Meritless lawsuits fuel need for reform

When you fill up your tank, a portion of your bill is going directly to trial attorneys. Gas companies are the latest target for class action lawyers who claim that fill-ups with higher octane gasoline are somehow fraudulently diluted because a few drops from a previous lower-octane purchase might linger in the pump.

It may sound absurd, yet, JOHNSON v. MFA PETROLEUM COMPANY, has been progressing through Missouri courts for the last three years, already costing MFA tens of thousands in court costs. The final ruling could cost the company millions more and start a costly domino effect for other petroleum marketers in the state.

Similar lawsuits are brought forth every year through the Missouri Merchandising Practices Act -- class action cases that seek millions from merchants who incur significant litigation costs to defend against them. Missouri consumers ultimately pay the price in the form of increased costs.

A law created to protect consumers, the MMPA is now used against consumers to make trial attorneys rich. Since the MMPA's 1967 enactment, "amendments and lenient interpretations have encouraged class-action lawyers and professional litigants to bring claims ... without merit," according to a white paper by Emory University School of Law professor Joanna Shepherd.

In addition to increasing consumer costs, Shepherd says a "dramatic increase in consumer protection litigation" lowers employment and overburdens taxpayers who must fund our civil courts.

The original MMPA defined prohibitions by enforcement actions and empowered only the state attorney general to enforce it. Merchants could face injunctions against unlawful conduct, be required to pay consumers who suffered financial losses as a result, and even be obligated to pay the state's legal costs if their violations proved to be willful.

Things changed for the worse in 1973. MMPA amendments included a private right of action, allowing personal injury lawyers to recruit supposedly defrauded clients for consumer lawsuits. Additional amendments permitted private lawsuits to seek punitive damages, attorneys' fees and monstrous class actions.

A 1985 amendment expanded the scope by declaring that consumer lawsuits could target allegedly unlawful practices outside Missouri if a Missouri consumer was affected. That amendment turned a law meant to provide protections in-state into an all-purpose moneymaker for plaintiffs and their lawyers nationwide. This change to the MMPA resulted in a 678 percent rise in reported decisions of consumer fraud claims from 2000 to 2009, according to a white paper by Emory University School of Law professor Joanna Shepherd.

Sen. Ron Richard introduced SB 487 to reform the MMPA. By passing the bill, lawmakers can help Missouri shed its reputation as a hot-spot for bogus consumer lawsuits. SB 487 contains three amendments to the MMPA that would:

• Require plaintiffs seeking damages to prove they behaved as "reasonable" consumers.
• Require plaintiffs to prove they relied on merchants' alleged misrepresentations in making their purchases
• Prohibit awards for punitive damages in consumer class actions.

SB 487 will return Missouri's MMPA to its original mission of preventing and punishing truly deceptive business practices. The legislation awaits a hearing by the Missouri Senate.

Dan Mehan is the President/CEO of the Missouri Chamber of Commerce and Industry in Jefferson City and Tiger Joyce is the President of the American Tort Reform Association in Washington, D.C.