History lesson: 1820 interpretation of common law at issue in Supreme Court

When the Missouri Supreme Court next weighs in on the ability of lawmakers to set limits on damages, expect a history lesson but perhaps not a sea change in the court’s precedent.

The court heard arguments on Dec. 8 on whether a jury verdict of more than $6 million was properly reduced to about $3.1 million after trial under Missouri’s cap on punitive damages. The prevailing business, All Star Awards & Ad Specialties, argues that the cap doesn’t apply and that the original amount should be restored. The defendant, HALO Branded Solutions, says the award is excessive and should be cut even further.

At issue is whether All Star’s cause of action, tortious interference with business expectancy, was recognized as common law when Missouri became a state in 1820. That otherwise obscure point of legal history has critical importance under a controversial line of Supreme Court cases that for the last decade have determined when damage caps can be enforced. 

In 2012, the Supreme Court in Watts v. Cox Medical Centers struck down the state’s cap on noneconomic damages in medical malpractice cases. The Missouri Constitution guarantees that “the right of trial by jury as heretofore enjoyed shall remain inviolate,” which the court’s majority said prohibited lawmakers from imposing limits on common-law causes of action that existed at the time the state constitution was first adopted in 1820.

Then in 2014, the court in Lewellen v. Franklin built on that ruling by holding that Missouri’s punitive-damages cap couldn’t be applied to long-recognized common-law causes of action, such as fraud. 

In briefs, HALO, along with the Missouri Organization of Defense Lawyers, urged the court to overturn those rulings. But at arguments, Erin Murphy of Kirkland & Ellis in Washington, D.C., an attorney for the defendant, was more restrained and said the court need only find that the plaintiffs’ suit was based on a cause of action that didn’t exist at the time of Missouri’s initial statehood.

“It’s not that at common law you brought a tortious interference claim under the label of trespass,” she said, citing an indisputably recognized common-law cause of action. “You couldn’t bring these kinds of claims, period.”

But Brent Coverdale of Scharnhorst Ast Kennard Griffin in Kansas City, an attorney for All Star, offered an entirely different reading of legal history, pointing to English cases as far back as 1410 that he said allowed a person to sue for the disruption of his business. 

“There’s no precedent in this court for splitting hairs between common law claims that have evolved from what they would have been as of 1820,” he said. “The point is, do we go to a jury in 1820? The answer is we could under the facts of this case.”

The attorneys spent little time on the continued validity of the Watts line of cases, and the judges didn’t appear inclined to overrule them. Judge Zel Fischer at one point noted that the language of Missouri’s jury-trial right is different from that of other states (and that of the Seventh Amendment to the U.S. Constitution) where damage caps have been permitted.

Fischer, however, indicated that its current line of cases could cut both ways for the parties.

“The elephant in the room is that there are two answers to this question, neither of which would require this court to reverse any of its cases,” he said. “If it’s a common law claim, there can’t be a damage cap. Or, if it was a common law claim recognized or created after 1820, the cap can apply.”

Judge W. Brent Powell, however, asked whether All Star’s argument would require the court to broaden its earlier holdings, as Coverdale’s argument suggested that legislative damage limits were improper for any case whose facts might have gone to a jury 200 years ago. Coverdale insisted that tortious interference with business expectancy did exist then; it’s just evolved since.

“The evolution of the claim is not as vast as HALO wants to make it sound,” he said.

All Star, a small Kansas City-based company that makes and sells custom awards and promotional materials, alleged at trial that HALO, a larger rival, gained proprietary information by hiring away All Star’s general manager. In 2019, a Jackson County jury awarded $525,000 in actual damages and $5.5 million in punitive damages against HALO. After trial the judge applied the state’s cap on punitive damages, which limits such awards to five times the actual damages or $500,000, whichever is greater.

The case is All Star Awards & Ad Specialties Inc. v. HALO Branded Solutions Inc., SC99007.