Missouri Supreme Court Upholds the Constitutionality of the Statutory Punitive Damages Cap, as Applied to Claims for Breach of the Duty of Loyalty and Tortious Interference
ABSTRACT: Missouri Supreme Court rules that the statutory cap on punitive damages applies to claims for breach of the duty of loyalty and tortious inference with a contract; and reminds appellants that briefs must strictly comply with Rule 84.04.
Several months ago, when the Missouri Supreme Court agreed to review the case of All Star Awards v. HALO Branded Solutions, we wrote that “we believe that in accepting this case…the Supreme Court, at minimum, is thinking that the case bears some resemblance to Dodson.” And that is indeed what was troubling the Court.
In Dodson v. Ferrara, the Supreme Court held that R.S. Mo. 510.265’s damages cap on noneconomic and punitive damages applied to the plaintiff’s wrongful death claim, because at the time the Missouri Constitution was enacted in 1820, there was no such thing as a wrongful death claim. The legal principle is as follows: if the claim presently being asserted is the same or is closely analogous to a claim that existed in 1820 and was both triable by jury and eligible for punitive damages way-back-when, then the modern day statutory damages cap infringes the Missouri Constitution’s right to trial by jury and cannot be enforced. In our earlier post, we noted that Dodson directed that the claims truly be the same or very closely analogous, and that “broad generalizations will not carry the day for a plaintiff.” In Dodson, the Court rejected the plaintiff’s claim that the 1820 cause of action for loss of services of a child was closely analogous to a wrongful death claim.
In All Star Awards, HALO Branding hired an executive away from its competitor All Star Awards, and the trial court record showed that even before the executive changed companies, he had begun diverting business to HALO, providing it with proprietary information about All Star customers, and engaging in other improper activities. All Star sued for breach of the duty of loyalty, conspiracy to breach that duty, and tortious interference with a business contract. The trial court found in All Star’s favor, awarding over $500,000 in actual damages, and the jury entered a verdict for $5.5 million in punitive damages against HALO. Circuit Judge Torrance applied the statutory damages cap and reduced the punitive damages award to five times All Star’s actual damages, or $2,627,709.40. But the Western District Court of Appeals disagreed and reversed the trial court’s application of the damages cap, holding that plaintiff’s claims would have been cognizable, triable by jury and eligible for punitive damages in 1820, on the broad and generalized theory that the claims involved “wrongs to the person or property for which money damages are claimed.” In a 6-1 ruling, the Supreme Court disagreed, finding that All Star's causes of action did not exist under Missouri law until long after 1820, reinstating the reduced punitive damages award, and affirming the Circuit Court judgment.
The Supreme Court also reviewed and rejected HALO’s claim that even at the reduced ratio of 5:1, the punitive damages award was grossly excessive and violative of its due process rights. The Court reviewed the Circuit Court record and found ample evidence that HALO’s actions were reprehensible; that the award fell well within the 10:1 ratio beyond which punitive damages awards are subject to higher scrutiny; and that prior Missouri appellate case law provided HALO with notice that punitive damages in approximately this ratio could be awarded for tortious interference.
The Supreme Court ruling also contains an important admonition to appellate practitioners in Missouri, which has appeared countless times in Missouri appellate rulings: if your appellate brief does not comply with the stringent requirements of Missouri Rule of Civil Procedure 84.04, the appellate court can and will decline to review those parts of your argument that infringe the Rule.
When we have worked with a client’s national counsel on briefs to the Missouri Court of Appeals or Supreme Court, those out-of-state lawyers have been amazed and usually somewhat aghast at the multifaceted and highly technical requirements of this Rule. One aspect of Rule 84.04 is that each Point in your argument must be framed in substantially the following form: "The trial court erred in [identify the challenged ruling or action], because [state the legal reasons for the claim of reversible error], in that [explain why the legal reasons, in the context of the case, support the claim of reversible error].” Similarly, the Supreme Court has cautioned that “multifarious” points containing multiple, divisible claims “are noncompliant with Rule 84.04(d) and preserve nothing for review”, and this caused some problems for appellant All Star.
In All Star Awards, the Supreme Court examined the way All Star presented its points on appeal, raising some seven different alleged errors, combined into three points on appeal, and ruled that every argument raised by All Star - except for the need to apply the statutory damages cap - was noncompliant and could be disregarded by the Court. Thus, the Court refused to review several points of error All Star was attempting to assert (mainly involving alleged erroneous rulings during the trial), agreeing only to review as a matter of the Court’s “cautious” exercise of discretion, the “noncompliant” point about whether the reduced punitive damages award was still excessive and violative of due process. As we observed several years ago, a failure to follow Missouri’s appellate briefing rules can lead to draconian consequences.
So, does this mean that Missouri’s appellate courts have some sort of mean streak and are looking to holler “gotcha”, and kick you and your brief out of court for failure to abide by Rule 84.04? No – actually, the exact opposite is true. They want your brief to be compliant, and Clerk’s office in the appellate court will typically bend over backwards to ensure that your brief is in the correct form. If you have a brief due at the Court of Appeals or Supreme Court, it always makes sense to call the Clerk’s office well in advance of the due date and ask the following question: “Our brief is due on [date]. May we submit our brief to you to review as to form, and if so, how much advance notice do you need?” The reply is likely to be along the following lines: “we’ll be happy to do so. Please get it to us in essentially final form, five business days before the due date.” And they will flag for you any matters that need additional work. This procedure requires advance planning but can spare an appellant some potential headaches and embarrassment.