Free Motion for Miscellaneous Relief - District Court of Federal Claims - federal

Case 1:00-cv-00697-JFM

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS WISCONSIN ELECTRIC POWER COMPANY, Plaintiff, v. THE UNITED STATES, Defendant. PLAINTIFF'S MOTION FOR LEAVE TO FILE A SECOND AMENDED AND SUPPLEMENTAL COMPLAINT Pursuant to Rules 15(a) and (d) of the Rules of the Court of Federal Claims ("RCFC"), plaintiff Wisconsin Electric Power Company ("WE") moves for leave to file a Second Amended and Supplemental Complaint (Attachment A to this motion) in order to update its claim to include the damages that WE incurred in 2006 and in early 2007 and to update its weighted average cost of capital ("WACC") claim to reflect the new September 2007 trial date. The costs at issue are the same type of costs that WE has previously claimed in this litigation including cask acquisition costs, cask loading costs, spent fuel storagerelated Nuclear Regulatory Commission ("NRC") fees, and costs to attempt to license WE's existing VSC-24 casks as transportable casks. In addition, as noted, WE seeks to update its WACC claim to reflect the new trial date of September 10, 2007. I. BACKGROUND No. 00-697C (Senior Judge Merow)

On November 16, 2000, WE filed its original Complaint, alleging a continuing partial breach of contract arising from the failure of the Department of Energy ("DOE") to remove SNF from WE's Point Beach Nuclear Plant ("PBNP") as required by WE's Standard Contract with the DOE, as well as other claims. Compl. at 7-10. WE's original Complaint alleged that its damages, estimated at $35 million by August 2000, "continue to accrue." Id. at ¶ 21.

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Further, WE reserved the right to recover presently unascertainable damages that may be caused by the DOE's future partial breaches of the Standard Contract. Id. On December 20, 2005, the Court issued an Order that moved the WE trial date from July 2006 to March 27, 2007. Thereafter, on February 6, 2006, WE moved for leave to file its First Amended and Supplemental Complaint ("First Amended Complaint") to update its damages since WE filed its original Complaint. On April 6, 2006, the Court granted WE's motion for leave and WE filed its First Amended Complaint on April 7, 2006. The First Amended Complaint updated WE's damages through 2005 and computed WE's claim in present dollars through the then applicable trial date of March 27, 2007. In a February 23, 2007 Order, the Court recently rescheduled trial from March 27, 2007 to September 10, 2007. WE now seeks leave to file a Second Amended and Supplemental Complaint to update its damages since the filing of its First Amended Complaint, i.e., to claim damages incurred in 2006 and early 2007 and to reflect Wisconsin Electric's total damages in present dollars up through the September 10, 2007 trial date. These damages are the same type of costs that WE has previously claimed in this litigation including cask acquisition costs, cask loading costs, spent fuel storage-related NRC fees, licensing costs to have the VSC-24 cask licensed as transportable and the WACC of WE's damages to reflect the new trial date of September 10, 2007. II. A. ARGUMENT

WE Should Be Granted Leave to Amend Its Complaint Under Rule 15(a). WE's motion for leave should be granted in the interests of justice and to facilitate the

speedy and inexpensive determination of this action. See RCFC 1. Rule 15(a) states in pertinent part: "A party may amend the party's pleadings . . . by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." The decision to grant leave to amend a Complaint is within the sound discretion of the trial court. Holland v. United States, 62 Fed. Cl. 395, 406 (2005). The broad policy of granting

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amendments freely is based in part on the belief that decisions on the merits should be made whenever possible, absent countervailing considerations. Id. The U.S. Supreme Court has identified the types of limited considerations that can justify denial of a motion for leave to amend: "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc." Foman v. Davis, 371 U.S. 178, 182 (1962) (mandate of freely allowing amendment under Rule 15(a) "is to be heeded"). No such considerations are present here. There has been no undue delay, bad faith or dilatory motive on the part of WE. Further, there has not been repeated failure to cure deficiencies by amendments previously allowed. With trial now rescheduled for September 2007, WE simply seeks to claim those damages incurred since 2005 and to update its WACC to reflect the new September 2007 trial date. These are the same type of costs claimed in WE's original Complaint and in WE's First Amended Complaint. Because the costs at issue were incurred in 2006 and early 2007, there obviously has been no undue delay by WE. Further, there will be no "undue prejudice" to the Government. From the beginning of this action, the Government has been on notice that WE's damages would continue to accumulate after the filing of its Complaint. See Compl. ¶ 20. The Government also is extremely familiar with the types of costs at issue, namely, cask acquisition costs, cask loading costs, spent fuel storage-related NRC fees, VSC-24 licensing costs, and WE's WACC. Indeed, the Government has conducted extensive discovery and audit verification activities regarding these same types of costs. This development also is not a surprise to the Government. When trial was rescheduled from July 2006 to March 2007, WE updated its damages to include costs incurred through the end of 2005. It naturally follows that WE would seek leave to update its damages to include costs incurred through February 2007 and to incorporate the WACC for its past damages as of the new trial date of September 10, 2007.

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Moreover, contemporaneous with the filing of this motion, WE is providing to the Government the information that the Government has sought previously to verify past costs and WE's Third Supplemental Disclosures and Damages Schedules. WE's document production also includes an errata for the Kenrich Group expert report that will identify WE's updated damage claim. It also includes supporting documentation including invoices, checks, purchase orders/contracts, and the labor reports previously provided to the Government (CATS data from both WE and NMC). With the documentation that is being provided contemporaneously with this motion, the Government's damages consultants have more than sufficient time to verify that the claimed costs have been incurred. There are a few additional supporting documents that WE will provide to the Government within the next several weeks. Further, while WE does not believe that the Government will require any additional discovery regarding this claim update, there also is time available for limited discovery. Trial is not for more than five months. Moreover, to provide as much advance notice as possible, WE notified government counsel in a March 9, 2007 letter that WE intended to move for leave to amend its Complaint. See Attachment B. B. WE Should Be Allowed to Supplement Its Complaint Under Rule 15(d). Rule 15(d) permits a party to set forth "transactions or occurrences or events which have happened since the date of the pleading sought to be supplemented." The purpose of Rule 15(d) is to promote as complete an adjudication of the dispute between the parties as possible by allowing the addition of claims that arise after the initial pleadings are filed. William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F.2d 1014, 1057 (9th Cir. 1981) (applying parallel Fed. R. Civ. P. 15(d)). Further, it is an abuse of discretion to deny an amendment when a supplemental Complaint "relates to the same cause of action originally pleaded." Intrepid v. Pollock, 907 F.2d 1125, 1129 (Fed. Cir. 1990).

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Rule 15(d) allows a plaintiff to supplement its Complaint when there has been an increase in damages identified in the original Complaint. J. F. Shea Co. v. United States, 4 Cl. Ct. 46, 54-55 (1983), aff'd, 754 F.2d 338 (Fed. Cir. 1985) ("it must be recognized that additional facts may be developed which could increase or decrease the amount of a claim"); see also St. Paul Fire & Marine Ins. Co. v. United States, 1994 WL 874400, at *15 (Fed. Cl.) (citing Shea and Rule 15(d), the Court stated: "[T]he rules of this court allow for amendments or supplemental pleadings that increase previously-categorized damages which have changed during the course of the litigation."). Indeed, an important purpose of supplemental pleading is to bring into the record new facts which will enlarge or change the kind of relief to which the plaintiff is entitled. Southern Pac. Co. v. Conway, 115 F.2d 746, 750 (9th Cir. 1940). In the instant case, WE's proposed Second Amended and Supplemental Complaint alleges damages incurred after the damages sought by WE's First Amended Complaint, resulting from the Government's same continuing partial breach of the Standard Contract. For example, in its original Complaint, WE alleged the following: As a direct and proximate result of DOE's partial material breach of the Standard Contract, WE has incurred and will incur damages in a substantial amount which, as noted, exceeded $35 million dollars by August, 2000. WE's damages continue to accrue. The rate at which WE's damages will continue to accrue is dependent upon when and on what schedule DOE finally performs its contractual obligation. WE reserves its rights to recover presently unascertainable damages that may be caused by DOE's future partial breaches of the Standard Contract. Compl. ¶ 21. The damages that WE incurred prior to filing its Complaint included, among other things, the cost to construct and maintain a dry storage facility and to develop and purchase casks for use at that facility. Id. ¶ 17. WE had paid $168 million into the Nuclear Waste Fund at that time, November 2000. Id. ¶ 10.

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In its First Amended Complaint, WE alleged that it continued to pay fees to DOE under the Standard Contract. First Amended Compl. ¶ 34. WE further alleged: From November 2000 and continuing through December 2005, as a direct and proximate result of the Government's continuing partial breach of WE's Standard Contract and continuing taking of WE's property without just compensation, WE has incurred substantial damages. The amount of damages suffered by WE during this period exceeds $26 million (present dollars as of March 27, 2007), the exact amount to be determined at trial. These costs related to the following transactions, occurrences, or events, among others: fabrication oversight, purchase, and delivery of dry storage containers; loading and handling of dry storage containers; operation and maintenance of WE's ISFSI; and spent fuel management activities to address the long-term disposal of spent fuel. Id. ¶ 36. WE's Second Amended and Supplemental Complaint alleges that it continues to pay fees to DOE under the Standard Contract and that, as of January 30, 2007, it had already paid more than $217 million into the Nuclear Waste Fund pursuant to the Standard Contract. Second Amended and Supplemental Compl. ¶ 34 (Attachment A). WE further alleges: From January 1, 2006 and continuing through February 28, 2007, as a direct and proximate result of the Government's continuing partial breach of WE's Standard Contract and continuing taking of WE's property without just compensation, WE has incurred substantial damages. The amount of damages suffered by WE during this period exceeds $5.9 million (present dollars as of September 10, 2007), the exact amount to be determined at trial. These costs related to the following transactions, occurrences, or events, among others: fabrication oversight, purchase, and delivery of dry storage containers; loading and handling of dry storage containers; operation and maintenance of WE's ISFSI; and spent fuel management activities to address the long-term disposal of spent fuel. Id. ¶ 36. In sum, the allegations of WE's proposed Second Amended and Supplemental Complaint all concern damages resulting from DOE's same and continuing breach of the Standard Contract. WE's Second Amended and Supplemental Complaint merely describes the damages previously alleged and updates these damages. Since WE filed its First

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Amended Complaint in April 2006, WE has incurred approximately $5.4 million in nominal dollar damages ($5.9 million present dollars as of September 10, 2007) and WE's updated total claim in present dollars as of September 10, 2007 is $97.6 million. These additional damages are attributable to DOE's continued failure to perform under the Standard Contract. The Second Amended and Supplemental Complaint is permitted under Rule 15(d) because it is "part of the same claim arising out of the government's acts." Intrepid, 907 F.2d at 112930. Accordingly, the Court should grant WE's motion for leave to file its Second Amended and Supplemental Complaint. C. WE Should Be Allowed to Amend Its Complaint in the Interests of Judicial Efficiency Judicial efficiency would be served by allowing WE to file a Second Amended and Supplemental Complaint to update its damages. WE has entered into a Letter of Intent to sell its nuclear plant to Florida Power and Light ("FPL"), and WE expects the sale to close in October 2007. By updating its claim as sought in this motion for leave, WE expects to claim its remaining damages against DOE. WE expects that, upon closing of this sales transaction, FPL will assume all rights and obligations under the Standard Contract, including the right to recover post-Closing damages resulting from DOE's continuing failure to commence acceptance and removal of SNF for disposal as required by the Standard Contract. Again, the Government will not be prejudiced by the granting of leave to WE to update its damages claim. The costs at issue are the same type of damages that WE has previously claimed and the Government is extremely familiar with the type of costs at issue. The Government has already conducted extensive discovery and audit verification activities regarding these types of costs. Under the applicable Rule 15 standard, WE's motion should be granted so that the damage totals may be updated through February 28, 2007 and to permit WE to supplement its pleading to allow these updated damages to be resolved in this proceeding.

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III.

CONCLUSION

For the foregoing reasons, WE respectfully requests that the Court grant WE's Motion for Leave to File a Second Amended and Supplemental Complaint under Rules 15(a) and 15(d), and allow WE to file its Second Amended and Supplemental Complaint (see Attachment A).

Dated: April 10, 2007

Respectfully submitted,

Of Counsel: Donald J. Carney Perkins Coie LLP 607 Fourteenth Street, N.W. Washington, D.C. 20005-2011 (202) 434-1675

s/Richard W. Oehler by s/Emily C.C. Poulin Richard W. Oehler Perkins Coie LLP 1201 Third Avenue, Suite 4800 Seattle, Washington 98101-3099 (206) 583-8419

Attorneys for Plaintiff WISCONSIN ELECTRIC POWER COMPANY

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CERTIFICATE OF SERVICE
I certify under penalty of perjury that, on April 10, 2007, I caused a copy of the foregoing "Plaintiff's Motion for Leave to File a Second Amended and Supplemental Complaint" to be filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system. s/ Emily C.C. Poulin Emily C.C. Poulin

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