February 10, 2012

Missouri Supreme Court upholds state cap on punitive damages

Missouri Supreme Court Building
State courts continue to disagree about the constitutionality of caps on punitive damages.  The Arkansas Supreme Court recently declared that state's cap on punitive damages unconstitutional. On January 31, the Missouri Supreme Court issued a contrary opinion, rejecting constitutional challenges to that state's statutory cap on punitive damages.  The cap limits punitive damages to five times the amount of actual damages, but permits awards up to $500,000 if the actual damages are less than $100,000.

This case, Overbey v. Chad Franklin National Auto Sales, involved a cause of action created by statute, namely, the Missouri Merchandising Practices Act (MMPA).  The court ruled that, because the Missouri legislature created the MMPA cause of action, the legislature had authority to set limits on the remedies permitted under statute. The court expressly declined to address the constitutionality of the statute as applied to common law causes of action.  (See footnote 3 on page 16.)   Two justices dissented, taking the position that any cap on punitive damages violates the constitutional right to a jury trial.