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Barfield v. Sho-Me Power Electric Cooperative

United States District Court, W.D. Missouri, Central Division

April 10, 2018

CHASE BARFIELD, et al., Plaintiffs,
v.
SHO-ME POWER ELECTRIC COOPERATIVE, et al., Defendants.

          ORDER

          NANETTE K. LAUGHREY UNITED STATES DISTRICT JUDGE.

         On March 31, 2014, the Court ruled that Defendants, Sho-Me Power Electric Cooperative (“Sho-Me Power”) and Sho-Me Technologies (“Sho-Me Tech”), were both liable for crossing the class members' land to operate their commercial telephone business without first obtaining commercial telecommunications easements from the landowners. Doc. 396. It found liability based on both trespass and unjust enrichment. Plaintiffs elected at trial to proceed on their unjust enrichment claim, and a jury awarded Plaintiffs $79, 014, 140 in actual damages. Doc. 619.

         The Sho-Me Defendants appealed. On appeal, the Eighth Circuit reversed this Court's grant of summary judgment on the unjust enrichment claim but affirmed the grant of summary judgment on the trespass claim. Barfield v. Sho-Me Power Elec. Coop., 852 F.3d 795, 799-804 (8th Cir. 2017). The Eighth Circuit ordered the matter remanded, giving the landowners a right to pursue damages on their trespass claim if they elected to do so.

         At the second trial, a jury found Plaintiffs' damages for the trespass to be $129, 211, 337 and awarded Plaintiffs punitive damages in the amount of $1, 300, 000. Doc. 859. Before the matter was submitted to the jury, however, Defendants filed a Rule 50(a) motion. For the reasons set forth below, Sho-Me's Rule 50(a) motion is denied.

         I. Background

         Sho-Me Power placed fiber optic cable on its electric transmission easement across the class members' land for telecommunications purposes. Neither Sho-Me Power nor Sho-Me Tech had an easement to cross the class member's land for the purpose of commercial telecommunications. Nonetheless, the fiber optic system was intentionally developed to have far more capacity than Sho-Me Power needed to meet its own internal telecommunication needs, because Sho-Me Power planned to lease its excess capacity to Sho-Me Tech for a commercial telecommunications business. P29; Doc. 867, Tr. 221:10-21, 225:2-14; 219:15-220:1. Sho-Me Tech then entered into multiple contracts, with various entities, for telecommunications services on Sho-Me Power's fiber optic network. Doc. 867, Tr. at 228:5-10; P47; Doc. 868, Tr. at 300:2-302:21. At the time of trial, Sho-Me Tech's revenues were approaching $320 million annually. Doc. 868, Tr. at 288:12-17-22; P56.

         While Sho-Me Power had the right to condemn property for electric transmission and even telecommunications purposes related to its electric services, it had no right to condemn property for commercial telecommunications. Indeed, Missouri law prohibited it from operating a commercial telecommunications business at all. Nevertheless, Sho-Me Power created Sho-Me Tech to operate a commercial telecommunications business. P31; Doc. 868, Tr. at 292:2-11. Sho-Me Tech had no employees and was for all intents and purposes operated by Sho-Me Power. Doc. 868, Tr. at 351:10-23. Much of the revenue generated by Sho-Me Tech's extensive telecommunications business was transferred to Sho-Me Power, permitting Sho-Me Power to reduce its customers' electric rates. Doc. 868, Tr. 294:10-13. Sho-Me Power provides the lowest-priced wholesale electric service in Missouri and the third lowest-priced wholesale electric service in the United States. Doc. 870, Tr. 672:14-23. Sho-Me Tech has been described as the best investment Sho-Me Power ever made. Doc. 868, Tr. 355:2-4.

         II. Motion for Judgment as a Matter of Law Standard

         Federal Rule of Civil Procedure 50 provides that a court may enter judgment as a matter of law against a party after the party has been fully heard if there is no legally sufficient evidentiary basis for that party's claims. Fed.R.Civ.P. 50(a)(1). “[T]he law places a high standard on overturning a jury verdict because of the danger that the jury's rightful province will be invaded when judgment as a matter of law is misused.” Bavlsik v. Gen. Motors, LLC, 870 F.3d 800, 805 (8th Cir. 2017) (quotation marks and citation omitted). “Judgment as a matter of law is proper only when the evidence is such that, without weighing the credibility of the witnesses, there is a complete absence of probative facts to support the verdict.” Browning v. President Riverboat Casino-Mo., Inc., 139 F.3d 631, 634 (8th Cir. 1998).

         III. Discussion

         Defendants argue for judgment as a matter of law as to both compensatory damages and punitive damages.[1]

         A. Actual Damages

         1. The Nature of the Trespass

         Defendants first ask the Court to reconsider its earlier ruling that the trespass is temporary, not permanent. Doc. 847, at 11-17. If the trespass is permanent, the measure of damages would be the difference in fair market value before and after the trespass, rather than the fair market rental value. According to Defendants, the Plaintiffs did not present evidence of the before-and-after fair market value, and Defendants therefore argue that only nominal damages were permissible.[2]

         Under Missouri law, an appropriation that is “[]capable of actual, physical repair, ” “readily removable, ” and “only slight and amenable to restoration” is temporary, not permanent. Sterbenz v. Kansas City Power & Light Co., 333 S.W.3d 1, 8-9 (Mo.Ct.App. 2010) (citation omitted). In such a case, “recovery for permanent damage is not permissible.” Id. Thus, in Beetschen v. Shell Pipe Line Corp., the Missouri appellate court found that a fence impermissibly erected above a properly authorized pipeline constituted a temporary and continuing trespass because it “may be removed and the land restored to its former condition without in any wise interfering with the crude oil flowing through the pipe line.” 248 S.W.2d 66, 73 (Mo.Ct.App. 1952) (“Beetschen I”). In affirming the finding that the trespass was temporary, the Missouri Supreme Court noted that “all trespasses to land incidental to the maintenance of” the authorized purpose of the easement-in other words, all uses that are “not an integral part of the . . . purpose for which private property may be condemned, ” are temporary. Beetschen v. Shell Pipe Line Corp., 363 Mo. 751, 759 (Mo. 1952) (“Beetschen II”).

         In contrast, a permanent trespass is one in which “injury to real property is extensive or permanent, not easily [or fully] remedied by repair . . . .” Sterbenz, 333 S.W.3d at 9 (citation omitted). A trespass is also considered permanent where “the appropriation was in fact necessary for the very public purpose for which the easement could have been acquired in a condemnation proceeding.” Beetschen I, 253 S.W.2d at 788.

         Here, the Defendants' trespass involved no physical structure that would have to be removed to terminate the trespass.[3] In fact, the trespass is readily abatable: to halt the trespass, Defendants would need only to cease commercializing the fiber optic cable on the class members' land. The trespass can stop without interfering with the communications for electric transmission-the only authorized use of the easement.

         Defendants argue, however, that because Sho-Me Tech had the authority to condemn land for commercial telecommunications purposes, its use of Sho-Me Power's cables for telecommunications is “necessary for the very public purpose for which the easement could have been acquired in a condemnation proceeding, ” and therefore, as a matter of law, cannot be abated. But the evidence showed that the cable at issue is merely one part of an information superhighway, a “mesh” of cables that is not necessarily or predictably used by Sho-Me Tech at any given time. Doc. 867, Tr. at 226:7-228:23 (“We have multiple routes that we can choose . . . .”). The use of the cable across Plaintiffs' land for commercial telecommunications purposes therefore cannot be deemed “necessary” to the “public purpose” that Tech may serve. Moreover, Defendants fail to direct the Court to any actual evidence supporting their claims that they cannot cost-effectively run Sho-Me Tech's commercial telephone business without trespassing, particularly given Sho-Me Tech's regular transfer of proceeds to Sho-Me Power. See Doc. 847, at 7 (citing only Doc. 311-1, a redline of a class notice, in support of this argument).

         Further, the agreement governing Sho-Me Tech's usage of Sho-Me Power's fiber optic cable can be terminated on six months' written notice, and Sho-Me Power totally controls Sho-Me Tech. Therefore, it is up to Sho-Me Power, an entity without the power of condemnation, to determine how long Sho-Me Tech will conduct its telecommunications business. As such, it cannot be said that Sho-Me Tech's trespass will be indefinite.

         Finally, Defendants have failed to show that they have been prejudiced by Plaintiffs' claim for temporary trespass as opposed to a claim for permanent trespass. By definition, the damages for permanent trespass would be higher. This is confirmed by every case concerning a permanent trespass reviewed by the Court. In each, it was the landowner who wanted the trespass to be permanent and the trespasser who wanted it to be temporary. It also is confirmed by Dr. Kilpatrick's testimony, which showed the before-and-after fair market value damages to be substantially higher than the damages for temporary trespass.

         For these reasons, the Court will not alter its ruling that the trespass ...


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