Kaiser Aluminum & Chemical Corporation v. The United States

409 F.2d 238, 187 Ct. Cl. 443, 1969 U.S. Ct. Cl. LEXIS 142
CourtUnited States Court of Claims
DecidedApril 11, 1969
Docket49-63
StatusPublished
Cited by15 cases

This text of 409 F.2d 238 (Kaiser Aluminum & Chemical Corporation v. The United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kaiser Aluminum & Chemical Corporation v. The United States, 409 F.2d 238, 187 Ct. Cl. 443, 1969 U.S. Ct. Cl. LEXIS 142 (cc 1969).

Opinions

ON DEFENDANT’S MOTIONS UNDER RULE 69(b) (1) AND (2) FOR RELIEF FROM JUDGMENT AND FOR STAY OF PROCEEDINGS

NICHOLS, Judge.

This case is before us on defendant’s motion under Rule 69(b) (1) and (2) for relief from our judgment in Kaiser Aluminum & Chem. Corp. v. United States, 388 F.2d 317, 181 Ct.Cl. 902 (1967), and defendant’s motion for a stay of proceedings on the Rule 69(b) motion until a decision has been rendered in another case pending before us. Plaintiff, Kaiser Aluminum & Chemical Corp. (hereinafter Kaiser), opposes both motions. A brief review of this earlier Kaiser case (hereinafter Kaiser I) is necessary for an understanding of the present controversy.

As part of the aluminum expansion program during the Korean War, the General Services Administration (hereinafter GSA) executed contracts on behalf of the defendant with three major aluminum suppliers: Kaiser, the Reynolds Metals Company (hereinafter Reynolds), and the Aluminum Company of America (hereinafter Alcoa). The contracts with each of the companies required expansion of their aluminum production facilities in return for defendant’s market guarantee agreements. Under its contracts, Kaiser was to construct additional facilities, privately fi[239]*239nanced, and operate them. In return defendant guaranteed to purchase the production of the additional facilities required by the contracts to the extent that Kaiser was unable to sell this production or use it for its own purposes. Kaiser’s contracts obligated it to produce 2 billion 282 million pounds of primary aluminum pig. The ultimate issue in Kaiser I was whether or not that amount of production had been achieved. If it had, the Government was relieved of its guarantee liability. If not, Kaiser could produce the remainder and “put” it to the Government, as defined below. The dispute centered around the accounting method used in measuring production under these contracts prior to April 1, 1957. The method of measuring production after that date was not in dispute, having been settled by amendments to the contracts and specifically it was decided by such amendments what treatment should be accorded off-grade aluminum (an unintended product of an aluminum reduction line, most often in the startup phase of operations, which, according to accepted commercial practices when the contracts were negotiated, was defined as aluminum pig having a purity of less than 99%) and alloys (a product which results from the deliberate addition of other metals in the reduction pots). We held, however, that the amendments left open the measurement of production before April 1, 1957.

Kaiser claimed two grounds for recovery in that suit: first, that defendant had breached its original contracts with Kaiser and second, that defendant had breached its later so-called “most favored nation” agreement with Kaiser. Article I of the contracts provided (the contracts were identical in their relevant terms and the following provision is taken from the contract to construct facilities at Chalmette, Louisiana referred to in Kaiser I as Chalmette I):

Subject to the terms and conditions hereof, Contractor agrees to produce and to sell Five Hundred Thousand (500,000) short tons of 2,000 pounds each, of primary aluminum pig, said primary aluminum to be of minimum grade of ninety-nine percent (99%) aluminum, which primary aluminum is herein called the “additional production.” The Contractor will produce such aluminum from facilities which the contractor agrees hereafter to construct, herein called the “additional facilities.” * * *

Kaiser interpreted this provision to mean that only metal which had a minimum purity of 99% aluminum or higher would be included in computing “additional production” (thus excluding off-grade) and also that the weight of minimum purity metal should be determined without reference to any other metal added to make alloys. (In Kaiser I we referred to this basis of measuring contract production as the “net basis”.) The parties had stipulated that the weight of all offgrade and alloy additions before April 1, 1957 was 84,-407,143 pounds, thus, if plaintiff’s interpretation of the contract were correct, then Kaiser would have been able to “put” (a forced sale of aluminum to the Government due to a contractor’s inability to dispose of the offered aluminum through the usual channels. See Finding 15, Kaiser, supra, 388 F.2d 317, 181 Ct.Cl. at 944.) An additional 84,407,143 pounds to the Government, as the amount of contract production would have been reduced by that amount.

Defendant argued that the weight of all aluminum produced at the additional facilities prior to April 1, 1957, regardless of purity and including alloys, should be used to measure the amount of “additional production.” (This basis of measurement was referred to as the “gross basis” in Kaiser I.) If this interpretation were correct, then Kaiser would have had no claim for recovery.

Kaiser also relied on a most favored nation theory to support its claim. In negotiating the contracts the defendant had agreed that each of the aluminum companies would receive uniform treatment. Letters from defendant to each of the suppliers confirmed this policy. [240]*240The agreement allowed Kaiser to compel amendment of its contract terms to conform with the terms of its competitors’ contracts. Kaiser had never requested amendment of its contract pursuant to the agreement, but it did contend that its contract should be accorded the same interpretation as those of its competitors. Kaiser argued that Reynolds had been allowed to exclude alloys and off-grade and therefore, under the terms of the agreement, it should be allowed to compute its production for contract purposes in the same way. Kaiser regarded defendant’s refusal to permit it to compute its contract production on a net basis as a breach of the most favored nation agreement. Defendant for reasons needless to go into, in view of other conclusions we reach, decided not to contest Kaiser’s assertions about Reynolds’ accounting methods. Reynolds was not a party and its officials were not called as witnesses. The court took what was said about Reynolds as true, and so found. (Finding 42.) We decided that Kaiser’s most favored nation agreement gave it a right to compel a uniform interpretation of its contract and that since Reynolds (as we supposed) had been allowed to exclude alloys and off-grade in computing its contract production Kaiser was entitled to do the same. On December 15, 1967, we entered judgment for Kaiser in the amount of $7,-198,655.55.

After our Kaiser I decision, Reynolds filed a claim for damages of $7,643,436 with the GSA. Reynolds claimed that it had not excluded all of its offgrade metal in computing contract production, but only some of it, and therefore under its most favored nation agreement with the defendant, it was entitled to the same interpretation of its contract that Kaiser received in Kaiser I, i. e., it claimed the right to exclude all offgrade in computing contract production. GSA denied the claim and defendant then brought a suit in the United States District Court for the District of Columbia for a declaratory judgment stating that the United States was not liable to Reynolds notwithstanding our Kaiser I decision.

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Bluebook (online)
409 F.2d 238, 187 Ct. Cl. 443, 1969 U.S. Ct. Cl. LEXIS 142, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kaiser-aluminum-chemical-corporation-v-the-united-states-cc-1969.