Craig Outdoor Advertising v. Viacom Outdoor, Inc.

• Decision Date: 04 June 2008
• Docket Number: No. 06-3339.,No. 06-3337.,No. 06-3335.,No. 06-3341.,06-3335.,06-3337.,06-3339.,06-3341.
• Citation: 528 F.3d 1001
• Parties: CRAIG OUTDOOR ADVERTISING, INC.; Curtis Massood; Midwest Outdoor Media, LLC; Patriot Outdoor, LLC, Plaintiffs-Appellees, v. VIACOM OUTDOOR, INC.; Defendant, Wally Kelly; Defendant-Appellant, Randall F. Romig; Randy Jackson; Harold Gustin; CPA Carlton Beckstrom, Defendants. Craig Outdoor Advertising, Inc.; Curtis Massood; Midwest Outdoor Media, LLC; Patriot Outdoor, LLC, Plaintiffs-Appellees, v. Viacom Outdoor, Inc., Defendant-Appellant, Wally Kelly; Randall F. Romig; Randy Jackson; Harold Gustin; CPA Carlton Beckstrom, Defendants. Craig Outdoor Advertising, Inc.; Curtis Massood; Midwest Outdoor Media, LLC; Patriot Outdoor, LLC, Plaintiffs-Appellees, v. Viacom Outdoor, Inc.; Wally Kelly; Randall F. Romig; Randy Jackson, Defendants, Harold Gustin, Defendant-Appellant, CPA Carlton Beckstrom, Defendant. Craig Outdoor Advertising, Inc.; Curtis Massood; Midwest Outdoor Media, LLC; Patriot Outdoor, LLC, Plaintiffs-Appellants, v. Viacom Outdoor, Inc.; Wally Kelly, Defendants-Appellees, Randall F. Romig; Randy Jackson, Defendants, Harold Gustin, Defendant-Appellee, CPA Carlton Beckstrom, Defendant.
• Court: U.S. Court of Appeals — Eighth Circuit

528 F.3d 1001

CRAIG OUTDOOR ADVERTISING, INC.; Curtis Massood; Midwest Outdoor Media, LLC; Patriot Outdoor, LLC, Plaintiffs-Appellees, v. VIACOM OUTDOOR, INC.; Defendant, Wally Kelly; Defendant-Appellant, Randall F. Romig; Randy Jackson; Harold Gustin; CPA Carlton Beckstrom, Defendants.

Craig Outdoor Advertising, Inc.; Curtis Massood; Midwest Outdoor Media, LLC; Patriot Outdoor, LLC, Plaintiffs-Appellees, v. Viacom Outdoor, Inc., Defendant-Appellant, Wally Kelly; Randall F. Romig; Randy Jackson; Harold Gustin; CPA Carlton Beckstrom, Defendants.

Craig Outdoor Advertising, Inc.; Curtis Massood; Midwest Outdoor Media, LLC; Patriot Outdoor, LLC, Plaintiffs-Appellees, v. Viacom Outdoor, Inc.; Wally Kelly; Randall F. Romig; Randy Jackson, Defendants, Harold Gustin, Defendant-Appellant, CPA Carlton Beckstrom, Defendant.

Craig Outdoor Advertising, Inc.; Curtis Massood; Midwest Outdoor Media, LLC; Patriot Outdoor, LLC, Plaintiffs-Appellants, v. Viacom Outdoor, Inc.; Wally Kelly, Defendants-Appellees, Randall F. Romig; Randy Jackson, Defendants, Harold Gustin, Defendant-Appellee, CPA Carlton Beckstrom, Defendant.

No. 06-3335.

No. 06-3337.

No. 06-3339.

No. 06-3341.

United States Court of Appeals, Eighth Circuit.

Submitted: October 15, 2007.

Filed: June 4, 2008.

Floyd R. Finch Jr., Maxwell Carr-Howard, Husch Blackwell Sanders LLP, Kansas City, MO, James Robert Wyrsch, John Justin Johnston, Wyrsch Hobbs & Mirakian PC, Kansas City, MO, for Plaintiffs.

Karen L. Hirschman, Stacey H. Dore, Vinson & Elkins, LLP, Dallas, TX, James M. Humphrey, Jennifer G. Bacon, Lawrence R. Ward, Shughart Thomson & Kilroy, PC, Kansas City, MO, Glenn Eugene Davis, Armstrong Teasdale, LLP, St. Louis, MO, Robert C. Walters, Dallas, TX, Phillip R. Anderson, Lewis, Rice & Fingersh, Kansas City, MO, for Defendants.

Before BYE, BOWMAN, and SMITH, Circuit Judges.

BOWMAN, Circuit Judge.

Craig Outdoor Advertising, Inc., Midwest Outdoor Media, LLC, Patriot Outdoor, LLC (collectively "Plaintiffs"), and Curtis Massood, the former owner of a small billboard company, filed this lawsuit in which they alleged that Viacom Outdoor ("Viacom"), and Viacom executives Wally Kelly and Harold Gustin (collectively "individual Defendants")¹ perpetrated a scheme by which Viacom and its employees and consultants would represent to businesses and individuals interested in constructing billboards on railroad property that Viacom was acting as the agent for those railroads with respect to billboard construction and that applications to build on railroad property would be evaluated on a first-come, first-served basis. In reality, however, Viacom employees or consultants reviewed each site application to determine if Viacom wanted to develop the site itself. Plaintiffs and Massood alleged that Viacom misrepresented and omitted information about the review process in an effort to induce them to identify billboard sites. Viacom then appropriated certain sites and covered up the scheme, for example, by falsely stating that another entity had applied for the site first or by failing to forward the site application to the railroad. Plaintiffs and Massood asserted claims for relief based on both Missouri and Connecticut state law and the civil remedies provisions of the Organized Crime Control Act of 1970, Racketeer Influenced and Corrupt Organizations, ("RICO"). 18 U.S.C. §§ 1961-68. Prior to trial, the District Court granted Viacom summary judgment on the RICO claims asserted by Plaintiffs against the company and dismissed all of Massood's claims. A jury returned verdicts in favor of Plaintiffs on their state-law claims and on their RICO claims against Kelly and Gustin. Viacom, Kelly, and Gustin appeal and Plaintiffs and Massood cross-appeal. The parties raise numerous claims, each of which we will address in turn.

I. VIACOM

A. Fraud Claims. Viacom first argues that the evidence was insufficient to support the jury's verdict in favor of Plaintiffs on their state-law fraud claims. A jury verdict is entitled to extreme deference, Morse v. S. Union Co., 174 F.3d 917, 922 (8th Cir.), cert. dismissed, 527 U.S. 1059, 120 S.Ct. 29, 144 L.Ed.2d 832 (1999), and we will not set it aside unless no reasonable jury could have reached the same verdict based on the evidence submitted, Ryther v. KARE 11, 108 F.3d 832, 836 (8th Cir.), cert. denied, 521 U.S. 1119, 117 S.Ct. 2510, 138 L.Ed.2d 1013 (1997). In conducting our review, we consider the evidence in the light most favorable to the jury verdict. Id. Specifically, we "assume all conflicts in the evidence were resolved in [Plaintiffs'] favor, assume [Plaintiffs] proved all facts that [their] evidence tended to prove, and give [Plaintiffs] the benefit of all favorable inferences that reasonably may be drawn from the proven facts." Morse, 174 F.3d at 922. Keeping in mind our extremely deferential standard of review, we conclude that the jury's verdict on Plaintiffs' fraud claims was supported by the evidence.

Plaintiffs asserted fraudulent-misrepresentation claims under Missouri and Connecticut law,² pursuant to which they were required to establish the following elements: a false material representation by Viacom; Viacom's knowledge of the representation's falsity or ignorance of its truth; Viacom's intent that Plaintiffs act on the representation "in a manner reasonably contemplated"; Plaintiffs' ignorance of the representation's falsity; Plaintiffs' rightful reliance on the truth of the representation; and proximate injury. Norden v. Friedman, 756 S.W.2d 158, 164 (Mo. 1988); see Nazami v. Patrons Mut. Ins. Co., 280 Conn. 619, 910 A.2d 209, 214 (Conn.2006) (noting that a fraud claim requires proof that (1) the defendant made a false representation as a statement of fact, (2) the defendant knew the statement was untrue, (3) the defendant made the statement to induce reliance, and (4) the other party relied on the statement to his detriment).

In addition to claims that Viacom fraudulently misrepresented the review process, Plaintiffs also asserted that Viacom's failure to disclose the true nature of the review process constituted a fraudulent omission. Viacom argues that the fraudulent-omission theory should not have been submitted to the jury because, "as a matter of law, Viacom had no duty to disclose" the existence or details of its review process. Br. of Viacom at 31. Under Missouri and Connecticut law, silence may constitute a representation for purposes of a fraud claim if the party sought to be held accountable for fraud conceals material facts that he had a legal duty to disclose. VanBooven v. Smull, 938 S.W.2d 324, 328 (Mo.Ct.App.1997) (per curiam); Ceferatti v. Boisvert, 137 Conn. 280, 77 A.2d 82, 84 (Conn.1950). A legal duty to disclose may arise from a relationship of trust or confidence, an inequality of condition, or superior knowledge that is not reasonably available to the other party. VanBooven, 938 S.W.2d at 328; see Glazer v. Dress Barn Inc., 274 Conn. 33, 873 A.2d 929, 961-62 (Conn.2005). Under Connecticut law, whether a duty to disclose exists is a question of law. See Glazer, 873 A.2d at 961. Under Missouri law, "`[w]hether or not a duty to disclose exists ... must be determined on the facts of the particular case.'" Hess v. Chase Manhattan Bank, USA, 220 S.W.3d 758, 765 (Mo.2007) (quoting Ringstreet Northcrest, Inc. v. Bisanz, 890 S.W.2d 713, 720 (Mo.Ct.App.1995)). Before we consider the sufficiency of the evidence to support the jury's fraud verdicts, we will address Viacom's argument that it had no duty to disclose details of the review process.

First, the evidence established that Viacom possessed superior knowledge with respect to its review process. Viacom had been engaged by the railroads to operate as their leasing agent and was, by virtue of that position, the gatekeeper for billboard site applications. Plaintiffs, as applicants for railroad billboard sites, had no choice but to submit their applications, including detailed descriptions of site locations, to Viacom for processing. And only Viacom was in a position to know that its application-processing procedures included an internal review by a local Viacom office and a determination by that office of whether a particular site should be appropriated by Viacom or released to an applicant. Kelly testified that Viacom employed a firstcome, first-served policy for railroad billboard applications except in areas where Viacom operated, in which case applications would be reviewed by the local office. See, e.g., Tr. at 1464.

Second, the evidence established that Viacom's superior knowledge of the review process was not reasonably available to Plaintiffs. Viacom did not inform Plaintiffs that their applications would be subjected to the review process. Nor did Viacom inform Plaintiffs that the sites identified in their applications could be appropriated by Viacom if the site was deemed desirable by a local office. Plaintiffs and other applicants, as well as representatives from the railroads, testified that as far as they knew, Viacom was operating strictly as an agent for the railroads in processing these applications and not as a competitor for the sites. Jim Boeh (Midwest Outdoor), Mark Derench (Patriot Outdoor), and Craig Fedynich (Craig Outdoor) testified that they asked Viacom employees whether competing applications had already been submitted for their proposed sites, and they were told that no such applications had been received. Id. at 605-06; 239-40; 420. Viacom did not inform Boeh, Derench, or Fedynich that their applications would be reviewed and that their sites could be appropriated by Viacom. Accordingly, Boeh, Derench, and Fedynich submitted applications with the understanding that Viacom would process those applications on a first-come, first-served basis. Viacom argues that it had no duty to disclose its review process because it was operating as a competitor in an arm's-length transaction for any given site. This argument was...