October 28, 1999
Summary Review
of
Kansas Association of Private Investigators, et al
vs
Mulvihill, et al
(Kansas City Board of Police Commissioners)

Private Security operations in Kansas City, Missouri are controlled by the Board of Police Commissioners under the legal theory that they are quasi-police officials. The board is a composed of five appointees; their existence and authority to control private security is established by state statutes. The board is, legally, a state agency composed of individual political appointees. There is no actual legal entity called the "Board of Police Commissioners"; this is a collective title for the group of appointees. In 1996, the board included two attorneys, two citizens with PhDs and the Kansas City Mayor, a minister. In 1997, one of the PhDs departed and was replaced by an attorney. In 1999, the head of the board, an attorney, also resigned, and the mayor was replaced at the election. The authority of the board is established by two state statutes which remove the police department from the direct control of the city government (RSMo 84.350), and gives the board the additional authority to regulate private officers (RSMo 84.720). The latter statute can be traced, substantially unchanged, to the Charter of the City of St. Louis which was adopted and included in the Missouri State Constitution. The separation of power to control city police and private officers has traditionally been separated from the city government during the entire existence of the state. The structure is apparently intended to be a check and balance on the integrity of the city government. Based on this, the board is recognized as a state agency rather than a city agency. It operates with state authority. As a state agency, the Board utilizes the state administrative regulation system and has published its rules for private security operations as an administrative regulation under Title 17. In 1993, the Missouri legislature revised the statute pertaining to the regulation of private officers by the City of Kansas City. Prior to this revision, the statute had been identical to the statute which granted similar authority to St. Louis. This revision dropped the term 'Private Detective' from the title and altered the internal wording as well. Later that year, the Kansas City Board revised its administrative regulations. No public hearing was held on this revision; negative comments submitted by some associations and security companies were apparently ignored. This regulation had a number of internal problems which laid the foundation for the conflict in early 1997. The 1993 Title 17 regulation contained:

• a. Classifications for private officers which were incomplete and confusing. They were not based on the 1986 U.S. Department of Labor, Standard Industrial Classification System for Private Security operations (It has two: Private Detectives, Armored Couriers). Instead, it created a variety of job title classifications which overlapped and overlaid them with armed/unarmed classifications. The average company had difficulty trying to determine which category applied to what operation and whether there was a requirement to reclassify or relicense if the duties changed. The classifications seemed to be drawn from various corporation job titles while discarding or not considering the usual job descriptions in contract security, courier or investigation companies.
• b. The regulation did not directly set fees, but did contain a statement that fees would be 'posted from time to time' in the private officer licensing section.
• c. A statement that all persons performing security duties within the city had to be licensed.

Other problems existed, but these three would form the nucleus of the brewing dispute.

In 1996, the board created, or 'recognized' (depending on who is telling the story) the Ad Hoc Advisory Council. The authority, purpose and so forth are not completely known. Apparently, the board intended for this council to provide some kind of input pertaining to private security. Incredibly, the council was composed almost entirely of persons drawn from corporate security operations, most of whom had connections to the Kansas City Police Department. No professional associations were invited to join and small business operations, contract security operations, courier operations and investigative operations outside of a corporate setting received very limited representation. As it turns out, even this representation was ignored by the council. The 'good old boy' circuit was in full operation. In late 1996, the Board of Police Commissioners adopted a new licensing fee structure at its scheduled meeting. There was no notification to the current licensees that a new structure was being considered. In December 1996, the Private Officer Licensing Section mailed a letter to licensees implementing the fee increase beginning in February 1997. The fee increase was more complex than the one previously used. The simplest way to demonstrate the impact is to show the impact in one case. In 1996, an armed private detective renewed this city license for a cost of $35.00. He was required to attend a range firing of his firearm at the police range as part of the licensing process. In 1997, he was still required to attend the same range firing, but the licensing fee for exactly the same job was now $450.00 (an 1100% increase). For this expenditure, he received a license valid in one city! This kind of increase is difficult for a small business to handle financially, even if it is necessary. This one was questionable in its necessity. On receipt of this letter, members of the Kansas Association of Private Investigators began to contact each other. The initial question was: Why didn't we know this was coming? This was quickly followed by more questions. Some initial research conducted by a KAPI corporate officer indicated that the fee increase was required to be implemented by a mandatory process established by a specific state statute (RSMo 536.021), and that the collection of fees could not exceed the regulating agency's expenditures (case law). Incredibly, the board had failed to follow the mandated process which included public notification. The association attorney was contacted, reviewed the initial research, and concluded that it was correct. The attorney wrote to the Private Officer Licensing Section. A return letter received from the Police Department's Legal Section indicated that they had no obligation to use the state procedure. They later advanced the argument that the 1993 regulation relieved them of that requirement entirely! This is an incredible legal argument; it is based upon the theory that the board, created by the legislature, has the authority to ignore the controls placed upon it by the same legislature. KAPI responded by scheduling an appearance at the next public meeting of the Board of Police Commissioners. Having previously been scheduled to appear on 26 March 1997, KAPI was not given a specific time to appear; its representatives were forced to wait over 4 hours. Others were taken out of order of appearance and given special treatment. When the time came to speak, the KAPI representative began his presentation; written copies had been provided to the individual board members. The presentation was interrupted by Commissioner Simon who lambasted it. When the KAPI representative attempted to respond his comments, the Commissioner objected to the interruption of his interruption. Essentially, the attitude communicated was shut up and get out. He specifically stated that the courthouse was across the street if we didn't like it. Commissioner Daniels did ask for a follow-up letter. As the KAPI members departed with their presentation incomplete, the Board of Police Commissioners moved to more important business; a visit by clowns from the police circus. The next day, KAPI attempted to obtain a transcript of this meeting and the previous meeting in which the fee increase was adopted. We were advised that any copy would be $400.00 each and that none were available for review at the Board's office. KAPI provided a letter to the board members the next day, completely outlining the four problems and recommendations. No reply to this letter was ever received. The four problems were:

• a. Fee increase adopted improperly.
• b. The fee increase is excessive and unreasonable.
• c. The dual requirement of city occupational licenses and separate police board permits was improper.
• d. The licensing regulation was not being applied equally; police officers weren't being required to meet the licensing requirements.

Shortly afterward, KAPI retained a Kansas City law firm to represent the association in the matter. Contact was also made with a Missouri Senator asking that the Attorney General render an opinion on the statute in question. The Attorney General's Office declined to render an opinion. By June, no response had been received to the letter sent directly to the Board by KAPI. The law firm then contacted the Board's attorney directly. A short series of phone calls and letters lead to a meeting in July 1997 between the Board's Attorney and KAPI representatives. The position was outlined to him; he indicated that he would present it to the Board. In September 1997, the Board's attorney advised the KAPI attorney that resolution of the matter had been declined by the board. KAPI responded to this by filing a petition in October 1997 with the Missouri Department of Administration asking for a review of this action by a state agency. Incredibly, the Department declined to review. In doing so, they stated that they no longer had authority. A further check showed that the Missouri Legislature had just passed an emergency change to the applicable statute which went into effect immediately upon passage, but had not yet been published in the update of statutes. This meant that the only administrative appeal possible was to the Board itself. The only other options were forget it or go to court. After serious discussion among its membership and others, KAPI opted to file the case. The attorney began preparing the case and scheduled a final appearance at the Board of Police Commissioners.

On 30 January 1998, KAPI appeared through its attorney, Doug Stone. During the presentation, Commissioner Mulvihill (an attorney who had replaced one PhD), indicated that the Board had already made a decision on this issue, and then accused the KAPI attorney of simply running up a legal bill. With that clearly close-minded and arrogant attitude publicly demonstrated again, the KAPI attorney began the final draft of the civil action. Requests made by him for public information during this period were rebuffed by the Board. Shortly after the appearance, letters of termination were initiated against both KAPI and non-KAPI members. Some sole proprietors had declined to pay the $250.00 agency and $100.00 computer fees assessed in addition to the increased individual fee. These people were affected by the notice. Others in the industry simply did not renew their licenses due to the cost. In initiating the civil action, KAPI recognized that there were certain problems. Finances were a concern as was the perception of the association as an 'outsider.' The small membership base limited the association's financial support base while its lack of Missouri members seemed likely to affect its credibility and standing. KAPI began looking for members of the security industry who were interested in supporting the action. Assistance was located. Financial support was provided by the membership to the extent possible and also received from outside the association. Some of the outside financial support was extensive. Some members of the industry agreed with our position, but did not wish to be identified as 'troublemakers.' They would support the action, but would not step forward. KAPI agreed to step forward as the primary plaintiff; its 'outsider' position meant that it would be less seriously affected than those members of the industry whose businesses were located inside Kansas City, MO. In February 1998, a class action civil suit (K.A.P.I. et al vs Joseph J. Mulvihill, et al CV 198-203-CC) was filed in the Circuit Court of Cole County in Jefferson City, MO. The case had seven counts and three classes of plaintiffs. The counts can be summarized as follows:

• I - Title 17 C.S.R. requires that all persons or organizations providing services are required to obtain a license, but the included definitions for the classification system left out portions of the security services typically provided. This made it impossible to determine what type of license was required when providing these services.
• II - The Board of Police Commissioners were required to adopt fees as a rule or regulation under the provisions of a specific state statute. This was not done in 1996; therefore the fee increase was legally invalid. Enforcement of nonpayment of these fees was, therefore, also legally invalid and denied a property interest of the licensee who was terminated.
• III - The Board of Police Commissioners were required to adopt fees as a rule or regulation under the provisions of a specific state statue. This had not been done for any fee dating back to 1988. Fees charged during this period were also legally invalid.
• IV - The fee increase implemented in 1996 was unreasonably high.
• V - The Board of Police Commissioners was not requiring Kansas City Police officers to meet the requirements of Title 17 when working off-duty even though the state regulation did not specifically exempt police officers and clearly stated that 'all persons' were required to obtain a license. This constituted unequal enforcement.
• VI - Certain members of the Police Board and Police Department violated the civil rights of certain plaintiffs by failing to adopt the fees as a regulation as required by law and then enforcing the improperly adopted fees. When made aware of the error, the defendants persisted in enforcement 'under the color of law."
• VII - Certain members of the Police Board and Police Department violated the civil rights of certain plaintiffs by failing to adopt the fees as a regulation as required by law and then enforcing the improperly adopted fees. When made aware of the error, the defendants persisted in enforcement 'under the color of law."

The three classes of plaintiffs were:

• I - Persons and entities who were licensed on December 17, 1996 and February 3, 1997 (Approximately 3,500).
• II - Persons and entities who were licensed on February 3, 1997 and paid less than the full renewal fee, but were relicensed anyway (approximately 40). These members were later terminated for non-payment.
• III - Persons and entities who were licensed at anytime after September 29, 1988 (approximately 3,500).

A restraining order was requested in the filing; it was denied by the judge.

The defendants responded to the filing and then moved the case to the federal district court using an option available to them under the civil rights counts. It was refiled as K.A.P.I et al vs Mulvihill et al 98-4056-CV-C-BA in the Central Division, Western District of Missouri. Motions and discovery actions continued until November; a great deal of difficulty was experienced in obtaining any information or compliance with discovery from the defendants. The court did not enforce their failure to respond very strongly. In November 1998, the federal district court issued a summary judgment based on arguments presented in late August. On Counts VI and VII, the judge ruled that the Board of Police Commissioners was entitled to either legislative immunity or qualified immunity under Missouri statues since it was performing a legislative role in enacting the regulation. Qualified immunity would apply if the commissioners had a 'reasonable belief' that they were acting within their authority. The federal judge then declined to rule on the remainder of the issues and referred them back to state court. After considering the decision, KAPI decided to forego an appeal on these decisions at the federal level. While the first point seemed more somewhat supported by case precedents, the qualified immunity decision seemed patently absurd. In this case, it required you to believe that PhDs, attorneys and a Mayor of a large city could not read and understand one simple state statute. It appeared that the judge was just looking for a way to protect the Board and dump the case. Due to the limited financial resources available, an appeal was not sought. It seemed to be more important to focus on the central issue in the case; the fee adoption and reasonableness. In December 1998, the state court held a hearing on the motions for summary judgment on the remaining counts based on legal issues. Count IV could not be included in these motions since it was a fact-based decision and not a legal issue. Here were the issues pending at that time:

• Count I - Classification Issue. This decision is probably a moot issue. A decision would affect whether certain types of security services require a Kansas City license and which category of classification applies. It could have significant effect, but is unlikely to based on commentary in past hearings and decisions.
• Count II - Adoption of 1996 Fee Increase. If this decision favors the plaintiffs, then the Board of Police Commissioners will be required to refund all fees collected since February 1997 and restore the licenses of those people they terminated for nonpayment. They would then have to establish a proper fee and classification system. The amount of money to be refunded: $1-2 million. plus payment of plaintiffs' legal expenses.
• Count III - Adoption of 1988 Fees. If this decision favors the plaintiffs, then the Board of Police Commissioners will be required to refund all fees collected between 1988 and 1997. Amount of money to be refunded: up to $1 million. Payment of plaintiff's legal fees.
• Count IV - 1996 Fees are Unreasonably High. If the decision on Count II is favorable to the plaintiffs, then this count becomes a moot issue. If that decision is favorable to the defendants, then this count can go to trial on the issue.
• Count V - Police Officer Defacto Exemption from Licensing. If the decision is for the plaintiffs, then all Kansas City Police Officers who work security off-duty will have to obtain private security licenses.
  

On 29 April 1999, a decision was reached on Counts II and V. Count II was decided in favor of the plaintiffs, the fee structure implemented in 1997 is legally invalid. Fees collected must be returned and persons terminated must be reinstated. Count V was decided in favor of the defendants; police officers are not required to hold private officer licenses when working off-duty. However, this decision was reached on the basis of a KCMo Police Department policy which limits police officers in this setting to just enforcing laws; they can not perform or enforce rules of the employer. This means that they are effectively prohibited from providing 'security services;' they may only provide 'law enforcement services.' The immediate effects were:

• KCMo has no legally valid private officer licensing fee or classification structure
• Members of classes I and II are entitled to refunds and reinstatement [Estimated at $1,000,000-$2,000,000 total]
• St. Louis may also be affected by this decision

Shortly after receipt of the court order, members of Class II presented a request for reinstatement and refund of fees to the Private Officer Licensing Section. The request was initially declined and contact between the attorneys for plaintiffs and defendants followed along with a telephone conference with the judge. The result was that the judge declined to strongly enforce the court order until the final disposition of the case. This resulted in the Private Officer Licensing Section dropping the licensing fees to the 1996 levels, processing 'terminated' members as 'new' applicants rather than reinstated licensees, and initiated a 'notification and release' form to licensees concerning the fee dispute. Some of these actions do not appear to comply with the court orders.

On August 25, 1999 a hearing was held in Jefferson City, MO. KAPI was represented by its attorney, Doug Stone, and the Board of Police Commissioners was represented by Dale Close, Legal Advisor to KCMO PD, and Bryan Round, Secretary and Legal Advisor to the Board.

The parties presented a joint stipulation as to several facts; no witnesses were called to testify. Stone and Close then provided oral arguments after which the judge made a few comments.

Plaintiffs began by making preliminary comments on the relevancy of certain stipulations; citing the hearsay nature of the testimony involved and the impropriety its comments on finances when the defendants had failed to provide financial information during discovery. The judge noted the comments concerning the cited stipulations and then ruled that defendants could not submit an amendment to the petition. Plaintiff's attorney then proceeded with his arguments.

On Count I, the definition of 'security services', Stone commented on a list of services which conceivably meet the definition of investigations or security services (included in the stipulation - see August monthly bulletin for complete listing) and asked for a ruling by the judge as to whether these services could properly be regulated by the Board based on the statutory authority granted in the state statute.

Addressing Count II, the 1996 fee increase, Stone emphasized that the judge had initially denied a TRO to plaintiffs intended to prevent the loss of business during the adjudication. He then presented argument in favor of a full refund.

Count III was then addressed citing the current application of the 1988 fees using the same legally invalid fee adoption procedure. If invalid, these fees would also be refunded. The judge raised questions about the length of time involved (from 1988 to 1997) without protest by the plaintiffs, citing a recent series of Missouri Supreme Court cases pertaining to an implied 'statute of limitations.' Stone then addressed the topic of sovereign immunity recently raised by the defendants. Stone advanced arguments as to why the doctrine did not apply to this case. Defendants then made comments.

Dale Close essentially presented three points of argument. First, the actions taken by the Board were done in good faith; there was no malicious intent. Second, public comments on the 1988 fees had been permitted through a series of actions including the opportunity for comment by members of the security industry, posting of the fees in the private officer licensing section, and a letter from the then President of KAPI, included as part of the stipulation. Third, the Board, even if it was wrong was entitled to sovereign immunity; this prevented it from being required to pay back the fees collected. Finally, Close argued that refund of any fees would have a financial impact on the public in general which may be significant.

After final comments, by both sides, Judge Brown made brief comments concerning the possibility of a settlement by the two sides prior to a final decision. He inquired about the total cost of the refund. He also included comments which indicated that the first consideration in setting a fee refund was whether the refund was required as a matter of law. If it was, then full refund of all fees to all persons affected would be required. If the refund was not a matter of law, then ordering a refund would be a fairness issue decided by the judge.

Judge Brown then gave the Plaintiffs until September 20 to submit a brief on the issue of Sovereign Immunity and a draft of proposed findings and conclusions. The defendants were given until September 15 to provide a brief on the issue of whether refunds were required as a matter of law and proposed findings and conclusions. Judge Brown indicated that he would then render a decision within 30 days after those submissions.

In mid-October, Judge Brown asked for additional input on Court I, the issue pertaining to the definition of 'security services.' This led to a joint stipulation by the parties. On October 28, 1999, Judge Brown issued a final order. The final order renders these decisions:

• Establishes the legal interpretation of the term 'security services' as it appears in the state statutes and regulations pertaining to private security in Kansas City.



• The fees for private officers used since 1988 are legally invalid.



• Orders the return of all private officer fees collected since 1988.



• Orders actions to locate the affected people.

The practical effect is this:

• The Kansas City Board of Police Commissioners must immediately refund approximately $2,000,000 to $3,000,000 in illegally collected fees.



• The Kansas City Board of Police Commissioners has no legal fee stucture in place for private officers; it must pass a new regulatory fee structure using the procedure specified in RSMo 536.021.



• The Kansas City Board of Police Commissioners has limited its regulation of private investigations to selected areas; those areas primarily pertain to criminal investigations and armed investigators.



• The St. Louis Board of Police Commissioners may be affected by the fee ruling in this case. If its fees were adopted in a similar manner, the St. Louis Board would probably be required to return any fees collected and to adopt a new structure also. While this ruling is not binding on St. Louis, it establishes a clear case precedent that would be applicable to their operations.

The final points to make are what questions remain. The public should consider the following:

• Why did a police board composed of two attorneys, two PhDs and a Doctor of Theology with the advise of two additional attorneys fail to follow a simple statute in the adoption of fees? The statute involved is neither complex nor obscure. It was easily understood on the first reading by a private investigator who is educated, but is not an attorney. This interpretation was upheld by the court. If a citizen can understand it, why couldn't the police board and its attorneys?



• When confronted with the error, why did this police board arrogantly stated "The courthouse is across the street?" rather than simply fix the problem? Why did they compound this initial, arrogant error by publicly accusing the plaintiff's attorney of engaging in unethical conduct (simply running up a legal bill) rather than simply fix the problem?



• Why was it necessary for a group of private investigators to engage in negotiations and legal action for nearly three years to fix a simple mistake? Why is the public going to foot legal bills for over $100,000 to fix a simple mistake when its representatives were offered the opportunity to simply fix it for free?



• Was the Board and its legal staff grossly incompetent for not knowing the correct procedure? Or were they grossly unethical for knowing and simply refusing to do it right? In the final analysis, it probably doesn't matter. Either interpretation shows grounds for removal from their positions on the basis of poor performance. The public needs to examine who should be retained.

In November 199, the plaintiffs filed a motion to hold the plaintiffs in contempt of court for continuing to charge fees for licensing.

In December 1999, the defendants filed for a stay of execution of the judgment with the appellate court.

In January 2000. The appellate court judge granted the defendant's stay of execution; they were not required to post a bond or to begin paying back fees collected since 1988. At the same time, the judge also ordered the defendants to stop charging fees for private officer licenses. Final resolution of the plea is pending.

For more information, contact the Secretary of the Kansas Association of Private Investigators at: P.O. Box 2111, Shawnee Mission, KS 66201-1111 e-Mail: secretary@kapi.org 816-830-1177
"Who knows what evil lurks in the heart of the Great Plains? The Wheat Stalker knows!" Contact a member of the Kansas Association of Private Investigators today! www.kapi.org

John W. Ellis Secretary, K.A.P.I.