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UNITED STATES STEEL CORP. v. UNITED STATES

July 14, 1970

UNITED STATES STEEL CORPORATION, Plaintiff,
v.
UNITED STATES of America, Defendant


Levet, District Judge.


The opinion of the court was delivered by: LEVET

OPINION, FINDINGS OF FACT, AND CONCLUSIONS OF LAW

LEVET, District Judge.

 This opinion involves issues in an action by United States Steel Corporation ("U. S. Steel") against the United States, pursuant to 28 U.S.C. § 1346(a) (1), for refund of certain 1950 income and excess profits tax payments, together with interest. By agreement of the parties, the present issues were tried by the court without jury. (2-4) *fn1"

 PRIOR PROCEEDINGS IN THIS LITIGATION

 A. The Complaint

 In a complaint dated September 30, 1965 and filed October 11, 1965, U. S. Steel *fn2" brought suit under 28 U.S.C. § 1346(a) (1) to recover portions of federal income tax paid for the year 1950. Plaintiff claimed that certain 1950 federal income and excess profits tax payments were erroneously and illegally assessed and collected.

 In general, U. S. Steel maintained in the complaint:

 1. That it was entitled to additional depletion deductions for the year 1950.

 2. That certain alleged abnormalities occurring during 1947, 1948 and 1949 should have been considered by defendant in the computation of the "average base period net income" figure for the relevant base period years 1947-1949, which figure was used to determine the extent to which U. S. Steel was subject to income and excess profits taxes for the year 1950. The abnormalities alleged were (a) low quality of coking coal and iron ore, resulting in loss of production; (b) abnormal cost-price relationships, resulting in the depression of plaintiff's business and earnings; (c) numerous and protracted strikes, resulting in the interruption and diminution of plaintiff's normal production, output and operation; and (d) other abnormalities referred to at the time plaintiff's 1950 consolidated federal income and excess profits tax return was filed.

 3. That, if it be determined that plaintiff is entitled to no relief or only certain partial relief under 2 above, plaintiff should be entitled to press an alternative claim for disallowance of deductions for certain "strike expenses."

 B. Rulings on Motions for Summary Judgment

 As to plaintiff's claim for additional depletion deductions, both parties moved for summary judgment. On May 19, 1967, this court denied plaintiff's motion and granted defendant's motion, holding in substance that, for the purpose of calculating the deduction for percentage depletion under 26 U.S.C. §§ 23(m) and 114(b) (4) of the Internal Revenue Code of 1939, plaintiff, as lessee, could not include payments of Minnesota ad valorem and royalty taxes in its gross income from mining. 270 F. Supp. 253 (S.D.N.Y.1967).

 As to plaintiff's claim that "low quality of coking coal and iron ore, resulting in loss of production" was a qualifying abnormality for excess profits tax purposes within the meaning of 26 U.S.C. Excess Profits Taxes § 442 (1939 Code), the defendant moved for summary judgment. The motion was granted on July 1, 1969 and plaintiff's subsequent motion for reargument was denied on October 2, 1969. In substance, this court held as a matter of law that war-induced shortages of men and materials and delays by suppliers and subcontractors during the period of 1941 to 1948 may not constitute the basis for relief under § 442, because effects directly attributable to United States government policies during World War II, including post-war competitive pressures engendered by wartime conditions, are not qualifying abnormalities within the meaning of the statute. 305 F. Supp. 497 (S.D.N.Y.1969), 305 F. Supp. 516 (S.D.N.Y.1969).

 As to plaintiff's claim that "abnormal cost-price relationships, resulting in the depression of Plaintiff's business and earnings" constituted a qualifying abnormality within the meaning of § 442, the defendant moved for summary judgment. The motion was granted on July 1, 1969 and plaintiff's subsequent motion for reargument was denied on October 2, 1969. This court held in substance that the factors submitted by plaintiff were not shown to consist of more than the valid exercise of governmental regulatory authority or competitive pressures which businessmen must reasonably expect in the course of their operations. 305 F. Supp. 508 (S.D.N.Y.1969), 305 F. Supp. 516 (S.D.N.Y.1969).

 C. Issues Remaining for Trial

 The present proceedings arise primarily from U. S. Steel's allegations in the complaint that "numerous and protracted strikes, resulting in the interruption and diminution of Plaintiff's normal production, output and operation; and other abnormalities" qualify as "unusual" occurrences under § 442. U. S. Steel now contends that the allegedly "unusual" events -- a 1948 explosion, two 1948 strikes by the United Mine Workers and a 1949 strike by the United Steel Workers -- significantly affected plaintiff's taxable income within the meaning of § 442(a) during the years 1948 and 1949, which years were designated as part of the base period pursuant to the Excess Profits Tax Act of 1950, 26 U.S.C. Excess Profits Taxes § 430 et seq. As a result of the alleged effects of these events on its taxable income in 1948 and 1949, plaintiff suggests, the defendant should have computed U. S. Steel's "average base period net income" for the relevant base period years 1947-1949 in accordance with relief provisions contained in § 442, so as to decrease the amount of tax owed for 1950 by the taxpayer.

 If it develops that plaintiff is not entitled to any application of § 442 for 1948 and 1949 or that it is entitled to § 442 application for only one of the years (i. e., 1948 or 1949), plaintiff presents an alternative claim under 26 U.S.C. Excess Profits Taxes § 433(b) (9) for disallowance of deductions for certain "strike expenses" incurred in the year 1949. If U. S. Steel should then be eligible for application of § 442 and § 433(b) (9) for 1949, plaintiff may opt for application of whichever section would afford greater relief to the taxpayer. (Stipulation, May 26, 1970) period years for which it seeks application of § 442. If more than one qualifying abnormality has been established for a particular year, the properly established effects of each of the qualifying abnormalities on the taxpayer's income for that year may then be aggregated for purposes of determining whether the taxpayer has made the required showing of "significant and not trivial" diminution in its normal productive process for that year due to any qualifying abnormalities. See Reg. 130 (1939 Code), § 40.442-2(a) (2).

 Since the parties agree that the 1948 explosion and the 1949 strike by the United Steel Workers were qualifying abnormalities under § 442, the court need consider only the extent of the quantitative effects of those events on U. S. Steel's income for each of the years involved. With respect to the 1948 strikes by the United Mine Workers, the parties disagree on the initial issue of unusualness. *fn3" The court must therefore determine whether the 1948 strikes were in the first instance qualifying abnormalities within the meaning of § 442(a) (1).

 The regulations advise that an event during a base period year may be "unusual" in the "experience of the taxpayer" if occurrence of the event "is not ordinarily encountered in the taxpayer's business operations." If unusualness is established, the taxpayer must also establish that any "unusual" occurrences in a base period year significantly interrupted "normal production, output, or operation," defined as "the level of production, output, or operation customary for the taxpayer, determined on the basis of the actual experience of the taxpayer up to the time" the "unusual" event occurred. Reg. 130, § 40.442-2(a) (1) (2) (3). *fn4"

 There can be no dispute that a strike is an event within the purview of § 442(a) (1). Reg. 130, § 40.442-2(a) (3) ("* * * events include floods, fires, explosions, strikes, and other exceptional and uncommon circumstances hindering production, output or operation."); Sen. Rep. No. 2679, 81st Cong., 2d Sess., dated December 18, 1950, as quoted in Internal Revenue Cumulative Bulletin 1951-1, 252 ("* * * [the World War II] law provided relief * * * because of a physical interruption to production, such as a fire, strike, or flood, * * *. Your committee's bill provides relief in these same areas.").

 In discussing a framework for analysis of the factual record presented at trial, plaintiff argues (1) that strikes by the United Mine Workers (which affect U. S. Steel's coal-producing facilities and may also result in interruption of production at plaintiff's steel-making facilities) and strikes by the United Steel Workers against plaintiff's steel-making facilities should be considered as separate and distinct types of events under § 442; and (2) that a strike or strikes during a taxpayer's base period might be deemed "unusual" under § 442 if the strikes in question had a substantially greater impact on production and shipments than other strikes in the years before the base period.

 After a careful study of the statute, regulations, legislative history and prior judicial determinations, I believe plaintiff's first proposition is unsound, and its second generally sound.

 A. A Strike As An Event

 According to the appropriate regulation, "* * * events include * * * strikes, and other exceptional and uncommon circumstances hindering production, output, or operation." (Emphasis added) Reg. 130, § 40.442-2(a) (3). A strike is thus viewed as an occurrence which hinders production, output or operation.

 Similarly, the Senate Committee on Finance, referring to a strike as an event, focused on a strike as a potential interruption of production: "* * * [the law provides relief] when * * * the income * * * was substantially abnormal because of a physical interruption to production, such as a * * * strike * * *." (Emphasis added) Sen.Rep.No. 2679, 81st Cong., 2d Sess., as quoted in I.R.C.B. 1951-1, 252.

 In essence, the type of event contemplated is a strike which interrupts production. In evaluating a strike as an event, the court must consider it primarily in the sense of a physical interruption of production brought about by labor-management difficulties. Another court, considering whether a strike during a base period year was an "unusual" event in the taxpayer's experience, referred to the taxpayer's overall "labor history" and "labor picture." See New York Shipbuilding Corporation v. United States, 237 F. Supp. 995, 1001 (D.N.J.1965), aff'd per curiam, 362 F.2d 550 (3rd Cir. 1966).

 U. S. Steel has been engaged principally "in the integrated business of making and selling iron and steel products" since 1901. (Stipulation, June 10, 1970) Plaintiff's production and shipment of iron and steel products might be subject to interruption because of a strike either by the United Mine Workers or the United Steel Workers. It is of course possible that a strike by the United Mine Workers against plaintiff's coal-producing facilities might not affect plaintiff's production of iron and steel products, for coal production is but one step in the ultimate production and shipment of iron and steel products. However, insofar as the record may indicate that a coal strike and resultant unavailability of coke did interrupt iron and steel production at plaintiff's steel-making facilities, it seems inappropriate to segregate the effects of a coal strike on such production in a given year from the effects of a steel strike on such production in the same year.

 The court believes that the proper analytical yardstick (for determining whether the two 1948 strikes by the United Mine Workers were "unusual" under § 442) is physical interruption of U. S. Steel's production and shipments of iron and steel products due to strikes against plaintiff's production facilities, whether by the United Mine Workers, the United Steel Workers, or another union representing other employees of U. S. Steel.

 B. Comparing the Effects on Production and Shipments of the 1948 Strikes and Strikes in Other Relevant Years

 An event may be declared "unusual" within the meaning of § 442 if its occurrence "is not ordinarily encountered in the taxpayer's business operations." Reg. 130, § 40.442-2(a) (3).

 U. S. Steel, while acknowledging that strikes or work stoppages against its production facilities by the United Mine Workers and the United Steel Workers had occurred in the years before 1948, contends that the two 1948 strikes by the United Mine Workers were "unusual" events because of their impact upon the production of iron and steel. (Plaintiff's First Reply Memorandum Re 1948 Coal Strikes, April 9, 1970, p. 4)

 There is authority for the general principle that an event need not be unique for it to be considered "unusual" under § 442.

 In Oxford Paper Co., 33 T.C. 943 (1960), rev'd on other grounds, 302 F.2d 674 (2nd Cir. 1962), the Tax Court decided that a drought in the base period years 1947 and 1948 was an "unusual" event under § 442. After weighing such factors as average rainfall in the years 1894-1945 and average monthly river flow in the years 1912-1946, the Tax Court found that the 1947-1948 drought "was of greater intensity and of longer duration than any other that Oxford has experienced during its considerable history," and held that the drought in question was "so severe" as to constitute a qualifying abnormality within the meaning of § 442(a) (1). See 33 T.C. at 953, 959. See also the reference in New York Shipbuilding, supra at 998, to the Tax Court's findings in Oxford Paper ("There had been other droughts, but none so severe.").

 Since § 442(a) (1) requires that events during a year or years within the base period be "unusual" in the experience of the taxpayer, it seems appropriate to compare the event or events (proposed as "unusual" occurrences in the base period) with the same type of events in the taxpayer's experience before the onset of the base period. See Oxford Paper Company v. Commissioner, supra, 302 F.2d at 678; New York Shipbuilding, supra, 237 F. Supp. at 1001. Therefore, in a determination of whether the 1948 strikes were "unusual" events, the court believes that the occurrence of strikes during the base period years 1946 and 1947 should not be dispositive. Still another reason for excluding consideration of any 1946 strikes on the issue of unusualness is the procedure set forth in §§ 435(d) (2) and 442(b) (2) (A) of the Korean War Act. Although the Act provided a base period consisting of the years 1946-1949 (§ 435(b)), a taxpayer is entitled under § 435(d) (2) and § 442(b) (2) (A) to eliminate automatically the least profitable year during the period, irrespective of whether any abnormality allegedly within the scope of § 442(a) had occurred. See Oxford Paper Company v. Commissioner, supra, 302 F.2d at 676. U. S. Steel chose to eliminate the year 1946 (Complaint, dated September 30, 1965, p. 3).

 Plaintiff alleges that the 1948 coal strikes reduced its 1948 income by causing certain increased costs as well as lost income from production and shipment of iron and steel products. It is true that certain increased costs may be considered (in addition to income losses in production and shipments) for purposes of a determination whether a qualifying abnormality or qualifying abnormalities interrupted the taxpayer's normal productive process in a relevant base period year to the extent required, i. e., significant and not trivial. However, a qualifying abnormality or qualifying abnormalities must first be established before any increased costs may be considered. It may be noted that plaintiff has not claimed that the 1948 strikes were qualifying abnormalities because of alleged increased costs resulting from the strikes; rather, it maintains that any such costs are relevant only to the determination of whether there was a significant impact on income in 1948 as a result of an occurrence or occurrences already found to be "unusual" within the meaning of § 442(a). (Plaintiff's Third Reply Memorandum Re 1948 Coal Strikes, April 27, 1970, pp. 4-5)

 I conclude that determination of whether the two 1948 strikes were "unusual" under § 442 should be based upon a comparison of losses of shipments of iron and steel products in 1948 (as a result of the two 1948 strikes) *fn5" with losses of shipments of iron and steel products on a yearly basis as a result of strikes against U. S. Steel's production facilities in years before 1946,5A the beginning of the statutory base period. It would be impossible of course to determine such losses with exactitude. By sifting the record, the court strives to fashion a reasonable approximation from the evidence presented.

 THE NATURE OF PLAINTIFF'S EVIDENCE RELATING TO ESTIMATES OF PRODUCTION LOSSES DUE TO STRIKES

 During the course of the trial, which ran approximately twenty-two days, more than two-hundred exhibits submitted by plaintiff and defendant were admitted into evidence. Among these were plaintiff's exhibits 132-143, 128, 124, 55, 56, 94-97, all of which were admitted as business records within the ambit of 28 U.S.C. § 1732(a).

 28 U.S.C. § 1732(a) provides in relevant part:

 
"In any court of the United States and in any court established by Act of Congress, any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence, or event, shall be admissible as evidence of such act, transaction, occurrence, or event, if made in regular course of any business, and if it was the regular course of such business to make such memorandum or record at the time of such act, transaction, occurrence, or event or within a reasonable time thereafter.
 
"All other circumstances of the making of such writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect its weight, but such circumstances shall not affect its admissibility. * * *"

 In the landmark case of Palmer v. Hoffman, 318 U.S. 109, 114, 63 S. Ct. 477, 480, 87 L. Ed. 645 (1943), Justice Douglas, speaking for a unanimous court, stated that the basic standards for admissibility under § 1732 are "the character of the records and their earmarks of reliability * * * acquired from their source and origin and the nature of their compilation." The trial judge is in the best position to gauge the regularity and trustworthiness of a record proposed as evidence. See Gaussen v. United Fruit Company, 412 F.2d 72, 74 (2nd Cir. 1969).

 Exhibits 132-136, 138, 140-143 are said to include each of the available "Form B" reports prepared at production plants of U. S. Steel subsidiaries as an estimate of production losses due to strikes or work stoppages *fn6" during the years 1941 to 1950. Available contemporaneous lists of the "Form B" reports were submitted for the years 1944 (Ex. 139) and 1945 (Ex. 137).

 Exhibit 128 is a summary prepared by U. S. Steel's Cost and Statistics Division of "Work Stoppages -- Detail," including estimates of production losses and man-hour losses for the years 1942-1950. Exhibit 124 is essentially a summary of figures contained in Exhibits 132-143 and 128. Exhibits 55 and 56 are summaries which, according to plaintiff, show production losses sustained by U. S. Steel manufacturing subsidiaries as a result of the United Mine Workers' strikes in March-April 1948 and July 1948, respectively. Exhibits 94-97 are summaries of estimated production losses resulting from "Coal Miners Strike -- April 1 to May 29, 1946" (Ex. 94); "Coal Mine Work Stoppages [for] Period Ended June 27, 1947" (Ex. 95); "Strike Losses [during 1949]" (Ex. 96); and "Work Stoppages -- Delaware Contract Companies [for period from] V-J Day through June 30, 1950" (Ex. 97).

 This court has repeatedly attempted to elicit information from the parties in order to pinpoint the issues in this case. I believe that the ensuing account demonstrates that plaintiff and defendant have had adequate opportunities throughout the course of the proceedings to prepare and submit evidence for the court's consideration. The evidentiary value of the exhibits and testimony mentioned in this discussion is determined in the court's Findings of Fact, infra.

 Leverne J. King, a U. S. Steel employee from 1929 to 1969, and Bracy D. Smith, an employee of plaintiff almost continuously since 1940, testified in somewhat general terms during the first week of the trial about U. S. Steel's procedures for the reporting of estimated production losses due to strikes and work stoppages.

 King stated that on May 1, 1944 he was assigned to develop the cost accounting system for plaintiff's subsidiaries. On May 1, 1945, he became cost and statistics supervisor responsible for seeing that plaintiff's steel-producing subsidiaries "compiled data on a consistent basis." From May 1, 1945 through 1950, his basic function was to receive reports and records from U. S. Steel subsidiaries; to consolidate reports by companies; and to provide a service to plaintiff's central management in reporting "both the usual routine things and also the out of the ordinary things for their information and guidance, to have them improve their effectiveness." (653-655) For the period 1945 to 1950, the "collection of reports on strikes and work stoppages" was a regular procedure. (King, 659)

 Smith testified that in the spring or summer of 1942 he was placed in charge of the accounting department section responsible for the recording of production, materials used and inventories at the Gary Works of plaintiff's Carnegie-Illinois subsidiary. During 1943, he was in charge of recording production and consumption for monthly statements at Gary. In October 1943, he was transferred to Pittsburgh, where he was concerned with "controls and planning and procedures in all of the Carnegie-Illinois plants." (425-427)

 From the summer of 1944 to the spring of 1946, Smith served in the Navy. (427, 511) Upon his return from military duty, he worked in the cost planning bureau of the accounting department at Carnegie-Illinois headquarters in Pittsburgh. In February or March of 1947, he was assigned to the statistics division of the same department, where he worked through 1958. (511-512)

 Smith testified that reports on losses caused by strikes and work stoppages were prepared in the Carnegie-Illinois organization "back to at least 1943," although he could not answer for the two-year period during 1944-1946 when he was in the Navy. (443-444)

 Smith testified as to 1948 and 1949 that the Carnegie-Illinois accounting system "spelled out the requirement for all plants to report any work stoppages or any strike; the losses that occurred from it, man hours, production, and so forth." (445) It was part of his job to receive strike loss reports from each of the Carnegie-Illinois plants in 1948 and 1949. After receiving such reports, he "analyzed them to see that they were complete; that they appeared reasonable * * *." (446) If a figure "appeared to be out of line based on my knowledge of the operation, information that I had, then I would take it back to the plant and talk with them to assure myself that it was a reasonable figure" or have them "revise it and support it as to what we would show as the figure." (447) After the plant reports were compiled into a "total picture" for Carnegie-Illinois, a compilation was forwarded to King. (450)

 With primary reference to the years 1948 and 1949, Smith stated that each production plant of plaintiff's Carnegie-Illinois subsidiary submitted a report on the effects of a particular strike or work stoppage; that there was a prescribed format for such reports; and that a set of instructions and a copy of the prescribed format were sent to the plants when the reporting procedures were initiated. (531, 533, 534, 537-538, 541, 544, 545, 547, 575-576)

 When Smith was asked whether any instructions to the plants were available, he answered that he "might be able to find them." (576)

 At the start of the second week of the trial, the court addressed eighteen written questions to plaintiff regarding accounting procedures and the availability of source documents. (888, 985-999; Court's Ex. 1, 991) In response to questions A-1 and A-2, plaintiff's counsel remarked that U. S. Steel had recently located original records dealing with work stoppages and that plaintiff would produce such records. (987) In response to question B-8, counsel stated that he believed U. S. Steel could produce samples of written instructions sent to each plant regarding accounting procedures utilized to estimate production losses due to strikes. (996)

 King then testified that the figures on Exhibits 55 and 56 came from the chief accounting officers of plaintiff's subsidiaries. (1018-1019) The production loss estimates were used "by the commercial department in their customer relationships as to why certain orders weren't filled according to promises" and by management to explain to directors and stockholders effects on U. S. Steel's profits and loss situation caused by production losses. (1025-1026, 1030) The figures were also used during labor-management negotiations to remind a union that a prior work stoppage had caused certain production losses. (1033-1034)

 After argument by the parties, the court admitted Exhibits 55 and 56 (summaries of estimated production losses for plaintiff's manufacturing subsidiaries for March-April 1948 and July 1948 coal strikes) into evidence. Exhibits 94-97 (summaries relating to production loss estimates for the years 1946-1950) were also admitted. (1037-1066, 1085-1087)

 Subsequently, plaintiff's counsel proffered "instructions with respect to accumulating information about strikes and work stoppages." (1533) According to plaintiff's counsel, "[we] did not know whether our copies of them were complete and whether these were the actual instructions in force on the relevant dates, but * * * if they are not these are actual instructions and the instructions on the relevant dates were reasonably close to these, there would be only minor changes from what we actually have found." The particular instructions included in Exhibit 119 "do bear dates and some of them are instructions going out," but plaintiff was not able to ascertain "whether those instructions were still in effect at the relevant time or whether perhaps they had been modified by additions or deletions * * *." (1533-1534)

 Exhibit 119, admitted into evidence, contains certain letters dated March 5, 1942; August 24, 1943; August 28, 1943; December 13, 1943; and September 1, 1949. These letters, which do not present a complete picture of reporting procedures in effect at U. S. Steel production plants at particular times, may be described as follows:

 1. From Director of Industrial Relations to Industrial Relations Executives, dated March 5, 1942, with heading "Strikes or Work Stoppages." This letter is referred to by its writer as a supplement to previous letters dated February 27, 1941 and October 21, 1941. Attached to the present letter is a note from a Statistical Supervisor to the Chief Accounting Officers of plaintiff's subsidiaries, with heading "Strikes or Work Stoppages Form 'B'." The note reads:

 
"Supplementing our letter of October 21, 1941: Dues picketings, slowdowns and other types of union activity which cause a loss of output should be considered in the same sense as a strike for purpose of reporting statistics on Form 'B'. 'B' reports covering any such incidents since January 1, 1942 should be forwarded to this office promptly as possible. Procedures mentioned in our letter of October 21, 1941 are not changed. * * *"

 2. From Statistical Supervisor to General Supervisor of Statistics Division for plaintiff's Carnegie-Illinois subsidiary, dated August 24, 1943, with heading "Strikes or Work Stoppages." This letter reminds Carnegie-Illinois plants to submit "Form B" reports promptly, and authorizes advance telephone reports to overcome any delays either in sending of written reports by plants or in delivery of such reports to headquarters.

 3. From General Works Auditor of plaintiff's Carnegie-Illinois subsidiary to Works Auditors, dated August 28, 1943, with heading "Strikes, Work Stoppages, or Slow-Downs." It reads in relevant part:

 
"In order to satisfy a request from the American Iron and Steel Institute, [plaintiff has asked Carnegie-Illinois] to report all cases of strikes, work stoppages, or slow-downs as soon as they are started and to supply weekly statistical information concerning losses of man hours [and] production. * * * The notification to the Institute is made up of the following factors: 1. Name of plant[,] 2. Division or unit affected (complete or partial) [,] 3. Normal output of such division or unit per 8-hour shift in tons of products[,] 4. Cause of stoppage or strike (e. g., wages, working conditions, discipline of employees, jurisdictional disputes, etc.) * * * You should use the average production per 8-hour shift of the previous month for the normal output unless this figure is not representative, in which case, you should substitute a representative figure. * * * [In preparing subsequent reports after the early notification to the Institute at the start of a strike, work stoppage, or slow-down, record the] Estimated Loss of Production by Products. Enter here the estimated total production lost in both the direct and indirect divisions or units during the week covered by the report. * * * This procedure is to be made effective with the week ending September 3, 1943. * * *"

 Enclosed with these instructions is a general format for use by Carnegie-Illinois plants, which format includes four proposed headings: "Form 'B' Report Number," "Division or Unit," "Estimated Total Man Hours Lost," and "Estimated Loss of Production by Products."

 4. From Statistical Supervisor to General Supervisor of Statistics Division for plaintiff's Carnegie-Illinois subsidiary, dated December 13, 1943, with heading "Strikes or Work Stoppages." This letter informs Carnegie-Illinois plants that they may discontinue the practice of telephone or telegraph reports suggested in letter #2 above, but that "Form B" reports should still be submitted at the "earliest possible date."

 5. From plaintiff's Cost and Statistics Division to plaintiff's subsidiaries, dated September 1, 1949, with heading "Instructions For Reports * * * Strike or Work Stoppage -- Form 'B'." This letter contains instructions for preparation of "Form B" reports by the plants for "all strikes and work stoppages including dues, picketing, slow-downs, or other types of union activity which cause a loss of output." Under the subheading "Estimated Loss of Production," the letter advises:

 
"The loss in production caused by the strike or work stoppage is estimated and reported by product name and net tons. Where losses are measured in number of base boxes, cubic feet, gallons, or other units, the net-ton equivalent is also shown. The tonnage estimate is obtained by multiplying the average tonnage per operating hour by the number of operating hours lost because of the strike. * * * It should be noted that tonnage reported as 'Direct Loss' and tonnage reported as 'Indirect Loss' are to be nonadditive to avoid pyramiding of primary semi-finished, and finished goods, together under the common label of 'Total Steel Lost'."

 These letters represent the only examples presented by plaintiff at trial of any written instructions transmitted to U. S. Steel's production plants. From this incomplete evidence of instructions, the court cannot determine with certitude which instructions were in force at particular plants at particular times.

 Later in the trial, plaintiff's witness Raymond S. Ganem, a U. S. Steel employee since February, 1952 who now works in the accounting department, cost and statistics division (1445, 1460), testified that he had caused a search to be made of plaintiff's archives in response to the court's inquiries to plaintiff about its accounting procedures and the availability of source documents. (987, 1890)

 Ganem stated that the search resulted in the discovery of "Form B" reports for each of the years 1941 to 1950. However, plaintiff was unable to find all the reports for the year 1941 and "certain of the other years." Exhibits 132-136, 138, 140-143, consisting of a volume of the available "Form B" reports for each of the years 1941 to 1950, and Exhibits 137 and 139, contemporaneous lists of the "Form B" reports for the years 1944 and 1945, were admitted into evidence. (1890-1896, 2382) Exhibits 124 and 128 were also admitted. (2382)

 In a letter to the parties May 11, 1970, the court referred to Exhibits 132-143 and requested plaintiff to attempt preparation of an additional exhibit or exhibits setting forth summaries of estimated production losses for certain years, based on the available "Form B" reports contained in Exhibits 132-143. In response, plaintiff proposed Exhibits 4-7. (See Court's Exhibit 5, May 11, 1970; Plaintiff's letter to the court, May 13, 1970)

 In a letter to the parties May 18, 1970, the court stated:

 
"A study of these proposed exhibits and Exhibits 132-143 reveals that production losses (due to strikes and work stoppages) were reported in various forms. Exhibits 132-143 are said to include each available report (or 'Form B') prepared by each plant of each manufacturing subsidiary as an estimate of production losses due to strikes or work stoppages during the years 1941 to 1950. The various Form B reports appear to record estimated production losses in at least four different contexts: (1) a production loss of ingots only; (2) a production loss of actual products only; (3) a production loss of ingots and actual products; (4) a production loss of ingots, together with product loss figures, which figures may or may not be intended as a projection of potential product losses which would be expected to result from the specified loss of ingots. * * * In order to analyze the approximate production losses due to strikes or work stoppages in a particular year or years in comparison with the approximate production losses due to strikes or work stoppages in another particular year or years, the court believes that a comparative standard as nearly uniform as possible is required for each of the years 1941 to 1950. Plaintiff has not attempted to propose a basis for evaluating the different types of reports and totals included in Exhibits 132-143 and mentioned above. Since, as plaintiff has stated, these exhibits constitute 'underlying documents,' the documents must be utilized as primary sources for determining reported production losses due to strikes and work stoppages in the years 1941 to 1950. * * * Plaintiff is asked to submit a proposed exhibit or exhibits attempting to set forth, on the basis of Exhibits 132-143, the estimated production losses due to strikes and work stoppages for each of the years 1941 to 1950 by a reconciliation and explanation of the varying types of Form B reports previously noted. * * * Plaintiff is asked to specify the extent to which the original Form B reports for each year are included in Exhibits 132-143. For example, plaintiff may propose to demonstrate that the total of the available Form B reports is comparable to figures in contemporaneous summaries or annual reports. * * * Insofar as it appears that certain Form B reports are not available, plaintiff may propose in detail which, if any, documents it wishes the court to consider as a means of filling in gaps. * * *" (Court's Exhibit 6, May 18, 1970)

 In response, plaintiff proposed Exhibits 8-10 and told the court that these exhibits included:

 
"* * * a reconciliation and explanation of the Form B reports for the years 1944 and 1945, for which years there were available Exhibits 137 and 139, as well as 138 and 140, which enabled the explanation to be made. Plaintiff has attempted to make exhibits of a similar nature for other years. These attempts, however, are based in part on conjecture. * * * To the best of plaintiff's knowledge, the files of Form B reports, * * * together with other documents marked in evidence, constitute all of the presently available records concerning work stoppages of United States Steel Corporation and its subsidiaries for the years 1941 through 1950, with the exception of the fact that there are references to work stoppages and the resulting tonnage losses in the Comptroller's letters * * *, the Annual Reports * * *, and similar conclusory reports which have been excluded from evidence. So far as plaintiff has been able to determine by reconciliation, the Form B Reports are substantially complete for each of the years, with the exception of 1941, 1946 and 1948. With respect to the year 1941, only a portion of the Form B Reports has ever been found. The 1946 Form B Reports add up ...

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