Machining doesn't cost $390. Perhaps putting the truck on a lift, disassembling the rear end, bringing the drums to a machine shop, and then reinstalling does.
We offered to cover the machining as you just mentioned, our warranty does not cover labor.
That being said, and as Arthur mentioned earlier, we would still cover the cost of a machining service(which is typically around $50/drum). The shop locally does it for $40/drum.
Threatening to call the Vermont states attorney and sue us over $50 drums isn't the best way to find a mutually agreeable resolution.
Why would you ship 4 pairs of drums?