Missouri Merchandising Practice Act—the MMPA
Experienced Missouri Merchandising Practices Act
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What Is The Missouri Merchandising Practices Act?
The Missouri Merchandising Practices Act (the “MMPA”) is a broadly encompassing consumer protection law which, at its core, prohibits false, fraudulent, or deceptive merchandising practices. Unless the specific type of conduct (i.e., false vs. fraudulent vs. deceptive) matters to our discussion of certain provisions in the MMPA, we’ll generally just collectively refer to these types of behaviors as “false practices.” The MMPA expressly authorizes both class action lawsuits, as well as individual private cause of action seeking damages from those who violate the law.
Importantly, the same type of conduct prohibited by the MMPA can simultaneously violate any number of other state and federal laws. Most notably, due to the nature of an MMPA violation (i.e., “false practices), it is common for Hollingshead & Dudley’s MMPA clients to also be pursuing related claims against the same defendants for other torts, but most frequently for fraudulent misrepresentation (we’ll just refer to this type of claim as “fraud”). Why would someone simultaneously pursue both an MMPA and fraud claim?
On one hand, there are many aspects of the MMPA that are very appealing to our clients. For one, an MMPA claim has fewer elements to prove than with fraud. With less elements to prove, in theory, it is oftentimes easier to prevail on an MMPA claim than on fraud. Second, the MMPA authorizes a prevailing plaintiff to recovery his or her reasonable attorneys’ fees from the losing party. However, if you prevail on a fraud claim, you are not entitled to any type of attorneys’ fees award under Missouri law.
On the flip side of the coin, there are many aspects of a fraud claim that are also appealing to our clients. First, the MMPA is subject to statutory punitive damages caps of the greater of $500,000 or five (5) times actual damages (NOTE: “actual damages” also include any attorneys’ fees awarded to the plaintiff by the trial judge). To the contrary, thanks to a Missouri Supreme Court decision, many common law claims (such as fraud) are not subject to any sort of punitive damages cap.
Most importantly, by simultaneously pursuing both an MMPA and fraud claim, you give yourself two separate, yet similar, claims that a jury could find the defendant to have violated. While we are using fraud as an example, there are a myriad of other state and federal laws that overlap with the protections of the MMPA, and in most such cases, a plaintiff is free to pursue any combination of applicable causes of action.
What Do You Have To Prove to Win an MMPA Claim?
First and foremost, while broad, the MMPA does not cover every type of false practice. Rather, in order to win an MMPA case, the false practices you are alleging: 1) must occur in connection with the sale or advertisement of any merchandise in trade or commerce; 2) must result in an ascertainable loss of money or real or personal property; and 3) must occur to a person who purchases or leases merchandise primarily for personal, family, or household purposes. As to this last requirement, simply put, the MMPA does not generally apply in business-to-business transactions, unless the business is purchasing the merchandise primarily for the personal usage of, say, one of its employees or owners.
While the MMPA specifically uses the word “merchandise,” the term is broadly defined under the law to include goods, services, real estate commodities, etc. In all events, though, you must have actually purchased or leased “merchandise” to have a claim under the MMPA. An attempted purchase, for example, does not give rise to a claim under the law. Examples of transactions that were considered the purchase of merchandise under the MMPA include putting money into a video poker machine, purchasing medical supplies, using the services of a real estate broker in connection with a real estate transaction, and the purchase of real estate itself.
While an attempted purchase does not qualify under the MMPA, it is important to note that certain voided purchases do qualify. For example, a voided vehicle sale due to noncompliance with Missouri’s title transfer law was considered actionable under the MMPA. In general, a defendant’s violation of the MMPA can occur, before, during, or after a sale or lease of goods or services.
What Constitutes A “Deceptive Practice?”
Under the MMPA, a “deceptive practice” is one involving the concealment of important facts. A deception involving the omission of an important facts requires you to show, among other things, that: 1) the omitted fact was either known by or reasonably discoverable by the defendant; 2) you acted as a reasonable consumer would have acted in light of all the circumstances of the transaction; 3) the deception was of a nature that it would have caused a reasonable person to enter into the transaction that resulted in damages; and 4) individual damages with sufficiently definitive and objective evidence which would allow the judge or jury to calculate your losses with a reasonable degree of certainty. Whether you have satisfied these requirements is decided by Missouri’s trial courts on a case-by-case basis.
To better illustrate what a “deceptive practice” looks like under the MMPA, consider the following examples of behavior that Missouri’s courts have held to constitute deceptive practices under the MMPA: 1) false representations by a contractor defective work would be repaired; 2) false representations concerning the value of a product sold to a consumer; and 3) false statements concerning “sale” prices, “negative option practices” (i.e., billing customers for goods or services that the customer did not solicit or collecting payments on a voided retail installment sale’s contract.
What Constitutes A “Deceptive Practice?”
Under the MMPA, a “deceptive practice” is one involving the concealment of important facts. A deception involving the omission of an important facts requires you to show, among other things, that: 1) the omitted fact was either known by or reasonably discoverable by the defendant; 2) you acted as a reasonable consumer would have acted in light of all the circumstances of the transaction; 3) the deception was of a nature that it would have caused a reasonable person to enter into the transaction that resulted in damages; and 4) individual damages with sufficiently definitive and objective evidence which would allow the judge or jury to calculate your losses with a reasonable degree of certainty. Whether you have satisfied these requirements is decided by Missouri’s trial courts on a case-by-case basis.
To better illustrate what a “deceptive practice” looks like under the MMPA, consider the following examples of behavior that Missouri’s courts have held to constitute deceptive practices under the MMPA: 1) false representations by a contractor defective work would be repaired; 2) false representations concerning the value of a product sold to a consumer; and 3) false statements concerning “sale” prices, “negative option practices” (i.e., billing customers for goods or services that the customer did not solicit or collecting payments on a voided retail installment sale’s contract.
Other Than A “Deceptive Practice,” What Other Types Of Conduct Might Violate The MMPA?
In addition to a defendant engaging in a “deceptive practice,” Missouri’s courts have found a wide range of other nefarious behavior to be sufficient to constitute a violation of the MMPA. By ways of example, fraud, false pretenses, false promises, misrepresentations, and “unfair practices” have been found to violate the MMPA.
“Unfair practices” are defined as any practice that “presents a risk of, or causes, substantial injury to consumers.” Importantly, the defendant does not even need to know of the deceptive or unfair practice, and the consumer (i.e., you—the plaintiff) does not need to rely upon the deceptive or unfair practice to have a claim. However, the consumer must still suffer from some form of actual damages as a result of the unfair practice.
What Does It Mean For A “Deceptive Practice” To Occur “In Connection With” The Sale Of Goods Or Services?
Missouri’s courts have held that the use of deceptive practices is actionable under the MMPA if there is a relationship between the sale of merchandise and the alleged unlawful action which, again, can occur before, during, or after the sale/lease has taken place. Additionally, with regard to loans, a “deceptive practice” can occur “in connection with” the loan at any time during the loan’s term. This is the case since the loan transaction includes typically includes the lender’s right to collect on the loan at any time during its term.
What Is Considered “Personal Or Household Use” Under The MMPA?
While the purpose for which goods or service were purchased is largely considered to be a factual issue to be decided by a jury, the simple rule is that, in order to be considered for “personal or household use,” purchases or leases must be for the direct use by a consumer (i.e., not for resale commercially).
What Does The MMPA Mean By “Ascertainable Loss?”
Remember, the MMPA requires that the plaintiff suffer an “ascertainable loss of money or property, real or person” as a result of the defendant’s unlawful conduct. This element can be satisfied on the basis of what is known as the “benefit of the bargain rule.” The “benefit of the bargain rule” compares the actual value of goods or services to the value of the goods or services if they had been as represented by the defendant at the time the transaction occurred. That is, was there a loss in the actual value of the goods or services as a result of the defendant’s deceptive practice?
Another way to demonstrate ascertainable losses under the MMPA is by setting forth any expenses for repairs that you have incurred as a result of the defendant’s deceptive practice. Importantly, if you never pay anything to the defendant, you cannot satisfy this essential element of an MMPA claim. Similarly, your ascertainable loss must be the direct result of the defendant’s deceptive practice.
What Is The Statute Of Limitations On An MMPA Claim?
For most MMPA claims (i.e., private actions for damages), there is a five (5) year statute of limitations. That is, you generally have five (5) years from the date of the unlawful practice in which to file a lawsuit alleging violations of the MMPA. However, determining when to “start the clock” on an MMPA claim’s statute of limitations can sometimes get tricky because a claim begins accruing under the MMPA at the time of the transaction or at the time the plaintiff received notice that the defendant had engaged in an unlawful practice under the MMPA. It also matters, not only when your damages were sustained, but also when the damages were capable of ascertainment such that they would put a reasonably prudent person on notice of a potential MMPA violation.
As an example, let’s assume you purchased a used car seven (7) years ago that you were told had 50,000 miles on it. In fact, when you purchased the car, its odometer clearly read “50,000” miles. Unbeknownst to you at the time, when the dealership bought the car at auction, it actually had 150,000 miles on it! As it turns out, before you ever walked onto the parking lot, the dealership took the liberty of “rolling back the car’s odometer”—a practice where dealers quite literally “roll back” the odometer to make it look like a car has less miles on it than it actually does. You are probably wondering, “how could any reasonable consumer ever know that this deceptive practice had taken place?!” It turns out, not only is that a great question, it also gets to the core of how an MMPA claim’s statute of limitations could possibly be longer than five (5) years.
Truth is, for the average car buyer, it would be nearly impossible to detect this type of underhanded behavior by a dealership. For the sake of this hypothetical, let’s assume that you didn’t discover the dealer’s deceptive odometer practice until two (2) years later when you took your vehicle in for extensive maintenance at a manufacturer dealer (e.g., a Ford, Lexus, GMC, etc. dealer with manufacturer credentials). Under this type of situation, you would have a pretty good argument that your five (5) year MMPA statute of limitations didn’t begin to run until two (2) years after you purchased the vehicle; that is, when you were finally in a position to ascertain that the dealership had engaged in a deceptive practice that caused you damages (i.e., your car’s re-sale value is now almost certainly less than it would have been with 100,000 less miles on it).
With all of that said, because this type of statute of limitations’ analysis is, on its best day, complicated, if you think that you may have an MMPA claim, it is critical that you don’t delay in seeking the advice of an attorney with experience in these types of claims. In short, there is no penalty for filing your claim five (5) years before the statute of limitations expires. However, the penalty for missing the statute of limitations is that, no matter how badly you were injured by the defendant’s conduct, you would be forever barred from seeking any sort of recovery!
Important Evidentiary Matters When Pursuing An MMPA Claim
First, generally speaking, a litigant in any case involving a signed contract may not present evidence outside the written terms of the signed agreement. Presenting oral or other communication between the parties outside of the written terms of a contract is known in legal parlay as “parol evidence,” and the prohibition against using such outside evidence is known as the “parol evidence rule.” While parol evidence is generally inadmissible in most breach of contract cases, the parol evidence rules does not apply in the context of the MMPA.
Second, while a fraud claim requires you to prove that you relied upon some false statement or omission by the defendant, such is not the case under the MMPA. That is, a defendant’s liability under the MMPA does not require proof that you relied (justifiably or otherwise) upon the defendant’s deceptive practice.
Third, a corporation’s officers can be held individually liable for participating in conduct that is found to have violated the MMPA, so long as you can show that the officers had actual or constructive knowledge of the unlawful deceptive practice. Actual knowledge is pretty well understood to mean that the officers “actually knew” of the deceptive practice. However, as you might imagine, most corporations are savvy enough to avoid putting this type of knowledge in writing (e.g., emails, internal memos, etc.). Thus, you will oftentimes find yourself having to prove an officer’s knowledge by virtue of what is known as “constructive knowledge.”
Simply put, “constructive knowledge” only requires you to prove that the officer “should have known” about the deceptive practice, something you can prove through circumstantial evidence (e.g., by showing that, by virtue of the deceptive practice alleged, any corporate officer would necessarily have to be aware of the practice). Constructive knowledge can also be demonstrated by showing a systematic course of dealing by the company or its affiliates, involving other similar transactions whereby the company engaged in the same (or a similar) deceptive practice to the one you are alleging in your lawsuit.
Fourth, it is possible to present evidence that the defendant engaged in similar deceptive practices to other consumers. Under the MMPA, this type of so-called “me too” evidence is admissible for the purposes of proving punitive damages. In order to obtain punitive damages under an MMPA claim, you must demonstrate by clear and convincing evidence that the defendant intentionally harmed you without just cause or acted with a deliberate and flagrant disregard for the safety of others. Even if punitive damages are applicable under the facts of your MMPA case, any so-called “me too” evidence must be connected enough to the wrongful conduct you are alleging so as to show the defendant’s disposition, intention, or motive in the commission of the particular acts for which damages are claimed.
Importantly, while you are permitted to seek punitive damages in an MMPA claim, you are not permitted to make a request for punitive damages in your initial lawsuit. Rather, once your attorney believes that he or she has collected through the discovery process enough evidence/testimony to satisfy Missouri’s punitive damages’ standard, your attorney must request a hearing before the Court, present the evidence, and request leave from the Court to amend your lawsuit to include punitive damages. You will only be permitted leave to do so if the judge believes that the evidence presented is sufficient for a reasonable jury to find in your favor at trial as to the applicability of punitive damages.
Can You Recover Attorneys’ Fees Under The MMPA?
The short answer is, yes. However, in order to recover attorneys’ fees under the MMPA, you would have to successfully try your MMPA claim to a jury (i.e., you would have to win your MMPA claim at trial). To put this requirement into perspective, as discussed above, your case may very well proceed to a jury on more than just your MMPA claim. As a hypothetical, assume you submitted both your MMPA claim and a fraud claim to the jury. In this hypothetical, there are four (4) possible outcomes for the jury’s verdict:
1. You win both your MMPA and fraud claims—you are entitled to recover attorneys’ fees.
2. You win your MMPA claim, but you lose the fraud claim—you are entitled to recover attorneys’ fees.
3. You win the fraud claims, but you lose the MMPA claim—you are NOT entitled to recover attorneys’ fees.
4. You lose both your MMPA and fraud claims—you are NOT entitled to recover attorneys’ fees.
What Are Some Potential Defenses To An MMPA Action
The principal defense to an MMPA claim is that the transaction at issue in the lawsuit does not fall within the statute’s coverage (i.e., the plaintiff has failed to satisfy one or more of the elements discussed above). For example, simple breach of contract claims or claims based on an attempted purchase of goods or services are not covered under the MMPA. You may be wondering, “what if I signed a contracted stating that I was purchasing a good or service ‘as is’”? The good news here is that contract terms stating that an item is purchased “as is” or that contain some other type of disclaimer, do not constitute valid defenses to an MMPA claim. However, it is possible for unambiguous contract terms to sometimes defeat a claim alleging defective practice. Here, the defense is less about an actual legal defense and more about the contract’s terms demonstrating that the defendant’s conduct was not deceptive. For example, if a contract for the purchase of a vehicle clearly states that the vehicle’s transmission will need rebuilt, you would have a tough time proving that the dealership deceptively hid any issues with the vehicle’s transmission. Finally, the MMPA does not apply to any transaction related to the purchase of a new residence whereby the buyer is offered and accepts in the sale’s contract an express warranty by the builder or through a third-party warranty company paid for by the builder, so long as the sale’s contract contains substantially the specified statutory disclaimer.
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