CBS Lawsuit TDI 2006

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION NATHAN L.
SIMMONS; PATRICIA A. HERRON d/b/a Herron & Company; KEITH A. FRANKLIN d/b/a FRANKLIN OUTDOOR ADVERTISING COMPANY; and SIGNX LLC, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Civil Case No. 06-0863-CV-W-JTM JURY TRIAL DEMANDED
Plaintiffs, v. CBS OUTDOOR INC. f/k/a Viacom Outdoor Inc. f/k/a Infinity Outdoor Inc.; WALLY KELLY; HAROLD GUSTIN; and GEORGE GROSS, Defendants.
COMPLAINT Plaintiffs Nathan L. Simmons, Patricia A. Herron d/b/a Herron & Company (Herron), Keith A. Franklin d/b/a Franklin Outdoor Advertising Company (Franklin), and Signx LLC (Signx) allege: NATURE OF THE ACTION 1. This action arises out of a scheme to defraud small billboard operators out of their
investment in and right to leases for various premium billboard locations. The scheme of defendants CBS Outdoor, Inc., f/k/a Viacom Outdoor, Inc., f/k/a Infinity Outdoor, Inc. (CBS), Wally Kelly, Harold Gustin, and George Gross involved inducing the plaintiffs and other small billboard operators to reveal the locations of their premium sites to CBS as the leasing agent for
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Case 4:06-cv-00863-DW Document 1
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various railroads based on the representation that billboard locations along railroad lines would be distributed on a first-come, first-served basis. 2. Once defendants induced the plaintiffs to reveal their billboard locations,
defendants CBS, Kelly, Gustin, Gross and other coconspirators directed the denial of those applications, or stalled a response on those applications, and then CBS either took the sites for itself or planned to take those sites. In addition, the defendants used this scheme to devalue the businesses owned by the plaintiffs and other small billboard operators so that CBS could have the opportunity to purchase those companies at a reduced price and thereby keep the plaintiffs and other small business owners from competing with CBS, or at least to ensure the small operators remain weaker competitors. The defendants committed these acts against many small billboard operators in several states. 3. To accomplish their scheme, defendants and other coconspirators, known and
unknown to the plaintiffs, took advantage of CBSs role as the leasing agent of Burlington Northern/Santa Fe Railroad, CSX Railroad, Kansas City Southern Railway, Norfolk Southern Railway, and other railroads. In its role as leasing agent for these railroads, CBS was supposed to manage applications to lease property to billboard advertising businesses on a first-come, first-served basis. In order to process the application, CBS required the applicants to identify the proposed site. 4. To further this scheme, maintain the secrecy of the conspiracy, and fraudulently
obtain the leases to these premium locations, the defendants made false, fraudulent, and misleading statements and omissions by telephone, fax, e-mail, and through the mails in violation of numerous criminal statutes including 18 U.S.C. 1341 (mail fraud) and 1343 (wire
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fraud). The defendants also made false, fraudulent, and misleading statements and omissions in face to face communications to further their scheme. 5. In addition, the coconspirators obstructed justice and tampered with witnesses in
violation of 18 U.S.C. 1512, threatened to retaliate against witnesses in violation of 18 U.S.C. 1513, interfered with interstate commerce in violation of 18 U.S.C. 1951, and conspired to violate each of these laws. 6. Through this conduct the defendants also made fraudulent omissions and
misrepresentations to plaintiffs, tortiously interfered with plaintiffs business expectancies, and unfairly competed with the plaintiffs, all in violation of law and causing substantial damages for which defendants are jointly and severally liable. Defendants engaged in willful and outrageous misconduct, malice, aggravated and egregious fraud, wantoness, and oppression. Defendants conduct was also consciously indifferent, recklessly indifferent, and deliberately disregarded the rights of plaintiffs. Thus, defendants conduct justifies an award of punitive damages in such an amount as will serve to punish defendants and to deter them and others from like conduct. 7. Defendants are jointly and severally liable for treble damages for their operation
of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. 1962(c). PARTIES 8. Plaintiff Simmons is an individual who resided and at all relevant times has
resided in Coffee County, Alabama. 9. Plaintiff Herron is an individual who resided and at all relevant times has resided
in Johnson County, Kansas. 10. Plaintiff Franklin is an individual who resided and at all relevant times has resided
in Wright County, Minnesota.
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11.
Plaintiff Signx is an Oklahoma limited liability company with its principal place
of business in Claremore, Oklahoma. 12. Defendant CBS is one of many subsidiaries of CBS Corporation and is a
Delaware corporation with its principal place of business in Arizona. CBS is registered to do business in Missouri. Its registered agent is CSC-Lawyers, Inc., 221 Bolivar Street, Jefferson City, Missouri. It can be served with process at its office at 2459 Summit Street, Kansas City, Missouri 64108. 13. Defendant Wally Kelly is currently the Chairman and Chief Executive Officer of
CBS and formerly served as its president. He resides in Arizona and can be served personally at 2502 North Black Canyon Highway, Phoenix, Arizona 85009. 14. Defendant Harold Gustin is a New York resident who can be served personally at
839 Lowell St, Woodmere, New York 11598. 15. Defendant George Gross is currently the Vice President for the Eastern Region of
CBS. He resides in New York and can be served personally at 185 U.S. Highway 46, Fairfield, New Jersey 07004. JURISDICTION AND VENUE 16. This Court has jurisdiction over this action pursuant to 28 U.S.C. 1331 as the
claims brought under the Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. 1961 et seq. raise a federal question. 17. In addition, this Court has jurisdiction over this action pursuant to 28 U.S.C.
1332, as this Complaint also brings state law claims by citizens of the states of Alabama, Kansas, Oklahoma, and Minnesota against citizens of other states, and the amount in controversy exceeds $75,000.
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18.
Venue is proper in this judicial district pursuant to 28 U.S.C. 1391(b) and (c)
and 18 U.S.C. 1965(a) as defendant CBS has an office and an agent in this district and it transacts business here. FACTUAL BASIS FOR CLAIMS Significant Mergers and Acquisitions in the Development of CBS Outdoor Inc. 19. In the 1990s, Transportation Displays Inc. (TDI), an outdoor advertising firm with
a large presence in the United States, served as the exclusive agent for processing applications for leases of billboard sites along railroad rights-of-way for numerous national railroads, including Norfolk Southern, Kansas City Southern, Boston & Maine, and Amtrak railroads. Defendant Gustin worked for TDI as an executive in the billboard acquisition process. In 1996, Infiniti Broadcasting Corporationthe radio arm of CBS Corporationpurchased TDI. 20. Also in the 1990s, Outdoor Systems Inc. was the largest outdoor advertising
company in North America (and the world). Defendant Kelly was an executive at Outdoor Systems Inc. One of its sources of revenue was its role as the exclusive leasing agent for billboard sites along the rights-of-way for various national railroads, including Burlington Northern Santa Fe and CSX railroads. 21. In December of 1999, Infinity Broadcasting Corporationthe radio arm of CBS
Corporationacquired Outdoor Systems Inc. for approximately $8.7 billion. On April 25, 2000, Outdoor Systems Inc. changed its corporate name to Infinity Outdoor Inc. With this acquisition, CBS Corporation obtained control of the billboard application process for every major railroad in the United States except Union Pacific. 22. On May 4, 2000, CBS Corporation merged with Viacom International Inc. At the annual meeting of Viacom Inc.
resulting in a new company called Viacom Inc.
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shareholders on June 29, 2000, Chairman and Chief Executive Officer Sumner M. Redstone gave a speech in which he stated: The media and entertainment industry as a whole is currently benefited from several powerful trends. The exciting news for Viacom, and for you, its shareholders, is that we will reap disproportionate benefits. . . . Viacom has an extraordinary management team, lead by the best operator in the business, Mel Karmazin. Mel and I share an obsession with building shareholder wealth, and we have delivered. Together, we will be unrelenting in our drive to exceed what we thus far accomplished. And helping us to get there is a deep and seasoned team of operational executives who continue to outperform their peers year after year. You can look to them to drive cash flow growth at our core operations at the rate of 20% or more. 23. For a time, Infinity Outdoor (f/k/a Outdoor Systems Inc.) and TDI operated
independently under the Viacom umbrella. On August 1, 2001, Viacom Inc. merged the two divisions into the Viacom Outdoor Group and named Wally Kelly as President and Chief Executive Officer. In a press release that day, Kelly stated, I look forward to working with our new, combined team of talented management and sales executives to unleash the power of this new division. 24. On August 28, 2001, the Viacom Outdoor Group changed its name to Viacom
Outdoor Inc. In 2002, Viacom Outdoor Inc.s revenues totaled $1.6 billion. 25. On December 31, 2005, Viacom Inc. split into two separate publicly traded
companies: CBS Corporation and Viacom Inc. 26. As a part of this split, Viacom Outdoor Inc. became CBS Outdoor Inc., a
subsidiary of CBS Corporation. For purposes of clarity and conciseness, this Complaint will refer to CBS Outdoor Inc. and its predecessor entities as CBS.
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27.
On information and belief, CBS is currently the single largest owner and operator
of outdoor advertising structures in North America. CBS and its major competitors, Lamar and Clear Channel, today control over two-thirds of the billboards in the United States. Billboard Advertising on Railroad Property 28. At all relevant times plaintiffs Simmons, Herron, Franklin, and Signx have been
engaged in the outdoor advertising business, buying, selling, leasing, constructing, and maintaining billboards and providing services related thereto. A vital part of this business involves identifying and leasing desirable locations where billboards can be constructed in accordance with state and local regulations and rented for profit, and obtaining the necessary permits to construct those billboards. 29. Plaintiffs and others like them identify and obtain leases to desirable billboard
sites. Once sites are identified, plaintiffs and others like them determine who the owner of the site is and how to obtain the lease and appropriate permits. 30. Some of the sites identified by the plaintiffs are located on property and/or rights-
of-way owned by railroads, usually near highways and public thoroughfares. 31. Railroads usually use an agent to process applications for leasing these potential
billboard sites. At all relevant times CBS and its predecessors had contractual arrangements with almost all of the nations railroads to act as their agent for leasing billboard sites on railroad property. 32. Railroads have a legitimate interest in ensuring that outdoor advertising structures
located on their property are located so as not to be a safety hazard for railroad personnel or the public. If those safety concerns can be satisfied, however, billboards offer a long-term income stream to the railroads that is valuable to them. Thus, it is in the interest of the railroads to
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consider and to approve billboard applications expeditiously.
For example, prior to its
acquisition by CBS, it was standard practice at TDI for applications to be processed in 30 to 60 days. CBS could process railroad billboard applications within 30 to 60 days as well if it wanted to do so. 33. As a result of the acquisitions and mergers described above, at all relevant times
CBS was the leasing agent for CSX Railroad, the Burlington Northern/Santa Fe Railroad, Norfolk Southern Railway, Amtrak, and Kansas City Southern Railway, among others. Though CBSs current headquarters are in Phoenix and New York, its operations are decentralized, and it has dozens of offices around the country. The CBS office in charge of handling applications for billboard locations on rights-of-way of the CSX and the Burlington Northern Railroad systems is in Atlanta, Georgia. The CBS office in charge of handling applications for billboard locations on rights-of-way of the Norfolk Southern, Kansas City Southern Railways, Amtrak, and Boston & Maine Railroad is in Philadelphia, Pennsylvania, the former headquarters of TDI. 34. In addition to its duties as a fiduciary for CSX, Burlington Northern, Kansas City
Southern, Norfolk Southern, Amtrak, and other railroad systems, CBS had a thriving outdoor billboard advertising business of its own. CBS boasts that it is the largest out-of-home
advertising company in North America with over 100,000 billboards and transit advertising in nearly every major city. CBSs Conflicting Interests and Incentive to Defraud 35. In these dual roles, CBS has a conflict of interest. On the one hand, CBS owes a
fiduciary duty to the railroads it represents to encourage independent sign companies and individuals to bring in as many legitimate billboard sites as possible for the railroads consideration, as the development of more billboards would maximize the railroads revenue
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from this business. As a billboard company itself, however, it is in CBSs interest to control as many billboards on as many premium locations as possible in order to maximize its revenue and its market power, as well as to limit the opportunities for its competitors to place competing billboards. 36. It has been CBSs publicly stated policy to encourage small billboard operators
and independent sign companies to apply for leases along the rights-of-way of the railroads for which it serves as leasing agent. To further this goal, CBS announced to potential applicants that its policy was first-come, first-served. In concept, the first person or business which identified a good billboard location along a railroad right of way would have the right to apply for the location and to build a billboard on that site. This first-come, first-served policy was intended to maximize the number of opportunities the railroads would have to lease billboards located on their property, as that policy encourages billboard operators to identify premium locations to CBS. 37. CBS required that independent sign companies identify the location of the
proposed site as part of the process of applying for that site. 38. Though this policy was presented as a tool for promoting the railroads interests,
in practice CBS used independent billboard operators like the plaintiffs to identify premium billboard sites at no cost or expense to CBS, which would then fraudulently steal those sites for itself. Each of the defendants directed or participated in that fraudulent activity. 39. In addition, over the last several years CBS has been buying up premium
billboard locations and billboard companies from small operators in order to expand its already substantial market share. CBS sought to minimize the value of existing small operator
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billboard companies by denying them premium railroad sites so that CBS could purchase those companies at a discounted price and remove them from the marketplace as competitors. 40. Generally, CBS does not steal the sites of its larger competitors such as Clear
Channel Communications or Lamar Advertising because it realized that those competitors would have the resources and legal talent to fight back. But CBS assumed that small operators like the plaintiffs would fear to challenge the great white shark of the industry. 41. To further defendants scheme, CBS employed various strategies to steal Sometimes CBS falsely informed small independent sign companies who
billboard sites.
brought premium locations to CBSs attention that another company had applied for the location they identified before they had identified those locations. Other times, CBS would simply withhold a decision from the applicant. CBS would then submit its own application for the same or nearby location, award the site to itself, obtain the appropriate permits, and obtain the leases. Plaintiffs were victims of this scheme on several occasions. On other occasions, CBS would falsely blame indefinite delays on the railroad in hopes the applicant would give up or drop its application. Other times, CBS would stall an application until local codes changed, then deny the application as unbuildable. This tactic reduced CBSs competition, thereby increasing its market power. On some occasions CBS would deny the applications of those companies it was trying to purchase to reduce the companies value prior to closing on the purchase. 42. The motivation for this scheme was that CBS received a much higher revenue
stream by owning the billboard than it did merely by acting as the agent for the railroad companies. The billboard is worth more to CBS than its agency fees. In addition, it was able to obtain control over some of these small companies by purchasing them at a price below what their fair market value would have been if they had been properly awarded the billboard sites that
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they had identified. Some companies were forced to sell out to Lamar or Clear Channel, thereby reducing the number of CBSs competitors. These actions served to reduce the number of CBSs competitors in several local markets. BEGINNING TO UNCOVER THE SCHEMETHE FIRST LAWSUIT 43. In 1997 and 1998 Curtis Massood, a billboard entrepreneur based in Kansas City,
Missouri, identified three valuable billboard sites along railroad property. 44. After discovering that he would have to apply for the billboard sites with CBS,
the railroads agent, Massood discussed the process with CBS employees. These employees informed Massood that CBS had a first-come, first-served policy. 45. In reliance on the first-come, first-served policy, Massood revealed the identity
of the sites to CBS and was told that he was the first to do so. Massood then sought permit letters from CBS that would allow him to get the proper measurements to file an official application for the sites. But, contrary to its representations, CBS stalled their response to Massoods request for permit letters and, on February 19, 1998, sent Massood a letter telling him that another outdoor advertising company had applied for the same sites at an earlier date. 46. This communication to Massood was a fraudulent misrepresentation. CBS
actually stole those sites for itself after Massood brought them to CBSs attention. 47. CBS had a strong financial incentive to steal Massoods sites because, even
before Massood identified the sites, CBS made it known that it wanted to purchase WilsonCurtis Inc., the outdoor advertising company owned by Massood and his partner Wilson Tanner, Jr., and certain billboard assets owned individually by Massood. 48. CBS eventually purchased Wilson-Curtis Inc. and some of Massood's billboard
assets a year later.
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49.
David Gilley, the former Property Development Manager in CBSs Atlanta office,
and someone who witnessed the taking of Massoods sites, has admitted that Massood was the first person/entity to identify the sites that CBS stole. 50. During the summer of 2000, Massood and Tanner brought a lawsuit against CBS
in the Circuit Court of Jackson County, Missouri, alleging that CBS had committed fraud in the way it obtained the billboard sites Massood identified to CBS in January 1998, and that these actions also amounted to tortious interference with business expectancies. That lawsuit was entitled Massood and Tanner v. Infinity Outdoor Inc. (CBS I) and was assigned Jackson County Circuit Court case number 00-CV-214627.1 51. In the course of discovery in that litigation, plaintiffs deposed Gilley and Gilleys
boss, Randy Romig, who was CBSs Director of Real Estate Acquisitions. These depositions took place in Atlanta on November 8, 2000. 52. Around the time of these depositions in November 2000, Romig threatened
Gilleys employment by suggesting Gilley would lose his job with CBS if he told the truth about why CBS rejected Massoods efforts to obtain the sites he identified. 53. Further, as alleged in greater detail below, defendant Kelly also attempted to bribe
Gilley into silence by offering him a dramatic increase in salary and other benefits when he attempted to alert senior officers within the CBS organization of the defendants racketeering activities. All of these actions were taken in the course of Massoods affirmative and continuing effort to learn the truth behind the denial of his application for the three Burlington billboard locations.
Tanner dismissed his claims without prejudice in CBS I in May 2001.
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54.
CBS I was ultimately dismissed on standing grounds. The Court of Appeals for
the Western District of Missouri held that the claims made in CBS I belonged to Wilson-Curtis and thatbecause Massood had sold his shares in the companyhe lacked standing to bring those claims. See Massood v. Infinity Outdoor Inc., No. WD60956 (Mo. Ct. App. filed Sept. 24, 2002). THE SECOND LAWSUIT REVEALS CBSS FORMAL POLICY OF STEALING SITES FROM SMALL BILLBOARD OPERATORS 55. On January 16, 2004, three plaintiffs filed an action against CBS and CBS
employees Wally Kelly, Harold Gustin, Randy Romig, and Randy Jackson in the United States District Court for the Western District of Missouri. See Craig Outdoor Advertising, Inc. et al. v. Viacom Outdoor, Inc. et al. (Case No. 4:04-cv-00074-DW) (CBS II). 56. The plaintiffs in CBS II, Craig Outdoor Advertising Inc., Curtis Massood,
Midwest Outdoor Media LLC, and Patriot Outdoor LLC, alleged violations of the federal RICO statutes, common law fraud (including fraud by omission), tortious interference with a business expectancy, and unfair competition. 57. Plaintiffs in CBS II and Massood in CBS I both alleged that small outdoor
advertising companies identified valuable sites to CBS in reliance on assurances that CBS followed a first-come, first-served policy. CBS, though various means, stole plaintiffs sites for itself. 58. During discovery in CBS II, it was revealed that the conduct which resulted in the
injury to the plaintiffs was (and remains) CBSs official policy. In late January 2002, defendant Kelly called a meeting in New York City attended by defendants Kelly, Gustin, and Gross. Also in attendance at that meeting were Gilley, Leon Chip Tolleson, and Don Avjean. This meeting was called, in part, to encourage defendants and their agents to induce small outdoor advertising
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companies to identify valuable billboard sites on railroad property that CBS could take for itself, as it had done with Massood in 1998-99 and Ad Trend in 2000-03. 59. In the January 2002 meeting defendant Kelly made it clear to the CBS employees
present that, despite the announced first-come, first-served policy, CBSs actual policy is to deny all applications for good sign locations on railroad property submitted by any small operators of billboard companies. Defendant Kelly explained that CBS did not make enough money merely collecting a lease payment from billboard operators after buying the easement from the railroad. Defendant Kelly stated that the more profitable course would be for CBS to appropriate good sign locations brought to it by small billboard operators. 60. As part of defendants Kellys new plan, CBS hired two consultants (and former
colleagues of Kellys at Outdoor Systems Inc.), Don Avjean and Leon Chip Tolleson. Kelly established that Tom Rende,2 Gilley, and others were to send all applications from small outdoor advertising companies for billboard sites on railroad property to George Gross in CBSs New York office. Gross was to then forward the applications to Avjean (in Florida) or Tolleson (in Phoenix) via fax or mail. Avjean and Tolleson, in turn, would review the sites to see if they were valuable, working with CBSs regional managers to see what sites CBS might want to take for itself. Harold Gustin was also intimately involved in this review process. If the regional managers wanted the sites for CBS, then CBS would award the sites to itself, and the applications of the small billboard operators were to be rejected. 61. Defendant Kelly made it clear, however, that this policy would not be enforced
against the two other major billboard companies in the United StatesLamar Advertising and Clear Channel. Defendant Kelly suggested that the reason for this difference in treatment was
Tom Rende was the CBS employee who oversaw sign applications on the property of Kansas City Southern and Norfolk Southern Railways, Amtrak, and Boston & Maine Railroad. Rende was based in CBS Philadelphia office.
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that the other large companies would realize what was going on and have the resources to mount a legal battle against CBSs efforts to steal premium billboard locations identified to it. Defendant Kelly suggested that the smaller companies would not have the resources to pursue a legal challenge to CBSs efforts to steal billboard locations brought to it by smaller billboard operators. DEFENDANTS FRAUDULENT SCHEME INJURED SMALL OUTDOOR ADVERTISING COMPANIES DOING BUSINESS IN JACKSON COUNTY, MISSOURI 62. During the summer of 2000, Ad Trend Inc. (Ad Trend),3 an Oklahoma
corporation with its prinicpal place of business in Jackson County, Missouri, located two premium potential billboard sites on the north side of Missouri Highway 150. One site was approximately 500 feet west of Missouri Highway 71 and the other was approximately one-half mile west of Missouri Highway 71. These sites will be referred to as the Eastern and Western Highway 150 sites. Ad Trend employed substantial effort to verify these sites satisfied the requirement of Kansas City and could be built and managed profitably. 63. The Highway 150 sites are located on property owned by the Kansas City
Southern Railroad. In August 2001, Ad Trend learned that an application for the Highway 150 sites should be made to CBSs Philadelphia office. Boeh called CBSs Philadelphia office and spoke to Tom Rende. Boeh described the site and its location and asked Mr. Rende about the application procedure. At no time did Rende indicate that any other person or entity had applied for the Highway 150 sites.
Ad Trend is not yet a party to this lawsuit, but plaintiffs anticipate Ad Trend will join their lawsuit in the near future.
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64.
Ad Trends principal, Jim Boehlike Massoodhad been told many times by
representatives of CBS that CBS had a first-come, first-served policy for its railroad applications. 65. On August 14, 2001, Rende sent an application form by facsimile transmission
over telecommunication wires to Boeh instructing him to fill out the application forms and to provide detailed information about the sites. 66. On or about August 20, 2001, Ad Trend submitted an application for the Highway
150 sites to CBSs Philadelphia office as instructed by Rende. Under the previous and normal practices of TDI, Ad Trend could reasonably have expected approval of its application in about 90 days. Despite Ad Trends repeated phone calls to Rende, no action was taken on Ad Trends application for these sites during the remainder of 2001 or 2002. 67. Boeh called Rende several times during 2002 about Ad Trends 150 Highway
applications, only to be told that neither CBS nor Rende could get the Kansas City Southern Railroad to take any action on Ad Trends applications. 68. Frustrated with the stalled applications, in January 2003 Boeh contacted Kansas
City Southern Railroad directly by telephone and learned from the railroads employee Glenn Ebeling that an application had been approved for one of Ad Trends proposed sites. 69. Under the impression that one of Ad Trends applications had finally been
approved, Boeh then wrote to Rende on January 31, 2003, asking him to provide Ad Trend with a permit letter so that Ad Trend could obtain the appropriate permits from state and city authorities. 70. The application Kansas City Southerns Glen Ebeling had referred to as
approved, however, was not Ad Trends application. Instead, the new application that CBS had
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sent to Kansas City Southern for approval had been submitted by David Hyatt of CBSs Kansas City office on January 10, 2003, only 16 months after Boeh had applied for the very same site. 71. On January 17, 2003, Rende issued a permit letter to CBSs Kansas City leasing
agent Hyatt granting CBS permission to seek permits for the site Ad Trend had first identified 500 feet west of Highway 71 North of Highway 150. CBS then obtained the city permit on February 14, 2003. On information and belief, Hyatt also obtained the required state permit on behalf of CBS. Further, on information and belief, CBS has renewed these permits and CBS intends to build a billboard on the site 500 feet west of Highway 71 for its own account.4 72. Another company, Masterpiece Media, applied to CBS for the Western 150 site
on June 25, 2002. By letter dated January 23, 2003, Gustin advised Masterpiece Media that we have been working with Kansas City Southern Railway on signboard sites within the same area as another party through one of our other offices. After hearing the news that it would not be able to build its billboard on railroad property, Masterpiece Media approached a neighboring landowner and obtained the right to place a billboard on land adjacent to railroad property. 73. Gustin never advised Ad Trend that CBS had decided to take the Western
Highway 150 site for itself. If Ad Trend would have known that CBS was looking to take the site for itself, CBS would have done the same as Masterpiece Media, i.e., approach an adjoining landowner to erect a billboard. 74. On March 21, 2003, CBSs Senior Vice President for Landlease, defendant
Harold Gustin, informed Ad Trend in a letter posted in the United States mails that Ad Trends application had been denied for the Western Highway 150 sites. Gustin justified his denial on
On December 29, 2003, Ad Trend assigned its rights in certain billboard locations, including the site 500 feet west of Highway 150, to Midwest Outdoor Media LLC. Midwest Outdoor sued CBS, Kelly, and Gustin in February 2004 in the United States District Court for the Western District of Missouri (Case No. 4:04-cv-00074-DW). The lawsuit resulted in CBS being held liable for fraud, tortious interference, and unfair competition, and Kelly and Gustin found liable under federal RICO statutes.
4
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his false claim that CBS had received multiple applications for the Western Highway 150 site and on Boehs perceived lack of activity during the past year. Gustin falsely claimed that this alleged lack of activity prompted [CBS] to work with another party through one of our other offices. The other party to which Gustin was referring was, of course, CBS. Gustin also directed Boeh to cease direct contact with CBSs client Kansas City Southern. 75. Boeh responded to Gustins letter on April 11, 2003, noting that the lack of
activity was on CBSs part, not that of Ad Trend. Moreover, he observed that CBS told him that the application would be dealt with on a first-come, first served basis. Nevertheless, CBS continued forward with its plan to steal the Highway 150 sites Boeh had identified. 76. CBSs review of the site to see if CBSs Kansas City office wanted it caused over
an 18-month delay in responding to Ad Trends request to secure the site. During CBSs fraudulent delay, Masterpiece Media secured a billboard location on property adjacent to the Western Highway 150 Site. Under local zoning and state spacing regulations, Masterpiece Medias billboard, when built, prevented the construction of another billboard on the Western Highway 150 site. CBSs delay and fraudulent misrepresentations, therefore, caused Ad Trend and Kansas City Southern to lose a valuable billboard location. DEFENDANTS FRAUDULENT SCHEME INJURED PLAINTIFFS ALLEGATIONS RELEVANT TO PLAINTIFF SIMMONS 77. Nathan Simmons is a developer and operator of billboards in Alabama and
Georgia. He lives in rural southern Alabama and works out of his home. He has been in the outdoor advertising business for over 22 years. He has no employees, and does everything himself or hires independent contractors as needed. 78. In the summer of 2001, Simmons identified several prime locations for billboards
along CSX railroad rights of way in Savannah, Georgia, and two on Interstate 65 north of
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Montgomery, Alabama. He contacted the railroad and was told he needed to apply through CSXs agent, CBS. Both CBSs Philadelphia office (the former TDI) and CBSs Atlanta office handle portions of CSXs business. Simmons was concerned by the fact that CBS was the agent for CSX because Simmons realized that CBS was also his competitor in the billboard business, and he was uncomfortable disclosing to CBS the locations he had identified. 79. As directed by CSX, early in August 2001 Simmons phoned CBSs Philadelphia
office from his mother-in-laws home in Savannah, Georgia, and spoke to Bob Orlando. Simmons told Orlando that he had located some good billboard locations on the CSX Railroad, but that he was uncomfortable disclosing them to CBS, his competitor. Simmons raised with Orlando his concern that CBS might take his billboard locations if he disclosed them to Orlando. Orlando assured him that he had nothing to worry about. Orlando explained that the
Philadelphia office acted as the agent for the railroads and was separate from the billboard leasing agents that worked in the other CBS offices across the country. Orlando told Simmons that as long as he was the first to identify a location, he would be allowed to build the billboard, so long as it met the railroads requirements. Orlando said the only thing Simmons had to worry about was that the local CBS leasing agent or some other competitor might apply for the site first. Simmons understood this as the first-come, first-served policy. What Orlando said encouraged Simmons to identify his sites quickly. Over the next few months, Simmons worked almost exclusively on identifying places to put additional billboards on railroad property. 80. In reliance upon what Orlando told Simmons in their conversation, Simmons
started to gather the information needed to make applications. Simmons spent considerable time investigating these sites, confirming the local zoning, taking detailed measurements and photographs, staking the positions of the proposed billboards, deciding on the spots which
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satisfied the railroads criteria, and drawing up the maps of the locations for use in the application process. 81. On August 6, 2001, Orlando faxed Simmons a blank TDI application form, which
Simmons completed. Typically, Simmons would fax to CBS Philadelphia an application as a placeholder and then send the original application with photographs attached in the United States mails or in a FedEx package. First, Simmons faxed and mailed to CBSs Philadelphia office applications for several sites near the Savannah International Airport. 82. On August 16, 2001, Orlando sent Simmons a letter by mail about the Savannah
sites advising him that we have already either obtained permits or applied for GA DOT permits on all of said sites with the exception of I-516 at International Paper . . . . This appeared to Simmons to be a result of the first-come, first-served policy. Thus, Simmons initially assumed that CBS actually had obtained permits on the Savannah sites Simmons had identified. 83. The next time Simmons was in the Savannah area he made a point of stopping by
the local Georgia Department of Transportation office to check on the CBS applications Orlando had referenced. There werent any applications for permits filed with the Georgia DOT for the sites Simmons had identified. Shortly thereafter, Simmons called CBSs Philadelphia office and spoke either with Bob Orlando or Tom Rende. He told Orlando or Rende that he had found that there were no competing applications in Savannah pending with the Georgia DOT. Simmons asked if he could apply again for those same sites. Orlando or Rende told Simmons to re-file his applications, which he did. 84. Because of what Orlando had told Simmons about the importance of being the
first to apply for railroad billboards, Simmons made a determined effort to identify more places to erect billboards on railroad property. Over the next several weeks, Simmons spent most of his
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time scouting out locations, checking zoning regulations, taking measurements and pictures, and doing all those things necessary to apply for railroad billboard sites. As he identified more railroad billboard applications on CSX and Norfolk Southern tracks in Georgia and Alabama, he submitted them to CBSs office in Philadelphia, Pennsylvania, by fax (interstate phone lines) and the mail or FedEx. Occasionally Simmons would call Philadelphia to check on the status of his applications. At some point late in 2001, Orlando left the company and Simmons started exchanging phone calls and messages with Tom Rende. 85. On November 5, 2001, Simmons mailed to CBSs Philadelphia office applications
for a total of seven sites along CSX right-of-way one in Calera, Alabama, along Interstate 65;5 five sites near the Savannah, Georgia, International Airport along Highway 21 (identified as Port Wentworth, Georgia); and one site in Montgomery, Alabama. Simmons also applied for one site in Jessup, Georgia, on Norfolk Southern track. CBS affixed application numbers to the
Savannah/Port Wentworth applications of CSX 6874-78. The Calera site was labeled CSX 6872, the Montgomery site was labeled CSX-6879, and the Jessup site was labeled NS-6880. Through the end of the year, Simmons continued to submit applications, and CBS continued to supply numbers for his sites. Ultimately, Simmons submitted applications for at least 18 different locations to CBS as the agent for the railroads. 86. On January 17, 2002, Tom Rende mailed to Simmons permit authorization letters
on his applications numbered CSX-6890(E), -6891(E), -6892(E), and -6894(E), so that Simmons could gather the necessary permits on these sites. In these letters, Rende identified CBS as the authorized agent of CSX Transportation sign program . . . .
Simmons has no complaint about the handling of this site along Interstate 65 in Calera, Alabama.
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87.
Simmons called Rende via the interstate telephone lines multiple times during the
winter and early spring of 2002. Neither Rende nor anyone else at Viacom Outdoor ever told Simmons that CBS had adopted a policy of reviewing every billboard application submitted by independent companies to see if CBS wanted that site for itself, and that CBS planned to take good sites that fit CBSs market needs. If Rende or anyone else at CBS had told Simmons that was CBSs policy, he would have never submitted any application to CBS. If Simmons had already submitted an application, he would have immediately located nearby sites on private property to space out the sites he had identified to CBS. 88. Toward the end of March 2002, Simmons received a phone call from Tom Rende
over the interstate phone lines. Rende told Simmons that nearly all of his pending applications would be denied because "another applicant" already had applied for those locations. Simmons took this unhappy result as enforcement of the first-come, first-served policy. 89. Simmons did not receive a letter from Rende confirming the denial of his
applications. He did receive a fax from Rende with some of his applications and the word Denied in handwriting at the top of each page. Simmons had no further communication with Mr. Rende concerning these billboard applications. 90. CBSs employee Orlando lied to Simmons when Orlando said that CBS operated
on a first-come, first served basis and when Orlando wrote in his letter of August 16, 2001, that CBS had already applied for permits on the Savannah sites. CBSs employee Rende lied to Simmons when Rende failed to disclose that CBS would review Simmons's sites and take the good ones for CBS, and when Rende told Simmons that someone else had applied first for the sites Simmons had identified.
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ALLEGATIONS RELEVANT TO PLAINTIFF HERRON 91. Herron & Company is a small outdoor advertising company in Olathe, Kansas. It
was created by Donald F. Herron to own and operate a billboard on Burlington Northern Santa Fe Railroad Company property southwest of the intersection of West 119th Street and Interstate 35 in Olathe, Kansas (the Olathe site). This billboard was intended to provide a retirement income for Donald F. Herrons wife Patricia Herron,who was not actively involved in the business. 92. Donald F. Herron passed away in February 2004. After his death, two of Mr.
Herrons sons, Mark and Donald P. Herron, assisted their mother with the operation of this billboard. 93. In March of 2004, David Gilley of CBSs Atlanta office notified Herron via
United States mail that the Herron lease associated with the Olathe site would be cancelled. Subsequent communications between Gilley and Herron, however, resulted in Herron making additional payments and Gilley agreeing not to cancel the lease. 94. In July of 2004, Herron & Company notified Gilley that it wanted to make some
modifications to the Olathe site to ensure compliance with city, state, and/or railroad regulations Herron requested that Gilley forward the proposals to Burlington Northern for engineering approval. 95. Almost two months passed before Gilley responded to Herron & Companys
request for railroad approval. Gilley finally responded on September 16, 2004, via e-mail, saying that the railroad wanted the license cancelled. Although his e-mail was vague, Gilley said the reason for the cancellation was because the location of the sign was in conflict with the original application.
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96.
A few days later, Gilley wrote Herron & Company an e-mail stating that CBS is
rescinding its earlier agreement to not cancel the lease. Gilley also stated that the railroad wanted Herron & Companys billboard removed and that the billboard violated local ordinances. 97. Upon information and belief, at the discretion of CBS, Gilley was misrepresenting
the facts to Herron & Company in order to free up Herron & Companys billboard site for CBSs own use or to eliminate Herron & Company as a competitor in an area in which CBS had its own billboards. On October 12, 2004, Herron & Company e-mailed Gilley and asked, Do you think you can deal with us in good faith or do you have a conflict of interest in representing [CBSs] interests and the Railroads [sic] interests? 98. Gilley responded to Herron & Companys October 12th e-mail with a response e-
mail stating, The office acts in a fiduciary role with all of the railroads that we serve. It is both our policy and procedure not to disclose any information to any operating department of [CBS] that may create any such conflict of interest. 99. Herron & Company was forced to remove its billboard from the Olathe site by
October 20, 2004, thereby eliminating one of CBSs competitors in the area. ALLEGATIONS RELEVANT TO PLAINTIFF FRANKLIN 100. Franklin Outdoor Advertising (Franklin) based in Albertville, Minnesota builds
and rents billboards in northern Minnesota as far south as the suburbs of the Twin Cities. Steve Anderson is the Leasing Manager of Franklin. 101. In October of 2001 and February of 2002, Franklin applied for a total of five
billboard sites along Burlington Northern (BNSF) right-of-way in Minnesota. Franklins experience with railroad billboards is that they are handled on a first-come, first-served basis, and that it typically takes about 60-90 days to obtain approval. An employee of CBSs Atlanta
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office, which was the agent of the Burlington Northern Railroad Company, confirmed that applications were handled on a first-come, first-served basis. Anderson had repeated contact via the interstate phone lines with CBSs employee Joyce Johnson in Atlanta. 102. After Franklins applications were sent to CBS using the U.S. Mails, Anderson
contacted Ms. Johnson repeatedly over the last three and one-half years using the interstate telephone lines to ask her why Franklins applications were delayed. She generally said she would have to look into that. She claimed she did not know the reason for the delay. 103. Ms. Johnson never explained to any agent or employee of Franklin that there was
a new policy that required pending applications to be reviewed to see if CBS was interested in taking for itself the sites for which Franklin applied. She never suggested that there was any kind of dispute with BNSF that would delay the routine handling of Franklins applications. 104. Ms. Johnson consistently told Anderson that she would check into why there was
a delay in approval of Franklins applications, but then she would never call back and explain the delay. Anderson became frustrated with CBS, and concluded that CBS was just stalling my applications for its own secret purposes. 105. CBS has a Pending Applications spreadsheet that lists the five sites Franklin
applied for in 2001-02, including three in Becker, Minnesota. In November of 2002 14 months after Franklin applied for its sites CBS itself applied for one of the same railroad billboard sites in Becker, Minnesota. BNSF could not both award Franklins site to Franklin and award CBSs later-applied for site to itself because local zoning ordinances require greater spacing between billboards. Thus, CBS was attempting to take one or two of the Becker signs for which Franklin applied in 2001.
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106.
If Franklin would have known that CBS was reviewing small outdoor advertising
companies applications to take locations CBS wanted for itself, Franklin would not have applied for those sites with CBS. Franklin would have looked to build on adjacent property or other nearby locations. 107. As a result of the defendants conduct, Franklin was deprived of the opportunity
to construct, at a minimum, five outdoor advertising structures. ALLEGATIONS RELEVANT TO PLAINTIFF SIGNX 108. J.D. Basler is the General Agent and Professional Engineer for Signx LLC, which
develops outdoor advertising in the Claremore, Oklahoma area. 109. Basler was familiar of the practices of CBS, including CBSs first-come, first-
served policy, because Basler had applied for billboard sites in Claremore, Oklahoma in 2001. 110. On March 14, 2002, Basler, General Agent and Professional Engineer, developed
Signx to operate his business of developing outdoor advertising locations. 111. After developing Signx LLC, Basler identified and applied for over twenty
billboard sites (with multiple faces at each site) with CBS. CBSs agents never informed Basler or any other Signx LLC agent that CBS would be reviewing all billboard sites identified by small outdoor advertising companies to see if CBS wanted the sites for itself. 112. CBS has never responded to Signx LLCs application and identification of Because of CBSs delay, Signx LLC and the railroad have lost
multiple billboard sites.
significant revenue opportunities. Moreover, the zoning regulations in the area have changed, precluding billboards from being built on some of the locations that Signx LLC would have developed had it not relied on Joyce Johnsons promise that these locations would have been approved.
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THE ENTERPRISES 113. CBS itself was the enterprise used by the defendants to pursue their racketeering
activity, which resulted in the fraudulent theft of the sites, which should rightfully have been awarded to the plaintiffs. 114. Alternatively, at all relevant times, defendant CBS formed an association-in-fact
with CBSs client railroad, Burlington Northern/Santa Fe Railroad, for the purpose of defrauding the plaintiffs and other small billboard businesses and their owners. This association-in-fact was an enterprise within the meaning of RICO, 18 U.S.C. 1961(4).6 While CBSs client railroad was a part of the association-in-fact, it was a victim of the defendant coconspirators, not a coconspirator itself. 115. At the same time, defendant CBS formed a second association-in-fact with CBSs
client railroad, Kansas City Southern Railroad, for the purpose of defrauding the plaintiffs and other small billboard businesses and their owners. This association-in-fact was an enterprise within the meaning of RICO, 18 U.S.C. 1961(4). While CBSs client railroad was a part of the association-in-fact, it was a victim of the defendant coconspirators, not a coconspirators itself. 116. Defendant CBS formed a third association-in-fact with CBSs client railroad,
CSX, for the purpose of defrauding the plaintiffs and other small billboard businesses and their owners. This association-in-fact was an enterprise within the meaning of RICO, 18 U.S.C. 1961(4). While CBSs client railroad was a part of the association-in-fact, it was a victim of the defendant coconspirators, not a coconspirator itself.
This Court, in CBS II, Case No. 4:04-cv-00074-DW, held that CBS could not form an association-in-fact that would constitute an enterprise under the RICO statutes with innocent railroad companies. Plaintiffs have addressed this issue as part of their pending cross-appeal in the United States Court of Appeals for the Eighth Circuit. If the Eighth Circuit affirms this Courts ruling on this issue, plaintiffs will voluntarily dismiss Count II of their Complaint, which claims CBSs relationship with the various railroad companies constituted an association-infact and/or enterprise under the RICO statutes.
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117.
These associations-in-fact had the common or shared purpose of leasing property
owned by the railroad to outdoor billboard businesses and on information and belief were governed by contracts between CBS and its client railroads. THE PREDICATE ACTS OF RACKETEERING 118. As alleged above, defendants Kelly, Gustin, and Gross concocted, directed, and
supervised a scheme to defraud small outdoor advertising companies out of valuable billboard locations. In directing and supervising this scheme, defendants Kelly, Gustin, and Gross had to use the mail and interstate wires to communicate with subordinates within the CBS enterprise (and it was reasonably foreseeable that they would have to use the mail and interstate wires to implement their scheme). In fact, the mail and interstate wires were used hundreds of times, either directly by Kelly, Gustin, or Gross or indirectly by their subordinates in accomplishing the goals of their scheme. 119. The defendants, acting through their enterprises, committed numerous violations
of the criminal laws of the United States. Specifically, the defendants violated 18 U.S.C. 1343which prohibits the use of the telephone and other wires to execute a scheme or artifice intended to defraud another or to obtain money or property by means of false statements, omissions, and concealmentswhen they made, or caused others to make, telephone calls and/or to send facsimile messages: a. Defendants Kelly, Gustin, and Gross had to use wire communications to communicate with CBS employees in offices around the country. Kelly was in Phoenix, Gustin was in the New York area, Tolleson was in Phoenix, Gross was in New York, Tom Rende was in Philadelphia, Randy Romig and David Gilley were in Atlanta, and other employees were located across the country. Wire communications were used by defendants to let other employees know that all
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applications from small outdoor advertising companies should be sent to George Gross for review to see if CBS wanted the sites for itself. CBSs agents, in turn, used wire communication to communicate with small outdoor advertising companies, inducing them to identify sites by submitting applications to CBS and failing to tell them that CBS would be reviewing the applications for sites it wanted to keep for itself. The following is a list of examples of wire fraud predicate acts committed directly and indirectly by defendants. This list merely represents a small sample of the numerous predicate acts committed by defendants. i. On August 6, 2001, Rende faxed instructions from Philadelphia to Simmons in Alabama explaining how to apply for billboard sites without mentioning the possibility that CBS might review Simmons application to see if CBS wanted Simmons sites for itself. ii. On January 11 and 12, 2002, Gilley sent e-mails to Gustin regarding travel arrangements for the January, 2002, meeting in which Kelly explained that all applications from small outdoor advertising companies would now be reviewed by CBS to see if any local CBS office wanted the sites identified. Kelly would have known when he called the January, 2002, meeting regarding the scheme that the interstate wires would be used to communicate with persons in other offices about that meeting. These communications helped to further defendants scheme. iii. On February 11, 2002, Kelly, who lives in Phoenix, Arizona, sent an email, which travels via the interstate wires, to Gustin and Gross in New
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York reemphasizing CBSs new official policy of reviewing all of the applications from small outdoor advertising companies to see CBS wanted to take the sites for itself. iv. Gustin responded via e-mail the same day to Kellys February 11th message, telling Kelly that Tom Rende in CBSs Philadelphia office was on board with the new review policy. v. On April 2, 2002, Gustin sent an e-mail to Kelly and Tolleson apologizing for Tom Rende not following along with the scheme and telling Kelly that Gustin was, awaiting [Kellys] decision on the sites [applied for by small outdoor advertising companies] to be used for [CBS] in Atlanta. vi. On April 15, 2002, Rende sent an e-mail to Gustin in which Rende provided the addresses of small outdoor advertising companies that had submitted applications for sites that CBS was considering taking for itself. vii. On May 3, 2002, Tolleson sent an e-mail to Gustin explaining that they had reviewed many sites identified by small outdoor advertising companies and some of those sites could be released back to the smaller companies. viii. In August of 2002, Kelly Pendergast in CBSs New York office faxed David Hyatt in CBSs Kansas City office copies of Ad Trends applications for sites West of Highway 71 along Highway 150. This communication via interstate wires, like so many others, was a direct or indirect result of the scheme contrived by defendants and served to further the purpose of that scheme.
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ix. On December 12, 2002, Avjean sent a facsimile to Rende, Gilley, Gross, and Gustin, requesting that Gilley and Rende send Avjean a list of applications submitted by small outdoor advertising companies. x. On March 12, 2003, Rende sent a facsimile to the Kansas City Southern Railroad Company requesting approval of the sites Ad Trend identified. xi. On March 14, 2003, Rende sent a facsimile to Pendergast in New York with Ad Trends applications for the Highway 150 sites. xii. On April 24, 2003, Gustin sent a facsimile to Avjean asking if CBSs wants Ad Trends Highway 150 site for itself. xiii. On April 29, 2003, Rende sent an e-mail to Hyatt and Gustin asking if CBS is going to build on the sites Ad Trend identified. xiv. On April 30, 2003, Gustin sent an e-mail to Rende, Hyatt, and Avjean asking if CBS is going to build on the sites Ad Trend identified. In this email Gustin also notes that both Ad Trend and Masterpiece Media, another small outdoor advertising company, want the sites. xv. On May 1, 2003, Avjean sent an e-mail to Gustin, Rende, Hyatt, and Mitch Matson in CBSs Chicago office telling them that CBS needs to decide about the Highway 150 sites to protect its contract with the railroads and avoid legal situations with the small outdoor advertising companies. xvi. On December 3, 2004, Joyce Johnson, an administrative assistant in CBSs Atlanta office, sent an e-mail to Gustin discussing applications submitted by Signx LLC before September of 2002 for sites in Oklahoma.
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b. Additionally, CBSs agents induced small outdoor advertising companies to identify sites by submitting applications to CBS. Every time a small outdoor advertising company (including one of the plaintiffs) sent an application to CBS via facsimile or e-mail, these communications constituted use of the interstate wires to execute defendants scheme to defraud. Defendants could have readily foreseen that the wires would be used in this way to allow small outdoor advertising companies to identify sites that CBS would then take for itself. Any telephone calls made by small outdoor advertising companies (including plaintiffs) were also uses of the interstate wires that defendants knew would help them execute their scheme to defraud. 120. In addition, the defendants violated 18 U.S.C. 1341which prohibits the use of
the mails of the United States to execute a scheme or artifice intended to defraud another or to obtain money or property by means of false statements, omissions, and concealmentswhen they sent, or caused others to send, letters through the mail: a. Defendants Kelly, Gustin, and Gross had to use the mails of the United States to communicate with CBS employees in offices around the country. Kelly was in Phoenix, Gustin was in the New York area, Tolleson was in Phoenix, Gross was in New York, Tom Rende was in Philadelphia, Randy Romig and David Gilley were in Atlanta, and other employees were located across the country. Defendants used the mails of the United States to let other employees know that all applications from small outdoor advertising companies should be sent to George Gross for review to see if CBS wanted the sites for itself. CBSs agents, in turn, used the mails of the United States to communicate with small outdoor
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advertising companies, inducing them to identify sites by submitting applications to CBS and failing to tell them that CBS would be reviewing the applications for sites it wanted to keep for itself. The following is a list of examples of mail fraud predicate acts committed directly and indirectly by defendants. This list merely represents a small sample of the numerous predicate acts committed by defendants. i. On August 16, 2001, Bob Orlando in CBSs Philadelphia office mailed a letter to Simmons explaining that the sites Simmons had identified were already taken. This letter was sent to further the purpose of taking sites identified by Simmons for CBSs own purposes. ii. On October 19, 2001, Joyce Johnson mailed a letter to Franklin telling Franklin that CBS would submit Franklins sites to the railroad for approval. iii. On April 1, 2002, Rende mailed a memorandum to Gustin telling Gustin that defendants new policy of reviewing the applications of each small outdoor advertising company to see what sites CBS wants for itself will cause a severe decline in the number of applications and increase the number signs built on property adjacent to railroad property. iv. On April 4, 2002, Gross mailed a memorandum to Gustin and Kelly regarding applications from small outdoor advertising companies that CBS is reviewing under defendants policy. v. On April 5, 2002, Gross mailed a memorandum to Gustin and Kelly with more applications from small outdoor advertising companies attached.
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Gross informed Gustin and Kelly that these applications would be reviewed in accordance with defendants policy. vi. On April 11, 2002, Gustin mailed a memorandum to Gross and Kelly regarding a list of sites submitted by small outdoor advertising companies to be reviewed under defendants policy. The list of sites included in this correspondence included billboard sites in Georgia and Alabama. vii. On May 2, 2002, Tolleson and Avjean mailed a memorandum to Kelly reporting on sites in Atlanta and Minneapolis that are being reviewed under defendants policy. viii. On August 21, 2002, Gustin mailed to Gross, Kelly, and Avjean a list of applications submitted by small outdoor advertising companies. The sites identified in the applications were to be reviewed in accordance with defendants fraudulent policy. ix. On August 30, 2002, Avjean mailed a memorandum to Gustin, Gross, and Kelly stating that CBSs Chicago office wanted the sites in Kansas City identified by Ad Trend. x. On September 12, 2002, Hyatt mailed a memorandum to Pendergast in CBSs New York office with information about the sites Ad Trend identified. xi. On October 21, 2002, Gustin mailed Avjean, Kelly, and Gross a letter containing twenty applications submitted by small outdoor advertising companies. These applications were to be reviewed by CBS to see if the local CBS offices wanted to take these sites for their own use.
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xii. On January 2, 2003, Rende mailed a memorandum to Gustin asking if Hyatt wanted the sites Ad Trend identified. xiii. On April 1, 2003, Gilley mailed a memorandum to Kelly, Gustin, and Gross stating that he understands defendants policy is to review applications submitted by small outdoor advertising companies to see if CBS wants any of the sites identified for itself. xiv. On December 1, 2004, Gustin mailed a letter to Ad Trend denying Ad Trends applications for the Highway 150 sites because other companies applied first. b. Additionally, CBSs agents induced small outdoor advertising companies to identify sites by submitting applications to CBS. Every time a small outdoor advertising company (including one of the plaintiffs) sent an application to CBS via U.S. Mail, FedEx, UPS, or other mail carrier, these communications constituted use of the mails to execute defendants scheme to defraud. Defendants could have readily foreseen that the mails would be used in this way to allow small outdoor advertising companies to identify sites that CBS would then take for itself. 121. In furtherance of, and to conceal their racketeering activity, the defendants also
violated 18 U.S.C. 1503, which prohibits obstructing or impeding the due administration of justice when they did threaten, direct others to threaten, or conspired to threaten David Gilley with the loss of his job should he testify truthfully in his deposition in CBS I as described more fully above. CBS impeded and obstructed the fair administration of justice by obstructing discovery in CBS I. This obstruction was not just aimed at undermining the private civil
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litigation instituted by Massood, but was also intended to shield the defendants from any federal criminal investigation which might have been prompted by their admission of their fraudulent conduct. 122. In their continuing effort to shield their scheme from discovery, the defendants,
including defendant Kelly, have sought to silence David Gilley in violation of 18 U.S.C. 1512(b). Specifically, defendant Kelly, in concert with and pursuant to a joint scheme with the other defendants, offered Gilley financial rewards to keep the truth regarding the racketeering scheme a secret from both federal law enforcement authorities and the plaintiffs. After Gilley sent a letter to CBSs superiors within the CBS organization in the fall of 2002 reporting on what he thought were various examples of the illegal and fraudulent activity outlined in this Complaint, he received a call from defendant Kelly. Defendant Kelly asked Gilley to tell him what kind of salary would make Gilley happy. Gilley felt that this was an attempt to buy his silence. In response Gilley asked for a 60% increase in his income, a far greater increase than he had ever received from CBS in any previous year. Defendant Kelly granted him the increase he requested and added $5,000 more. In addition, he made the salary increase retroactive to the previous June. 123. The defendants also threatened David Gilley with the loss of his employment in
violation of 18 U.S.C. 1512(c) in an effort to prevent him from revealing the scheme to the plaintiffs and federal law enforcement authorities as described in more detail above. This conduct was intended to further the racketeering scheme. 124. When the defendants feared their criminal efforts to silence Gilley would fail,
they engaged in another violation of federal criminal law and retaliated against him in violation of 18 U.S.C. 1513 by attempting to transfer him to a position in New York in early 2003. The
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Defendants knew that because of family obligations Gilley would not be willing to accept the transfer and that this act would effectively terminate Gilley. The defendants took this action in direct retaliation for Gilleys refusal to promise that he would continue to cover-up the racketeering scheme. 125. Also in furtherance of, and to conceal their racketeering activity, the defendants
violated 18 U.S.C. 1503 when they attempted to influence or change the testimony of David Gilley through their in house counsel David Posy and their counsel in CBS II, Robert Walters, of the law firm Vinson & Elkins. Both Mr. Posy and Mr. Walters told Mr. Gilley that Mr. Walters would represent him at his deposition in CBS II. In each conversation Mr. Gilley refused such representation, demanded separate counsel, and eventually hired his own counsel. Mr. Walters's effort to impose himself as counsel on Mr. Gilley was a blatant effort to obstruct the fair administration of justice not simply because his conduct violated the Rules of Professional Conduct governing attorneys at law, but because he attempted to bully or force Mr. Gilley into changing his testimony. 126. During each conversation with Mr. Posy and Mr. Walters, Mr. Gilley was told
that he had to be represented by Mr. Walters. As the court found in CBS II, this conduct violated the Rules of Professional Conduct governing attorneys as Mr. Gilley had claimed status as a whistle-blower, repeatedly demanded separate counsel, and, ultimately, hired his own counsel. Specifically the CBS II court found that Rules 4-1.7 and 4-4.2 Missouri Rules of Professional Conduct which prohibit a lawyer from representing a person with whom he has a conflict of interest, and which prohibit lawyers from communicating directly with persons who are already represented by counsel were violated.
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127.
Mr. Posy and Mr. Walters imposed ever-increasing pressure on Mr. Gilley to
change his testimony and to alter the facts as he remembered them. Even when Mr. Gilley reminded Mr. Walters in person that he was represented by counsel, Mr. Walters refused to contact that counsel and insisted in representing Mr. Gilley at the deposition. Mr. Walters attempted to get Mr. Gilley to change statements he had made under oath in an affidavit filed in CBS II asserting misconduct by these defendants and others employed by CBS at the time, just prior to his testimony. During his deposition, and particularly during breaks in that deposition, Mr. Gilley felt that Mr. Walters was seeking to limit his testimony and to prevent him from answering the questions truthfully. 128. After the deposition was complete, Mr. Posy sent Mr. Gilley an agreement in
which CBS offered to pay $15,000 in fees for the attorney Mr. Gilley had hiredbut CBS and its counsel had ignoredin an exchange for Mr. Gilley releasing CBS from any claims he might have against the company. Mr. Posy and Mr. Walters efforts to silence Mr. Gilley and to change his testimony were an effort to obstruct justice in CBS II in violation of 18 U.S.C. 1503. Mr. Posys settlement offer was an additional effort to buy Mr. Gilleys silence. Each of these interactions were separate predicate acts making up part of the pattern of racketeering conduct engaged in by these defendants. 129. Defendants also endeavored corruptly to influence, obstruct, and impede the due
administration of justice in CBS II by attempting to purchase the cooperation and favorable testimony of CBS's former employee Tom Rende by promising him and his company valuable billboard assets if he cooperated with CBS, concealed and withhold evidence unfavorable to CBS and testified favorably to CBS, all in violation of 18 U.S.C. 1503 and 1512.
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130.
Finally, the defendants have traveled in interstate commerce and used facilities in
interstate commerce with the intent to distribute the proceeds of their unlawful activities and to promote their racketeering scheme to steal billboard locations from the plaintiffs and to devalue their competitors so that they can purchase them at a reduced value, all in violation of 18 U.S.C. 1952. PATTERN OF RACKETEERING ACTIVITY 131. The defendants scheme is an ongoing pattern of racketeering involving numerous
criminal acts, as alleged above, committed to further the scheme and to conceal it from its victims and federal and state law enforcement authorities. 132. Each of the predicate acts alleged above are related to each other and were
committed to further the racketeering scheme. For example, the wire fraud and mail fraud were used to fraudulently obtain property from the plaintiffs while the obstruction, bribery, and retaliation predicate acts were all committed to conceal the scheme from its victims and from local, state, and federal law enforcement authorities. constitutes a pattern as required by the RICO statute. 133. This scheme, by its nature, projects into the future and presents a threat of As such, the racketeering activity
repetition. The threat of repetition is caused both by the ongoing nature of CBSs duties as leasing agent and the coconspirators desire to keep the truth of the scheme from their victims and from local, state, and federal law enforcement authorities. 134. The defendants have been engaged in these schemes since at least 1998 and the
conduct continues through the date of the filing of this Complaint. This conduct is the official, albeit unwritten, policy of CBS as alleged above. As a result, it is certain to continue and CBS is certain to continue fraudulently to obtain billboard locations from unsuspecting small billboard companies.
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135.
In addition to the plaintiffs, the defendants have victimized numerous other small
businesses in a similar or identical manner. This conduct is the officially sanctioned policy of CBS, and there are many other victims of the defendants who are not aware of the fraud that has been committed against them. EFFECT ON INTERSTATE COMMERCE 136. The racketeering activity and the scheme pursued by the defendants have had a Through their racketeering the defendants have
direct impact on interstate commerce.
successfully eliminated outdoor advertising competitors by devaluing their businesses and then purchasing them. Moreover, they have defrauded the plaintiffs out of billboard sites in Alabama, Kansas, Minnesota, Oklahoma, and many other states. This conduct has directly impacted the billboard market in major metropolitan areas within these states and, as a result, has had an effect on interstate commerce. 137. In addition, it has impacted interstate commerce by affecting the cost of
advertising for companies located throughout the country who wish to advertise in the above mentioned states. INJURY TO PLAINTIFFS PROPERTY CAUSED BY RICO VIOLATIONS 138. The plaintiffs and others were injured as a result of the conduct of the defendants This loss caused their
by failing to obtain the billboard sites they had a right to obtain.
businesses to be devalued as they lost income from the billboard sites which they were prevented from obtaining, all in an amount to be proved at trial. 139. The plaintiffs were all injured as a result of the competitive edge CBS received
over the plaintiffs because of the conduct of the defendants. 140. Plaintiffs injuries were caused by reason of the RICO violations alleged herein.
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COUNT I VIOLATION OF 18 U.S.C. 1962(c) CONDUCTING, OPERATING, ORGANIZING, AND DIRECTING AN ENTERPRISE THROUGH A PATTERN OF RACKETEERING ACTIVITY 141. 142. Plaintiffs re-allege each of the preceding allegations as if fully set forth herein. At all relevant times, plaintiffs Simmons, Herron, Franklin, and Signx were
persons within the meaning of RICO, 18 U.S.C. 1961(3) and 1964(c). 143. At all relevant times, defendants Kelly, Gustin, and Gross were persons within
the meaning of RICO, 18 U.S.C. 1961(3). 144. At all relevant times, CBS was an enterprise within the meaning of RICO, 18
U.S.C. 1961(4). 145. At all relevant times, the CBS enterprise was engaged in, and its activities
affected, interstate and foreign commerce within the meaning of RICO, 18 U.S.C. 1962(c). 146. At all relevant times, defendants Kelly, Gustin, Gross, and other conspirators
known and unknown to the plaintiffs, associated with the enterprise and conducted or participated, directly or indirectly, in the conduct of the enterprises affairs through a pattern of racketeering activity within the meaning of RICO, 18 U.S.C. 1961(5), in violation of RICO, 18 U.S.C. 1962(c). 147. Specifically, at all relevant times, defendants Kelly, Gustin, Gross, and the other
conspirators engaged in racketeering activity within the meaning of 18 U.S.C. 1961(1) by engaging, directly or indirectly, in the Predicate Acts set forth above. As alleged above, these acts constitute a violation of one or more of the following statutes: 18 U.S.C. 1341 (mail fraud); 1343 (wire fraud); 18 U.S.C. 1503 (obstruction of justice); 18 U.S.C. 1512 (tampering with a witness); 18 U.S.C. 1513 (retaliation against a witness); and 18 U.S.C. 1951
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(interfering with interstate commerce). Defendants Kelly, Gustin, and Gross each committed, directly or indirectly, the commission of two or more of these acts of racketeering activity. 148. The acts of racketeering activity referred to in the previous paragraph constituted
a pattern of racketeering activity within the meaning of 18 U.S.C. 1961(5). The acts alleged were related to each other by virtue of common participants, similar victims, a common method of commission, and the common purpose and common result of defrauding the plaintiffs. This fraudulent scheme began in 1998, and perhaps earlier, and continues through the filing of this Complaint. 149. Each of the defendants knowingly and willfully conducted or participated,
directly or indirectly, in the conduct of the affairs of the enterprise through a pattern of racketeering activity, as described in detail above. 150. The defendants continue to operate the enterprises and continue in their pattern of
racketeering activity in violation of 18 U.S.C. 1962. As a result, the plaintiffs are unable to obtain leases from new locations for their billboards if those locations are on property belonging to one of the railroads for which CBS is the leasing agent. To apply for a new location would simply permit the defendants to steal yet another location. 151. CBSs tremendous market power in this industry intimidates small billboard
operators and others from coming forward and reporting its wrongdoing for fear of retaliation. 152. As a result of the conduct of defendants Kelly, Gustin, and Gross, the plaintiffs
lost lucrative billboard locations, the necessary leases, and had their companies value reduced. 153. As a result of the conduct of defendants Kelly, Gustin, and Gross, through the
CBS enterprise, each of the plaintiffs suffered a competitive injury because of the benefits the defendants obtained as a result of their fraudulent misrepresentations and omissions.
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154.
Finally, each of the plaintiffs also lost opportunities to apply for new sites upon
discovery of the scheme and continues to suffer this injury today. 155. Pursuant to 18 U.S.C. 1964(c), plaintiffs are entitled to recover three times the
actual damages they suffered as a result of this violation of the RICO statute and for the cost of this lawsuit, including reasonable attorneys fees. 156. On February 24, 2004, various small outdoor advertisers (other than plaintiffs)
filed a lawsuit against defendants Kelly and Gustin alleging that these defendants violated 18 U.S.C. 1962(c). This lawsuit was filed in the United States District Court for the Western District of Missouri and assigned Civil Case Number 4:04-cv-00074-DW. 157. The following allegations from the February 24, 2004, lawsuit are identical to
allegations found in Count I of this lawsuit: (1) CBS was an enterprise (as defined under the RICO statute) that affected interstate and foreign commerce; (2) Kelly and Gustin were persons (as defined under the RICO statute); (3) Kelly and Gustin were associated with or employed by CBS; (4) Kelly and Gustin knowingly engaged in a pattern of racketeering activity; and (5) Kelly and Gustin knowingly conducted or participated in the conduct of CBS through a pattern of racketeering activity. 158. On July 26, 2005, a jury entered a verdict finding that (1) CBS was an enterprise
(as defined under the RICO statute) that affected interstate and foreign commerce; (2) Kelly and Gustin were persons (as defined under the RICO statute); (3) Kelly and Gustin were associated with or employed by CBS; (4) Kelly and Gustin knowingly engaged in a pattern of racketeering activity; and (5) Kelly and Gustin knowingly conducted or participated in the conduct of CBS through a pattern of racketeering activity.
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159.
Before the jurys July 26, 2004, verdict, Kelly and Gustin had a full and fair
opportunity to be heard regarding all claims against them. Trial on these claims lasted from July 11, 2005, to July 26, 2005. 160. The Court issued a final judgment on the merits in Case Number 4:04-cv-00074-
DW on July 18, 2006. The case is currently pending on appeal before the United States Court of Appeals for the Eighth Circuit. 161. Therefore, Kelly and Gustin should be estopped from denying the following
elements of plaintiffs RICO actions: (1) CBS was/is an enterprise (as defined under the RICO statute) that affected interstate and foreign commerce; (2) Kelly and Gustin were/are persons (as defined under the RICO statute); (3) Kelly and Gustin were associated with or employed by CBS; (4) Kelly and Gustin knowingly engaged in a pattern of racketeering activity; and (5) Kelly and Gustin knowingly conducted or participated in the conduct of CBS through a pattern of racketeering activity. COUNT II7 VIOLATION OF 18 U.S.C. 1962(c): CONDUCTING, OPERATING, ORGANIZING, AND DIRECTING AN ENTERPRISE THROUGH A PATTERN OF RACKETEERING ACTIVITY 162. 163. 164. Plaintiffs re-allege each of the preceding allegations as if fully set forth herein. This Count is plead in the alternative to Count I. At all relevant times, plaintiffs Simmons, Herron, Franklin, and Signx were
persons within the meaning of RICO, 18 U.S.C. 1961(3) and 1964(c). 165. At all relevant times, defendants CBS, Kelly, Gustin, and Gross were persons
within the meaning of RICO, 18 U.S.C. 1961(3).
See footnote 4 above.
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166.
At all relevant times, defendant CBS formed an association-in-fact with CBSs
client railroad, Burlington Northern/Santa Fe Railroad, for the purpose of defrauding the plaintiffs and other small billboard businesses and their owners. This association-in-fact was an enterprise within the meaning of RICO, 18 U.S.C. 1961(4). While Burlington Northern was a part of the association-in-fact, it was a victim of the defendant conspirators, not a conspirator itself. 167. At all relevant times, defendant CBS formed an association-in-fact with CBSs
client railroad, Kansas City Southern Railway, for the purpose of defrauding the plaintiffs and other small billboard businesses and their owners. This association-in-fact was an enterprise within the meaning of RICO, 18 U.S.C. 1961(4). While Kansas City Southern was a part of the association-in-fact, it was a victim of the defendant conspirators, not a conspirator itself. 168. At all relevant times, defendant CBS formed an association-in-fact with CBSs
client railroad, CSX Railroad, for the purpose of defrauding the plaintiffs and other small billboard businesses and their owners. This association-in-fact was an enterprise within the meaning of RICO, 18 U.S.C. 1961(4). While CSX was a part of the association-in-fact, it was a victim of the defendant conspirators, not a conspirator itself. 169. Each of these associations-in-fact had the common or shared purpose of leasing
property owned by the respective railroads to outdoor billboard businesses. 170. At all relevant times, these enterprises was engaged in, and their activities
affected, interstate and foreign commerce within the meaning of RICO, 18 U.S.C. 1962(c). 171. At all relevant times, defendants Kelly, Gustin, Gross, and other conspirators
known and unknown to the plaintiffs, associated with the enterprises and conducted or participated, directly or indirectly, in the conduct of the enterprises affairs through a pattern of
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racketeering activity within the meaning of RICO, 18 U.S.C. 1961(5), in violation of RICO, 18 U.S.C. 1962(c). 172. Specifically, at all relevant times, defendants Kelly, Gustin, Gross, and the other
conspirators engaged in racketeering activity within the meaning of 18 U.S.C. 1961(1) by engaging, directly or indirectly, in the Predicate Acts set forth above. As alleged above, these acts constitute a violation of one or more of the following statutes: 18 U.S.C. 1341 (mail fraud); 1343 (wire fraud); 18 U.S.C. 1503 (obstruction of justice); 18 U.S.C. 1512 (tampering with a witness); 18 U.S.C. 1513 (retaliation against a witness); and 18 U.S.C. 1951 (interfering with interstate commerce). Defendants Kelly, Gustin, and Gross each committed, directly or indirectly, the commission of two or more of these acts of racketeering activity. 173. The acts of racketeering activity referred to in the previous paragraph constituted
a pattern of racketeering activity within the meaning of 18 U.S.C. 1961(5). The acts alleged were related to each other by virtue of common participants, similar victims, a common method of commission, and the common purpose and common result of defrauding the plaintiffs. This fraudulent scheme began in 1998, and perhaps earlier, and continues through the filing of this Complaint. 174. Each of the defendants knowingly and willfully conducted or participated,
directly or indirectly, in the conduct of the affairs of the enterprise through a pattern of racketeering activity, as described in detail above. 175. The defendants continue to operate the enterprises and continue in their pattern of
racketeering activity in violation of 18 U.S.C. 1962. As a result, the plaintiffs are unable to obtain leases from new locations for their billboards if those locations are on property belonging
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to one of the railroads for which CBS is the leasing agent. To apply for a new location would simply permit the defendants to steal yet another location. 176. CBSs tremendous market power in this industry intimidates small billboard
operators and others from coming forward and reporting its wrongdoing for fear of retaliation. 177. As a result of the conduct of defendants Kelly, Gustin, and Gross, the plaintiffs
lost lucrative billboard locations, the necessary leases, and had their companies value reduced. 178. As a result of the conduct of defendants Kelly, Gustin, and Gross, through the
CBS enterprise, each of the plaintiffs suffered a competitive injury because of the benefits the defendants obtained as a result of their fraudulent misrepresentations and omissions. 179. Finally, each of the plaintiffs also lost opportunities to apply for new sites upon
discovery of the scheme and continues to suffer this injury today. 180. Pursuant to 18 U.S.C. 1964(c), plaintiffs are entitled to recover three times the
actual damages they suffered as a result of this violation of the RICO statute and for the cost of this lawsuit, including reasonable attorneys fees. COUNT III FRAUDULENT MISREPRESENTATIONS 181. 182. Plaintiffs re-allege each of the preceding allegations as if fully set forth herein. Defendants represented to the plaintiffs and/or their predecessors and agents, as
alleged in detail above, that they needed to reveal the locations of their proposed billboard sites in order to apply for the location and that the information would be used to determine if there had been another application for that site.
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183.
Defendants represented to the plaintiffs and/or their predecessors and agents, as
alleged in detail above, that their efforts to obtain railroad sites through the application process would be dealt with on a first-come, first-serve basis. 184. Defendants represented to the plaintiffs and/or their predecessors and agents, as
alleged in detail above, that there had been another applicant for their proposed sites and denied their applications on that basis, or represented that the application was stalled by the railroad and/or various other circumstances, when the defendants had no intent of ever granting the applications. 185. 186. These representations were false and the defendants knew that they were false. These representations were material to the plaintiffs decisions to reveal the
proprietary information about the location of the proposed billboard sites. 187. As a direct result of these representations the plaintiffs and/or their agents did
reveal the location of their proposed billboard sites and CBS used this information to make application for those sites and built or plan to build billboards for its own account on those locations. In some cases the plaintiffs applications were denied or never acted upon to prevent the plaintiffs from gaining a competitive edge and/or to devalue the plaintiffs to permit CBS to purchase those companies and/or to eliminate them as competitors. Plaintiffs were damaged as a result of the loss of these billboard locations. 188. As a direct and proximate result of the fraudulent misrepresentations by
defendantsdiscussed in detail aboveplaintiffs were neither able to lease the sites they had identified nor were they able to secure contracts for the lease of valuable advertising space at any of these sites. Plaintiffs have suffered substantial damages in excess of $75,000, including
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diminution in the value of their companies, loss of billboards, loss of revenue, and loss of competitive position. 189. Defendants conduct was willful and outrageous and they engaged in malice,
aggravated and egregious fraud, wantoness, and oppression. Defendants conduct was also consciously indifferent, recklessly indifferent, and deliberately disregarded the rights of plaintiffs. Thus, defendants conduct justifies an award of punitive damages in such an amount as will serve to punish defendants and to deter them and others from like conduct. COUNT IV FRAUDULENT OMISSIONS / CONCEALMENTS / SUBMISSIONS
190. 191.
Plaintiffs re-allege each of the preceding allegations as if fully set forth herein. Defendants have admitted that the historical practice in the outdoor advertising
industry is that the first outdoor advertising company to identify a billboard site is the company who has the first right to build on that site, assuming the site is in accordance with local ordinances and the railroads wishes. This practice was employed by CBS and its predecessors and was referred to as the first-come, first-served policy. 192. Defendants failed to inform plaintiffs when they abandoned the first come, first
served policy and started reviewing all small outdoor advertising companies applications for billboard locations to see if CBS wanted to take any of the sites identified for itself. Defendants had a duty to inform plaintiffs of this material change in defendants practice. 193. The failure to inform described in the immediately preceding paragraph was
crucial to defendants scheme because, if defendants would have told plaintiffs that CBS would be reviewing all applications submitted by the smaller companies to see if CBS wanted any of
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the sites, the smaller companies would never have disclosed the locations to CBS in the first place. 194. Defendants failure to inform plaintiffs that the first come, first served policy was
no longer in effect was a material omission intended to defraud plaintiffs of the valuable billboard locations they identified in their applications. 195. As a direct result of these fraudulent omissions, the plaintiffs and/or their agents
were induced to reveal the location of their proposed billboard sites and CBS used this information to make application for those sites and built or plan to build billboards for its own account on those locations. In some cases the plaintiffs applications were denied or never acted upon to prevent the plaintiffs from gaining a competitive edge and/or to devalue the plaintiffs to permit CBS to purchase those companies and/or to eliminate them as competitors. Plaintiffs were damaged as a result of the loss of these billboard locations. 196. As a direct and proximate result of the fraudulent omissions by defendants
discussed in detail aboveplaintiffs were neither able to lease the sites they or their predecessors had identified nor were they able to secure contracts for the lease of valuable advertising space at any of these sites. Plaintiffs have suffered substantial damages in excess of $75,000, including diminution in the value of their companies, loss of billboards, loss of revenue, and loss of competitive position. 197. Defendants conduct was willful and outrageous and they engaged in malice,
aggravated and egregious fraud, wantoness, and oppression. Defendants conduct was also consciously indifferent, recklessly indifferent, and deliberately disregarded the rights of plaintiffs. Thus, defendants conduct justifies an award of punitive damages in such an amount as will serve to punish defendants and to deter them and others from like conduct.
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COUNT V TORTIOUS INTERFERENCE WITH BUSINESS EXPECTANCIES 198. 199. Plaintiffs re-allege each of the preceding allegations as if fully set forth herein. Because plaintiffs were the first to identify the sites for which they filed or
attempted to file applications, CBSs first-come, first-served leasing policy or procedure presented plaintiffs with a valid business expectancy in: (a) leasing the sites from the railroad landowner, and/or (b) securing contracts for the lease of valuable advertising space at each of the sites. 200. CBS, as the exclusive leasing agent for the railroads, had knowledge that the
plaintiffs and/or their predecessors expected to lease the sites they applied for and/or to collect advertising revenues from these sites. CBS was responsible for administering CBSs firstcome, first-served policy or procedure and knew that these leases and/or the advertising revenues produced by the sites would be substantial. 201. Defendants intentionally interfered with and breached the plaintiffs business
expectancies in one or more of the following respects: (a) Defendants knowingly and falsely represented that an earlier applicant had
already applied for the sites or made other false statements or falsely represented that the application was permanently stalled, as alleged above; (b) CBS abandoned its stated first-come, first-served licensing policy or
procedure by appropriating the sites identified by plaintiffs for itself; (c) (d) Defendants misappropriated the sites the plaintiffs identified for CBS; Defendants concealed, suppressed, or omitted the material fact that CBS
had secured the sites for itself after being led to the sites by the plaintiffs.
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202.
Defendants interference was without justification because it employed wrongful
means in obtaining the billboard sites: (a) With regard to the actions directed against Simmons, defendants employed
unlawful trade practices in violation of Ala. Code 8-19 et seq. (b) With regard to the actions directed against Herron, defendants employed
deceptive acts and practices and/or willfully concealed, suppressed, omitted, or failed to state a material fact in violation of Kan. Stat. Ann. 50-626 et seq. (c) With regard to the actions directed against Franklin, defendants employed
deceptive trade practices in violation of Minn. Stat. Ann. 325D.44 et seq. (d) With regard to the actions directed against Signx LLC defendants
employed unlawful practices in violation of Okla. Stat. Ann. 753 et seq. (e) Defendants made fraudulent misrepresentations, omissions, suppressions,
and concealments that caused plaintiffs damage as more fully described above. (f) 203. Defendants violated 18 U.S.C. 1962, as alleged more fully above.
As a direct and proximate result of the foregoing interference by defendants,
plaintiffs were neither able to lease the sites they or their predecessors had identified nor were they able to secure contracts for the lease of valuable advertising space at any of these sites. Plaintiff Herron was forced by defendants to take her billboard down. Plaintiffs have suffered substantial damages in excess of $75,000, including diminution in the value of their companies, loss of billboards, loss of revenue, and loss of competitive position. 204. Defendants conduct was willful and outrageous and they engaged in malice,
aggravated and egregious fraud, wantoness, and oppression. Defendants conduct was also consciously indifferent, recklessly indifferent, and deliberately disregarded the rights of
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plaintiffs. Thus, defendants conduct justifies an award of punitive damages in such an amount as will serve to punish defendants and to deter them and others from like conduct. COUNT VI UNFAIR COMPETITION 205. 206. Plaintiffs re-allege each of the preceding allegations as if fully set forth herein. Defendants represented to plaintiffs Simmons, Franklin, and Signx, as alleged in
detail above, that they needed to reveal the locations of their proposed billboard sites in order to apply for the location and that the information would be used to determine if there had been another application for that site. 207. Each of the locations the plaintiffs revealed constituted a trade secret as each
was intended to be used to create economic gain for plaintiffs by placing a billboard on each site. 208. The defendants, as agents for CBSs client railroads, owed a duty of confidence to
the plaintiffs as the owners of these trade secrets. The defendants created circumstances and made statements that led the plaintiffs to reasonably conclude that the disclosure would be confidential and not shared with competitors. Without the assurance that the information would be treated as confidential these plaintiffs or other small billboard companies would not have revealed the locations to CBS. 209. Knowing that they were acquiring the plaintiffs trade secrets and fraudulently
stating that the trade secrets were being requested for the application, the defendants improperly acquired the locations for CBSs own use and/or delayed leasing the sites, thereby preventing plaintiffs from improving their competitive position in the marketplace.
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210.
With regard to plaintiff Herron, defendants made her dismantle and remove her
billboard in order to reduce competition for CBS billboards on Interstate 35 in Johnson County, Kansas. 211. As a direct and proximate result of the foregoing conduct by defendants, plaintiffs
were neither able to lease the sites they identified nor were they able to secure contracts for the lease of valuable advertising space at any of these sites. In plaintiff Herrons case, she suffered substantial expenses in removing her billboard and loss of income from outdoor advertising it generated. Plaintiffs have suffered substantial damages in excess of $75,000, including
diminution in the value of their companies, loss of billboards, loss of revenue, and loss of competitive position. 212. Defendants conduct was willful and outrageous and they engaged in malice,
aggravated and egregious fraud, wantoness, and oppression. Defendants conduct was also consciously indifferent, recklessly indifferent, and deliberately disregarded the rights of plaintiffs. Thus, defendants conduct justifies an award of punitive damages in such an amount as will serve to punish defendants and to deter them and others from like conduct. WHEREFORE, plaintiffs pray this Court award the plaintiffs actual damages in the amount shown by the evidence, treble damages for their injuries, attorneys fees, and the costs of prosecuting this action, and award the plaintiffs punitive damages.
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Respectfully submitted,
s/ Floyd R. Finch, Jr. Floyd R. Finch, Jr. MO #28377 Michael E. Callahan MO #49552 BLACKWELL SANDERS PEPER MARTIN LLP 4801 Main Street, Suite 1000 Kansas City, Missouri 64112 Phone: (816) 983-8000 Facsimile: (816) 983-8080 ffinch@blackwellsanders.com mcallahan@blackwellsanders.com Attorneys for Plaintiffs
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Case 4:06-cv-00863-DW Document 1-1
Case 4:06-cv-00863-DW Document 1-1

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION NATHAN L.

Civil Case No. 06-0863-CV-W-JTM JURY TRIAL DEMANDED

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in Wright County, Minnesota.

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resulting in a new company called Viacom Inc.

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consider and to approve billboard applications expeditiously.

For example, prior to its

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assets a year later.

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Tanner dismissed his claims without prejudice in CBS I in May 2001.

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Ad Trends principal, Jim Boehlike Massoodhad been told many times by

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multiple billboard sites.

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