Court Opinion

ID: 2782302
Source: CourtListenerOpinion
Date Created: 2015-02-26 13:01:26.218134+00
Date Added: 2024-06-11T11:28:23.282620
License: Public Domain

In the United States Court of Federal Claims
                                  No. 14-168 C
                               (February 25, 2015)

ALABAMA POWER COMPANY,                  )
GEORGIA POWER COMPANY,                  ) Plaintiff as Proper Party; Future
and SOUTHERN NUCLEAR                    ) Damages.
OPERATING COMPANY, INC.                 )
                 Plaintiffs,            )
         v.                             )
                                        )
THE UNITED STATES,                      )
                           Defendant.   )

      Eric B. Langley, Balch & Bingham, LLP, Birmingham, AL, for plaintiffs.
M. Stanford Blanton, K.C. Hairston, Jason B. Tompkins, and Adam K. Israel, of
counsel.

       Melissa L. Baker, Commercial Litigation Branch, Civil Division, United
States Department of Justice, Washington, D.C., with whom appeared Joyce R.
Branda, Acting Assistant Attorney General, Robert E. Kirschman, Jr., Director,
and Allison Kidd-Miller, Assistant Director, for defendant. Jane K. Taylor, Office
of the General Counsel, United States Department of Energy, Washington, D.C., of
counsel.
                                    ORDER

      Merow, Senior Judge

      This case is the third round of litigation between the parties with regard to
the government’s breach of its obligation to dispose of plaintiffs’ spent nuclear
fuel. See Doc. 1 (filed Mar. 4, 2014); Alabama Power Co., et al. v. United States,
No. 1:08-237 (Fed. Cl. filed Apr. 3, 2008); S. Nuclear Operating Co., et al. v.
United States, No. 1:98-cv-614 (Fed. Cl. filed July 29, 1998).

       On April 18, 2014, the government moved to dismiss three portions of the
case, claiming that: (1) Southern Nuclear Operating Company, Inc. (“Southern”)
is not a proper party to the suit; (2) plaintiffs’ claim for prejudgment interest is
improper; and (3) plaintiffs’ claim for damages between the time the lawsuit was
filed and the time of trial is improper. See Doc. 7. The issues have now been fully
briefed, and the court finds as follows.

I.    SOUTHERN AS A PLAINTIFF

        Southern has been a party to both the first and second rounds of this
litigation. The government objected to its presence in the first round case, see
Southern, No. 1:98-cv-614, Doc. 109, but the court deferred ruling, see id., Doc.
234 at 4, and ultimately determined there was no need to dismiss Southern when
the government renewed its request after the trial, see Doc. 362 at 74. The court
did not make an affirmative determination that Southern was a proper party.

       The government has again raised the issue, and insists that because Southern
is not in privity with the government, it cannot participate in the litigation as a
plaintiff. See Doc. 7 at 6-9.

       As the Federal Circuit recently noted, “[t]o have standing to sue the United
States on a contract claim, a plaintiff must be in privity with it.” Lea v. United
States, No. 2014-5100, 2014 WL 5786662, at *3 (Fed. Cir. Nov. 7, 2014) (citing
Sullivan v. United States, 625 F.3d 1378, 1379-80 (Fed. Cir. 2010)). “This means
that the plaintiff must either be a party to the contract or ‘stand[ ] in the shoes of a
party within privity’ as a third party beneficiary.” Id. (quoting First Hartford
Corp. Pension Plan & Trust v. United States, 194 F.3d 1279, 1289 (Fed. Cir.
1999)).

      It is undisputed that Southern is not a party to the contract at issue here. See
Doc. 1 at 1-2 (complaint naming Alabama Power and Georgia Power as the entities
with which the government made contracts for the disposal of nuclear waste); Doc.
13 at 2 (Southern admitting it “is not a party to the Standard Contract”). Rather,
Southern alleges that it is the “operating agent and attorney-in-fact for Alabama
Power and Georgia Power,” see Doc. 1 at 2, and that it asserts claims in its
“representational capacity,” see id at 3.

        Because Southern is not a party to the contract, in order to sue, it must do so
as a third-party beneficiary. As the Federal Circuit recently explained, the
appropriate test for determining whether a party is a third-party beneficiary such
that it has the right to sue the government, is as follows:

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      In order to prove third-party beneficiary status, a party must
      demonstrate that the contract not only reflects the express or implied
      intention to benefit the party, but that it reflects an intention to benefit
      the party directly. . . . Third-party beneficiary status is an “exceptional
      privilege” and the contracting parties’ intent to create that status can
      generally be inferred if “the beneficiary would be reasonable in
      relying on the promise as manifesting an intention to confer a right on
      him.”

Lea, at *4 (citations omitted).

       Southern claims that the operational and administrative functions it performs
for Plants Farley and Hatch amount to a “sufficient interest in the administration of
the Standard Contract to give it the right to join this lawsuit in a representative
capacity.” See Doc. 13 at 3. “As the licensed operator, Southern Nuclear
administers the Standard Contract,” and is allegedly responsible for “possession,
management, control, operation, maintenance, shutdown and decommissioning
activities” at the power plants. See Doc. 13 at 3.

       Performance of these functions, however essential, simply does not speak to
the intent of the contracting parties with respect to Southern. Because Southern
has presented no evidence that the Standard Contract was executed for its benefit,
the court has no basis on which to find that it was an intended third party
beneficiary.

    The government’s motion to dismiss Southern as a party to this lawsuit is
GRANTED.

II.   PLAINTIFFS’ CLAIM FOR PREJUDGMENT INTEREST

       The government next moves to dismiss plaintiffs’ request for prejudgment
interest pursuant to Court of Federal Claims Rule 12(b)(6). See Doc. 7 at 1.
Plaintiffs argue that their request for prejudgment interest is not technically a
claim, and therefore, is not a proper subject of a motion to dismiss. See Doc. 9 at
4-6. The government counters that Federal Circuit precedent weighs so heavily
against plaintiffs’ position that the court should foreclose recovery of prejudgment
interest at the outset of the lawsuit. See Doc. 10 at 6-9.

       The court does not see any particular benefit to deciding the legal merits of
plaintiffs’ request for prejudgment interest at this time. It appears unlikely that the

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parties will need to conduct discovery or present evidence on this issue.
Consequently, the court considers it appropriate to address any arguments the
parties wish to make in the final briefs.

       Should the parties find it necessary to conduct discovery or present evidence
relating to prejudgment interest that would require material resources, the
government may move the court to resolve the question at that time.

    The government’s motion to dismiss the request for prejudgment interest is
DENIED.

III.   DATE RANGE FOR PLAINTIFFS’ DAMAGES CLAIM

       Finally, the government argues that the court should prohibit plaintiffs from
seeking to recover what it calls “future damages,” by which it seems to mean any
damages incurred after the date the complaint was filed. See Doc. 7 at 10-11. In
response, plaintiffs claim that such a complete bar does not exist, pointing to the
earlier round of this litigation in which plaintiffs filed the complaint in 2008, but
recovered damages incurred into 2010. See Doc. 9 at 6-7. According to the
government, the Federal Circuit’s decision in Indiana Michigan Power Co. v.
United States, 422 F.3d 1369 (Fed. Cir. 2005), should be read to prohibit this
strategy. See Doc. 10 at 9-10.

       It is clear from a careful read of the Indiana Michigan decision that what the
Federal Circuit meant to prohibit was not necessarily the recovery any amount of
damage incurred after the complaint was filed, but rather, damages that require
speculation. As the Circuit explained: “Because of its highly speculative nature, a
claimant may not recover, at the time of the first suit for partial breach, prospective
damages for anticipated future nonperformance resulting from the same partial
breach.” Indiana Michigan, 422 F.3d at 1376. The court then noted that the
plaintiff was allowed to “obtain recovery for post-breach damages as they are
incurred.” See id. at 1377. So long as the damages have actually been incurred
prior to recovery, they are not absolutely barred in an action for partial breach.
Indeed, as plaintiffs noted, this court has previously permitted plaintiffs to recover
damages that were incurred after the relevant complaint was filed. See, e.g.,
Alabama Power Co., et al. v. United States, No. 1:08-237 (although the complaint
was filed in 2008, the court awarded damages through 2010).

      It is equally true, however, that it would be impractical to allow an open-
ended recovery of all damages incurred up to the date of trial, particularly in cases

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as complex and detail-oriented as spent nuclear fuel cases. In order to avoid the
presentation of unnecessarily voluminous accounting data at the time of trial, for
example, the court has ordered the parties to cooperate in an audit process in each
of the first two rounds of this litigation. It intends to the do the same in this third
round. In order for that audit process to work, there must be a definite range of
damages to be evaluated.

       The parties are encouraged to make every effort to agree upon a sensible
date range for the damages alleged in this case. On or before April 1, 2015, the
parties shall file a joint report notifying the court of the date range. In the event
that the parties are unable to agree, plaintiffs may file a motion for leave to
supplement the complaint pursuant to RCFC 15(d), and explain to the court the
additional damages they wish to recover and why the inclusion of those damages in
this suit makes sense.
       As this court has explained: “Supplementation should be allowed where
post-commencement events are material to the action, consideration of those
events could be accommodated with the orderly progression of the case to trial or
other disposition, and supplementation would not prejudice any party.
Supplementation may be limited or curtailed to avoid prejudice.” Sys. Fuels, Inc.
v. United States, 73 Fed. Cl. 206 (2006) (citing Pac. Gas and Elec. Co. v. United
States, 70 Fed. Cl. 758, 764-65 (2006), and discussing additional spent nuclear fuel
cases in which the court permitted plaintiffs to supplement the damages claim by
expanding the time period for which damages were sought). See also Boston
Edison Co. v. United States, 658 F.3d 1361, 1365-66 (Fed. Cir. 2011) (explaining
that although plaintiff Entergy Nuclear Generation Company originally filed a
complaint seeking damages incurred between 1999 and 2005, it later amended the
complaint to seek damages through 2008).
      Once a date has been selected, the court will enter an order that will govern
the audit process. If either party wishes to change the date range at a later time, a
motion for leave to do so shall be filed with the court.

      The government’s motion to dismiss plaintiffs’ claims that relate to damages
incurred after the complaint was filed is GRANTED, but the issue may be revisited
upon agreement of the parties or a motion for leave to amend filed by plaintiffs.

      SO ORDERED.
                                               s/ James F. Merow
                                               James F. Merow
                                               Senior Judge
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