Government & Politics

Would Missouri bill gut consumer protections or end frivolous lawsuits?

Legislation currently making its way through the Missouri Capitol would make sweeping changes to the Merchandising Practices Act, which has kicked off a firestorm of debate in recent weeks. Its critics say if the bill becomes law it would deny justice to victims of unscrupulous businesses. The bill’s proponents say it simply makes long-needed changes in the law to protect businesses from frivolous lawsuits.
Legislation currently making its way through the Missouri Capitol would make sweeping changes to the Merchandising Practices Act, which has kicked off a firestorm of debate in recent weeks. Its critics say if the bill becomes law it would deny justice to victims of unscrupulous businesses. The bill’s proponents say it simply makes long-needed changes in the law to protect businesses from frivolous lawsuits.

After months of driving a beat-up used car that seemed to always be breaking down, Erica Knoll knew it was time for a change.

After shopping around, Knoll, 20, settled on a 2012 Subaru Legacy that a Kansas City dealership said had been in a minor accident. Her grandmother loaned her $12,000, and Knoll drove the car off the lot.

“The dealer told me the car was in a fender bender,” she said, “but that everything was inspected and was perfectly fine.”

Two weeks later, on a freezing cold day, the heat in the car wouldn’t work. Then the engine started smoking and the car stalled.

Turns out the previous accident was more severe than the dealer had let on. The car needed extensive repairs. Despite initially agreeing to pay for those repairs, the dealer eventually stopped returning her calls, Knoll said. And it wouldn’t send her the title, so she couldn’t even get it registered.

She eventually sued under the Missouri Merchandising Practices Act, a law that prohibits deceptive and unfair business practices. She emerged victorious last year.

But her lawyer, Lee Anderson, says lawsuits like Knoll’s wouldn’t be possible under legislation currently making its way through the Missouri Senate.

“The bill is designed to protect businesses from being responsible for onerous conduct,” Anderson said.

The legislation, which would make sweeping changes to the Merchandising Practices Act, has kicked off a firestorm of debate in recent weeks. Its critics say if the bill becomes law it would deny justice to victims of unscrupulous businesses. The bill’s proponents say it simply makes long-needed changes in the law to protect businesses from frivolous lawsuits.

Looming over the debate is Republican megadonor David Humphreys.

His company, Joplin-based Tamko Building Products, is facing a class-action lawsuit under the Missouri Merchandising Practices Act alleging it sold defective shingles. The company denies any wrongdoing.

Humphreys and his family have given millions in political contributions to Missouri Republicans in recent years, including more than $2 million last year to Gov. Eric Greitens and $200,000 to the bill’s sponsor, Senate President Pro Tem Ron Richard of Joplin.

Those donations have inspired cries of pay to play, with Humphreys standing accused of trying to use his checkbook to bend state law to his advantage.

In a statement to The Star, Humphreys expressed his full support for the proposed legislation, saying critics “attempt to cast themselves as champions for the consumer when they are merely fronts for trial lawyers’ special interests.”

But state Sen. Ryan Silvey, a Kansas City Republican, says Humphreys’ donations are a red flag.

“I’d never want to impugn the character of one of my Senate colleagues,” he said, “but this certainly does raise questions worth asking.”

Richard said Thursday that he’s never discussed the bill with Humphreys and that his sponsorship was not motivated by political donations.

Karen Buschmann, spokeswoman for the Missouri Chamber of Commerce and Industry, said over the years the Merchandising Practices Act has become a “vehicle to enrich trial attorneys rather than protect consumers.”

“Missouri’s harsh legal climate against employers has gained national attention,” she said. “Our (Merchandising Practices Act) is one reason why. We simply seek a law that is balanced for all parties.”

Under the bill, the Merchandising Practices Act would no longer apply to any business that is “regulated by the Federal Trade Commission or any other regulatory agency.”

Anderson said nearly every industry is regulated by a government agency and thus would be shielded from lawsuits stemming from violations of the consumer protection law.

Car dealerships, for example, are regulated by the state Department of Revenue. But if a car dealer sells a car without a title, Anderson said, state law does not provide consumers a remedy.

“This is a common feature of various laws,” he said. “They specify what can and cannot be done but do not provide consumers a remedy if the law is broken.”

Darren McKinney, a spokesman for the advocacy group Americans for Tort Reform, said it makes more sense for victims of misconduct to turn to government regulatory agencies instead of hiring an attorney and filing an expensive lawsuit.

“If you want justice,” he said, “we are already paying government regulators.”

Among the other provisions in the bill, the Merchandising Practices Act would no longer require companies to pay attorney’s fees if a consumer wins a case against them, and it would make it more difficult to file class-action lawsuits against companies.

“The bill essentially guts the Merchandising Practices Act,” Silvey said. “If it passes, we might as well not have a Merchandising Practices Act.”

Silvey, who faced a Humphreys-funded opponent in his re-election bid last year, said there is a “strong bipartisan coalition against the bill in the Senate.” He hopes that’s enough to kill it, but if not he plans to amend it so that it’s not retroactive and therefore won’t affect the class-action lawsuit against Humphreys’ company.

Humphreys said every major shingles company has faced similar class-action lawsuits in recent years. It was “probably just a matter of time until we became a target,” he said. He denies his company engaged in any misconduct. The case is currently on appeal to the U.S. Supreme Court.

“If the (Merchandising Practices Act) stays as is,” Humphreys said, “then Missouri will continue to be viewed as a judicial hellhole run by trial lawyers that new businesses should avoid.”

Jason Hancock: 573-634-3565, @J_Hancock

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