Opposition Brief — Union Electric Co. v. Harris

Supreme Court, U.S.

dv FILED

ANIOL, JR.

In The ) pe

Supreme Court of the United States

October Term, 1985

ty

we

UNION ELECTRIC COMPANY,

Petitioner,

vs.

HAROLD HARRIS, CONTINENTAL CASUALTY

COMPANY, a corporation, and NATIONAL FIRE

INSURANCE COMPANY OF HARTFORD, a

corporation, individually and as representatives of all

of the holders of the $70,000,000 first mortgage bonds

of Union Electric Company, 1042% Series due

March 1, 2005, as of April 11, 1978,

Respondents.

Ly.

og ee

BRIEF IN OPPOSITION TO PETITION

FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

ty.

sen

Campsett & CAMPBELL

Davo L. Campsett, MBE #17926

Attorney: for Plaintiffs-Respondents

10411 Clayton Road, Suite 305

St. Louis, Missouri 63131-2997

(314) 991-0241

COCKLE LAW BRIEF PRINTING CO., (800) 228-8845 (tone) 75

or call collect (42) 342-2831

i

QUESTIONS PRESENTED

I. Whether the Highth Circuit’s holding that the pro-

spectus failed to disclose material facts concerning the

exceptions to the ‘‘no-call’’ feature of the bond contract

was correct and based upon sound principles of construc-

tion and creates any conflict with other circuits or prior

decisions of this court on important issues of federal se-

curities law?

A. Whether the Eighth Cireuit’s holding that the

prospectus failed to disclose material facts con-

cerning the exceptions to the ‘‘no-call’’ feature

of the bond contract was correct and based upon

sound principles of construction?

B. Whether the Eighth Circvit’s decision is in con-

flict with the decision of the Fifth Circuit in

Broad v. Rockwell International Corp., with that

of the Second Circuit in Fershtman v. Schectman,

or with its own decision in St. Louis Union Trust

Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc.?

Il. Whether the Eighth Circuit’s holding properly

employed an out-of-pocket measure of damages and is in

conflict with the weight of authority or with 4 28(a) of the

Securities Exchange Act of 19341

Ili. Whether the Eighth Circuit’s holding that the

class purchased ‘‘in connection with’’ the fraudulent con-

duct of Union Electric is in conflict with Blue Chip Stamps

v. Manor Drug Stores because the plaintiffs’ bringing this

action and the class members were found to have been pur-

chasers and because the purchasers were causally connect-

ed to the fraudulent conduct?

IV. Whether the Eighth Circuit exceeded the appro-

priate scope of judicial review and relied on a theory not

submitted to the jury in affirming the District Court’s

decision to exclude evidence which was irrelevant.and im-

material to the issue of Plaintiffs’ damages?

A. Whether the Appellate Court exceeded the appro-

priate seope of appellate review?

B. Whether the evidence excluded by application of

the ‘‘second investment decision’’ rule was irrele-

vant and immaterial to the issue of Plaintiffs’

damages?

iil

TABLE OF CONTENTS

Questions Presented

Table of Contents

Table of Authorities Cited

Opinion Below

Statement

Reasons for Denying the Writ ‘

I. THE WRIT SHOULD BE DENIED BECAUSE

THE EIGHTH CIRCUIT’S HOLDING THAT THE

PROSPECTUS FAILED TO DISCLOSE MATERIAL

FACTS CONCERNING THE EXCEPTIONS TO THE

“NO-CALL” FEATURE OF THE BOND CONTRACT

WAS CORRECT AND BASED UPON SOUND PRIN-

CIPLES OF CONSTRUCTION AND CREATES NO

CONFLICT WITH OTHER CIRCUITS OR THE DE.-

CISIONS OF THIS COURT ON IMPORTANT IS.

SUES OF FEDERAL SECURITIES LAWS.

A. THE EIGHTH CIRCUIT’S HOLDING THAT

THE PROSPECTUS FAILED TO DISCLOSE MATE-

RIAL FACTS CONCERNING EXCEPTIONS TO THE

‘‘NO-CALL” FEATURE OF THE BOND CONTRACT |

WAS CORRECT AND BASED UPON SOUND PRIN-

CIPLES OF CONSTRUCTION.

B. THE EIGHTH CIRCUIT’S DECISION DID

NOT HOLD PETITIONER LIABLE UNDER RULE

10b-5 FOR EXERCISING A CONTRACTUAL RIGHT,

BUT FOR ENGAGING IN A SCHEME AND COURSE

OF BUSINESS TO DEFRAUD, AND IS NOT IN CON-

FLICT WITH THE DECISION OF THE FIFTH CIR-

CUIT IN BROAD v. ROCKWELL INTERNATIONAL

CORP., WITH THAT OF THE SECOND CIRCUIT IN

FERSHTMAN V. SCHECTMAN, OR WITH ITS OWN

DECISION IN ST. LOUIS UNION TRUST CO. v.

MERRILL LYNCH, PIERCE, FENNER & SMITH,

INC.

oo - FS <4

iv

TABLE OF CONTENTS—Continued

Page No.

Il. THE EIGHTH CIRCUIT’S HOLDING EM-

PLOYED AN OUT-OF-POCKET MEASURE OF

DAMAGES AND IS NEITHER IN CONFLICT WITH

THE WEIGHT OF AUTHORITY NOR WITH SEC.

TION 28(a) OF THE SECURITIES EXCHANGE

ACT OF 1934.

Il. THE EIGHTH CIRCUIT'S HOLDING THAT

THE. CLASS PURCHASED ‘IN CONNECTION

WITH” THE FRAUDULENT CONDUCT OF UNION

ELECTRIC IS NOT IN CONFLICT WITH BLUE

CHIP STAMPS v. MANOR DRUG

IV. THE EIGHTH CIRCUIT DID NOT EXCEED

THE APPROPRIATE SCOPE OF JUDICIAL RE.

VIEW BECAUSE THE THEORY RELIED ON BY

THE.CIRCUIT COURT WAS SUBMITTED TO THE

JURY AND DID NOT ERR IN AFFIRMING THE

DISTRICT COURT’S DECISION TO EXCLUDE EV-

IDENCE WHICH WAS IRRELEVANT AND IMMA-

ages cme 205 OF PLAINTIFFS’ Ds i-

AG

A. THE APPELLATE COURT DID NOT EX-

CEED THE APPROPRIATE SCOPE OF APPEL-

LATE REVIEW.

B. THE EVIDENCE EXCLUDED BY APPLI-

CATION OF THE “SECOND INVZSTMENT DE-

CISION” RULE WAS IRRELEVANT AND IM-

MATERIAL TO THE ISSUE OF PLAINTIFFS’

DAMAGES.

Conclusion

15

v

TABLE OF AUTHORITIES

CASES: Page

Associated Builders, Inc. v. Alabama Power Co.,

505 F.2d 97 (5th Cir. 1974) 6

Blue Chap Stamps v. Manor Drug Stores, 421 U.S.

725 (1975) 17, 18, 21

Broad v. Rockwell International Corp., 642 F.2d

929 (5th Cir. 1981) (en bane), cert. denied, 454

U.S. 965 (1981) 7, 8, 9, 11, 12, 13

Conley v. Gibson, 355 U.S. 41, 47-48 (1957) 23

Fershtman v. Schectman, 450 F.2d 1357 (2d Cir.

1971) 11, 13, 14

Franklin Life Insurance Co. v. Commonwealth Edi-

son Co., 451 F.Supp. 602 (S.D. Ill. 1978), aff’d, 598

F.2d 1109 (7th Cir.), cert. denied, 444 U.S. 900 (1979) 8

Harris v. American Investment Co., 523 F.2d 220,

228 (8th Cir. 1975), cert. denied, 423 U.S. 1054

(1976) 26, 27

Incas v. Florida Power and Light Co., 765 F.2d 1039

(11th Cir. 1985) 5, 6,8

St. Louis Union Trust Co. v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 562 F.2d 1040 (8th Cir. _

1977) 9, 11, 12,13

Shapiro v. Midwest Rubber Reclaiming Co., 626 F.2d

63 (8th Cir. 1980), cert. denied, 449 U.S. 1079 (1980) 27

Superintendent of Insurance v. Bankers Life & Cas-

ualty Co., 404 U.S. 6, 12-13 (1971) 19, 20

v

OPINION BELOW

The opinion of the court of appeals is reported at 787

F.2d 355, and is reproduced as Appendix A to Petitioner’s

Petition for Writ of Certiorari. References to the court

of appeals opinion will be cited as ‘‘Op.’’, with reference

to the page number in Appendix A to the Petition.

STATEMENT

Respondents object to the purported statements of

fact, appearing at pages 3-7 of the Petition and as Appendix

P, as being woefully incomplete and so selective as to be

misleading. For example, Petitioner states that ‘‘in the

state court action, the Missouri Court of Appeals, Eastern

District, held the petitioner had the contractural right to

redeem and to refund the bonds in the manner it had pro-

posed’’ [Pet p.4], and that ‘‘the prospectus describes the

bond contract including the ‘‘no call’’ limitation, the Im-

provement Fund and the Maintenance Fund.’’ [Pet. p.6]

What the Missouri court actually held was that Union

Electrie could use Maintenance Fund cash to redeem bonds

under Article VIII, § 8 of the original indenture. [A-52-3,

56-7] The Missouri court specifically declined to rule on

any issue of prospectus disclosure [A-42], and noted that

‘‘the Prospectus and disclosure issues are not properly

before us.”’ [A-58, n.7]

No mention of this Article VIII, § 8 redemption right,

which is what Union Electric attempted in April, 1978,

appears anywhere in the prospectus. [A-12]

1

Respondents would refer the Court to the court of

appeals opinion for an accurate and complete rendition

of the facts pertinent to the issues of the case.

REASONS FOR DENYING THE WRIT

The Petitioner raises six different arguments under

four separate points in its Petition for Certiorari, which

are fraught with contortions and mischaracterizations of the

Righth Circuit’s Opinion and of the authorities the Peti-

tioner cites in support of its position on the issues dis-

cussed. The text of the Petitioner’s ‘‘Reasons for Grant-

ing the Writ’’ comes dangerously close to an attempt to

‘*hoodwink’’ this Court. Hach one of Petitioner’s argu-

ments and contentions is completely without merit and fails

to demonstrate any cogent reason why this Court should

review the judgment and Opinion of the Eighth Circuit in

this case. Respondent’s arguments are arranged and num-

bered so as to correspond with the arrangement and num-

bering of the points in Petitioner’s Petition for Writ of

Certiorari.

L

THE WRIT SHOULD BE DENIED BECAUSE THE

EIGHTE CIRCUIT’S HOLDING THAT THE PROSPEC-

TUS FAILED TO DISCLOSE MATERIAL FACTS CON.

CERNING THE EXCEPTIONS TO THE ‘‘NO-CALL’”’

FEATURE OF THE BOND CONTRACT WAS CORRECT

AND BASED UPON SOUND PRINCIPLES OF CON.

STRUCTION AND CREATES NO CONFLICT WITH

OTHER CIRCUITS OR THE DECISIONS OF THIS

COURT ON IMPORTANT ISSUES OF FEDERAL SE.

CURITIES LAWS.

A. THE EIGHTH CIROUIT’S HOLDING THAT

THE PROSPECTUS FAILED TO DISCLOSE

MATERIAL FACTS CONCERNING THE EX-

CEPTIONS TO THE ‘“‘NO-CALL’’ FEATURE

OF THE BOND CONTRACT WAS CORRECT

AND BASED UPON SOUND PRINCIPLES OF

CONSTRUCTION.

The Petitioner argues that the prospectus disclosed

the exceptions to the ‘‘no-call’’ features of the bond con-

tract and attacks the Eighth Circuit’s conclusion to the

contrary by, among other things, the presentation of a

slightly ‘‘altered’’ yersion of that Court’s reasoning. The

Petitioner states that ‘‘(t]he Opinion (at p. A-11) con-

cludes that both interpretations of the cover page are plau-

sible....’’ [Pet. p.10] The statement is lifted from a

discussion of the opposing grammatical construction ad-

vanced by the parties concerning the interpretation of the

‘‘eall protection provision on the cover page of the pros-

pectus.’’ [Op. A-10] The statement referred to was in

fact a reference to the ambiguous and misleading nature

of the prospectus [Op. A-11,12]; viz.:

Although the plaintiffs’ and U.E.’s interpretations of

the cover page provision are plausible, we do not limit

4

our determination to this single provision. To the

contrary, we consider the prospectus in its entirety,

as we assume the jury did, together with the intention

of the parties. When the cover page provision is read

together with the redemption provisions on pages three

and twenty-eight, and with the Improvement and Main-

tenance Fund provisions on page twenty-nine, it is

clear that the jury could have reasonably found that

the prospectus is ambiguous and misleading in that it

omits material facts concerning the call protection.

Petitioner contends that the Court’s conclusion ‘‘can-

not be supported by the language of the prospectus’’; that

its finding of ambiguity ‘‘relied upon testimony relating

to the intentions of the parties in 1975’’; and that “the

bondholders were .. . advised of the features of the bond

contract in the prospectus.’’ [Pet. p.10] The Opinion

succinctly sets forth the gravamen of its conclusion that the

prospectus is misleading [Op. A-12], and exposes the va-

cuity of Petitioner’s position here:

Article VIII, section 8 of the bond contract has

been judicially construed by the Missouri Court of Ap-

peals to authorize lower cost refunding at the special

redemption prices. Harris v. Union Electric Co., 622

S.W.2d at 251. The prospectus, however, does not men-

tion Article VIII, section 8. The prospectus is mis-

leading in that it does not adequately disclose the

authorization set forth in section 8, while giving the

impression thet refunding the bonds at a lower rate of

interest before March 1, 1985 is prohibited. The re-

demption provision on page twenty-eight of the pros-

pectus prohibits lower cost refunding at the Regular

Redemption Prices, and the bond contract allows such

refunding at the Special Redemption price. This ‘‘pro-

tection’ is a sham. The Regular Redemption Prices

are premiums, but the Special Redemption Price is

fixed at par. A restriction on lower cost refunding

at a premium with no such restriction at par affords

5

no meaningful protection against call. UE would never

call the bonds at a premium if it could call them at the

lower price of par. This renders the premium price

list on page twenty-eight of the prospectus

and , since it represents prices that would

never be paid. Finally, the prospectus is misleading

in that it failed to disclose UR’s right to directly call

the bonds through the Maintenance Fund. The bond

contract, however, has been judicially construed to pro-

vide UE with such a right. Yet, the Maintenance Fund

provision on page twenty-nine of the prospectus indi-

cates that funds deposited in the Maintenance Fund

may be used indirectly to redeem bonds by first trans-

ferring the money to the Improvement Fund. This

distinction is important because had UE redeemed the

bonds indirectly through the Maintenance Fund ac-

cording to the provisions on page twenty-nine, it could

not have avoided paying the premium prices. The jury

reasonably could have found that the prospectus is

misleading and ambiguous in that it omits material

facts that would have adequately disclosed the call pro-

tection of the bonds. (Emphasis supplied).

Petitioner relies heavily on Lucas v. Florida Power

and Light Co., 765 F.2d 1039 (11th Cir. 1985), and states

that ‘‘the testimony at trial of the instant case was that

Union Electric officials were not aware of the possibility

of a maintenance fund redemption until after the Florida

Power & Light Company redeemed its bonds.’’ [Pet. p.10]

Not only is this statement not true, but the factual issues

on this point were resolved by the jury against Petitioner.

As noted by the Court in its opinion [Op. A-13, n.7]:

... The evidence is inconsistent concerning this point.

Although UE contends that none of its officials were

aware of the possibility of calling the bonds in the

manner in which it pianned, Mr. Friel, a vice president

and the controller at UE, testified that he was aware

of such possibility in 1975. Even if UE officials did

6

not deliberately leave the meaning of the prospectus

obseure, they were obviously aware of uncertainties,

the meaning of which were decided at a later date to

suit UE’s purposes.

The Petitioner’s discussion of Lucas v. Florida Power

and Light Co., supra, does nothing to refute the Eighth

Circuit’s decision in the instant case. Whether the lan-

guage in the Florida Power & Light prospectus was ‘‘boiler-

plate’’ or not has no bearing on that case’s applicability to

Lucas’ at bar. In Lucas, the prospectus specifically re-

ferred to Florida Power’s ability to redeem the bonds in

the fashion it did, language which is notably absent in the

Union Electric prospectus. IJd., at 1041; c.f., Pet. pp.A-59-

70. In addition, that case involved a redemption, whereas

the present case involves a refunding. [Op. A-23] No-

where in Lucas does the Eleventh Cireuit hoid that the call

protection provision in that prospectus disclose the possi-

bility of an early refund. The Eighth Circuit’s distinction

of Lucas on its facts clearly makes the ultimate holding in

that case inapplicable here. If Lucas is taken to stand for

the proposition that the Court must look to the language

of the prospectus to determine whether the prospectus was

misleading it still does not conflict with what the Eighth

Circuit did in this case. Here, having examined the pros-

pectus and having found the ambiguities noted above, the

Eighth Cireuit referred to testimony concerning the intent

of the parties, only to find that the prospectus should be

resolved as representing the bonds in question as having

solid protection against lower interest cost refunding for

ten years. [Op. A-14-15] Such ambiguities were not

present in Lucas.

Petitioner’s reliance on Associated Builders, Inc. v.

Alabama Power Co., 505 F.2d 97 (5th Cir. 1974), also is of

7

no help to its position. In that case, the Court found the

prospectus to be not misleading based upon a finding that

although a material fact was not disclosed on the cover

page of the prospectus, it was disclosed elsewhere in the

prospectus. In the instant case, the Court took pains to

make it clear that its findings that the prospectus was

ambiguous and misleading were based upon a reading of

the prospectus as a whole, not just of the cover page. [Op.

A-11-12] Despite the Petitioner’s contention that ‘‘the

disclosures appear at three places including the cover page

of the prospectus’’ [Pet. p.13], there is no disclosure of the

Article VIII, § 8 redemption right, which is what is involved

in this case, that appears anywhere at all in the prospectus.

[Op. A-12]

Petitioner also attempts to manufacture a conflict

between the Eighth Circuit’s decision and that of the

Fifth Circuit in Broad v. Rockwell International Corp.,

642 F.2d 929 (5th Cir. 1981) (en banc) cert. denied, 454

U.S. 965 (1981), apparently arguing that Union Electric

was under no ‘‘duty to disclose in a detailed fashion the

indenture’s provisions for more remote future contingen-

cies’. [Pet. p.14] (Emphasis added). The point is irrel-

evant since not only were the exceptions in Article VIII,

§8 of the Union Electric bond contract not disclosed in

a detailed fashion, they were not disclosed at all. The

prospectus does not even mention that Article VIII, Sec-

tion 8 exists. [Op. A-12] In addition, the prospectus

goes on to give the impression that the refund procedure

allowed by the section is in fact prohibited. Id. In ad-

dition, the Broad opinion is inapplicable for the simple

reason that the very creation of the undisclosed contract

right in that case occurred after the alleged fraud was

8

committed, where here the fraud involved not only the

failure to disclose the Article VIII, § 8 redemption right,

but also the use of that right by UE after duping the

bondholders into a false sense of security that no such

right existed.

The Petitioner’s reliance on Franklin Life Insurance

Co. v. Commonwealth Edison Co., 451 F. Supp. 602 (8.D.

Ill. 1978), aff’d, 598 F.2d 1109 (7th Cir.), cert. demed,

444 U.S. 900 (1979), is also misplaced. In that case, the

Court found a failure to establish ‘‘that defendant omitted

a material fact necessary in order to make the statements

made, in light of the circumstances under which they were

made, not misleading because the material facts omitted

were not objective, but were rather subjective, involving

defendant’s intent and beliefs concerning interpretation

of the redemption provision’’. Id., at 608-609; Pet. p.14.

This is not the situation present in the instant case. The

Eighth Circuit went to great lengths to point out specific-

ally how the prospectus as a whole was misleading and

which misrepresentations and omissions rendered it so.

[Op. A-12] The facts omitted here were not subjective

at all. The Plaintiffs-Respondents have never contended

that the prospectus was misleading for failure to disclose

the intents or beliefs of the Defendant-Petitioner, and

the Cireuit Court did not base its holdings on any such

contention or finding. The Eighth Circuit’s description

of the fraud [Op. A-15] makes it clear that neither Lucas

nor Broad have any relevance to this case, nor do those

decisions conflict in any way with that in this case:

Based on the language of the prospectus, the

testimony of the parties expressing their intentions,

and the testimony of the market experts, we conclude

9

that the plaintiffs produced sufficient evidence for

the jury to have found that the prospectus is ambig-

uous and misleading in that it omitted material facts

that would have adequately disclosed U.E.’s right to

call! the bonds, in violation of Rule 10b-5(b). We

also conclude that the evidence is sufficient for the

jury to have found that these omissions were part

| of a larger scheme or course of business to defraud

the bondholders. To knowingly implement a plan in

1978 to call bonds that were previously intended and

marketed as having solid call protection until 1985,

constitutes a course of business, or a device, scheme,

or artifice that operates as a fraud on the bondhold-

ers in violation of Rule 10b-5(a) and (c). Therefore,

UE’s conduct falls within all three subparagraphs of

Rule 10b-5. (Emphasis supplied).

Petitioner’s Point I, A is without merit.

B, THE EIGHTH CIRCUIT’S DECISION DID NOT

HOLD PETITIONER LIABLE UNDER RULE

10b-5 FOR EXERCISING A CONTRACTUAL

RIGHT, BUT FOR ENGAGING IN A SCHEME

AND COURSE OF BUSINESS TO DEFRAUD,

AND IS NOT IN CONFLICT WITH THE DE.

CISION OF THE FIFTH CIRCUIT IN BROAD

v. ROCKWELL INTERNATIONAL CORP.

WITH THAT OF THE SECOND CIRCUIT IN

FERSHTMAN v. SCHECTMAN, OR WITH ITS

OWN DECISION IN ST. LOUIS UNION TRUST

CO. v. MERRILL LYNCH, PIERCE, FENNER

& SMITH, INC.

Petitioner attempts to characterize the Eighth Cir-

cuit’s decision as imposing 10b-5 liability for the mere

exercise of a contractual right. It attempts to castigate

the Court for its finding of scienter, and follows with a

selective presentation of what it denominates as the rea-

soning of the Court’s opinion. In fact, Petitioner’s pre-

10

sentation is nothing more than a thinly disguised attempt

to obfuscate the real issues of the case and mislead this

Court as to the factual situation which constitutes the

fraud.

Petitioner begins by attempting to show that the

Court based its finding of scienter on the existence of

reckless conduct alone [Pet. p.16]:

It was UE’s intent that the bonds would possess

solid protection against call for 10 years. To repre-

sent and market the bonds as possessing such protec-

tion and then implement a plan to call the bonds

within the 10 year period, constitutes at the very least

recklessness on UE’s part. [Op. A-22, n. 12]

However, the Court’s finding of scienter was not

based on recklessness at all, but rather on intentional con-

duct, as a reading of the opinion clearly shows [Op. A-21]}:

... There is substantial evidence demonstrating the

UE knew that the plan was contrary to its repre-

sentation in the prospectus concerning the call pro-

tection. Several UE officials testified that the com-

pany, without a doubt, initially intended to provide

‘solid protection’”’ against call for ten years. The evi-

dence indicated that Mr. Grainger, one of UE’s Ad-

visory Directors, vehemently opposed the plan as

‘‘subordinating moral responsibility for financial

gain,’’ and cautioned UE’s president that-the ‘‘con-

tract with the Bondholders should be kept invioiate.’’

UE’s Vice President of Finance, Mr. Welshans, testi-

fied that the company was well aware that the plan

was contrary to the protection that the underwriters,

the bondholders, and Union Electric ali mutually in-

tended the bonds to possess. The evidence also indi-

cated that UE only hesitated long enough to assure

itself that it could re-enter the bond market at a later

date withont any trouble. Once UE observed that

11

FP & L’s plan did not adversely affect its ability to

re-enter the market, UE implemented its plan... .

Clearly, the evidence is sufficient from which the jury

could have found that UE acted with the intent to

defraud the bondholders.

Petitioner’s major argument is basically that it could

not have violated Rule 10b-5 because it was only attempt-

ing to exercise a contract right, and that the Eighth Cir-

cuit’s opinion thus conflicts with Broad v. Rockwell In-

ternational Corp., 642 F.2d 929 (5th Cir. 1981); St. Louis

Union Trust Co. v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 562 F.2d 1040 (8th Cir. 1977); and Fershtman v.

Schectman, 450 F.2d 1357 (2d Cir. 1971). However, the

facts show that Petitioner’s conduct cannot honestly be

characterized in so innocent a fashion.

Union Electric, the bondholders and the underwriters

intended the bonds to have a solid protection against call

for 10 years. [Op. A-13, n. 7; 14; 15; 21; 22, n. 12; 23;

24] Union Electric, through the prospectus, represented

to the public that the bonds would indeed possess that

protection, [Op. A-11-15] Union Electric marketed the

bonds based upon the existence of the solid call protec-

tion. [Op. A-15, n. 8] Plaintiffs purchased the bonds in

reliance upon that representation. [Op. A-17] Union

Electric later implemented a plan which it knew was con-

trary to the representations made in the prospectus. [Op.

A-21] It was the implementation of that plan which ren-

dered the representation in the prospectus concerning

solid call protection false and misleading. [Op. A-19]

Hence, Union Electric ‘‘certainly intended to defraud the

bondholders of this protection when they announced the

plan to call the bonds before the ten-year period had run”’.

[Op. A-21]

12

To paraphrase—All the parties intended the bonds

to have solid protection against call for ten years, and

indeed the securities were bought and sold with all

parties believing that such protection existed. So far as

everyone involved was concerned, the protection described

in the prospectus was real, and indeed was inflating the

price of the bonds as it had from the time the initial issue

was offered and sold. Then, three years later, Union

Electric in effect announces: ‘‘We know the bonds were

supposed to have solid call protection for ten years; we

know we are the ones who said that they would and we

know that you only paid the price you did at the yield

offered because of that protection; we know that we have

taken full advantage of your belief that these bonds were

non-refundable fer 10 years; but we have just discovered

a way to call the bonds early that we didn’t know about

before, and although we know that it is inconsistent with

what all of us intended the bond contract to be, we’re

going to do it despite our representation to the contrary

in the prospectus and regardless of the effect upon your

investment.’’

As the Circuit Court pointed out, Broad and St. Louis

Union Trust Co. are readily distinguishable from the in-

stant case in that ‘‘[u]nlike the situations in Broad and

St. Louis Union Trust Co., the parties’ intentions in this

case were contrary to the subsequently construed con-

tractual right in question. It’s undisputed that U.K. mar-

keted the bonds as possessing solid call protection for ten

years.’’ [Op. A-15, n. 8] The Highth Circuit recognized,

and the Petitioner ignores, the fact that the Article VIII,

§8 right that Union Electric attempted to exercise was

not disclosed and was a material fact. Neither case sup-

mm ny

13

ports the Petitioner’s position, nor holds that an issuer

can omit disclosures of material provisions of the terms

of a bond, and then later exercise such rights to the detri-

ment of the bondholders. These two cases can further

be distinguished by the fact that in both Broad and St.

Louis Union Trust Co., the rights in question were cre-

ated by contracts which were independent of the security

in question. Here, the refunding right under Article VIII,

§ 8 springs from the bond contract itself, which created

the security in question. Union Electric’s reliance on

Broad and St. Louis Union Trust Co. is obviously mis-

placed.

Petitioner also argues that the Eighth Circuit’s de-

cision is in conflict with Fershtman v. Schectman, 450

F.2d 1357 (2d Cir. 1971). In that case, there was a dis-

crepancy between provisions in a limited partnership

agreement and in the certificate of limited partnership.

The general partners brought about termination of the

partnership in accordance with the provision in the lim-

ited partnership agreement. Plaintiffs’ claims under

Rule 10b-5 were dismissed because of lack of federal jur-

isdiction and failure to state a claim under Rule 10b-5.

The reasons given by the Court were many. None of the

alleged misrepresentations and omissions, save one, were

material nor did they cause damage. /d., at 1360. The

one misrepresentation which may have been material was

made negligently and did not cause damage. IJd., at 1361.

Furthermore, the partnership agreement and the certifi-

cate of limited partnership were both sent to and received

by the plaintiffs. The only misrepresentation which might

have been considered to be material was in the form of

14

an attorney’s opinion letter concerning the discrepancy

between two documents. The letter was written after the

partners had already signed the agreement and may never

have come to the plaintiffs’ attention at all. Jd., at 1360-

1361. The most important factual distinction between the

Fershtman case and the case at bar is that the document

which purportedly gave rise to the right exercised (the

partnership agreement), was disclosed to the plaintiffs in

that case, whereas in the instant case, there was no dis-

closure of the Article VIII, §8 right. The circumstances

in Fershtman are so different from those in the present

ease that not even the incomplete statements quoted by

the Petitioner from that opinion can apply here.

The Court’s holding that Union Electric’s conduct in

representing and marketing the Series 2005 bonds as hav-

ing solid call protection for 10 years, and then announc-

ing their intention to implement a plan to call those bonds

before the ten-year period had expired with intent to de-

fraud the bondholders, constitutes a course of business,

or a device, scheme, or artifice that operates as a fraud

on the bondholders in violation of Rule 10b-5(a) and (c),

[Op. A-14-15; 22, n. 12], is correct and does not conflict

with the holdings of the Fifth or Second Circuits, nor the

prior decisions of the Eighth Circuit. The Petitioner’s

Point I, B is also without merit.

15

qt.

THE EIGHTH CIRCUIT’S HOLDING EMPLOYED

AN OUT-OF-POCKET MEASURE OF DAMAGES AND

IS NEITHER IN CONFLICT WITH THE WEIGHT OF

AUTHORITY NOR WITH SECTION 28(a) OF THE SE-

CURITIES EXCHANGE AOT OF 1934.

Petitioner contends that the Eighth Circuit held that

the announcement to call the bonds caused the plaintiffs’

damages [Pet. p.19]; that the Plaintiffs were allowed to

recover for a temporary market drop and paper loss

[Pet. p.20]; and that ‘‘the plaintiffs and the class did

not sustain any actual damages.’’ [Pet. p.19] None of

these statements are true.

Petitioner admits that the proper measure of dam-

ages is the ‘‘out-of-pocket loss, namely, the excess of what

[they] paid over what [they] got’’. [Pet. p.19) The

Court’s Opinion makes it abundantly clear that this is

precisely the measure of damages used in this case [Op.

A-18-19] :

The proper measure of damages in this case is the

difference between purchase price and the actual

value of the bonds on the date they were issued. This

remedy is best suited to the harm in this case because

it represents the reduction in the value of the bonds

caused by the lack of call protection. Although the

plaintiffs purchased the bonds for less than 101, the

bonds were worth much less because the call protec-

tion that the plaintiffs thought they were purchasing

did not exist. The plaintiffs paid more for the bonds

than they were actually worth.

There is no need at this point to reiterate the Eighth

Circuit’s discussion of authority for choosing the measure

it did, [Op. A-17-19], as the Petitioner’s argument, mis-

16

construing the Circuit Court’s holding as it does, fails to

challenge it.

The Opinion cites ‘‘ample evidence’’ introduced by

the Plaintiffs-Respondents to show that, in order for

Union Electric to sell the bonds without the call protec-

tion at the 10%% interest rate, it would have had to do

so at a substantially lower price. The damages then were

measured by the ‘‘reduction in the initial purchase price

of the bonds that would have been necessary in order to

sell them at 101%4% without the call protection’’. [Op.

A-19] Logically, that price value differential not only

existed at the time the bonds were issued, but continued

to exist until the absence of the call protection became

known and the market adjusted the price of the bonds to

reflect the absence of the call protection. Plaintiffs sub-

mitted substantial evidence of what this differential was,

of which the market drop was but one factor. The Cir-

cuit Court agreed that the reduction in the market value

of the bonds on the date the fraud was discovered evi-

dence was that ‘‘fairly represents the reduction in the ini-

tial purchase price of the bonds that would have been neces-

sary in order to sell them at 10%% without the call pro-

tection.’? [Op. A-19] The ‘‘market drop’’ then was not

the measure of damages at all, but-rather it represented

evidence which was used to help measure ‘‘the difference

between the purchase price of the bonds and their true

value on the date purchased”’ as being $120. [Op. A-19]

The jury’s award of $40 per bond was obviously based on

its consideration of other evidence as well, and is living

proof that the jury did not consider the market drop to

be the measure of damages per se, as Petitioner now

contends.

17

The Circuit Court’s holding, that damages are to be

measured by the difference between the actual value of

the bonds and the purchase price on the date of issue and

that the ‘‘market drop’’ was evidence properly used to

ascertain the amount of that difference because it fairly

represented the reduction in price necessary to sell the

bonds on the date of issue at 1014% and without the call

protection, is a proper one allowing Plaintiffs-Respon-

dents to recover only those ‘‘actual damages’’ allowed

under Section 28(a) of the Securities Exchange Act of

1934, 15 U.S.C. § 78bb(a) and under the weight of judi-

cial authority interpreting that section. Petitioner’s Point

II is without merit and must fail.

II.

THE EIGHTH CIROUIT’S HOLDING THAT THE

CLASS PURCHASED ‘‘IN CONNECTION WITH’ THE

FRAUDULENT CONDUCT OF UNION ELECTRIC IS

NOT IN CONFLICT WITH BLUE CHIP STAMPS v.

MANOR DRUG STORES BECAUSE THE PLAINTIFFS

BRINGING THIS ACTION AND THE CLASS MEM.

BERS WERE FOUND TO HAVE BEEN PUROHAS.

ERS AND BECAUSE THE PURCHASERS WERE CAS.

UALLY CONNECTED TO THAT FRAUDULENT CON.

UOT.

There is no doubt that a threshold requirement of a

Rule 10b-5 action is that the Plaintiffs, in order to main-

tain a private action for damages under the Rule, must

be either purchasers or sellers of a security. Blue Chip

Stamps v. Manor Drug Stores, 421 U.S. 725 (1975). There

really is no legitimate issue as to the standing of the

Plaintiffs-Respondents as purchasers of the Series 2005

bonds. The Petitioner is. attempting, however, to also

18

cite the ubiquitous Blue Chip Stamps as authority for its

contention that all members of the class must be shown to

have been purchasers. No such contention was made to

the trial court, and thus is not properly preserved for re-

view. However, Blue Chip Stamps, does not hold that

such a showing must be made with respect to each indi-

vidual member of a class, nor does Petitioner offer any

authority to such effect. Petitioner attempts to impose

an impossible burden on representatives of large classes

which would defeat the very reason for the existence of

a class action in the first place.

In fact, despite the definition of the class in the instant

case, the Eighth Circuit did find that the class members

were ‘‘purchasers’’. The Circuit Court’s statement in

footnote 11 on page 20 of the Opinion does not, as Petitioner

contends, substitute-a general “dealing in the security test’’

for the purchaser or seller requirement. The body of text

to which this footnote refers states [Op. A-20]:

... we believe that UE’s fraudulent conduct ‘‘tonches’’

the class members’ purchases of their bonds... . If the

call protection had been accurately disclosed before

these members of the ciass purchased their bonds, they

would have paid less for the bonds or demanded a

higher yield, Clearly, these members of the class

purchased their bonds in connection with UE’s fraudu-

lent conduct.’’ (Emphasis supplied).

It is clear that the Cirenit Court found that those class

members ‘‘dealt in the security to which the omissicns

concerning the call protection relate’’ as ‘‘purchasers’’.

[Op. A-20, n.11]

Petitioner next attacks the Highth Cireuit’s finding

that Petitioner’s fraudulent conduct ‘‘touches’’ the class

19

members’ purchases because the market price ‘‘reflected

the misleading call protection’? and because these pur-

chasers would have “paid less’’ or ‘‘demanded a higher

yield’’ had the call protection been ‘‘accurately disclosed’’.

[Op. A-20; Pet. for Cert. 22]. The Eighth Circuit’s find-

ing was based on the holding of this Court in Superin-

tendent of Insurance v. Bankers Life & Casualty Co., 404

U.S. 6, 12-13 (1971), that a showing that the fraudulent

conduct ‘‘touches’’ the purchase or sale of securities satis-

fies the ‘‘in connection with’’ requirement.

The Petitioner begins by stating in footnote 9 on page

22 of its Petition for Certiorari that the Eighth Circnit’s

finding is factually inaccurate because it was not shown that

the class members made their purchases at the time the

bonds were issued in 1975. This contention is absurd, es-

pecially in light of the Circuit Court’s discussion of the

issue of reliance [Op. A-16-17] (which, incidentally, is not

challenged by the Petitioner), and of the issue of the meas-

ure of damages [Op. A-18-19] (which, as discussed in the

previous section of this Answer, the Petitioner completely

misconstrues). The effect of the misleading omissions and

representations in the prospectus, indeed of the entire

course of fraudulent conduct, on the market price of the

bonds was present not only on the day of issue, but

continued until the fraud was discovered in April, 1978.

Throughout that entire period the market price of the

bonds reflected the belief in the existence of the call pro-

tection, so that anyone who purchased the bonds during

that time period would have been paying a premium for

call protection that didn’t exist. Since the class members

who purchased after the issue date but before April 11,

1978 relied on the market, affected as it was by the fraud,

20

in making their decisions to invest in the bonds, the fraud

‘‘touched’’ all of the purchases made within that period.

The fact that the class members would have paid less or

demanded a higher yield had the call protection been accur-

ately disclosed was as true the day before Union Electric

announced its plans to call the bonds as it was on the day

the bonds were issued.

The Petitioner also contends that the theory used by

the Eighth Circuit relying on Bankers Life ‘‘ignores the ‘in

connection with’ requirement by substituting a new and

unidentified standard’’. [Pet. p.22] Nothing could be

further from the truth. The standard used by the Kighth

Circuit in its discussion of this issue is taken directly from

this Court’s Opinion in Bankers Life. Neither the standard

itself, nor the use of it, ignores the ‘‘in connection with’’

requirement, but rather are based upon that requirement.

Though the requisite ‘‘touching’’ was not defined in

Bankers Life, the Plaintiffs-Respondents have no doubt

that whatever connection this Court had in mind as meeting

this test, the ‘‘causal connection between the alleged fraud

and the purchase or sale’’ would, no doubt, be involved.

Even with this in mind, the “in connection with’’ require-

ment was satisfied in this case, as held by the Circuit

Court.

The Plaintiffs-Respondents agree that the purchase

or sale of securities occurring prior to the fraudulent con-

duct or after the fraudulent conduct is exposed vould prob-

ably not be made ‘‘in connection with’’ that fraudulent

conduct. Although the Petitioner contends that the Highth

Circuit found that it was the 1978 redemption announce-

ment which constituted the fraud, the Opinion demonstrates

otherwise. The Highth Circuit specifically found that the

21

Petitioner’s entire course of conduct from the representa-

tions in the prospectus in 1975, through the announcement

to refund the bonds » 1978, constituted a ‘‘course of busi-

ness and scheme or artifice which operated as a fraud on

the bondholders’’. [Op. A-7, 14-15, 21, 24] Accordingly,

since the named plaintiffs and class members all purchased

their bonds during this period, all of those purchases were

made ‘‘in connection with’’ the fraudulent conduct of the

Petitioner which also occurred during that same period.

The important thing is that the purchases were made during

the course of conduct by the Petitioner which was pro-

hibited by Rule 10b-5. That the petitioner may not have

decided until later to taint this course of conduct by using

it to defraud the bondholders does not sever the connection

between the conduct and the purchases it procured.

There was no misapplication or erosion of Blue Chip

Stamps by the Highth Circuit in this case. There is no

merit to Petitioner’s contentions to the contrary in Point

III of its Petition for Certiorari.

IV.

THE EIGHTH CIRCUIT DID NOT EXCEED THE

APPROPRIATE SCOPE OF JUDICIAL REVIEW BE-

CAUSE THE THEORY RELIED ON BY THE CIRCUIT

COURT WAS SUBMITTED TO THE JURY AND DID

NOT ERR IN AFFIRMING THE DISTRICT COURT’S

DECISION TO EXCLUDE EVIDENCE WHICH WAS

IRRELEVANT AND IMMATERIAL TO THE ISSUE OF

PLAINTIFFS’ DAMAGES.

A. THE APPELLATE COURT DID NOT EXCEED

THE APPROPRIATE SCOPE OF APPELLATE

The Petitioner argues that the EKighth Circuit based

its decision in this case upon a theory which was neither

22

pled, proven nor submitted, thereby exceeding the permis-

sible scope of appellate review, and denying Petitioner its

7th Amendment right to trial by jury. Petitioner’s con-

tention .: inaccurate and therefore must fail. Furthermore,

the 7th Amendment argument was never presented to the

Court of Appeals, and is not preserved for review.

In paragraph 21 of the First Amended Complaint [A-

86-90], and in paragraph 31 of the Amendment to First

Amended Complaint [A-112], the Plaintiffs-Respondents

did indeed plead a series of allegations that were sufficent

to put the Defendant-Petitioner on notice of a claim that

the entire course of conduct alleged, [which includes the

making of the representations in the 1975 prospectus, the

announcement of intent to refund the bonds in 1978, and all

the related conduct in between], was in violation of Rule

10b-5. While the pleadings did aver that the material mis-

representations and omissions in the 1975 prospectus and

the announcement to call the bonds in 1978 would each,

standing alone, constitute violations of various provisions

of Rule 10b-5, it also averred that these discreet violations

were connected and that they made up a course of conduct

which also violated the Rule. That the entire course of con-

duct by the Petitioner from March, 1975 through April, 1978

constituted a scheme or artifice to defraud and a course of

business operating as a fraud against the bondholders was

implicit in the allegations found in the First Amended Com-

plaint and the Amendment to First Amended Complaint.

In fact, the damage allegations in Count IJ specifically

refer to ‘‘the aforesaid devices, schemes, and artifices to

defraud, and the aforesaid acts, practices and courses of

business which operate as a fraud and deceit upon the Plain-

tiffs and Class Members.’’ [A-104] It is noteworthy that

23

Petitioner never attacked the sufficiency of this pleading,

nor asked for more definite statement—a tacit admission

on its part that it was given fair notice of the Plaintiffs’

claims and the grcunds on which these claims were based.

This is all that is required under the ‘‘notice pleading’’

permitted by the Federal Rules of Civil Procedure. Conley

v. Gibson, 355 U.S. 41, 47-48 (1957). That the Petitioner

may not have recognized the existence of this theory in the

First Amended Complaint and the subsequent Amendment

thereto can only be attributd to an inability to “see the

forest for the trees’’ and does not change the fact that this

theory was contained in the pleadings.

As for Petitioner’s claim that this theory of liability

was not supported by ‘‘any facts in the record’’, [Pet. p.24],

a reading of the voluminous facts cited throughout the

Eighth Circuit’s Opinion shows that quite the opposite is

true. In fact, all of the evidence concerning the Petitioner’s

conduct during this period supports this theory.

The theory relied upon by the EHighth Circnit was also

submitted to the jury in Liability Instruction Number 13

[A-114], which clearly shows that the conduct of Union

Electric, as established by the evidence produced at trial,

was subjected to the jury’s scrutiny under al! three pro-

visions of Kule 10b-5. The theory that Petitioner’s con-

duct constituted a ‘‘device, scheme, or artifice to defraud’’

or a “practice or course of business which operated as a

fraud or deceit upon any person in connection with the

purchase of a security’’ was not abandoned as the Peti-

tioner claims. In fact, the Eighth Circuit’s Opinion points

out that not only did the material omissions in the prospec-

tus constitute conduct in violation of Rule 10b-5(b), but also

that the entire course of conduct, including the use of the

24

ambiguous and misleading prospectus, constituted both a

course of business and a device, scheme, or artifice which

operated as a fraud on the bondholders in violation of Rule

10b-5(a) and (c) so that all three provisions of the rule

were violated. [Op. A-14-15] Obviously, the theory of

liability relied on by the Circuit Court was submitted to the

jury in Liability Instruction Number 13.

Finally, Petitioner argues that the theory relied upon

by the Eighth Circuit was not argued on appeal. At their

appellate argument, the Plaintiffs-Respondents referred

to the conduct of the Petitioner as constituting both ‘‘dis-

closure fraud’’ and ‘‘transaction fraud’’. This was a

shorthand way of referring to the various subparagraphs

of Rule 10b-5 violated by the particular discreet instances

of conduct involved: ‘‘disclosure fraud’’ referring to that

conduct which violates Rule 10b-5(b), while ‘‘transaction

fraud’’ refers to that conduct which violates Rule 10b-5(a)

and (c). A substantial section of the Plaintiffs-Respon-

dents’ brief on appeal, as well as of their oral argument,

was devoted te the discussion of how the misrepresentations

and omissions in the prospectus, by themselves, constituted

‘‘disclosure fraud’’. However, the Respondents were also

careful in their discussion of a ‘‘transaction fraud’’ on

pages 26 through 36 of their appellate brief to point out the

importance of the representations made in the 1975 pros-

pectus to the overall fraudulent scheme, device, or artifice

and course of business employed and engaged in by the

Petitioner. Nowhere during the course of this entire appel-

late process did Petitioner raise the objections that it now

presents to this Court. The Eighth Circuit certainly ap-

preciated this interrelationship, argued by the Plaintiffs-

Respondents, and the way it served to bind the individual,

25

discreet instances of conduct by Union Electric into a

continuous course of conduct violating the ‘transaction |

fraud’’ provisions of Rule 10b-5, also argued by the Plain-

tiffs-Respondents, even if the Petitioner did not.

The judgment of the Highth Circuit was based solely

upon facts which were pled, proven, submitted, and resolved

by the jury in the District Court below and argued on ap-

peal. Therefore the holding of the Eighth Circuit that

Union Electric’s entire course of conduct from March of

1975 through April of 1978 as it related to the series 2005

bonds constituted a course of business and a scheme, device,

or artifice that operated as a fraud on the bondholders in

violation of Rule 10b-5(a) and (c) and was properly within

the scope of appellate review. There is no merit to Peti-

tioner’s argument in Point IV, A of its Petition for

Certiorari.

B. THE EVIDENCE EXCLUDED BY APPLICA-

TION OF THE ‘‘SECOND” INVESTMENT DE-

CISION’’ RULE WAS IRRELEVANT AND IM-

MATERIAL TO THE ISSUE OF PLAINTIFFS’

DAMAGES.

The Petitioner’s argument on this point suffers from

the same fatal flaw as its argumeni in Point IT of its Peti-

tion for Certiorari concerning the issue of damages, name-

ly it is based upon an incorrect characterization of what

constituted the Plaintiffs-Respondents’ damages in this

case. As discussed earlier in Point II of this Answer, the

damages consisted of the difference between the actual

value of the bonds and the price paid for them on the

date of issne, not the ‘‘market drop”’ itself. [Op. A-18-

19] The Circuit Court made it plain that it was applying

the principle of the ‘‘second investment decision’’ rule as

26

stated in Harris v. American Investment Co., 523 F.2d

220, 228 (8th Cir. 1975), cert. denied, 423 U.S. 1054 (1976),

although the Harris Court’s enunciation of the rule was

in response ‘‘to the argument that the investor should

have mitigated his damages by selling his stock after dis-

covering the fraud’’. [Op. A-27] The Circuit Court

thus continued to recognize that the ‘‘market drop’’ did

not constitute the damages in this case. If it were, the

Cireuit Court here would have been responding to the

same mitigation argument as was the Court in Harris.

The Plaintiffs’ ‘‘second investment decision’’ to hold the

bonds, knowing that they carried no call protection against

lower interest cost refunding, was wholly unrelated to

their initial decision to purchase the bonds, believing they

did carry such protection, and thus was wholly unrelated to

Union Electric’s fraudulent conduct. Any fluctuations in

market price after that time, then, are not relevant to the

issue of damages in a cause of action under Rule 10b-5.

This, coupled with the measure of damages used in the

instant case, is why the ‘‘recovery of the bonds two

months later, and the continued receipt of interest pay-

ments have no bearing on the measure of the plaintiffs’

damages caused by UEH’s fraudulent conduct’’. [Op.

A-27] Recovery of the bond price occurred after the

‘‘second investment decision’’ and the interest payments

were the same after discovery of the fraud as they were

before. The evidence offered by the Petitioner was there-

fore irrelevant and immaterial to the issue of how much

more the Plaintiffs-Respondents paid for the bonds than

they were actually worth as measured by that difference

on the date the bonds were issued. As an aside, it cer-

tainly would have been interesting to see what the Peti-

27

tioner’s position on this point would have been had the

market price of the bonds continued to fall.

The Eighth Circuit correctly decided that the District

Court did not abuse its discretion in excluding evidence

of the continued interest payments and of the recovery

of the market price of the bonds two months after the

discovery of Union Electric’s fraudulent conduct, because

that evidence was irrelevant and immaterial to the issue

of Plaintiffs-Respondents’ damages. The Highth Cir-

cuit’s rulings on the exclusion of such evidence was in

keeping with its previous rulings on the same issue in

Harris v. American Investments Co., 523 F.2d 220, 228

(8th Cir. 1975), cert. denied, 423 U.S. 1054 (1976) and

Shapiro v. Midwest Rubber Reclaiming Co., 626 F.2d 63

(8th Cir. 1980), cert. denied, 449 U.S. 1079 (1980). This

Court has twice before refused to grant certiorari to re-

view this issue and should do so again. Petitioner’s Point

IV, B in its Petition for Certiorari is without merit.

—

oi

CONCLUSION

For the foregoing reasons, Union Electric’s Petition

for a Writ of Certiorari to review the judgment and Opin.

ion of the Eighth Circuit should be denied.

Respectfully submitted,

CampBeLL & CamMpsBELL

Davin L. Campserz, MBE #17926

Attorneys for Plaintiffs-Respondents

10411 Clayton Road, Suite 305

St. Louis, Missouri 63131-2997

(314) 991-0241