# Opposition Brief — Compressed Gas Corp. v. United States Steel Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0880%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1989 - **Citation:** 490 U.S. 1006 ## Text bse Supreme Coane US. (3) FILED No. 88-1316 MAR “8: 1889 | JOSBPH F. SPANIOL, JR. * IN THE CLERK a SUPREME COURT OF THE UNITED STATES October Term, 1988 COMPRESSED GASCORPORATION - - Petitioner, versus ae UNITED STATES STEEL CORPORATION and JACK B. KELLEY,INC. - - - - Respondents. On Petition for Writ of Certiorari to the United States Court of Appeals for the Sixth Circuit BRIEF IN OPPOSITION JOHN R. McCALL BROWN, TODD & HEYBURN 1600 Citizens Plaza — Louisville, Kentucky 40202 (502) 589-5400 Counsel of Record AND ROBERT Y. GWIN BROWN, TODD & HEYBURN 1600 Citizens Plaza Louisville, Kentucky 40202 (502) 589-5400 AND WAYNE L. EMERY USX CORPORATION Law Department 600 Grant Street Pittsburgh, Pennsylvania 15230 (412) 433-2898 Counsel for Respondenis WESTERFIELD-BONTE CO., 619 W. KENTUCKY-—P.O,. BOX 3251, LOUISVILLE, KY. | ied QUESTIONS PRESENTED! I. Is the Seventh Amendment violated by the Sixth Cir- cuit’s ruling that there was insufficient evidence of fraudulent misrepresentation under Kentucky law to submit the issue to a jury? Il. Does the Sixth Cireuit’s application of Kentucky law create a conflict among federal circuits that apply the laws of different states in diversity cases? III. Did the Sixth Cireuit correctly apply Kentucky law limiting the recovery of alleged lost profits? IV. May Congress pass a law fixing the rate of post-judg- ment interest in diversity cases? 1Pursuant to United States Supreme Court Rule 28.1, USS pro- vides the following information. United States Steel Corporation changed its name to USX Corporation in the summer of 1986. By stipulation of the parties, the trial was conducted using the name, United States Steel Corporation. USX Corporation is a publicly- owned corporation. li TABLE OF CONTENTS PAGE QUESTIONS PRESENTED .................++--- i PARLE OF GCOMTMNTS ow... ccc cess cccscssses ii-iii TABLE OF AUTHORITIES’ .... 2... ccccccccences iv- Vv PUITIONED TRI aoa cc ic cc cae Sesnnssa lita 1 STATEMENT OF THE CASE ................... 1- 5 REASONS FOR DENIAL OF WRIT ............-: 5-18 I. Summary of Arguments ............--.....-. 5- 6 II. Is The Seventh Amendment Violated By The Sixth Circuit’s Ruling That There Was Insuffi- cient Evidence Of Fraud To Submit The Issue Te A FUG? ooo ic ndssaheneee eee 6-10 A. The Court May Withdraw a Case From the Jury for Insufficient Evidence, ........... 6- 7 B. The Sixth Cireuit Correctly Determined In- sufficient Evidence of Fraud. .............. 7- 9 C. The Sixth Cireuit Properly Considered All Evidence of Belamee. ¢isccinactanccaaesss 9-10 III. The Sixth Circuit’s Application Of Kentucky Law Creates No Conflict Among Federal Cir- cuits That Apply The Laws Of Other States In Dively GG .6. 6665 Hee 11 IV. The Sixth Circuit Correctly Applied Kentucky Law Regarding Recovery Of Alleged Lost rrr eae arin 12-15 A. Kentucky Law Requires Proof of Some Prof- Melillo... csdichiis eee 12-13 B. Trial Evidence Established No Profitability .13-14 C. CGC’s Citation to Unrelated Federal Statutes Does Not Alter the Kentucky Profitability PORMNNNGE. oes dv oe va ee eee 14-15 lil PAGE V. Congress Has The Authority To Pass A Law Fixing The Rate Of Post-judgment Interest In sa cewieseietivekeenscvcesas 15-17 EE 18 ei. sce cns wa ckwnadaces la-18a Appendix 1. Judgment of the United States Dis- trict Court for the Western District of Ken- ke lh el a a la Appendix 2, Published Opinion of the United States Court of Appeals for the Sixth Circuit. .3a-17a Appendix 3. Order of the United States Court of Appeals for the Sixth Cireuit Denying Petition Te aaa opens ie alae. eee 18a iv TABLE OF AUTHORITIES —___— Cases: PAGE Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) 8 Bailey v. Chattem, Inc., 888 F, 2d 149 (6th Cir.), cert. denied, __ U.S. —_, 108 S. Ct. 2831 (1988).. 17 Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) ...... 11 Everaard v. Hartford Acc. and Indemn. Co., 842 : F, 2d 1186 (10th Cir. 1988) ..............-.-- 16-17 Fashion Originators Guild v. Federal T. Com., 312 ip aro. |) reer ry ree eee 11 : Galloway v. United States, 319 U.S. 872 (1943) ... 5, 6 G.M. Brod & Co. v. U.S. Home Corp., 759 F. 2d 1526 (11th Cir. 1985) .........-. cee ee sree nec ecnee 17 Gunning v. Cooley, 281 U.S. 90 Go) Beams emer 7-8 Hanna v. Plumer, 380 U.S. 460 (1965) ........... 15, 16 Improvement Co. v. Munson, 81 U.S. (14 Wall.) 442 c: ) SO ea remy Peete re rT crore te 8 Nissho-Iwai Co. v. Occidental Crude Sales, Inc., 848 F. 2d 613 (Sth Cir. 1988) .......-.2sesceecene 16 Northrop Corp. v. Triad Intern. Marketing, S.A., 842 F. 2d 1154 (9th Cir. 1988) ................ 17 Pauline’s Chicken Villa, Inc. v. KFC Corp., Ky., 701 hfe) At) errr errr ree 6, 12 Ruhlin v. New York Life Ins. Co., 304 U.S. 202 (RN ee ois eas aes helen cee es ane eens 5-6, 11 Story Parchment Co. v. Paterson Parchment Paper Co. SOR US. Sam CIB) ooias in eis nee cass, 6, 15 Wadkins’ Adm’x v. Chesapeake & Ohio Railway Co., Ky., 298 S.W. 2d 7 (1956) ..........--.--- 7 Wahba v. Don Corlett Motors, Inc., Ky. App., 573 Oe Se Te EO) sb vikdaiwessaeseka Nev eewes 8 Weitz Co., Inc. v. Mo-Kan Carpet, Inc., 723 F. 2d WE HI OE, BUD 6 oak sien eens 5 cea een 6, 16 Constitutional Provisions: PAGE TIO Cueet. Ast. Fa CLD. cases coe ce eee ease 15-16 Statutes: Oo URt 4 Ei ae 11 a6 UG: Cia oe ees 6, 15, 16, 17 No. 88-1316 IN THE SUPREME COURT OF THE UMTED STATES -~ CoMPRESSED GAs CORPORATION - - Petitioner, Vv. UNITED STATES STEEL CORPORATION and Jack B. Kevitey, Inc. - - - - Respondents. ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT BRIEF IN OPPOSITION OPINIONS BELOW In addition to the opinions and judgments reprinted in the appendix to the Petition for a Writ of Certio- ‘ari, the Judgment of the United States District Court for the Western District of Kentucky 1s reprinted in the Appendix at p. la. STATEMENT OF THE CASE The Opinion of the United States Court of Appeals for the Sixth Circuit correctly states the facts of this ease. For brevity, United States Steel Corporation (*USS’’) and Jack B. Kelley, Inc. (** Kelley’’)* adopt “Compressed Gas Corporation's Petition incorrectly refers to Jack B. Kelley, Ine. as Jack B. Kelley Co., Ine, 2 and incorporate by reference the facts set forth in that decision. (Appendix, pp. 5a-8a) USS and Kelley pro- vide the following additional facts relevant to the issues before the Court. (1) The evidence at trial established that 31 eyl- inders are safe containers for uncontaminated natural gas and no witness testified otherwise. (2) Neither USS nor Kelley ever represented to anyone that 3 cylinders could be used to transport gases contaminated with hydrogen sulfide and water. In fact, USS advised all who inquired of the require- ment for uncontaminated gas. (3) The Department of Transportation (**DOT’’) by special permit issued in 1974 authorized transpor- tation of ‘‘uatural gas, proper shipping name meth- ane’? in 37 cylinders. In a 1973 preface comment which appeared in only one issue of the Pederal Reg- ister, the DOT appeared to distinguish natural gas from methane and to interpret the regulations listing the gases approved for trausport in 3T eylinders as excluding natural gas; however, it reversed its position when it later granted the 1974 permit specifically allow- ing natural gas transport in 3T cylinders and treating it as synonymous with methane. USS had no actual knowledge of the 1973 preface comment (which never became a part of the regulations and never appeared in the Code of Federal Regula- tions). However, USS did have actual knowledge of the special permit allowing natural gas transport in “yr ST eviinders and equating natural gas with methane, 3 a gas specifically listed in the regulations as approved for transport in 3T cylinders. After the accident in this case, the DO'T amended its regulations to exclude natural gas as a product suitable for transport in 3T cylinders, but the DOT specifically acknowledged that its prior regulations had confused the industry. (4) The DOT regulates both manufacturers and users of 37 cylinders. The wser regulations published in the Code of Federal Regulations and directly appli- cable to Compressed Gas Corporation (**CGC’’) pro- hibited users of 3T cylinders from introducing into the cylinders any substance that might impair the cylinders’ serviceability. Every expert at trial agreed that hydrogen sulfide would impair the cylinders’ serviceability. Post accident analysis of CGC’s nat- ural gas wells revealed that, contrary to CGC’s pre- accident representations to Kelley and others, the wells contained high concentrations of hydrogen sulfide and water. Every expert at trial agreed that, absent CGC’s introduction of hydrogen sulfide or water into the ey!- inders, the rupture would not have occurred. (5) CGC ignored or refused to learn the DOT regulations applicable to its activities. CGC’s founder and principal, Gobel Mattingly, saw a welley brochure which promoted 81T cylinders, but he never read the DOT regulations that were identified on the front of the brochure. Prior to the accident, at CGC’s request, Kelley sent CGC a copy of the actual DOT regulations specifically setting forth the gases approved for trans- port in 3 cylinders. Again, Mattingly testified he 4 did not read the regulations or the cover letter that came with them. In addition, while visiting Kelley’s Texas offices, Mattingly saw but did not read a USS brochure which advised that the DOT governed the use of the cylinders. Mattingly testified that he did not read any USS brochures, rather he only ‘‘looked at the pictures.”’ (6) No natural gas trailer transport business ulti- mately made a net profit. The only other similar oper- ation in CGC’s geographic region discontinued opera- tions because of economic infeasibility. During the gas curtailments in the late 1970's a nearby southern Indiana hotel set up an operation similar to CGC’s to meet its gas needs. After only two months of opera- tion, it discontinued the project because it could buy gas more cheaply from the local utility than it could run the truck transport operation. (7) lian attempt to create support for its claim for lost profits, CGC has mischaracterized the evidence from Don Fowler of Texas Gas Transport. Contrary to statements in CGC’s Petition, Fowler never testified that his company made $14 million in gross revenues. CGC also fails to note that Fowler’s companies’ gross revenues resulted from a variety of enterprises un- related to its gas transport business. I*owler specifi- cally testified that he did not realize a net profit on his gas transport business. Moreover, in no event could Fowler’s operation provide support for CGC’s claim for lost profits. Fowler operated in a different market area 900 miles from CGC’s operations, and Fowler sii 5) used only uncontaminated natural gas. Fowler pointed out that he had considered and abandoned efforts to operate in Kentucky because he could not find wells with gas in the quantity and quality necessary to jus- tify a gas hauling business. REASONS FOR DENIAL OF WRIT I, Summary Of Arguments This case is a diversity, tort case in which Ken- tucky substantive law provides the rule of decision. CGC has overlooked this simple fact and has pre- sented nothing warranting a writ of certiorari in its Petition. The Sixth Circuit received on appeal a trial court verdict awarding damages almost forty times the trial evidence of property damage. The Sixth Circuit eould not find sufficient evidence in the record to justify a jury finding of fraudulent inisrepresentation, reliance on misrepresentation, or lost profits. Reviewing the record and applying the standards of review required of it, the Sixth Circuit reversed the trial court and narrowed the issues for retrial. fach of the four arguments CGC presents in its Petition fails: (1) the Seventh Amendment does not inhibit a directed verdict or JNOV where insufficient evidence exists to submit the case to the jury. Gailo- way V. United States, 319 U.S. 372 (1948). (2) De- cisions of federal courts of appeals applying the laws of different states in diversity actions do not create reviewable conflicts among the circuits. Ruhlin v. New 6 York Life Ins. Co., 304 U.S. 202, 206 (1938). (3) Under applicable Kentucky law and, indeed, federal law as well, CGC failed to produce sufficient evidence that it could ever make a profit even absent the acci- dent. Pauline’s Chicken Villa, Inc. v. KFC Corp., Ky., 701 S.W. 2d 399, 401 (1985); Story Parch- ment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 562 (1931). (4) Finally, 28 U.S.C. § 1961(a) controls the rate of post-judgment interest on diversity eases. ‘‘The accrual of ‘mterest on judgments is an ordinary incident of judicial relief, and . . . the power that creates the tribunal that enters the judgment can also provide for such ordinary incidents.”’ Weitz Co., Ine. v. Mo-Kkan Carpet, Inc., 723 I. 2d 1382, 1386 8th Cir. 1983). Therefore, CGC has presented no issue for review by this Court and its Petition must be denied. II. Is The Seventh Amendment Violated By The Sixth Circuit’s Ruling That There Was Insufficient Evidence Of Fraud To Submit The Issue To A Jury? A. The Court May Withdraw a Case From the Jury For Insufficient Evidence. The court’s decision in Galloway v. United States, 319 U.S. 372 (1943) confirms the federal court’s power to withdraw a case from a jury based on insufficiency of the evidence. In Galloway, the court stated: If the intention is to claim generally that the [Sev- enth] Amendment deprives the federal courts of power to direct a verdict for insufficiency of evi- dence, the short answer is the contention has been 7 foreclosed by repeated decisions made here con- sistently for nearly a century. * * * It is not that ‘the rules of the common law’ in 1791 deprived trial courts of power to withdraw cases from the jury, because not made out, or appellate courts of power to review such determinations. The jury was not absolute master of the facts in 1791. 319 U.S. at 389-90. B. The Sixth Circuit Correctly Determined Insufficient Evidence of Fraud. The Sixth Cireuit correctly ruled that CGC failed to produce sufficient evidence of fraud to permit sub- mission of the issue to the jury. Contrary to the representation in CGC’s Petition, the Sixth Circuit specifically stated the standard of review it applied. At page 6a of its Opinion, the Court states that it ‘‘will reverse-the denial of a judgment notwithstanding the verdict if we do not find the evi- dence of fraud of probative value having fitness to in- duce conviction in the minds of reasonable persons’’. The Court goes on to find at page 7a of its Opinion that CGC failed to present ** ‘more than a scintilla of evi- dence’ toward meeting’? its burden of proof. Both the Kentucky courts and the federal courts follow the ? same *‘more than a scintilla of evidence’’ standard re- garding sufficiency of the evidence as the Sixth Circuit applied in this case. Wadhins’ Adm’x v. Chesapeake & Ohio Railway Co., Wy., 208 S.W. 2d 7, 9 (1956) ; Gun- 8 ning Vv. Cooley, 281 U.S. 90, 94 (1930) ; Improvement Co. v. Munson, 81 U.S. (14 Wall.) 442, 449 (1871). Kentucky law requires proof of all elements of fraud by clear and convincing evidence. Wahba v. Don Corlett Motors, Inc., Ky. App., 573 S.W. 2d 357, 359 (1978). To overcome a directed verdict on a fraud elaim under Kentucky law, the party asserting the fraud must sustain the burden of proof. This burden requires clear and convincing evidence of all elements of fraud. In other words, as stated by this Court in a case involving the clear and convincing evidence burden of proof in the context of the malice element in a libel action: Progressing to the specific issue in this case, we are convineed that the inquiry involved in a ruling on a motion for summary judgment or for a di- rected verdict necessarily implicates the susbtan- tive burden of proof that would apply at the trial on the merits. [That is, whether the evidence presented is such that a reasonable jury might find that actual malice had been shown with convincing clarity (emphasis added). Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 257 (1986). Similarly, the standard of review in the present case is whether there was more than a scintilla of evidence of probative value having fitness to induce conviction in the minds of reasonable persons that all the elements 9 of fraud had been shown with convincing clarity. The Sixth Circuit properly ruled that CGC did not produce evidence sufficient to warrant submission of its fraud claim to the jury. ‘he Appellate Court acted within its well-established power and no Seventh Amendment issue arises from its ruling. C. The Sixth Circuit Properly Considered All Evidence of Reliance. CGC’s allegation that the Sixth Circuit’s Opinion ‘rests in part upon the wrong evidence’’ has no basis. CGC complains that the Court did not properly con- sider page 16 of the USS brochure when it ruled that CGC presented insufficient evidence of reliance to sup- port a fraud claim. CGC specifically raised the same argument before the Court of Appeals in its Petition for Rehearing. The Court of Appeals confirmed that it did consider precisely the same evidentiary issue when it stated in its order denying the Petition: The panel has further reviewed the petition for rehearing and concludes that the issues raised in the petition were fully considered upon the original submission and decision of the case. (Appendix, p. 18a) Further, the Sixth Circuit correctly construed this exhibit in its analysis and opinion. The Sixth Cireuit noted in its Opinion at page Ila, the USS brochure relates to ‘‘various uses to which seamless pressure vessels 2... enn be put.”” he brochure refers to gases that a variety of USS pressure vessels can trans- 10 port without specifying which gases are suitable for which vessels. The USS brochure contains no repre- sentation regarding the particular use (contaminated natural gas) to which CGC put 3T cylinders. The Sixth Circuit correctly noted that CGC could not rely on the brochure without further inquiry. Moreover, the record establishes that CGC could not have relied on the USS brochure at trial because Mattingly never read the brochure. Although Mat- tingly read to the jury at trial portions of page 16 of the USS brochure, when confronted with the bold red letters on page 16 relating to DOT regulations (Mat- tingly claimed he did not know prior to the accident that the DOT regulated the use of 3T cylinders), Mat- tingly stated: ‘‘No, I did not rely, no, there was any rules for the shipper. I didn’t read all that brochure; still haven’t.’’ Mattingly went on to explain ‘‘I looked at all the pictures, I will say that.’’ Finally, when pressed for an answer as to whether he did or did not read page 16 of the USS brochure, Mattingly confessed that he did not know. The Sixth Cireuit considered the entire USS bro- chure. It properly concluded that the testimony re- lated to the brochure does not constitute sufficient evi- - dence of reliance to justify submission of CGC’s fraud claim to the jury. 11 III. The Sixth Circuit’s Application Of Kentucky Law Creates No Conflict Among Federal Circuits That Apply The Laws Of Other States In Diversity Cases. Contrary to CGC’s argument, no reviewable con- flict exists among the federal circuits as to what con- stitutes reliance as an element of a fraud claim in a diversity case. State law defines the substantive ele- ments of the cause of action. 28 U.S.C. § 1652; Frie Rk. Co. v. Tompkins, 304 U.S. 64 (1938) ; Fashion Orig- mators Guild v. Federal T. Com., 312 U.S. 457 (1941). The Sixth Circuit correctly applied and specifically cited the Kentucky authority establishing the substan- tive law on which it decided this diversity case. (Ap- pendix, pp. 8a, 10a-1la, 13a) CGC does not argue that the Sixth Cireuit ineor- rectly applied Kentucky law. Rather, CGC cites eases from other federal circuits applying the law of other states and argues that they demonstrate a reviewable conflict among the circuits. It is axiomatie and this Court has held that decisions by federal courts of ap- peals applying different laws of different states do not create reviewable conflicts among the circuits. Ruhlin v. New York Life Ins. Co., 304 U.S. 202, 206 (1938). The Sixth Circuit’s application of Kentucky law ere- ates no conflict with the decisions of other federal ap- pellate courts applying the laws of other states. CGC has presented no issue warranting a writ of certiorari. 12 IV. The Sixth Circuit Correctly Applied Kentucky Law Regarding Recovery Of Alleged Lost Profits. A. Kentucky Law Requires Proof of Some Profitability. The Sixth Circuit applying Kentucky law correctly held that CGC did not produce sufficient evidence of the fact that, absent the accident, CGC could have made a profit. As the Sixth Circuit pointed out at page 13 of its Opinion (Appendix, p. 15a) ‘‘ Kentucky law requires that CGC establish the fact of lost profits with reasonable certainty. Pauline’s Chicken Villa, Inc. v. KFC Corp., 701 S.W. 2d 399, 401 (Ky. 1985).”’ The court in Pauline’s referred to nine factors exist- ing in that case which eliminated the ‘‘uncertainty”’ of new business profitability. The Sixth Circuit listed the nine Pauline’s factors and observed that Kentucky’s highest court had removed *“‘virtually all the uncertain variables’’ for determining the profitability test for a new business under Kentucky law. Contrary to CGC’s allegations, the Sixth Circuit did not require that CGC prove all of the nine factors listed in Pauline’s. Rather, the Sixth Circuit expressly stated that ‘‘[m Jot one of these factors existed in this case’? (emphasis added). (Appendix, p. 15a). ‘ CGC misunderstands Kentucky law when it argues that it can recover lost profits merely by offering evi- dence that USS and Kelley caused some kind of dam- age. That there was damage of some kind does not mean there was damage of a particular kind. One 13 of several possible kinds of damage is ‘‘lost profits’’. While it is true that the wnount of lost profits need not be proven with certainty, the fact of lost profits still must be proven in accordance with Kentucky law. Kentucky law requires that CGC prove with reason- able certainty that USS and Kelley caused CGC to suffer lost profits. Consequently, CGC must prove with reasonable certainty that, absent the accident, it would-have made profits. B. Trial Evidence Established No Profitability. In this case, the Sixth Circuit correctly held that CGC failed to introduce sufficient probative evidence that it would have made any profits. The evidence at trial established that: (a) CGC never in its entire existence made a profit ; (b) CGC had a pre-accident operating history of less than*ten days without any profit; (ec) no natural gas cylinder trailer transport oper- ation anywhere ultimately returned a profit; and (d) the only similar operation in the same geo- graphic region discontinued operations be- cause of economic infeasibility. Moreover, CGC’s only lost profits evidence came from its economist, Dr. Donald Monath, who merely subtracted CGC’s pre-operational expense estimates from the projected maximum estimated revenues CGC could realize if it operated 24 hours a day, 365 days 14 a year for ten years. Dr. Monath made no investiga- tion and offered no testimony regarding CGC’s ability to meet its expense or income projections or realize any profits at all. CGC’s failure of proof is highlighted by the equivo- ‘ation of Dr. Monath. He made no effort to determine i whether CGC, absent the accident, could even have \/ continued to operate. Dr. Monath had no information about how CGC created the pre-operational cost esti- mates or expectations on which he relied. Dr. Monath did not know the company had only a ten-day operat- ing history or that CGC’s management had no exper- ience in the gas transport industry. Dr. Monath had no knowledge of the contaminated quality and inade- quate quantity of CGC’s product. He did not consider the negative financial history of other natural gas transporters. Applying Kentucky law, the Sixth Circuit correctly found this evidence insufficient to submit the specula- tive issue of lost profits to the jury. C. CGC’s Citation to Unrelated Federal Statutes Does Not Alter the Kentucky Profitability Standard. CGC’s argument is not supported by its cited au- thorities. The federal question cases CGC cites in- volve claims under various federal statutes. ~They do \ not control this diversity case which is a common law i) tort case in which Kentucky’s substantive law pro- vides the rule of decision. Moreover, the standard applied in the cases CGC cites does not significantly differ from the Kentucky standard. Thus, the failure a 15 of proof in this case supports the Sixth Cireuit’s hold- ing under either standard. For example, the passage from Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555 (1931) quoted at page 21 of CGC’s Petition states in part: “The rule which precludes the recovery of un- certain damages applies to such as are not the certain result of the wrong, not to those damages which are definitely attributable to the wrong and only uncertain in respect of amount.’”’ 282 U.S. at 562. The party seeking lost profits must prove that ‘‘those damages,”’ i.e., the lost profits, resulted from the wrong. In this case, CGC did not sufficiently establish that it could have made any profit regardless of the accident. Therefore, irrespective of the law applied, the Sixth Circuit correctly decided that CGC failed to present sufficient evidence of lost profits to permit an instruction on the issue. — V. Congress Has The Authority To Pass A Law Fixing The Rate Of Post-Judgment Interest In Diversity Cases. 28 U.S.C. § 1961(a) sets the rate of interest on any money judgments in civil cases in U.S. District Courts. No exemption exists for diversity cases. Therefore, the statute governs the post-judgment interest rate in this case unless the provision is unconstitutional. Hanna v. Plumer, 380 U.S. 460, 471 (1965): U.S. Consr. Art. 16 VI, Cl. 2.° In finding the statute constitutional, the Court in Weitz Co., Inc. v. Mo-Kan Carpet, Inc., 723 F. 2d 1382, 1386 (8th Cir. 1983) stated: Congress has the power, under Article III of the Constitution, to ordain and establish inferior fed- eral courts, including this Court and the District Court which entered the judgment below. It has the power to pass ail laws necessary and proper for the execution of powers specifically granted. The accrual of interest is an ordinary incident of judicial relief, and we think it clear that the power that creates the tribunal that enters the judgment ean also provide for such ordinary incidents. The Erie doctrine does not require a different result. Even if the rate of interest that a judg- ment will bear is in some sense ‘‘substantive’’ in that it is a part of the damages recovered by the winning side, it is also easily susceptible of char- acterization as ‘‘procedural,’’ since it has to do ex- clusively with events that occur after a dispute gets < to court. The question of interest, therefore, is at most in ‘‘the uncertain area between substance and procedure,”’ and rationally capable of classification as either. Hanna v. Plumer, supra, 380 U.S. at 472, 85 S. Ct. at 1144. It is therefore a subject with respect to which Congress has full power to legislate, even as to cases that get into the federal courts only because of diversity of citizenship. See also, Nissho-Iwai Co. v. Occidental Crude Sales, Inc., 848 F. 2d 613, 622-624 (5th Cir. 1988) ; Everaard 3Because CGC has not complied with Rule 28(3)(b) of the U.S. Supreme Court Rules, it is assumed that CGC does not challenge the constitutionality of 28 U.S.C. § 1961(a). eo 17 v. Hartfort Acc. and Indem. Co., 842 F. 2d 1186, 1193, 1194 (10th Cir. 1988); G. M. Brod & Co. v. U.S. Home Corp., 759 F. 2d 1526, 1542 (11th Cir. 1985); Bailey v. Chattem, Inc., 838 F. 2d 149, 152, 153 (6th Cir.), cert. denied, — U.S. —, 108 S. Ct. 2831 (1988) ; North- rop Corp. Vv. Triad Intern. Markciing, S.A., 842 F. 2d 1154, 1155-1156 (9th Cir. 1988). These authorities specifically reject CGC’s argument that 28 U.S.C. § 1961(a) violates the Frie doctrine and establish that CGC’s argument has no merit. 18 CONCLUSION CGC has presented no argument warranting a writ of certiorari. The Sixth Circuit’s proper application of Kentucky law to this diversity case creates no un- resolved constitutional questions nor any reviewable conflict among federal circuits. USS and Kelley re- spectfully request that this Court deny CGC’s Petition for a Writ of Certiorari. Respectfully submitted, JOHN R. McCatu Brown, Topp & HEYBURN 1600 Citizens Plaza Louisville, Kentucky 40202 (502) 589-5400 Counsel of Record AND Ropert Y. Gwin Brown, Topp & HEYBURN 1600 Citizens Plaza Louisville, Kentucky 40202 (502) 589-5400 — AND WayYNE L. EMERY USX Corporation Law Department 600 Grant Street Pittsburgh, Pennsylvania 15230 (412) 433-2898 Counsel for Respondents APPENDIX la APPENDIX 1 a“ ‘ere HLINS “9 JNIGVN Gjyzini_ | (78° 68€‘9EZ‘ TTeys queugpnl 2842 ‘s3utpury sAoqe 3437 UO paseq‘ qyzyqauo YFHLYUNA SI LI 99° "Ae@Tap 10g asnes asn{ ou 8uraq arayy ‘Juemspnf artqerteadde pue Teurz e@ st stu UFetey sqysod sn{dj ‘pred ,raun quemgpn€ sty jo Kaqua JO 92ep 9y3 wor; A{[enuue papunodmos 3uacied (ZT) ®ATAM2 Jo aje1 |yQ Ae uoaIsYyI AsaraquT Y3tM ‘aaoge yz10j3 Yas se OZ °TL£Z*99ZL‘T$ JO wns [Te {03 eB AaAoda1 treus f° OUT ‘uorze10di09 se5 pessaidmog ‘zzrquretd SUL “SUT ‘**09 AaTTay “gq yOeLr ALYIHL GAYGNNH OML NOITTIN JNO JO JuNOMe 943 UT paiaqua aq OZ *TLZ‘99ZL‘TS SAOVNVA TVLOL 00°000‘0¢$ quaMASsaAUr. 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Defendants United States Steel Corporation (“USS”) and Jack Kelley appeal, and plaintiff Compressed Gas Corporation (“CGC”) cross-appeals, the jury verdict for plaintiff in this diversity action resulting from the explosion of a steel cylinder. The “3T” cylinder, manufactured by defendant USS and leased by defendant Jack B. Kelley, Inc., (“Kelley”) ruptured while being filled with natural gas apparently containing certain contami- nants. The explosion killed two persons, injured four others, and caused property damage. The personal injury 4a and wrongful death claims were adjudicated in a separate lawsuit. At trial in this action, CGC claimed that it had been defrauded by the misrepresentations of USS and Kelley that the cylinders were safe for transporting natural gas and approved for that purpose by the United States Department of Transportation (“DOT”). CGC also made a products liability claim for a defective cylinder and failure to warn. This appeal focuses on the property damage re- sulting to plaintiff CGC from the rupture of the cylinder. For the reasons set forth below, we believe the jury was improperly permitted to find against USS and Kelley on a theory of fraudulent misrepresentation, and was also im- properly permitted to include CGC’s alleged “lost profits” in the damages award. Because the jury reached a dam- ages verdict that apparently was calculated upon a theory of fraudulent misrepresentation, and which also incorpor- ated CGC’s alleged lost profits, the verdict against the defendants must be vacated. We must therefore reverse on those issues and remand the entire case to the district court for a new trial. Further, we believe that an incorrect rate of interest was applied to the judgment below. We affirm on all of the remaining issues. This case was tried as a summary jury trial on February 13, 1985, which resulted in a verdict of $200,000 against defendants USS and Kelley. The case was then reassigned to the Honorable Ronald Meredith of the Western District of Kentucky, who allowed additional discovery.