500 million in actual damages and $1.62 billion in punitive damages).

Missouri courts continue to push the boundaries when it comes to unreasonable punitive damages awards, as can be noted in the J&J talc litigation. Moreover, in March 2021, the Missouri Supreme Court affirmed a lower court’s decision to award punitive damages in a medical malpractice case, applying a relatively lax standard. Specifically, the Court in Rhoden v. Missouri Delta Med. Ctr., ruled that “acting willfully, wantonly, or maliciously is equivalent to acting with a complete indifference to or in conscious disregard for the rights or safety of others.” Effective and applicable to causes of action arising after August 28, 2020, newly enacted legislation - SB 591 - takes this issue head on and requires that a jury find “the evidence clearly and convincingly demonstrated that the health care provider intentionally caused damage to the plaintiff or demonstrated malicious misconduct that caused damage to the plaintiff.” § 538.210.8, RSMo. (2020). Further, the statute explicitly states that: “Evidence of negligence including, but not limited to, indifference to or conscious disregard for the safety of others shall not constitute intentional conduct or malicious misconduct.” The legislation was enacted as a counter to the intermediate appellate court’s decision in Rhoden, and its failure to recognize the distinction between negligence and intentional or malicious misconduct. This change reflects a return to the original common-law standard of intentional misconduct and is an effort to clarify for the courts the proper standard and prohibit the use of lesser standards. The implications of this decision have yet to be seen, but the hope is that at least for cases filed after August 28, 2020, decisions like Rhoden will have become a thing of the past.

While the Missouri legislature is moving forward in enacting stricter reform related to lawsuit abuse, it remains to be seen what impact, over time, those laws will have on litigation in the City of St. Louis. Until then, we will likely continue to see it included on the list of “Judicial Hellholes”. 

Once More unto the Breach: the Missouri Supreme Court Again Takes Up the Question of Constitutional Limits on Missouri's Statutory Punitive Damages Cap

November 10, 2021 | David Eisenberg

In 2012 and 2014, the Missouri Supreme Court sent shudders down the spine of defense lawyers throughout the state, via its decisions in Watts v. Lester E. Cox. Medical Centers and Lewellen v. Franklin, which refused to apply statutory limitations on noneconomic damages (Watts) and punitive damages (Lewellen), on the grounds that the statutes abridged the Missouri Constitution’s right to trial by jury. Those cases reversed decades of Supreme Court authority to the contrary. The legal theory goes as follows: (1) if a case has been brought under a common law cause of action (e.g., fraud); (2) that same cause of action existed at the time the state Constitution was enacted in 1820; (3) and that cause of action included the right to a jury trial back in 1820; then the application of a statutory limit on punitive damages or noneconomic damages abridges the right to a trial by jury.

This same legal theory has been tested in 31 states. And as the New Mexico Supreme Court wrote earlier this year, “Of the thirty jurisdictions to consider whether a statutory cap on damages violated the constitutional right to a trial by jury, twenty-four have applied such caps, reasoning that a statutory limit on recovery is a matter of law within the purview of the state legislature”. (The New Mexico court’s ruling made the score 25 to 6 in support of the legislative caps.)

The Missouri Supreme Court has since re-examined this issue, each time attempting to carefully circumscribe its holdings in Watts and Lewellen. In Dodson v. Ferrara, decided in 2016, the plaintiffs challenged the application of the statutory noneconomic damages cap in a wrongful death case, attempting to analogize a common law claim that existed in 1820, for the loss of services of a child whose death was wrongfully caused. The Court rejected plaintiff’s argument, reasoning that a wrongful-death claim and a common-law “loss of services” claim based on a wrongful death “may both be civil actions for monetary damages” arising out of a wrongful death, “but they arise from completely different principles of law.” The Court accordingly found the analogy too strained to support an argument that wrongful-death claims are analogous to claims that were tried to a jury in 1820.

Then, earlier this year, in Ordinola v. University Physician Associates, the Court similarly rejected a plaintiff’s attempt to broadly construe the Watts decision. In Ordinola, the plaintiff brought statutory claims for medical negligence, and argued that because medical negligence claims were triable to juries at common law in 1820, the damages caps could not be applied. The Supreme Court disagreed, holding that the legislature had the authority to abolish common law causes of action, and replace them a statutory cause of action, which may in turn include limitations on what measure of damages can be recovered. That is what the state legislature did with medical negligence claims, and the statutory damages caps were therefore held to be enforceable.

In the current All Star Awards case, the plaintiff company’s (All Star) general manager terminated his employment with All Star and went to work for the defendant (HALO), a competitor. He allegedly diverted substantial amounts of business to HALO. Plaintiff brought claims against the manager for breaching his duty of loyalty, and against HALO under two legal theories: tortious interference with business expectancy, and civil conspiracy to breach a duty of loyalty. At trial, the jury rendered a verdict against HALO that included punitive damages of well beyond five times the total compensatory damages award, and the Circuit Court judge applied Missouri’s statutory damages cap and reduced the punitive damages award from $5.5 million to $2,627,709.40.

On appeal, the Western District Court of Appeals reversed the trial court’s application of the damages cap, essentially holding that plaintiff’s causes of action against HALO would have been cognizable under common law and triable by jury in 1820, because they involved “wrongs to the person or property for which money damages are claimed.” On appeal to the Supreme Court, HALO has argued – convincingly, in our view – that Missouri common law claims for tortious interference with business expectancy did not exist in 1820, and in fact were not recognized until 1953; and that claims for breach of duty of loyalty (let alone conspiracy to breach that duty) did not exist until 1966. The Dodson case certainly appears to stand for the principle that the 1820 common law claim must be either the same or very closely analogous to claim in the case currently before the court, and that broad generalizations will not carry the day for a plaintiff. (In Lewellen, the plaintiff’s claim was for consumer fraud, and such claims were recognized at common law in 1820.)

On the damages cap issue, HALO has made a twofold argument to the Supreme Court: that it should at very least reinstate the trial court’s holding that the damages cap applies in a case like this, but that more properly, the Court should reconsider its holdings in Watts and Lewellen. And given the very strong consensus among courts across the nation that damages caps are enforceable and can withstand state constitutional challenge, there is much to be said for the latter approach. We believe that in accepting this case for review, the Supreme Court, at minimum, is thinking that this case bears some resemblance to Dodson.  

In its appeal, HALO has argued several other legal points: that there was insufficient evidence to support a claim for tortious interference; that the award in plaintiff’s favor was based on inadmissible damages testimony from a lay witness, who incorrectly calculated lost profits; and that the punitive damages award was so disproportionate to actual damages that it violated due process. But we believe the reason the Supreme Court accepted this case is to weigh in once again on the damages cap, and that is where the action is.  The case has been docketed for oral argument in early December 2021. Stay tuned.

Natural Gas Company Cannot Evade Anti-Indemnification Statute's Application in Dispute with Utility Locator after JJ's Restaurant Explosion

October 5, 2021 | Brett Simon

More than eight years after the Country Club Plaza district in Kansas City, Missouri was rocked by a gas line explosion that destroyed JJ’s Restaurant, the United States Court of Appeals for the Eighth Circuit has ruled that utility-locating company USIC has no duty to indemnify natural gas company Spire.

The explosion led to a series of lawsuits against Spire, many of which Spire settled for a collective $75 million. USIC was subsequently asked to indemnify it on the basis that the contract between the two companies placed sole financial responsibility upon USIC—regardless of who was actually at fault. To that end, Spire sought a declaratory judgment that USIC owed Spire for the amount of the prior settlements in addition to any future settlements. USIC moved for summary judgment arguing that R.S.Mo. § 434.100.1, Missouri’s anti-indemnification statute, precluded Spire’s attempt to escape financial liability.

The anti-indemnification statute generally prohibits contractual clauses which force one party to hold another party harmless and indemnify them for their own negligence. In other words, the law prevents a subcontractor from indemnifying a general contractor for any damage caused by the general contractor’s negligence. However, this statute only applies to “any contract or agreement for public or private construction work.”

Spire took the position that USIC’s services could not be considered “construction work” within the statute’s meaning. The Eighth Circuit looked to subsection 3 of the anti-indemnification statute, which defined the terms to include “construction, alteration, maintenance or repair of any . . . pipeline.” The Court easily dispensed with Spire’s argument and held that USIC’s work in locating and marking the gas line meant that USIC was preserving the lines and keeping them in a state of repair. The Court found it irrelevant that USIC did not construct something within the usual meaning of the word since the anti-indemnification statute’s definition of construction controlled the dispute.

In addition to illustrating the scope of the anti-indemnification’s statute in the construction industry, this case also teaches about litigation strategy. Here, Spire opted to pursue an “all-or-nothing approach” and appealed solely on the basis that USIC’s purported obligation to indemnify was absolute. To that end, Spire did not seek any decision on whether it was actually negligent, or whether USIC had an obligation to indemnify it for any amount less than the full cost of the settlements. In that sense, the case suggests that parties may be well-served to pursue other issues in a case, even if those issues may not lead to a full and complete victory.  

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About Missouri Law Blog

Baker Sterchi's Missouri Law Blog examines significant developments, trends and changes in Missouri law on a broad range of topics of interest to Missouri practitioners and attorneys and businesses with disputes subject to Missouri law. Learn more about the editor, David Eisenberg.

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