Osterneck v. Ernst Whinney

• Decision Date: 21 February 1989
• Docket Number: No. 87-1201,87-1201
• Citation: 109 S.Ct. 987,489 U.S. 169,103 L.Ed.2d 146
• Parties: Myles OSTERNECK and Guy-Kenneth Osterneck, etc., Petitioners v. ERNST & WHINNEY
• Court: U.S. Supreme Court

489 U.S. 169

109 S.Ct. 987

103 L.Ed.2d 146

Myles OSTERNECK and Guy-Kenneth Osterneck, etc., Petitioners

v ERNST & WHINNEY.

No. 87-1201.

Argued Nov. 29, 1988.

Decided Feb. 21, 1989.

Syllabus

As part of the merger of a company that they owned with another company, petitioners exchanged stock in their company for stock in the other company. In approving the merger, petitioners allegedly relied on the other company's financial statements prepared by respondent accounting firm. Subsequently, petitioners concluded that certain of those statements misrepresented the company's financial condition. They then filed an action in Federal District Court against respondent and others, alleging violations of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and state common law. While returning a verdict against some of the defendants, the jury found in favor of respondent and another defendant. After judgment was entered, petitioners filed a timely motion for prejudgment interest. While that motion was still pending, petitioners filed a notice of appeal from the judgment in favor of respondent and the other defendant. Ultimately, the court granted the motion for prejudgment interest and ordered that the judgment be amended to include that interest. The Court of Appeals held that petitioners' motion for prejudgment interest was a motion to alter or amend the judgment under Federal Rule of Civil Procedure 59(e), which rendered the notice of appeal ineffective under Federal Rule of Appellate Procedure 4(a)(4), which provides that if a party files a timely motion under Rule 59(e) to alter or amend the judgment a notice of appeal filed before the disposition of that motion "shall have no effect." The court also rejected petitioners' contention that Thompson v. INS, 375 U.S. 384, 84 S.Ct. 397, 11 L.Ed.2d 404, required it to hear their appeal because they had relied on several actions of the District Court that indicated that the judgment was final and appealable notwithstanding the pending motion for prejudgment interest.

Held: Petitioners' motion for prejudgment interest constituted a Rule 59(e) motion and rendered ineffective under Rule 4(a)(4) their notice of appeal filed before a ruling on that motion. Pp. 173-179.

(a) Prejudgment interest is part of the compensation due a plaintiff. A postjudgment motion for discretionary prejudgment interest involves the kind of reconsideration of matters encompassed within the merits of a judgment to which Rule 59(e) was intended to apply. Pp. 174-176.

(b) To conclude that a postjudgment motion for discretionary prejudgment interest is a Rule 59(e) motion helps further the important goal of avoiding piecemeal appellate review of judgments. Moreover, by preventing appellate review before such a motion is resolved, that conclusion gives added assurance that an appellate court will have the benefit of the district court's plenary findings with regard to factual and legal issues subsumed in the decision to grant prejudgment interest. Pp.177-178 .

(c) On the record, the Court of Appeals correctly declined to apply the reasoning of Thompson, supra, to excuse petitioners' failure to file an effective notice of appeal. By its terms, Thompson applies only where a party has performed an act that, if properly done, would postpone the deadline for filing his appeal and has received specific assurance by a judicial officer that this act has been properly done. That is not the case here. Pp. 178-179.

825 F.2d 1521 (CA11 1987), affirmed.

KENNEDY, J., delivered the opinion for a unanimous Court.

Laurie Webb Daniel, Atlanta, Ga., for petitioners.

Gordon Lee Garrett, Jr., Atlanta, Ga., for respondent.

Justice KENNEDY delivered the opinion of the Court.

Federal Rule of Appellate Procedure 4(a)(4) provides that if any party files a timely motion "under Rule 59 [of the Federal Rules of Civil Procedure] to alter or amend the judgment," a notice of appeal filed before the disposition of that motion "shall have no effect." In this case, we decide whether a motion for discretionary prejudgment interest filed after the entry of judgment constitutes a Rule 59 motion to alter or amend the judgment and renders ineffective any notice of appeal filed before a ruling on that motion. If we decide the question in the affirmative, we are asked to decide whether this case nevertheless falls within the so-called "unique circumstances" exception to the timely appeal requirement announced in Thompson v. INS, 375 U.S. 384, 84 S.Ct. 397, 11 L.Ed.2d 404 (1964) (per curiam).

I

The history of this case is complex but can be stated in a summary way. In September 1969, the Cavalier Bag Com- pany merged into E.T. Barwick Industries, Inc. (Barwick Industries). The Osternecks, owners of Cavalier and petitioners here, approved the merger and exchanged their stock in Cavalier for stock in Barwick Industries. In approving the transaction, petitioners allegedly relied on financial statements of Barwick Industries prepared by Ernst & Whinney, an independent certified public accounting firm and the respondent here.

Sometime later, petitioners concluded that Barwick Industries' financial statements for two years preceding the merger misrepresented the company's actual financial condition. In 1975, petitioners filed this action alleging violations of §§ 10(b) and 20 of the Securities Exchange Act of 1934, ch. 404, 48 Stat. 891, 899, as amended, 15 U.S.C. §§ 78j(b), 78t (1982 ed. and Supp. IV), Rule 10b-5 thereunder, 17 CFR § 240.10b-5 (1975), and Georgia common law. Petitioners named as defendants, among others, Barwick Industries, respondent Ernst & Whinney, and certain directors and officers of Barwick Industries (E.T. Barwick, B.A. Talley, and M.E. Kellar).

After nearly 10 years of pretrial proceedings, the case finally went to trial in 1984. The jury returned a verdict against Barwick Industries, M.E. Kellar, and B.A. Talley in the amount of $2,632,234 in compensatory damages for violations of the federal securities laws and Georgia common law. The jury found in favor of E.T. Barwick and respondent Ernst & Whinney.

Immediately after the jury verdict was announced, petitioners moved orally for prejudgment interest on the damages assessed against Barwick Industries, M.E. Kellar, and B.A. Talley. The District Judge, not wishing to hear argument on petitioners' motion at that point, directed petitioners to submit their motion for prejudgment interest in writing within 10 days. He stated:

"The judgment will be entered on this particular verdict as soon as possible, then if prejudgment interest is granted it will be—the judgment can be amended." App. 5.

The judgment was filed and entered on the same day, January 30, 1985. Id., at 6-7. On February 11, 1985, petitioners, as directed, filed a written motion for prejudgment interest. Id., at 8-9.

During March 1985, the various parties filed notices of appeal and cross-appeal challenging the January 30 judgment. Of particular importance here, on March 1, 1985, while their motion for prejudgment interest was still pending, petitioners filed a notice of appeal from the January 30, 1985, judgment in favor of E.T. Barwick and respondent Ernst & Whinney. Id., at 34.

The District Court did not rule on petitioners' motion for prejudgment interest until July 1, 1985. On that date, the court entered an order stating that the final judgment shall be "AMENDED" to reflect an "additional award of [$945,512.85 in] prejudgment interest on the federal securities claim." Id., at 44. On July 9, 1985, the District Court filed a document captioned "AMENDED JUDGMENT," stating that the January 30, 1985, judgment "is hereby amended by adding thereto . . . [the] award of prejudgment interest," but shall "remain the same in every other respect." Id., at 45. After the amended judgment had been entered, petitioners filed one additional notice of appeal on July 31, 1985, captioned as a cross-appeal against M.E. Kellar, B.A. Talley, E.T. Barwick, and Barwick Industries. Id., at 46-47. But, and this is the vital fact for purposes of this case, the notice failed to include respondent Ernst & Whinney as a party to the appeal.

The Court of Appeals dismissed petitioners' appeal as to Ernst & Whinney for lack of jurisdiction, finding that no effective notice had been filed. Osterneck v. E.T. Barwick Industries, Inc., 825 F.2d 1521 (CA11 1987). The Court of Appeals concluded that petitioners' February 11, 1985, mo- tion for prejudgment interest was a motion to alter or amend the judgment under Rule 59(e), which rendered ineffective under Federal Rule of Appellate Procedure 4(a)(4) the March 1, 1985, notice of appeal filed before the disposition of the prejudgment interest motion. 825 F.2d, at 1525-1527.¹ The Court of Appeals rejected petitioners' contention, based on our decision in White v. New Hampshire Dept. of Employment Security, 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982), that their motion for prejudgment interest was not a motion to alter or amend the judgment under Rule 59(e) because it merely addressed an issue collateral to the main cause of action. 825 F.2d, at 1526. The Court of Appeals also rejected petitioners' contention that our decision in Thompson v. INS, 375 U.S. 384, 84 S.Ct. 397, 11 L.Ed.2d 404 (1964) (per curiam ), required that it hear their appeal because they had relied upon several actions of the District Court which indicated that the January 30, 1985, judgment was final and appealable notwithstanding the pending motion for prejudgment interest. 825 F.2d, at 1527-1528.

Petitioners sought review here, and we granted certiorari, 486 U.S. 1042, 108 S.Ct. 2032, 100 L.Ed.2d 618 (1988), to resolve a conflict in the Courts of Appeals over whether a motion for prejudgment interest filed after the entry of judgment constitutes a Rule 59(e) motion to alter or amend the judgment. Cf. Jenkins v. Whittaker Corp., 785 F.2d 720 (CA9 1986). We also agreed to consider, if...