Missouri Supreme Court Rules in Key Case

On Dec. 5, the Missouri Supreme Court issued an opinion in a case in which AFSA was involved. AFSA submitted an amicus brief in Jeff Reed v. The Reilly Company, LLC, a case that arose out of a contract dispute between Mr. Reed and his former employer, The Reilly Company. One of the issues before the Court, and the central issue for AFSA members is whether entities regulated by the Missouri Division of Finance are exempt from liability under the Missouri Merchandising Practices Act (MMPA). The amicus argued that they are exempt.

Over the last several years, AFSA members have seen the plaintiffs’ bar use the MMPA as a weapon against consumer finance companies to discourage collections and obtain debt forgiveness. Settling these cases is expensive for finance companies. In addition, financial services companies are faced with difficult choices when determining how -- or whether -- to pursue collections from Missouri consumers in default and how to market their products to consumers in Missouri without inadvertently creating potential exposure under the MMPA.

The court did not rule on the MMPA interpretation question. However, while this case was on appeal, the Missouri Southern District Court heard a case called Meyers v. Kendrick. In that case, the court held that there was no private right of action under the MMPA against industries regulated by the Missouri Division of Finance. In doing so, the court rejected the circular reading of the MMPA that had been successfully advanced against AFSA members.

Meyers articulates a clear “bright line” exemption to the MMPA for regulated industries like AFSA members. For that reason, it seemed very likely that Meyers would either be appealed or taken by the Missouri Supreme Court of its own accord. But, surprisingly, it was not. Meyers is now binding precedent and it should effectively end MMPA claims against AFSA members.