O'Neill v. Sears, Roebuck and Co.

Decision Date31 July 2000
Docket NumberNo. Civ.A. 97CV3767.,Civ.A. 97CV3767.
Citation108 F.Supp.2d 443
CourtU.S. District Court — Eastern District of Pennsylvania

Page 443

108 F.Supp.2d 443
Richard P. O'NEILL
No. Civ.A. 97CV3767.
United States District Court, E.D. Pennsylvania.
July 31, 2000.

George P. Wood, Stewart Wood & Branca, Norristown, PA, Carmen R. Matos, Stewart, Wood and Branca, Norristown, PA, for Richard P. O'Neill.

Craig S. Hudson, Marshall, Dennehey, Warner, Coleman and Goggin, Philadelphia, PA, Colleen Bannon, Marshall, Dennehey, Warner, Coleman & Goggin, Philadelphia, PA, Thomas C. De Lorenzo, Marshall, Dennehey, Warner, Coleman & Goggin, Philadelphia, PA, for Sears.


HART, United States Magistrate Judge.

On January 25, 2000, after a five day trial, the jury returned a verdict for the plaintiff in this age discrimination suit. The jury awarded $106,736 in backpay, $130,596 in front pay, and $175,000 in compensatory damages provided for by the Pennsylvania Human Relations Act, ("PHRA"). In addition, the jury found the defendant's violation of the Age Discrimination in Employment Act, "ADEA," willful. Therefore, the court doubled the award for backpay, resulting in a total award of $519,068. The Plaintiff has filed a Motion to Mold the Verdict to include

Page 444

prejudgment and post-judgment interest and damages resulting from the tax consequences of receiving the economic damages in a lump sum, rather than over the number of work years plaintiff would have worked, but for his premature termination.1 For the reasons that follow, the plaintiff's Motion will be granted in part and denied in part.

I. Prejudgment Interest

"The Third Circuit has stated that there is `a strong presumption in favor of awarding prejudgment interest, except where the award would result in unusual inequities.'" Shovlin v. Timemed Labeling Systems, Inc., No. 95-4808, 1997 WL 102523 *1 (E.D.Pa., Feb.28, 1997) (quoting Booker v. Taylor Milk Co., Inc., 64 F.3d 860, 868 (3d Cir.1995)). The plaintiff seeks prejudgment interest on the backpay portion of the award, only. The defendant argues that an award of prejudgment interest would be inequitable because the plaintiff received an award of liquidated damages and an award of compensatory damages. (Defendant's Response, at 2). The Third Circuit's decision in Starceski v. Westinghouse Electric Corp., 54 F.3d 1089 (3d Cir.1995), directly addressed the relationship between liquidated damages and prejudgment interest and provides guidance in assessing the propriety of awarding prejudgment interest when an award of compensatory damages was made.

In Starceski, the Third Circuit, relying on the Supreme Court's decision in TransWorld Airlines v. Thurston, 469 U.S. 111, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985), concluded that the purposes of liquidated damages and prejudgment interest did not overlap. Therefore, an award of prejudgment interest was appropriate in an ADEA case when liquidated damages had previously been awarded.

We think the Supreme Court's decision in Thurston, 469 U.S. at 125, 105 S.Ct. at 623-24, guides us in answering [the] question [whether pre-judgment interest may be awarded along with liquidated damages]. There it stated that liquidated damages are punitive in nature and designed to deter willful conduct.... We have also recognized that the purpose of an award of prejudgment interest is to reimburse the claimant for the loss of the use of its investment or its funds from the time of the loss until judgment is entered. We are unable to reconcile Thurston's statement that liquidated damages are punitive with a denial of pre-judgment interest designed to compensate for loss of the time value of money.

Starceski, at 1101-02 (internal citations omitted).

Hence the court found that the purposes of the two awards were different and concluded that an award of prejudgment interest was appropriate when an award of liquidated damages had been made.

If awards of pre-judgment interest are compensatory, and liquidated damages are punitive, a concomitant grant of both is appropriate because pre-judgment interest serves the statutory goal of making [the Plaintiff] whole, i.e., it compensates him for the discriminatory wrong that he has suffered, while liquidated damages would punish [the Defendant] for its willful violation of the ADEA.

Id., at 1101. See also, Shovlin v. Timemed Labeling Systems, Inc., No. 95-4808, 1997 WL 102523 *2 (E.D.Pa. Feb.28, 1997) ("In Starceski, the Third Circuit made clear that in an ADEA case the district court may award prejudgment interest to back pay loss even though the claimant was awarded liquidated damages.").

Applying this analysis to a concomitant award of prejudgment interest and compensatory damages pursuant to the PHRA brings this court to the same result. As this court instructed the jury, "[c]ompensatory damages include damages for emotional pain, embarrassment, suffering,

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humiliation, inconvenience, mental anguish and other what we call non-monetary or non-pecuniary losses." (N.T. 1/24/2000, 111). Since compensatory damages pursuant to the PHRA refer specifically to non-economic losses, and pre-judgment interest is an economic award to compensate the plaintiff for the loss of the time value of money, a concomitant award is not double compensation for the same loss. Furthermore, the award of both is consistent with the "statutory goal of making [the plaintiff] whole." Starceski, at 1101. Therefore, the court will award prejudgment interest.

The plaintiff and defendant do not agree on the interest rate, at which the prejudgment interest should be calculated. The plaintiff proposes that this court utilize the Internal Revenue Service's rate of interest for the time period in issue. The defendant argues that the court be guided by the post-judgment interest statute, 28 U.S.C. § 1961.

"The decision to award prejudgment interest and the amount of interest awarded are within the trial court's discretion." Kraemer v. Franklin and Marshall College, 941 F.Supp. 479, 487 (E.D.Pa.1996) (citing Berndt v. Kaiser Aluminum & Chem. Sales, Inc., 629 F.Supp. 768, 770 (E.D.Pa.1985), aff'd, 789 F.2d 253 (3d Cir.1986)). Although both bases for calculation have support in our circuit, see Kraemer, Taylor v. Central Pennsylvania Drug and Alcohol Servs. Corp., 890 F.Supp. 360, 368-70 (M.D.Pa.1995); EEOC v. Reads, Inc., 759 F.Supp. 1150, 1162, n. 20 (E.D.Pa.1991) (awarding pre-judgment interest on back pay in Title VII case using IRS rates and compounded quarterly), but see, Shovlin, at *2 (citing Sun Ship, Inc. v. Matson Navigation, Co., 785 F.2d 59, 63 (3d Cir.1986)); Young v. Lukens Steel Co., 881 F.Supp. 962, 977-978 (E.D.Pa.1994) (awarding prejudgment interest on backpay utilizing the post-judgment interest statute), the court is convinced by the defendant's argument, utilizing the post-judgment interest statute, in light of the district court's reasoning in Davis v. Rutgers Casualty Insurance Co., 964 F.Supp. 560, 576 (D.N.J. 1997).

First, this rate is easy to determine from the federal post-judgment interest rate charts following 28 U.S.C. § 1961. Second, the 52-week Treasury bill rate has been found by Congress and by the marketplace to be a suitable approximation of the available return for a typical risk-free investment; such a benchmark is a reasonable approximation of a risk-free investment available throughout the period in which the employer retained the employee's wages and benefits.


The post-judgment interest statute, 28 U.S.C. § 1961(a), provides for the calculation as follows:

Such interest shall be calculated from the date of the entry of the judgement, at a rate equal to the coupon issue yield equivalent (as determined by the Secretary of the Treasury) of the average accepted auction price for the last auction of the fifty-two week United States Treasury bills settled immediately prior to the date of judgment.

28 U.S.C....

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    ...from a lump sum award of front or back pay. Courts within the circuit are divided on the issue. Compare O’Neill v. Sears, Roebuck & Co. 108 F.Supp.2d 443, 448 (E.D.Pa. 2000) (finding increased tax liability damages appropriate, and noting plaintiff supported her request with testimony from ......
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