The opinion of the court was delivered by: LEVET
The plaintiff has moved for reargument of the court's decisions stated in opinions dated July 1, 1969, 305 F. Supp. 497, 305 F. Supp. 508.
Plaintiff maintains that the three basic conditions alleged in its complaint, namely (1) "low quality of coking coal and iron ore, resulting in loss of production;" (2) "abnormal cost-price relationships, resulting in the depression of Plaintiff's business and earnings;" and (3) "numerous and protracted strikes, resulting in the interruption and diminution of Plaintiff's normal production, output and operation;" (Complaint, September 30, 1965, p. 3) " interact with one another so that, even if, contrary to plaintiff's firm insistence it should be concluded that no one claim in and of itself constituted, within the meaning of the statute, temporary economic circumstances unusual in the case of the taxpayer or events unusual and peculiar in the experience of the taxpayer, when all three claims are taken together there did occur such circumstances and events, and that plaintiff is entitled to aggregate those abnormalities to this end." (Plaintiff's memorandum, August 8, 1969, p. 8)
Apparently, the argument is as follows: Each of the three claims in and of itself should constitute a qualifying abnormality. However, even if the three claims do not qualify separately, the plaintiff should be entitled to aggregate them and submit them in combination so as to constitute one qualifying abnormality.
In support of this theory, plaintiff cites a paragraph from the Treasury Department Bulletin on Section 722 (November, 1944) which raises the possibility that "(an) unusual combination or concurrence of usual conditions may of itself constitute an unusual event or condition under section 722(b)(2). For instance, a taxpayer's business may have been depressed during the base period because of an unusual combination of temporary economic circumstances, no one of which was unusual or would have abnormally depressed the business if existing alone." Treasury Department Bulletin on Section 722, Part III(B), cited in Standard Excess Profits Tax Reporter, volume 3A (1946), at para. 5145.12.
Plaintiff cites no decision where any court has either endorsed this general suggestion or discussed it; nor is this court aware of any. Indeed, the foreword to the Bulletin contains the comment that any provision therein "does not have the force or effect of a published ruling or of a Treasury decision." Id. at para. 5145.
Obviously, the Bulletin does not have the force of a judicial determination.
Even if a court did favor the general idea presented, it could not, in the absence of any guidelines, determine when a combination of separate non-qualifying conditions would constitute a qualifying abnormality and when such a combination would not. The Bulletin's hypothetical suggestion, therefore, not only lacks any authoritative imprimatur (as indicated by the absence of even a scintilla of legislative or judicial support since the idea was advocated originally in 1944), but also lacks even a semblance of practicability.
Plaintiff maintains that the three conditions alleged in its complaint as qualifying abnormalities should not be adjudicated separately because they are "related by their application to plaintiff's production and the depression of plaintiff's business, and related by time and space." (Plaintiff's memorandum, September 22, 1969, p. 3)
However, separable issues (for purposes of interlocutory adjudication) may be presented in a tax refund action for a given year, even if only one "claim for relief" is said to be filed for each taxable year (for purposes of appealability under F.R.Civ.P. 54(b)).
It should be pointed out that final judgment in this case (in contrast to any interlocutory adjudication of separable issues which may constitute portions of a "claim for relief") must await judicial determination of all such issues. The parties agree that the third condition, propounded as a basis for relief under 442(a), involving "numerous and protracted strikes, resulting in the interruption and diminution of Plaintiff's normal production, output and operation," must be litigated at a forthcoming trial.
In determining whether separately adjudicable issues are present, a court analyzes the set of operative material facts specifically asserted as the underlying basis for each allegation of a qualifying abnormality. Each separate condition must stand on its own as the first element required for relief is considered, i.e., whether a taxpayer has established a qualifying cause for any diminution of its production or depression of its earnings during the base period years. Establishment of one or more qualifying causes is a prerequisite to further consideration under 442 as to the amount of quantitative relief to which a taxpayer may be entitled for each year in question. If more than one qualifying cause is determined to exist, the effects of the separately-established causes may then be aggregated for quantitative considerations.
After the defendant had moved for summary judgment as to the issues in plaintiff's complaint dealing with "low quality of coking coal and iron ore, resulting in loss of production" (Motion #2, 305 F. Supp. 497) and "abnormal cost-price relationships, resulting in the depression of Plaintiff's business and earnings," (Motion #3, 305 F. Supp. 508) both parties submitted statements pursuant to General Rule 9(g) of the Southern District of New York.
In order to pinpoint the issues and "pierce the pleadings and * * * assess the proof in order to see whether there is a genuine need for trial," (Dressler v. MV Sandpiper, 331 F.2d 130, 132 (2nd Cir. 1964)) the court requested the parties to prepare Joint 9(g) Statements delineating the facts which were not genuinely disputed for the purposes of the two motions, as well as separate statements setting forth any specific facts alleged to be in genuine dispute.
Subsequently, the parties submitted joint statements for Motion #2 (110 paragraphs) and Motion #3 (45 paragraphs). See the sections in the court's opinions on The Propriety of Summary Judgment.
The three basic conditions alleged as qualifying abnormalities are mentioned together in both joint statements in identical paragraphs, which read in pertinent part as follows:
"The occurrences depressing plaintiff's business and diminishing its production in 1947 and 1948 * * * included the imbalance between the inherent characteristics of constituent materials for blast furnace burdens as mined and the beneficiating facilities to adjust and transform such characteristics, strikes and an unusual labor relations situation, and an abnormally narrow cost-price gap, each of which reacted on the other in contributing to the overall depression of plaintiff's business."
Joint 9(g) Statement on Motion #2, para. 21;
Joint 9(g) Statement on Motion #3, ...