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Class Action

Wholesalers Qualify as Persons Liable Under Missouri’s Consumer Fraud Act

By May 22, 2014October 21st, 2019No Comments

The Missouri Supreme Court held that wholesalers are persons liable for violations of the Merchandising Practices Act (MPA). In Gibbons v. J. Nuckolls, Inc., 216 S.W.3d 667 (Mo. 2007), the car buyer had sued an automobile wholesaler under Merchandising Practices Act (MPA), alleging that the wholesaler (Nuckolls) failed to disclose to dealership that car had been in an accident. The trial court (Judge Patrick Clifford) had granted Nuckolls’ motion to dismiss for lack of privity between Gibbons and Nuckolls.

The Supreme Court reversed the trial court’s dismissal based upon a straight-forward reading of Missouri statutory law. The Supreme Court noted that Section 407.020 of the Missouri Merchandise Practices Act (MPA) states as follows: The act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce … in or from the state of Missouri, is declared to be an unlawful practice.

Then, the Supreme Court noted the language of Section 407.025 of the MPA: Any person who purchases or leases merchandise primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property, real or personal, as a result of the use of employment by another person of a method, act or practice declared unlawful by section 407.020, may bring a private civil action in either the circuit court of the county in which the seller or lesser resides or in which the transaction complained of took place, to recover actual damages.

The Supreme Court then noted that the MPA defines “Person” as any natural person or his legal representative, partnership, firm, for-profit or not-for-profit corporation, whether domestic or foreign, company, foundation, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, trustee or cestui que trust thereof. In reversing the trial court, the Missouri Supreme Court reasoned that the above-cited provisions of the MPA permit an aggrieved party to seek relief from any person, including a corporation such as Nuckolls.

The statute’s plain language does not contemplate a direct contractual relationship between plaintiff and defendant, and Missouri courts have not imposed such a requirement through statutory construction. On the contrary, in State v. Polley, 2 S.W.3d 887 (Mo.App.1999).and State ex rel. Nixon v. Estes, 108 S.W.3d 795 (Mo.App. 2003), the attorney general was permitted to seek restitution from a wholesaler on behalf of consumers under section 407.100. The statute’s broad language of “any person who has suffered any ascertainable loss” contemplates that other parties, besides the direct purchaser or contracting party, who suffer damages resulting from the violator’s prohibited conduct under the Act are included among those eligible to receive restitution. The consumer who receives the product or services through a third party such as a builder … is included within the meaning of the statute as one for whom restitution shall apply. To hold otherwise would undermine the fundamental purpose of the Act: the protection of consumers.

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