799 F.2d 265 (7th Cir.1986)
Northern Indiana Public Service Company, an electric utility in Indiana whose rates are regulated by the Indiana Public Service Commission, entered into a contract in 1978 with Carbon County Coal Company, a partnership owning a coal mine in Wyoming.1 The contract required Carbon County to sell and NIPSCO to buy about 1.5 million tons of coal annually for 20 years.2 The initial price was $24 per ton and escalated to $44 per ton by 1985.3 The price functioned as a floor, and NIPSCO committed to a fixed quantity to secure a supply of low-sulfur coal.4
In 1983 NIPSCO requested a rate increase, but the Commission issued economy purchase orders in December 1983 and February 1984 directing NIPSCO to purchase electricity from other utilities whenever possible at lower costs.5 NIPSCO determined it could not recover the costs of the Carbon County contract from ratepayers and on April 24, 1985 filed suit in federal district court seeking a declaration that it was excused from the contract on grounds including the force majeure clause, frustration, impossibility, and violation of the Mineral Lands Leasing Act due to Carbon County's ties to the Union Pacific Railroad.6
Carbon County counterclaimed for breach of contract, obtained a preliminary injunction compelling continued deliveries, and the case proceeded to a six-week trial beginning August 26, 1985 that resulted in a jury verdict awarding Carbon County $181 million.7 The district court denied specific performance, dissolved the injunction after judgment, and the mine closed. NIPSCO appealed the damages award while Carbon County cross-appealed the denial of specific performance and the absence of a bond for staying execution of the judgment.8
Whether the district judge abused his discretion in refusing to give NIPSCO more time to prepare for trial?9
Matters of trial management are for the district judge.10 The judge must be allowed considerable leeway in scheduling civil cases given heavy caseloads and the Speedy Trial Act.11 Reversal requires a showing that the judge acted unreasonably and that the denial caused prejudice to the complaining party.12
No. The district judge scheduled the trial to begin two months after issuing the preliminary injunction.13 NIPSCO had decided in 1984 to stop accepting coal deliveries from Carbon County and had retained a large Chicago law firm nine months before trial.14 NIPSCO had the ability to plan the case and conduct discovery once suit was filed four months before trial.15 The court found no changed circumstances requiring an extension.16
NIPSCO showed no prejudice from the compressed schedule given its resources and the absence of any indication that additional time would have changed the result.17
The district judge did not abuse his discretion in refusing to give NIPSCO more time to prepare for trial.18
Whether the contract was unenforceable as a violation of the Mineral Lands Leasing Act?19
No. The contract between NIPSCO and Carbon County was not illegal on its face.22 Any violation of section 2(c) of the Mineral Lands Leasing Act through Carbon County's attenuated affiliation with the Union Pacific Railroad was trivial and completely harmless because no competitor or regulator complained.23 The obsolescence of the statute and the risk of injecting uncertainty into hundreds of similar contracts favored enforcement over invalidation.24
The contract was not unenforceable as a violation of the Mineral Lands Leasing Act.25
Whether NIPSCO’s obligations under the contract were excused or suspended by virtue of the force majeure clause?26
No. The Indiana Public Service Commission's economy purchase orders merely prevented NIPSCO from passing fuel costs to ratepayers.29 The orders did not prevent NIPSCO from using the coal it had agreed to buy from Carbon County.30 The orders simulated the effects of falling input prices in a competitive market, a risk NIPSCO expressly assumed by entering a fixed-price fixed-quantity contract with a price floor.31
NIPSCO’s obligations under the contract were not excused or suspended by virtue of the force majeure clause.32
Whether NIPSCO’s obligations under the contract were excused or suspended by the doctrines of frustration or impracticability?33
No. NIPSCO assumed the risk of falling coal and substitute fuel prices when it signed the long-term fixed-price contract to secure an assured supply of low-sulfur coal.36 The economy purchase orders were a foreseeable regulatory intervention that made the contract less advantageous.37 The doctrines do not allow a buyer to escape a disadvantageous bargain simply because an act of government affected market conditions.38
NIPSCO’s obligations under the contract were not excused or suspended by the doctrines of frustration or impracticability.39
Whether Carbon County was entitled to specific performance of the contract?40
No. Damages of $181 million adequately compensated Carbon County for the difference between the contract price and its costs of production.43 An order of specific performance would force uneconomical production of coal that cost more to mine than its market value after the collapse of oil prices.44 The breach was efficient because it halted a process no longer cost-justified, and specific performance would waste scarce resources.45
Carbon County was not entitled to specific performance of the contract.46
Whether NIPSCO should be required to post a bond to be allowed to stave off the execution of the damage judgment until the appellate process is over?47
No. NIPSCO has assets exceeding $4 billion and annual revenues approaching $2 billion, making it good for the $181 million judgment with no risk of placing assets beyond reach.50 Carbon County's cross-appeal seeking specific performance in lieu of damages further eliminated any need for security during the stay.51
NIPSCO should not be required to post a bond to be allowed to stave off the execution of the damage judgment until the appellate process is over.52