States’ rights might be all the rage when it comes to health care, but the Missouri Legislature is perfectly fine with federal law when it comes to employment discrimination.

Lawmakers this month gave final approval to a bill that throws out several pieces of Missouri caselaw, including the Missouri Supreme Court’s landmark Daugherty v. Maryland Heights decision.

Missouri Gov. Jay Nixon gives his State of the State address as he stands in front of Lt. Gov. Peter Kinder, right, and Speaker of the House Steven Tilley during a joint session of the House and Senate at the Capitol in Jefferson City earlier this year. Associated Press file photo by L.G. Patterson

Instead, the bill pegs Missouri statutes to federal law, going as far as to suggest which federal cases Missouri judges ought to find “highly persuasive.”

The bill now awaits a decision from Gov. Jay Nixon, who has until next week to veto it — something plaintiff employment law attorneys are strongly urging him to do.

“We hope and believe that Gov. Nixon is going to veto the bill,” said Mark Jess, an employment lawyer in Kansas City. “It is bad for Missouri business and for Missouri workers.”

The bill, however, was a major legislative goal for the Missouri Chamber of Commerce and Industry, and it was heavily supported by Republican lawmakers as a way to make the state more business friendly.

“I deal with a lot of companies that have the chance to move their headquarters and operations to this state, and many of them, after looking at Missouri’s legal landscape, don’t even put Missouri into consideration because of that Daugherty case and others like it,” said James Foster Jr., of McMahon Berger, who defended the city of Maryland Heights in the litigation.

Daugherty, decided in 2007, made it much harder for employers to win summary judgment in cases by allowing plaintiffs to show that age, race or sex was a “contributing” factor in their firing. Before that, Missouri courts had followed federal caselaw, which required those factors to be the “motivating” reason.

The loss of the Daugherty precedent is just one of many changes in the bill, some of which might have even wider consequences.

Still, the abrogation of Daugherty and several other cases would signal a major shift. Kevin Dolley was the attorney who represented Douglas Daugherty, a former police officer who alleged he was fired because of his age and a disability related to a spinal injury he suffered on the job.

Dolley said that by throwing out the precedent in the case, lawmakers are in effect saying “we should have more conduct like that in the state of Missouri.”

“I think if people understood that, I don’t think there’d be significant favor for that law,” he said.

Damage caps

Among the bill’s major provisions are damage caps tied to the number of people who work for the employer. The caps range from $50,000 for businesses with fewer than 100 employees to $300,000 for businesses that employ more than 500.

The bill sets similar caps in cases brought against companies by whistle-blowers. In addition, the bill specifies that the activity brought to light by whistle-blowers must actually be illegal, which would strip protections for those who report acts they think are wrong but don’t violate the law.

Supporters said the changes “would bring Missouri employment law provisions in line with the federal Civil Rights Act of 1964,” which has similar damage caps.

“Currently there is no harmony in how employment law is treated between federal standards, state law and how our three appellate courts in Missouri have ruled on the law,” Senate President Pro Tem Robert Mayer, R-Dexter and a lawyer, said in a press release the day the bill passed. “By harmonizing our state employment law with federal employment law, Missouri companies can invest more in hiring new employees, rather than expansive legal fees to navigate a current system riddled with uncertainty.”

The bill also could force a number of cases, even those brought under the Missouri Human Rights Act, into federal court. The bill requires discrimination lawsuits to be filed against the employer itself, not against the employees who might have carried out the discriminatory conduct.

Procedurally, that would create complete diversity between a plaintiff and any company based in another state, allowing those employers to remove suits to federal court.

But Jess, of the Employee Rights Law Firm, said that would strip workplace harassers of any liability, other than the loss of a job.

“What I find unbelievable for so-called conservatives who are proponents of this bill is that it eliminates individual liability — i.e., personal responsibility — for people who illegally discriminate and harass in the workplace,” he said. “Frankly, the bill ought to have been called the Sexual Predator in the Workplace Protection Act.”

The role of jury trials

A larger federal role for discrimination suits isn’t historically unusual. Missouri didn’t even recognize a constitutional right to have a jury trial under until a 2003 Missouri Supreme Court case, State ex rel. Diehl v. O’Malley, which allowed them in discrimination cases seeking only monetary damages. Before that, many such cases were filed in federal court, where federal law has allowed jury trials since 1991.

(Plaintiffs attorneys also noted that the federal damage caps were set that same year and haven’t been changed since. If Congress ever does change them, however, the Missouri law would automatically adopt the new caps.)

Ferne Wolf, an attorney with Sowers & Wolf in St. Louis, said many states still don’t allow jury trials in such cases, sending them before a judge or an administrative group instead. For instance, neighboring Illinois just enacted them in 2008.

Wolf was involved in another Missouri case, McBryde v. Ritenour School District, that also has found disfavor with the Legislature and was abrogated in SB188. The 2006 case was an earlier recognition that Missouri wasn’t bound by the “motivating” language in federal law.

But, as the Eastern District pointed out in McBryde, “motivating” and “contributing” aren’t all that far apart. In fact, federal model jury instructions define “motivating” as “played a part” in the employer’s decision, and that it “need not have been the only reason.”

Wolf said judges would have to apply federal caselaw to decide if a jury gets to hear the case, even though the jury would be looking at state statutes to make the ultimate decision. The upshot of the proposed law changes is that plaintiffs in such cases will have a much harder time getting their cases heard, she said, than they would in other types of civil cases.

“I don’t know of any other civil cause of action in Missouri that’s handled that way,” Wolf said.

Protections for cities

It’s not just businesses that would gain additional protections in court. Daugherty, after all, was a suit against a municipality, as are many employment law cases. The bill bars punitive damages against the state of Missouri and its political subdivisions.

Jess sees a danger there as well.

“Unless you have an award of punitive damages available, people are not going to stop, especially with the damages caps they put in,” he said.

In January, Jess won a $2.6 million award against the city of Kansas City in a discrimination case. The verdict included $1.8 million in punitive damages. It came just two days after another of Jess’ cases against Kansas City was affirmed by the Missouri Supreme Court. That $2.1 million case included $1.5 million in punitives.

In affirming the case, the Supreme Court split over the controversial subject of punitive damages against cities. Chief Justice William Ray Price Jr. partially dissented, arguing the punitive damages should have been thrown out because Missouri caselaw generally doesn’t allow such damages to be assessed against municipalities.

Robert Jester, a lawyer whose firm, Ensz & Jester, defends many Kansas City-area cities in employment cases, hopes the bill is signed.

“Without that limitation, it just throws all kinds of budgeting out the window,” he said, noting that insurance policies don’t cover punitive damages. “It places the burden of exemplary damages on the taxpayers of whatever entities they are assessed against.”

Matthew Gist, also of Ensz & Jester, expected that many cities also would benefit tremendously from the damage caps.

“I think you would potentially have many cities in the lowest and certainly the lower categories” of employees, he said.

Data from the Missouri Municipal League support Gist’s estimation. In a 2008 fringe-benefit survey of 317 cities in Missouri, 177 cities reported employment numbers that would put them in the lowest tier of damages. Another 82 cities reported fewer than six employees, which would make them (and businesses with similar employment numbers) exempt from discrimination lawsuits under the bill.

For comparison, Maryland Heights, which according to its current budget has more than 200 employees, would be subject to a jury verdict of $200,000. The Daugherty v. Maryland Heights lawsuit ended in a $775,000 settlement, according to a copy of the agreement the city provided last year under a Sunshine Law request from this newspaper.

To veto or not to veto?

Whether Nixon will veto the bill has been the subject of eager speculation among lawyers.

At an appearance in Kansas City on Thursday, Nixon told reporters the bill “is what I will spend my weekend reading,” though he declined to say what he intends to do.

“Obviously, we don’t want to move backwards when it comes to civil rights or human rights,” he said.

The bill landed on the governor’s desk on April 18, giving Nixon until May 3 to decide what to do, spokesman Scott Holste said. (If a bill passes while the Legislature is in session, the governor has 15 days to make a decision. Under the Missouri Constitution, all bills that are passed become law unless the governor takes action against them.)

The Missouri Legislative Black Caucus is urging Nixon to veto the bill. In a letter to the governor released last week, the caucus said the legislation would reverse important legal protections and roll back decades of progress on civil rights. The letter was signed by most caucus members.

If Nixon does veto the bill, it is unclear if lawmakers will be able to override that decision. The bill cleared its final hurdle with a 93-63 vote in the House — a substantial margin, but not quite the two-thirds majority needed for a veto override. The final vote in the Senate was 25-9.

Both votes were largely along party lines. One Senate Republican, Sen. Luann Ridgeway, R-Smithville, voted against it, as did 12 Republicans in the House.

Among the House’s naysayers was Rep. T.J. Berry, R-Kearney, who is serving his first term. He said he favored the law earlier this session but ultimately came out against it.

“Yeah, we can reduce it to the federal government level and it probably isn’t going to be a huge deal,” he said in an interview. “But at one point we wanted to be a little better. Is this the place that we want to reduce and be at a lower standard? I decided it wasn’t, for me.”

Berry added that he thought Nixon would sign the bill.

“It probably will create a better business climate,” he said. “At whose cost? Yet to be determined.”