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 ). 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) reveals the same emphasis on the remedial role of the treble damages provision [as § 4 of the Clayton Act]" (see Shearson/American Express v. McMahon, 482 U.S. 220, 241, 96 L. Ed. 2d 185, 107 S. Ct. 2332 ).
In sum, the treble damages provision of the Clayton Act has been held to sufficiently compensate victims of antitrust injuries without the need to add an award of interest (see Trans World Airlines, supra at p. 80). Also, the legislative intent underlying the enactment of, RICO's treble damages provision tracks that of the Clayton Act. Therefore, it appears that interest awards under RICO are similarly unnecessary to fairly compensate a successful plaintiff.
In this regard, the Court is cognizant of at least one reported RICO case in this Circuit where prejudgment interest was added to the RICO treble damages. In Tri Component Prod. Corp. v. Benarroch, No. 87 CIV. 2351, 1988 U.S. Dist. LEXIS 18561, 1988 WL 12650 (S.D.N.Y. Aug. 5, 1988), the Southern District adopted the report and recommendation of a Magistrate Judge, which made a finding as to certain actual damages, and in reliance on Rolf v. Blyth, Eastman Dillon & Co., 637 F.2d 77, 86-87 (2d Cir. 1980), awarded prejudgment interest on these damages ( Tri Component, supra, at p. *6). The Court then trebled the amount of the actual damages along with the prejudgment interest instead of adding the interest to the amount trebled. The Court notes that in Tri Component, the judgment was entered on default.
It appears that no other Court in this Circuit has taken this expansive view of the applicability of prejudgment interest with regard to an award of treble damages in a RICO case. Further, in this Court's view, the facts in this case do not warrant the imposition of prejudgment interest. Based on the evidence adduced at the trial, the jury's verdict, after being trebled, would more than "fully compensate the wronged party for actual damages suffered" ( Wickham, supra, at p. *1) without the need for prejudgment interest.
The thrust of the recent decisions on the subject of prejudgment interest has been to limit the award of interest to fair and just compensation and to avoid excessive recoveries. For example, on January 16, 1992, the New York Court of Appeals in Milbrandt v. A.P. Green Refractories Co., 79 N.Y.2d 26, 588 N.E.2d 45, 580 N.Y.S.2d 147, (N.Y. Ct. of App. 1992) made a major change in determining the rate of interest in wrongful death actions, so as to more fairly evaluate "just compensation." The Milbrandt Court held in part that pre-verdict interest on damages in a wrongful death action should be added only if the award has been discounted to a time prior to the award so as to provide "fair and just compensation" and to avoid "a windfall" and a "double recovery" [see Milbrandt, supra]).
Moreover, in accordance with the RICO statute, the plaintiffs also awarded attorney's fees . The treble damages then, will be a net recovery to the plaintiff Nu-Life. The imposition of pre-judgment interest either before or after the trebling would, in this Court's view, not only "overcompensate" Nu-Life, but would provide an undeserved windfall unrelated to any "business injuries" it sustained.
Prejudgment Interest on the Counterclaim
The defendant Board also moved for prejudgment interest on its contract counterclaim. The Board's contract claim, based on New York state law, is before this Court as a pendent matter, and the Court must look to the New York law of prejudgment interest to determine whether the Board is entitled to interest on its counterclaim.
New York's Civil Practice Law and Rules ("CPLR") § 5001(a) provides that "interest to verdict" "shall be recovered upon a sum awarded because of breach of performance of a contract. . . ." In the practice commentary to this section, Professor Siegel noted that in federal actions based on diversity jurisdiction, substantive rights are decided by state law pursuant to the @e doctrine. A right to prejudgment interest under this section is such a substantive right (see Siegel Supplemental Practice Commentaries, CPLR [McKinney 1992]; see also Lee v. Joseph E. Seagram & Sons, Inc., 592 F.2d 39, 42 [2d Cir. 1979]).
The contract counterclaim is based on pendent jurisdiction, which is similar to diversity jurisdiction for the purpose of determining prejudgment interest under CPLR § 5001(a) (see e.g., Felkay v. ZB Limited Partnership No. 1, No. 81 Civ. 0289, 1983 WL 1325 [S.D.N.Y. June 16, 1983] [pendant jurisdiction sustains prejudgment interest award under CPLR § 5001(a) on breach of contract claim]).
Therefore, the Court finds that the provisions of CPLR § 5001(a) apply to the Board's counterclaim. Prejudgment interest shall be awarded from the date of the breach (see Tomanelli v. Lizda Realty, Ltd., 174 A.D.2d 889, 571 N.Y.S. 2d 171, 173 [3d Dept. 1991]), which in this case, is August 31, 1985. The rate of interest provided for under this section is set by statute at the rate of nine per cent per annum (see CPLR § 5004 [McKinney 1992 Supp.]). Accordingly, prejudgment interest at the rate of nine per cent from August 31, 1985, is to be added to the sum awarded in favor of the Board against Terminate.
The motion of plaintiff Nu-Life to add prejudgment interest to the amount of the RICO award is denied.
The motion of the Board to add prejudgment interest on the award against Terminate on the counterclaim is granted. Such interest is awarded at the rate of nine percent per annum, from August 31, 1985 to the date of the entry of judgment.
Dated: Uniondale, New York
March 16, 1992
Arthur D. Spatt
United States District Judge
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