__________ Nos. 95-2460 and 95-2462

__________ S. Michael McKay, * * Appellant/Cross-Appellee, * * v. * Appeal from the United States * District Court for the WilTel Communication Systems, * Eastern District of Missouri Inc., a Delaware corporation, * * Appellee/Cross-Appellant. *

__________ Submitted: February 12, 1996 Filed: June 28, 1996

__________ Before MAGILL, HEANEY, and MURPHY, Circuit Judges.

__________ MURPHY, Circuit Judge.
Michael McKay sued his former employer, WilTel Communication Sy stems, Inc. (WilTel), to collect additional commissions on a large phone system sold by a n affiliated company. The jury awarded McKay $119,215. McKa y appeals fr om the judgment entered by the district court in his favor , arguing he should hav e also received statutory damages and attorney fees. WilTel cross-appeals to challenge the sufficiency of the evidence an d several rulings by the district court on jury instructions and evidence. We affirm in part and reverse in part.

### The $30,439 commission was based on McKay's compensation 1 

### agreement, which provided for one percent on the first $3 million of a major sale and two percent on the balance. This figure was revised later, and the record suggests that McKay received a total of either $30,877.42 or $31,000.72. McKay does not dispute that he received the latter amount, but to avoid confusion we will refer simply to a $30,000 commission.
-2- I.

McKay joined a predecessor of WilTel as a salesperson in 1977 an d soon became its sales manager for Arkansas. Except for a brief period in 1980-81, McKay continued to work for WilTel through 1990, when he resigned

. WilTel is an unregulated vendor of telecommunications equipment. During the re levant period, it was a subsidiary of Centel Corporation , headquartered in Chicago. Centel was also the parent company of Central Teleph one Company of Florida (Florida Central), which is a regulate d provider of telephone service with its headquarters in Tallahassee.

The dis pute here revolves around a sale in which McKay helped sel l a multi-million dollar phone system, including b oth equipment and service, to Florida State University (FSU). The university considered a proposal to buy the system from WilTel, but decided to purchase from Florida Centra l because the latter co uld offer a purchase agreement using periodic tariff payments.
FSU agreed to pay Florida Central ro ughly $6 million during the five year contract term and $6 million more if it exercised its option to exten d for another five years. Florida Central purchased equipment valued a t about $2.5 million from WilTel and then resold it to FSU as part of th e sales and service package. WilTel added a hypothetical profit to the pric e it charg ed Florida Central and paid McKay approximately $30,000 as a 1 commission based on t he equipment sale. McKay argued he should receive a commission on the ent ire value of the FSU transaction because of his role in it, but he cashed the commission check after informing WilTel managemen t

### -3-

that he was protesting the amount.
The Florida Central sale took two years to complete, and McKay' s role
was sign ificant. He had been assigned the account in late 1985 when a senior WilTel manager learned of FSU's plan to replace its existing system

. McKay visited FSU some fifteen times, and the evidence suggests that he wa s the employee from the Centel entities most significantly and consistently involved in the sale efforts.

It became clear in 1986 that FSU's financial situation would no t allow a c ash sale, so McKay devised a joint approach for the Cente l entities, including WilTel and Florida Central. Because Florida Central was regulated, it cou ld offer a tariffed sale proposal while WilTel could not. Ultimately Cent el presented three options to FSU in one proposal on Centel letterhead. Centel prevailed over several competitors, and FS U selected an option involving both WilTel and Florida Central. Equipment from WilTel would all ow FSU to run its own switching facility and provide servi ce directly to students. It would also provide the advance d technology necessary for FSU's expanding compute r operations. The package apparently also included local service from Flor ida Central. All payments
were to be made to Florida Central according to the tariffed rate over fiv e
or ten years. Florida Central then purchased the equipment from WilTel fo r resale to FSU.

McKay discussed his compensation with his superiors several time s during the process. In early 1987, he asked his immediate manager, Lynn McKee, how his commission would be computed. After McKee checked with mor e
sen ior executives, he told McKay he would receive his normal commissio n
even if the tariff option were chosen. McKay testified that he felt i t
unne cessary to obtain a precise definition of "normal" at that poin t because the sale was still speculative, a cash sale to FSU was still a possibility, and he had always been treated fairly by the company. As a tariffed

### -4-

sale became more likely, however, it became clear that the vast majority of the proceeds from the sale would pass through Florida Central accounts rather than WilTel's. McKay was concerned that he would not be compensate d fairly and wrote a series of memoranda to McKee and other WilTel executive s in late 1987 and early 1988.

After WilTel paid McKay the $30,000 commission check cashed unde r protest, he argued inanother series of memoranda that he was entitled to
a commission on the entire transaction between Florida Central and FSU, no t just the transfer bet ween the two subsidiaries. The commission issue was still not resolved when McKay resigned in 1990 t o accept another position.

McKay bro ught suit in state court in 1992, alleging that WilTel had breached the compensa tion agreement and had been unjustly enriched by not paying him a commission on the full value of the FSU transaction. McKay also alleged he was entitled to statutory damages under R.M. § 407.913 , which provides for additional payment if commissions are not paid as due when a salesperson is terminated. The first complaint also containe d breach of contract an d unjust enrichment claims against WilTel based on a sale to McDonnell Dou glas, Inc. WilTel removed the case to federal court based on diversity of citizenship.

The d istrict court granted summary judgment in favor of WilTel o n both counts relating to McDonnell Douglas and on the breach of contrac t claim rega rding FSU. The court concluded that McKay had received al l commissions due him on the McDonnell Douglas sale and that the compensatio n plan was inapplicable to the FSU transaction because WilTel had not made a sale to FSU.

McKay t hen was granted leave to file an amended complaint in whic h he alleged that "the sum of $30,439 does not represent the reasonable valu e of the services performed by plaintiff" in the FSU transaction and tha t WilTel was unjustly enriched. He again

### Article I, § 13 of the Missouri Constitution states that 2 

### "no law . . . retrospective in its operation . . . can be enacted."
-5- incl uded the statutory claim under Mo. Rev. Stat. § 407.913, but th e district court ruled before the case was submitted to the jury that th e statute could not be applied. The jury returned a verdict after trial in favor of McKay for $119,215, plus interest and costs. WilTel's motions fo r judgment as a matter of law, for remittitur, and for a new trial wer e denied, and this appeal and cross-appeal followed.

II.
McKay raises only one issue on appeal: that the district court erred by concluding that Mo. Rev. Stat. § 407.913 could not be applied in this
case. The district court concluded that use of the statute would be a n unconstitutional retroactive application because the FSU sale had occurred
more than a year before the statute's enactment. Mo. Rev. Stat. Const

. Art. I, § 13. 2

Section 407.913 was enacted in 1989 and reads: Any principal who fails to timely pay the sales representative commissions earned by such sales representative sha ll be liable to the sales representative in a civil action for the actua l da mages sustained by the sales representative, an additiona l am ount as if the sales representative were still earnin g commissions calculated on an annualized pro rata ba sis from the date of termination to the date of payment. In addition th e cou rt may award reasonable attorney's fees and costs to th e prevailing party. McKay claimed throughout this litigation that he is entitled to both the statutory damages, which he computed to be some $300 per day, and attorney fees.
WilTel responds first that the statute does not apply because M cKay's cause of action regarding any additional commissions

### Similarly, we need not address the arguments raised by 3 

### WilTel regarding the constitutionality of retroactive application of the statute or by McKay regarding WilTel's late amendment of its answer to include its affirmative defense on the constitutional issue.
-6- accrued before the ef fective date of the statute and it cannot be applied retroactively. WilTe l's position is that the right to sue accrued in the spring of 1988, more than a year before the statute's enactment (July 1989 ) and its effective dat e (no earlier than October 1989). McKay argues that his r ight to sue accrued when he left the company in 1990, but that th e statute could be appl ied retroactively even if the correct date were 1988 because it only creates an additional remedy, not a new cause of action. Under Missouri law procedural statutes may be applied retroactively, but substantive ones, often defined as those affecti ng vested rights, may not. See, e.g. , Doe v. Roman Catholic Diocese of Jefferson City , 862 S.W.2d 338 , 340-42 (Mo. 1993) (en banc). We do not need to decide when a cause o f actio n accrues under § 407.913 or whether the statute is procedural o r substantive because the section is inapplicable for other reasons. 3

The parties also disagree whether the commissions McKay seeks ar e
covere d by § 407.913. WilTel argues that they are not because McKa y
rece ived all commissions due under his contract when it paid him th e $30,000 in 1988. McKay argues that the statute applies because he seeks additiona l commissions on the FSU sale which were due and owing when h e left WilTel. Our rev iew of legal questions is de novo, and we may affirm
on a ny basis supported by the record. Monterey Development Corp. v

. Lawyer's Title Insurance Corp. , 4 F.3d 605, 608 (8th Cir. 1993).

The statute, and the other sections enacted with it, focus on th e timely payment of sales commissions earned by a sales representative under contract with a principal. See Mo. Rev. Stat. §§ 407.911-.915. Section 407.913 provides for actual damages, plus an additional amount for th e period between the date a salesperson

### Monetary awards are "calculated on an annualized pro rata 4 

### basis from the date of termination to the date of payment." Mo. Rev. Stat § 407.913.
-7- is termi nated and the date the commission is ultimately paid. I n det ermining when, and impliedly if, a sales commission becomes due, th e contract between the sales representative and the principal "shal l
con trol." Rev. Stat. Mo. § 407.912.1(1). McKay now concedes that h e
rec eived all he was due under his written contract, and it is th e extracontractual nature of his efforts on the FSU transaction that makes recovery in quantum meruit possible. Recover y of commissions on a quantum meruit basis rather than on a compensation plan or contract appears to be outside the intended scope of the statute. McKay's breach of contract claim w as dismissed before trial, and he has not appeal ed that decision. McKay also testified that he left WilTel voluntarily to pursue another business op portunity, but the statute appears designed to p revent loss of commissions because of discharge from employment. Since WilTel paid McKay his contractual commissio n and he was 4

never term inated, McKay's situation is not covered by § 407.913. Th e dist rict court did not err in declining to permit application of th e statute.

III.

On its cross appeal, WilTel challenges the admission of som e evidence, several jury instructions, and other questions of law. All of its a rguments were properly preserved in its motions for judgment as a matter of law.

WilTel ar gues that McKay presented no evidence that it gained a direct economic benefit from the transfer of the equipment to Centra l Florida or from the total sale to FSU. A benefit retained by the defendan t is required by Missouri law under an unjust

### This language was not included in the original complaint, 5 

### which apparently claimed only unjust enrichment. "All pleadings shall be so construed as to do substantial 6 

### justice." Fed.R.Civ.Proc. 8(f).
-8- enrichment theory. See Koepke Construction, Inc . v. Woodsage Construction Co. , 844 S.W.2d 508 (Mo.App. 1992). WilTel therefore contends that th e district court erred by refusing to instruct the jury that a benefit must be proven and by deny ing WilTel's motions for judgment as a matter of law or for a new trial.

The amended complaint included a claim that the $30,000 commissio n paid does not "represent the reasonable value of the services performed by plaintif f." While the amended complaint also claims that WilTel wa s 5 unjustly enriched, the relief requested was the reasonable value of McKay' s services, not the amo unt by which WilTel was allegedly unjustly enriched. The d istrict court interpreted this claim as one in quantum meruit, o r imp lied contract, and concluded that any economic benefit to WilTel wa s irrelevant. E.g. , Excerpts from the Transcript for March 2, 1995 at 4, 13

. It therefore instructed the jury that:
Your verdict must be for [McKay] and against [WilTel] if yo u believe first: [McKay] furnished services to [WilTel] wit h respect to the Florida State University transaction mentioned in the evidence; and second, [WilTel] accepted such service s for which [McKay] was not fully compensated by [WilTel].

If a pr oper objection is made, jury instructions are reviewed as a whole to insure that they fairly and adequately state the substantive law on the issue raised. American Business Interiors, Inc. v. Haworth, Inc. , 798 F.2d 1135, 1139 (8th Cir. 1986). If the objecting party can als o demonstrate that it was prejudiced, a new trial is necessary. See Fink v. Fole y-Belsaw Co , 983 F.2d 111, 113-14 (8th Cir. 1993). The distric t court's in struction is consistent with the pleadings and appears to be a 6 faithful

### -9-

application of Missouri Approved Jury Instruction § 4.04 on quantum meruit

. The district court's interpretation of this clai m should not be disturbed.

Recovery under quantum meruit or implied contract does not requir e proof that the defend ant made a profit or received some economic benefit, only that the plaintiff performed services and t hat the defendant accepted them. Johnson Group, Inc. v. Beecham Inc. , 952 F.2d 1005, 1007 (8th Cir. 1991) (Missouri law); Jorritsma v. Tymac Control s Corp. , 864 F.2d 597, 599 (8th Cir. 1988) (Missouri law); Missouri Approved Jury Instructions § 4.04

. WilTel requested that McKay pursue the FSU sale using a joint approach wit h Florida Central. He performed the requested ser vices, and Florida Central made the sale. The d istrict court did not err in denying the motions for judgment as a matter of law and for a new trial or in refusing to instruct the jury on a benefit to WilTel. Holland v. Tandem Computers Inc. , 49 F.3 d 1287, 1288 (8th Cir. 1995) (denial of motion for judgment as matter of law reviewed de novo with evidence viewed in light m ost favorable to nonmoving party); N orton v. Caremark, Inc. , 20 F.3d 330, 334, 340 (8th Cir. 1994 ) (denial of motion for new trial reviewed for clear abuse of discretion).

WilTel also argues that McKay failed to prove that his work on th e FSU sale was sufficiently different from his work under his compensation agreement to warrant equitable damages. Under Missouri law, quantum merui t damages are available from an employer only if the services are "outside the scope of the cont ract." H.H. Robertson Co., Cupples Products Div. v. V.S. DiCarlo General Contractors, Inc. , 950 F.2d 572, 577-78 (8th Cir

. 1991) (Missouri law); St. Louis Testing Laboratories, Inc. v. Mississippi Valley Structural Steel Co. , 254 F.Supp. 47, 55-56 (E.D.Mo. 1966), aff'd 375 F .2d 565 (8th Cir. 1967). The evidence must be viewed in the ligh t most favorable to McK ay as we review WilTel's argument. McBryde v. Carey Lumber Co. , 819 F.2d 185, 188 (8th Cir. 1987).

### Because there was evidence from which the jury could 7 

### conclude that WilTel's $30,000 payment did not satisfy its obligations to McKay, the district court did not err in refusing WilTel's requested instruction to the contrary.
-10- There is no dispute that McKay's compensation agreement did not cover tariff sa les made by Florida Central but arranged by McKay. WilTe l witnesses indicated that the structure of the FS U sale was highly unusual, and it is undisputed that WilTel agreed to pay M cKay a "normal" commission
on a tari ff sale. The evidence also would support a finding that hi s superiors urged him t o pursue a joint approach to the sale, including the tariff option which h e apparently proposed and which only Florida Central could offer. There was substantial evidence from which the jury could fin d that McKay provided services outside the scope of his contract that made
a success ful sale possible, and denial of the motions for judgment as a matter of law was proper. Hastings v. Boston Mutual Life Insurance Co. , 7 975 F.2d 506, 509 (8th Cir. 1992).

WilTel also argues that McKay waived his claim to additiona l commissions by continuing to work for the compan y for over two years after the FSU sale. As the many memoranda from McKay to various superiors and his cashing the commission check under protest d emonstrate, however, McKay made clear his dissatisfaction with WilTel's resolution of the matter.

The c ases relied upon by WilTel are not on point because in them a party continued to accept payments under a contract after becoming aware of a bre ach of that contract. See, e.g. , Barker v. SAC Osage Electri c Cooperative, Inc. , 857 F.2d 486 (8th Cir. 1988) (Missouri law); Long v
. Huf fman , 557 S.W.2d 911 (Mo. App. 1977); Chemical Fireproofing Corp. v

. Bronska , 542 S.W.2d 74 (Mo. App. 1976). While waiver of a breach was foun d under those circumstances, McKay's situation differs. His acceptance of the commission for th at part of the sale which fit under his compensation agreement cannot be interpreted as acquiescence in

### For similar reasons WilTel's argument that the district 8 

### court should have given an affirmative defense instruction based on waiver and estoppel is without merit.
-11- WilTel's decision to pay him only that amount fo r the FSU sale. The cited
cases do n ot speak to the situation where a sale is beyond a writte n contract and a claim is made for additional compensation under a quantum meruit theory. 8

Likewise, McKay's cashing of the check under protest was not a n accord and satisfaction under Missouri law. The doctrine of accord an d satisfaction does not apply unless the payor indicates its intent tha t acceptance of the check will settle all claims b etween the parties. McKee Construction Co. v. Stanley Plumbing & Heating Co. , 828 S.W.2d 700, 70 1 (Mo. App. 1992). Because there was no evidence that WilTel expressed such an intent, the distri ct court did not err in denying WilTel's motions for judgment as a matter of law on this basis.
WilTel argues that the jury should h ave been instructed that McKay's compensation agreement would have limited his commission to $100,000 had the comple te sale to FSU been made directly by WilTel. The jury wa s instructed that: In determining the reasonable value of the services rendered by Plainti ff to Defendant, with respect to the Florida Stat e Univer sity transaction mentioned in the evidence, you ma y consid er all of the evidence adduced during trial, includin g the provision of the 1987 Compensation Plan mentioned in th e ev idence. However, the Court has ruled as a matter of law , that that plan does not provide a maximum value for Plaintiff's services

. (emphasis added).

We conclu de as a matter of law that McKay could not have reasonably expected to make more than a $100,000 commission on the sale and that that jury instruction was therefore erroneous. McKay

### Having reached this conclusion, we need not address 9 

### WilTel's argument that it was error to exclude McKay's responses to interrogatories in which he acknowledged the $100,000 limit.
-12- was told he would be paid on a normal basis. His compensation plan read "[t]he maximum allowable commission on any one sale shall be $100,000 on SL-100's . . . . Exceptions for large PBX netwo rks may be appropriate but must be approved in w riting by the President in advance of the proposal." His commission therefore would have been limited to $100,000 had WilTe l made the sale directl y. Just as WilTel, or other Centel entities, should not have received essentially free services from McKay because FSU chose the tariff option rather than a purchase straight from WilTel, McKay shoul d not receive more thanthe contract maximum. In reaching this conclusion,
we al so note that McKay himself assumed the $100,000 limit would appl y throughout his unsuccessful negotiations with WilTel for additiona l commissions and during the first stages of this litigation.

The district court therefore erred in not granting WilTel's motio n for remittitur. The damages awarded to McKay should be reduced so that hi s tot al recovery before interest and costs is $100,000 (but deducting th e
com missions already paid on the FSU transaction). A new trial i s 9 unnecessary because there is a clear standard that can be applied in a reliable manner to reduce the jury's verdict to the contractual $100,000 limit. Cf. Hicks v. Capitol American Life Insurance Co. , 943 F.2d 891, 89 5 (8th Ci r. 1991) (case remanded for new trial where evidentiary recor d needed to be redeveloped).
WilTel argues that the jury should have been instructed to redu ce the value of the Central Florida-FSU transaction to its present value before computing McKay's commission. Under Missouri la w, damages based on future payments should be re duced to their present value. Mattan v. Hoover Co. , 166 S.W.2d 557 (Mo. 1942).

### -13-

While the better course would have been to instruct the jury on presen t value, WilTel's closing argument stressed that the present value of damage s should be calculated. It pointed to a September 1987 memorandum prepared by McKay in which he consistently used the present value to arrive at the commission he believed was due. Because the jury was aware of th e relevance of present value as it considered the reasonable value of McKay' s services, WilTel has not made a sufficient showi ng of prejudice to require a new trial.
WilTel also argues that the district court should have instruct ed the jury that there is a presumption under Missouri law that services performe d for an employer are not "extra work" subject to additional compensation. Henderson v. Brown Electrical Supply Co. , 555 S.W.2d 635, 639 (Mo. App

. 1977). The evidence is clear, however, that McKay's efforts related to th e FSU transaction were out of the ordinary. It was apparently the first tim e
a joint a pproach was taken by WilTel with a sister subsidiary phon e company, and this situation was not contemplated by the compensation plan. McKay was assigned and encouraged to do the work normally necessary t o consummate a sale but to make available to FSU purchase options which woul d preclude commissions under the contract. He was told he would receive a normal commission on any resulting sale. A conclusion that his effort s fell outside his normal duties is implicit in th e jury's decision that the reasonable value of his services was more than he was paid. In light of the evidence, WilTel has failed to demonstrate that it was prejudiced by any failure to instruct on the presumption.

WilTel also challenges the admission of evidence relating to th e
reason able value of McKay's services. The district court admitte d testimony and documents related to the commissions paid by Regional Bell Ope rating Companies to sales agencies who sold phone services for them

. Evid ence was also admitted showing that WilTel paid a twenty percen t commission to its sales representatives on

### WilTel contends that this commission rate also should not 10 

### have been admitted because it was not adopted on a national basis until 1993 and would not have been applicable to the FSU transaction in any event. The rate was relevant to the determination of the reasonable value of McKay's services, however, because it tends to show how WilTel valued the efforts of its sales representatives in situations similar to the FSU sale.
-14- its share of sales made on behalf of Bell companies. The evidence shows 10 that the Bell agency commission rates were presented to the jury as being analogous, but not directly applicable, to the FSU transaction. WilTel ha d the opportunity to point out any defects in the analogy to the jury. Base d
on t he evidence, these Bell agreements covered situations sufficientl y similar to the FSU sale to make them useful to t he jury in determining the reasonable value of McKay's services, and WilTel has not shown that an y prejudice outweighed their probative value, and their admission was not an abuse of discretion. Cummings v. Malone , 995 F.2d 817 (8th Cir. 1993).
Finally, WilTel argues that the district court should not hav e admitted evidence showing how WilTel sales representatives were compensate d in other unusual transactions. It suggests the evidence was irrelevan t because the sales inv olved neither McKay nor WilTel. Again, the district court did not abuse its discretion because these transactions wer e sufficien tly similar to the FSU sale to aid the jury in determining th e reasonable value of McKay's services.

IV.

In conclusion, we affirm on all issues except for the amount o f damages which is reve rsed, and the case is remanded to the district court for further proceedings consistent with this opinion.

### -15- A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.