Legislation aims to tighten some actions of Missouri's Merchandising Practices Act
By Allison Retka
For Missouri consumers who encounter faulty tire rims, mislabeled milk cartons or an exterminator whose termite-fighting abilities leave much to be desired, a personal injury suit has always been an option.
But when it comes to defective products or services, the plaintiffs' bar has been shifting to a more viable option: bringing class action suits under the state's consumer protection laws.
Several classes of Missouri plaintiffs have cinched choice settlements using the Missouri Merchandising Practices Act, including a recent BJC HealthCare deal that will potentially hand over millions of dollars to uninsured patients.
Still, there's a flip side to the new option. Like any suit waged against a large corporation, the actions have a habit of ending up in federal court or lumped together in massive multidistrict litigation cases.
Plaintiffs' attorneys say that with the right handling, false advertising or unfair business practices cases still have a lot of potential, given Missouri's relatively plaintiff-friendly statutes.
"The statutes have risen to those challenges; it's flexible enough," said John Campbell, a St. Louis attorney with Simon Passanante. "With such a broad definition, [it applies to] car transactions to cell phone bills to household cleaners almost anything a consumer deals with. It's versatile in court and allows plaintiffs to stand up for themselves."
In the past three years, Campbell and his firm have filed a number of Merchandising Practices Act-based suits against payday lenders, Charter Communications and two debt adjusters.
The firm also represents a consumer group that claims a Colorado dairy illegally labeled its milk as organic. The U.S. Judicial Panel on Multidistrict Litigation decided in February to consolidate two Missouri suits against Aurora Organic Dairy with dozens of others from across the country. The panel ruled the suits will go forward in the St. Louis-based federal court.
All 50 states have some form of an unfair and deceptive business practices statute, commonly referred to as UDAP laws.
A class action suit filed under UDAP laws in California recently netted a $23.3 million settlement for consumers who bought Airborne, an herbal supplement developed by a schoolteacher promising to cure the common cold.
Like California, Missouri's UDAP statute is prized nationwide because it's free of reliance, a standard that has proved to be a tough hurdle for plaintiffs and a boon to defendants.
To meet a reliance requirement, plaintiffs must prove they relied upon the false or misleading advertising when they purchased a product or service.
Campbell said reliance is particularly difficult to show across a class of thousands of plaintiffs who could have bought the defective product for any number of reasons.
"The reason the UDAP statutes are so useful is that they don't require individual proof of reliance or intent to rely because, as you can imagine, if you had to prove that, you could never really have a class action," Campbell said. "You'd have to bring every person in and say, 'Did you really rely on that?' The whole basic idea behind a class action is that one person can represent everyone else."
Defense strategy
That doesn't stop defense attorneys from taking a close look at the statute and arguing reliance standards under a different name.
Andy Carpenter, a defense attorney with Shook, Hardy & Bacon in Kansas City, said even Missouri's law calls for plaintiffs to show they suffered an "ascertainable loss" as a result of the company's conduct.
That language alone has the potential to cut down a plaintiffs' case during class certification proceedings or later, he said.
"Whether you call it reliance or not is kind of a question of semantics," Carpenter said. "If you drill down behind consumer protection statutes, there's almost always a requirement that you show a link that caused economic damage to a plaintiff."
Carpenter said Missouri's law, contained in Chapter 407 of the state statutes, is overbroad and subsequently makes for overbroad classes of plaintiffs.
As an example, he offered a case he's defending for The Coca-Cola Co. A Missouri woman was granted class certification two years ago on a suit that claims the company failed to warn consumers that fountain Diet Coke contains saccharin, a sugar substitute. Coca-Cola's appeal of the certification is now pending before the Missouri Supreme Court.
"That class is everyone who drank Diet Coke, regardless of what you care about [saccharin]," Carpenter said. "That's a crazy overbroad consumer class brought under the Merchandising Practices Act."
Legislative action
Missouri legislators have taken up the cry of the defense bar, filing bills last year and this year to tighten the statute and write in tougher requirements for plaintiffs.
The sponsor of the bills, Rep. Bryan P. Stevenson, R-Webb City, said reform of the state's Merchandising Practices Act is necessary. His measure limits a plaintiff's recovery to out-of-pocket costs and requires each class member to prove individual harm by the product or business practice.
Carpenter said he testified before the House Judiciary Committee at a March 11 hearing on the bill. He said the measure brings back a much-needed balance to the act. The bill is still in committee, and no vote has been scheduled.
Don Downing, a St. Louis plaintiffs' attorney with Gray, Ritter & Graham, said the bill would make it much more difficult to bring class actions under the state's consumer protection act.
"It's a very, very powerful tool that can be used and has been used for decades in Missouri to keep sellers of goods and services honest," Downing said. "I would be against any effort to water that down or make it more difficult for people who have been deceived."
Battling at the federal level
Downing was the lead plaintiffs' attorney for the March 18 settlement with BJC HealthCare. He is also managing one of the suits against Aurora Dairy over the labeling of organic milk.
A former assistant attorney general in Missouri, Downing used the state Merchandising Practices Act to bring successful consumer fraud suits against a burial services company and Orkin pest control services.
"I'm not a personal injury lawyer, but I think the landscape for those cases has changed in the last decade," Downing said. "I think more and more courts are determining that personal injury class actions are more difficult to be certified than economic class actions like consumer [cases]."
Norm Siegel, an attorney at Kansas City-based Stueve Siegel Hanson, agrees.
"In a strict personal injury claim, it is virtually impossible to get a class certified," he said.
But Siegel has seen most consumer protection class actions yanked from Missouri state courts and sent to the federal level. Even more are being consolidated into multidistrict litigation proceedings, he said. This is due in large part to the Class Action Fairness Act of 2005, he said, which set up the federal courts as proper jurisdiction for class actions in which members are from different states.
There are benefits and drawbacks to multidistrict litigation, Siegel said. On the plus side, lawyers can pool resources and work together on discovery.
"The drawbacks are that if you are intending to file and litigate a Missouri-only case and keep it in that forum, I think that's becoming more difficult," he said.
Siegel did win a valuable remand to state court in a case he led over the marketing of the painkiller drug Vioxx. This effort had two important components, he said.
"You need to have a legitimate claim that you can keep it in state court," Siegel said. "And you need to act very quickly to alert the federal courts before it gets sent off to an MDL proceeding that the case should be remanded."
Even with the looming possibility of a consolidated class action at the federal level, Carpenter said canny plaintiffs' attorneys have taken full advantage of the class action opportunities under Missouri's MPA.
"And they've been pretty successful," he said. "It's harder to oppose in class certifications than your standard strict liability … and it's a much more streamlined way to get a class certified."
