IN RE PAGO PAGO AIRCRASH OF JANUARY 30, 1974

• Citation: 525 F. Supp. 1007
• Decision Date: 09 October 1981
• Docket Number: MDL No. 176.
• Parties: In re PAGO PAGO AIRCRASH OF JANUARY 30, 1974.
• Court: U.S. District Court — Central District of California

525 F. Supp. 1007

In re PAGO PAGO AIRCRASH OF JANUARY 30, 1974.

MDL No. 176.

United States District Court, C. D. California.

October 9, 1981.

Belli & Choulos, San Francisco, Cal., Paul F. Cronin, Honolulu, Hawaii, Ferguson, Ferguson & Newburn, La Jolla, Cal., Kreindler & Kreindler, New York City, Bernal L. Lewis, Woodside, Cal., Morgan, Wenzel & McNicholas, Los Angeles, Cal., Gerald C. Sterns, San Francisco, Cal., Butler, Jefferson & Dan, Los Angeles, Cal., Demanes & Bailey, Burlingame, Cal., Magana, Cathcart, McCarthy & Pierry, Los Angeles, Cal., Simons & Schlesinger, Hollywood, Fla., Hagenbaugh & Murphy, Los Angeles, Cal., for plaintiffs.

Tucker & Coddington, O'Melveny & Myers, Los Angeles, Cal., Dept. of Justice, Civ. Div., Aviation Unit, Tort Claims Section, Washington, D. C., Johnsen, Manfredi & Thorpe, Overton, Lyman & Prince, Los Angeles, Cal., for defendants.

MEMORANDUM ORDER RE: PREJUDGMENT INTEREST

WM. MATTHEW BYRNE, Jr., District Judge.

I. INTRODUCTION

These consolidated wrongful death and personal injury cases arise out of the crash of a Pan American World Airways, Inc. ("Pan Am") Boeing 707 in Pago Pago, American Samoa, on January 30, 1974, in which ninety-seven persons died and the four survivors were injured. After four years of multi-district litigation proceedings, international discovery, motions practice, myriad hearings before two judges and a special master, and over forty days of pre-trial conference, all cases were jointly tried before the Court and a jury on the bifurcated issue of the liability of the several defendants. The "liability" trial lasted 108 trial days and concluded in the jury finding Pan Am liable for the crash, and the jury and Court finding all other defendants not liable. One of a series of special interrogatories put to the jury asked whether Pan Am was guilty of "wilful misconduct," as that term had been defined in the jury instructions. The jury answered that interrogatory in the affirmative.

Although some of the cases were settled or dismissed, twenty cases proceeded to separate trials before juries on the bifurcated issue of damages. These damage trials were tried under the laws of five different states. Final judgments in all these cases have been filed and entered.

This Court has ruled on the issue of whether awards of prejudgment interest would be included in the judgments in the "damage" cases and, if so, on what portions of the judgments such awards would be made. This order is now filed for the dual purposes of explaining more fully this Court's ruling on interest and setting forth the factual findings on which the specific prejudgment interest awards in each case are based.

II. CHOICE OF LAW

Plaintiffs have urged this Court to find that federal common law applies to these cases and authorizes an award of prejudgment interest on the entire amount of the judgment from the date of the crash in each case. Plaintiffs rely primarily upon City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 93 S.Ct. 1854, 36 L.Ed.2d 547 (1973), in arguing that federal law controls, and upon analogies to cases decided under the Jones Act, the Interstate Commerce Act, the securities laws, or under admiralty law, in describing what the controlling federal common law might be. When the issue of what law applies has been raised previously, this Court has consistently ruled that federal common law would not be applied, and it will not now be applied to plaintiffs' claims for prejudgment interest.¹

In diversity cases, state law governs the award of prejudgment interest. See United California Bank v. THC Financial Corp., 557 F.2d 1351, 1360-61 (9th Cir. 1977); d'Hedouville v. Pioneer Hotel Co., 552 F.2d 886, 895 (9th Cir. 1977); Michael-Regan Co. v. Lindell, 527 F.2d 653, 659 (9th Cir. 1975); Hunt Foods, Inc. v. Phillips, 248 F.2d 23, 26 (9th Cir. 1957). There is, however, a question as to which state's law should govern this issue. This Court, sitting in diversity, must apply the law of the forum state, including its choice of law principles, to resolve that question. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). California choice of law principles utilize a "governmental interest analysis." See Hurtado v. Superior Court, 11 Cal.3d 574, 114 Cal.Rptr. 106, 522 P.2d 666 (1974); Reich v. Purcell, 67 Cal.2d 551, 63 Cal.Rptr. 31, 432 P.2d 727 (1967). Accordingly, this approach must be applied by this Court to determine which state's law should control.

The interest of any particular jurisdiction in the application of its law on prejudgment interest turns upon the policy served by that law. For reasons elaborated upon below, the Court concludes that the purpose of awarding prejudgment interest is to compensate a plaintiff fully for the injury he or she has suffered.

The parties have not so much pointed to actual conflicts among the policies underlying the question of whether prejudgment interest should be awarded in these cases as to differences among the definitions of the states concerned herein of when an award of prejudgment interest is necessary for an injured person to be considered fully compensated by his or her award. That is, the several states involved allow prejudgment interest on different portions of different kinds of awards, which run from different dates, at different rates of interest. Following the analysis set forth in Hurtado and Reich, this Court concludes that the jurisdiction with the greatest interest in defining when an injured person has been fully compensated is the jurisdiction in which the person is domiciled. Furthermore, in these cases, the Court has applied the general damage law of the jurisdiction in which the decedent or surviving passenger was domiciled at the time of the accident. It is most consistent with that ruling that this same law control the determination of prejudgment interest in each of these cases.

Because no party has presented or urged the application of foreign law in those cases in which the decedent or surviving passenger was domiciled in a foreign country, the Court has applied, and with regard to prejudgment interest will apply as well, the law of California in such cases. The law of California, therefore, will be applied in the majority of cases.

III. CALIFORNIA LAW

Three provisions of the California Civil Code authorize an award of prejudgment interest: sections 3287(a) & (b) and 3288. Grouped under the general heading, "Interest as Damages," those sections read, in pertinent part, as follows:

§ 3287. Interest on damages; right to recover; time from which interest runs

(a) Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or the act of the creditor from paying the debt....

(b) Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.

§ 3288. Interest on damages; noncontractual obligation; discretion of jury

IN ACTIONS OTHER CONTRACT.

In an action for the breach of an obligation not arising from contract, and in every case of oppression, fraud, or malice, interest may be given, in the discretion of the jury.

Cal.Civ. Code §§ 3287 and 3288 (West 1970). The law of California with regard to the applicability of each of the above sections, and the standards to be applied under each, is far from clear. See Parvin v. Davis Oil Co., 655 F.2d 901, 904-905 (9th Cir. 1979), cert. denied, 445 U.S. 965, 100 S.Ct. 1654, 64 L.Ed.2d 241 (1980). The Court relies, in part, for its conclusions on the few cases that offer specific standards under each section, with particular reference to the most recent California Supreme Court opinion on the subject, Greater Westchester Homeowners Association v. City of Los Angeles, 26 Cal.3d 86, 160 Cal.Rptr. 733, 603 P.2d 1329 (1979), cert. denied, 446 U.S. 933, 100 S.Ct. 2149, 64 L.Ed.2d 786 (1980). Perhaps the most relevant analysis, however, may be derived from the policy underlying, and the structure of, the statutory scheme for prejudgment interest in the State.

A. The Appropriate Statute

1. Section 3287(a)

By its terms, section 3287(a) of the California Civil Code applies to all actions for damages, referring as it does to "every person who is entitled to recover damages ...." Defendant Pan Am contends that section 3287(a) applies only to actions sounding in contract, not those sounding in tort. Pan Am's argument is two-fold. First, it contends that because section 3287(a) is limited to persons entitled to recover damages "certain or capable of being made certain by calculation ...," it is limited in application to cases involving a contract providing for a liquidated damage sum or a method of calculating damages. Second, Pan Am argues that because section 3288 reads, "in actions other than contract," the two sections must be read exclusively. The Court rejects both of these arguments.

In Levy-Zentner Co. v. Southern Pacific Transportation Co., 74 Cal.App.3d 762, 142 Cal.Rptr. 1 (1977), the California Court of Appeal reversed a trial court ruling that prejudgment interest could not be awarded under section 3287(a) in a tort action for damage to real or personal property. 74 Cal.App.3d at 797-98, 142 Cal.Rptr. at 24. The court noted that "when sections 3287 and 3288 were adopted in 1872, the key distinguishing factor was not ... whether the cause of action arose in tort or contract, but rather whether the damages were readily ascertainable." Id. at 795, 142 Cal.Rptr. at 23. The court further noted that the legislature had...