FILED

United States Court of Appeals

Tenth Circuit

JUL 2 2002

PATRICK FISHER

Clerk PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

THE GUIDES, LTD., a Colorado

limited liability company, doing

business as The Africa House;

and TSEGHE FOOTE, individually,

Plaintiffs/Appellants/Cross- Appellees,

v. No. 99-1388

THE YARMOUTH GROUP PROPERTY MANAGEMENT, INC.(1); TABOR CENTER ASSOCIATES, L.P., No. 99-1389

No. 99-1392

Defendants/Appellees/Cross- Appellants. No. 99-1455

No. 99-1459

No. 99-1464

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

(D.C. NO. 96-S-2516)

Darold W. Killmer (David H. Miller and Mari Newman with him on the brief), Miller,

Lane, Killmer & Greisen, LLP, Denver, Colorado, for the Plaintiffs/Appellants/Cross-

Appellees.

Robert Lawrence Ashe, Jr., Paul, Hastings, Janofsky & Walker, LLP, Atlanta, Georgia,

(Kelly J. Koelker and Maureen E. O'Neill, Paul, Hastings, Janofsky & Walker, LLP,

Atlanta, Georgia; Dov M. Grunschlag, Steinhart & Falconer, LLP, San Francisco,

California; and James L. Aab, Aab & Botts, LLC, Denver, Colorado, with him on the

(1) The Yarmouth Group Property Management, Inc., is now known as Jones Lang

LaSalle Property Management, Inc.

brief for Tabor Center Associates, L.P.; David H. Stacy, Elzi Pringle & Gurr, Denver,

Colorado, for The Yarmouth Group Property Management, Inc., joins in the brief for

Tabor Center Associates, L.P.), for the Defendants/Appellees/Cross-Appellants.

Before BRISCOE and MCWILLIAMS, Circuit Judges; and JENKINS, Senior District

Judge.(2)

BRISCOE, Circuit Judge.

Plaintiffs Tseghe Foote and The Guides, Ltd., d/b/a The Africa House (hereinafter

Africa House) brought a civil rights action against defendants The Yarmouth Group

Property Management, Inc., and Tabor Center Associates, L.P., alleging the defendants

had violated 42 U.S.C.  1981, and had intentionally interfered with Africa House's

prospective business advantages in conjunction with the defendants' eviction and failure

to lease retail space for Africa House. A jury found in favor of Foote and Africa House

on all counts, and awarded each plaintiff compensatory and punitive damages. Following

post-trial motions, the district court dismissed Foote as an individual plaintiff for lack of

standing and vacated the jury's award to her. The district court also granted Africa

House's request for attorney fees, although it reduced the requested rates, and further

granted prejudgment interest to Africa House.

The defendants appeal the district court's denial of their motion for judgment as a

(2) The Honorable Bruce S. Jenkins, United States Senior District Judge for the

District of Utah, sitting by designation.

matter of law and motion for new trial or remittitur, as well as the district court's award of

prejudgment interest. The plaintiffs cross-appeal the dismissal of Foote as an individual

plaintiff and the reduction in attorney fees. Our jurisdiction is pursuant to 28 U.S.C.

 1291. We affirm in part, reverse in part, and remand.

I.

The Guides, Ltd., is a subchapter S corporation organized under Colorado law and

doing business as The Africa House, a retail store specializing in African art and artifacts.

Tseghe Foote, an immigrant from Ethiopia, is its sole shareholder and president. In 1993,

Foote entered into two separate short-term lease agreements with the prior owners of the

Tabor Center, a downtown mall in Denver, Colorado, for Africa House to occupy space

322 at the Center. The first short-term agreement ran from February through August of

1993, and the second ran month-to-month beginning in September 1993. Under the terms

of the leases, the rent consisted of a base amount of approximately $23 per square foot,

and 15% of sales above a predetermined level. The lease did not require Africa House to

make any payments for mall operating costs or to incur any improvement or build-out

expenses. In exchange for these favorable terms, the lease provided that the owners could

terminate the tenancy or relocate the business with fifteen days' notice if they required

space 322 for any reason. The possibility of relocation was dependant upon available

space and the owners' judgment concerning merchandising mix and balance.

In October 1994, defendant Tabor Center Associates acquired the Tabor Center

and became the plaintiffs' landlord. In February 1995, defendant Yarmouth assumed

management responsibilities for the Center. In an effort to improve the profitability of

the Center, Yarmouth implemented new leasing procedures that included negotiating

long-term leases with future tenants. Yarmouth also approached existing tenants to

negotiate new long-term and short-term tenancies. However, Yarmouth did not approach

Foote, and in fact had no contact with her until September 1996 when Foote approached

Yarmouth to discuss the possibility of renewing or entering into a new lease.

From this initial meeting until late October 1996, Foote had several meetings with

representatives of Yarmouth concerning the possibility of leasing space at the Tabor

Center. However, Yarmouth would not clarify its intentions or engage in serious

negotiations. Foote and Yarmouth discussed a possible space for relocation of the

business, but Yarmouth would not assure Foote that the space would be available, even

though it was undisputed there were many empty spaces available at the Tabor Center.

During these attempted negotiations, a representative from Yarmouth made

misrepresentations to Foote concerning the lease at space 322 and commented that her

store: (1) did not "mix well" with other tenants; (2) was not glamourous enough; (3) "had

to go"; (4) did not "fit the image of Tabor Center"; (5) should change its name; (6)

devalued the Tabor Center; and (7) was unsophisticated. Yarmouth also drew up

blueprints which did not include Foote's store.

On September 13, 1996, General Nutrition Centers (GNC), a national vitamin and

health chain, entered into a ten-year lease with Yarmouth for space 322 at an annual rent

double that charged for Africa House. Foote was not informed of this lease while she

negotiated with Yarmouth. On September 24, 1996, Foote arrived at her store to find a

man making detailed measurements. When she called management to find out the

purpose of the measurements, she was informed that it was an attempt to lower the

insurance rates for the Center. It was only later that Foote learned that space 322 had

been leased to GNC, and the measurements were made in connection with that lease.

On September 26, Yarmouth informed Foote that Africa House would not be

offered a long-term lease because its gross sales did not meet or exceed $800,000.

Yarmouth was also reluctant to offer Africa House a different space or a short-term lease.

On October 14, 1996, the defendants served Foote with notice terminating her lease for

space 322. The termination notice did not contain any offer of relocation or a short-term

lease, even though other tenants who had been terminated by Yarmouth were offered such

options. Foote hired an attorney to negotiate with Yarmouth. Yarmouth eventually

offered Africa House a four-month lease for space 202 in the Center, but Foote rejected

the lease due to its short duration.

On October 29, 1996, Foote filed the complaint in this action against Yarmouth

and Tabor Center Associates, along with an application for a temporary restraining order.

Before a hearing on the order, the parties stipulated to relocate the business to space 202

until the legal issues were resolved. In the complaint, Foote brought claims on her own

behalf and on behalf of Africa House, alleging that the defendants had (1) unlawfully

interfered with the right to make and enforce a contract, in violation of 42 U.S.C.  1981;

and (2) unlawfully interfered with the right to lease real property, in violation of 42

U.S.C.  1982. Africa House also brought a claim alleging that the defendants had

intentionally interfered with its prospective business advantages.

A jury found in favor of both Foote and Africa House on all claims. The jury

awarded $200,000 in compensatory damages and $1,500,000 in punitive damages to

Foote; and awarded $150,000 in compensatory damages and $1,000,000 in punitive

damages to Africa House. The defendants filed a motion for new trial or remittitur,

which the district court denied. The defendants also filed a motion for judgment as a

matter of law. The district court granted this motion in part, finding that Foote's claims

merged with those of Africa House and, therefore, she was without standing. The court

dismissed Foote and set aside the verdict and damages in her favor. The plaintiffs filed

an application for attorney fees pursuant to 42 U.S.C.  1988(b). The district court

granted this motion, but reduced the hourly rates requested. The district court further

granted the plaintiffs' motion for prejudgment interest.

II.

We first address plaintiffs' contention that the district court erred in dismissing

Foote's  1981 and  1982 claims for lack of standing. The district court reasoned that

dismissal was necessary because the injury was suffered by Africa House rather than

Foote, in that the defendants had refused to contract with or lease property to Africa

House rather than to Foote individually, and that Foote's claim for injuries was the result

of that refusal. The plaintiffs argue on appeal that Foote has standing because as sole

shareholder of Africa House she suffered injury separate and distinct from that of Africa

House, and further that she has standing in her own right because she signed a guaranty

contract in her 1993 lease which gave rise to a special duty separate and distinct from that

owed to Africa House.

We review issues of standing de novo. Faustin v. City & County of Denver,

Colorado, 268 F.3d 942, 947 (10th Cir. 2001). In order to determine whether Foote has

standing to claim injury under 1981 and  1982, we first consider the language used in

those statutes. Section 42 U.S.C. 1981 guarantees the right of all persons to "make and

enforce" contracts. Section 42 U.S.C. 1982 guarantees the right to "inherit, purchase,

lease, sell, hold, and convey real and personal property." It has been held that

"[p]rudential limitations on standing ordinarily require that an action under section 1981

or 1982 be brought by the direct victims of the alleged discrimination because they are

best situated to assert the individual rights in question." Clifton Terrace Assocs., Ltd. v.

United Technologies Corp., 929 F.2d 714, 721 (D.C. Cir. 1991).

In the instant case, Foote alleged discrimination based on her race. However, the

party seeking to contract with the defendants and to lease property, and thus the direct

victim of the alleged discrimination, was Foote's corporation, Africa House, rather than

Foote herself.(1) We agree that Africa House has standing to assert discrimination claims

under  1981 and  1982 where such discrimination is based on the race of one of its

employees. See Gersman v. Group Health Ass'n, Inc., 931 F.2d 1565 (D.C. Cir. 1991),

vacated on other grounds, 502 U.S. 1068 (1992).(2) The question is whether Foote has

standing to bring a claim for emotional damages which she herself allegedly suffered as a

result of the defendants' discrimination.

We have held that, as a general rule, a stockholder cannot maintain a personal

action against a third party for harm caused to the corporation. Stat-Tech Intern. Corp. v.

Delutes, 47 F.3d 1054, 1060 (10th Cir. 1995). There is, however, an exception to this

rule where the actions of the third party that injure the corporation also cause injury to the

shareholder which is unique to himself or herself as a shareholder of the corporation and

not suffered by the other shareholders. Id.

Foote alleged that she suffered emotional distress as a result of the defendants' actions. However, this distress arose from the failure of the defendants to contract with or

lease to Africa House and was a product of the economic damages which were suffered

by the corporation. Foote suffered no violation of her contract rights or right to lease that

was in any way different from the violations claimed by Africa House. Her claim is

derivative of that of Africa House and she does not have standing to sue on her own

behalf. See Bellows v. Amoco Oil Co., 118 F.3d 268, 276-77 (5th Cir. 1997) (holding that

plaintiff who was president of a corporation and 51% shareholder had no individual cause

of action under  1981 for emotional distress arising from discrimination against the

corporation based on plaintiff's race).

Foote also argues that she has standing as the result of her guarantee of the

corporation's 1993 lease. However, we reject the premise that a stockholder's status as a

guarantor gives the stockholder status to assert an individual claim against a third party

where that harm is derivative of that suffered by the corporation. See Sparling v.

Hoffman Constr. Co., 864 F.2d 635, 640 (9th Cir. 1988); Nicholson v. Ash, 800 P.2d

1352, 1357 (Colo. App. 1990). Foote's status as guarantor of the previous lease is of no

significance to her claim that the defendants refused to contract or lease to her

corporation.

We hold that the district court did not err in dismissing Foote as an individual

plaintiff and setting aside the damages awarded to her.

(1) According to the Stipulated Pretrial Order, the plaintiffs' claims with regard to

1981 and 1982 are that "defendants have denied The Africa House the opportunity to

rent or negotiate for the rental of retail space at The Shops at Tabor Center." App. at 61.

The complaint identifies Africa House as the corporation. Id. at 36.

(2) In Gersman, a corporation, CSI, brought a 1981 claim against a defendant who

had ended a contractual relationship when the defendant learned that the president of CSI

was Jewish. The court held that CSI had standing to bring suit under 1981 because the

injury it suffered fell "within the zone of interests protected by the statute," in that the

termination of the contract was "solely because an individual associated with CSI was

Jewish." 931 F.2d at 1569. See also Hudson Valley Freedom Theater, Inc. v. Heimbach,

671 F.2d 702, 706 (2d Cir. 1982) (holding theater corporation had standing to assert claim

alleging it was discriminated against because it sought to involve the black and Hispanic

communities).

III.

We next consider the defendants' contention that their motion for judgment as a

matter of law should have been granted because there was insufficient evidence to sustain

the jury's finding of intentional race discrimination. In reviewing the district court's

denial of a Rule 50(b) motion for judgment as a matter of law, we apply the same

standard as the district court. Tyler v. RE/MAX Mountain States, Inc., 232 F.3d 808, 812

(10th Cir. 2000). We review all the evidence in the record, construing it and all

inferences drawn therefrom most favorably to the nonmoving party, and refrain from

making credibility determinations or weighing the evidence. Id. A party is entitled to

judgment as a matter of law only if there is no legally sufficient evidentiary basis for the

claim. Hampton v. Dillard Dept. Stores, Inc., 247 F.3d 1091, 1103 (10th Cir. 2001).

A  1981 or  1982 plaintiff must prove by a preponderance of the evidence that

the defendant intentionally discriminated against him or her on the basis of race. See

Stewart v. Adolph Coors Co., 217 F.3d 1285, 1288 (10th Cir. 2000). Such proof may

come from either direct or indirect evidence. Hampton, 247 F.3d at 1107. When asked to

review the sufficiency of the evidence in 1981 and  1982 claims based on indirect

discrimination, we assume that the plaintiff met his or her burden of proving a prima facie

claim and the claim properly went to trial, leaving only the question of whether the

plaintiff presented sufficient evidence to support the jury's determination that the adverse

action was taken on the basis of race. Id. at 1108; Stewart, 217 F.3d at 1288.

Based on the record as a whole, we conclude there was sufficient evidence from

which a jury could infer that the defendants discriminated against Africa House.

Although the undisputed evidence indicated that Africa House was always an excellent

tenant at the Tabor Center, and although the defendants could not identify a legitimate

reason why she would not be an appropriate tenant in the future, the defendants made no

attempt to discuss the possibility of a future lease. The defendants told Foote that Africa

House was not eligible for a long-term lease because it did not have enough gross annual

sales; however, at the same time they offered a long-term lease to another business whose

year-to-date sales were approximately $20,000 less and whose rent-to-sales ratio was

comparable. When Foote attempted to pursue a short-term lease, she was told that spaces

were unavailable or was begrudgingly offered only a temporary lease even though, at the

same time, the defendants were soliciting other tenants for short-term leases. At one

point, the defendants made misrepresentations to Foote concerning why they were taking

measurements of her business, telling her the measurements were for insurance purposes

when they were actually in preparation for a new tenant.

Further, there is evidence from which a jury could infer that Foote's race and the

perceived race of Africa House's clientele were the basis for this discriminatory conduct.

There was testimony from Jana Thorpe, a tenant who was offered a long-term lease, that

when she asked whether Foote's business would be offered a long-term lease, she was

told that the business "didn't fit the proposed image of the Tabor Center." App. at 1343.

She interpreted this statement to mean that "Africa House didn't fit the image of the

Tabor Center [because] Africa House was a store owned by a black person that sold

things from Africa and had black customers." Id. at 1344. There was also testimony that

Yarmouth management told Foote that her business did not "mix well," was not

glamourous enough, and devalued the Center, while at the same time tenants who were

not black were encouraged to sign leases. Further, management stated at various times

that the name "Africa House" should be changed.

Reviewing the evidence presented at trial, we cannot say that "the evidence points

but one way, and is susceptible to no reasonable inferences supporting [the plaintiffs']

claim." Hampton, 247 F.3d at 1107. The district court did not err in denying the

defendants' motion for judgment as a matter of law based on the sufficiency of the

evidence.

IV.

The defendants next contend there was insufficient evidence to support the jury's

determination that they interfered with Africa House's prospective business advantages,

and that the district court erred in denying their motion for judgment as a matter of law as

to that claim. They argue that Africa House failed to introduce evidence that the

defendants induced or otherwise caused a third person not to enter into or continue a

prospective business relationship.

After a careful review of the record, we are unable to find any evidence to support

the jury's verdict. On appeal, Africa House similarly fails to point to any evidence which

would support the verdict. As a result, we reverse the jury's verdict on this issue.

V.

The defendants next argue that the district court committed several trial errors

which, individually and cumulatively, require reversal. "When a party seeks 'reversal of a

jury verdict or of a denial of a motion for new trial' by claiming trial errors, it 'must

establish the alleged trial errors were both prejudicial and clearly erroneous.'" Baty v.

Willamette Indus., Inc., 172 F.3d 1232, 1247 (10th Cir. 1999) (quoting Gust v. Jones, 162

F.3d 587, 591 (10th Cir. 1998)).

First, defendants assert that it was error for the district court to allow the lay

opinion testimony of three witnesses: Jana Thorpe, Phil Pankoff, and David Fine. Under

Federal Rule of Evidence 701, lay opinion must be "(a) rationally based on the perception

of the witness, and (b) helpful to a clear understanding of the witness' testimony or the

determination of a fact in issue." The admission of lay opinion testimony is within the

sound discretion of the district court. Gust, 162 F.3d at 595. We conclude that the

district court did not abuse its discretion in admitting the testimony. The testimony of

Thorpe, Pankoff and Fine was rationally based on their perceptions and helpful to a

determination of facts in issue.

The defendants also argue that the district court erred in denying their motions in

limine seeking to exclude (1) the plaintiffs' expert witness, Dr. William Kaempfer, and

(2) irrelevant comparative evidence. The district court denied the motions, reserving the

issues for trial. At trial, the defendants did not object to any of the testimony identified in

their motions in limine. As a result, they have failed to preserve these alleged errors for

appeal. See Hampton, 247 F.3d at 1113 (stating that failure to make a timely and proper

objection constitutes waiver of the issue absent plain error resulting in manifest injustice).

We conclude that the defendants have failed to show the denial of their motions in limine

resulted in manifest injustice.

The defendants further contend that the district court abused its discretion when it

granted the plaintiffs' motion in limine to exclude a finding made by the Colorado Civil

Rights Commission that there was no cause to believe that the defendants had

discriminated against the plaintiffs in the leasing decision. However, the decision of

whether to admit or exclude findings of a civil rights commission lies within the sound

discretion of the district court. See Denny v. Hutchinson Sales Corp., 649 F.2d 816, 821-

22 (10th Cir. 1981). The defendants sought to admit the finding on the grounds that it

might contain statements to the commission that would contradict Foote's testimony at

trial. The district court excluded the evidence, but stated that it would entertain a motion

for reconsideration in the event that Foote actually did make statements at trial that

conflicted with her testimony to the commission. The defendants made no attempt to do

so, and do not now point to any conflicting statements. The district court did not abuse its

discretion in granting the plaintiffs' motion in limine to exclude the commission report.

The defendants next argue that the district court erred when it allowed plaintiffs'

counsel, during closing argument, to refer to the size and scope of the defendants'

operations. Plaintiffs' counsel implored the jury to "send a clear message" "all the way to

Sydney, Australia where [the defendants] are based on the other side of the world," and

further implied that the large size, international operations, and presumed profitability of

the defendants warranted a large award of punitive damages. App. at 1725-27. However,

the defendants did not object to this statement at closing argument, and we will not

address it on appeal. See Glenn v. Cessna Aircraft Co., 32 F.3d 1462, 1465 (10th Cir.

1994) (holding that "[a] party who waits until the jury returns an unfavorable verdict to

complain about improper comments during opening statement and closing argument is

bound by that risky decision and should not be granted relief")

Finally, the defendants contend that the district court erred in allowing Foote to

remain as a plaintiff in the case. They argue that her presence in the case confused the

jury. However, at no time during trial did the defendants object to Foote's presence as a

plaintiff. Under the circumstances, there was no error.

VI.

We next consider the defendants' argument that the compensatory damages

awarded to Africa House were not supported by sufficient evidence. The jury was

instructed that, in determining compensatory damages, it could consider (1) financial

losses, including lost profits and expenses; and (2) loss of good name, reputation, honor

or integrity. The jury ultimately awarded $150,000 in compensatory damages.

We will uphold a jury's award of damages unless it is clearly erroneous or there is

no evidence to support the award. See Brown v. Presbyterian Healthcare Services, 101

F.3d 1324, 1330 (10th Cir. 1996). "[T]he amount of damages awarded by a jury can be

supported by any competent evidence tending to sustain it." Advantor Capital Corp. v.

Yeary, 136 F.3d 1259, 1266 (10th Cir. 1998) (quoting Bennett v. Longacre, 774 F.2d

1024, 1028 (10th Cir. 1985)).

Dr. William Kaempfer testified as to Africa House's lost profits, ultimately fixing

the lost profits as a result of the defendants' conduct at $75,316.95. The defendants argue

that this testimony was unreliable. However, the jury apparently found the testimony

credible. "It is within the virtually exclusive purview of the jury to evaluate credibility

and fix damages." United Intern. Holdings v. Wharf (Holdings), 210 F.3d 1207, 1230

(10th Cir. 2000). Thus, Dr. Kaempfer's testimony was sufficient to support $75,316.95 in

compensatory damages.

We do not, however, reach the same conclusion regarding the remaining

$74,683.05 in compensatory damages awarded by the jury. The plaintiffs contend that the

award is supported by the testimony of Andrew Warren, Lewis Gaiter, Kathleen

Scheuerman, and Foote herself. However, while financial consultants Warren and Gaiter

suggested new business strategies which would help Africa House increase its business,

most of these business strategies were not adopted, and in fact the suggestions were made

more than one year prior to the alleged actions of the defendants. They expressed no

opinion concerning lost profits or loss of Africa House's good name, honor or integrity.

Similarly, Kathleen Scheuerman, an employee of Africa House, testified only that the

business in the new space was not as profitable as it was in the old space, and her

testimony in no way supports an award for lost profits above that presented by Dr.

Kaempfer, nor does it provide any evidence of a loss of good name, reputation, honor or

integrity.

Finally, Foote's testimony fails to support lost profits over and above those

calculated by her expert, and does not mention any damage to Africa House's good name,

reputation, honor, or integrity. As a result, we conclude there is insufficient evidence to

sustain a compensatory damage award over and above $75,316.95, and remand with

directions that the district court enter a remittitur reducing the compensatory damages

awarded to Africa House to that amount or, in the alternative, order a new trial.

VII.

The defendants contend that the district court erred in denying their motion for

judgment as a matter of law, arguing the punitive damages awarded to Africa House are

not supported by the evidence.(3)

(3) The plaintiffs argue that defendants failed to raise the issue of insufficient

evidence to support punitive damages in their Fed. R. Civ. P. 50(a) motions, and therefore

should not have been allowed to raise the issue in a Fed R. Civ. P. 50(b) motion, or on

appeal. However, the plaintiffs themselves failed to object on this basis in their response

to the defendants' Rule 50(b) motion. Under such circumstances, the plaintiffs may notassert the failure of the defendants to raise the insufficient evidence issue. When the

nonmoving party fails to raise the inadequacy of a Rule 50(a) motion in opposition to a

Rule 50(b) motion, that party cannot raise waiver as an argument on appeal. See Williams

v. Runyon, 130 F.3d 568, 572 (3d Cir. 1997); Thompson & Wallace of Memphis, Inc. v.

Falconwood Corp., 100 F.3d 429, 435 (5th Cir. 1996); Whelan v. Abell, 48 F.3d 1247,

125153 (D.C. Cir. 1995); Gibeau v. Nellis, 18 F.3d 107, 109 (2d Cir. 1994); Collins v.

Illinois, 830 F.2d 692, 698 (7th Cir. 1987); Beauford v. Sisters of Mercy Province of

Detroit, Inc., 816 F.2d 1104, 1108 n.3 (6th Cir. 1987); Halsell v. Kimberly Clark Corp.,

683 F.2d 285, 29395 (8th Cir. 1982). Therefore, we will address the issue.

"Whether sufficient evidence exists to support punitive damages is a question of

law reviewed de novo." Fitzgerald v. Mountain States Tel. & Tel. Co., 68 F.3d 1257,

1262 (10th Cir. 1995). We have held that the standard for punitive damages in actions

claiming a violation of federal civil rights requires that the discrimination must have been

malicious, willful, and in gross disregard of the rights of the plaintiff. See Hampton, 247

F.3d at 1115.

We conclude that this standard for punitive damages cannot be satisfied by a

showing of intentional discrimination alone. Otherwise, every jury verdict in a successful

 1981 or  1982 claim would include an award of punitive damages. Instead, we believe

that a plaintiff must prove that the defendant acted with malicious, willful or gross

disregard of a plaintiff's rights over and above intentional discrimination.

In examining the evidence, we are not persuaded that the plaintiffs proved the

defendants acted in malicious, willful or gross disregard of their rights. While the

indirect evidence in this case is sufficient to establish that the defendants intentionally

discriminated against the plaintiffs on the basis of race, there is no evidence which would show that the defendants acted in malicious or willful disregard of Africa House's rights.

As a result, we reverse the district court's denial of the defendants' motion for judgment

as a matter of law as to the $1 million in punitive damages awarded to Africa House.

VIII.

The defendants next contend that the district court abused its discretion when it

applied a state law rate of interest to compute the award of prejudgment interest to Africa

House. The district court applied a 9% interest rate to the prejudgment interest award

pursuant to Colo. Rev. Stat. Ann.  13-21-101. The defendants argue that the district

court should have applied the rate of interest for post-judgment awards found in 28

U.S.C.  1961 because the district court's jurisdiction was based on a federal question

jurisdiction rather than diversity jurisdiction.

We agree that a federal rate of interest rather than the state rate applies where

jurisdiction is based on a federal question, and therefore the district court erred in

determining that it was bound to apply the state rate of interest. See Carpenters Dist.

Council of New Orleans & Vicinity v. Dillard Dept. Stores, Inc., 15 F.3d 1275, 1288 (5th

Cir. 1994) (stating that "federal law governs the range of remedies, including the

allowance and rate of prejudgment interest, where a cause of action, as in this case, arises

out of federal statute"). See also U.S. Industries, Inc. v. Touche Ross & Co., 854 F.2d

1223, 1254 (10th Cir. 1988) (stating that an award of prejudgment interest in a federal

securities law claim is controlled by federal law), overruled by implication on other grounds by Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164

(1994). We therefore remand to the district court to fix the rate of prejudgment interest.

See Towerridge, Inc. v. T.A.O., Inc., 111 F.3d 758, 764 (10th Cir. 1997) (stating where

the prejudgment rate is governed by federal law, a court is free to choose any rate which

would fairly compensate the plaintiff for the delay); see also Jones v. Unum Life Ins. Co.

of America, 223 F.3d 130, 139 (2d Cir. 2000) (holding that because there is no federal

statute that purports to control the rate of prejudgment interest, the rate is left to the

discretion of the district court).

The defendants also contend that the district court erred in awarding prejudgment

interest from the date that the claim accrued rather than as the lost profits occurred. They

argue that because the lost profits did not all occur at the time the claim accrued,

awarding prejudgment interest from the date the claim accrued gives a windfall to the

plaintiffs.

The purpose of prejudgment interest is "'to compensate the wronged party for

being deprived of the monetary value of his loss from the time of the loss to the payment

of judgment.'" Anixter v. Home-Stake Prod. Co., 977 F.2d 1549, 1554 (10th Cir. 1992)

(quoting U.S. Industries, 854 F.2d at 1256). It appears that the district court in the case at

hand may have felt bound to apply state law found in Colo. Rev. Stat. Ann.  13-21-101

to the calculation of prejudgment interest, which provides for prejudgment interest to be

calculated from the date the action accrued. On remand, we direct the district court to

consider the timing of the award of prejudgment interest that will serve to fairly

compensate Africa House for the deprivation of the monetary value of its loss.

IX.

The plaintiffs also contend that the district court erred in reducing the rates at

which attorney fees were calculated for purposes of its award under 42 U.S.C.  1988(b).

The plaintiffs had requested fees for a total of 482.70 hours by attorney Darold Killmer at

$250 per hour, 309.55 hours by attorney David Miller at $250 per hour, and 118.60 hours

by attorney Mari Newman at $115 per hour. The district court reduced Killmer's and

Miller's hourly rates to $200 and reduced Newman's hourly rate to $100, finding that the

plaintiffs had failed to produce evidence showing that the higher rates were reasonable.

"In light of the discretionary nature of the district court's decision, we review an

attorney's fee award under 42 U.S.C.  1988(b) for an abuse of discretion." Robinson v.

City of Edmond, 160 F.3d 1275, 1280 (10th Cir. 1998). We review the district court's

factual findings for clear error, and the court's legal conclusions de novo. Id.

A claimant who files an application for attorney fees under  1988(b) has the

burden to prove that the fee is reasonable. Id. A reasonable rate is the prevailing market

rate in the relevant community. Malloy v. Monahan, 73 F.3d 1012, 1018 (10th Cir.

1996). To meet this burden, the claimant must:

produce satisfactory evidence - in addition to the attorney's own affidavits -

that the requested rates are in line with those prevailing in the community

for similar services by lawyers of reasonably comparable skill, experience

and reputation. A rate determined in this way is normally deemed to be

reasonable and is referred to - for convenience - as the prevailing market

rate.

Blum v. Stenson, 465 U.S. 886, 895 n. 11 (1984).

Here, the evidence fails to show that the requested rates were reasonable. While

Killmer submitted an affidavit as to the prevailing rates at his firm and another local firm,

the rates charged by attorneys at the other firm ranged from only $160 to $190 per hour.

An affidavit from Lynn Feiger, a former partner of Killmer, stated only that she charged

$310 per hour for the same type of work. While this evidence serves to establish Feiger's

rate, it does not establish the rates charged were consistent with rates charged by

comparably skilled lawyers in the community. Similarly, the only evidence of the

appropriateness of Newman's hourly rate was provided in the affidavit of Killmer.

The defendants contend that, instead of relying on their asserted rates, the district

court incorrectly relied on its own knowledge. However, we are unpersuaded by this

argument. Where a district court does not have before it adequate evidence of prevailing

market rates, the court may use other relevant factors, including its own knowledge, to

establish the rate. See Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243 (10th Cir. 1998).

We conclude that the district court did not err in finding that the plaintiffs failed to

satisfy their burden of establishing the reasonableness of the requested attorney fees and

in reducing those rates according to its own knowledge of the prevailing market rate.

X.

The decision of the district court dismissing Foote for lack of standing is

AFFIRMED. We VACATE the judgment and direct the district court to dismiss Africa

House's claim of intentional interference with prospective business advantages. We

REVERSE the district court's denial of the defendants' request for a remittitur and

REMAND with directions that the district court enter a remittitur order reducing the

compensatory damages awarded to Africa House to $75,316.95 or, in the alternative, to

grant a new trial. We AFFIRM the district court's denial of the defendants' motion for a

new trial for alleged evidentiary errors. We REVERSE the district court's denial of the

defendants' motion for judgment as a matter of law as to the punitive damages awarded to

Africa House and VACATE the award of punitive damages. We REVERSE the district

court's order granting prejudgment interest at the state rate from the date the claim

accrued, and REMAND for a determination of the rate of prejudgment interest and for a

determination of the date or dates of accrual. We AFFIRM the district court's award of

attorney fees.

Nos. 99-1388 et al., The Guides v. The Yarmouth Group

JENKINS, Senior District Judge, concurring and dissenting.

I concur with the majority opinion with one modest exception. I would reverse the

order of the court below dismissing Ms. Foote's jury award and reinstate her

compensatory damages judgment of $200,000.

Section 1981 states that "[a]ll persons . . . shall have the same right . . . to make

and enforce contracts . . . as is enjoyed by white citizens." 42 U.S.C.  1981 (1994).

Section 1982 states that "[a]ll citizens of the United States shall have the same right . . . as

is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real

and personal property." 42 U.S.C.  1982 (1994). Initially enacted pursuant to the Civil

Rights Act of 1866, sections 1981 and 1982 were "intended [to protect] . . . citizens of the

United States in enjoyment of certain rights without discrimination on account of race,

color, or previous condition of servitude," United States v. Cruikshank, 92 U.S. 542, 555

(1875), or because of their ancestry or ethnic characteristics, St. Francis College v. Al-

Khazraji, 481 U.S. 604 (1987), and to "confer on [African-Americans] a civil status

equivalent to that enjoyed by white persons." Valle v. Stengel, 176 F.2d 697, 703 (3d Cir.

1949). The protection afforded by these statutes finds its roots in the Thirteenth and

Fourteenth Amendments. See Runyon v. McCrary, 427 U.S. 160, 168Ä72 (1976)

(Thirteenth Amendment); Jones v. Alfred H. Mayer Co., 392 U.S. 409, 437Ä44 (1968)

(same); General Bldg. Contractors Ass'n v. Pennsylvania, 458 U.S. 375, 384Ä91 (1982)

(Fourteenth Amendment).

Although neither section 1981 or 1982 define "person" or "citizen," respectively,

the United States Supreme Court has provided useful guidance. In Arlington Heights v.

Metropolitan Housing Development Corporation, 429 U.S. 252 (1977), the Court stated

that, for the purposes of standing under the Fourteenth Amendment, "a corporation . . .

has no racial identity and cannot be the direct target of the . . . alleged discrimination."

Id. at 263.

In today's opinion, the majority disregards Arlington Heights in concluding that

Africa House has standing because under sections 1981 and 1982, "the direct victim of

the alleged discrimination, was Foote's corporation, Africa House, rather than Foote

herself."

In this case, Africa House by itself cannot have standing to assert section 1981 and

1982 claims because, as Arlington Heights explains, a corporation cannot be the direct

target or victim of racial discrimination. However, the Court in Arlington Heights did not

address whether a corporation would have standing if it were an indirect target of racial

discrimination, that is, whether a corporation has standing when it suffers an injury such

as lost profits resulting from unlawful discrimination directed at a member of a protected

class. Cases since Arlington Heights indicate that a corporation that is harmed by

discriminatory action has standing to litigate that harm. See Hudson Valley Freedom

Theater, Inc. v. Heimbach, 671 F.2d 702, 708 (2d Cir. 1982) (Pierce, J., concurring)

("[U]nder the 14th Amendment and the statutes which seek to implement its purposes,

any person, including a colorless corporate `person', although not a member of a

protected group, has an implied cause of action against any other person who, with

racially discriminatory intent, causes . . . it . . . [an] injury."). This view comports with

the Court's dictum in Arlington Heights and the purposes for which Congress enacted

sections 1981 and 1982.

The majority relies on Gersman v. Group Health Association, Inc., 931 F.2d 1565

(D.C. Cir. 1991), vacated on other grounds, 502 U.S. 1068 (1992), to hold that "Africa

House has standing to assert discrimination claims under  1981 and  1982 where such

discrimination is based on the race of one of its employees."

I agree with the reasoning in Gersman,(1) and I agree that the jury correctly found that Africa House suffered an injury resulting from unlawful discrimination. However,

the jury also found that the defendants had discriminated against Ms. Foote because of

her race and that Ms. Foote suffered a compensable injury distinct from that suffered by

Africa House.(2) Ms. Foote, as is required by our prior cases,(3) is a member of the protected

class under sections 1981 and 1982 and was the direct target of the defendants' racial discrimination whether she was acting in her individual capacity in seeking to enter into

the prospective lease contract,(4) or was acting as agent for her corporation. She is entitled

to redress for her own injuries that also fall clearly within the zone of interests protected

by sections 1981 and 1982. The defendants caused injury both to Africa House and Ms.

Foote by refusing to deal with Ms. Foote-a refusal the jury found to be racially

motivated. Affirming the defendants' liability to the corporate plaintiff, Africa House,

acknowledges that the corporation suffered an injury resulting from unlawful

discrimination-racial discrimination for which Ms. Foote served as the very human

direct target.

In dismissing Ms. Foote's claims, the majority relies on Bellows v. Amoco Oil

Company, 118 F.3d 268 (5th Cir. 1997). However, Bellows does not support the

majority's holding for several reasons. First, in Bellows, the jury found in favor of the

defendant Amoco on the corporate plaintiff's section 1981 claim. The corporate plaintiff,

Phillips Industrial Constructors, Inc. ("PICI"), did not appeal the jury's determination and

was therefore not before the Fifth Circuit at all. As the court itself stated: "The obvious

problem that Bellow faces with [his] argument, of course, is that the jury found that

(1)Gersman adequately addresses the difficult issues raised in Arlington Heights. In

Gersman, the defendant argued that the corporation, CSI, did not have standing to bring a

cause of action under section 1981 because CSI lacked a racial or religious identity.

Gersman, 931 F.2d at 1568. The court declined to rule that "racial identity is a predicate

to discriminatory harm" and instead approached the issue "by assuming that, if a

corporation can suffer harm from discrimination, it has standing to litigate that harm." Id.

Addressing this issue further, the court stated

a party may suffer a legally cognizable injury from discrimination even where that

party is not a member of a protected minority group. Thus, it is not necessary to

determine whether CSI has a "racial identity." [Given that a corporation exists as

an entity separate from its employees, officers and stockholders,] [s]uch a query

would lead to difficulties of determining what, in fact, constitutes a racial identity.

. . . For example, in the present case, CSI alleges that it has a racial identity

because it is operated and owned by Mr. and Mrs. Gersman, who are both Jewish.

Yet the situation would be no different if Gentile shareholders owned CSI and [the

defendant] ended the contractual relationship because the corporation had a single

Jewish employee. Thus, CSI need not have a "Jewish identity," or even have

predominantly Jewish owners or employees, in order to suffer injury from [the

defendant's] discriminatory actions.

Id. at 1570.

(2)The jury was instructed:

If you find that either or both of the Defendants discriminated on the

basis of Plaintiffs' race in the making or enforcement of a lease for the

Tabor Center for which they were qualified, you may award reasonable

compensation for the following:

- financial losses (for either Plaintiff Tseghe Foote or Plaintiff Africa

House);

- pain, suffering, and physical and emotional distress (for Plaintiff Tseghe

Foote only).

. . .

If you find for the Plaintiffs, or either of them, on more than one

claim for relief, you may award damages only once for the same business

losses.

(Jt. App. vol. I-A, at 308, 310.)

(3)In this Circuit, a racial identity is the cornerstone of a section 1981 and 1982 cause of

action and a necessary element of a plaintiff's prima facie case. See Shawl v. Dillards,

Inc., No. 99-1409, 2001 WL 967887, at *2 (10th Cir. Aug. 27, 2001) ("To establish a

claim under 1981, the plaintiffs must show that (1) they are members of a protected

class . . . ." (citing Hampton v. Dillard Dep't Stores, Inc., 247 F.3d 1091, 1101 (10th

Cir.2001))).

(4)The majority bases its holding that the corporation was the direct victim of the alleged

discrimination, in part, on the fact that the injurythe refusal to contract with or lease

propertywas suffered by Africa House, not Ms. Foote individually. However, the

majority ignores evidence in the record that suggests that Ms. Foote leased space from the

defendants under her own name, "Tseghe Foote, Tenant." On the existing record,

whether Africa House was to be the party to the prospective contract is ambiguous at best.

(Jt. App. vol. X, at 2445-49.)

Amoco did not interfere with PICI's contracts, or ability to contract, with Amoco on the

basis of race." Id. at 276. In other words, the court found that Bellow's claim, as it was

dependent on PICI's dismissed claim against Amoco, was meritless on appeal. Second,

the facts are distinguishable from the facts of the present case in that Bellow's claim was

one step removed from the cause of action as expressed by PICI. That is, in Bellows,

plaintiff Bellow claimed that Amoco discriminated against him on the basis of his race by

engaging in conduct that had the effect of terminating, modifying, or changing Bellow's

right to contract with PICI as distinguished from PICI's right to contract with Amoco. Id.

at 272Ä73.

Ms. Foote is not asserting that the defendants interfered with her right to contract

with Africa House. Ms. Foote is asserting that she has an injury resulting directly from

the defendants' discriminatory conduct towards her, separate and distinct from that

suffered by Africa House-an issue not raised or dealt with in Bellows or Gersman.

Rather than her claim being "derivative of that of Africa House," if anything, Africa

House's claim is derivative of the unlawful discrimination Ms. Foote experienced

firsthand in dealing with the defendants. Africa House could make no contract without

her participation. The jury found that the defendants frustrated Ms. Foote's efforts to

obtain a new lease, and did so because of Ms. Foote's race, thereby harming both Ms.

Foote and Africa House.

The majority dismisses Ms. Foote's harm as merely "a product of the economic

damages which were suffered by the corporation." Yet the uncontroverted testimony of

Ms. Foote and other witnesses established that she became deeply disturbed beginning in

September 1996-before Africa House had suffered any actual economic loss. The jury

found in Ms. Foote's favor, awarding her $200,000 in damages.

The majority has simply substituted its judgment for that of the jury concerning

whether Ms. Foote suffered the mental anguish that she and others testified to at trial as

resulting from the discrimination she experienced.

I would therefore hold that both Africa House and Ms. Foote have standing to

assert the section 1981 and 1982 causes of action against the defendants, and that the

district court's ruling as to Ms. Foote should be reversed and judgment in favor of Ms.

Foote should be reinstated as to compensatory damages.