All Star Awards & Ad Specialties, Inc. v. HALO Branded Solutions, Inc.

• Decision Date: 05 April 2022
• Docket Number: SC 99007
• Citation: 642 S.W.3d 281
• Parties: ALL STAR AWARDS & AD SPECIALTIES, INC., Appellant-Respondent, v. HALO BRANDED SOLUTIONS, INC., Respondent-Appellant.
• Court: Missouri Supreme Court

642 S.W.3d 281

ALL STAR AWARDS & AD SPECIALTIES, INC., Appellant-Respondent,

v.HALO BRANDED SOLUTIONS, INC., Respondent-Appellant.

No. SC 99007

Supreme Court of Missouri, en banc.

Opinion issued April 5, 2022

All Star was represented by Brent N. Coverdale, Paula L. Brown and Andrew J. Lewis of Scharnhorst Ast Kennard Griffin PC in Kansas City, (816) 268-9400.

HALO was represented by Erin E. Murphy and Lauren N. Beebe of Kirkland & Ellis LLP in Washington, D.C., (202) 389-5000; and Douglas M. Weems and Patrick J. McAndrews of Spencer Fane LLP in Kansas City, (816) 474-8100.

W. Brent Powell, Judge

All Star Awards & Ad Specialties Inc. appeals the reduction of a jury's punitive damages award against HALO Branded Solutions, Inc.The jury awarded All Star $25,541.88 in actual damages after finding All Star's employee, Doug Ford, breached his duty of loyalty to All Star and HALO conspired with Ford to breach this duty of loyalty.The jury also found Ford and HALO tortiously interfered with All Star's business and awarded All Star $500,000 in actual damages.¹Finally, the jury assessed $5.5 million in punitive damages against HALO.The circuit court thereafter reduced the punitive damages award to $2,627,709.40 pursuant to section 510.265.²All Star contends the application of the statutory punitive damages cap found in section 510.265 violated its right to a jury trial.

HALO cross-appeals.In three multifarious points relied on, HALO contests the circuit court's rulings: (1) overruling HALO's motion for directed verdict and partially overruling its motion for judgment notwithstanding the verdict("JNOV") as to the tortious interference claim; (2) allowing All Star to submit the issue of future damages to the jury as to the tortious interference claim; (3) permitting All Star to introduce an exhibit as evidence of lost profits; (4) refusing to strike testimony regarding that exhibit and regarding lost profits; (5) overruling HALO's motions for directed verdict and JNOV because punitive damages were not submissible; (6) overruling, in part, HALO's motion to reduce punitive damages because All Star failed to make a submissible case for punitive damages; and (7) overruling, in part, HALO's motion to reduce punitive damages because even the reduced punitive damages award violated due process.

Despite All Star and HALO's various challenges, the circuit court's application of the punitive damages cap in section 510.265 did not violate All Star's right to a jury trial, and the reduced award did not violate HALO's due process rights.This Court declines to review the remaining arguments HALO raises on appeal, as they fail to comply with Rule 84.04.The circuit court's judgment is affirmed.

Factual and Procedural History³

Both HALO and All Star sell branded promotional products and offer other branding services to their clients.HALO is a large, full-service promotional products distributor employing about 2,000 people.HALO is an expanding company; its expansion comes, in part, from hiring other promotional companies’ account executives who have preexisting clients.All Star is a small, family-operated business that employs about 20 people.All Star employees build client relationships, but those clients belong to All Star and not individual employees.

All Star hired Doug Ford in 1994.In early 2018, Ford informed All Star he intended to take a sales position with HALO.But, unbeknownst to All Star, Ford had begun working for HALO before the end of 2017 and had surreptitiously engaged in several activities intended to benefit HALO.At HALO's request, Ford sent HALO confidential information about All Star customers.Ford also informed his All Star clients of his impending move to HALO; transferred customer orders to HALO; acquired promotional artwork and files from All Star for HALO; and induced All Star employees to prepare material, such as customer reports, that Ford intended to share with HALO.⁴Ford did these things in coordination with HALO's management and staff.All Star, then unaware of Ford's activities, agreed to allow Ford to stay on until he officially started working for HALO.About a week after Ford gave his notice, All Star discovered evidence of Ford's activities and terminated him.All Star demanded HALO cease processing orders from All Star clients, but HALO refused.Instead, HALO processed orders only from All Star customers with whom Ford had a longstanding prior relationship.

In March 2018, All Star sued Ford and HALO.A jury found HALO tortiously interfered with All Star's business expectancy.The jury also found Ford breached his duty of loyalty to All Star and HALO conspired with Ford to breach this duty of loyalty.⁵The jury awarded All Star $525,541.88 in actual damages for both claims.All Star further alleged HALO acted with an evil motive or reckless indifference and sought punitive damages.In a bifurcated proceeding, the jury assessed $5.5 million in punitive damages against HALO.⁶The circuit court subsequently accepted the jury's verdicts and award of actual and punitive damages against HALO and entered judgment for All Star.Following HALO's motion for JNOV, new trial, and remittitur, the circuit court applied section 510.265 and capped the punitive damages award at five times All Star's actual damages, or $2,627,709.40, but otherwise overruled HALO's motions and entered final judgment in accordance with the jury's verdicts.All Star appealed; HALO cross-appealed.After an opinion by the court of appeals, this Court transferred the case pursuant to article V, section 10 of the Missouri Constitution.

Analysis

I.All Star's Claims

All Star raises four points on appeal, all challenging the circuit court's reduction of the $5.5 million punitive damages award.This Court need only consider All Star's first two arguments related to the application of the punitive damages cap in section 510.265, as they are dispositive.⁷

a. The Right to Trial by Jury and Punitive Damages Caps

Article I, section 22(a) of the Missouri Constitution states "the right of trial by jury as heretofore enjoyed shall remain inviolate."This provision endows litigants pursuing legal claims today with the right to a jury trial if they would have enjoyed such right at common law when the Missouri Constitution was first adopted in 1820.Dodson v. Ferrara , 491 S.W.3d 542, 553(Mo. banc 2016).The phrase "as heretofore enjoyed" as used in article I, section 22(a), however, limits the modern scope of the right to trial by jury.Watts v. Lester E. Cox Med. Ctrs. , 376 S.W.3d 633, 638(Mo. banc 2012)."The phrase heretofore enjoyed means that the constitution protects the right as it existed when the constitution was adopted and does not provide a jury trial for proceedings subsequently created."

Dodson , 491 S.W.3d at 553(internal quotation omitted).The right applies only to causes of action that would have been tried by a jury when the Missouri Constitution was adopted in 1820.⁸Id.In 1820, juries were authorized to assess punitive damages for common law tort claims, and statutory caps on punitive damages did not exist.Lewellen v. Franklin , 441 S.W.3d 136, 143(Mo. banc 2014)(noting"imposing punitive damages was a peculiar function of the jury");see alsoDay v. Woodworth , 54 U.S. 363, 371, 13 How. 363, 14 L.Ed. 181(1851)(observing assessing damages by way of punishment "has been always left to the discretion of the jury").

In 2005, the Missouri legislature enacted section 510.265, which caps the amount of punitive damages litigants can recover.⁹Statutory caps on punitive damages violate the right to a trial by jury as provided by article I, section 22(a) if the litigant's common law cause of action existed in 1820 and the claim would have supported a finding of punitive damages in 1820.Lewellen , 441 S.W.3d at 143;Dodson , 491 S.W.3d at 557;Overbey , 361 S.W.3d at 375.Statutory caps on punitive damages also violate the right to a trial by jury as provided by article I, section 22(a) if the litigant's common law cause of action is "analogous" to a claim that existed in 1820 and the claim would have supported a finding of punitive damages in 1820.Dodson , 491 S.W.3d at 553.But, if the particular legal cause of action did not exist or if the modern common law claim is not sufficiently "analogous" to a claim existing in 1820, then article I, section 22(a) does not guarantee litigants the right to have a jury make an unlimited determination of damages, and the legislature may enact statutory limits on punitive damages.Watts , 376 S.W.3d at 638.Finally, if the legal claim or analogous legal claim was cognizable in 1820 but did not support the assessment of punitive damages in 1820, then article I, section 22(a) does not ensure a modern litigant the right to a jury's determination of unlimited damages on that claim and the legislature may enact statutory limits on punitive damages.SeeDodson , 491 S.W.3d at 558("The phrase heretofore enjoyed means that the constitution protects the right as it existed when the constitution was adopted."(internal quotation omitted)).

In its appeal, All Star contends the circuit court violated its right to trial by jury as guaranteed by Missouri's Constitution because it reduced the jury's punitive damage award pursuant to the statutory cap on punitive damages found in section 510.265.All Star asserts that, in applying the statutory punitive damages cap, the circuit court misapplied this Court's prior precedent.All Star maintains "the applicable analysis is not whether the plaintiff's claims are ‘common law claims,’ and is instead whether ... civil conspiracy to breach the duty of loyalty and tortious interference with business expectancy [ ] are civil actions for damages involving a fact issue" for which a jury would have had limitless power to decide punitive damages in 1820 when Missouri's Constitution was first adopted.

All Star contends its legal claims against HALO are not subject...