UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

MCKESSON CORP. et al., ) ) Plaintiffs, ) ) v. ) Civ. Action No. 82-220 (RJL) ) ISLAMIC REPUBLIC OF IRAN et al., ) ) Defendants. )

MEMORANDU~ON November l!i, 2010 Plaintiff, McKesson Corporation ("McKesson"), a U.S. company, alleges that

defendant, Islamic Republic of Iran ("Iran"), expropriated McKesson's interest in an

Iranian dairy and illegally withheld dividends. This case has spanned twenty-eight years

and reached our Court of Appeals five times. Most recently, following remand by the

Court of Appeals, I held that McKesson does have a cause of action under Iranian law,

that customary international law continues to provide McKesson with a cause of action,

and that the act of state doctrine does not apply in this case. See McKesson Corp. v.

Islamic Republic of Iran, No. 82-220,

(D.D.C. Nov. 23, 2009).

Following that ruling, the parties submitted additional briefing on the merits of the

Iranian law causes of action. Upon review of the parties' submissions, as well as the

arguments of counsel at the hearing held on this matter and the extensive record in this

case, the Court now enters judgment for McKesson on its Iranian law causes of action

and awards $43,980,205.58 in damages and prejudgment interest. BACKGROUND

As the facts of this case have been described in great detail in a plethora of

opinions by our Circuit, Judge Flannery, and this Court, the following short summary

shall suffice. 1 In 1960, McKesson and a group of Iranian investors joined together to

create Pak Dairy ("Pak"). During the Iranian Revolution in 1979, McKesson personnel at

Pak fled the country, and the Iranian government took control ofPak's Board of

Directors. See McKesson 2007,520 F. Supp. 2d at 40. In 1982, McKesson sued Iran in

this Court alleging, inter alia, that Iran had illegally withheld dividends issued by Pak

and that Iran had, as a result of this and other interferences with McKesson's property

rights, expropriated its thirty-one percent interest. See id.

In 1997, after years of litigation and two appeals to our Circuit, Judge Flannery,

who was previously assigned this case, found Iran liable under customary international

law and the 1955 Treaty of Amity, Economic Relations, and Consular Rights ("Treaty of

Amity" or "the Treaty") between the United States and Iran for expropriating

McKesson's equity interest and for withholding the dividends. McKesson 1997, No. 82-

1 For additional background, see our Circuit's previous decisions, Foremost-McKesson, Inc. v. Islamic Republic of Iran,

(D.C. Cir. 1990) ("McKesson f'); McKesson Corp. v. Islamic Republic of Iran,

(D.C. Cir. 1995) ("McKesson If'); McKesson HBOC, Inc. v. Islamic Republic of Iran,

(D.C. Cir. 2001) ("McKesson IIf'); McKesson HBOC, Inc. v. Islamic Republic of Iran,

(D.C. Cir. 2003) ("McKesson IV"); and McKesson Corp. v. Islamic Republic of Iran,

(D.C. Cir. 2008) ("McKesson V"), as well as the previous decisions issued by Judge Flannery and this Court, including McKesson Corp. v. Islamic Republic of Iran, No. 82-220,

(D.D.C. June 23, 1997) ("McKesson 1997"); McKesson Corp. v. Islamic Republic of Iran,

(D.D.C. 2000) ("McKesson 2000"); McKesson Corp. v. Islamic Republic of Iran,

(D.D.C. 2007) ("McKesson 2007"); and McKesson Corp. v. Islamic Republic of Iran, No. 82-220,

(D.D.C. Nov. 23, 2009) ("McKesson 2009").

2 220,

at *12-16. Following a bench trial from January 18 through

February 17,2000, Judge Flannery held that McKesson was entitled to $20,071,159.14 in

total damages, which includes the value of the expropriated property and prejudgment

interest. McKesson 2000,

, 43 (citing Treaty of Amity).

In 2001, our Circuit affinned Judge Flannery's judgment in part, but remanded the

case for another trial on two particular factual issues. McKesson 111,

. In

2003, the Circuit further ordered this Court, which in the meantime had been assigned to

this case, to also reexamine Judge Flannery's decision that the Treaty of Amity provides

McKesson with a U.S. cause of action in this Court. McKesson IV,

.

After extensive discovery and motions practice with regard to the remanded issues, this

Court conducted a three-week bench trial in 2007 on the two factual issues remanded.

Once again, McKesson prevailed at that trial, and this Court issued a lengthy Opinion

reinstating the 2000 judgment against Iran. McKesson 2007,

. On

appeal, our Circuit held, however, that contrary to its previous decisions, the Treaty of

Amity does not provide McKesson with a cause of action in our courts. McKesson V,

. As such, the Court of Appeals remanded the case to this Court on

August 26, 2008, for consideration of three legal issues to determine whether there was a

sufficient legal basis for this suit to go forward.

On November 20,2009, following yet another round of briefing by the parties, this

Court held that McKesson does have a cause of action under Iranian law, that customary

international law continues to provide McKesson with a cause of action, and that the act

3 of state doctrine does not apply in this case. McKesson 2009, No. 82-220,

, at *1. Undaunted, Iran filed a motion for certification of an immediate

interlocutory appeal, which I denied on January 26, 2010. The parties then filed briefs on

the merits of the Iranian law causes of action-the Treaty of Amity, the Civil

Responsibility Act, the Civil Code, and the Commercial Code-and I held oral argument

on August 26, 2010. For the following reasons, I find that McKesson is entitled to

judgment on each of the four causes of action it asserts under Iranian law and reinstates

the 2000 judgment awarding damages and prejudgment interest through May 26, 2000,

the date of Judge Flannery's decision. In addition, the Court awards McKesson

compound interest from May 27, 2000, to the date of this Opinion.

ANALYSIS

To say the least, the parties are in stark disagreement as to the appropriate

disposition at this stage of the case. Viewed most charitably, Iran's current position is

that certain issues previously addressed by this Court must now be litigated under Iranian

law for the first time. McKesson counters that Iran is merely attempting to obtain

reconsideration of numerous findings of fact and law that have long since been decided

and are the law of the case. I agree with McKesson. See LaShawn A. v. Barry,

(D.C. Cir. 1996) ("The Supreme Court has instructed the lower courts to be

loathe to reconsider issues already decided in the absence of extraordinary circumstances

such as where the initial decision was clearly erroneous and would work a manifest

injustice." (internal quotation marks omitted)); see also McKesson II,

4 ("[L ]aw-of-the-case doctrine holds that decisions rendered on the first appeal should not

be revisited on later trips to the appellate court.").

Iran's attempt to relitigate issues, such as its "come to the company" defense that

diverted this litigation for a number of years, is simply incredible. More specifically, the

Court has considered and rejected Iran's argument, made over a decade ago, that Iranian

law imposes a general "come to the company" requirement on shareholders in Iranian

companies, and that holding was expressly affirmed by the Court of Appeals in 2001.

See McKesson III,

("[W]e agree with the district court that no general

principle of Iranian corporate law excuses Pak Dairy's withholding of McKesson's

dividends due to its failure to come to the company."). Moreover, during the 2007 trial

before this Court, Iran failed to prove its factual defense that Pak Dairy had in fact

adopted such a requirement, and this Court also held that even if there had been a "come

to the company" requirement, it would have been/utile for McKesson to seek its payment

in that manner. See McKesson 2007,

. Similarly, Iran's attempt

to resuscitate the separate juridical entity question is remarkable, given that it has already

been found, and affirmed, that Iran's role in causing Pak Dairy to cut off dividend

payments to McKesson was "direct and manifest." McKesson II,

; see

McKesson 1997, No. 82-220,

, at *7 (citing 1993 Opinion [Dkt. #207]).

Finally, Iran's argument that it cannot be held liable because this Court held that

the cut-off of dividends to McKesson was based on a governmental currency control

decision to guard against capital flight mistakenly relies upon a single sentence in

5 McKesson 2007, despite the fact that the currency controls defense had been rejected by

Judge Flannery a decade earlier, see McKesson 1997, No. 82-220,

, at

* 10 n.17, and thus was not even before this Court in 2007. But to make the record

indisputably clear: this Court did not hold in 2007 that the non-payment of dividends to

McKesson was the result of sovereign conduct by Iran to prevent capital flight. Rather, I

was merely discussing the dearth of evidence presented by Iran that Pak was refusing to

pay McKesson because it did not abide with an alleged "come to the company"

requirement. See McKesson 2007,

. Indeed, it is hard to

imagine how Iran could legitimately believe the currency controls defense is still viable

at this stage of the litigation, given my ruling in 2009 that Iran's actions were

"commercial in nature" and that the act of state doctrine therefore does not apply. See

McKesson 2009, No. 82-220,

, at *5. Thus, despite what appear to be

Iran's latest efforts to protract this litigation even further, I will now proceed to final

judgment on the merits of McKesson's Iranian law claims.

I. The Treaty of Amity

The Treaty of Amity provides:

Property of nationals and companies of either High Contracting Party, including interests in property, shall receive the most constant protection and security within the territories of the other High Contracting Party, in no case less than that required by international law. Such property shall not be taken except for a public purpose, nor shall it be taken without the prompt payment of just compensation. Such compensation shall be in an effectively realizable form and shall represent the full equivalent of the property taken; and adequate provision shall have been made at or prior to the time of taking for the determination and payment thereof.

6 Treaty of Amity, art. IV, para. 2. "Under Iranian law, treaties have the force of law."

Legal Op. of Mahmoud Katirai [Dkt. #898-1] ("Katirai Op.") at 18. To that end, Iran

does not dispute that McKesson has a cause of action under the Treaty of Amity as a

matter of Iranian law. 2 See Iran's Mem. Regarding Proposed Iranian Law Causes of

Action [Dkt. #927] ("Iran's Mem.") at 14-16; Legal Op. of Dr. M.E. Sanaei [Dkt. #927-

2] ("Sanaei Op.") at 6; see also McKesson III, 271 F .3d at 1108 ("Iran does not dispute

that the Treaty of Amity creates enforceable rights."). Rather, Iran asserts that the Treaty,

by its terms, requires McKesson's expropriation claim to be litigated in Iran as a

condition of the right to recover damages. See Iran's Mem. at 16. This Court and the

Court of Appeals, however, have both rejected this argument, and Iran curiously has

proffered no reason to reconsider those rulings. See McKesson III,

("[A ]lthough this language suggests that one party will receive protections within the

territory of the other party, it doesn't say that those protections can only be enforced in

the territory of the other party."); McKesson 2009, No. 82-220,

, at *2

("[I]t is difficult, if not impossible, to comprehend how a provision stating that

companies in the United States and Iran must have access to the courts of the other

country 'both in defense and pursuit of their rights' requires McKesson to file its suit in

Iran, much less how it requires it 'unambiguous[ly]. '" (emphasis in original)).

2Although the Court of Appeals held in McKesson V that, contrary to its previous rulings, McKesson does not have a Treaty cause of action in this Court under U.S. law, the Court of Appeals did not consider whether McKesson had a Treaty cause of action under Iranian law. See McKesson V,

.

7 Iran further asserts that under Iranian law, the Treaty cause of action for

expropriation is exclusive and supersedes all other possible Iranian law causes of action.

See Iran's Mem. at 14-15. Again, Iran is attempting to resuscitate an argument that has

already been rejected by this Court. See McKesson 2009, No. 82-220,

, at *2-3. In fact, Iran acknowledges as much, stating that "Iran disagrees with

this ruling" and pointing to a new expert opinion to "buttress" its argument. Iran's Mem.

at 14. The expert opinion, of course, does nothing to change the fact that this issue is

closed. Simply put, Iran is not entitled to relitigate the law of the case just because it has

found another expert to support its position. Regardless, even if the Treaty were, as

Iran's expert asserts, the "most appropriate" source of relief under Iranian law, the Court

is convinced by McKesson's expert that there is "no provision under Iranian law that

would strip a group of people of their general rights under various statutory provisions

simply because they receive specific protection under a treaty." 2d Supp. Legal Op. of

Mahmoud Katirai [Dkt. #929-1] ("Katirai 2d Supp. Op.") at 3; see also McKesson 2009,

No. 82-220,

, at *2 (noting that Iran has not offered support for its

preemption argument).

Aside from rearguing that McKesson's Treaty claim must be brought in Iran and is

the exclusive remedy, Iran has offered no defense to this cause of action. This comes as

no surprise, however, as the prior findings of the Court establish that McKesson's

dividends and investment were taken without compensation and that Iran caused the cut-

off of dividends and repudiation of McKesson's shareholder rights, in violation of the

8 Treaty. See McKesson 1997, No. 82-220,

, at * 14 ("Because the record

is clear that Iran has indeed failed to compensate McKesson, Iran has violated the Treaty

of Amity, and is liable for its violation in this Court."); id. at *12 ("[T]here is no question

in the Court's mind that interference with McKesson's shareholder rights ripened into

expropriation [by April 1982]."); see also McKesson 2007,

(affirming Judge Flannery's interpretation of the Treaty of Amity). In short, Iran is liable

under the Treaty of Amity for the uncompensated expropriation of McKesson's dividends

and interest in Pak.

Accordingly, with all elements of McKesson's Treaty cause of action already

established, the Court reaffirms Judge Flannery's award of damages under the Treaty and

hereby reinstates his award. 3 See McKesson 2000,

(quoting Treaty

of Amity, art. IV, para. 2). That award of$20,071,159.14 was the equivalent to the full 4 value of the property expropriated plus simple interest, through May 26, 2000.

.

The assessment of interest from May 27,2000, to the present day is discussed in Part V,

infra.

3 This result is consistent with customary international law, which continues to provide McKesson with a cause of action. See McKesson 2009, No. 82-220,

, at *3-4; see also McKesson 2000,

("Customary international law similarly provides that compensation for expropriated property of a foreign national must be 'just. "').

4 Specifically, Judge Flannery awarded $383,732.78 for the 1981 dividend plus $649,370.48 in interest; $341,983.96 for the 1982 dividend plus $538,245.34 in interest; and $6,893,488.55 for the expropriated equity plus $11,264,338.03 in interest, for a total compensatory award of $20,071,159.14. McKesson 2000,

.

9 II. Civil Responsibility ActS

McKesson alleges that Iran has violated Article 1 of the Civil Responsibility Act

of Iran, which states:

Any person who without any legal authority intentionally or as the result of carelessness inflicts any harm on the life, health, property, freedom, dignity, commercial reputation or any other right created for people, that entails financial or intangible damage, shall be responsible for the damages resulted from hislher act.

Katirai Op. at 6. To establish a claim under the Civil Responsibility Act, a party must

prove three elements: (1) damage, (2) fault, and (3) causation. Id. at 7. Based on prior

findings of fact and conclusions of law in this case, it is clear that these elements have

been readily established.

First, financial damage, such as loss of property or loss of profits, is recognized as

damage under the Civil Responsibility Act. Id. In McKesson 1997, Judge Flannery held

that McKesson had suffered compensable damages consisting of unpaid dividends that

Pak wrongfully withheld in 1981 and 1982 and the loss of its equity interest in Pak as of

April 1982. McKesson 1997, No. 82-220,

, at * 12. As described above,

the Court entered judgment for McKesson based on those damages and also held that

McKesson was damaged by the nearly twenty-year delay in compensation, awarding

simple interest. McKesson 2000,

.

5Although McKesson is entitled to receive full compensation in the form of damages and prejudgment interest under the Treaty, the Court will address the three Iranian statutory causes of action in an effort to prevent yet another lengthy remand, should our Circuit Court reverse this Court on the Treaty claim.

10 Second, fault under the Civil Responsibility Act includes both intentional conduct

and negligence. Katirai Gp. at 7. Again, prior rulings of the Court have established fault

in this case on the part ofIran, as "Pak Dairy's board and its government shareholders

forced the dairy to disregard its commercial mission and its duties to McKesson as a

shareholder." McKesson 11,

; see also McKesson 1997, No. 82-220,

at *11 (citing the Iran-United States Claims Tribunal's finding that the

"serious infringement" of McKesson's rights as a shareholder "can be attributed beyond

doubt" to Iran); id. at *7 ("Iran is responsible for the acts of its codefendants .... "). In so

doing, Iran violated a number of legal duties to McKesson under Pak's Articles of

Association, the Treaty, and Iranian statutes. See Katirai Gp. at 8-20. Thus, contrary to

Iran's assertions, it cannot rely on Article 11 to avoid liability under the Civil

Responsibility Act for acting "in accordance with the law ... to safeguard social

interests." Katirai 2d Supp. Gp. at 6-7. Rather, as has been found by both the Iran-

United States Claims Tribunal and this Court, the decisions to cut off dividend payments

to McKesson and squeeze out McKesson by the government-controlled majority

shareholders were entirely commercial in nature and thus were not undertaken pursuant

to any legal authority to safeguard any social interest. See McKesson 1997, No. 82-220,

at * 11 (citing the Iran-United States Claims Tribunal decision);

at

* 10 n.17 ("[T]his Court has already determined that the acts at issue here are commercial

in nature."); McKesson 2009, No. 82-220,

, at *5 (finding that the act

of state doctrine did not apply).

11 Finally, the Civil Responsibility Act requires a causal relationship between the

defendant's fault and the plaintiffs damage. See Katirai Op. at 13. There can be no

doubt that the actions ofPak's board, which are attributable to Iran, caused "the more or

less irreversible deprivation" of McKesson's property. McKesson 1997, No. 82-220,

, at *12. Iran's argument that "McKesson caused itself damage" by

withdrawing its representatives from the board in October 1981 and refusing to meet in

Vienna for settlement negotiations, see Iran's Mem. at 28, has already been rejected by

this Court. See McKesson 1997, No. 82-220,

, at * 11 (finding

withdrawal of representatives irrelevant "given the extent to which McKesson's

shareholder rights had been interfered with" and the refusal to negotiate

"inconsequential"). With all of the elements thus established, the Court finds that Iran is

liable under the Civil Responsibility Act.

Article 3 of the Civil Responsibility Act describes the scope of damages that may

be recovered because of injury to property or other rights: "The court will fix the amount

of the loss and the method and manner of the compensation with due regard to the

circumstances and conditions surrounding the case." Katirai Op. at 23. As explained by

McKesson's expert, "the Act contemplates a full recovery of damages suffered because

of the wrongful acts."

Therefore, the Court has the full authority under this Act to

award the fair market value of McKesson's interest in Pak, i.e., the unpaid dividends

from 1981 and 1982 and its equity investment at the time of the taking. See id.; Katirai

12 2d Supp. Op. at 10-11. Accordingly, under the Civil Responsibility Act, McKesson is

entitled to a damages award equivalent to the Court's 2000 ruling, through May 26, 2000.

III. Civil Code

Article 308 of the Civil Code ofIran provides relief for the illegal conversion of

property, which "consists of taking over the right of another by force." See Katirai Op. at

14. To establish a claim of conversion, a plaintiff must prove four elements: (1) a taking

of another's property or rights, (2) intent to perform the wrongful act, (3) causation, and

(4) damages. See

McKesson, once again, has easily established each of these

elements. First, Pak and its government shareholders and board members took away

McKesson's shareholder rights. See McKesson 1997, No. 82-220,

, at

* 12. Second, depriving McKesson of its shareholder rights, including dividends,

"appears to have been done with the object of discriminating against [McKesson]" and

"constituted a serious infringement of [McKesson's] right to enjoy the fruits of its

holding in Pak Dairy." Id. at *2, * 11 (quoting the Iran-United States Tribunal decision).

Iran again attempts to avoid liability by arguing-again, to no avail-that it was acting

pursuant to legal authority in refusing to pay McKesson in any currency. Third, there can

be no dispute that the actions ofPak Dairy's board, which are attributable to Iran, were

the cause of McKesson's injury. Finally, as discussed above, McKesson's damages have

been established.

The Civil Code provides that one who has destroyed another's property must

replace it with its equivalent or compensate the owner for any injury. Katirai Op. at 21-

13 22 (citing Civil Code Articles 301-04, 328, 331). To that end, Iran's main response to

McKesson's claim under the Civil Code is that if McKesson were to prevail, it would

only be entitled to return of the actual shares, and not their value. See Iran's Mem. at 29.

This argument, unfortunately, ignores the fact that this Court has already concluded that

return of the shares is not a meaningful remedy in this case. See McKesson 1997, No. 82-

220,

, at *12 n.22; see also Katirai 2d Supp. Op. at 12 ("Because the

Court's prior findings establish an irreversible interference with McKesson's property

rights ... McKesson's loss cannot be remedied simply by returning McKesson's

shares."). Instead, in this case, McKesson must be compensated by the value of its

interest in Pak as well as the value of the actual or expected dividends of such interest.

See Katirai Op. at 25. Accordingly, under the Civil Code, McKesson is also entitled to a

damages award consistent with the Court's 2000 ruling, through May 26, 2000.

IV. Commercial Code

Finally, McKesson asserts a cause of action under the Commercial Code of Iran.

Iran in turn does not dispute that McKesson has a remedy under the Commercial Code, to

the extent that McKesson seeks damages other than for a taking. 6 See Iran's Mem. at 16-

17. More specifically, Article 90 of the Commercial Code, as amended on March 15,

1969, requires that at least ten percent of the net profit of ajoint stock company be

distributed among its shareholders as a dividend. Katirai Op. at 9. Any dividend

6 This Court has already rejected Iran's arguments that the Commercial Code precludes other Iranian law causes of action and that the Iranian government cannot be sued under the Commercial Code. See McKesson 2009, No. 82-220,

, at *2 n.4.

14 declared by the company must be distributed to all the company's shareholders within a

certain time frame.

Accordingly, Pak's repudiation of the rights of McKesson, the

minority shareholder, by paying dividends to Iranian shareholders but not to McKesson,

violated Pak' s obligations under the Commercial Code. See id. at 9-10, 17. As it has

already been found that Iran was directly responsible for the actions that squeezed

McKesson out of its investment and cut off its dividend payments, see McKesson 1997,

No. 82-220,

, at *12, Iran is liable to McKesson under the Commercial

Code.

Curiously, although Iran's expert agrees that McKesson would have a cause of

action under the Commercial Code for "violation of commercial law and articles of

association," he contends that McKesson does not assert such a cause of action. Sanaei

Op. at 7. That is simply incorrect. As stated above, minority shareholder oppression is

part of McKesson's claims, as is breach of the obligation to pay declared dividends

within the time proscribed by law. Iran again attempts to avoid liability by characterizing

McKesson's non-receipt of dividends as the result of a sovereign decision to control

capital flight and adherence to a come to the company requirement. See Iran's Mem. 18-

25. Those arguments remain untenable for the same reasons as stated above. Therefore,

McKesson is also entitled to judgment under the Commercial Code of Iran.

Iran argues that McKesson's remedy under the Commercial Code is only for

recovery of the value of the dividends and not for the fair market value of its entire

investment. See Iran's Mem. at 25-26. As McKesson's expert explains, however, there

15 is "no basis under Iranian law or in logic" for limiting the remedies available under the

Commercial Code to just the value of the dividends. Katirai Op. at 27. Rather, "[t]he

rule of lazarar [no harm] ... entitles a court to stop ongoing oppression, to extirpate the

source of oppression and to provide a remedy for an Iranian joint stock company's

repudiation of the rights of one of its shareholders.,,7 Id. at 28. Considering that

McKesson was deprived of receiving dividend payments, shareholder communications,

and the benefit of other shareholder rights, the Court finds that the extreme nature of the

minority oppression in this case entitles McKesson to damages equal to the full value of

its equity investment in addition to the unpaid dividends. Therefore, under the

Commercial Code, as with the other Iranian statutory causes of action, McKesson is

entitled to a damages award consistent with the Court's 2000 ruling, through May 26,

2000.

V. Prejudgment Interest

As the Court has already recognized, customary international law and the Treaty

of Amity which incorporates it provide for prejudgment interest. See McKesson 2000,

(quoting Restatement (Third) of Foreign Relations Law § 712).

Furthermore, "Iranian law has adopted the principles of customary international law

concerning the payment of interest as a component of full compensation for the

7 The rule of lazarar, a principle of Islamic law, provides that the exercise of legal rights cannot be a means of causing harm to another. See Katirai Op. at 11. This legal principle applies when enacted laws are not complete or explicit in achieving the goal of full compensation to a party that was harmed. See Katirai 2d Supp. Op. at 9-10.

16 expropriation ofa foreign investment in Iran." Katirai 2d Supp. Op. at 13; see also id. at

14-16 (discussing how Articles 515 and 520 of the Civil Procedure Act of 2000, Article

320 of the Civil Code, and the Civil Responsibility Act all provide for "delay damages").

It is abundantly clear that under all four Iranian law causes of action asserted in this case,

prejudgment interest or damages for delay of payment are necessary to fully compensate

McKesson for its injury. As I previously stated, "it is hard to imagine ... that less

evidence has ever delayed the awarding of so much, to one so deserving, for so long!"

McKesson 2007,

.

Judge Flannery's 2000 award of pre-judgment interest, which was based upon

customary international law and the Treaty of Amity, calculated simple interest at a rate

of nine percent through May 26,2000, the date of that opinion. See McKesson 2000,

. McKesson filed a motion to reconsider, seeking compound interest,

which the Court denied. See McKesson 2000,

. On appeal, our

Circuit held that, although the Court had incorrectly found that customary international

law required simple interest, the Court had nonetheless properly exercised its discretion

in applying simple interest. See McKesson 111,

. As that award has

already been appealed and affirmed, this Court declines to exercise its discretion to

modify Judge Flannery's award of simple interest through May 26, 2000.

Determining the interest from May 27,2000, until the present, however, is an

entirely different matter. Since that time, over a decade ago, Iran has successfully

avoided payment of any damages by invoking a come to the company defense that was

17 entirely devoid of factual support but nonetheless managed to sidetrack the final

resolution of this litigation for quite a few years. Under Iranian law, this Court is not

constrained to award simple interest, and Iran does not argue to the contrary. See Katirai

Op. at 39. While permitting compound interest, however, Iranian law does not provide

guidance on when to award it. Federal common law, in tum, awards prejudgment interest

"to compensate for the loss of use of money due as damages from the time the claim

accrues until judgment is entered, thereby achieving full compensation for the injury

those damages are intended to redress." West Virginia v. United States,

,

310 n.2 (1987). Prejudgment interest at a compound rate is appropriate under federal law

where simple interest is insufficient to make plaintiffs whole. See, e.g., Am. Nat'l Fire

Ins. Co. v. Yellow Freight Sys.,

,938 n.ll (7th Cir. 2003); Saulpaugh v.

Monroe Cmty. Hasp.,

, 145 (2d Cir. 1993). Such an approach is entirely

consistent with the Iranian law principle of awarding the victim "full compensation." See

Katirai Op. at 20; see also Expert Op. of Judge Stephen M. Schwebel [Dkt. #929-2] at 4

(stating that under the Treaty and customary international law, compound interest is an

appropriate and necessary component of damages in this case).

It is apparent that at this point in time, twenty-eight years after this litigation was

commenced and over a decade since Judge Flannery's initial award, the disparity

between simple and compound interest has grown dramatically. To award McKesson full

compensation, therefore, it is necessary to award compound interest from May 27, 2000,

until the present day. The Court previously found, in accordance with our Circuit's law,

18 that the average prime rate was an appropriate rate under federal law. See McKesson

2000,

. Since May 27,2000, the average prime rate is 7.77%.

Accordingly, the Court shall assess 7.77% interest, compounded annually from May 27,

2000, until November 19,2010, on $20,071,159.14, which is the total value of

McKesson's equity interest and unpaid dividends from 1981 and 1982 plus prejudgment

interest through May 26,2000. Compound interest during that time period totals

$23,909,046.44. Therefore, the Court will now enter final judgment for McKesson as a

matter ofIranian law and award McKesson $43,980,205.58 in total damages and

prejudgment interest. I will leave for another day in the near future, however, the amount

of additional legal fees and expenses, if any, Iran owes McKesson's counsel.

CONCLUSION

For all of the above reasons, Iran is liable under the Treaty of Amity as a matter of

Iranian law, as well as the Civil Responsibility Act of Iran, the Civil Code of Iran, and the

Commercial Code of Iran. Accordingly, the Court enters judgment in favor of McKesson

and awards $43,980,205.58 in damages and interest. f

~ United States District Judge

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