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NU-LIFE CONSTR. CORP. v. BOARD OF EDUC. OF NEW YOR

March 16, 1992

NU-LIFE CONSTRUCTION CORP. and TERMINATE CONTROL CORP., Plaintiffs, against BOARD OF EDUCATION OF THE CITY OF NEW YORK, STUART HOROWITZ, STANLEY DOBROWOLSKI, JOHN TRAPANOTTO, JOHN FRISONE and NICHOLAS E. BORG, Defendants.


The opinion of the court was delivered by: ARTHUR D. SPATT

MEMORANDUM DECISION AND ORDER

 SPATT, District Judge.

 In this civil case brought pursuant to the Racketeer Influenced and corrupt Organizations statute, 18 U.S.C. § 1961 et. seq. ("RICO"), after approximately ten weeks of trial, a jury returned a verdict in favor of the plaintiff Nu-Life Construction Corp. ("Nu-Life") against defendants John Trapanotto and Stanley Dobrowolski. The jury also rendered a verdict in favor of the defendant Board of Education of the City of New York (the "Board") on its breach of contract counterclaim against the plaintiff Terminate Control Corp. ("Terminate").

 After the verdict had been rendered and the jury was polled and discharged, the Court granted the motions of the plaintiff Nu-life for treble damages and attorney's fees, as provided for by the terms of 18 U.S.C. § 1964(c).

 Nu-life and the Board then moved for prejudgment interest on the amount of their respective jury awards. The issue presented is whether the Court should award prejudgment interest on the RICO recovery.

 DISCUSSION

 Prejudgment Interest in the Federal District Court

 The RICO statute is silent on the subject of prejudgment interest. However, as Nu-Life correctly pointed out, generally, in the federal judicial system, awards of prejudgment interest are discretionary with the trial court (see City of New York v. Rapgal Assocs., 703 F. Supp. 284, 288 [S.D.N.Y. 1989] ["whether to award prejudgment interest in cases arising under federal law has in the absence of a statutory directive been placed in the sound discretion of the district courts"] quoting Waterside Ocean Navigation Co., Inc. v. International Navigation Ltd., 737 F.2d 150, 153-54 [2d Cir. 1984]).

 Recently, in Wickham Contracting Co., Inc v. Local Union No. 3, Int. Bro. of Elec. Workers, AFL-CIO, 955 F.2d 831 (2d Cir. 1992), in a comprehensive discussion, the Second Circuit analyzed the factors under which the application of prejudgment interest is appropriate. Writing for the Court, Judge Miner initiated the discussion, as follows:

 "since the early part of this century, the United States Supreme Court has stated repeatedly that discretionary awards of prejudgment interest are permissible under federal law in certain function of (i) the need to fully compensate the wronged party for actual damages suffered, (ii) considerations of fairness and the relative equities of the award, (iii) the remedial purpose of the statute involved and/or (iv) such other principles as are deemed relevant by the court" (emphasis supplied) ( Wickham, supra, at p. *1).

 A court may not award prejudgment interest if such an award is contrary to congressional intent. Where there is no indication of intent on the subject, the courts should then take other factors into consideration, such as whether an award of prejudgment interest is fair and equitable or whether such an award would result in overcompensation of the plaintiff ( Wickham, supra, at p. *2 [citing cases]).

 Another important consideration in determining the appropriateness of an award of prejudgment interest is whether the federal statute under which damages have been obtained is remedial or punitive in nature. In this regard, the Second Circuit noted that "prejudgment interest should not be awarded if the statutory obligation on which interest is sought is punitive in nature" ( Wickham, supra, at p. *2). Although it appears to be an open question in the Second Circuit as to whether RICO's treble damage provision is in fact punitive in nature, the Court has suggested that an award of interest is generally improper where the statute itself provides for treble damages (see Wickham, supra, at p. *3; Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 80 [2d Cir. 1971] rev'd on other grounds, 409 U.S. 363, 34 L. Ed. 2d 577, 93 S. Ct. 647 [1973]).

 In Trans World Airlines, a private antitrust suit, the Second Circuit considered the treble damage provision of the Clayton Act and stated that the absence of congressional intent on the issue of interest as an element of such provision indicated that the trebling of damages was itself a sufficient remedy, so that an award of interest was unnecessary.

 In regard to treble damages under the Clayton Act, the United States Supreme Court stated that "the treble damages cause of action conferred on private parties by § 4 of the Clayton Act . . . seeks primarily to enable an injured competitor to gain compensation for that injury" (see Mitsubishi Motors v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 635, 87 L. Ed. 2d 444, 105 S. Ct. 3346 [1985]). Furthermore, the Court stated that § 4 of the Clayton Act provides, "the injured party [with] ample damages for the wrong suffered" (see Mitsubishi, supra, at p. 637 [quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 486, 50 L. Ed. 2d 701, 97 S. Ct. 690 n. 10 (1977)]). Comparing the legislative intent underlying the Clayton Act with the RICO statute, the Supreme Court found that "the legislative history of § 1964(c) ...


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