Metropolitan Express Services, Inc. v. City of Kansas City

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No. 95-1248
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Metropolitan Express Services, *
Inc., a Kansas Corporation, *
*
Plaintiff/Appellant, *
*
Sylvia B. Krieger, doing *
business as Overland Limousine; * Appeal from the United States
Furney Charters, Inc., doing * District Court for the
business as Travelers Express, * Western District of Missouri.
a Kansas Corporation; G & B *
Enterprises, Inc., doing *
business as KCI Roadrunner, a *
Kansas Corporation; A-1 City *
Cab Shuttle Corporation, a *
Kansas Corporation, *
*
Plaintiffs, *
*
v. *
*
City of Kansas City, Missouri, *
a Municipal Corporation of *
Missouri, *
*
Defendant/Appellee. *
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Submitted: September 13, 1995

Filed: November 30, 1995
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Before BOWMAN, BRIGHT, and WOLLMAN, Circuit Judges.
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WOLLMAN, Circuit Judge.

In this diversity action, Metropolitan Express Services, Inc.
(Metropolitan) appeals the district court's1 refusal to award damages and
attorney fees after finding in favor of Metropolitan

1
The Honorable Dean Whipple, United States District Judge for
the Western District of Missouri.
and voiding the concession agreement between Metropolitan's competitor and
Kansas City. We affirm.

I. Facts and Procedural History

Beginning in 1982, Metropolitan provided scheduled and unscheduled
ground transportation services at the Kansas City Airport. The controversy
arose when the Kansas City Area Transportation Authority, the provider that
subcontracted transportation business to Metropolitan, cancelled its
exclusive concession agreement with the airport. Kansas City published
notice that it would open bids to qualified bidders for a new scheduled
ground transportation concession agreement. The city distributed to
potential bidders a bid form that provided, among other things, that the
successful bidder(s) would be allowed to sell tickets only from stationary
counters. Mobile ticket counters would not be allowed. Because
Metropolitan believed that putting a stationary counter in each of the
airport's three terminals was prohibitively expensive and that mobile
ticket counters were necessary to make a profit, it did not bid.

After receiving only two bids, Kansas City awarded the concession
agreement to KCI Shuttle. KCI Shuttle's bid did not contemplate mobile
ticket counters; however, once the bid was accepted, KCI Shuttle negotiated
with Kansas City to allow the use of mobile ticket counters inside each
terminal. The arrangement between Kansas City and KCI Shuttle included an
exclusivity agreement that prohibited Metropolitan or anyone else from
competing with KCI Shuttle for passengers within the airport terminal
buildings. On February 17, 1992, Kansas City banned Metropolitan from
entering the airport to continue its services.

Metropolitan and four other plaintiffs filed a complaint seeking a
declaratory judgment, injunctive relief, and a temporary restraining order
to prevent Kansas City from implementing the new

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concession agreement. Following a two-day evidentiary hearing on all the
issues, including damages, the court dismissed the complaint for lack of
standing. On appeal, we reversed, finding that Metropolitan had standing
to challenge the contract even though it did not bid. On remand, the
district court voided the concession agreement between KCI Shuttle and
Kansas City, finding that the agreement violated the Missouri Constitution
and that the bidding procedures were illegal under the Kansas City
Administrative Code. The court ordered Metropolitan to brief the issues
of compensatory damages and attorney fees. Metropolitan requested leave
to introduce additional evidence on damages. The court denied this request
and awarded neither damages nor attorney fees.

II. Damages

Metropolitan claims as damages lost potential profits caused by the
illegal concession agreement between KCI Shuttle and Kansas City. The
district court denied Metropolitan recovery for these damages because
Metropolitan failed to offer evidence sufficient to establish a reasonably
certain estimate of lost profits. Metropolitan claims that the district
court misapplied Missouri law. According to Metropolitan, Missouri law
requires a plaintiff to offer only the best evidence available to establish
lost profits. They need not be established with reasonable certainty.

Missouri law governs this diversity case. See Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938). We review this question of law de novo. See
Salve Regina College v. Russell, 499 U.S. 225, 231 (1991).

The Missouri Supreme Court has held that lost profits are generally
too remote and speculative to be recoverable. Coonis v. Rogers, 429 S.W.2d
709, 714 (Mo. 1968) Under Coonis, to recover

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lost profits a plaintiff must establish with reasonable certainty both that
the defendant's actions caused the plaintiff to lose profit and the amount
of those damages. Id. In Coach House of Ward Parkway, Inc. v. Ward
Parkway Shops, Inc., 471 S.W.2d 464, 472-73 (Mo. 1971), the Missouri
Supreme Court established an exception to the general rule requiring
reasonable certainty to prove both the fact and the amount of damages.
Coach House holds that in some cases where the fact of lost profits has
been proved with reasonable certainty but the loss is of a character that
renders the amount incapable of proof, the plaintiff need offer only the
best evidence available to establish the amount. Id. at 471. Metropolitan
argues that the district court should have applied this less restrictive
Coach House standard, rather than requiring proof of the amount of lost
profits with reasonable certainty.

We need not determine whether this case falls within the Coach House
exception. At the very least, Metropolitan must prove with reasonable
certainty the fact of damages. That is, Metropolitan must prove that it
suffered some loss of net profits that it would have realized in the usual
course of business absent the defendant's unlawful actions. We conclude
that Metropolitan has failed to do so. Moreover, Metropolitan has failed
to meet even the less restrictive requirement of the best evidence
available.

Although the district court found that Kansas City's bidding
procedures were illegal, Metropolitan has not proved that absent the
illegal bidding procedures it would have been the successful bidder; thus
it has not established with reasonable certainty that it suffered any
damages as a result of the illegal procedures.

The district court found that the exclusivity clause of the agreement
violated the Missouri Constitution. Because of this clause Metropolitan
was banned from meeting customers in the airport. As a result,
Metropolitan claims that it lost customers

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and was eventually compelled to close down its business. To establish
damages in the form of lost profits caused by this exclusion, Metropolitan
must show with reasonable certainty that had it been allowed to continue
meeting customers in the airport, it would have realized net profits.

Metropolitan must demonstrate those lost net profits by offering
"proof of the income and expenses of the business for a reasonable time
anterior to its interruption with a consequent establishing of the net
profits during the previous period." Coonis, 429 S.W.2d at 714. Put
simply, to show that it lost profits, Metropolitan must first show that it
was previously earning profits. Metropolitan has not done so. The only
lost profit evidence Metropolitan offered was the contradictory testimony
of its president, Charles Bale. Bale first testified that Metropolitan
netted approximately $60,000 per year. On cross-examination, however, Bale
admitted that in the two years prior to Metropolitan's ban from the
airport, the company lost $30,000 and $18,000 respectively. Although
Metropolitan argues that the loss figures are deceptive because they
represent the company's overall loss for tax purposes and ignore individual
gains within segments of the company, Metropolitan offered no documentary
evidence to explain the contradiction. In light of this contradictory live
testimony, and in the absence of any documentary evidence, Metropolitan
fell short of meeting even the best evidence available standard.
Accordingly, the district court's denial of damages was appropriate.

Finally, Metropolitan argues that it needs to conduct discovery and
introduce new evidence to prove its lost profits during the time period of
the trial. We conclude that the district court did not abuse its
discretion in denying this request. See White v. Nix, 43 F.3d 374, 377
(8th Cir. 1994). Metropolitan was banned from the airport on February 17,
1992, almost nine months before the trial began. If Metropolitan lost
profits from the

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exclusivity agreement, that loss began at the time of the ban. Assuming
such a loss occurred, it would have continued throughout the trial so long
as Kansas City continued to prohibit Metropolitan from conducting business
in the airport. Because Metropolitan did not introduce persuasive evidence
to show that a pre-trial loss occurred, however, the question of continued
loss is moot. The district court acted well within its discretion in
denying Metropolitan's request for additional discovery and leave to
introduce new evidence.

III. Attorney Fees

Metropolitan contends that the district court erred in denying its
motion for attorney fees. Metropolitan contends that its success in
obtaining relief that benefits others similarly situated entitles it to
attorney fees under the "special circumstances" or "common fund" exceptions
recognized by the Missouri courts. The district court found that an award
of attorney fees was not warranted under either of those exceptions.
Having reviewed the district court's analysis of Missouri case law on the
subject, we are satisfied that the district court did not err in so ruling.

The judgment is affirmed.

BRIGHT, Circuit Judge, concurring and dissenting.

I concur in the majority's denial of damages to Metropolitan.

I dissent in the refusal to direct the district court to award
something in the way of attorney's fees to Metropolitan.

I recognize that under Missouri case law special circumstances must
exist to justify any fee shifting. By virtue of this action, Metropolitan
has provided the community, the state and the public with the following
benefits flowing from the judgment:

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 1. invalidating the concession agreement and the manner of its
adoption;

2. benefitting other transportation providers for the airport
terminals;

3. benefitting the public by requiring competitive bidding; and

4. other tangential benefits to the public and to state and public
entities arising from clarification of law relating to public bidding
procedures.

Thus the litigation, in part, conferred a common benefit to others,
as well as Metropolitan. Several Missouri cases suggest the
appropriateness of an award of attorney's fees to the successful plaintiff
in this case. See Temple Stephens Co. v. Westenhaver, 776 S.W.2d 438, 442
(Mo.App. 1989) (special circumstances existed where contiguous landowner
incurred attorney's fees in invalidating ordinance which affected city
government and other contiguous property owners and court's opinion
clarified notice obligations contained in city ordinances to benefit of
present and future property owners in city); Von Seggern v. 310 West 49th
St., Inc., 631 S.W.2d 877, 883 (Mo.App. 1982) (attorney's fees particularly
appropriate where question litigated was of general application).

I believe the Missouri courts in similar or analogous circumstances
would allow attorney's fees. Thus, I would require Kansas City to pay, at
least in part, Metropolitan's legal fees and other related expenses not
otherwise taxed as costs of the action.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

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