Shell Oil Company v. United States , 896 F.3d 1299 ( 2018 )


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  •   United States Court of Appeals
    for the Federal Circuit
    ______________________
    SHELL OIL COMPANY, ATLANTIC RICHFIELD
    COMPANY, TEXACO, INC., UNION OIL COMPANY
    OF CALIFORNIA,
    Plaintiffs-Appellees
    v.
    UNITED STATES,
    Defendant-Appellant
    ______________________
    2017-1695
    ______________________
    Appeal from the United States Court of Federal
    Claims in Nos. 1:06-cv-00141-SGB, 1:06-cv-01411-SGB,
    Senior Judge Susan G. Braden.
    ______________________
    Decided: July 18, 2018
    ______________________
    MICHAEL W. KIRK, Cooper & Kirk, PLLC, Washington,
    DC, argued for plaintiffs-appellees. Also represented by
    JOSE JOEL ALICEA, VINCENT J. COLATRIANO, WILLIAM C.
    MARRA.
    FRANKLIN E. WHITE, JR, Commercial Litigation
    Branch, Civil Division, United States Department of
    Justice, Washington, DC, argued for defendant-appellant.
    Also represented by CHAD A. READLER, ROBERT E.
    KIRSCHMAN, JR., STEPHEN CARL TOSINI.
    2                             SHELL OIL CO.   v. UNITED STATES
    CHRISTOPHER MARRARO, Baker & Hostetler LLP,
    Washington, DC, for amicus curiae American Fuel &
    Petrochemical Manufacturers.   Also represented by
    RICHARD BRYAN RAILE.
    DANIEL MAX STEINWAY, Baker Botts, LLP, Washing-
    ton, DC, for amicus curiae Exxon Mobile Corporation.
    Also represented by MICHAEL PATRICK MCGOVERN.
    ______________________
    Before PROST, Chief Judge, WALLACH and CHEN, Circuit
    Judges.
    WALLACH, Circuit Judge.
    This case returns to us for a third time. Following
    two remands on liability determinations, see Shell Oil Co.
    v. United States (Shell II), 
    751 F.3d 1282
    , 1285−90 (Fed.
    Cir. 2014); Shell Oil Co. v. United States (Shell I), 
    672 F.3d 1283
    , 1285 (Fed. Cir. 2012), the U.S. Court of Feder-
    al Claims issued two orders, which are the subject of the
    present appeal. In its 2015 Order, the Court of Federal
    Claims (1) granted appellees Shell Oil Company, Atlantic
    Richfield Company, Texaco, Inc., and Union Oil Company
    of California’s (collectively, “the Oil Companies”) motion
    for partial summary judgment to prevent discovery into
    any insurance coverage settlements and policies, and
    (2) denied appellant the United States’ (“Government”)
    motion for leave to amend its answer to assert counter-
    claims in fraud. See Shell Oil Co. v. United States (Shell
    III), 
    123 Fed. Cl. 707
    , 714−15, 727 (2015). In its 2017
    Order, the Court of Federal Claims awarded damages in
    the amount of $99,509,847.32 to the Oil Companies for
    breach of certain contracts entered into during World War
    II to produce 100-octane aviation gasoline (“avgas”) (the
    “Avgas Contracts”) for the war effort. See Shell Oil Co. v.
    United States (Shell IV), 
    130 Fed. Cl. 8
    , 11−13 (2017).
    SHELL OIL CO.   v. UNITED STATES                         3
    The Government appeals. We have jurisdiction pur-
    suant to 
    28 U.S.C. § 1295
    (a)(3) (2012). We affirm.
    BACKGROUND
    I. The Avgas Contracts 1
    In 1942 and 1943, the Government contracted with
    the Oil Companies to purchase avgas, “the most critically
    needed refinery product during World War II.” Shell II,
    751 F.3d at 1285 (internal quotation marks omitted). 2
    Under the Avgas Contracts, the Government would
    purchase large quantities of avgas, and would “enable[]
    the Oil Companies to build the new refining facilities
    needed to produce the high levels of avgas vital to the war
    effort.” Id.; see, e.g., J.A. 1467−90 (April 10, 1942 con-
    tract), 1560−88 (May 1, 1943 contract). The Avgas Con-
    tracts permitted a profit margin for the Oil Companies of
    “between 6% and 7%.” Shell II, 751 F.3d at 1287. “Given
    the low profit margin,” the Avgas Contracts “contained
    various concessions to the Oil Companies.” Id.; see id.
    (describing contract clauses wherein the “agreed-upon
    base price of avgas was subject to adjustment depending
    on the Oil Companies’ costs” and contracts were signed for
    “three-year[s]” to “provid[e] some measure of certainty
    that the newly-constructed avgas production facilities
    1   The relevant factual and procedural background
    has been set forth in earlier opinions. See Shell II, 751
    F.3d at 1285−90; Shell IV, 130 Fed. Cl. at 12−34; Shell
    III, 123 Fed. Cl. at 710−15. Therefore, only the facts
    necessary for an understanding of the issues that give rise
    to this appeal are discussed here. We cite to these prior
    opinions where facts are undisputed.
    2  The Oil Companies entered into three-year con-
    tracts to sell avgas to the Government between January
    17, 1942, and May 1, 1943. See Shell IV, 130 Fed. Cl. at
    13 nn.4−7; see also Shell II, 751 F.3d at 1287.
    4                             SHELL OIL CO.   v. UNITED STATES
    would pay off over time”). Under the Avgas Contracts,
    “avgas production increased over twelve-fold” from 1941
    to 1945, and “was crucial to Allied success in the war.” Id.
    (footnote omitted).
    II. The Oil Companies’ Production of Avgas and Disposal
    of Associated Waste Products
    The manufacture of avgas from crude oil uses a 98%
    purity sulfuric acid to serve as a catalyst in a process
    known as alkylation. Id. at 1288. The alkylation process
    dilutes the sulfuric acid such that it turns it into a waste
    product called “spent alkylation acid.” Id. Spent alkyla-
    tion acid may be used to (1) catalyze the alkylation pro-
    cess again following purification; (2) produce non-avgas
    petroleum by-products; or (3) be disposed of as waste. Id.
    If spent alkylation acid is used to produce other non-
    avgas petroleum by-products, it becomes a secondary
    waste product with a lesser percentage of acid content
    called “acid sludge.” Id. Acid sludge can be (1) used to
    manufacture fertilizer; (2) burned; or (3) disposed. See
    Shell IV, 130 Fed. Cl. at 22 (stating “both of the parties’
    petroleum engineering experts essentially agreed on how
    crude oil was processed”).
    The Avgas Contracts placed no restrictions on how the
    Oil Companies could use the spent alkylation acid that
    resulted from catalyzing crude oil to produce avgas. See,
    e.g., J.A. 1467−90, 1560−88. The Oil Companies used
    some of the spent alkylation acid to acid treat other
    products and produce non-avgas petroleum by-products.
    Shell IV, 130 Fed. Cl. at 23, 29. Unable to reprocess the
    increased amount of spent alkylation acid given the
    Government’s prioritization of production over repro-
    cessing, 3 the Oil Companies dumped additional spent
    3  “The Government twice refused applications to
    construct new acid processing facilities,” and “the scarcity
    SHELL OIL CO.   v. UNITED STATES                           5
    alkylation acid, along with acid sludge, on property in
    California owned by Eli McColl (“the McColl site”). Shell
    II, 751 F.3d at 1285, 1288; see Shell IV, 130 Fed. Cl. at
    29. 4 Twelve percent of the waste dumped at the McColl
    site was spent alkylation acid, and 82.5% was acid sludge
    resulting from the treatment of non-benzol products.
    Shell II, 751 F.3d at 1288. 5 The McColl site closed on
    September 6, 1946. Shell IV, 130 Fed. Cl. at 14.
    III. The Relevant Procedural History
    In 1991, the Government and California sued the Oil
    Companies under the Comprehensive Environmental
    Response, Compensation, and Liability Act (“CERCLA”),
    
    42 U.S.C. §§ 9601
     et seq., for costs of cleaning up the
    McColl site. Shell II, 751 F.3d at 1285. The Oil Compa-
    nies countersued, alleging the Government was jointly
    and severally liable for clean-up costs under CERCLA.
    Id. at 1289; see 
    42 U.S.C. § 9607
    (a)(3) (extending
    CERCLA liability to “any person who by contract, agree-
    ment, or otherwise arranged for disposal or treatment, or
    arranged with a transporter for transport for disposal or
    treatment, of hazardous substances”). After twelve years
    of litigation, the Ninth Circuit held that the Oil Compa-
    nies were liable for all clean-up costs (including cleanup of
    of available railroad tank cars (and the [Government’s]
    refusal to make transportation of acid waste a priority)
    meant the Oil Companies were unable to transport acid
    sludge for reprocessing or other uses.” Shell II, 751 F.3d
    at 1288.
    4   The Oil Companies also continued to burn limited
    quantities of acid sludge until 1944. See Shell II, 751
    F.3d at 1288; Shell IV, 130 Fed. Cl. at 25 & nn. 23, 24.
    5   The remaining 5.5% of waste was comprised of ac-
    id sludge from treatment of benzol. See Shell II, 751 F.3d
    at 1288 (differentiating between benzol and non-benzol
    acid sludge).
    6                             SHELL OIL CO.   v. UNITED STATES
    benzol and non-benzol acid waste) at the McColl site and
    the Government was liable under CERCLA only for clean-
    up costs with respect to the disposal of benzol acid waste,
    United States v. Shell Oil Co., 
    294 F.3d 1045
    , 1056,
    1060−62 (9th Cir. 2002), which comprised 5.5% of the
    waste remediated at the McColl site, see Shell II, 751 F.3d
    at 1288.
    The Oil Companies filed a new complaint in the Court
    of Federal Claims, seeking reimbursement for CERCLA
    costs of the non-benzol acid waste clean-up under a
    breach of contract theory. Id. at 1289. They argued that
    a clause in the Avgas Contracts in which the Government
    agreed to reimburse the Oil Companies for “any new or
    additional . . . charges . . . which [the Oil Companies] may
    be required . . . to collect or pay by reason of the produc-
    tion, manufacture, sale[,] or delivery of [avgas],” J.A. 1482
    (emphasis added), entitled them to remediation costs at
    the McColl site, see Shell II, 751 F.3d at 1290−91. “Be-
    cause there was extensive discovery and the parties
    entered into comprehensive stipulations of fact in the
    underlying CERCLA action [in the Ninth Circuit], the
    parties agreed that no further factual development was
    necessary . . . .” Shell I, 
    672 F.3d at 1285
    . Therefore, “the
    case was litigated on successive summary judgment
    motions―one as to liability and the other relating to
    damages.” 
    Id.
     However, following our initial remand and
    vacatur of the Court of Federal Claims’ liability and
    damages determinations in Shell I, see 
    id. at 1294
    , the
    Court of Federal Claims stated that, with respect to
    damages, “the issue of what portion of the non-benzol
    waste was created ‘by reason of’ the avgas program
    raise[d] factual questions that [were] simply not ade-
    quately answered by the evidence or stipulations current-
    ly before the [c]ourt,” Shell Oil Co. v. United States, 
    108 Fed. Cl. 422
    , 446, 448 (2013). The Court of Federal
    Claims made these statements “[n]otwithstanding [its]
    holding that the Oil Companies’ indemnification claims
    SHELL OIL CO.   v. UNITED STATES                          7
    fail as a matter of law,” id. at 445; in other words, it did
    not decide the issue of damages on remand because it
    found the Government did not breach the Avgas Con-
    tracts, see Shell II, 751 F.3d at 1289.
    In Shell II, we reversed, holding that “[t]he Avgas
    Contracts require reimbursement of the Oil Companies’
    CERCLA costs [for clean-up of non-benzol-related waste],”
    id. at 1290 (capitalization modified), and remanded be-
    cause the parties did “not contest the trial court’s finding
    of a genuine dispute regarding how much of the acid
    waste at the McColl site resulted from the [A]vgas
    [C]ontracts,” id. at 1303. 6 The Court of Federal Claims
    then reopened the record for further discovery on damag-
    es. See Shell III, 123 Fed. Cl. at 714.
    During discovery, the Government requested, for the
    first time in the litigation before the Court of Federal
    Claims, information related to the Oil Companies’ insur-
    ance policies and any insurance coverage settlements that
    included clean-up costs at the McColl site. Id.; see
    J.A. 142−45 (stating, in a press release, that Shell Oil
    Company received insurance settlements for its environ-
    mental coverage claims based on filings against insurers
    in the early 1990s). The Government also filed a Motion
    6    We also held that the Government was not collat-
    erally estopped by the “prior CERCLA litigation” “from
    challenging the amount of acid waste attributable to the
    [A]vgas [C]ontracts” because “[t]he Ninth Circuit did not
    rely on or incorporate the district court’s attribution
    holding with respect to the non-benzol waste.” Shell II,
    751 F.3d at 1303; see Shell Oil, 
    294 F.3d at 1062
     (revers-
    ing, in the Ninth Circuit, the district court’s holding that
    the Government was liable for non-benzol acid waste
    clean-up under CERCLA and finding this holding “ren-
    ders moot the [Government’s] appeal of the district court’s
    allocation of liability . . . as to the non-benzol waste”).
    8                             SHELL OIL CO.   v. UNITED STATES
    for Leave to Amend, seeking to amend its answer to
    assert counterclaims related to the insurance settlements
    based on various theories of fraud. See Shell III, 123 Fed.
    Cl. at 715. The Oil Companies opposed the Motion to
    Amend, and both parties filed motions for partial sum-
    mary judgment on the issue. Id. at 714−15.
    The Court of Federal Claims held the following in
    Shell III: (1) the Government could not engage in discov-
    ery related to the Oil Companies’ insurance policies or
    settlements because it waived any arguments related to
    an insurance offset by not raising them in its Answer in
    2008 to the Oil Companies’ initial breach of contract claim
    before the Court of Federal Claims, id. at 719;
    (2) alternatively, it would exceed the scope of our mandate
    in Shell II to allow the Government to raise arguments
    based on any insurance offset, id. at 721; and (3) the
    Government could not amend its pleadings at such a late
    stage in the litigation, id. at 727.
    Following the close of discovery and oral arguments,
    the Court of Federal Claims issued its order on damages
    in Shell IV. It considered “new evidence not previously
    considered by the . . . Federal Circuit,” 130 Fed. Cl. at 36
    (emphasis omitted), and held that the Government was
    liable for all of the Oil Companies’ clean-up costs for non-
    benzol waste at the McColl site, id. at 38. The Court of
    Federal Claims allocated a total award of $99,509,847.32,
    including accrued interest, accordingly: $58,292,868.56 to
    Shell Oil Company, $18,847,165.08 each to Union Oil
    Company of California and Atlantic Richfield Company,
    and $3,522,648.60 to Texaco, Inc. Id. at 42.
    DISCUSSION
    The Government makes three primary arguments
    challenging the Court of Federal Claims’ Orders. The
    Government argues the Court of Federal Claims
    (1) “failed to allocate between recoverable and non-
    recoverable costs,” Appellant’s Br. 23 (capitalization
    SHELL OIL CO.   v. UNITED STATES                           9
    omitted); see id. at 23−33; (2) “wrongfully admitted stipu-
    lations” into evidence to calculate damages, id. at 41
    (capitalization omitted); see id. at 41−51; and (3) “wrongly
    refused to allow the Government to prove double recov-
    ery,” by showing payment of the same costs by insurance
    settlements, id. at 33 (capitalization omitted); see id. at
    33−41. We address each argument in turn.
    I. Challenges to the 2017 Order
    A. Standards of Review
    We review the Court of Federal Claims’ legal conclu-
    sions de novo and its factual findings for clear error. See
    John R. Sand & Gravel Co. v. United States, 
    457 F.3d 1345
    , 1353 (Fed. Cir. 2006). “A finding may be held
    clearly erroneous when the appellate court is left with a
    definite and firm conviction that a mistake has been
    committed.” Ind. Mich. Power Co. v. United States, 
    422 F.3d 1369
    , 1373 (Fed. Cir. 2005) (internal quotation
    marks, ellipsis, and citation omitted).
    “This court provides the trial court with wide discre-
    tion in determining the appropriate quantum of damag-
    es.” Sys. Fuels, Inc. v. United States, 
    666 F.3d 1306
    , 1310
    (Fed. Cir. 2012) (citation omitted). When reviewing
    damages awarded by the Court of Federal Claims,
    “[d]ifferent standards of review are applicable to different
    aspects of a damages award.” Home Sav. of Am., FSB v.
    United States, 
    399 F.3d 1341
    , 1346 (Fed. Cir. 2005). “This
    court has held that the amount of a prevailing party’s
    damages is a finding of fact. Thus, where the amount is
    fixed by the court, review is in accordance with the clearly
    erroneous standard.”           
    Id.
     (internal quotation marks,
    ellipsis, and citation omitted). “[T]he clear error standard
    governs . . . findings about the general type of damages to
    be awarded . . . , their appropriateness . . . , and rates
    used to calculate them.” 
    Id.
     “However, certain subsidiary
    decisions . . . are . . . reviewed under the abuse of discre-
    tion standard.” 
    Id. at 1347
    . “The abuse of discretion
    10                             SHELL OIL CO.   v. UNITED STATES
    standard applies to decisions about methodology for
    calculating rates and amounts.” 
    Id.
     at 1346−47 (citation
    omitted). A court abuses its discretion when (1) its “deci-
    sion is clearly unreasonable, arbitrary or fanciful”; (2) “the
    decision is based upon an erroneous construction of the
    law”; (3) its “factual findings are clearly erroneous”; or
    (4) “the record contains no evidence upon which the [trial]
    court could have rationally based its decision.” Hi-Shear
    Tech. Corp. v. United States, 
    356 F.3d 1372
    , 1377−78
    (Fed. Cir. 2004) (internal quotation marks and citation
    omitted) (alterations in original).
    B. The Court of Federal Claims Did Not Err in Determin-
    ing the Amount of Waste Attributable to the Avgas Con-
    tracts
    The Government raises four arguments on appeal as
    to why the Court of Federal Claims “failed to allocate
    between recoverable and non-recoverable costs” when it
    found all of the clean-up costs attributable to avgas pro-
    duction for the Avgas Contracts. Appellant’s Br. 23
    (capitalization omitted). Specifically, the Government
    contends that the Court of Federal Claims failed to
    (1) follow our instructions for allocation based on the
    language in the Avgas Contracts, see 
    id.
     at 23−28;
    (2) properly discount pre-contract activities, see id. at 31;
    (3) discount dumping from non-avgas waste, see id. at 21,
    24−25, 31; and (4) discount dumping from non-contractual
    avgas production waste, see id. at 21, 24, 27. We disagree
    with the Government. 7
    7  Although the Government also argued in its brief-
    ing that “[t]he trial court misapplied the governing causa-
    tion standard” when it applied the three part test from
    Indiana Michigan Power Co., Appellant’s Br. 23 (capitali-
    zation omitted); see id. at 28−33, the Government dis-
    claimed these assertions at oral argument, see Oral Arg.
    SHELL OIL CO.   v. UNITED STATES                         11
    1. Contract Interpretation and Shell II
    The Government argues that the Court of Federal
    Claims’ fundamental legal error was its failure to apply
    “longstanding canons of contractual interpretation” to
    allocate costs based on the language of the relevant clause
    in the Avgas Contracts. Id. at 26; see id. at 25 (citing the
    contractual clause that “charges” will be incurred “by
    reason of the production, manufacture, sale[,] or delivery
    of the commodities delivered hereunder” (emphasis omit-
    ted)); see also id. at 25−28. However, the Government
    misunderstands the limited inquiry of the damages
    analysis. We determined in Shell II that the Government
    was required to pay all “CERCLA costs incurred ‘by
    reason of’ the [A]vgas [C]ontracts,” 751 F.3d at 1293
    (emphasis added), and remanded for “a trial on damages,”
    including the factual question of “how much acid waste at
    the McColl site” was attributable to the Avgas Contracts,
    id. at 1303. As the Government acknowledges, see Appel-
    lant’s Br. 29, by reason of “requires at least a showing of
    ‘but for’ causation,” Burrage v. United States, 
    571 U.S. 204
    , 213 (2014). The Court of Federal Claims used this
    but for direct causation inquiry to determine that all costs
    incurred were a result of the Avgas Contracts, based on
    our instruction. See Shell IV, 130 Fed. Cl. at 38. There-
    fore, on remand, further contract interpretation was not a
    necessary part of the damages inquiry.
    The Government appears to argue that because we
    acknowledged in Shell II that factual questions remained
    as to the amount of waste that resulted from the Avgas
    Contracts, see 751 F.3d at 1302−03, we required the Court
    at    1:00−10,      http://oralarguments.cafc.uscourts.gov/
    default.aspx?fl=2017-1695.mp3 (Q: “You’re not challeng-
    ing the use of the test? A: “No . . . we’re not challenging
    the use of a test for how you determine damages in the
    event of a breach.”).
    12                            SHELL OIL CO.   v. UNITED STATES
    of Federal Claims to make a finding on remand that some
    of the acid waste was not attributable to the Avgas Con-
    tracts, see Appellant’s Br. 23 (asserting the Court of
    Federal Claims “misinterpret[ed] . . . the [Federal Cir-
    cuit’s] mandate”), 24−28 (similar). We set no such re-
    quirement. In Shell II, we acknowledged that “a genuine
    dispute” on the issue remained, 751 F.3d at 1303, and
    entrusted the Court of Federal Claims to conduct an
    attribution analysis. The Court of Federal Claims was
    free to determine that some, or all, of the acid waste at
    the McColl site was attributable to the Avgas Contracts,
    and use this factual finding in its ultimate consideration
    of the amount of CERCLA costs incurred as a result of the
    Avgas Contracts to award damages.
    2. Consideration of Pre-Contract Activities
    The Government argues the Court of Federal Claims
    clearly erred in its findings on the amount of damages to
    award because the but for world should have been calcu-
    lated from the Oil Companies’ “pre-contract activities.”
    Appellant’s Br. 31. This is so, it avers, because “the[ Oil
    Companies] had been dumping waste at the McColl site
    months before selling any avgas under the contracts.” Id.
    The Court of Federal Claims considered this argument,
    see Shell IV, 130 Fed. Cl. at 36, but found it unpersuasive.
    Instead, the Court of Federal Claims decided the relevant
    hypothetical for the non-breach world would be 1946, and
    found that “none of the Oil Companies disposed of acid
    waste at the McColl [s]ite in 1946.” Id.
    The Court of Federal Claims did not err in its consid-
    eration of pre-contract activities. In adopting the year
    1946 as the relevant timeframe for the but for analysis, at
    which time the Oil Companies did not dump any spent
    alkylation acid or acid sludge at the McColl site, see id.
    (citing to evidence that “avgas production plummeted in
    1946 to pre-Contract levels” (emphasis added)), the Court
    of Federal Claims gave greater weight to the Oil Compa-
    SHELL OIL CO.   v. UNITED STATES                         13
    nies’ evidence that 1946 reflected “‘normal’ refinery opera-
    tions,” as opposed to the Government’s proposed year of
    1941, because “by early 1940, the Oil Companies already
    began to increase the production of military avgas,” id.;
    see id. (citing a 1940 letter indicating the Government
    was ready to buy avgas immediately). 8 Moreover, the
    Government did not propose any allocation method that
    would take into consideration pre-contract dumping for
    the Court of Federal Claims to consider until its post-trial
    briefing. See id. at 35−36 (stating the Government “took a
    different tack in its closing argument” after it “mis-
    stat[ed] the but[ ]for causation standard”); Oral Arg. at
    11:39−45 (“We did propose in our post-trial brief in this
    case a method of potentially allocating these
    waste[s] . . . .”). Given the evidence presented, “[i]t was
    proper for the [Court of Federal Claims] to resolve con-
    flicting testimony by weighing the evidence and making
    its own findings.” Precision Pine & Timber, Inc. v. United
    States, 
    596 F.3d 817
    , 833 (Fed. Cir. 2010); see 
    id.
     (stating
    that we give “great deference” to a trial court’s determina-
    tions of assigning weight to competing evidence (internal
    quotation marks and citation omitted)).
    8   The Government ignores the historical fact that
    prior to the U.S. Congress’ declaration of war on Decem-
    ber 8, 1941, the United States had limited powers to order
    avgas production by fiat. Following the Declaration, the
    Government could and did direct the Oil Companies on
    means, methods, and priorities of production. See Exec.
    Order No. 9276, 
    7 Fed. Reg. 10,091
    , 10,091 (Dec. 2, 1942)
    (establishing the Petroleum Administration for War and
    defining its functions and duties); cf. Evan J. Wallach,
    The Use of Crude Oil by an Occupying Belligerent State
    as a Munition de Guerre, 41 Int’l & Comp. L.Q. 287, 293,
    300 (1992) (discussing international law rules and Ameri-
    can practice for treating crude oil as a war material
    subject to commandeering for military purposes).
    14                            SHELL OIL CO.   v. UNITED STATES
    3. Allocation of Acid Sludge from Avgas Production Under
    the Avgas Contracts
    The Government next avers that the Court of Federal
    Claims failed to conduct a proper damages calculation
    because it included acid sludge from “many other com-
    modities in addition to avgas” that the Oil Companies
    produced during the contractual period, Appellant’s
    Br. 24, such as “motor fuel and other products,” id. at 26;
    see id. at 28 (citing Shell II, 751 F.3d at 1288, which
    explained that 82.5% of waste dumped was acid sludge
    resulting from chemical treatment of non-avgas petrole-
    um products).
    The Court of Federal Claims did not clearly err in its
    determination regarding acid sludge from non-avgas
    products. All acid sludge created from the production of
    non-avgas components, such as motor fuel, began as
    sulfuric acid that was catalyzed with crude oil during the
    process to create avgas and became spent alkylation acid
    in need of waste disposal. See J.A. 1868 (presenting a
    stipulation by the Government that “[m]ost of the acid
    waste at the McColl [s]ite began as fresh sulfuric ac-
    id . . . that was used in the alkylation units to produce
    alkylate for avgas” (brackets omitted)), 1932−37 (explain-
    ing, by the Oil Companies’ expert, that the Oil Companies
    produced “unnecessary non-avgas products in order to
    maximize avgas production”), 11804 (stating, by the
    Government’s expert, that acid sludge produced from
    treatment of non-avgas by-products is “the result of the
    production of alkylate in the alkylation unit for avgas”).
    Thus, even if the acid sludge was a secondary waste
    product, it is still directly related to the initial reaction
    used to create avgas under the Avgas Contracts. See
    Swiff-Train Co. v. United States, 
    793 F.3d 1355
    , 1363
    (Fed. Cir. 2015) (holding injured parties need not “isolate
    the injury caused by” a particular factor, or limit damages
    calculations to “the ‘principal’ cause of injury” to meet the
    “by reason of” statutory causation standard). Moreover,
    SHELL OIL CO.   v. UNITED STATES                         15
    the Avgas Contracts explicitly acknowledged that avgas
    production would necessarily result in the production of
    acid sludge produced from treatment of non-avgas prod-
    ucts, see J.A. 1475 (“[S]ubstantial quantities of motor fuel
    and other products must necessarily be produced and sold
    in connection with production of [avgas].”), and still
    provided that the Government would pay for “any” charg-
    es related to the production of avgas, J.A. 1482 (emphasis
    added).
    Further, the Court of Federal Claims considered the
    by-products and determined they still created waste
    attributable to the Avgas Contracts because the Govern-
    ment, by setting only a 6−7% profit margin for the sale of
    avgas, “was aware that the Oil Companies had to maxim-
    ize revenues from all non-avgas petroleum by-products or
    be at risk of having to ask the Government to increase
    their profit margins,” and “make every effort to recycle
    and reuse both spent alkylation acid and acid sludge to
    keep the costs of avgas production down.” Shell IV, 130
    Fed. Cl. at 35 (emphasis omitted); see id. at 36 (citing a
    Government survey from 1941 which asked “what provi-
    sions will be made for . . . handling resultant [acid]
    sludge?” (alterations in original)). 9 The Oil Companies
    9   At oral argument, the Government stated that, if
    the Oil Companies had not repurposed spent alkylation
    acid into by-products and instead dumped the acid, the
    Government would not contest its obligation to reimburse.
    See Oral Arg. at 13:50−14:36 (Q: “Are you saying, then,
    that what the Oil Companies should have done with the
    spent alkylation acid is just to have dumped it rather
    than to have . . . repurposed it . . . ?” A: “Yes.”). Given
    the Court of Federal Claims’ earlier findings related to
    the Government’s understanding of the Avgas Contracts,
    which are uncontested on appeal, see generally Appel-
    lant’s Br., we find the Government’s new theory jejune.
    16                             SHELL OIL CO.   v. UNITED STATES
    even presented evidence that they tried to “reprocess[] as
    much acid sludge into [non-waste] fertilizer as possible,”
    id. at 25, but were stymied in their ability to do so be-
    cause of the Government’s refusal to allocate rail cars to
    transport the acid sludge to reprocessing facilities, id.; see
    J.A. 1964 (stating that, until 1945, only one plant in
    southern California “could reprocess significant quantities
    of acid sludge”), 9449 (providing statement by Oil Compa-
    nies’ witness that “[t]he [G]overnment will not allow us to
    use the tank cars for that purpose. . . . We have to dispose
    of [the acid sludge], and I tell you in all sincerity, this
    must go on. We must make [avgas]”). We do not find
    clear error based on these facts.
    4. Allocation of Acid Sludge from Non-Contractual Avgas
    Production
    Finally, the Government contests the Court of Federal
    Claims’ inclusion of waste from the production of non-
    contractual avgas. See Appellant’s Br. 27 (disputing
    “‘charges’ relating to non-[contractual] avgas”). 10 The
    Court of Federal Claims found that, even if a small per-
    centage of waste “nominally could be attributed” to non-
    contractual avgas sales, the manner of clean up at the
    site, which “result[ed] from the increased production of
    avgas” and hence the multiple “contaminants of concern,”
    created a scenario where the waste resulting from the
    Avgas Contracts mandated a large scale remediation
    solution. Shell IV, 130 Fed. Cl. at 37, 38; see id. at 32−33
    (discussing expert testimony on clean up method chosen).
    10  At oral argument, the Government stated that it
    believed this avgas was also being purchased by the
    Government, outside of the contractual scheme. See Oral
    Arg. at 16:29−36 (claiming the non-contractual avgas was
    “likely being sold to the Government, just probably direct-
    ly to the military services”).
    SHELL OIL CO.   v. UNITED STATES                         17
    The Court of Federal Claims did not clearly err in this
    determination. Contrary to the Government’s contention,
    the Court of Federal Claims did not “allocate 100 percent
    of all response costs” “once it found a drop of waste relat-
    ed to avgas production.” Appellant’s Br. 29. The Court of
    Federal Claims reasoned that the waste dumped by the
    Avgas Contracts caused all of the remediation costs, given
    the need for a broad containment clean up based on the
    size and scale of the contaminants. Shell IV, 130 Fed. Cl.
    at 38 (applying “but for” language to the non-contractual
    avgas analysis). The Court of Federal Claims’ determina-
    tion to allocate all remediation costs to the Government
    was further supported by the reasons detailed earlier in
    its Order explaining the difficulties of disposing of acid
    waste due directly to the Avgas Contracts’ requirement to
    ramp up production immediately. See id. at 35 & n.40
    (discussing Government’s knowledge of the expense of
    waste disposal and that a prior disposal site “was reach-
    ing capacity” when the Avgas Contracts were signed),
    35−36 (discussing “how much acid waste disposed of at
    the McColl [s]ite was caused by the increased avgas
    production and need to maximize the manufacture and
    sale of non-avgas petroleum by-products”), 36 n.41 (stat-
    ing it was possible after the war for all “acid sludge pro-
    duced . . . [to be] sent for reprocessing via tank cars or
    pipelines”).
    Moreover, as the Court of Federal Claims acknowl-
    edged, there is no evidence that any of the waste that may
    have derived from the production of non-contractual sales
    of avgas was actually dumped at the McColl site. See id.
    at 36−37 (“The record . . . does not establish that any of
    the spent alkylation acid that resulted from the sale of
    this avgas was disposed of at the McColl [s]ite . . . . The
    record . . . reflects that for the entire year 1943, Shell
    disposed of 112,367 barrels of sludge at the McColl [s]ite,
    an unknown amount of which could be attributed to non-
    [contractual] customers.”), 37 (hypothesizing “nominally
    18                             SHELL OIL CO.   v. UNITED STATES
    attributed” acid sludge waste in 1943 at “3.6%”); cf. Appel-
    lees’ Br. 20−33 (citing to J.A. 1868, 1931−32) (arguing
    that all waste at the McColl site was generated by avgas
    production under the Avgas Contracts). The Government
    does not make any supported argument to rebut these
    findings. See Appellant’s Br. 24 (asserting that the Oil
    Companies generally were producing “non-contract avgas”
    but offering no evidence where waste from that produc-
    tion was dumped). See generally id. Absent evidence to
    the contrary, we will not find that the Court of Federal
    Claims erred in its determination that all costs of waste
    remediation at the McColl site were attributable to the
    Avgas Contracts. See Ind. Mich. Power Co., 
    422 F.3d at 1373
    ; see also Jones v. Dep’t of Health & Human Servs.,
    
    834 F.3d 1361
    , 1369 (Fed. Cir. 2016) (“Unsubstantiated
    assertions do not equate to evidence.” (internal quotation
    marks, brackets, and citation omitted)).
    C. The Court of Federal Claims Did Not Abuse Its Discre-
    tion in Its Determination of Damages with Reasonable
    Certainty
    The Court of Federal Claims also determined that the
    Oil Companies had proven their damages with “reasona-
    ble certainty,” as required under the applicable legal
    standard for damages. Shell IV, 130 Fed. Cl. at 41; see id.
    at 41−42; see also Ind. Mich. Power Co., 
    422 F.3d at 1373
    (stating plaintiff must show damages “with reasonable
    certainty”). The Government asserts the Court of Federal
    Claims erred in determining that damages had been
    shown with reasonable certainty when it “admitted stipu-
    lations despite language in those stipulations prohibiting
    their use at trial” and “failed to require proof of costs” for
    each of the Oil Companies. Appellant’s Br. 41, 48 (capi-
    talization omitted). We disagree with the Government.
    1. Reliance on Stipulations
    In its damages calculation, the Court of Federal
    Claims looked to as “relevant, admissible, and reliable
    SHELL OIL CO.   v. UNITED STATES                         19
    evidence,” Shell IV, 130 Fed. Cl. at 41 (citation omitted),
    inter alia, a stipulation from October 13, 1999 (“the Stipu-
    lation”), entered into during the litigation in the Ninth
    Circuit, in which the parties stated the total amount of
    remediation costs through 1998, excluding interest, see
    J.A. 1851−58, along with statements made by both parties
    in the earlier litigation (“Parties’ Statements”), see
    J.A. 1859−910; see also Shell IV, 130 Fed. Cl. at 38−39,
    79. The Court of Federal Claims found these documents
    showed that the Oil Companies were entitled to
    $64,219,514.46 in total remediation costs for the period up
    to 1998, including $18,000,000 paid in 1994,
    $46,219,514.46 paid by 1997, and certain interest pay-
    ments on both these costs. See Shell IV, 130 Fed. Cl. at
    40, 42.
    The Court of Federal Claims did not abuse its discre-
    tion by crediting the Stipulation and Parties’ Statements
    to make its damages calculation through 1998. 11 See
    Home Sav. of Am., 
    399 F.3d at
    1346−47 (reviewing meth-
    odology for damages calculation for abuse of discretion).
    “[R]easonable certainty requires more than a guess, but
    less than absolute exactness or mathematical precision.”
    Precision Pine, 
    596 F.3d at 833
    ; see Ark. Game & Fish
    Comm’n v. United States, 
    736 F.3d 1364
    , 1379 (Fed. Cir.
    2013) (“All that is required is such reasonable certainty
    that damages may not be based wholly upon speculation.”
    (internal quotation marks and citation omitted)). The
    Court of Federal Claims did not admit the documents as
    stipulations or judicial admissions, but only as “admissi-
    ble evidence” that “could be weighed . . . against other
    evidence adduced at trial,” and found that, based on all
    evidence on record, the Stipulation and Parties’ State-
    11   The parties do not dispute the amount of damages
    calculated after 1998. See Appellant’s Br. 48, 50; Appel-
    lees’ Br. 52 n.4.
    20                              SHELL OIL CO.   v. UNITED STATES
    ments supported its findings on damages with reasonable
    certainty. Shell IV, 130 Fed. Cl. at 77 (citation omitted).
    The Court of Federal Claims was free to admit the
    Stipulation and Parties’ Statements into evidence. It
    properly followed the Federal Rules of Evidence, see 
    28 U.S.C. § 2503
    (b) (2012) (“The proceedings of the Court of
    Federal Claims shall be in accordance with . . . the Feder-
    al Rules of Evidence.”), which allow parties to submit for
    consideration relevant evidence, defined as that which
    “has any tendency to make a fact more or less probable
    than it would be without evidence,” Fed. R. Evid. 401
    (Test for Relevant Evidence). Here, the evidence is ad-
    missible as opposing party statements. See Fed. R. Evid.
    801(d)(2)(A), (B) (stating that prior statements made by
    an opposing party that were “in an individual or repre-
    sentative capacity,” or are “one[s] the party manifested
    that it adopted or believed to be true,” are admissible if
    “offered against” said opposing party). The factfinder is
    “free to weigh” any evidence properly allowed into the
    record “against the other evidence” in making its factual
    findings. Paice LLC v. Toyota Motor Corp., 
    504 F.3d 1293
    , 1312 (Fed. Cir. 2007); see 
    id.
     (affirming lower court’s
    consideration of unfavorable statements not made under
    cross-examination as admissible evidence, rather than
    considering them as judicial admissions). 12
    12  Because the Court of Federal Claims did not con-
    sider the Stipulation a binding admission in Shell IV, we
    find unpersuasive the Government’s argument that the
    Court of Federal Claims erred by not “explicitly ac-
    cept[ing] those facts” through a motion pursuant to Rules
    of the Court of Federal Claims (“RCFC”) Rule 56(e)(2) or
    56(g). Appellant’s Br. 44; see 
    id.
     at 42−49; see also RCFC
    56(e)(2) (“If a party fails to properly support an assertion
    of fact or fails to properly address another party’s asser-
    tion of fact . . . the court may: . . . consider the fact undis-
    SHELL OIL CO.   v. UNITED STATES                          21
    We are unconvinced by the Government’s counterar-
    gument that the Stipulation and Parties’ Statements were
    made for purposes of settlement, such that consideration
    of these statements contravenes Federal Rule of Evidence
    408(a). Appellant’s Br. 42. That rule “excludes factual
    admissions made in the course of settlement negotia-
    tions.” Fed. R. Evid. 408(a)(2); see 
    id.
     (“Evidence of the
    following is not admissible . . . conduct or a statement
    made during compromise negotiations about the
    claim . . . .”). The documents relied upon by the Court of
    Federal Claims give no indication they were made for
    purposes of settlement. See, e.g., J.A. 1856 (stating, in the
    Stipulation, that amounts will be paid only if the appeal
    of underlying liability determination is unsuccessful),
    1859 (responding, by the Government, to proposed find-
    ings of fact for purposes of summary judgment), 1874
    (same). Moreover, the Government agreed the Stipula-
    tion provided an accurate description of total costs should
    it be responsible for all remediation in the current litiga-
    tion as late as 2013. 13 See Shell, 108 Fed. Cl. at 425; see
    also J.A. 1886 (responding, by the Government in 2012, to
    the Oil Companies’ proposed response costs by stating the
    costs were “uncontroverted”). We do not find abuse of
    discretion.
    2. Allocation Amongst the Oil Companies
    The Court of Federal Claims divided the assessed
    damages among the four Oil Companies in the following
    amounts: $58,292,868.56 to Shell Oil Company,
    puted for purposes of the motion . . . .”); RCFC 56(g)
    (stating procedure for the Court of Federal Claims to treat
    a fact as established when it “does not grant all the relief
    requested by the motion”).
    13  Tellingly, the Government still has offered no re-
    buttal calculation of its own for costs through 1998. See
    generally Appellant’s Br.
    22                            SHELL OIL CO.   v. UNITED STATES
    $18,847,165.08 each to Union Oil Company of California
    and Atlantic Richfield Company, and $3,522,648.60 to
    Texaco, Inc. Shell IV, 130 Fed. Cl. at 42. The Govern-
    ment disputes the quantum of damages by arguing that
    damages costs were not properly allocated either “be-
    tween costs stemming from different products,” Appel-
    lant’s Br. 48, or between individual plaintiffs, id. at 50;
    see id. at 50−51. We agree with the Court of Federal
    Claims that requiring the Oil Companies to itemize costs
    among different products, where the waste accumulated
    over a period of years in the decades prior and the reme-
    diation cost was not itself divided into solutions tailored
    to treat each particular waste product, would require the
    kind of “absolute exactness or mathematical precision”
    that we have stated is not necessary to prove damages
    with reasonable certainty. Shell IV, 130 Fed. Cl. at 41–
    42; see Precision Pine, 
    596 F.3d at 833
     (stating trial court
    is free to consider evidence and modify proposed damages
    calculations so long as it provides “well-reasoned explana-
    tions”). As plaintiffs in the case, the Oil Companies were
    required to show reasonable certainty with respect to
    damages owed by the Government to the Oil Companies
    collectively. They did. See supra Section I.C.1. They
    further provided a breakdown of costs, see J.A. 1792, 1884
    (showing cost and waste disposal breakdown by compa-
    ny), 2129 (providing expert testimony confirming cost
    breakdown), and the Government has not offered any
    evidence to rebut or otherwise challenge this evidence, see
    generally Appellant’s Br. 14
    14 The Government also argues in a conclusory fash-
    ion that the Anti-Assignment Act, 
    31 U.S.C. § 3727
    (2012), should bar recovery, see Appellant’s Br. 50. How-
    ever, the Government has offered no argument in re-
    sponse to the Court of Federal Claims’ determination that
    the Anti-Assignment Act does not apply here because “the
    SHELL OIL CO.   v. UNITED STATES                         23
    The Government equates this case to Howard Indus-
    tries, Inc. v. United States, in which our predecessor court
    found a plaintiff had not shown damages with reasonable
    certainty. See Appellant’s Br. 48−49 (citing 
    115 F. Supp. 481
    , 487 (Ct. Cl. 1953)). There, the court found a plaintiff
    had not proven damages because the plaintiff “had to
    indulge in a number of assumptions entirely unsupported
    by any evidence and which . . . were susceptible of actual
    proof,” and “the record contain[ed] no evidence from which
    the court c[ould] even approximate the amount of plain-
    tiff’s loss, if any.” Howard, 115 F. Supp. at 487 (emphasis
    added). Here, on the contrary, the Oil Companies have
    submitted evidence showing damages incurred, see
    J.A. 1851−910, that has been unrebutted by any evidence
    to the contrary, see generally Appellant’s Br., and this
    evidence is sufficient, for the reasons stated above, to
    prove reasonable certainty. Therefore, we conclude the
    Court of Federal Claims did not err in its award of dam-
    ages.
    II. Challenge to the 2015 Order
    A. Standards of Review
    We review the Court of Federal Claims’ grant of
    summary judgment de novo, see Dairyland Power Co-op.
    v. United States, 
    16 F.3d 1197
    , 1201 (Fed. Cir. 1994), and
    decisions on motions to amend for abuse of discretion, see
    Balestra v. United States, 
    803 F.3d 1363
    , 1368 (Fed. Cir.
    Oil Companies did not assign their rights to receive
    reimbursement . . . to any third parties.” Shell IV, 130
    Fed. Cl. at 42. Accordingly, we find this argument
    waived. See United States v. Great Am. Ins. Co., 
    738 F.3d 1320
    , 1328 (Fed. Cir. 2013) (“It is well established that
    arguments that are not appropriately developed in a
    party’s briefing may be deemed waived.” (citation omit-
    ted)).
    24                            SHELL OIL CO.   v. UNITED STATES
    2015). Summary judgment is appropriate “if the movant
    shows that there is no genuine dispute as to any material
    fact and the movant is entitled to judgment as a matter of
    law.” RCFC 56(a). An abuse of discretion occurs when,
    for example, “the record contains no evidence upon which
    the [trial] court could have rationally based its decision.”
    Hi-Shear Tech., 
    356 F.3d at
    1377−78 (internal quotation
    marks and citation omitted).
    B. The Court of Federal Claims Properly Denied Discov-
    ery of Insurance Settlements and Agreements
    The Court of Federal Claims granted the Oil Compa-
    nies’ Motion for Partial Summary Judgment denying
    discovery or assertion of arguments related to insurance
    policies and settlements, and denied the Government’s
    alternative Motion for Leave to Amend its pleadings to
    assert claims related to insurance settlements. See Shell
    III, 123 Fed. Cl. at 719. The Court of Federal Claims
    thoroughly analyzed all of the parties’ arguments and
    concluded, inter alia, that discovery of insurance policies
    and settlements a decade after the case was brought to
    the court would contravene the requirement that affirma-
    tive defenses be raised at the time of initial pleading. Id.
    at 718. The Court of Federal Claims similarly rejected
    the Government’s Motion for Leave to Amend for undue
    delay and prejudice. Id. at 727. The Government argues
    that the Court of Federal Claims erred in its rulings
    related to the insurance policies. Appellant’s Br. 33−41.
    We disagree with the Government. 15
    15 Because we affirm the Court of Federal Claims’
    use of its discretion to deny leave to amend, we need not
    address its alternative holdings as to the scope of the
    mandate and the statute of limitations to assert a special
    plea in fraud pursuant to 
    28 U.S.C. § 2514
    , or the Gov-
    ernment’s arguments related to these alternative hold-
    SHELL OIL CO.   v. UNITED STATES                         25
    First, the Court of Federal Claims did not err in clas-
    sifying the Government’s arguments related to mitigation
    of damages for possible insurance payments as an affirm-
    ative defense. “[T]he failure to plead [an affirmative
    defense] can result in waiver.” Hor v. Chu, 
    699 F.3d 1331
    ,
    1337−38 (Fed. Cir. 2012); see Caldera v. Northrop World-
    wide Aircraft Servs., Inc., 
    192 F.3d 962
    , 970 (Fed. Cir.
    1999) (adopting rule that affirmative defenses as recited
    by Federal Rule of Civil Procedure 8(c), which is equiva-
    lent to RCFC 8(c), “must be timely pled or general-
    ly . . . deemed waived”). RCFC 8(c)(1) likewise provides a
    non-exhaustive list of affirmative defenses that “must” be
    asserted in response to a pleading. See RCFC 8(c)(1)
    (providing that “[i]n responding to a pleading, a party
    must affirmatively state any avoidance or affirmative
    defense, including . . .”). Although mitigation by third
    party payment is not explicitly listed in RCFC 8(c), gener-
    ally, any defenses that “admit the allegations of the
    complaint but suggest some other reason why there is no
    right of recovery [or] concern allegations outside of the
    plaintiff’s prima facie case that the defendant therefore
    cannot raise by simple denial in the answer” are consid-
    ered affirmative defenses. 5 Wright & Miller, Fed. Prac.
    & Proc. § 1271; see Cornwall v. U.S. Constr. Mfg., Inc.,
    
    800 F.2d 250
    , 252 (Fed. Cir. 1986) (“[A]ny matter that
    does not controvert the opposing party’s prima facie case
    is to be affirmatively pleaded . . . .”); see also Ultra-
    Precision Mfg., Ltd. v. Ford Motor Co., 
    411 F.3d 1369
    ,
    1376 (Fed. Cir. 2005) (“The purpose of Rule 8(c) of the
    ings. See Watts v. XL Sys., Inc., 
    232 F.3d 877
    , 879 n.1
    (Fed. Cir. 2000) (declining to address alternative argu-
    ments when affirming trial court judgment); Appellant’s
    Br. 38−41; see also 
    28 U.S.C. § 2514
     (forfeiting claims
    against the United States “by any person who corruptly
    practices . . . any fraud against the United States in the
    proof . . . thereof”).
    26                             SHELL OIL CO.   v. UNITED STATES
    Federal Rules of Civil Procedure is to give the opposing
    party notice of the affirmative defense and a chance to
    respond.” (internal quotation marks and citation omit-
    ted)).
    The Government’s assertion of mitigated damages in-
    curred by breach of contract due to third party payment is
    an affirmative defense and hence waivable, as it admits
    the allegations of the Complaint but suggests there is no
    right to recovery based on payments falling outside of the
    Avgas Contracts. See Appellant’s Br. 33 (discussing the
    Government’s        “proffer   of     evidence    showing
    that . . . companies sustained no damages in light of their
    insurance recoveries”); see also 5 Wright & Miller, Fed.
    Prac. & Proc. § 1271. 16 Indeed, the Government itself has
    characterized arguments related to mitigation of damages
    through third party payment as affirmative defenses
    before the Court of Federal Claims. See, e.g., Kan. City
    16 This conclusion is in accord with that reached by
    our sister circuits. See In re ZAGG Inc. Shareholder
    Derivative Action, 
    826 F.3d 1222
    , 1231 (10th Cir. 2016)
    (“[W]e agree with the Third Circuit that in determining
    whether an issue should be treated as an affirmative
    defense . . . the critical question . . . is whether requiring
    the defendant to plead the matter is necessary ‘to avoid
    surprise and undue prejudice by providing the plaintiff
    with notice and the opportunity to demonstrate why the
    affirmative defense should not succeed.’” (quoting In re
    Sterten, 
    546 F.3d 278
    , 285 (3d Cir. 2008)); Travellers Int’l,
    A.G. v. Trans World Airlines, Inc., 
    41 F.3d 1570
    , 1580−81
    (2d Cir. 1994) (finding argument related to mitigation of
    damages waived when not properly asserted as affirma-
    tive defense); 999 v. C.I.T. Corp., 
    776 F.2d 866
    , 870 n.2
    (9th Cir. 1985) (noting that mitigation of damages is
    properly considered as an affirmative defense subject to
    waiver).
    SHELL OIL CO.   v. UNITED STATES                         27
    Power & Light Co. v. United States, 
    131 Fed. Cl. 161
    , 168
    (2017) (discussing the Government’s affirmative defense
    that “damages should be offset by monies plaintiff re-
    ceived from another source”). Thus, as an affirmative
    defense, the Government should have asserted any offset
    related to insurance policies in its 2008 Answer. Because
    it did not, the Government waived this defense.
    Second, the Court of Federal Claims did not abuse its
    discretion when it denied the Government’s attempt to
    amend its pleadings in 2015. See Shell III, 123 Fed. Cl. at
    721−27 (discussing Motion for Leave to Amend). Alt-
    hough generally “[i]n the absence of any apparent or
    declared reason―such as undue delay . . . [or] undue
    prejudice to the opposing party . . . ―the leave [to amend]
    sought should . . . be freely given,” Foman v. Davis, 
    371 U.S. 178
    , 182 (1962) (internal quotation marks omitted),
    “amendments are not allowed where they result in undue
    delay or prejudice,” Cencast Servs., L.P. v. United States,
    
    729 F.3d 1352
    , 1363 (Fed. Cir. 2013).
    As for undue delay, the Government does not contest
    the Court of Federal Claims’ findings that the Govern-
    ment “was aware of the fact of the existence of the Oil
    Companies’ insurance policies and coverage litigation as
    early as 1992 and certainly by 1997.” Shell III, 123 Fed.
    Cl. at 719; see id. (citing the Government’s filings in the
    Ninth Circuit); see also Appellant’s Br. 36. Instead, the
    Government only contests the date at which it learned of
    the actual settlements. See Appellant’s Br. 15−16, 35.
    However, in a 1997 filing in the Ninth Circuit litigation,
    the Government stipulated that “[e]ach of the Oil Com-
    pan[ies] have [sic] sued their insurers, claiming
    that . . . insurance policies . . . entitle each Oil Company
    to be reimbursed for response costs at the McColl site.”
    J.A. 1832. Therefore, the Court of Federal Claims did not
    abuse its discretion because its factual finding was not
    clearly erroneous.
    28                             SHELL OIL CO.   v. UNITED STATES
    As for unfair prejudice, nearly a decade had passed
    since the Oil Companies filed their Complaint in the
    Court of Federal Claims, see J.A. 81, and more than seven
    decades had passed since the operative events that gave
    rise to the insurance policies, see, e.g., Shell II, 751 F.3d
    at 1285 (“In 1942 and 1943, the Government . . . entered
    into the [A]vgas [C]ontracts with the Oil Companies.”).
    We do not find an abuse of discretion in the Court of
    Federal Claims’ discovery ruling here, where the Gov-
    ernment had “ample opportunity to broaden the scope of
    the litigation . . . but chose not do so” in a timely fashion.
    Am. Airlines, Inc. v. United States, 
    551 F.3d 1294
    , 1306
    (Fed. Cir. 2008); see Cencast, 729 F.3d at 1363 (affirming
    denial of a motion for leave to amend only two years after
    deadline for amendments had passed). Therefore, we hold
    that the Court of Federal Claims did not err in determin-
    ing that the Government waived all arguments related to
    insurance settlement payments, and could not assert
    them for the first time on remand from Shell II.
    CONCLUSION
    We have considered the Government’s remaining ar-
    guments and find them unpersuasive. Accordingly, the
    Orders of the U.S. Court of Federal Claims are
    AFFIRMED
    

Document Info

Docket Number: 17-1695

Citation Numbers: 896 F.3d 1299

Filed Date: 7/18/2018

Precedential Status: Precedential

Modified Date: 1/12/2023

Authorities (18)

Travellers International, A.G. And Windsor, Inc. v. Trans ... , 41 F.3d 1570 ( 1994 )

Sterten v. Option One Mortgage Corp. (In Re Sterten) , 546 F.3d 278 ( 2008 )

Ultra-Precision Manufacturing v. Ford Motor Co. , 411 F.3d 1369 ( 2005 )

999, a Corporation, Plaintiff/appellee/cross-Appellant v. C.... , 776 F.2d 866 ( 1985 )

Paice LLC v. Toyota Motor Corp. , 504 F.3d 1293 ( 2007 )

united-states-of-america-and-state-of-california-ex-rel-california , 294 F.3d 1045 ( 2002 )

Indiana Michigan Power Company v. United States , 422 F.3d 1369 ( 2005 )

Dairyland Power Cooperative v. United States , 16 F.3d 1197 ( 1994 )

John D. Watts v. Xl Systems, Inc. , 232 F.3d 877 ( 2000 )

Louis Caldera, Secretary of the Army v. Northrop Worldwide ... , 192 F.3d 962 ( 1999 )

Kenneth R. Cornwall v. U.S. Construction Manufacturing, Inc.... , 800 F.2d 250 ( 1986 )

American Airlines, Inc. v. United States , 551 F.3d 1294 ( 2008 )

System Fuels, Inc. v. United States , 666 F.3d 1306 ( 2012 )

Shell Oil Co. v. United States , 672 F.3d 1283 ( 2012 )

Home Savings of America, Fsb v. United States , 399 F.3d 1341 ( 2005 )

Precision Pine & Timber, Inc. v. United States , 596 F.3d 817 ( 2010 )

Hi-Shear Technology Corporation v. United States , 356 F.3d 1372 ( 2004 )

Foman v. Davis , 83 S. Ct. 227 ( 1962 )

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