UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

┐ NEW LONDON TOBACCO MARKET, INC.; FIVEMILE │ ENERGY, LLC, │ Plaintiffs-Appellees, │ │ v. > No. 20-5565 │ │ │ KENTUCKY FUEL CORPORATION; JAMES C. JUSTICE │ COMPANIES, INC., │ │ Defendants-Appellants, │ │ THE GETTY LAW GROUP, PLLC; RICHARD A. GETTY, │ Interested Parties. │ ┘

Appeal from the United States District Court for the Eastern District of Kentucky at London. No. 6:12-cv-00091—Gregory F. Van Tatenhove, District Judge.

Argued: January 28, 2021

Decided and Filed: August 9, 2022

Before: BATCHELDER, STRANCH, and NALBANDIAN, Circuit Judges.

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COUNSEL ARGUED: Thomas H. Dupree, Jr., GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellants. John A. Lucas, BROCK SHIPE KLENK PLC, Knoxville, Tennessee, for Appellees. ON BRIEF: Thomas H. Dupree, Jr., Jacob T. Spencer, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellants. John A. Lucas, W. Edward Shipe, BROCK SHIPE KLENK PLC, Knoxville, Tennessee, Scott M. Webster, TOOMS, DUNAWAY & WEBSTER, London, Kentucky, for Appellees. No. 20-5565 New London Tobacco Market v. Ky. Fuel Corp. Page 2

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OPINION _________________

NALBANDIAN, Circuit Judge. By all accounts, this case involves discovery abuses and violations that are (thankfully) unusual in their frequency and mendacity. That conduct by Defendants resulted in the ultimate sanction—default judgment for the Plaintiffs. That judgment, however, is not this appeal’s subject, the damages awarded by the district court are.

New London Tobacco Market, Inc. and Fivemile Energy, LLC, (“New London”) sued Kentucky Fuel Corporation and James C. Justice Companies, Inc. (“Kentucky Fuel”) for breach of contract and fraud. During this litigation, Kentucky Fuel committed a string of egregious discovery violations. As a result, the district court entered default judgment against it and awarded damages to New London on all counts. On appeal, Kentucky Fuel challenges these awards. For the reasons below, we affirm in part, reverse in part, and remand.

I.

The agreements. This case is about a coal-mining arrangement gone wrong. In 2005, New London acquired several leases and related permits to mine coal on various properties.1 A short time later, it assigned these leases and permits to Kentucky Fuel with the understanding that Kentucky Fuel would mine the coal and New London would get a cut.

But things did not go as New London had planned. Five years passed and Kentucky Fuel did not mine any of the coal. So by 2010, the leases expired with no coal to show