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Missouri Legislature pushes forward on tort reform

by Joe Gamm | May 5, 2019 at 5:05 a.m. | Updated May 5, 2019 at 11:07 a.m.
The Missouri State Capitol in Jefferson City is shown here on Feb. 21, 2018.

The Missouri Senate spent more than seven hours last week debating a bill that would change some of the rules lawyers and the courts must follow when preparing for a trial.

And the state House last week passed a bill to remove most of the courts' ability to award punitive damages in lawsuits.

Those two bills are the latest in a years-long effort by conservative lawmakers to change the rules for civil lawsuits in Missouri - rules that if not changed, they say, make it more difficult for businesses to operate in the state.

For instance, Senate Majority Leader Caleb Rowden, R-Columbia, said Thursday that General Motors is interested in states' "lawsuit climate," as GM considers expanding its Wentzville plant - or expanding operations in another state.

"They mentioned in our meeting with them (Thursday) morning the importance of venue-joinder reform and a couple other things that we've already done," Rowden said, noting a bill sent to Gov. Mike Parson last week that limits the ability of out-of-state plaintiffs to get involved in Missouri lawsuits.

"We work really hard to be low-tax, low-regulatory - you know, the right type of regulations - a good litigation environment," Rowden added.

"It's for a moment like this, when you're trying to make sure that a good patron of the state, like GM, doesn't decide to go somewhere else."

President Pro Tem Dave Schatz, R-Sullivan, added: "Obviously, they're very pleased with what we've done on tort reform."

Punitive damages

The House passed the punitive damages bill sponsored by state Rep. Bruce DeGroot, R-Chesterfield, by a 93-58 vote Tuesday.

House Bill 489 requires that punitive damages be awarded only if the plaintiff proves "by clear and convincing evidence that the defendant intentionally harmed the plaintiff without just cause," according to the bill summary.

Through the legislation, lawmakers are simply trying to deter bad behavior, DeGroot said. He conceded on the House floor Wednesday the purpose of punitive damages is to punish an actor. The purpose of the bill is to make it more difficult to punish someone, he said.

"It's my opinion that they allege punitive damages, in some cases on the flimsiest of facts, to increase - and sometimes dramatically increase - the value of that case," DeGroot said.

State Rep. Rudy Veit, R-Wardsville, argued against the changes to Missouri law. On the floor and during a phone conversation with the News Tribune on Friday afternoon, Veit - who has practiced law for 40 years - said he's concerned about the bill's limits on the timing for hearings and judges' rulings over the potential for awarding punitive damages.

That's impractical, Veit said. And there's no procedure for appealing a judge's decision.

"(The bill) talks about intentional or malicious (acts)," he said. "Nobody really intends to hurt somebody most of the time. It's just with conscious disregard or reckless indifference. That's what the law (says now).

"When they don't look at unintended consequences, we have problems."

It takes a lot more than just negligence now for a court to award punitive damages, Veit said.

An example may be shown through some "hot coffee" cases. If the provider of the coffee has been warned 30 or 40 times not to have the coffee that hot, Veit said, yet they continue to keep it exceptionally hot to keep clients coming to or staying in the business longer, they may have set themselves up for a lawsuit. If a company receives memos about its product likely causing cancer but continues to ignore them, it's a problem.

The thing is, Veit continued, very few plaintiffs are rewarded punitive damages. He said he could think of only two or three this year.

And Missouri's courts already are set up to correct "unreasonable verdicts," Veit said. Courts and judges can reduce the verdicts.

A few years ago, a jury awarded $50 million to a plaintiff who sued Walmart.

"When it was done, the courts reduced it to $500,000," Veit said.

Representing plaintiffs and defendants, Veit has seen the system from both directions. He has represented products, contractors, trucks and cars - and done all kinds of defense work.

"I have no intention of putting good people out of business. But the punitive damages serve an important role to punish people for bad conduct," Veit said. "We can't expect our government to oversee every product out there."

By the time the government has a chance to look at a product, that product may have been responsible for the deaths of 10 or 12 people.

What the courts do by awarding damages allows the state to do its job.

"I just want people to realize that our judicial system serves a very important role," Veit said. "Damages haven't destroyed anything yet. And they've made a lot of products safer."

If the bill ultimately is passed, it also will cost the state some money - because, under current law, half of any punitive damages award goes to the state.

So, in that Walmart case where the punitive damages were cut from $5 million to $500,000, the plaintiff received only $250,000 - and that amount is considered taxable income.

Rules of 'discovery'

The Senate's debate on state Sen. Tony Luetkemeyer's bill changing the procedures for "discovery" ended with a compromise at about 2:30 a.m. Thursday.

"The bill that was perfected earlier today is a better bill than what hit the floor last night," state Sen. Scott Sifton, D-Affton, told reporters Thursday afternoon.

"There was a lot of significant compromise on several important points in that bill - so, yeah, the process of the Senate did what it was meant to do."

Luetkemeyer, R-Parkville, described his proposal in a column for his constituents.

"'Discovery' refers to the process of gathering evidence prior to the start of a trial. While television dramas focus on the events that take place in the courtroom, easily 75 percent of the time and expense of a civil action is devoted to discovery," he said. "My legislation places limits on the frequency and extent of discovery requests and requires those requests are proportional to the needs of the case.

"These reforms will expedite lawsuits, ensure more timely resolution of disputes and reduce costs for all parties involved."

Sifton and Luetkemeyer both are attorneys, and both were involved in the negotiations to reach the compromise.

Sifton disagreed with Luetkemeyer's assessment of the bill's benefits.

"This bill, unfortunately - even in its post-negotiated form - is still going to make it harder for average Missourians to access the courts, and it's going to make it more expensive for the parties that do," Sifton told reporters. "That said, I think a lot of the changes that were made are not going to be terribly jarring for practitioners.

"But I am concerned that overall it's going to cost more money to fight in court, and all things being equal, the legal system that we have is already far too expensive as it is. We don't need to make it any worse."

Luetkemeyer said in his column, after the compromise was reached and the bill received its first-round approval: "I believe it improves Missouri's litigation environment and will relieve stress from a clogged legal system."

Missouri's Supreme Court generally writes the rules for court procedures.

But lawmakers from both parties agreed the Legislature has the constitutional authority to revise the Supreme Court's rules - so there's no issue of overstepping the Constitution's separation of powers language.

Article V, the Missouri Constitution's section on the Judiciary, says in Section 5: "Any rule may be annulled or amended in whole or in part by a law limited to the purpose."

Sifton said: "The courts more typically do it - and that was one of my concerns with, and objections to, the bill that we ought to let the Judiciary and the Bar continue to drive what the rules of the road are going to be with regard to civil procedure."

Rowden told reporters Thursday afternoon: "I think the things we did last night were very much in-bounds. They were at least copying what's happening at the federal level, and streamline the process and make the process better for the folks who are involved."

Luetkemeyer's bill needs one final roll-call vote in the Senate before it can be sent to the House, while DeGroot's punitive damages bill already has been sent to the Senate.

Even though only two weeks remain in this year's regular legislative session, House and Senate leaders say it's not too late for either bill to be passed and sent to the governor.

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