Government & Politics

Consumer protection bill resurfaces a year after accusations of pay-to-play scheme

A cart of Tamko Building Products shingles sat at the front of a Missouri House hearing room on Monday. A lawmaker on the committee brought the shingles to draw attention to the company owner's involvement with the issue.
A cart of Tamko Building Products shingles sat at the front of a Missouri House hearing room on Monday. A lawmaker on the committee brought the shingles to draw attention to the company owner's involvement with the issue.

State Rep. Mark Ellebracht wheeled a cart bearing shingles into the House hearing room to make a point.

Bumping into chairs, Ellebracht, a Liberty Democrat, grunted as he propped up a package of shingles made by Joplin-based Tamko Building Products.

“It’s not a prop,” Ellebracht said to a passerby who cautioned that props aren’t allowed during committee hearings. “It’s for informational purposes.”

While his name was never uttered during the hearing on Monday, the shingles made mega donor David Humphreys’ presence known. Debate ran for nearly two hours about a bill that would make extensive changes to the Missouri Merchandising Practices Act.

Humphreys, the owner of Tamko, faces a class-action lawsuit under the act alleging that his company sold faulty shingles. Supporters of the bill argue it would prevent frivolous lawsuits from being brought against businesses, while opponents warn that it would gut the state’s consumer protection law, making it more difficult for Missourians to seek recourse.

The bill, sponsored in the House by Rep. David Gregory, a St. Louis Republican, was first introduced by former Senate President Pro Tem Ron Richard in 2015, shortly after the lawsuit against Humphreys’ company was filed in 2014. The lawsuit is ongoing.

Richard, a Joplin Republican, carried the Senate version of the bill for four years, until questions about a pay-to-play scheme erupted last year. This year, Sen. Caleb Rowden, a Columbia Republican, is sponsoring a version of the bill that has been passed out of a Senate committee. This is the first time a House version has been filed.

Gregory said the bill would establish consistency between federal and state law, and provide clarity to companies on what's considered an “unlawful practice.”

“The good news is this bill makes it much more difficult to file frivolous lawsuits,” Gregory said, “while at the same time preserving the ability to file a legitimate lawsuit.”

The bill would make it more difficult to file class-action lawsuits and would exempt transactions that are “permitted, approved, or regulated by the Federal Trade Commission” from the state law.

“That's literally everything,” Ellebracht said. “There's maybe four things in the whole state of Missouri that are bought and sold that aren't regulated by the FTC. By the mere existence of the thing being in the market, that's tacit approval by the FTC that it should be there.”

Accusations of a pay-to-play scheme surrounded last year’s version of the bill after Richard received a $100,000 check from Humphreys six days after filing the legislation. Humphreys and his family have given millions to Republicans throughout the state, including Gov. Eric Greitens.

At the time, Humphreys denied accusations regarding the timing of the donation, and Richard said to a reporter about Ellebracht’s allegations: “Tell him to kiss my ass.”

Ellebracht has demanded more transparency regarding Richard and Humphreys’ relationship in the past and said Humphreys’ actions are “a bold attempt to purchase the legislation and the legislators.”

The shingles from Humphreys' company didn’t go unnoticed for long. Ellebracht directed the room’s attention to them within the first five minutes of the hearing.

“If you turn to your right immediately, you'll see a stack of Tamko shingles,” Ellebracht said to Gregory at the hearing. “Can you see the state of disrepair that those packages are in when they came from the warehouse that they were purchased from?”

Ellebracht argued that the bill would cause the arbitration clause printed on the packaging to apply not only to the person who purchases the shingles, such as a roofing company, but to a homeowner who buys a house built with the shingles.

An arbitration clause means a dispute would be kept out of the courts and resolved through arbitration.

“They kept saying over and over again that this was about fairness,” Ellebracht said of those testifying in support of the bill. “I cannot begin to imagine how they believe that arbitration clause being enforced against a third-party homebuyer is in any way fair. They don't even see the shingles when they come off the truck. The only time they see the shingles is when they're hammered on the roof of their house.”

Ellebracht said that the bill would “eviscerate” protections for consumers and that parts of the Senate bill’s language were “another veiled attempt to protect Tamko.”

“Mr. Humphreys has not read the legislation,” Ken Spain, Humphreys spokesman, said Wednesday, “nor has he taken a position on the bill.

Ellebracht circled back to the same central question throughout the hearing, asking, “Why is that we want to take away consumer protections in the state of Missouri?”

Lawyers in support of the bill said that the Merchandising Practices Act has been abused, creating a clog of meritless cases.

Jennifer Artman, an attorney at the Kansas City-based law firm Shook, Hardy & Bacon who testified on behalf of the American Tort Reform Association, cited a rise in lawsuits, such as when a Missouri man sued Hershey’s for “under-filling” his box of candy.

“These abuses are apparent in the numbers,” Artman said. “Between the years 2000 and 2009, reported decisions under the MMPA rose by 678 percent. That makes Missouri the fourth largest state in terms of consumer protection for recommendation. These abuses come in the form of costs to everyone.”

Ellebracht questioned how many of those cases eventually get dismissed for being meritless, resulting in no lawsuit.

Jorgen Schlemeier, a lobbyist testifying on behalf of the Missouri Hotel and Lodging Association — and who was also hired along with six other members of the Gamble & Schlemeier lobbying firm to represent Humphreys in February — said Missouri is “out of step with other states.”

Schlemeier said he has heard from some clients that the state’s consumer protection law has discouraged businesses from opening their doors in Missouri.

“They said, 'We will not open a business in the city of St. Louis until we can get those tort issues a little bit more in balance,’ ” Schlemeier said.

Rep. Kevin Corlew, a Kansas City Republican, stressed that those are potential jobs that could aid economic development, and lobbyists and attorneys testifying on behalf of groups such as the Missouri Chamber of Commerce and Industry and the Home Builders Association of St Louis & Eastern Missouri agreed. But Ellebracht insisted that consumers would still be the ones getting hurt.

“Basically — and this is something that I thought conservative Republicans loved all the time — we've decentralized it,” Ellebracht said. “We've opened it to the market. We've said, 'If you got ripped off, go file your lawsuit if you want to.' And now the industry is coming to us and saying, 'Please. Make it stop.’ ”

Schlemeier disputed Ellebracht’s point.

“We’re not trying to say, ‘Make it stop,’ ” Schlemeier said. “We’re saying, ‘Make it fair.’ ”

For Missourians like Ernie Roberts, a National Guard sergeant and small-business owner who testified against the bill, the Merchandising Practices Act is a way he’s able to achieve that fairness. Roberts’ attorney said the act gives him a means to pursue a lawsuit he otherwise would be unable to afford.

After leaving work late one Sunday a few years ago in Grandview, Roberts said he saw a dealership with a vintage Harley Davidson sticker in its window. He said he went in just to browse and walked out with a motorcycle in tow. A month later, when he received the first bill, he was shocked.

“It was $521 for a payment that was supposed to be $330,” he said.

When Roberts tried to return the motorcycle, the dealership threatened to charge him storage costs. The bills added up and Roberts pulled his kids out of extracurriculars, like basketball and soccer, to save money.

If the bill were to pass, dealerships would be excluded from the act because they’re highly regulated, his attorneys said. In addition, the act currently allows his attorneys to explore the extent of the alleged malpractice and have his attorney’s fees covered, allowing him to afford a lawsuit.

“I don't want to operate in a state…” Roberts said, “where law and order take a back seat.”