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July 25, 1980

Charles NEDD et al.

The opinion of the court was delivered by: NEALON



 This is a derivative action brought by pensioned coal miners on behalf of the Anthracite Health and Welfare Fund ("The Fund"). Plaintiffs claim that the United Mine Workers of America ("The Union") is responsible for the failure of the Fund's Trustees to collect tonnage royalties from anthracite coal mine operators accruing from June 7, 1946 to January 23, 1969. Specifically, liability is sought to be imposed on the Union for unpaid royalties, which plaintiffs claim approach $ 10,000,000.00, because during the relevant period the Union, while occupying a dominant position on the Fund's Board of Trustees in violation of section 302(c)(5) of the Labor Management Relations Act of 1947, *fn1" pursued a collection policy which would not have been followed by a reasonable man exercising common skill, prudence and caution, and which prima facie benefited working miners to the detriment of the retirees. Four distinct theories of liability have been asserted: (1) tortious interference with a collective bargaining agreement, a federal common-law action recognized under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185; (2) breach of the federal common-law duty of fair representation; (3) breach of fiduciary duties implied from § 302 of the Labor Management Relations Act, 29 U.S.C. § 186; and (4) violations of the Pennsylvania common-law of trusts. Authority to entertain this suit is predicated on 28 U.S.C. § 1331, 28 U.S.C. § 1337, and the doctrine of pendent jurisdiction.

 In an opinion filed April 28, 1977, the Court of Appeals for the Third Circuit vacated this court's judgment in defendants' favor, concluding that (a) plaintiffs' federal causes of action are sufficient to support pendent jurisdiction; (b) the Union's liability under any of the theories advanced by plaintiffs requires no distinct factual findings; (c) plaintiffs have established that the Union qua trustee breached its duty of loyalty by pursuing a royalty collection policy that prima facie benefited working miners to the detriment of retired miners; (d) the Union's collection efforts, while in control of the Fund, were not performed with the degree of common skill, prudence, and caution required of a fiduciary; and (e) the burden is now on the Union to show what losses would have occurred in the absence of its breach of fiduciary obligations. Nedd v. U.M.W., 556 F.2d 190 (3rd Cir. 1977), cert. denied, 434 U.S. 1013, 98 S. Ct. 727, 54 L. Ed. 2d 757 (1978). The Court of Appeals accordingly remanded the case "for further proceedings in which the liability of the Union shall be redetermined by the application of the fiduciary standards of conduct and burden of proof set forth in this opinion." Id. at 214.

 Presently before the court are the plaintiffs' and the Union's proposed findings of fact concerning the scope of the Union's potential liability. *fn2" Plaintiffs, relying primarily on the Fund's ledger cards (Exhibit "O"), *fn3" claim that unpaid delinquencies attributable to the Union's breach of fiduciary duties involve 86 separate operators and total $ 9,887,268.03. *fn4" The Union contends that the Fund's ledger cards are unreliable indicia of operator delinquencies, asserting that if Lybrand audits, operator reports to the Fund, and judgments obtained in lawsuits were used to compute the amounts due and owing, delinquencies for the companies listed by plaintiffs would total $ 5,499,811.24. *fn5" The Union also asserts that $ 1,912,863.57 of the principal sum claimed by plaintiffs accrued during periods when certain operators had not been signatories to a collective bargaining agreement creating the royalty obligations. *fn6" Since, argues the Union, § 302(c)(5)(B) prohibits payments to an employee pension fund unless "the detailed bases on which such payments are to be made is specified in a written agreement with the employer," 29 U.S.C. § 186(c)(5)(B), the sum of $ 1,912,863.57 was not legally "due and owing," and, therefore, is not recoverable in this action. Finally, the Union contends that $ 97,872.48 of the $ 1,093,976.30 claimed for Penag Coal Co. cannot be recouped because the Union no longer controlled the Fund when this sum accrued, *fn7" and that the Fund's ledger cards limit potential recovery for Hammond Coal Co. delinquencies to $ 473,627.85, rather than the $ 505,116.95 requested by plaintiffs. *fn8"

 After careful consideration of the parties' proposed findings of fact and their supporting legal memoranda, I have concluded that (a) the ledger cards constitute competent proof of operator delinquencies; (b) arrearages accruing when certain operators were non-signatories to a collective bargaining agreement may be included as part of the Union's potential liability; (c) plaintiffs may claim as unpaid royalties for Hammond Coal Co. the sum of $ 505,116.95; and (d) the amount of $ 97,872.48 should be deducted from the figure claimed for Penag Coal Co. inasmuch as this sum represents delinquencies accruing after the Union relinquished its majority position on the Fund's Board of Trustees. *fn9" Accordingly, an order will be entered establishing the scope of the Union's potential liability as $ 9,789,395.55.


 It is the plaintiffs' burden at this stage of the remand proceedings to establish the extent of the Union's potential liability. Plaintiffs propose to discharge this burden with respect to seventy-seven of the eighty-six operators through the Fund's ledger cards, which list monthly tonnage reports submitted by the companies to the Fund pursuant to collective bargaining agreements negotiated between the Union and an employer association, referred to as the Anthracite Operators. The ledger cards also contain monthly production reports filed with the Pennsylvania Department of Mines. *fn10" In many instances, the operators, although filing tonnage reports with the Commonwealth, either failed to remit production reports to the Fund or submitted reports showing production lower than that which had been reported to the Pennsylvania Department of Mines. Where production reports were not submitted to the Fund, or where the reports submitted listed a smaller production than reported to the Commonwealth, the Fund's ledger cards indicate that the Department of Mines reports were used to calculate royalty delinquencies.

 The Union contends that "to the extent that the principal amounts stated by Plaintiffs are based solely on higher reports by certain operators to the Department (of Mines), Plaintiffs have failed to satisfy their burden of proving that the principal amounts recited by them were in fact due and owing." *fn11" Defendants' Proposed Findings of Fact, Doc. # 235 at 12. The Union asserts that the Department of Mines reports inflate the operators' delinquencies because (a) the amounts reported to the Department of Mines may have included production that was not anthracite "produced for use or for sale," for which royalties had to be paid; *fn12" (b) the amounts reported to the Department of Mines may have included production of certain grades of coal referred to as "fines," which purportedly did not constitute anthracite "produced for use or for sale"; *fn13" and (c) some operators may have padded their Department of Mines reports in order to obtain a larger allocation under the Anthracite Production Control Plan. Citing Defendants' Exhibit 29, the Union contends that Lybrand audits, judgments obtained in lawsuits, and company reports to the Fund would establish total royalty delinquencies of $ 5,499,811.24, almost 4.4 million dollars less than the sum claimed by plaintiffs. *fn14"

  Defendants' Exhibit 29 lists delinquencies as of June 30, 1974 for only 21 of the 86 operators named by plaintiffs. The 21 operators include 18 companies with respect to whom plaintiffs have utilized the Fund's ledger cards in support of claimed delinquencies. *fn15" The Union's position with respect to the other 65 operators for whom plaintiffs have cited the ledger cards is that this business record is totally unreliable, and, therefore, has no probative value whatsoever in demonstrating the extent of royalty delinquencies.

 Application of the principles governing proof of damages compels rejection of the Union's argument. The prevailing Pennsylvania standards are recited in Blackburn v. Aetna Freight Lines, Inc., 368 F.2d 345, 347-48 (3rd Cir. 1966):

"The law does not require that proof in support of claims for compensation must conform to the standard of mathematical exactness * * * If the facts afford a reasonably fair basis for calculating how much plaintiff is entitled to, such evidence cannot be regarded as legally insufficient to support a claim for compensation.' Smail v. Flock, 407 Pa. 148, 154, 180 A.2d 59, 62. "We have never held that the damages that are not capable of exact ascertainment are for that reason not recoverable .... Our law only requires that a reasonable quantity of information must be supplied by plaintiff so that the (fact-finder) may fairly estimate the amount of damages from the evidence.'

 Accord, Aiken Industries, Inc. v. Estate of Wilson, 477 Pa. 34, 42, 383 A.2d 808 (1978); Exton Drive-In, Inc. v. Home Indemnity Co., 436 Pa. 480, 488, 261 A.2d 319 (1969). This formulation would appear to be consistent with applicable federal standards. See, e.g., Story Parchment Co. v. Paterson Co., 282 U.S. 555, 51 S. Ct. 248, 75 L. Ed. 544 (1931); Eazor Express, Inc. v. Teamsters, 376 F. Supp. 841, 844, 848 (W.D.Pa.1974), modified, 520 F.2d 951 (3rd Cir. 1975), cert. denied, 424 U.S. 935, 96 S. Ct. 1149, 47 L. Ed. 2d 342 (1976). In sum, as to the extent of damages rather than the actual existence of compensable injury plaintiffs need only adduce evidence that establishes a basis for the assessment of pecuniary loss with a fair degree of probability. See Exton Drive-In Inc. v. Home Indemnity Co., 436 Pa. at 488, 261 A.2d 319. See generally C. McCormick, Handbook of the Law of Damages § 26 (1935).

 The Fund's ledger cards constitute such evidence. The operators had an obvious incentive to under-report production to the Fund because royalties were based on reported production. Thus, it is reasonable to conclude that where reports to the Fund were substantially lower than the statutorily required reports to the Department of Mines, the latter reports more accurately reflected actual production. In addition, when no reports were submitted to the Fund, the reports filed with the Commonwealth could ...

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