United States Steel Corp. v. United States (316 F. Supp. 990, 1970)

United States District Court for the Southern District of New York 1970-07-14

Internal Revenue Code

Citations

Full opinion text

OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW.

LEYET, 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)

PRIOR PROCEEDINGS IN THIS LITIGATION

A. The Complaint

In a complaint dated September 30, 1965 and filed October 11, 1965, U. S. Steel 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)

PLAINTIFF’S POST-TRIAL CONTENTIONS

The plaintiff’s claims after trial may be set forth generally as follows:

1. The two 1948 United Mine Workers’ strikes which shut down U. S. Steel’s coal-producing facilities and resulted in interruptions in production at plaintiff’s steel-making facilities were “unusual” occurrences within the meaning of § 442;

2. The 1948 explosion at plaintiff’s South Works in Chicago, Illinois was an “unusual” occurrence within the meaning of § 442;

3. U. S. Steel’s 1948 income before federal income taxes was reduced (as a result of “unusual” occurrences within the meaning of § 442) to a legally significant extent below what such income otherwise would have been; consequently plaintiff is entitled to application of § 442 for the year 1948.

4. The 1949 United Steel Workers’ strike which shut down plaintiff’s steel-making facilities was an “unusual” occurrence within the meaning of § 442;

5. U. S. Steel’s 1949 income before federal income taxes was reduced (as a result of the “unusual” occurrence) to a legally significant extent below what such income otherwise would have been; consequently, plaintiff is entitled to application of § 442 for the year 1949.

6. If plaintiff is not entitled to any § 442 application for 1948 and 1949 or if plaintiff is entitled to § 442 application for only one of the years (i. e., 1948 or 1949), plaintiff presses an alternative claim under § 433(b) (9) for disallowance of deductions for certain 1949 “strike expenses;” if plaintiff qualifies for application of both § 442 and § 433 (b) (9) for 1949, it seeks relief under whichever section is more favorable.

DEFENDANT’S POST-TRIAL CONTENTIONS

The defendant’s positions in response to plaintiff’s contentions may be set forth generally as follows:

1. The 1948 United Mine Workers’ strikes were not “unusual” events under § 442;

2. The 1948 explosion at U. S. Steel’s South Works was concededly an “unusual” event; but

3. Plaintiff’s 1948 income before federal income taxes was not reduced to a legally significant extent as a result of the 1948 explosion, the only “unusual” occurrence which affected U. S. Steel’s 1948 income.

Consequently, plaintiff is not entitled to application of § 442 for the year 1948.

4. The 1949 United Steel Workers’ strike was concededly an “unusual” event; but

5. U. S. Steel’s 1949 income before federal income taxes was not reduced to a legally significant extent as a result of the 1949 strike.

Consequently, plaintiff is not entitled to application of § 442 for the year 1949.

6. Plaintiff is not entitled to any relief for its alternative claim under § 433(b) (9).

ISSUES

The following issues are before the court for determination:

1. Were the two 1948 strikes against plaintiff by the United Mine Workers qualifying abnormalities within the meaning of 26 U.S.C. Excess Profits Taxes § 442(a) (1939 Code)?

2. If the two 1948 strikes were qualifying abnormalities, has U. S. Steel proved by a fair preponderance of the credible evidence that its 1948 income before federal income taxes was reduced to a legally significant extent (below what such income otherwise would have been) as a result of 1948 qualifying abnormalities, i. e., the 1948 explosion at plaintiff’s South Works in Chicago, Illinois, which explosion is conceded by defendant to have been a qualifying abnormality, and the two 1948 strikes (if it has been determined that the strikes were qualifying abnormalities) ?

3. If the two 1948 strikes were not qualifying abnormalities, has plaintiff proved by a fair preponderance of the credible evidence that its 1948 income before federal income taxes was reduced to a legally significant extent as a result of the 1948 explosion (which would then be the only qualifying abnormality for 1948)?

If U. S. Steel has sustained its burden of proof as to the issues mentioned above, plaintiff is entitled to have its net income for the base period year 1948 computed in accordance with § 442 for excess profits tax purposes.

4. Has plaintiff proved by a fair preponderance of the credible evidence that its 1949 income before federal income taxes was reduced to a legally significant extent as a result of the 1949 strike against plaintiff' by the United Steel Workers (which strike is conceded by defendant to have been a qualifying abnormality) ?

If U. S. Steel has sustained its burden of proof as to the fourth issue, plaintiff is entitled to have its net income for the base period year 1949 computed in accordance with § 442 for excess profits tax purposes.

5. If plaintiff is not entitled to any § 442 application for 1948 and 1949 or if plaintiff is entitled to § 442 application for only one of the years (i. e., 1948 or 1949), has plaintiff proved by a fair preponderance of the credible evidence that it is entitled to relief pursuant to its alternative claim under 28 U.S.C. Excess Profits Taxes § 433(b) (9) for disallowance of deductions for 1949 “strike expenses”? If so, is plaintiff entitled to greater relief for 1949 under § 433(b) (9) or § 442?

I. PLAINTIFF’S CLAIMS UNDER SECTION 442 RELEVANT STATUTE

26 U.S.C. Excess Profits Taxes § 442 (a) reads in pertinent part:

"§ 442. Average base period net income — abnormalities during base period

“(a) In general. If a taxpayer * * establishes that, for any taxable year within, or beginning or ending within, its base period:

“(1) normal production, output, or operation was interrupted or diminished because of the occurrence, either immediately prior to, or during such taxable year, of events unusual and peculiar in the experience of such taxpayer * * * [emphasis added] the taxpayer’s average base period net income [shall be] determined under this section * *

THE APPLICABLE STANDARD FOR DETERMINING WHETHER THE 1948 STRIKES WERE QUALIFYING ABNORMALITIES WITHIN THE MEANING OF SECTION 442

The Excess Profits Tax Act of 1950, 26 U.S.C. Excess Profits Taxes § 430 et seq., which is designed to tax at high rates unusually high profits earned during the Korean War, imposes a tax on profits in excess of an amount deemed to represent the taxpayer’s normal profits. Jarecki v. G. D. Searle & Co., 367 U.S. 303, 304, 81 S.Ct. 1579, 6 L.Ed.2d 859 (1961).

The object of relief provisions under both the Korean War Act and its predecessor, the World War II Excess Profits Tax Act of 1940, 26 U.S.C. Excess Profits Taxes § 710 et seq., was to ensure that the finally derived “average base period net income” should reflect what the taxpayer would have earned in the excess profits tax year (i. e., 1950) but for the war which may have fortuitously increased profits.

In furtherance of this objective, actual base period net income which is unrepresentative for a statutorily-defined reason should be replaced by a constructive income. Oxford Paper Company v. Commissioner of Internal Revenue, 302 F.2d 674, 681 (2nd Cir. 1962).

In order to warrant general relief under the statute, the taxpayer must first establish at least one qualifying abnormality for each one of the relevant base 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. 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).

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) 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, 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 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 CarnegieUlinois 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-l 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, “[w]e 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, slowdowns, 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 to 500,-000 tons less than the total reported on Exhibit 128 for that year. This difference centers principally on the losses reported for the 1946 steel strike. Apparently later reports of that strike are missing from this set of copies. * * * ” (Plaintiff’s first letter to the court, May 21, 1970)

In a later letter, plaintiff referred to the letter above and stated that “Form B” reports for certain subsidiaries were not available for the years 1944 and 1945. (Plaintiff’s second letter to the court, May 21, 1970)

On May 22, 1970, the record was reopened for argument and, at plaintiff’s request, for additional testimony by its witness Ganem. I discussed with .the parties an excerpt from one of plaintiff’s post-trial memoranda, to wit:

“It does not now seem to counsel for plaintiff that there is need for additional evidence, but should there be any points on which the Court foresees a possible failure of proof for lack of evidence, as opposed to a decision on the evidence offered, plaintiff’s counsel request the unusual courtesy of having any such areas revealed by the Court because counsel do not want their reluctance unnecessarily to over-burden the record to redound against the substantive rights of their client.” (Plaintiff’s Memorandum of May 11, 1970, p. 2 [in Response to the Court’s letter of May 6, 1970])

[THE COURT:] “The time for that, I think, has passed. We have endeavored here to ascertain clarifications, but each side, both plaintiff and defendant, will have to weigh the evidence which it has submitted and we must determine the issues on the basis of the actual submissions which have been made.” (3597)

Plaintiff was asked if it wished to submit any documents as a means of filling in gaps resulting from the unavailability of certain “Form B” reports (the source records, prepared by U. S. Steel production plants, which contain estimates of production losses due to particular strikes or work stoppages).

Plaintiff’s counsel, apparently alluding to conclusory documents such as annual reports, stated that certain documents of this nature had not been admitted into evidence. The court then reiterated that plaintiff had the opportunity to submit any papers as a proposed means of filling in gaps. (3598-3600) By letter to the court, plaintiff then reported that “it has again reviewed its files at length and has no additional documentary materials which it can submit in this connection.” (Plaintiff’s letter to the court, May 26, 1970)

During the course of Ganem’s testimony on May 22, 1970, Exhibits 4-10 were admitted into evidence. Exhibits 4 and 5 are attempts at summarizing estimated production losses due to strikes and work stoppages in terms of “ingots” and “total iron and steel” for manufacturing subsidiaries of U. S. Steel in the years 1941 through 1945. Exhibits 6 and 7 are, for the most part, attempts at summarizing the figures contained on the available “Form B” reports for 1943 and 1945. Exhibit 8 contains certain production statistics for the years 1941 to 1950. Exhibits 9 and 10 represent attempts at reconciliation of the estimated production loss figures included in varying contexts on the “Form B” reports available for the years 1944 and 1945.

After hearing the testimony of the parties and examining the pleadings, the exhibits and the proposed findings of fact and conclusions of law, this court makes the following findings of fact regarding the issues raised by plaintiff’s contentions that it is entitled to application of § 442 for the years 1948 and 1949:

FINDINGS OF FACT

1. The court has jurisdiction of this action pursuant to 28 U.S.C. § 1346(a) d).

2. Plaintiff United States Steel Corporation is a corporation organized under the laws of Delaware in September 1965 as “U. S. Steel Company,” and is the successor by merger on January 1, 1966 to United States Steel Corporation, a corporation organized under the laws of New Jersey. (Stipulation, 171)

3. On November 15, 1951, U. S. Steel, for itself and its subsidiaries, timely filed a consolidated federal income and excess profits tax return for the calendar year 1950. The tax due, as shown on the return, was timely paid in four installments during 1951. Thereafter, as a result of audits by the Internal Revenue Service, additional tax for 1950 was assessed and paid, together with interest thereon, and adjustments were made in the 1950 tax due to interim LIFO allowances. (Stipulation, 171)

4. By successive agreements between the taxpayer and the Internal Revenue Service, the time for assessment against plaintiff of additional federal income and excess profits tax for 1950 was extended to June 30, 1966. Additional payments of tax and assessed interest were completed on or about June 22,1965. (Stipulation, 171-172; Pretrial Order No. 1, Ex. A; Court’s Ex. 2)

5. On June 29, 1965, U. S. Steel filed a timely claim for refund of federal income and excess profits tax paid for 1950, and a refund of assessed interest paid on assessments of additional income and excess profits tax for 1950. (Stipulation, 172; Pretrial Order No. 1, Ex. B)

6. On August 4, 1965, the Internal Revenue Service forwarded to U. S. Steel by certified mail a notice of rejection of plaintiff’s refund claim. (Stipulation, 172)

7. U. S. Steel and its subsidiaries have been engaged principally in the integrated business of making and selling iron and steel products since 1901. (Stipulation, June 10, 1970)

8. The steel-making process generally consists of several production steps. The principal raw materials used in the manufacture of steel are coal, iron ore and limestone, each of which is mined at U. S. Steel’s own mines. After coal is mined, it is charged into coke ovens to produce coke. Coke, iron ore and limestone are then charged into a blast furnace to produce iron (or hot metal). Iron, with the principal addition of scrap, is then charged into the open-hearth furnace (or other facilities) to produce ingots, the first solid form of steel. Ingots are then processed further into semi-finished products (slabs, blooms and billets), which may be shipped to customers or processed further into finished products (plate, sheet and strip; structural steel and rails; and rods, bars, seamless pipes and tubes) for shipment to customers. (See Ex. 24; 400-404, 617-618)

9. During the years 1933-1950, the major subsidiaries of U. S. Steel (engaged in the production and manufacture of coal, coke, iron, ingots, semi-finished products and finished products) were as indicated in the following table:

MAJOR PRODUCTION SUBSIDIARIES OF U. S. STEEL: 1933-1950

Subsidiary Semi-finished Finished

(and years) Coal Coke Iron Ingots Products Products

H. C. Frick Coke

(1933-1950) X X

National Mining

(1933-1943; absorbed

by H. C. Frick 1/15/43) X

Sharon Coal & Lime-

stone (1933-1940; ab-

sorbed by National

Mining 12/31/40) X

U. S. Coal & Coke

(1933-1950) X

U. S. Fuel

(1933-1940; absorbed

by U. S. Coal & Coke

12/31/40) X

Carnegie-Ulinois

(1933-1950) XXX X X

MAJOR PRODUCTION SUBSIDIARIES OF U. S. STEEL: 1933-1950

Subsidiary Semi-Finished Finished

(and years) Coal Coke Iron Ingots Products Products

American Sheet & Tin

Plate

(1933-1936; merged with

Carnegie-Ulinois 6/1/36) XX X

American Steel & Wire

(1933-1950) XXX X X

Cyclone Fence

(1933-1940; dissolved

12/23/40) X

Columbia Steel

(1933-1946) X X X X X X

(1947-1950; coal, coke

and iron production

facilities sold to

Geneva Steel in

October, 1946) XX X

National Tube

(1933-1950) XXX X X

Tubular Alloy Steel

(1941-44; assets

transferred to National

Tube 9/26/44) X

Tennessee Coal & Iron

(1933-1950) X X X X X X

Geneva Steel

(1946-1950; government-

owned production

facilities at Geneva,

Utah purchased by U. S.

Steel 6/19/46) X X X X X X

American Bridge

(1933-1950) X

Canadian Bridge

(1933-1937; sóidas

of 9/1/37) X

Oilwell Supply

(1933-1950)

U. S. Steel Supply

(1933-1950; known

before 1942 as Scully

Steel Products)

U. S. Steel Products

(1939-1950; known be-

fore 9/23/43 as Boyle

Mfg.)

MAJOR PRODUCTION SUBSIDIARIES OF U. S. STEEL: 1933-1950

Subsidiary Semi-Finished Finished

(and years) Coal Coke Iron Ingots Products Products

Federal Shipbuilding &

Dry Dock

(1933-1948; yard transferred to U. S. Navy

12/31/48) X

Virginia Bridge

(1936-1950) X

Gerrard Steel Strapping

(1942-1950) X

Consolidated Western

(1948-1950; acquired

8/31/48) X

(Stipulation, June 9,1970; Court’s Ex. 7)

10. During the years 1933 through 1939, U. S. Steel’s production facilities were affected by “some strikes and other labor difficulties,” although plaintiff apparently did not maintain statistical records in those years indicating the approximate extent to which such occurrences may have interrupted the manufacture of iron and steel products by plaintiff's subsidiaries. (Exs. 207, 208; 2732)

11. During the year 1941, U. S. Steel began to instruct administrative officials at the production plants of its subsidiaries to prepare reports estimating man-hour losses and production losses due to any strikes or work stoppages. These papers, known as “Form B” reports, were transmitted by the subsidiaries to central management. The court cannot determine from plaintiff’s evidence exactly when each production plant of each subsidiary began to prepare and submit “Form B” reports for strikes or work stoppages, although it appears that almost all plants of the major subsidiaries were submitting the reports, when appropriate, by 1942 or 1943. (Ex. 119; 1533-1534; Exs. 141, 142, 143; 444, 575)

12. The only relevant years prior to 1948 for which plaintiff has presented any statistical evidence regarding strike losses are 1941, 1942, 1943, 1944 and 1945. (See Exs. 138, 140-143)

Since plaintiff started in 1941 to record estimates of production losses due to strikes, the court believes that a determination of whether the 1948 strikes were “unusual” within the meaning of § 442 should be based on a comparison of (a) alleged impact of the 1948 strikes on production and net shipments of iron and steel products; and (b) a reasonable approximation of the impact of strikes in 1941, 1942, 1943, 1944 and 1945 on production and net shipments of iron and steel products.

13. The appropriate loss indicator “for the purposes of this action,” by agreement of the parties, is net shipments. (Plaintiff’s first letter to the court, May 21, 1970; 3138-3139, 3625-3626) In the steel-making industry, production and total shipments are generally correlative. (3006, 3011, 3122, 3123, 3142) The court finds that a loss of production would have been comparable generally to a loss of total shipments.

U. S. Steel has been engaged principally in the “integrated business of making and selling iron and steel products since 1901.” (Finding of Fact #7) (Emphasis added) For the most part, however, plaintiff has referred during the trial to production and shipments of steel products, with only occasional mention of possible shipments of iron products. See Ex. 16 (“steel products”— shipments); Ex. 8 — May 22, 1970, p. 2 (“Steel Producers Shipments of Steel Products” — 1941-1950)

Although iron is charged into an open-hearth furnace (or other facility) with scrap to produce ingots (Finding of Fact #8), one witness, discussing certain production facilities of a U. S. Steel subsidiary in the year 1950, seemed to state that hot metal (iron) produced at those facilities was “sold as hot metal and does not go into the production of ingots at United States Steel Corporation.” (1908-1909) It thus appears that iron or hot metal is processed further into ingots and then into steel products, although to some unspecified extent iron or hot metal might be processed and sold as iron product rather than being processed further into ingots and then sold as steel product.

I shall proceed on the assumption that most of the iron or hot metal (estimated to have been lost due to strikes in the years 1941-1945) would have been processed further into ingots and then into steel products. Specified production losses of iron or hot metal will therefore be excluded from further consideration. To the extent that production loss estimates can be itemized only as a combined total of iron, ingots and steel products, the court will determine the range of possibilities regarding production losses of steel products. In other words, a combined total might conceivably represent all iron losses, at one extreme, or all steel product losses, at the other.

In an effort to obtain a reasonable approximation of potential strike losses in terms of net shipments of steel products, the court will analyze the evidence submitted for the relevant years (i. e., 1941-1945, 1948) and apply known statistical relationships for those years indicating (a) the average yield of net shipments of steel products from ingot production, and (b) the average yield of net shipments of steel products from total shipments of steel products.

Plaintiff’s allegations of 1948 losses in production and shipments of steel products due to two 1948 strikes by the United Mine Workers will be discussed presently. The court will then analyze the evidence presented for the years 1941-1945 in order to determine whether the strikes in 1948 were “unusual” within the meaning of § 442(a) by reason of their alleged impact on production and net shipments of steel products.

STRIKES DURING 1948

14. On March 15, 1948, the United Mine Workers commenced a strike which shut down plaintiff's coal-producing facilities. The strike terminated on or about April 22, 1948. About July 5, 1948, the United Mine Workers commenced a strike which again shut down plaintiff’s coal-producing facilities. This strike terminated on or about July 14, 1948. (Stipulation, 176)

As a result of these strikes, plaintiff alleges that it suffered losses in production of coal, coke, iron, ingots and “equivalent finished products.” The allegation of lost production of ingots and “equivalent finished products” is based on the claim that the strikes not only-shut down plaintiff’s coal-producing facilities but also interrupted production of coke at coke ovens, iron at blast furnaces, and most importantly, ingots (the first solid form of steel) and steel products at U. S. Steel’s steel-making facilities. (See Finding of Fact #8 for a general summary of production steps in the steel-making process)

15. U. S. Steel did not submit a summary based directly on the available “Form B” reports for the year 1948 contained in Exhibit 134.

Instead of relying primarily on figures contained in available “Form B” reports for 1948, U. S. Steel relies on figures set forth in Exhibit 55 (“Production’s Losses Resulting from Coal Miners’ Work Stoppage Starting March 15, 1948 * * * final data as submitted by the companies * * summary dated May 21, 1948) and Exhibit 56 (“Production Losses Resulting from Coal Miners’ Work Stoppage Starting July 6, 1948 * * * the production losses in net tons * * summary dated July 22, 1948).

According to plaintiff’s witness King, the figures in these exhibits came from the chief accounting officers of plaintiff’s subsidiaries. (1018-1019) However, plaintiff has failed to produce all of the particular chief accounting officers’ reports which supposedly were the source of the figures placed in Exhibits 55 and 56. Since plaintiff has been unable to provide the source documents from subsidiaries, the court has considered U. S. Steel’s allegations based on certain figures contained in Exhibits 55 and 56, as follows:

PLAINTIFF’S ALLEGED PRODUCTION LOSSES DUE TO THE TWO 1948 STRIKES: EXHIBITS 55 AND 56

The March-Apfil Strike

Subsidiary “Equivalent Finished Ingots Products”

American Steel & Wire 1,882 1,328

Carnegie-Illinois 251,141 183,333

Columbia Steel () 1,639 3,828

Geneva Steel 126,390 85,185

National Tube 21,293 14,013

Tennessee Coal & Iron 100,641 70,448

Totals for March-April Strike 502,986 358,135

(Exhibit 55)

»*##***#**

The July Strike

Carnegie-Illinois 65,977 48,163

National Tube 10,893 7,047

Totals for July Strike.................. 76,870 55,210

(Exhibit 56)

•» ****-*•>:-** *

Totals for both strikes.................. 579,856 413,345

16. Plaintiff has failed to provide the actual instructions which might have been utilized in 1948 by employees at individual plants or by the chief accounting officers of the subsidiaries as the basis