USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 92-2276
ALLENS MANUFACTURING COMPANY, INC.,
Plaintiff, Appellant,
v.
NAPCO, INC.,
Defendant, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Raymond J. Pettine, Senior U.S. District Judge]
__________________________
____________________
Before
Breyer, Chief Judge,
___________
Friedman,* Senior Circuit Judge,
____________________
and Stahl, Circuit Judge.
_____________
____________________

Michael J. McGovern with whom Indeglia & McGovern was on br

____________________
____________________
for appellant.
Mark A. Pogue with whom Deming E. Sherman and Edwards & Ang
______________
_________________
______________
were on brief for appellee.
____________________
August 25, 1993
____________________
_____________________
*Of the Federal Circuit, sitting by designation.

BREYER,
brought this
that

to

provide it

with

as promised, and on time.

failure is responsible for a

fine

Allens

Manufacturing Co.

diversity action against Napco, Inc., claiming

Napco failed

equipment,

Chief Judge.
____________

that

Allens

has

Protection

Agency

("EPA").

proper "clean

up"

Allens adds that this

significant part of a $210,000

agreed

to
After

pay

the

Environmental

listening

to Allens'

proposed evidence about damages -- evidence designed to show

for

what portion of the

____________

fine Napco was

responsible -- the

district

court

ruled

that

Allens'

evidence

was

not

sufficient to pinpoint Napco-caused damages with "reasonable

certainty."

It then

granted

Napco's

motion to

exclude

evidence of the fine, at which point the parties agreed that

the court should dismiss the complaint for failure to allege
the

jurisdictionally-necessary $50,000

1332(a). Allens,
so.

harm.

having reserved the right

It asks us to review

28

U.S.C.

to appeal, does

the court's evidentiary ruling.

We find the ruling lawful, and affirm the court's judgment.

I
Background
__________
Our review
on appeal

of the rather skimpy

suggests the

buckles, shoe

record before us

following: Allens makes

buckles, and

other items, through

metal belt
processes

-22

that

generate

waste

water

containing

pollutants.

In

February

1985

Allens

ordered

from Napco

waste

water

treatment system that Napco installed during 1985, and which

began to operate
apparently

in early 1986.

violated

regulations,

some

In the meantime,

federal

governing

environmental
waste

water

Allens

rules

discharges

and
and

others setting forth reporting requirements.

The record suggests that by 1989, EPA had compiled
a list

of one hundred or more separate violations committed

by Allens, which
months,

took place

between

September

in more
1981

apparently contemplated possible

amounting to
pointing

$384,000.

and

June

different

1989.

EPA

fines for these violations

Allens' counsel then

wrote to EPA,

out that Allens had "acted in good faith," was not

"recalcitrant," and
to

than fifty

had "cooperated with .

achieve compliance

as expeditiously

. . authorities

as possible."

He

suggested a "penalty . . . in the $50,000 to $65,000 range."

EPA

offered to settle with

Allens for a

fine of $125,000,

but Allens refused.

EPA then referred the
Justice
$125,000.

("DOJ").

DOJ insisted

matter to the Department of

on considerably

Allens and DOJ ultimately entered into a

-33

more than
consent

decree, in

which, as we have

said, Allens agreed to

pay a

fine of $210,000.
Subsequently, Allens filed this
that

Napco failed

to live

clean-up equipment, and

up to

lawsuit, claiming

its promises

to install

seeking reimbursement for the

fine

(and related costs) insofar as the fine reflects "discharge"

violations taking place after September 1985 (by which time,
according to Allens, Napco

should have had proper equipment

operating).
Before
court that

the case

went

Allens could not show

to trial,

Napco told

the

with reasonable certainty

how much of the fine resulted from Napco's claimed failings.

Without some such showing,
figure was

Napco argued, the $210,000 fine

misleading and prejudicial.

And, it

court to keep

evidence of that figure from the

court

then heard

itself

Allens'

evidence

asked the
jury.

on the

The
matter

(consisting of several EPA documents and the testimony of an

expert).

It agreed with Napco that this evidence failed to

prove damages with

"reasonable certainty,"

Napco's evidentiary motion.

that, given

and it

granted

Then, the parties having agreed

the evidentiary ruling, Allens

could not prove

significant
failure to

harm,

the court

set forth

dismissed the

a "matter in

complaint for

controversy exceed[ing]

-44

the sum or
Gibbs
_____

value of $50,000."

v. Buck,
____

307 U.S.

faith allegation that the

jurisdictional
amount

in

amount

Cir.

facts
that

requirement

is

See
___

(plaintiff's good

suffices

to

meet

unless challenged);
_________________

Gibbs,
_____

307

U.S.

at

challenged, plaintiff

the

Dept. of
________

World Boxing Ass'n, 942 F.2d

__________________

1991) (citing

jurisdictional amount

72 (1939)

1332(a).

matter in controversy exceeds the

controversy test,

Recreation & Sports v.

___________________
(1st

66,

28 U.S.C.

84, 88

72)

(once

must

show

sufficient to show that it is not a "legal certainty"

the

claim

involves

less
____

than

the

jurisdictional

amount).

See also 14A

_________

Wright,

Practice and Procedure

______________________
according trial judges

Miller &

3702 at 26-28

Cooper

Federal
_______

(favoring policy of

broad discretion as

to the mode

of

determining jurisdictional fact issues).

Allens appeals.
proposed evidence

Allens

is sufficient

requisite degree of certainty.

claim.
of

that

neither

We conclude

argues

only

to prove damages

that

its

with the

We have examined that single

that the district court's determination

evidentiary matter
party raises

any

is legally

correct.

other objection,

complaint's dismissal.

-55

II
The Evidence

And, as

we affirm

the

____________
Allens,

in

its effort

responsible for some reasonably

to

show

that Napco

was

identifiable portion of the

$210,000 fine, presented two EPA documents and the testimony

of

one expert.

The first

document quantifies the economic

"benefit" that Allens obtained as a result of its failure to

follow

EPA rules and

standards.

called a "gravity calculation,"

56 months,

The

second EPA document,

lists individually each

refers to Allens' violations

of

during that month,

and sets forth a possible fine for each month, the amount of
which

varies

with the

number

of

violations during

that

month, their duration, their significance, and the harm they

may have caused.
The "gravity

The "benefit" amounted

to about $94,000.

calculation" totalled $290,000.

Their sum is

approximately $384,000.
The expert, a former EPA lawyer, interpreted these
documents

in light

reprinted in 17
_____________
experience
document

of EPA's

ELR 35,083

at EPA.
(showing a

"Policy on
(Feb. 16,

Civil Penalties,"
1984), and

He apparently conceded
"benefit"

to Allens

little to do with Napco-related violations.

second

document --

the "gravity
-66

his own

that the first

of $94,000)

had

He analyzed the

calculation" --

month by

month.

He added together all penalties for any month (after

September 1985)

that referred only to discharge violations.

He allocated

penalties in

that

both "discharge"

showed

any (post-September

between those two categories.

He

found

total,

that,

of

the

approximately

violations"

and

1985) month

"reporting" violations,

He then added up

the total.

"gravity calculation"'s
$190,000

occurring after

reflected

September 1985.

$290,000
"discharge

He concluded

that Napco-related violations amounted to $190,000, or about

half, of the two documents' $394,000 total.
The expert recognized that
$394,000; rather, it

was $210,000.

the final fine was not

He

said, however, that

since Napco-related violations accounted for about

two documents' $394,000, they
final

$210,000

adjustments to
treatment

of

violations.
brief),

fine.

half the

likely accounted for half the

That

is

because,

in

his

view,

the $394,000 figure likely reflected similar

both

Napco-related

That is

"a reduction

more altered the ratio

to
of the

say (in

and

non-Napco-related

the words

original fine

of

Allens'

calculation no

of discharge to reporting violations

than

removing a

slice of

mince meat

pie would

alter the

ratio of apples to raisins in the remaining pie."

-77

III
The Problem with the Evidence
_____________________________
The basic
fact

that

$394,000.
DOJ,

the

problem with this evidence

EPA

Rather,

did

not

it proposed

fine

Allens

a fine of

a hypothetical
$125,000.

The record

does not explain how

the EPA or DOJ

arrived at these latter, actual, fine amounts.

meat

Then

after consulting with EPA, ended up imposing a fine of

$210,000.

record

lies in the

offers no more support

pie")

plausible

theory
(and

than

equally

it

Indeed, the

for the pro rata (or "mince

_________
offers

speculative)

produce dramatically different results.

for

other,

theories

equally

that would

We concede
about

that, in

what actually

expert suggested,
reflected

that the

the fact

negotiate a

happened,

that

settlement

$394,000

calculation

ceiling.

On the other

EPA,

in reaching

the

degrees

of

$394,000

calculation.

one might

proposed
EPA's

has a

122.41(a)(3), and that EPA

the absence of

any evidence

believe, as

$125,000 fine

independent

authority

$125,000 ceiling,

in

order

to

hand, it is at least as
$125,000 figure,

significance

simply

to

EPA's

reach

the
this

likely that

attached different

different
Policy

to

40 CFR

reduced all the elements of

pro rata
_________

the

on

elements
Civil

of

the

Penalties

-88

states that EPA will adjust initially calculated ("benefits"

plus

"gravity") fine amounts,

(1) the violator's history

as

"indicated through

in light of

such factors as

of cooperation or recalcitrance,

pre-settlement action,"

(2) whether

actions

were negligent

ability

to pay. See 17 ELR 35,083.

___

make (and Allens'

that

or wilful,

and (3)

the violator's

And here, Allens could

counsel did make) strong arguments to EPA

Allens' discharge violations were unintended and minor

_________

(not

"exceed[ing]

the

significant degree").
might

have proved

offered

willing to

Or, even

by

forgive the

if it

might have placed more

any

these arguments, it

reporting violations

no excuse.

arguments, EPA

limitations

If EPA accepted

more

violations than the

effluent

discharge

for which

did not

Allens

accept these

weight on forfeiting

"benefits" than on a calculation of "gravity."

Similarly, EPA
final
figure

$210,000 figure

and DOJ might have

by

arrived at the

increasing pro rata a

_________

$125,000

(or reducing pro rata the initial $384,000).

________

But it

is just as plausible, if not more plausible, to believe that

they

arrived at

cooperation,
settlement

or

that figure

in light

"recalcitrance"

action,"

and

costs for the government.

as

of Allens'
revealed

potentially increased
And, these factors may
-99

lack of
in

"pre-

litigation
have had

nothing

to

do with

discharge

violations after

September

1985.
The upshot
led

EPA

and

Moreover,

DOJ

this

is that we
to

end

do not know

up with

uncertainty reflects,

fine

what actually
of

$210,000.

not closely-balanced

evidence, but a lack of evidence, for the record contains no

____
evidence about what actually happened, nor does it set forth
evidence of any agency rule, pattern, or practice indicating
that pro rata reduction or increase is the norm.
________
is

that we

can only

speculate about

The result

the extent

to which

EPA's "mitigating" or "aggravating" factors may have applied

in

respect

to

each

violations that
extent

of

the

those factors

determining the ultimate fine

could do

personal
fine,

no

more than

knowledge about

may have
level.

1989)

and about the

played a

role in

More importantly, the

speculate,

how EPA

through

for he

calculated the

had

no

ultimate

nor did he have any special reason for believing that

these factors
in the

(1981

initially called for a fine,

to which

expert

many

applied pro rata to

________

every element identified

"benefit" and "gravity" calculations.

Finally, the

experienced trial
have

to

judge decided

speculate

damages.

And,

in

order

for the

that the jury,

to

determine

reasons stated, we

the

too, would
level of

agree with

his

-1010

conclusion

--

identify those
the law
A.2d

that

the

plaintiff's

requires. See National Chain Co. v.

___ ___________________

132, 134-5

upon

does

not

damages with the "reasonable certainty" that

(R.I. 1985)

(damages must

"with reasonable degree of certainty"

rely

evidence

speculation" in

order

Restatement (Second) of Contracts

_________________________________

to

Campbell, 487
________
be established

and plaintiff "cannot

prove his

damages);

352 (1981) ("Damages are

not recoverable for loss beyond an amount

that the evidence

permits to be established with reasonable certainty").

Allens raises one final
district court should not

point.

It says

that the

have insisted that it demonstrate

damages to

a "reasonable

certainty," for

permits Napco to benefit

own

conduct.

See
___

wrongful

ascertainment

U.S.

359, 379

conduct

of

the

has

with the

otherwise be
F.2d

1363,

same

Southern Photo
_______________

(1927) ("[A]

rendered

precise

plaintiff, is not entitled

measured

damages

(7th

defendant

difficult
suffered

the

by

exactness and

precision as

Cir.

1985)

(same).

one expect Napco to have

be

would

Knight, 754
______
The

short,

conclusive answer to this claim is that Napco's conduct

not create, nor can

the

to complain that they cannot

possible"); U.C. Castings Co. v.

__________________
1374

so, it

from uncertainty caused by Napco's

Eastman Kodak Co. v.

___________________

Materials Co., 273

______________
whose

in doing

did

foreseen, the

-1111

present problem.

Rather,

prove damages because

Allens has found it

difficult to

EPA will not permit its

officials to

testify, 40
insist
itself)

C.F.R.

that EPA

2.403,

publicly

2.404(a), and Allens

explain (perhaps

the basis for calculating

in the

the fine.

did not
decree

Napco is not

responsible.
In
Allens'

sum, the

proposed

demonstrate

district

evidence

damages to

$210,000 fine

see Fed.
___

effect, agree

district

court

properly

to meet

could
the

damages
degree

failed

on

grounds of
R. Evid.

the

"prejudice"

403).

complaint

$50,000 jurisdictional

And the

evidence, the
for failure
requirement.

For these reasons, the judgment of the district court is

Affirmed.
________

-1212

to

of certainty.

that, without the

dismiss

found that

properly exclude evidence of

(presumably

overcoming "relevance,"
parties, in

about

a reasonable

That being so, the court could

the

court properly