Missouri Supreme Court Vacates Class Certification, Rules Class Definition is Overbroad and Otherwise Deficient
April 5, 2019 – The Missouri Supreme Court has handed down an important decision that likely will have a large impact on consumer class action law. In State Ex Rel. General Credit Acceptance Company, LLC, v. The Honorable David L. Vincent, III, No. SC97175 (Mo. banc Apr. 2, 2019), the class action defendant GCAC (represented by Brown & James, P.C. principals Russell F. Watters and Timothy J. Wolf and counsel David McCourt) successfully petitioned the Missouri Supreme Court for a permanent writ of prohibition ordering the circuit court to vacate its certification of a class that was grossly overbroad, and for which the sole named representative was not typical.
Plaintiff Helena Weatherspoon sought to represent a class of more than 5,000 defaulting auto loan purchasers, asserting claims under the Uniform Commercial Code and other Missouri law for allegedly defective consumer notices, and for wrongful repossession of their vehicles after default. After years of litigation, in 2017 the trial court granted class certification.
GCAC successfully petitioned the Missouri Supreme Court, which held that consumers who had final judgments entered against them in deficiency actions were precluded from participation in the class, as were consumers who had their debts extinguished in bankruptcy without disclosing their claims against GCAC. Therefore the trial court abused its discretion by certifying a class containing a large majority of class members – here 87% – with “no unresolved claim against GCAC,” as “they had been precluded by deficiency judgments or have been extinguished in bankruptcy.” In addition, the Supreme Court held that Weatherspoon was an “inadequate” representative for a class of claimants alleging deficient repossession notices and wrongful repossession, as she had voluntarily surrendered her vehicle and had not suffered the damages claimed.
The decision is likely to have a profound impact on consumer class actions, where Missouri courts have often failed to scrutinize the claims of class representatives, or to exclude class members precluded by prior litigation, and class settlements have often included the forfeiture of deficiency judgments or the return of deficiencies collected by the creditor, which is no longer permissible.
Missouri Supreme Court Defines Essential Elements for Negligent Credentialing Claims against Hospitals – Physician Incompetence Must Be Shown to Make a Submissible Case
March 18, 2019 – The Missouri Supreme Court, in a recent decision – Tharp v. St. Luke’s Surgicenter – Lee’s Summit, LLC, No. SC96528 (Mo. banc Feb. 26, 2019), an appeal handled by Brown & James, P.C. principals David P. Ellington, T. Michael Ward, and Teresa M. Young – held that plaintiffs cannot maintain a negligent credentialing claim against a hospital granting privileges to a physician unless they show the physician is incompetent. Mere negligence in the credentialing process, as held by the Supreme Court, is not enough to make a submissible case.
In the past, patients had difficulty bringing vicarious liability claims against hospitals for injuries caused by physicians with staff privileges because no employment relationship existed between the hospitals and those physicians. To overcome the patient’s inability to state vicarious liability claims, courts across the United States began recognizing a cause of action based on negligence in the credentialing process for physician staff privileges. Courts, in adopting this cause of action, followed those cases holding the employer responsible for an independent contractor’s negligence when the employer fails to exercise reasonable care in hiring a competent contractor.
Missouri’s courts followed this trend, generally allowing an action for negligent credentialing. However, the few decisions addressing the cause of action never identified the specific elements necessary to maintain a negligent credentialing claim.
The Missouri Supreme Court, in Tharp, has now defined those elements. The Supreme Court, in addressing the scope of duty owed, held that a hospital owes a duty to its patients to credential only competent and careful physicians. The Court further held that a hospital breaches this duty only if the evidence shows a “reasonable investigation into the surgeon’s background and qualifications would have revealed that [the surgeon] was unqualified.” Finally, the Court held that a plaintiff must show that the hospital’s negligent credentialing is the actual and proximate cause of the plaintiff’s injuries in order for the plaintiff to maintain this cause of action. Thus, to maintain a negligent credentialing claim, a plaintiff must show the physician lacked the general competence or care necessary to perform the procedure, and not simply that the physician was negligent in that particular instance.
In Tharp, the plaintiff argued the hospital was negligent because it failed to terminate the credentialing process, as required by its bylaws, when it learned the physician had failed to include every lawsuit he had defended on his initial application. However, the plaintiff offered no evidence showing the physician was incompetent. To the contrary, the evidence established that the physician was a well-respected expert in his field. Under these facts, the Supreme Court held there was insufficient evidence to support the plaintiff’s negligent credentialing claim and reversed the trial court’s judgment on the jury’s verdict for the plaintiff.
The Missouri Supreme Court’s decision in Tharp will have a significant impact on negligent credentialing claims subject to Missouri law. The Court’s decision should reduce the number of credentialing claims against hospitals. No longer can such claims be predicated solely on mistakes made during the credentialing process. The requirement that physician incompetence must be shown to make a submissible case should permit the imposition of liability only in exceptional cases, namely, those involving a truly incompetent physician and not one who simply committed malpractice in a specific instance in the care and treatment of a patient.
Missouri Supreme Court Dramatically Narrows Co-Employee Liability
The Missouri Supreme Court, in a pair of decisions handed down this week – Conner v. Ogletree, No. SC95995 (Mo. banc Mar. 6, 2018), and Evans v. Wilson, No. SC95997 (Mo. banc Mar. 6, 2018), a case defended by Brown & James, P.C., partners Russ Watters, Mike Ward and Jackie Kinder – further narrowed the scope of co-employee liability in Missouri following the earlier Supreme Court cases decided in 2016 when the court decided the Peters v. Wady Indus., Inc., 489 S.W.3d 784 (Mo. banc 2016), and Parr v. Breeden, 489 S.W.3d 774 (Mo. banc 2016) where the Court defined the contours of co-employee liability for workplace injuries taking place between the 2005 and 2012 amendments to the Missouri Workers’ Compensation Law.
In these earlier decisions, the Supreme Court made plain that co-employee liability turned on whether the duty breached by the co-employee was part of the employer’s non-delegable duty to protect employees from “reasonably foreseeable” risks in the workplace. If so, no claim for co-employee liability may be maintained. If not, the co-employee’s claim against his or her fellow worker may proceed. However, the Supreme Court’s 2016 decisions left open as many questions as they answered, including the question whether an employee may sue a co-employee for negligence in carrying out the details of the employee’s work and the scope of an employer’s non-delegable duty to provide a safe workplace.
The Supreme Court has now addressed these questions in its 2018 decisions. In Conner, a lineman, who was rendered a quadriplegic in an electrocution accident, alleged his co-worker failed to ensure that a power line was de-energized, failed to warn him that the line was energized, and failed to follow the employer’s safety rules. In Evans, the injured worker was run over by his fellow worker operating a forklift. In both cases, the Supreme Court affirmed the trial courts’ summary judgments for the defendant co-employees, rejecting in both cases the plaintiffs’ claims that liability should be imposed based on the co-employees’ negligence in carrying out the details of their work.
The Supreme Court, in ruling for the defendant co-employees, adopted a bright-line test in Conner and Evans for determining co-employee liability in Missouri. Under the Supreme Court’s test, no co-employee liability claim may be maintained unless the defendant employee breaches a duty separate and distinct from the employer’s duty to provide a reasonably safe workplace. Restated, the imposition of co-employee liability requires a breach of a duty unrelated to the employment or a breach of the employer’s duty to provide a safe workplace that is so unforeseeable to the employer as to take the claim beyond the realm of the employer’s duty to provide a safe workplace.
For co-employee claims falling between the 2005 and 2012 amendments of the Missouri Workers’ Compensation Law, the Supreme Court’s 2018 decisions signal that actionable co-employee liability claims will be the exception rather than the rule. However, the Court’s decisions leave open for another day the question of co-liability under the Law’s 2012 amendment, Mo. Rev. Stat. § 287.120, which limits co-employee liability claims to those instances in which the defendant co-employee has engaged in affirmative negligent acts. Based on its decisions in Conner and Evans, the Court seems to be signaling that it will adopt a very narrow view of co-employee liability under the 2012 amendment, which was certainly the Missouri General Assembly’s intent.
Missouri Court of Appeals Finds That Sexual Stereotyping Can Form the Basis of a Sex Discrimination Claim
In a case of first impression, the Missouri Court of Appeals recently found that sexual stereotyping can form the basis of a sex discrimination claim under Missouri’s Human Rights Act. In Lampley v. Missouri Commission on Human Rights (MCHR), the Missouri Court of Appeals reversed the MCHR’s finding that a homosexual man could not pursue a sex discrimination claim.
The man claimed his employer had discriminated against him based on sex because his behavior and appearance contradicted the stereotypes of maleness held by his employer and managers. The MCHR argued that the man’s claim was merely a disguised claim for discrimination based on sexual orientation, which is not recognized in Missouri.
The Court of Appeals found: “If an employer mistreats a male employee because the employer deems the employee as insufficiently masculine, it is immaterial whether the male employee is gay or straight.” Despite the MCHR’s arguments to the contrary, the court found that a sex stereotyping analysis does not create a new suspect class. It simply recognizes one of the ways sex discrimination manifests itself.
While sex stereotyping claims have been recognized under federal law and in other states, this is the first time they have been recognized under Missouri’s discrimination law.
Permissive Use When Both the Driver and Owner Deny Permission Was Given
If you are an insurance company that deals with automobile coverage and permissive use, it just got tougher proving that a driver did not have “permission” to operate a vehicle. In Safeco Ins. Co. of America v. Sheri Lee Smith (Mo. App. WD 612010, 71356), a driver, Clint Smith, who was under the age of 15, had no driver’s license or learner’s permit, and was intoxicated, allegedly “borrowed” a pickup truck owned by Eric Cox. Clint lost control of the truck and his passenger, A.J. Smith ( no relation to Cline Smith) was thrown from the vehicle and lost his life.
Earlier that evening, Clint drove the pickup with Smith’s permission. However, later in the evening, after Smith fell asleep, Clint and A.J. Smith “borrowed” the truck and were involved in the fatality accident.
In the declaratory judgment action both the driver, Clint Smith, and the owner, Eric Cox, testified that the driver did not have permission. However, other circumstantial evidence tended to show he in fact had implied permission. The court reasoned that, the absence of an explicit restriction on use of automobiles is a strong indication that such use is permissible. The court further noted that, “…while it is true that the (injured parties) cannot offer direct evidence, contradicting the self serving testimony of the (driver) and (owner) that (driver) did not have permission to drive the truck on the night in question, the indirect evidence and the reasonable inferences therefrom are sufficient for a jury to disbelieve the claims and find that (driver) had permission to drive the truck.”
The Western District determined that there was a question of fact that needed to be tried even in light of the testimony of both the driver and the owner that the driver did not have permission. Safeco Ins. Co. of America v. Sheri Lee Smith, (Mo. App. WD71356 June 12, 2010).
Excess Policy Required Actual Payment Before Excess Coverage Was Triggered
On the campus of the University of Missouri in July of 2003, a young woman fell from a portable rock climbing wall when a safety cable snapped. The proprietor of the property had primary liability insurance with Virginia Surety Company, f/k/a Combined Specialty Insurance Company (Virginia Surety). The proprietor had an excess liability policy with Great American Assurance Company (Great American) in the amount of $4,000,000.00.
The primary carrier denied coverage based on an exclusion. Great American communicated to the insured that absent “primary” liability coverage, Great American had no contractual responsibility to provide “excess” liability coverage.
Thereafter, the proprietor and the decedent’s beneficiaries entered into a Mo. Rev. Stat. §537.065 agreement whereby they agreed to limit the execution of any judgment against the proprietor in the wrongful death lawsuit to insurance proceeds. The trial court in the wrongful death lawsuit entered a judgment in favor of the beneficiaries in the amount of $4,580,076.00. The beneficiaries then filed an equitable garnishment suit against Virginia Surety and Great American. Motions for summary judgment were filed on the applicability of the primary carrier’s liability coverage. The trial court ruled that the beneficiaries were entitled to coverage under the Virginia Surety policy, holding that the exclusion did not exclude coverage. Virginia Surety then settled with the beneficiaries.
However, they settled short. Virginia agreed to pay only $700,000.00 of their $1,000,000.00 limit. The beneficiaries agreed to “credit” Virginia Surety $300,000 in an attempt to trigger the excess policy. 
In pertinent part, the Great American policy read:
“(I) If the “Underlying Limits of Insurance” …are exhausted solely by payment of “loss” such insurance provided by this policy will apply in excess.
“Loss” means those sums actually paid in settlement or satisfaction of a claim.
The appellate court found that the “credit” did not equal actual payment. The court commented: “…Great American’s obligation to pay excess liability insurance coverage to appellants occurs if and when Virginia Surety’s $1,000,000.00 of underlying limits of insurance are exhausted solely by payment of those specified amounts of money actually paid in settlement or satisfaction of a claim…Thus, by the express terms of the Great American insurance contract, there is no evidence that the underlying limits of insurance have been exhausted in the manner provided in the Great American Insurance contract…and Great American has no obligation to make payments to appellants under its excess insurance policy.”
The holding required Virginia Surety to actually pay its limit, to trigger excess coverage. The credit scheme failed. Schmitz v. Great American Assurance Co. (Mo. App. WD 71160/71198 June 1, 2010).
 The beneficiaries had previously received $700,000 in a settlement. Therefore, the net judgment against Great American was $2,880,076.00
Sexual Harassment/Hostile Environment/Retaliation Claims under MHRA
The Missouri Supreme Court’s decision in Hill v. Ford Motor Co., 277 S.W.3d 659 (Mo. banc 2009) impacts many facets of Missouri employment law. First, the Supreme Court, in this sexual harassment / hostile work environment / retaliation claim, held that an employee, who was suspended and directed to obtain psychiatric treatment in retaliation for rejecting her supervisor’s sexual harassment and for making a prior unrelated discrimination claim, stated a claim under the Missouri Human Rights Act (MHRA), and not under Title VII. This aspect of the Court’s decision may have a significant impact on future discrimination claims in Missouri because MHRA claims are not subject to the burden-shifting analysis that governs Title VII claims. Under the federal burden-shifting analysis, employers may escape liability by showing a legitimate, non-discriminatory reason for the employment action. Therefore, the Missouri Supreme Court’s decision may signal an increase in claims brought under the MHRA. Second, in the employer’s favor, the Supreme Court recognized the Faragher-Ellerth defense to sexual harassment claims subject to Missouri law. To prove this defense, an employer must show: (1) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior; and (2) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. Third, the Supreme Court permitted the late joinder of parties to MHRA claims. The Court held the MHRA allows an action to be brought against a supervisor in his individual capacity even though he was not a party in the employee’s initial administrative claim before the Missouri Commission on Human Rights. The Court explained the failure to join the supervisor as a party will bar the employee’s claim only if the prior non-joinder results in prejudice. Fourth, the Missouri Supreme Court expressed its disfavor for summary judgment procedure in employment claims brought under the MHRA. The Court stated summary judgment on MHRA claims should be rarely granted because the claims almost always involve a dispute over material facts.
Retaliatory Discharge, Punitive Damages, “Me Too” Evidence, Expert Testimony on Emotional Distress
The Missouri Court of Appeals upheld a jury’s verdict for the plaintiff on a claim of retaliatory discharge for making a sexual harassment complaint. The Court, in so ruling, held the “contributing factor” standard is the appropriate standard for establishing the causation element of a retaliatory discharge claim, which element can be proven by indirect and circumstantial evidence. The Court further held a submissible claim for punitive damages is made in a retaliatory discharge claim when “the evidence and the inferences drawn therefrom are sufficient to permit a reasonable juror to conclude that the plaintiff established with convincing clarity – that is, that it was highly probable – that the defendant’s conduct was outrageous because of evil motive or reckless indifference.” The plaintiff sustains this burden by showing the defendant’s wrongful conduct was intentional and without just cause or excuse. Thus, the same evidence that supports a plaintiff’s claim that a retaliatory motive contributed to her discharge may also support the plaintiff’s punitive damage claim. The Court also held that “me too” evidence of the employer’s treatment of other employees may be relevant to support both the underlying and the punitive damage claim. Finally, the Court addressed the plaintiff’s emotional distress damage claim, holding expert testimony is inadmissible on the legitimacy of “garden variety” emotional distress. Williams v. Trans States Airlines, Inc., 281 S.W.3d 854 (Mo. App. E.D. 2009).
More Than Just a “Policy” Required for the Faragher/Ellerth Affirmative Defense in Sexual Harassment Cases
To establish the “prevention” prong of the Faragher/Ellerth affirmative defense in sexual harassment claims, the Missouri Court of Appeals held an employer must do more than have a facially-valid anti-harassment policy. Restated, the mere existence of the policy is insufficient to satisfy the employer’s burden to show that it exercised reasonable care in preventing sexual harassment. Instead, courts must consider the employer’s conduct in implementing the policy. In this case, as the employer had some information about an applicant’s termination from prior positions, the Court reversed the trial court’s summary judgment for the employer, holding the employer had an obligation to investigate the applicant’s prior acts of misconduct. Herndon v. City of Manchester, 284 S.W.3d 682 (Mo. App. E.D. 2009).
Wrongful Discharge Claim Cannot be Brought in the Guise of a Negligent Supervision Claim to Defeat Missouri’s Employment-At-Will Doctrine
Discharged employees brought a negligent supervision claim against their former employer, alleging the employer had a duty to supervise its managers to ensure they would not unfairly or unjustly — in violation of company policy and their employment contract — discriminate against employees so as to unjustly discharge them and cause them damage. The Missouri Court of Appeals observed the employees’ negligent supervision claim was a wrongful discharge claim in disguise. Thus, noting there was no employment contract, the Court reaffirmed Missouri’s employment-at-will doctrine and held the employees failed to state a claim upon which relief may be granted. The Court, in so ruling, explained that a contrary ruling would have undermined the at-will doctrine, observing in the past that wrongful termination claims brought by at-will employees in the guise of claims for prima facie tort, tortious interference with business expectancies, fraud, and emotional distress have failed as a matter of law. Doran v. Chand, 284 S.W.3d 659 (Mo. App. W.D. 2009).