George v. Foster

U.S. Court of Appeals for the Fifth Circuit October 29, 1997

Opinion

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

____________________________________

No. 96-31019 ____________________________________

BARBARA GEORGE and TASHA WILLIAMS,

Plaintiffs-Appellees- Cross-Appellants,

DALE FOSTER, et al.,

Defendants,

RACETRAC PETROLEUM, INC.,

Defendant-Appellant- Cross-Appellees.

_______________________________________________

Appeal from the United States District Court for the Western District of Louisiana (94-CV-1778) _______________________________________________ October 15, 1997

Before KING, DUHÉ, and WIENER, Circuit Judges.

PER CURIAM:*

In this hostile work environment sexual harassment case,

Defendant-Appellant-Cross-Appellee Racetrac Petroleum, Inc.

(Racetrac) appeals the district court’s denial of its motion for a

new trial on the grounds that (1) the evidence did not support the

* Pursuant to 5TH CIRCUIT RULE 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIRCUIT RULE 47.5.4. award of punitive damages to Plaintiffs-Appellees-Cross-Appellants

Barbara George and Tasha Williams (collectively, plaintiffs) and

(2) alternatively, the punitive damages award was excessive and

should have been remitted. Racetrac also asserts that the district

court erred in denying its motion to set aside the jury’s verdict

awarding mental anguish damages to plaintiff George. On cross-

appeal, plaintiffs seek to have the amount of compensatory damages

increased.

Having thoroughly reviewed the briefs and the record in this

case, we conclude that the district court did not abuse its

discretion in denying Racetrac’s motion to set aside the verdict

and motion for a new trial and remittitur, and we therefore affirm

the judgment in those respects. Additionally, we dismiss

plaintiffs’ cross-appeal because plaintiffs failed to make a motion

for a new trial in the district court. Finding that prejudgment

interest does not further the purpose of punitive damages, however,

we reverse the district court’s award of prejudgment interest on

plaintiffs’ punitive damages award.

We set forth our reasons for the reversal of the district

court’s assessment of prejudgment interest on plaintiffs’ punitive

damages award. We have established a two-step analysis for

determining whether prejudgment interest should be awarded under

federal statutes. Employing this analysis, the court must ask:

“[D]oes the federal act creating the cause of action preclude an

award of prejudgment interest, and if not, does an award of

2 prejudgment interest further the congressional policies of the

federal act.”1 If prejudgment interest can be awarded under this

test, the award of such interest is within the discretion of the

trial court.2 As Title VII is silent on the question of

prejudgment interest in general, the crucial question here is

whether an award of prejudgment interest on punitive damages would

advance the policy goals of § 1981a(b)(1) of the Civil Rights Act

of 1991 (the Act) by punishing an employer who discriminates “with

malice or with reckless indifference to the federally protected

rights” of an employee. Plaintiffs argue that prejudgment interest

would advance this punitive goal by (1) further punishing those who

violate the Act and (2) encouraging employers to settle meritorious

claims.

In West Virginia v. United States,3 the Supreme Court

explained the purpose of prejudgment interest: “Prejudgment

interest serves 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.”4 We have not specifically addressed the

1 Carpenters Dist. Council of New Orleans and Vicinity v. Dillard Dep’t Stores,

15 F.3d 1275, 1288

(5th Cir. 1994), cert. denied,

513 U.S. 1126

115 S. Ct. 933

130 L. Ed. 2d 879

(1995). 2 Id. 3

479 U.S. 305

107 S. Ct. 702

93 L. Ed. 2d 639

(1987). 4

Id.

at 310 n. 2,

107 S. Ct. at 706

n. 2.

3 issue of prejudgment interest on punitive damages under Title VII,

but we have held that awards that are penal in nature do not draw

interest.5 As we noted in Illinois Central Railroad Co. v. Texas

Eastern Transmission Corp.:

The rationale of the rule that penalties do not draw prejudgment interest is that a penalty does not reflect damages to the plaintiff but is assessed to encourage certain conduct on the part of the party penalized. Interest on a penalty does not further the purpose of making an injured party whole.6

Most other courts that have addressed the issue agree that

prejudgment interest is basically compensatory and generally should

not be granted on punitive damages.7 We adopt the view of these

5 Illinois Central R.R. Co. v. Texas E. Transmission Corp.,

551 F.2d 943, 944

(5th Cir. 1977) (citing Rodgers v. United States,

332 U.S. 371, 373

68 S. Ct. 5, 7

92 L. Ed. 3

(1947) and United States v. West Texas Cottonoil Co.,

155 F.2d 463, 466

(5th Cir. 1946)). 6

Id.

7 See United States v. Reul,

959 F.2d 1572, 1578

(Fed. Cir. 1992); Wickham Contracting Co. v. Local Union No. 3, Int’l Brotherhood of Elec. Workers, AFL-CIO,

955 F.2d 831, 834-35

(2d Cir. 1992), cert. denied,

506 U.S. 946

113 S. Ct. 394

121 L. Ed. 2d 302

(1992) (“prejudgment interest should not be awarded if the statutory obligation on which interest is sought is punitive in nature” or the “statute itself already provides for . . . punitive damages”) (citing Rodgers v. United States,

332 U.S. 371, 374-76

68 S. Ct. 5, 7

92 L. Ed. 3

(1947)); Fortino v. Quasar Co.,

950 F.2d 389, 397-98

(7th Cir. 1991) (prejudgment interest not available for punitive damages in age discrimination case); Emmel v. Coca-Cola Bottling Co. of Chicago, Inc.,

904 F. Supp. 723, 734

(N.D. Ill. 1995), aff’d,

95 F.3d 627

(7th Cir. 1996) (prejudgment interest not available for punitive damages in Title VII sexual harassment case); Nu-Life Constr. Corp. v. Board of Educ. of City of New York,

789 F. Supp. 103, 104

(E.D.N.Y. 1992); In re Marshall,

132 B.R. 904, 906

(C.D. Ill. 1991), aff’d,

970 F.2d 383

(7th Cir. 1992).

4 courts and hold that the district court erred in awarding

prejudgment interest on plaintiffs’ punitive damages award.

Accordingly, we reverse the district court’s award of

prejudgment interest on plaintiffs’ punitive damages award. We

dismiss plaintiffs’ cross-appeal, and in all other respects we

affirm the judgment of the district court. AFFIRMED in part;