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Litton Systems Inc. v. American Telephone and Telegraph Co.

October 16, 1984


Appeal from an order of the District Court for the Southern District of New York (William C. Conner, Judge), denying plaintiff-appellants' motion to amend a June 30, 1981, judgment to provide increased post-judgment interest pursuant to the 1982 amendment to 28 U.S.C. § 1961. 568 F. Supp. 507. Affirmed.

Author: Newman

Before: OAKES, NEWMAN, and WINTER, Circuit Judges.

JON O. NEWMAN, Circuit Judge:

This appeal presents the issue whether the 1982 amendment that changed the method for determining the rate of post-judgment interest may be given any retroactive effect. The practical consequence of the resolution of this somewhat esoteric issue is made abundantly clear in this case, since the additional interest at stake is more than $40 million. Plaintiffs-appellants Litton Corp. and related companies (collectively "Litton") appeal from a July 28, 1983, order of the District Court for the Southern District of New York (William C. Conner, Judge), denying their motion to amend a June 30, 1981, judgment that Litton obtained against defendant-appellee American Telephone & Telegraph Co. and related companies (collectively "AT & T"). We agree with Judge Conner that the 1982 amendment should not be given retroactive effect and affirm his denial of Litton's motion.

The June 1981 judgment awarded Litton $276,774,729 in treble damages following a jury verdict in its private civil antitrust action against AT & T. As amended on July 20, 1981, in a respect not in issue on this appeal, the judgment provided for post-judgment interest at a rate of 9%. The post-judgment interest statute in effect when the judgment was entered specified that interest would run at the rate established by state law. 28 U.S.C. § 1961 (1976). The post-judgment interest rate in New York on June 30, 1981, was 9%. 7B N.Y. Civ. Prac. Law & Rules §§ 5003, 5004 (McKinney 1963 & Supp. 1983). AT & T appealed the amended judgment to this Court on October 28, 1981. On November 19, 1981, the parties entered into a stipulation staying the execution of the amended judgment pending appeal. The stipulation recited the 9% post-judgment interest rate and was embodied in an order of the District Court.

On April 2, 1982, Congress enacted the Federal Courts Improvement Act of 1982 ("FCIA"), Pub. L. No. 97-164, Title III § 302(a)(1) and (a)(2), 96 Stat. 25, 55-56, 28 U.S.C. § 1961(a) (1982). The FCIA amended 28 U.S.C. § 1961 to provide that, effective October 1, 1982, interest on federal court judgments would be computed at the "coupon issue yield equivalent . . . of the average accepted auction price for the last auction of fifty-two week United States Treasury bills settled immediately prior to the date of the judgment."*fn1 Id. Slightly more than a month after passage of the FCIA, Litton submitted its reply brief to this Court in AT & T's appeal to the underlying judgment. Litton did not seek a remand to the District Court for an amendment of the judgment to reflect the interest rate calculation under the FCIA, nor did Litton otherwise seek to preserve the issue for later consideration by the District Court. This Court affirmed the District Court judgment on February 3, 1983, Litton Systems, Inc. v. American Telephone and Telegraph Co., 700 F.2d 785 (2d Cir. 1983), cert. denied, 464 U.S. 1073, 104 S. Ct. 984, 79 L. Ed. 2d 220 (1984), and issued its mandate on April 29, 1983. On May 18, 1983, more than six months after the effective date of the FCIA, Litton filed a motion in the District Court to amend the final judgment to increase the post-judgment interest rate from 9% to 13.146%, the Treasury bill rate at the time of the entry of judgment.*fn2 Litton sought to apply the increased rate from June 30, 1981, the date the judgement was entered. In effect, the motion sought an additional $40 million from AT & T.*fn3 On July 28, 1983, Judge Connor denied Litton's motion to amend the final judgment, Litton Systems, Inc. v. American Telephone and Telegraph Co., 568 F. Supp. 507 (S.D.N.Y. 1983). This appeal followed.

Litton urges us to apply retroactively the post-judgment interest provision of the FCIA, which amended section 1961. It relies on the general statement, proclaimed in Bradley v. School Board, 416 U.S. 696, 711, 40 L. Ed. 2d 476, 94 S. Ct. 2006 (1974), that "a court [on direct review] is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary." Litton contends that it is entitled to retroactive application of amended section 1961 because Congress gave no "contrary" indication, such application would not result in manifest injustice, and the judgment of the District Court was pending in this Court on direct review on the effective date of the FCIA.

Preliminarily, we have some doubt whether the quoted statement from Bradley is even applicable to this case. The plaintiff in Bradley sought in the District Court an award of attorney's fees, after prevailing in a school desegregation suit. While an appeal from denial of fees was pending, Congress enacted a statute authorizing fee awards. Civil Rights Attorney's Fees Awards Act of 1976, Pub. L. No. 94-559, § 2, 90 Stat. 2641, codified at 42 U.S.C. § 1988 (1982). Thus, the newly enacted legislation concerned the very legal standard at issue on the appeal. As Justice Blackmun noted:

The question, properly viewed, then, is not simply one relating to the propriety of retroactive application of [the attorney's fee statute] to services rendered prior to its enactment, but rather, one relating to the applicability of that section to a situation where the propriety of a fee award was pending resolution on appeal when the statute became law.

Bradley v. School Board, supra, 416 U.S. at 710.

Litton's situation is distinguishable from that of the appellant in Bradley because the appeal that was pending in this Court when the FCIA became effective involved no issue concerning the adequacy of post-judgment interest. Nevertheless, we are reluctant to give Bradley a narrow reading that would make this circumstance decisive. No party to an appeal should be held to a standard that permits consideration of an intervening statute only when issues affected by the statute are already pending on appeal... Such a standard would require either anticipation of statutes not yet enacted or the assertion of frivolous grounds in appeals and cross-appeals in the hope that a new statute might affect their resolution favorably. We agree with the District Court that the Bradley "rule" concerning retroactivity is not limited to cases in which the intervening statute concerns the precise issue already pending before the appellate court.

However, Bradley extends its retroactivity rule only to cases pending on direct appeal at the time a change in the law occurs, 416 U.S. at 710-11, and there is no unfairness in requiring a party seeking to have a new statute applied to a judgment pending on direct review to alert the appellate court to its contention. Though the Bradley rule does not require clairvoyance, it should not reward reticence. Litton apparently interprets the Bradley rule to mean that whenever a case is pending on direct review at the time a new law is enacted or becomes effective, a party may thereafter secure the benefit of the new law in collateral proceedings in the trial court. We disagree. The Bradley rule is not an invitation to litigants to seek collateral relief; it is an instruction to appellate courts to adjudicate cases pending on direct appeal according to the law then in effect.

Perhaps Litton assumed that it could not press its claim for interest at the increased rate in this Court, on the direct appeal since it had not, understandably, included a claim for additional interest in its cross-appeal, which was filed before the FCIA was enacted. Nevertheless, it was open to Litton thereafter to identify the issue on the direct appeal, if only to attempt to preserve its rights to obtain collateral relief in the District Court. Litton could have sought a remand to permit an application to the District Court,*fn4 or could have filed supplemental papers identifying the issue and requesting that the opinion of this Court at least not foreclose recourse to the District Court in order to pursue the interest claim.

Since this Court has not previously spoken authoritatively on the Bradley issue, particularly concerning a party's obligation to identify issues arising under newly enacted statutes while a direct appeal is pending, we are reluctant to rest decision in this case on the fact that Litton did not make any reference to post-judgment interest on direct review in this Court, but instead raised the matter for the first time collaterally in the District Court. Henceforth, however, we will expect any litigant seeking to benefit under Bradley from a new statute enacted while a direct appeal is pending to alert this Court to its contention during the pendency of the appeal. Otherwise, the party will normally be limited to those benefits from newly enacted statutes that are available ...

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