Business leaders lash out against punitive damages

JEFFERSON CITY, Mo. -- Missouri business leaders expressed alarm Thursday about a state Supreme Court ruling allowing unlimited punitive damages in a certain lawsuits.

The court had ruled unanimously Tuesday that Missouri's 2005 law capping punitive damages at $500,000 does not apply to lawsuits that make common-law claims of injury, such as fraud. The court reinstated a $1 million punitive damage award to a Missouri woman who sued a car dealership for fraud.

The Missouri Chamber of Commerce and Industry said Thursday the ruling has caused concern among business owners worried about paying for hefty punitive damages.

"That idea is striking fear into the heart of business owners in Missouri," said Jay Atkins, general counsel and director of governmental affairs for the chamber. "The reality is the court literally took a judicial wrecking ball to 2005 reform action and 20 years of settled constitutional law."

Republican lawmakers approved the punitive damages cap as part of "tort reform" legislation in 2005 that was a top priority of then-Gov. Matt Blunt. Labor unions, plaintiffs' attorneys and Democrats fought the measure, arguing it would make it harder for injured residents to get money from those responsible for their injuries.

Republican Lt. Gov. Peter Kinder said the ruling upended years of effort to fix a broken system.

"This ruling once again opens the floodgates for frivolous litigation by encouraging speculative lawsuits aimed at getting quick settlements to avoid the potential threat of multimillion dollar punitive awards," he said in a statement released Wednesday.

The Supreme Court issued a similar ruling in 2012. In a 4-3 decision, the high court ruled part of the 2005 law capping noneconomic damages at $350,000 in medical malpractice cases violated a common-law right to a jury trial that has been embedded in the Missouri Constitution since 1820.

Atkins said the rulings show a trend that could create a poor business climate in the state.

This will "start a lot of conversations about how we move forward and fix again the damage that this decision is going to do the legal landscape here in Missouri," he said.

But the president of the Missouri association of lawyers who represent plaintiffs in personal injury cases said the decision's effects will be limited. That's because the Supreme Court said its ruling doesn't apply to claims based on statutes.

"It's probably, frankly, a very small impact," said St. Louis lawyer Kenneth Vuylsteke.