United States: "Backward Or Forward" Where Will Missouri Supreme Court Go?

On August 28, 2017, Missouri Bill Senate Bill 43 ("SB 43") became law. Among other changes, SB 43 altered the causation standard for proving whether an employer discriminated against an employee and placed a cap on damages available under the Missouri Human Rights Act ("MHRA"). The changes have created uncertainty regarding current employment discrimination cases in which the alleged discrimination occurred before August 28, 2017.

The issue litigants currently face is whether courts will apply the amendments to alleged discriminatory conduct occurring before August 28, 2017. Generally, the Missouri Constitution prohibits the application of laws retroactive in operation. However, the Missouri Supreme Court has recognized two exceptions: "(1) where the legislature manifests a clear intent that it do so, and (2) where the statute is procedural only and does not affect any substantive right of the parties." 1

The question presented to Missouri courts considering the new changes is whether the amendments fit either of these two exceptions.

Damages Cap

SB 43 caps total recoverable damages under the MHRA. The size of the employer's workforce will determine the cap amount, which ranges from $50,000 to $500,000, plus back pay. SB 43 caps damages at:

  • $50,000 for employers with between 5 and 100 employees;
  • $100,000 for employers with between 100 and 200 employees;
  • $200,000 for employers with between 200 and 500 employees;
  • $500,000 for employers with more than 500 employees.

In September, our attorneys' analysis of SB 43 was that the damages cap was substantive in nature and would not apply retroactively. We might as well have proposed to baseball's National League that it would be legally bound to use the designated hitter rule. Or suggested to my millennial daughter that she leave her smart phone at home rather than next to her keyboard at the office for instant messaging. My inbox lit up with e-mails like a pinball machine, phones rang, and an angry mob formed outside my office door.

Our analysis that the damages cap would not apply retroactively brought fierce disagreement and strong opinions both ways. The disagreement was reminiscent of the debate regarding the retroactive nature of the Civil Rights Act of 1991's amendments to Section 1981. The 1991 Act, like now, drew heated disagreement and divided courts and litigants. The debate regarding SB 43's damages cap is fueled by two Missouri Supreme Court decisions.  

The Case Against Retroactive Application of the Damages Cap

In 2006, in a medical malpractice case, the Missouri Supreme Court considered a damages cap that the legislature placed on compensatory damages. 2 The Court held that "the legislature cannot change the substantive law for a category of damages after a cause of action has accrued." Any cap or change in measuring compensatory damages is substantive in nature and must be applied proactively only.

SB 43 caps all damages a plaintiff may recover, which includes compensatory damages. Because the legislature's cap applies to compensatory damages, the amendment must be a substantive change. The language in Klotz also mentions "a category of damages," indicating that the decision may apply to more than just compensatory damages. The legislature included compensatory damages in its cap; the amendment cannot be applied retroactively.

The Case for Retroactive Application of the Damage Cap

In 1986, the Missouri Supreme Court considered whether to retroactively apply a bar on punitive damages. 3 The Court found that plaintiffs have no vested right in punitive damages. Because there is no vested right in punitive damages, bars or caps on punitive damages are remedial in nature and must be applied retroactively. Other Missouri courts have also found similar penalty caps or bars must also be applied retroactively. 4 

While SB 43 caps all recoverable damages available to a plaintiff, the practical effect of the cap limits the amount of punitive damages a successful plaintiff would receive. SB 43 set the cap high enough that a plaintiff's compensatory damages would realistically not be capped. The cap would restrict punitive damages and plaintiffs have no vested right in punitive damages until after any entry of judgment. Therefore, the Missouri Supreme Court precedent set in Vaughan v. Taft Broad. Co. applies and the cap must be applied retroactively.

Causation Standard

Missouri's previous framework required employees bringing employment discrimination claims to prove that race, age, gender, or national origin was a "contributing factor" in an employer's adverse action. This standard was relatively easy for an employee to achieve because the employee only had to show that the employer merely considered unlawful criteria when making an employment decision.

SB 43 changed Missouri's framework by now requiring employees alleging discrimination to show that the employer's decision was "motivated" by discriminatory animus. This change brought the Missouri Human Rights Act's causation standard in line with the federal standard found in Title VII. This standard is more difficult for suing employees to prove than the previous Missouri standard. Aggrieved employees must now show that the discriminatory animus was not only a factor, but a factor that actually motivated the employer's action. It now needs to be the factor that makes a difference.

The Case for Retroactive Application of the New Standard

Those making the case that the new standard will apply retroactively contend that the new standard meets both exceptions. Since the standard applies retroactively, the courts would apply the new standard to alleged discriminatory conduct occurring before August 28, 2017.

The Missouri Legislature may disclose clear intent "through express language or by 'unavoidable implication.'" 5 The Missouri Legislature manifested a clear intent for the new standard to apply retroactively. SB 43 expressly "abrogates all Missouri approved jury instructions specifically addressing civil actions brought under this chapter which were in effect prior to August 28, 2017." The legislature created an unavoidable implication because had the legislature intended for the previous standard to control, it would not have abrogated the jury instructions to that standard.

Second, the new standard merely alters a procedural matter. The Missouri Supreme Court has held that procedural rules amount to "the legal machinery employed in the trial of a case." 6  Procedural matters include burdens of proof and evidentiary rules. 7 Those who believe the change in the standard applies retroactively note the change only affects the "legal machinery" of employment discrimination claims.

The Case Against Retroactive Application of the New Standard

Those making the case that the "contributing factor" standard will apply contend that the new standard does not fall into either exception. The Missouri Legislature did not manifest a clear intent for SB 43 to apply retroactively and the change is substantive.

The first exception does not apply because the Missouri Legislature did not use express language to manifest a clear intent. The Missouri Legislature also did not make it an unavoidable implication. SB 43 does not require courts to use the federal McDonnell Douglas standard, but simply states it should be highly persuasive. The lack of clear intent indicates that the changes should only apply proactively.

In 2007, the Missouri Court of Appeals considered a similar standard change in the Workers' Compensation Act. Amendments changed the burden of proof from "substantial factor" to "prevailing factor" to determine whether an injury by occupational disease amounted to a compensable injury. The court found that a "change in the standard of causation . . . did not merely affect the procedure or mechanism through which a suit is pursued." 8 Given the similarities between the change in the Workers' Compensation Act and SB 43, courts are unlikely to retroactively apply the measure.

Conclusion

Missouri courts will likely be sorting out the ambiguities of SB 43's amendments for years. Given the unresolved nature of the amendments, both employers and employees alleging discrimination should be aware that a court could reasonably find that either amendment applies retroactively. Until the courts resolve the ambiguities, both sides should factor both scenarios into evaluating claims.

Footnotes

State ex rel. St. Louis S. F. R. Co. v. Buder, 515 S.W.2d 409, 410 (Mo. 1974)

Klotz v. St. Anthony's Med. Ctr., 311 S.W.3d 752, 760 (Mo. Banc 2010).

3 Vaughan v. Taft Broad. Co., 708 S.W.2d 656, 660 (Mo. Banc 1986).

4 See Goad v. Treasurer of State, 372 S.W.3d 1, 8 n. 6 (Mo. App. W.D. 2011) ("statutory amendments reducing or eliminating penalties may be retroactively applied"); Ball—Sawyers v. Blue Springs Sch. Dist., 286 S.W.3d 247, 256-57 (Mo. App. W.D. 2009) (applying a statute limiting the penalty for an employer's failure to fully pay temporary worker's compensation award, to an underpayment which pre-dated the amendatory statute).

5 Junior Coll. Dist. of St. Louis v. City of St. Louis, No. ED81496, 2003 Mo. App. LEXIS 1407, at *14 (Ct. App. Sep. 9, 2003)

6 State v. Shafer, 609 S.W.2d 153, 157 (Mo. 1980)

7 State v. Thomaston, 726 S.W.2d 448, 461 (Mo. Ct. App. 1987).

8 Lawson v. Ford Motor Co., 217 S.W.3d 345, 349-50 (Mo.App.E.D. 2007).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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