Opinion
Civil Action No. 00-3598.
March 30, 2004
MEMORANDUM AND ORDER
In this opinion, we will dispose of Plaintiff's motion for pre- and post-judgment interest. To do so, requires a brief recitation of the facts. Plaintiff's employment as a Philadelphia police officer was terminated on August 18, 1998, and Plaintiff brought this § 1983 and Title VII case. On March 13, 2003, the jury returned a verdict in Plaintiff's favor and the court entered judgment on March 17, 2003. Shortly after the verdict, the parties agreed to a settlement of the case. As part of the settlement, the City paid Mr. Devore $400,000 in June, 2003. Unfortunately, the City did not live up to other obligations under the settlement agreement and the Court eventually vacated the settlement. After molding the verdict, the court awarded the Plaintiff $186,667 in back pay, $105,000 in front pay, $2,500 in punitive damages against the individual defendants, and compensatory damages of $60,000. The court also awarded Plaintiff $192,507 in attorneys' fees and $6,679.71 in costs. After the verdict, the Plaintiff sought pre- and post-judgment interest. The Defendants oppose such an award. For the reasons that follow, the Plaintiff's motion will be granted with modification.
I. Prejudgment Interest
"The Third Circuit has stated that there is `a strong presumption in favor of awarding prejudgment interest, except where the award would result in unusual inequities.'" Shovlin v. Timemed Labeling Systems, Inc., No. 95-4808, 1997 WL 102523 *1 (E.D. Pa., Feb. 28, 1997) (quoting Booker v. Taylor Milk Co., Inc., 64 F.3d 860, 868 (3d Cir. 1995)). The Plaintiff seeks prejudgment interest on the backpay portion of the award, only. The defendant argues that an award of prejudgment interest would be inequitable because the plaintiff received an award of liquidated damages, an award of compensatory damages, and the use of $400,000 from the time the City made payment on the settlement. (Defendant's Response, at 4).
As for the award of liquidated damages and compensatory damages, this court was faced with a similar situation inO'Neill v. Sears, Roebuck and Company, 108 F. Supp.2d 443 (E.D. Pa. 2000), in which a prevailing plaintiff in an ADEA case sought pre-judgment interest. There, relying on the Third Circuit's decision in Starceski v. Westinghouse Electric Corp., 54 F.3d 1089 (3d Cir. 1995), we concluded that an award of pre-judgment interest was appropriate. In Starceski, the Third Circuit found that the purpose of liquidated damages is punitive and the purpose of pre-judgment interest is to reimburse the plaintiff for the loss of the use of the money. Since the purposes of the two awards are different, the award of pre-judgment interest was appropriate. O'Neill, at 444 (citing Starceski, at 1101-02).
Similarly, since an award of compensatory damages is to compensate non-economic losses, such as pain, suffering, and humiliation, such an award serves a different purpose than an award for the economic loss of the use of the money. Hence, an award of both compensatory damages and pre-judgment interest in the same case is appropriate.
With respect to the City's argument that an award of pre-judgment interest would be inequitable considering the City's payment of $400,000 to the Plaintiff, we find that the City's payment did not completely offset the amounts of pre- and post-judgment interest to which we believe the Plaintiff is entitled. We will perform a detailed calculation to explain this finding.
The Plaintiff and Defendant do not agree on the interest rate at which the pre-judgment interest should be calculated. The Plaintiff asks the court to utilize the Internal Revenue Service's rate of interest for the time period in issue. The Defendant argues that the court should be guided by the post-judgment interest statute, 28 U.S.C. § 1961. Both methods have been endorsed by the courts of this circuit. However, we find the logic of the Honorable Jerome Simandle of the District Court in New Jersey compelling, when he chose to apply the postjudgment statute to calculate pre-judgment interest.
First, this rate is easy to determine from the federal post-judgment interest rate charts following 28 U.S.C. § 1961. Second, the 52-week Treasury bill rate has been found by Congress and by the marketplace to be a suitable approximation of the available return for a typical risk-free investment; such a benchmark is a reasonable approximation of a risk-free investment available throughout the period in which the employer retained the employee's wages and benefits.Davis v. Rutgers Casualty Insurance Co., 964 F. Supp. 560, 576 (D.N.J. 1997). Moreover, considering the credit to which the City is entitled based upon their payment of $400,000 post-verdict, utilizing the post-judgment statute to calculate the interest is more equitable.
The post-judgment interest statute, 28 U.S.C. § 1961(a), provides for the calculation as follows:
Such interest shall be calculated from the date of the entry of the judgement, at a rate equal to the coupon issue yield equivalent (as determined by the Secretary of the Treasury) of the average accepted auction price for the last auction of the fifty-two week United States Treasury bills settled immediately prior to the date of judgment.28 U.S.C. § 1961(a). The judges of our circuit have employed this statute differently in calculating prejudgment interest. See Shovlin, *2 (applying the average T-bill rate to calculate simple interest); Young v. Lukens Steel Co., 991 F. Supp. 962, 978 (E.D. Pa. 1994) (compounding the interest yearly based on the T-bill rate at the time of the judgment). As we explained in O'Neill, we believe a small change to Judge Hutton's method in Young is the most precise. Therefore, we will utilize the T-bill rate at the end of each year in compounding the interest rather than basing the entire calculation on the T-bill rate available at the time of the judgment.
As we explained in the Memorandum and Order disposing of the post-verdict motions, the evidence supported a backpay award of $40,000 per year. Therefore, using the T-bill rates for the period ending just prior to each year, with compound interest, results in the following calculation:
August 18, 1998-August 18, 1999 $40,000 *5.271% = $2,108.40 August 18, 1999-August 18, 2000 (42,108.40 + 40,000)*5.224% = $4289.34 August 18, 2000-August 18, 2001 (86,397.74 + 40,000)*6.375%= $8057.85 August 18, 2001-August 18, 2002 (134,455.59 + 40,000)*3.5%=$6105.94 August 18, 2002-March 17, 2003 (180561.53 + 26,667)*1.67%=$3460.71**** To account for the fact that interest runs for only 7 months in the final calculation, this figure is reduced by 5/12 to $2,018.74
The total pre-judgment interest is $22,580.27.
II. Post Judgment Interest
The Plaintiff also seeks post judgment interest. Such an award is calculated pursuant to 28 U.S.C. § 1961. See supra, at 3. Judgment was entered on March 17, 2003. Therefore, we will calculate the post-judgment interest based on the T-bill rate available on March 14, 2003, the last auction prior to the date of the judgment. At that point, the applicable T-bill rate was 1.16%. However, Mr. Devore is entitled to only 3 months of post-judgment interest because the City paid him $400,000 in June, 2003. Moreover, the City is entitled to an offset because the final judgment, as molded by the court, was $45,833 less than the amount paid by the City in June.
The calculations follow:
Plaintiff's Post Judgment Interest for Three Months:
$354,167 * 1.16% = 4,108.33 * 1/4 = $1,027.08
Offset Due the City for the Nine Months Plaintiff had Use of the Additional Monies:
$45,833 *1.16%=531.66 * 3/4 = $398.74
Therefore, the Plaintiff is entitled to $628.34 in post judgment interest.
III. Conclusion
As calculated by the court, the Plaintiff is entitled to $22580.27 in pre-judgment interest. Considering the offset due the City for the overpayment in June, 2003, the Plaintiff is entitled to $628.34 in post-judgment interest.
The court has previously denied Plaintiff's request for damages resulting from the negative tax impact of receiving his past wages in a single lump sum. The Plaintiff failed to support such negative tax consequences with any economic expert.
An appropriate Order follows.
ORDER
AND NOW, this 30th day of March, 2004, upon consideration of the Plaintiff's Motion for Pre- and Post-Judgment Interest, IT IS HEREBY ORDERED that the Motion is GRANTED IN PART AND DENIED IN PART.1. With respect to the motion for pre-judgment interest, the Motion is GRANTED. However, the court's method of calculation differs from that proposed by the Plaintiff. Pre-judgment interest through March 17, 2003, is awarded in the amount of $22,580.27, resulting in a backpay award of $209,247.27.
2. With respect to the motion for post-judgment interest, the Motion is GRANTED. However, the amount owed the Plaintiff is offset by the interest on the additional $45,833 that the City paid Mr. Devore in June, 2003. The Plaintiff is awarded $628.34 in postjudgment interest.
3. The Court previously denied Plaintiff's motion to the extent he sought damages for negative tax consequences.
4. Plaintiff's counsel shall have twenty days to submit a final request for fees that have not already been considered by the court.