W. Dudley McCarter
Behr, McCarter & Potter
St. Louis

Mark Weikel was chairman of the Foley's Division of May Department Stores. His employment agreement prohibited him from working for a competing business for two years after he left May Company. The agreement defined "competing business" as any retail department store, specialty store, or other retail business that sold goods or merchandise of the type sold by May or any store or business that competes with May for customers. Weikel received an offer to become the chief operating officer of Victoria's Secret stores. He advised May of the offer and asked May to agree that Victoria's Secret was not a competitor of May. When May refused, Weikel filed a declaratory judgment action seeking a declaration that his employment by Victoria's Secret would not violate his agreement with May.

After hearing extensive evidence, the trial court found that Victoria's Secret specialized in the sale of women's intimate apparel targeted to younger women. The trial court also found that May was a traditional department store with a broad array of products, that intimate apparel constituted approximately 3% of its total sales, and that its core customers were women between the ages of 40 and 50 years old. The court also found that Victoria's Secret customers were loyal to the brand and that its market strategy was brand-driven as opposed to price-driven, in contrast to May's strategy. The trial court found that Victoria's Secret and May Department Stores do not compete in any material or meaningful way and determined that Weikel would not violate his employment contract by accepting a position with Victoria's Secret. The Court of Appeals affirmed in Victoria's Secret Stores v. The May Department Stores, No. ED 83916 (Mo. App. E.D. 2004).

Covenants not to compete are presumptively void and are enforceable only to the extent they are demonstratively reasonable. The determination of reasonableness depends upon the competing needs of the parties, as well as the needs of the public. These needs are: (1) the employer's need to protect legitimate business interests, such as trade secrets and customer lists, (2) the employee's need to make a living, and (3) the public's need to secure the employee's presence in the labor pool. A restrictive covenant in an employment agreement is only valid and enforceable if it is necessary to protect trade secrets and customer contacts, and if it is reasonable as to time and place. The burden of demonstrating the covenant's validity is on the party seeking to enforce it.

Covenants not to compete are enforceable only to protect against unfair competitive use of either customer contacts or trade secrets. The protection does not extend to knowledge that is the natural product of the employment or known throughout the industry, but only to trade secrets or influences over customers. There was substantial evidence to support the trial court's finding that Victoria's Secret and May were not in material competition for the sale of intimate apparel and that any confidential information possessed by Weikel would not give Victoria's Secret a competitive advantage over May.

New Trial Required Where Jury Received Extraneous Evidence Outside the Courtroom

Sharon McBride filed a medical negligence suit against Dr. Joseph Farley. The case went to trial in January 2001, but a mistrial was declared due to issues injected during voir dire. The case was again tried in 2001, but resulted in a hung jury and another mistrial was declared. The third trial, which covered a period of 12 days, resulted in a verdict for Dr. Farley. After the verdict, McBride filed a motion for new trial alleging misconduct by the jury coordinator, who had told various jurors outside the courtroom that a previous trial resulted in a hung jury and that this was the second or third trial of the case. In both affidavits, and in testimony at the hearing on McBride's motion, several jurors confirmed that the jury coordinator had made this statement and that this information was discussed frequently among the jurors. The trial court denied McBride's motion for a new trial, but the Court of Appeals reversed in McBride v. Farley, No. 25448 (Mo. App. S.D. 2004).

The general rule in Missouri is that a juror's testimony or affidavit may not be used to impeach the verdict as to misconduct inside or outside the jury room, whether before or after the jury is discharged. Extrinsic evidentiary facts, however, are distinguishable from matters inherent in the verdict and are not prohibited under the general rule against impeaching verdicts. To permit a verdict to be attacked on the grounds of juror misconduct, the juror testimony must allege that extrinsic evidentiary facts (i.e. facts bearing on trial issues, but not properly introduced at trial) were interjected into the jury's deliberations, rather than merely that jurors acted on improper motives, reasoning, beliefs or mental impressions (the latter type of juror testimony is said to concern matters inherent in the verdict). While the information in the instant case did not come to the jurors through the misconduct of any of their number, but rather from a court official, the same analysis applies. Since the prohibition is against the receipt of extrinsic evidentiary facts (facts bearing on trial issues, but not properly introduced at trial), it should not matter whether the source of the information is from outside the jury, such as from a court official, or from other jurors.

In this case, the jury was clearly informed that McBride had the burden of proof and that her failure to meet that burden must result in a verdict for Dr. Farley. The information provided to the jurors by the jury coordinator dealt with a trial issue, i.e. whether plaintiff could prove defendant's liability for her claimed damages. The fact that there had been an earlier trial resulting in a hung jury effectively communicated to this jury that plaintiff had been unable to convince at least nine of those jurors that she had met her burden of proof and was entitled to a verdict. This information goes against matters inherent in this jury's verdict and involves facts bearing on trial issues that were not properly introduced at trial. The information involved here was obtained by the jurors outside the courtroom and is the equivalent of obtaining evidence extraneous to the trial. Once it is established that a juror has gathered evidence extraneous to the trial, prejudice will ordinarily be presumed and the burden is on the respondent in such a case to overcome the presumption of prejudice. The ultimate issues in this case were whether defendant was negligent in his care and treatment of plaintiff and whether she suffered damage as a result. The information provided by the jury coordinator reflected on those ultimate issues by indicating that, in light of the fact that plaintiff had the burden of proof, she had been unable to persuade at least nine of the jurors in the earlier trial that she had met that burden. This was an extrinsic evidentiary fact (one bearing on trial issues) that was not properly introduced at trial and did not concern matters inherent in the verdict. Defendants did not overcome the presumption of prejudice and the trial court abused its discretion in denying McBride's motion for new trial.

Discovery is Not Designed to Be a Scorched Earth Battlefield

Gary Anderson was driving a Ford Bronco when he died in a single-vehicle rollover accident. His family filed a wrongful death action against Ford Motor Co. The family served discovery on Ford seeking information related to all testing conducted on the stability and crashworthiness of the Bronco and the conclusions of all Ford consulting experts who had worked on Bronco litigation. Ford objected on the grounds that the information was work product. The trial court ordered Ford Motor Co. to produce the information, but Ford requested a writ of prohibition, which was granted by the Supreme Court in State of Missouri ex rel. Ford Motor Co. v. Westbrooke, No. SC 85970 (Mo. banc 2004).

The work product privilege precludes an opposing party from discovering materials created or commissioned by counsel in preparation for possible litigation. In addition, it protects the thoughts and mental processes of the attorney preparing a case. The doctrine protects both tangible work product and intangible work product from disclosure. Protection of intangible work product exists independently of Rule 56.01(b)(3), and a court ordering discovery shall protect against disclosure of mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation.

Blanket assertions of work product are insufficient to invoke protection. In order to invoke work product protection, the party opposing discovery must establish, through competent evidence, that the materials sought to be protected (1) are documents or tangible things, (2) were prepared in anticipation of litigation or for trial, and (3) were prepared by or for a party or a representative of that party. In evaluating the merits of the asserted privilege, the trial court may order an in camera review of the disputed documents. Missouri litigators are reminded that the discovery process was not designed to be a scorched earth battlefield upon which the rights of the litigants and the efficiency of the justice system should be sacrificed to mindless, overzealous representation of plaintiffs and defendants. The discovery process was not designed to be an endless and unduly expensive ordeal. The rules of discovery are intended to allow pre-trial discovery to be conducted as promptly and inexpensively as possible. Missouri litigators should act accordingly.

Decided on the same day was the case of State of Missouri ex rel. MacDonald v. Franklin, No. 26344 (Mo. App. S.D. 2004), which also discussed various discovery issues. In this case, the Southern District stated that the purpose of pre-trial discovery is to aid in the ascertainment of the truth, eliminate surprise, narrow issues, facilitate trial preparation, and obtain relevant information. The need for discovery, however, must be balanced against the burden and intrusiveness involved in furnishing this information. Where discovery goes beyond the issues raised in the pleadings, they are overly broad and objectionable.

When Electrical Wires Fall, the Electric Company Has a Duty to Discover the Danger and Shut Off Power Within a Reasonable Time

Edward Grattan was operating his vehicle on a road when a garbage truck ran off the road and knocked down an electrical pole. Live wires fell across the roadway and on to Mr. Grattan's car. He suffered an electrical shock 5-7 minutes after the poles fell and was electrocuted as he tried to escape his car. He filed suit against Union Electric. The trial court granted summary judgment to Union Electric, but the Supreme Court reversed in Grattan v. Union Electric Co., No. SC 85851 (Mo. banc 2004).

Grattan first claims that Union Electric failed to insulate or isolate the electric lines where they were likely to come into contact with people. A supplier of electricity must exercise the highest degree of care to keep its wires in such condition as to prevent injury to others who lawfully may be in close proximity to those wires. A utility company cannot, however, be held liable for injuries that immediately occur when motor vehicles leave the road and crash into poles, causing either the pole or electric lines to fall. Union Electric is not liable for harm caused by power lines that are displaced by a driver leaving the traveled roadway.

Grattan's second claim is that Union Electric failed to de-energize its wires after they were knocked down. When wires become dangerous, a utility has a duty to protect the public by fixing the problem within a reasonable time. A reasonable opportunity after actual notice of dangerous lines is a short period of time. When the wires fell, Union Electric had a duty to discover the danger and shut off the power within a reasonable time. Here, the record concerning the timeliness within which Union Electric shut off the power to the lines at issue is sparse. Union Electric did not present evidence of whether its system was operating correctly or at what point the system actually shut down the power. Union Electric had not met its burden of showing that there was not a genuine issue as to any material fact and that it was entitled to judgment as a matter of law on this issue.

Public Officials Are Protected By the Public Duty Doctrine

Melissa Green was driving her vehicle on Highway 19 when she lost control due to loose gravel that created a slick surface on a curve in the roadway. Her vehicle overturned and she suffered permanent injuries, including paralysis. Several days prior to her accident, a MoDOT maintenance crew had been making repairs to Highway 19. Two of the MoDOT employees working on the highway were Donald Weaver and Mark Simpson. Green filed suit against Weaver and Simpson, alleging that they were negligent in failing to sweep the loose gravel from the highway. Weaver and Simpson filed motions for summary judgment on the grounds that Green's suit against them was barred by the public duty doctrine. The court granted summary judgment to Weaver and Simpson, and the Court of Appeals affirmed in Green v. Missouri Department of Transportation, No. 25970 (Mo. App. S.D. 2004).

The public duty doctrine shields public officers and the governmental bodies that employ them from liability from injuries or damages resulting from the officers' breach of a duty owed to the general public. By the public duty doctrine, a public employee is not civilly liable - even for breach of a ministerial duty -- if the duty is owed to the general public, rather than to a particular individual. The policy behind this doctrine is the promotion of effective administration of public affairs by removing the threat of personal liability from those officials who must exercise their best judgment in conducting the public's business.

The public duty doctrine is not an affirmative defense; the plaintiff must plead certain facts to support the existence of a legal duty. Here, Green failed to plead facts establishing that Simpson and Weaver owed an individual duty to her, which they failed to perform. Since the duty of MoDOT and its employees to properly design and construct highways runs to the public at large, the duty to properly repair highways also runs to the public at large. Missouri courts broadly construe the meaning of public duty. The public duty doctrine recognizes that the duties of public officers are normally owed only to the general public and that a breach of such a duty will not support a cause of action by an individual injured thereby. A citizen has no cause of action for injuries sustained as the result of an alleged breach of public duty to the community as a whole.

Agreement to Arbitrate is Not Unconscionably Unfair Even Between Parties of Unequal Bargaining Power

Vernon Reynolds purchased a manufactured home financed by Green Point Credit, LLC. Reynolds defaulted on his payments and Green Point filed a replevin suit to obtain possession of the home. After an order of replevin was entered, Reynolds filed a counterclaim for wrongful replevin, conversion, fraudulent misrepresentations, and other tort claims. Green Point then filed a motion to compel arbitration, based on a mandatory arbitration provision in its contract with Reynolds. The trial court denied the motion to compel arbitration, but the Court of Appeals reversed in Green Point Credit, LLC v. Reynolds, et al, No. 26134 (Mo. App. S.D. 2004).

An order denying arbitration is appealable. A court must compel arbitration if it determines that the parties agreed to arbitrate the dispute. An agreement to settle disputes through arbitration instead of litigation is not unconscionably unfair even between parties of unequal bargaining power. Mindful of the public policy favoring arbitration, the court holds that an average member of the public who accepts a contract such as the one entered into between Green Point and Vernon Reynolds would reasonably expect disputes involving whether either party was in default under its terms to be subject to arbitration rather than litigation. An agreement to settle disputes of that nature by arbitration is not unreasonably unfair, even between parties of unequal bargaining power. A provision so requiring is not unenforceable on the basis that it is a contract of adhesion.

Moreover, Green Point was not estopped from asserting the contract arbitration provision by reason of having sought replevin in state court. Filing the replevin action was not inconsistent with the right to arbitrate, in that the filing of that particular type of action directed to the collateral was permitted by the terms of the arbitration provision. Moreover, Reynolds was not prejudiced by that act. Green Point had not waived its arbitration rights by proceeding with its replevin claim in state court. Any doubts as to whether waiver has occurred are resolved in favor of arbitration. A finding that arbitration has been waived is not favored, and there is a presumption against waiver.

Appeal Will Be Dismissed If the Controversy is Moot

Braveheart Real Estate Co. entered into a sales contract to purchase property from Gerald and Darlene Peters. The Peters refused to convey the property to Braveheart at closing and Braveheart filed suit for specific performance. The trial court granted summary judgment in favor of Braveheart and ordered the Peters to convey the property. When the Peters failed to convey the property as ordered by the trial court, Braveheart filed a motion for contempt. At the contempt hearing, the Peters appeared pro se and asked for a continuance, which the trial court denied. After the trial court discussed with the Peters the potential consequences of a finding of contempt, they agreed to convey the property to Braveheart and did so the following day in exchange for a payment of $565,000. The Peters appealed, but the Court of Appeals dismissed the appeal for mootness in Braveheart Real Estate Co. v. Peters, No. ED. 83244 (Mo. App. E.D. 2004).

A threshold question in any appellate review of a controversy is the mootness of the controversy. Because mootness implicates the justiciability of the case, an appellate court may dismiss a case for mootness sua sponte. In deciding whether a case is moot, an appellate court may consider matters outside the record. When a party voluntarily pays a judgment rendered against it, it may not appeal from that judgment. When the object of a proceeding is to secure possession of a particular tract of land, a voluntary surrender of possession may bar the right to appeal where the property is surrendered before process to enforce the judgment that has been issued. If a party voluntarily surrenders property, he or she effectively concedes the correctness of the judgment, thereby rendering the appeal moot. Here, the Peters avoided a finding of contempt by complying with the trial court's order to convey the property to Braveheart. When a person who is found to be in contempt purges himself or herself of the contempt by complying with the trial court's order, the case becomes moot and unappealable.

Damages For Construction Defects Must Be Based on Cost of Repair or Diminution in Value

The Farnings paid $2,468 to the Brendals for the installation of vinyl flooring in the Farnings' house. After the flooring was installed, it developed air pockets. The Brendals attempted to repair it, without success. The Farnings then contacted the manufacturer of the flooring, and it determined that the bubbling was caused by improper adhesive used during the installation. The manufacturer agreed to furnish new flooring to the Farnings at no cost. The Farnings hired Tom's Flooring to install the replacement flooring for $1,311. The Farnings sued the Brendals and the trial court awarded the Brendals $3,779 - the contract price of $2,468 plus $1,311 paid to Tom's Flooring. The Court of Appeals reversed in Farning v. Brendal, No. WD 63641 (Mo. App. 2004).

In a breach of contract case, the goal in awarding damages is to make an award that will put the non-breaching party in as good a position as he would have been if the contract had been performed. The trial court's award put the Farnings in a better position, since it had the effect of giving the Farnings a windfall by giving them new flooring at no cost. Generally, the proper measure of damages is the difference between the fair market value of the material before and after the installation. An exception to the general rule is the cost of repair test, which can be used when the property can be restored to its former condition at a cost of less than the diminution in value. The improperly installed flooring was replaced and new flooring installed at a cost of $1,311. The cost of repair was less than the diminution in value and was, therefore, the correct measure of damages.