Koch v. Koch Industries, Inc., 85-1636-SAC.

• Citation: 37 F.Supp.2d 1231
• Decision Date: 07 July 1998
• Docket Number: No. 85-1636-SAC.,85-1636-SAC.
• Parties: William I. KOCH, et al., Plaintiffs, v. KOCH INDUSTRIES, INC., et al., Defendants.
• Court: United States State Supreme Court of Kansas

37 F.Supp.2d 1231

William I. KOCH, et al., Plaintiffs, v. KOCH INDUSTRIES, INC., et al., Defendants.

No. 85-1636-SAC.

United States District Court, D. Kansas.

July 7, 1998.

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Clifford L. Malone, Adams, Jones, Robinson & Malone, Wichita, KS, Thomas E. Wright, Wright, Henson, Somers, Sebelius, Clark & Baker, LLP, Topeka, KS, Harry L. Najim, Najim Law Offices, Wichita, KS, John T. Hickey, Jr., Alex Dimitrief, Kirkland & Ellis, Chicago, IL, Joseph F Ryan, Lyne, Woodworth & Evarts, Boston, MA, Fred H. Bartlit, Jr., Bartlit, Beck, Herman, Palenchar & Scott, Chicago, IL, Donald E. Scott, Ellen A. Cirangle, Bartlit, Beck, Herman, Palenchar & Scott, Denver, CO, for William I. Koch, Oxbow Energy, Inc., Spring Creek Art Foundation, Inc., Northern Trust Co., plaintiffs.

Clifford L. Malone, Adams, Jones, Robinson & Malone, Wichita, KS, Harry L. Najim, Najim Law Offices, Wichita, KS, Gregory S.C. Huffman, L. James Berglund, II, Thompson & Knight, Dallas, TX, for LB Simmons Energy Inc., Gay A. Roane, Ann Alspaugh, Marjorie Simmons Gray, Marjorie L. Simmons, Paul Anthony Andres Cox, Holly A. Andres Cox Farabee, plaintiffs.

Clifford L. Malone, Adams, Jones, Robinson & Malone, Wichita, KS, Harry L. Najim, Najim Law Offices, Wichita, KS, Russell E. Brooks, Milbank, Tweed, Hadley & McCloy, New York City, for United States Trust Company of New York, Frederick R. Koch, plaintiffs.

Michael Paul Kirschner, Lee & Kirschner, P.L.L.C., Oklahoma City, OK,for Nationsbank NA, co-trustee of the Louis Howard Andres Cox Trusts B & D, plaintiff.

James M. Armstrong, Robert L. Howard, Timothy B. Mustaine, Foulston & Siefkin L.L.P., Wichita, KS, Donald L. Cordes, Koch Industries, Inc., Wichita, KS, for Koch Industries Inc, Charles G. Koch, defendants.

James M. Armstrong, Robert L. Howard, Timothy B. Mustaine, Foulston & Siefkin L.L.P., Wichita, KS, for Sterling V Varner, David H. Koch, Donald L. Cordes, Thomas M. Carey, defendants.

Michael W. Merriam, Gehrt & Roberts, Chartered, Topeka, KS, for Kansas Press Association, Kansas Ass'n of Broadcasters, Wichita Eagle Beacon, Topeka Captial-Journal, WIBW-TV, Kansas City Star Co., Wichita Business Journal, Harris Enterprises, Inc., movants.

Daniel R. Lykins, Bryan, Lykins & Hejtmanek, P.A., Topeka, KS, for Koch Crime Comm, movant.

MEMORANDUM AND ORDER

CROW, Senior District Judge.

The case comes before the court on a number of pending motions, including the parties' motions for judgment as a matter of law ("JMAL"). At the close of the defendants' case, the parties filed their respective JMAL motions. (Dks. 904, 905, 906, 907, 908, 909, 911 and 913). The parties argued the JMAL motions in chambers on Thursday, June 10, 1998, and the court took the motions under advisement. The court submitted all claims to the jury on June 17, 1998. The jury returned its verdict on June 19, 1998, finding that the plaintiffs were not entitled to recover on any of their claims and theories. The court issues the following as its ruling on the parties' JMAL motions. The court also takes this opportunity to comment on several objections and proffered instructions raised at the recent jury instruction conference, to explain its ruling on the plaintiffs' motion to present rebuttal evidence, and to clarify the record on several other matters.

DEFENDANTS' MOTIONS FOR JUDGMENT AS A MATTER LAW

A court may grant a JMAL motion only when "a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue." Fed.R.Civ.P 50(a)(1). The Tenth Circuit reads this rule to mean that "a court may grant the motion `only if the evidence points but one way and is susceptible to no reasonable inferences which may support the opposing party's position.'" Finley v. United States, 82 F.3d 966, 968 (10th Cir.1996) (quoting Q.E.R., Inc. v. Hickerson, 880 F.2d 1178, 1180 (10th Cir.1989)), rev'd on other grounds, 123 F.3d 1342 (10th Cir. 1997) (en banc). The court "must construe the evidence and inferences most favorably to the non-moving party, and refrain from weighing the evidence, passing on the credibility of witnesses, or substituting ... [its] judgment for that of the jury." Magnum Foods, Inc. v. Continental Cas. Co., 36 F.3d 1491, 1502 (10th Cir.1994) (citation omitted); see Harolds Stores, Inc. v. Dillard Department Stores, 82 F.3d 1533, 1546 (10th Cir.), cert. denied, 519 U.S. 928, 117 S.Ct. 297, 136 L.Ed.2d 216 (1996). On the other hand, judgment as a matter of law must be granted if there is no legally sufficient evidentiary basis with respect to a claim or defense under the controlling law. Harolds Stores, Inc., 82 F.3d at 1546-47. In order to deny judgment as a matter of law, the court must find more than merely "a scintilla of evidence" favoring the nonmovant, and the court must find that "evidence was before the jury upon which it could properly find against the movant." Cooper v. Asplundh Tree Expert Co., 836 F.2d 1544, 1547 (10th Cir. 1988). Judgment as a matter of law is only proper when "the evidence so strongly supports an issue that reasonable minds could not differ." Ryder v. City of Topeka, 814 F.2d 1412, 1418 (10th Cir.1987).

The court deferred ruling on the defendants' JMAL motions at the close of all evidence (Dks. 907, 908, 909, 911 and 913) and submitted all claims to the jury. The court followed "[t]he better practice" of not taking the case away from the jury in favor of deciding a motion for judgment notwithstanding the verdict after the jury's deliberations. Cottam v. First Baptist Church of Boulder, 756 F.Supp. 1433, 1439 (D.Colo.1991), aff'd, 962 F.2d 17 (10th Cir. 1992) (Table); see Garrett v. Barnes, 961 F.2d 629, 632 (7th Cir.1992); Therrell v. Georgia Marble Holdings Corp., 960 F.2d 1555, 1569 (11th Cir.1992); Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d 850, 861-62 (Fed.Cir.1991), cert. denied, 504 U.S. 980, 112 S.Ct. 2957, 119 L.Ed.2d 579 (1992); see, e.g., Anderson v. United Telephone Co. of Kansas, 933 F.2d 1500, 1502 (10th Cir.), cert. denied, 502 U.S. 940, 112 S.Ct. 375, 116 L.Ed.2d 327 (1991); Ware v. Unified School Dist. 492, Butler County, Kansas, 881 F.2d 906, 915 (10th Cir.1989) (J. Barrett, dissenting) ("`Even at the close of all the evidence it may be desirable to refrain from directing a verdict though it would be possible to do so.... If the jury agrees with the court's appraisal of the evidence, and returns a verdict for the party who moved for a directed verdict, the case is at an end. If the jury brings in a different verdict, the trial court can grant judgment notwithstanding the verdict.'" (quoting 9A Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure: Civil § 2533, p. 586)). As the jury here has agreed with the court's appraisal of the evidence, the case is at an end and the defendants' JMAL motions are denied as moot.

As the time and occasion are now appropriate, the court offers a few brief comments on its appraisal of the plaintiffs' case. Had the summary judgment record been the same as the trial record, none of the plaintiffs' claims would have survived summary judgment. The evidence fully established that the plaintiffs knew beginning in 1976 and continuing up to the time of the stock sale that Koch Industries, Inc. ("KII") had been discussing, considering and modifying plans for expansion at Pine Bend Refinery and, in fact, had implemented one or more stages of the modified plans and thereby increased Pine Bend's refining capacity. From the different written project studies and other presentations to the Board of Directors over the years, the plaintiffs had been told and were well aware of KII's expansion plans for Pine Bend. By reason of William Koch's knowledge and education in the field of chemical engineering, the plaintiffs necessarily understood that Pine Bend's capacity for processing crude would also continue to grow. William Koch demonstrated in his testimony a rather developed working knowledge of refineries that he eagerly called upon when it could be used to support his claims and that he selectively denied when it would have plainly undermined his allegations of not knowing Pine Bend's capacity and the defendants' plans for expansion.

His own notes from a Board meeting in March of 1982 reflect that William Koch had been told that KII considered the completion of the Wood River Pipeline to be the reliable source for crude supply needed to justify proceeding with expansion plans for Pine Bend. From the actual monthly crude runs for the fall of 1982, the plaintiffs learned that Pine Bend's calendar day capacity was at least 134,000 bpd. Based on the first quarter projections for 1983, the plaintiffs also knew that KII expected Pine Bend to continue processing 134,000 bpd. Both the actual runs and projected runs fully demonstrated to the plaintiffs, in particular William Koch with his knowledge of refineries, that Pine Bend's actual physical processing capacity in June of 1983 exceeded 134,000 bpd, that Pine Bend's stream day capacity was at or near 145,000 bpd in June of 1983, and that Pine Bend's capacity would continue to increase with the additional changes and the major turnaround planned for 1983.

The plaintiffs' professed reasons for not knowing about the refinery expansion were neither logical nor credibly supported by the evidence. Instead, they essentially proved that the plaintiffs' did not consider any expansion at Pine Bend to be material to their valuation of the KII stock. Considering his knowledge and experience with project studies, the use of economic assumptions in such studies, the marketing of refinery products at KII and the history of expansion at Pine Bend, William Koch could not have reasonably believed from reading the different KII studies that Pine Bend's physical capacity would not increase beyond 130,000 bpd anytime soon. The trial record also shows that William...