new damages theory relating to fixed costs incurred during March 1990, and that they are considerably prejudiced by this eleventh hour claim. Gateway denies that it has shifted damages claims, and contends that the Unions' surprise derives not from the company's failure to disclose evidence relating to its damages claim, but from defendants' own failure to fully explore Gateway's claim for fixed costs. Plaintiff's Opposition to Motion to Strike Damage Claim 6-7.
The Unions are correct that any claim by Gateway for lost profits on coal that it allegedly would have mined and sold at a certain price during the approximately one month its employees were not working, is without support in the record. If Gateway claims that it would have mined and sold coal at a profit between approximately June 16 and July 16, 1989, but was unable to do so at that time or thereafter, then defendants are entitled to summary judgment on that claim. Gateway eventually mined and sold all coal, at roughly the same price, that it would have mined and sold whether or not its employees struck during June and July of 1989. Rietman Depo. at 111-112 (Defendants' App. Exh. K); McNutt Depo. at 429-30 (Defendants' App. Exh. N).
However, plaintiff's lost profits claim appears to turn not on lost sales revenues, but on the timing of the production and sales. Gateway avers that it was operating productively, even profitably, from March 1989 up until the June 16, 1989 strike. McNutt Depo. at 403-04. (Plaintiff's App. Exh. 59). Gateway argues that, were it not interrupted by the miners' strike, it would have continued operating profitably, at least until its "long wall" had to be moved, which was to take place during the designated vacation week commencing July 17, 1989. The month long work stoppage during June and July 1989 interrupted that productive work mode, plaintiff contends. Gateway was unable to pick up where it left off before the strike because of a roof fall in the mine, and because Gateway had to create extra downtime to move the long wall since work on the coal had not progressed enough to accommodate a move during the vacation period. The company maintains that because of a loss in productivity and efficiency, due solely to the strike, it experienced a loss of $ 287,340. Id. at 397-405; Plaintiff's Brief In Opposition to Motion for Summary Judgment at 86.
Even in the absence of a strike, Gateway's operations would not have been profitable during the strike period. Gateway was a money-losing company in the two years preceding the strike, and was projected to lose $ 1.9 million in 1989. Gateway 1989 Annual Plan (Defendant's App. Exh. N). Gateway acknowledges that its "lost profits" claim is actually a claim for increased losses: "Gateway would have lost less money if it was able to continue to operate between June 16 and July 16, 1989." Plaintiff's Brief in Opposition to Motion for Summary Judgment at 85.
Gateway is permitted to seek damages for the aggravated losses it claims to have sustained during June 16 through July 16, 1989, as a result of the strike. Those alleged damages have been referred to by both parties as "lost profits," but, as plaintiff makes clear, Supplemental Brief in Opposition to Motion for Summary Judgment 14, they are nothing more than increased variable costs allegedly attributable to the work stoppage. If Gateway can prove that those allegedly increased variable costs aggravated its losses during the relevant period, it may recover those costs as damages. Whether Gateway would have maintained its productive capacity through mid-July of 1989 is a disputed factual issue which must be reserved for trial.
Plaintiff may also attempt to prove the fixed costs portion of its alleged damages. In the classic lost revenues case, fixed costs "are recoverable where the productive labor or output of the employer is reduced below its normal level as a result of the unlawful activity of the union." Sheet Metal Workers Int'l Ass'n, Local 223 v. Atlas Sheet Metal Co., 384 F.2d 101, 109 (5th Cir. 1967). Defendants seem to argue that because Gateway eventually resumed production, and earned revenues based upon the sale of coal mined subsequent to the strike, it should not be permitted to make any claim for fixed costs, even those that would not have been realized but for the strike, i.e., those costs attending Gateway's mine operations in March 1990. But there is no reason either in the theory of damages or in damages jurisprudence why increased fixed costs should not be available as a result of delayed production. As the United States Court of Appeals for the Third Circuit stated in Foam & Plastics Div., Tenneco Chem., Inc. v. General Drivers & Helpers Local Union 401, 520 F.2d 945 (3d Cir. 1975), "the measure of damages arising from a breach of a 'no strike' provision of a collective bargaining agreement is the actual loss sustained by reason of the breach." Id. at 948 (emphasis added). That uncontroversial statement reflects the notion that Section 303 of the NLRA is compensatory in nature, and that damages may be "recovered for actual losses sustained as the result of the unlawful secondary activity." Kerry Coal Co. v. UMWA, 488 F. Supp. 1080, 1101 (W.D.Pa. 1980), aff'd 637 F.2d 957 (1981)(quoting Sheet Metal Workers Int'l Ass'n, Local 223 v. Atlas Sheet Metal Co., 384 F.2d 101, 109 (5th Cir. 1967)). See also Midland-Ross Corp. v. United Steelworkers of America, 83 F.R.D. 426, 428 (W.D.Pa. 1979)("the victim of an illegal strike is permitted to recover fixed costs attributable to the period of the strike").
Plaintiff acknowledges that no production was ultimately lost as a result of the 1989 strike, but that fact does not erase, or mitigate, the additional month of fixed costs it allegedly would not have been required to pay but for the strike. To the extent Gateway can prove these alleged costs, and show that they constitute part of its "actual loss sustained by reason of the breach," Foam & Plastics Div., Tenneco Chem., Inc. v. General Drivers & Helpers Local Union 401, 520 F.2d at 948, there is no legal basis for keeping them out of the damages equation.
In their briefs in support of their motion for summary judgment, and in their motion to strike damages claim, the Unions claim they will be unfairly prejudiced by what they characterize as plaintiff's eleventh hour shift in its damages theory from June and July 1989 fixed costs to March 1990 fixed costs. Gateway denies that it has changed its damages theory: "at most, [plaintiff] has identified a way to overcome the UMWA's defense which the UMWA failed to perceive or pursue in discovery." Plaintiff's Brief in Opposition to Defendants' Motion to Strike Damage Claim at 8.
Plaintiff has indeed changed its damages theory. Richard McNutt, plaintiff's expert damages witness, testified during his July 29, 1992 deposition that the twenty days he was considering for the purpose of calculating Gateway's lost profits and fixed costs included the period from June 16, 1989 through July 14, 1989. July 29, 1992 McNutt Deposition at 102-03 (Plaintiff's Supp. App. Exh. 71). Plaintiff did not even hint at a claim for fixed costs in March 1990 until the Unions' motion for summary judgment was briefed, after the close of discovery. Nevertheless, unlike the cases cited by defendants in their Memorandum in Support of Motion to Strike Damage Claim, this matter has not been tried, nor even listed for trial. The possibility of irreparable prejudice is at most remote. Both parties have known all along that the closing of Gateway's mine, and the timing of that event, were an issue that could bear on plaintiff's damages claim, and plaintiff's fixed costs argument is merely a new spin on old facts rather than an introduction of new facts altogether.
Plaintiff's new fixed costs argument can be viewed as essentially an attempt to amend its complaint. As discussed, supra, the new fixed costs argument is not without legal basis, and therefore not futile, since it alleges damages due to (if not during) the 1989 strike. Federal Rule of Civil Procedure 15 provides that leave to amend a pleading be "freely given when justice so requires." See also Bechtel v. Robinson, 886 F.2d 644 (3d Cir. 1989) (court should use "strong liberality" in considering whether to grant leave to amend). An amended complaint is considered unduly prejudicial if it causes undue delay, or evidences bad faith or dilatory motive on the part of the movant. See Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962). Defendants do not argue that plaintiff's new theory will cause undue delay, and there is neither any allegation nor evidence of bad faith or dilatory motive on the part of Gateway.
AND NOW, this 15th day of April, 1994, consistent with the foregoing opinion, the defendant Unions' Motion for Summary Judgment (Docket No. 28) and Motion to Strike Damage Claim (Docket No. 39) are denied. Plaintiff's complaint is hereby amended to include a damages claim for fixed costs during March 1990. Should defendants require additional discovery concerning plaintiff's new damages theory, they shall apply to the Court for a short extension of the pre-trial schedule by no later than Friday, April 29, 1994.
BY THE COURT,
D. Brooks Smith
United States District Court