Opinion ID: 6335095
Heading Depth: 2
Heading Rank: 2

Heading: HALO’s Claims

Text: In its cross-appeal, HALO alleges a variety of errors. This Court considers only one of the several arguments HALO asserts.
In three points relied on, HALO raises seven distinct arguments. Each of HALO’s points relied on and corresponding arguments violate the straightforward and mandatory requirements in Rule 84.04 governing appellate briefing. Fowler v. Mo. Sheriffs’ Ret. Sys., 623 S.W.3d 578, 582-83 (Mo. banc 2021). Specifically, all three of HALO’s points relied on are multifarious, in that they contain multiple, divisible claims. Id. “Multifarious points relied on are noncompliant with Rule 84.04(d) and preserve nothing for review.” Macke v. Patton, 591 S.W.3d 865, 869 (Mo. banc 2019); see also Rule 84.13 (instructing “allegations of error not briefed or not properly briefed shall not be considered in any civil appeal”). While this Court possesses the discretion to review non-compliant briefing, it must “cautiously exercise this discretion” else it “send[s] an implicit message that substandard briefing is acceptable.” Scott v. King, 510 S.W.3d 887, 892 (Mo. App. 2017). 19 HALO’s briefing is rife with deficiencies, and these deficiencies are more than superficial. 16 Though this Court has discretion to review noncompliant briefing, it will exercise this discretion to review only one of HALO’s claims. The court of appeals noted HALO’s inadequate briefing before that court and sharply rebuked HALO for the deficiencies. The court of appeals nonetheless exercised its discretion to review all of HALO’s relevant claims to the extent the arguments could be deciphered. HALO then submitted to this Court an appellate brief that replicated many, if not all, of those same flagrant flaws. There 16 Aside from being multifarious, HALO’s first point relied on, for example, references a claim of instructional error for future damages that HALO does not later pursue or otherwise explain in the corresponding argument section: Tortious Interference with Business Expectancy. The trial court erred in denying HALO’s motion for a directed verdict on the claim for tortious interference with business expectancy, in submitting to the jury the question of future damages on that claim, and in denying HALO’s motions for judgment notwithstanding the verdict on the tortious-interference claim, because All Star failed to submit any legally sufficient evidence of damages, in that the only legally sufficient evidence of damages was the $25,541.88 in lost profits from a handful of one-time diverted orders, which All Star expressly conceded and the trial court held was not the basis for the jury’s $500,000 award for tortious interference, leaving that award unsubstantiated by any competent evidence. (Emphasis added.). HALO’s second point relied on contains two separate claims of error and is also multifarious: Unreliable Evidence of Lost-Profit Damages. The trial court erred in permitting All Star to introduce Exhibit 235 as evidence of All Star’s lost profits and refusing to strike Mrs. Vogt’s testimony regarding Exhibit 235 and lost profits, because that evidence and testimony was not admissible evidence of lost profits, in that Exhibit 235 was a made-for-litigation document containing a lay witness’s calculations prepared through an unreliable methodology, and Mrs. Vogt’s testimony was not based on actual facts or data that supported a rational estimate of lost profits. 20 was nothing inadequate about the court of appeals’ process of review, and this Court will not once again extend HALO the benefit of ex gratia review. The court of appeals, however, did not reach the due process claim raised in HALO’s third point relied on, contending the reduced punitive damage award violated due process. This point relied on also violates Rule 84.04 as it is clearly multifarious and contains multiple, divisible claims. 17 Nevertheless, because HALO has not had the benefit of appellate review of this due process claim, this Court will exercise its discretion to do so.
HALO alleges the punitive damages award is grossly excessive and violates due process. HALO argues even the reduced $2,627,709.40 award is unconstitutional. The Missouri and United States constitutions prohibit the state from denying any person “life, liberty or property without due process of law.” Mo. Const. art. I, sec. 10; U.S. Const. amend XIV, sec. 1. The United States Supreme Court has held this guarantee protects tortfeasors from “grossly excessive or arbitrary punishments[.]” State Farm Mut. Auto. 17 The point relied on contends both that punitive damages were not submissible and that the punitive damages award was excessive and in violation of due process: Punitive Damages. The trial court erred in denying HALO’s motions for a directed verdict and judgment notwithstanding the verdict on punitive damages and in denying, in part, HALO’s motion to reduce the $5.5 million punitive damages award, because All Star did not make a submissible case for punitive damages, and the punitive damages award is grossly and unconstitutionally excessive, in that punitive damages are an extraordinary and harsh remedy that should be applied only sparingly and in cases with the kind of outrageous conduct not present here, and are subject to due process constraints that were not satisfied here. 21 Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). This is because “[e]lementary notions of fairness” require defendants have “fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a State may impose.” BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574 (1996). When faced with a claim that a punitive damages award violates due process, a court must consider three guideposts: (1) the degree of the reprehensibility of the defendant’s conduct; (2) the ratio between the harm the defendant inflicted—measured in actual damages—and the punitive damages award; and (3) a comparison of the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct. Id. at 575; see also Lewellen, 441 S.W.3d at 146. The degree of the offensiveness of HALO’s conduct is the most important of the three factors. Gore, 517 U.S. at 575. Relevant to this consideration is whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. State Farm, 538 U.S. at 419. All Star made a compelling demonstration that HALO’s actions in the instant case deserve the reduced punitive damages award. In coordination with Ford, HALO pillaged All Star’s client information, including confidential information about All Star’s customers. HALO conspired with Ford to obtain a report that contained information on desirable, poachable clients that Ford directed All Star employees to unwittingly prepare. Using Ford’s position and the information he procured, HALO 22 processed orders from All Star customers. HALO took these actions knowing Ford was still employed with and obliged to be faithful to All Star. When All Star learned of HALO and Ford’s actions and demanded HALO cease taking orders from All Star customers, HALO initially refused. While HALO insisted it would take orders only from those customers with whom Ford had a long prior relationship, it did not actually ensure Ford had such relationships. This Court has found “infliction of economic injury, especially when done intentionally through affirmative acts of misconduct … can warrant a substantial penalty.” Lewellen, 441 S.W.3d at 146; see also Gore, 517 U.S. at 576. The first guidepost weighs in favor of the punitive damages award’s constitutional validity. The second guidepost—the ratio of actual damages to punitive damages—likewise suggests the reduced punitive damages award was constitutional. The jury awarded All Star $525,541.88 in actual damages. Following the jury’s determination that $5.5 million in punitive damages was warranted, the circuit court reduced that award to $2,627,709.40, or five times the actual damages award. “Single-digit multipliers are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution[.]” State Farm, 538 U.S. at 425. HALO's conduct justified the circuit court's single-digit-ratio award. 18 18 In Lewellen, the defendants, a car dealership and its owner, trapped Lillian Lewellen, an elderly, financially vulnerable widow, into a fraudulent scheme in which they sold her a vehicle as part of a special deal, promising they would contribute to her payments to keep her monthly payment at $49. 441 S.W.3d at 140. Lewellen repeatedly told the defendants she could not afford to pay more than $49 a month, and the defendants assured her that would be the extent of her obligation, stating they would cover the rest. Id. The defendants later stopped contributing payments; Lewellen became unable to make up the difference. Id. at 141. The bank that provided her with the loan repossessed Lewellen’s vehicle. Id. 23 The third guidepost concerns “the civil penalties authorized or imposed in comparable cases.” Gore, 517 U.S. at 575. “The fundamental question is whether [HALO] had reasonable notice that its [participation in a civil conspiracy to breach an employee’s duty of loyalty] and tortious interference with contracts and prospective business advantage could result in such a large punitive award.” Cont’l Trend Res., Inc. v. OXY USA Inc., 101 F.3d 634, 641 (10th Cir. 1996). No Missouri statute imposes civil penalties for civil conspiracy to breach the duty of loyalty or tortious interference with a business expectancy. One Missouri court tasked with analyzing the constitutional validity of a punitive damages award based in part on a tortious interference claim declined to assess this guidepost, finding: Tortious interference with contract involves acts that are ethically and morally reprehensible and are, in a civil sense, legally wrongful, whereas fraud claims founded in misrepresentation type acts are akin to criminal conduct for which sanctions might be identified and compared. The factor of comparative penalties is inconsequential in an action for tortious interference with contract. Env’t Energy Partners, Inc. v. Siemens Bldg. Techs., Inc., 178 S.W.3d 691, 708 (Mo. App. 2005). In Environmental Energy Partners, the jury issued two compensatory damages awards—one for the defendant’s tortious interference and the other compensating the plaintiff for a contract that a third party breached because of the defendant’s tortious interference—totaling $127,546.25. Id. at 708. The corresponding punitive damages This Court found the resulting 22:1 punitive damages award satisfied due process. Id. at 147. While HALO’s actions may not be as egregious as the defendants’ actions in Lewellen, the ratio of punitive to actual damages here was much smaller. The reprehensibility of HALO’s conduct was sufficient to support a 5:1 punitive damages award. 24 award totaled $500,000. Id. The court of appeals, disregarding the third guidepost, ultimately upheld the nearly 4:1 ratio. Id. Whether this Court disregards the final guidepost for the reasons Environmental Energy Partners articulates or discerns whether HALO had reasonable notice under the third guidepost, the result is the same. The third guidepost does not suggest the award was unreasonable and unconstitutional. In Environmental Energy Partners, the court of appeals affirmed the constitutional validity of a punitive damages award against a subcontractor who breached his subcontract with a primary contractor and interfered with the primary contractor’s contract with a hospital. Id. at 695. The subcontractor failed to timely perform his end of the subcontract and refused to communicate with the contractor and to submit reports used to justify the subcontractor’s payment requests to the contractor. Id. at 707. The subcontractor’s actions resulted in the hospital withholding payment from the contractor on the contract between the hospital and the contractor. Id. The subcontractor later attempted to secure payment for his unfinished work by filing and attempting to perfect a mechanic’s lien against the hospital, falsely representing his work on the hospital’s property was complete. Id. The subcontractor ultimately reached an agreement with the hospital whereby the hospital paid the subcontractor money owed to the contractor; the hospital also agreed not to inform the contractor of the agreement. Id. at 708. While the facts vary from the present case, Environmental Energy Partners provided a general warning that a defendant’s intentional, wrongful actions resulting in tortious interference with a contract alone could reap at least a punitive damages award 25 near a 4:1 ratio. This warning was sufficient to give HALO adequate notice that its conduct constituting tortious interference and civil conspiracy to breach the duty of loyalty could result in substantial punitive damages award. Because none of the three guideposts suggest the reduced punitive damages award was arbitrary or excessive, or that HALO was deprived of fair notice of the potential consequences of its conduct, the 5:1 punitive damages award did not violate due process. This point is denied.