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Proposed MMPA Legislation Would Provide Balance for Businesses and Consumers

ABSTRACT: In its current state, the MMPA has allowed consumers to collect substantial verdicts in cases that have strayed from the original intent of lawmakers. SB793 hopes to restore a balance that requires not only that businesses act fairly, but also that consumers act reasonably.

Missouri Senator Ron Richard (R) has introduced Senate Bill 793 which, if passed, would heighten the requirements for a claimant under the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.025, et seq. (the MMPA). In its current text, the MMPA has allowed courts broad discretion in qualifying certain transactions under the act and in awarding seemingly excessive damages for MMPA claims. The proposed change to the law adds a heightened threshold for causation and proof of damages.

Currently, the MMPA states, in pertinent part:

“Any person who purchases or leases merchandise primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by section 407.020, may bring a private civil action in either the circuit court of the county in which the seller or lessor resides or in which the transaction complained of took place, to recover actual damages. The court may, in its discretion, award punitive damages and may award to the prevailing party attorney's fees, based on the amount of time reasonably expended [ . . . ].”

Among the most problematic aspects of the MMPA for companies doing business in Missouri are its lax causation requirements (e.g., a plaintiff need not show that he relied on a misrepresentation in order to state a claim), and the availability of punitive damages that are limited only by Missouri’s general tort cap on punitive damages and constitutional due process considerations.

SB793 adds the following requirements in order to assert a civil action for recovery under the MMPA:

“A person seeking to recover damages shall demonstrate that he or she acted reasonably in light of all the circumstances and establish his or her individual damages with sufficiently definitive and objective evidence to allow the loss to be calculated with a reasonable degree of certainty. The damages shall be measured by the person’s out-of-pocket loss, which shall be defined as an amount of money equal to the difference between the amount paid by the consumer for the good or service and the actual market value of the good or service that the consumer actually received. In order to recover damages under this section, each person shall be required to prove that the method, act, or practice declared unlawful by section 407.020 caused him or her to enter into the transaction that resulted in his or her damages.”

The revised statute would also set a more certain accrual date for a cause of action under the MMPA, which is significant, since a claimant under the MMPA enjoys a five year statute of limitations. The proposed legislation further sets forth that “a cause of action under this section accrues on the date of the purchase or lease described in the first sentence of this section.” Thus, the only actions taken by a business that would give rise to a claim under the MMPA would be actions taken during or before the initial purchase, agreement, or transaction.

Another significant aspect of the bill is that class action plaintiffs would no longer be able to assert a claim for punitive damages under the MMPA.

While, on its face, the bill does not appear drastically different than the current law, the legislation could significantly limit the scope of the MMPA as well as the prospective damages for such a claim. Financial institutions would no longer face a never-ending threat of MMPA litigation in connection with their continued servicing or collection of a loan, as any claim arising more than five years after the initial transaction would be time-barred. Further, the proposed legislation would add the “reasonable reliance” requirement of many jurisdictions’ comparable consumer protection laws, requiring a claimant to demonstrate a connection between the defendant’s purported misrepresentation or omission and some action on the claimant’s part, to his or her detriment.

Identical legislation was proposed in Missouri in 2015, but the bill never made it out of committee. Providers of consumer goods and services in Missouri, as well as their counsel, should stay tuned for updates in this proposed legislation, which would help protect such businesses from frivolous litigation and disproportionate verdicts. Missouri consumers may be held to a standard of reasonableness, once and for all.