interest on past mental anguish, grief and sorrow of decedents' relatives, pre-death pain and suffering of decedents, and past loss of support. Saavedra at 3. Prejudgment interest in Saavedra was payable from the date of the accident to the date of judgment. Saavedra at 4.
This Circuit, following long established federal law in admiralty, has determined that prejudgment interest is recoverable in admiralty cases generally. Plaintiff in Magee v. United States Lines, Inc., 976 F.2d 821 (2d Cir. 1992), sought damages for claims of unseaworthiness under the general maritime law and for negligence under the Jones Act, 46 U.S.C.App. § 688. In reversing the District Court's denial of prejudgment interest, the Second Circuit noted that this Circuit has consistently "held that 'in admiralty cases prejudgment interest should be granted in the absence of exceptional circumstances.'" Magee, 976 F.2d at 823 (citing Ingersoll Milling Mach. Co. v. M/V Bodena, 829 F.2d 293, 310 (2d Cir.), cert. denied, 484 U.S. 1042, 108 S. Ct. 774, 98 L. Ed. 2d 860 (1988)). See also Middle East Engineering & Dev. Co. v. Arkwright-Boston Mfrs. Mut. Ins., 675 F. Supp. 855 (S.D.N.Y. 1987) (absent extraordinary circumstances prejudgment interest should be awarded in admiralty cases).
Defendant argues that prejudgment interest should be denied because plaintiffs delayed the litigation by pursuing the possibility of punitive damages and bringing suit against the Soviet Union. As noted earlier, this was a multidistrict litigation case which in its earlier phase went all the way to the United States Supreme Court after a lengthy liability trial. Both defendant and plaintiffs have made strategic decisions during the course of this litigation which have delayed the final judgment. And any delay that plaintiffs may have caused by pursuing alternate causes of action or remedies does not justify denying them prejudgment interest unless their actions were extraordinary.
In Federal Ins. Co. v. Sabine Towing & Transportation Co., Inc., 783 F.2d 347 (2d Cir. 1986), defendant alleged that plaintiff's posture during settlement negotiations was unreasonable, and that an award for prejudgment interest should be denied as a result. The Second Circuit noted that "prejudgment interest will be denied in admiralty cases only under extraordinary circumstances" and, therefore, affirmed the District Court's award of prejudgment interest. Sabine, 783 F.2d at 352 n. 4. See Mitsui & Co., Ltd. v. American Export Lines, 636 F.2d 807, 823 (2d Cir. 1981) ("Although the allowance of prejudgment interest in admiralty is said to be a matter committed to the trial court's discretion, it should be granted in the absence of exceptional circumstances") (citations omitted).
Throughout this litigation, defendant has urged that the Death On the High Seas Act ("DOHSA")
provides the exclusive remedy in this case under the Warsaw Convention. However, following the Second Circuit's precedent in Lockerbie, this court has determined that since the Warsaw Convention is itself a federal statute, this case is governed by that federal law which must be construed by looking to, applying and developing federal common law. In re Korean Air Lines Disaster of September 1, 1983, 1992 U.S. Dist. LEXIS 17710, No. 83 Civ. 8428, S.D.N.Y., November 19, 1992, p. 7. See Lockerbie, 928 F.2d at 1278-79. Nevertheless, if DOHSA were referred to, arguendo, in considering the issue of prejudgment interest, it would not preclude recovery because it is a statute relating to admiralty and passed with seamen's survivors in mind.
In Moore-McCormack Lines, Inc. v. Richardson, 295 F.2d 583 (2d Cir.), cert. denied, 368 U.S. 989, 82 S. Ct. 606, 7 L. Ed. 2d 526 (1962), the Second Circuit considered the availability of prejudgment interest under DOHSA which had been denied by the trial court. The Circuit Court noted that awarding prejudgment interest is a matter about which the District Court has discretion. Richardson, 295 F.2d at 592. See also Solomon v. Warren, 540 F.2d 777, 794 (5th Cir.), reh'g denied, 545 F.2d 1298 (5th Cir.), cert. dismissed, 434 U.S. 801, 98 S. Ct. 28, 54 L. Ed. 2d 59 (1977) ("The prevailing rule in [the Fifth Circuit] is that the award of pre-judgment interest in death claims under DOHSA is discretionary with the trial court") (citing National Airlines, Inc. v. Stiles, 268 F.2d 400, 404-06 (5th Cir.), cert. denied, 361 U.S. 885, 80 S. Ct. 157, 4 L. Ed. 2d 121 (1959)).
Despite the discretionary nature of the District Court's decision regarding prejudgment interest, the Court of Appeals in Richardson remanded the case for the allowance of prejudgment interest. The Second Circuit concluded that
the Death on the High Seas Act merely instructs that 'the recovery . . . shall be a fair and just compensation for the pecuniary loss sustained.' We see nothing in this language to indicate that the Congress did not intend that the damages should give full compensation for all pecuniary loss sustained including that resulting from delay in being compensated.
Richardson, 295 F.2d at 592-93 (citations omitted) (emphasis in original). Awarding prejudgment interest, then, is consistent with the purpose of DOHSA.
c. Civil Rights Cases
In developing the federal common law as it pertains to damages available under the Warsaw Convention, this court has looked to other federal laws and how they have been construed. See In re Korean Air Lines Disaster of September 1, 1983, 1992 U.S. Dist. LEXIS 17710, No. 83 Civ. 8428, Nov. 19, 1992, pp. 16-18. The civil rights laws are among the federal statutes which may be used in determining the federal common law under the Warsaw Convention.
In Loeffler v. Frank, 486 U.S. 549, 108 S. Ct. 1965, 100 L. Ed. 2d 549 (1988), the Supreme Court considered whether prejudgment interest may be awarded in a suit against the United States Postal Service brought under Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended, 42 U.S.C. § 2000e et seq.7 In concluding that prejudgment interest may be awarded against the Postal Service, the Court noted that "all the United States Courts of Appeals that have considered the question agree, that Title VII authorizes prejudgment interest as part of the backpay remedy in suits against private employers. This conclusion surely is correct." 486 U.S. at 557-58.
The Second Circuit has also determined that prejudgment interest is recoverable in civil rights cases, See Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992) ("Title VII authorizes a district court to grant prejudgment interest . . ."), and that it is ordinarily an abuse of discretion not to award prejudgment interest. Frank, 960 F.2d at 1154 (citing Donovan v. Sovereign Security, Ltd., 726 F.2d 55, 58 (2d Cir. 1984)).
d. Prejudgment Interest Under Other Federal Statutes
Similar to prejudgment interest under the Civil Rights Act, this Circuit has determined that prejudgment interest is also recoverable on damages awarded under § 17 of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 217 (1982), and the Equal Pay Act, 29 U.S.C. § 206(d) (1982). The Second Circuit dealt with this question in E.E.O.C. v. County of Erie, 751 F.2d 79 (2d Cir. 1984) and determined that since the goal of suit under FLSA and the Equal Pay Act is to make victims whole, it was "well within" the District Court's discretion to award prejudgment interest. County of Erie, 751 F.2d at 82.
C. THE CASE AT HAND
The test for determining the appropriateness of prejudgment interest, as discussed by the court in Wickham, is "a 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 general principles as are deemed relevant by the court." 955 F.2d at 834 (citing Loeffler v. Frank, 486 U.S. 549, 108 S. Ct. 1965, 100 L. Ed. 2d 549 (1988); Blau v. Lehman, 368 U.S. 403, 414, 82 S. Ct. 451, 457, 7 L. Ed. 2d 403 (1962); Rodgers v. United States, 332 U.S. 371, 373-74, 68 S. Ct. 5, 6-7, 92 L. Ed. 3 (1947); Board of County Comm'rs of the County of Jackson v. United States, 308 U.S. 343, 352, 60 S. Ct. 285, 289, 84 L. Ed.313 (1939); Miller v. Robertson, 266 U.S. 243, 257-58, 45 S. Ct. 73, 78-79, 69 L. Ed. 265 (1924)).
The Supreme Court has permitted the award of prejudgment interest under a variety of federal laws on the basis of one or more of these considerations. See Wickham, 955 F.2d at 834 (citing Loeffler, 486 U.S. at 557-58 (suit for back pay under Title VII); Jacobs v. United States, 290 U.S. 13, 16-17, 54 S. Ct. 26, 78 L. Ed. 142 (1933) (suit under takings clause of Fifth Amendment; interest viewed as part of "just compensation"); Waite v. United States, 282 U.S. 508, 509, 51 S. Ct. 227, 75 L. Ed. 494 (1931) (patent law infringement suit; interest viewed as part of "entire compensation" to which statute referred); Miller, 266 U.S. at 250 (contract suit under Trading With the Enemy Act); Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299, 302, 304-06, 43 S. Ct. 354, 354-57, 67 L. Ed. 664 (1923) (suit for taking of property under the Lever Act; interest viewed as part of "just compensation" to which state referred); Billings v. United States, 232 U.S. 261, 284-88, 34 S. Ct. 421, 425-27, 58 L. Ed. 596 (1914) (suit to recover federal excise taxes paid)).
Since the award of prejudgment interest is soundly within this court's discretion, given the absence of relevant language in the Warsaw Convention, the next step in this case is to determine whether or not prejudgment interest is consistent with the framers' intent. The Second Circuit in O'Rourke relied on the nature and purpose of the Warsaw Convention and the specific monetary cap of the Montreal Agreement to determine that an award for prejudgment interest is not available in cases under the Warsaw Convention where there is no finding of "wilful misconduct." At issue in this case is whether an award of prejudgment interest is consistent with the nature and purpose of the Warsaw Convention in cases where there has been a finding of "wilful misconduct" and the monetary cap of the Montreal Agreement is inapplicable.
Damage awards under the Warsaw Convention serve a compensatory purpose. In considering the issue of punitive damages, the Second Circuit in In re Air Disaster at Lockerbie, Scotland, 928 F.2d 1267, 1281 (2d Cir.), cert. denied, Rein v. Pan American World Airways, Inc., U.S. , 112 S. Ct. 331, 116 L. Ed. 2d 272 (1991) noted that the Warsaw Convention provides for compensatory damages only. See also Chendrimada v. Air-India, 802 F. Supp. 1089, 1091 (S.D.N.Y. 1992). The $ 75,000 limit of the Montreal Agreement is a departure from the full compensatory nature of tort recovery, generally. See In re Inflight Explosion on Trans World Airlines, Inc., 778 F. Supp. at 631. The express removal of the $ 75,000 limitation in the Montreal Agreement indicates an intent to fully compensate victims where there has been a finding of "wilful misconduct." See Inflight Explosion, 778 F. Supp. at 641.
Given the compensatory purpose of the Warsaw Convention, especially in the case at hand where there has been a finding of "wilful misconduct," and given the nine years that have past between the accident and the judgment, this court concludes that an award for prejudgment interest is appropriate in this case.
Plaintiffs in this case recovered damages for past lost support and lost inheritance. Plaintiffs recovered for the following non-pecuniary losses: past and future mental injury; past and future loss of love, affection and companionship; and decedent's conscious pain and suffering.
Where the cap of the Montreal Agreement is removed due to the defendant's "wilful misconduct," the Warsaw Convention provides for the full compensation of the plaintiffs. Full compensation includes awards for pecuniary as well as non-pecuniary losses. Plaintiffs, therefore, are entitled to prejudgment interest for both pecuniary losses and non-pecuniary losses. See also Saavedra at 3 (considering damages available under the facts of this case and allowing prejudgment interest on past mental anguish, grief, sorrow, pre-death pain and suffering and loss of support).
D. CALCULATION OF PREJUDGMENT INTEREST
The calculation of prejudgment interest is a discretionary matter for the district court. Rodgers v. United States, 332 U.S. at 966 (The calculation of prejudgment interest is "committed to the discretion of the district court"). See also Orshan v. Macchiarola, 629 F. Supp. 1014, 1017 (E.D.N.Y. 1986) ("In federal question cases, absent statutory directive, the rate of prejudgment interest is left to the court's discretion").
Pursuant to an agreement between the parties, the discounted interest rate will be 2%. See Trial Transcript pp 427-30.
Prejudgment interest in this case will be calculated according to the formula used by the Supreme Court in Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S 523, 103 S. Ct. 2541, 76 L. Ed. 2d 768 (1983): the entire award discounted back to the date of the accident, and prejudgment interest being awarded on that amount. See Taliercio v. Compania Empressa Lineas Argentina, 761 F.2d 126, 129 (2d Cir. 1985) ("when trial courts in this Circuit discount damages to present value, we believe it would be preferable to calculate interest in accordance with the Pfeifer formula").
The prejudgment rate of interest in this case will be the average of the prime interest rate from the date of the accident to the date of judgment.
For the foregoing reasons, plaintiffs in this case are entitled to prejudgment interest on damages remedying both their pecuniary and non-pecuniary losses. Prejudgment interest will be calculated according to the Pfeifer formula at the average prime interest rate from the date of the accident to the date of judgment.
Dated: January 26, 1993
New York, New York
CONSTANCE BAKER MOTLEY
United States District Judge