By Jill S. Bollwerk
On September 9, 2014, the Missouri Supreme Court held that Section 510.265 RSMo.'s punitive damages cap is unconstitutional in the case of Lillian Lewellen v. Chad Franklin and Chad Franklin National Auto Sales North, LLC. Ms. Lewellen, a 77-year-old widow, sued the defendants for fraudulent misrepresentation after her purchase of a new vehicle from the dealership. The dealership promised her that they would make arrangements with her so that she could purchase the new vehicle for a payment of only $49 per month. The dealership did not hold up their end of the bargain and the bank came after Ms. Lewellen and eventually repossessed the car. Ms. Lewellen sued the dealership for misleading her and the jury found in her favor. She was awarded $25,000 in actual damages and $1 million against each of the two defendants in punitive damages for the dealership's outrageous behavior. The trial court reduced the punitive damages award against one defendant to $500,000 and reduced the punitive damages award to $539,000 against the other defendant, as the court was required to do under Section 510.265 RSMo. An appeal followed and was eventually taken up by the state's highest court.
Section 510.265 RSMo. is a law that requires a court to reduce a punitive damages award rendered by a Missouri jury to either $500,000 or five times the net amount of the judgment awarded against the defendant. Ms. Lewellen argued to the state's highest court that this statutue is unconstitutional because it takes away a jury's right to determine damages and therefore, deprives her of a right to trial by jury guaranteed by the Missouri Constitution. The Supreme Court of Missouri agreed, and it declared that Section 510.265's cap on punitive damages is unconstitutional. The Supreme Court entered judgment consistent with the original jury award and raised the punitive damages award back to $1 million. In the future, trial courts will no longer reduce a jury's punitive award because of the caps set in Section 510.265. This is a big victory for Missouri consumers.
Puntive damage awards are important in cases where a corporation hurts a consumer in a deceitful and fradulent manner, because they can act as a deterrent to the corporation from engaging in the same bad behavior in the future. Furthermore, large punitive damage awards against one corporation make other corporations think twice before defrauding the most vulnerable members of our society, like Ms. Lewellen.