In a unanimous ruling, the Missouri Supreme Court has determined that a legislatively imposed cap on punitive damages applied to a jury’s finding of common-law fraud unconstitutionally interferes with the right to a trial by jury. Lewellen v. Franklin, No. SC92871 (Mo., decided September 9, 2014). The issue arose in the context of fraudulent misrepresentation and fraud claims brought under the Missouri Merchandising Practice Act (MMPA) and the common law by a 77-year-old plaintiff who convinced a jury that a car dealer and his dealership tricked her into buying a car by promising that she would have to pay just $49 dollars each month for it. After nine months, the defendants stopped paying her the difference between what the loan actually cost and the $49 payment, which she had repeatedly insisted was all she could afford to pay. They had legally bound her to the full amount of the loan by allegedly failing to explain or misrepresenting the paperwork she signed. The jury awarded the plaintiff $1 million in punitive damages against both defendants, but the trial court cut the awards approximately in half under a statutory cap.
The supreme court reversed as to the punitive damages cap applied to the common-law claim against the dealership’s owner because the cause of action existed in 1820 when the Missouri Constitution was adopted. According to the court, “Under the common law as it existed at the time the Missouri Constitution was adopted imposing punitive damages was a peculiar function of the jury.” The punitive damages cap later adopted by the legislature thus “necessarily changes and impairs the right of a trial by jury ‘as heretofore enjoyed.’” The court did not address the reduced punitive damages award against the dealership for violation of the MMPA, noting that the issue was not appealed, evidently in light of a prior ruling that the cap is constitutional as to MMPA claims, which did not exist in 1820. The court also rejected the defendants’ argument that the punitive damages violated their due process rights, finding that they were not grossly excessive “considering [the defendants’] intentional and flagrant trickery and deceit employed to target a financially vulnerable person causing her to lose her means of transportation, subject her to suit, and damage her credit.”