* After examining the briefs and appellate record, t his panel has determined

unanimously that oral argument would not materiallyassist the determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1 (G). The cause therefore is ordered submitted without oral argument. 

## F I L E D United States Court of Appeals Tenth Circuit 

### February 23, 2006
Elisabeth A. Shumaker Clerk of Court PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

DONALD D. REED, Plaintiff - Appellee,

vs. NORMAN Y. MINETA, Secretary of the Department of Transportation, on behalf of the United States Department of Transportation, Defendant - Appellant. No. 05-1057

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO (D.C. No. 98-N-1298 (MJW))

Submitted on the briefs: * Blain D. Myhre and Theresa L. Corrada, Isaacson, Ro senbaum, P.C., Denver, Colorado, for Plaintiff - Appellee. William J. Leone, Acting United States Attorney, an d Martha A. Paluch, Assistant United States Attorney, Denver, Colorado, for Defen dant - Appellant.- 2 -

Before KELLY , HENRY , and McCONNELL , Circuit Judges.

KELLY , Circuit Judge.

Defendant-Appellant Federal Aviation Administration(FAA) appeals from the district court’s order granting prejudgment int erest to Plaintiff-Appellee Donald D. Reed on the back pay portion of his Title VII damage award. Our jurisdiction arises under 28 U.S.C. § 1291, and we reverse and remand for recalculation of prejudgment interest.

Background The parties are familiar with the facts in this cas e, and we need only repeat those pertinent to our discussion here. Mr. Reed w as terminated from his position as an air traffic controller with the FAA on July 2 8, 1995, when he failed to report to work on several Saturdays. After exhaust ing his administrative appeals, Mr. Reed filed suit in federal district court alleg ing, inter alia , that the FAA violated Title VII by failing to accommodate his re ligious beliefs and intentionally discriminating against him on the bas is of his religion. The jury returned a verdict for Mr. Reed on both claims. In an advisory capacity, the jury awarded him $248,356 in back pay, plus front pay an d compensatory damages. Although the advisory verdict contained a lump sum back pay award, trial1 These amounts actually total $248,357, not $248,35 6. This $1 difference

is, however, immaterial to our consideration of the issue presented here. - 3 - testimony from Mr. Reed’s economist established that Mr. Reed’s losses accrued from the date of his termination through July 2, 20 01, a period of approximately six years. According to his economist, Mr. Reed lo st wages of $248,356, consisting of following amounts: $17,342 in 1995; $ 11,184 in 1996; $0 in 1997 (due to Mr. Reed’s temporary reinstatement pending a decision from the Merit Systems Protection Board); $37,883 in 1998; $70,300 in 1999; $75,267 in 2000; and $36,381 in the first six months of 2001. 1 Aplt. App. at 117. The advisory jury awarded $248,356. The district court adopted the jury’s advisory award in its initial judgment entered on July 31, 2001. After judgment was entered, the FAA filed a renewedmotion for judgment as a matter of law (“JMOL”) and a motion to alter o r amend the judgment. Mr. Reed filed a motion pursuant to Fed. R. Civ. P. 60 seeking prejudgment interest. The district court denied the FAA’s motion for JMOL , but granted its motion to alter or amend the judgment thereby reducing Mr. Re ed’s front pay and compensatory damage awards. Finally, the district court denied Mr. Reed’s motion for prejudgment interest, holding that his r equest should have been raised in a Rule 59(e) motion. Final judgment was enteredon August 14, 2002. The FAA appealed from the denial of its JMOL motionand Mr. Reed cross-2 The exhibit provided as follows:
CALCULATIONS FOR PREJUDGMENT INTEREST YEAR AMOUNT INTEREST RATE INTEREST 7/28/95-96 $248,356.00 9% $22,352.04 7/28/96-97 $270,708.04 9% $24,363.72 7/28/97-98 $295,071.76 9% $26,556.46 - 4 - appealed from the denial of his motion for prejudgm ent interest. This court affirmed in part and reversed in part. Reed v. Min eta , 93 Fed. Appx. 195, 200 (10th Cir. 2004). Upholding the denial of JMOL, we reversed the district court’s decision to deny Mr. Reed’s motion for prejudgment interest without considering the merits of his request, finding that such a deci sion “amounts to a failure to exercise discretion which is an abuse of discretion .” Id. On remand, Mr. Reed renewed his motion for prejudgm ent interest on his back pay award. Aplt. App. at 103. Mr. Reed’s mot ion requested “an award of nine percent (9%) per annum, compounded annually (the statutory rate in Colorado) from July 28, 1995 (the date of [Mr.] Ree d’s discriminatory termination) through July 31, 2001 (the date judgme nt was entered) . . .”. Id. at 108. Attached as an exhibit to his motion, Mr. Ree d provided the district court with a table which calculated prejudgment interest on the entire amount of his back pay award, $248,356, starting as of the date o f his termination, July 28,
1995. 2 Mr. Reed’s method of calculation led to a reques t for $168,469.97 in7/28/98-99 $321,628.22 9% $28,946.54

7/28/99-00 $350,574.76 9% $31,551.73 7/28/00-01 $382,126.49 9% $34,391.38 7/28/01-7/31/01 $416,517.87 9% 37,486.61/365 days =$102.70/day x 3 days =$308.10 TOTAL $168,469.97 Aplt. App. at 109. - 5 - prejudgment interest. Opposing the motion, the FAAargued that: (1) the appropriate interest rate was 3.6 percent as provid ed in 28 U.S.C. § 1961; and (2) interest should not be calculated as if Mr. Reed su ffered the entire $248,356 loss of wages on July 28, 1995, but rather it should be calculated “periodically over the entire six-year period between [Mr. Reed’s] termination and the date of the judgment.” Aplt. App. at 113. The district court granted Mr. Reed’s motion and, e mploying the method of calculation provided by Mr. Reed, awarded prejudgme nt interest in the amount of $168,469.97. Id. at 128. This appeal followed.

Discussion On appeal, the FAA does not take issue with the dis trict court’s decision to grant Mr. Reed prejudgment interest or with its dec ision to use a nine percent rate of interest. Rather, the FAA argues that the distr ict court erred in calculating- 6 -

interest on Mr. Reed’s entire back pay award from the date of his termination. The FAA maintains that the district court should have calculated the interest in accordance with when Mr. Reed’s monetary injuries w ere actually incurred, i.e., incrementally as his wages would presumably have be en earned but unpaid from the date of his termination through entry of judgme nt. We review the district court’s award of prejudgmentinterest for an abuse of discretion. See United States v. Crescent Amusement Co. , 323 U.S. 173, 185 (1944); Caldwell v. Life Ins. Co. of N. Am. , 287 F.3d 1276, 1286 (10th Cir. 2002). Accordingly, we will not reverse the decisi on of the district court unless it made an “arbitrary, capricious, whimsical, or manif estly unreasonable judgment.” Schrier v. Univ. Of Colo. , 427 F.3d 1253, 1258 (10th Cir. 2005) (quotation omitted). The abuse of discretion standard include s review to determine that the district court did not commit an error of law by ap plying an erroneous legal standard. See Winnebago Tribe of Neb. v. Stovall , 341 F.3d 1202, 1205 (10th Cir. 2003). Our determination of the issue presented here is gu ided by reference to the purpose for granting prejudgment interest on back p ay awards. See Estate of Pitre v. Western Electric Co. , 975 F.2d 700, 704 (10th Cir. 1992) (“[T]he distri ct court’s exercise of discretion in awarding back paymust be ‘measured against the purposes which inform Title VII.’”). Under Title V II, prejudgment interest “is an- 7 -

element of complete compensation” in back pay award s. Loeffler v. Frank , 486 U.S. 549, 558 (1988) (internal citation and quotati ons omitted). That is, as Mr. Reed stresses, “prejudgment interest helps to make victims of discrimination whole and compensates them for the true cost of mon ey damages they incurred.” E.E.O.C. v. Wilson Metal Casket Co. , 24 F.3d 836, 842 (6th Cir. 1994); see also Thomas v. Texas Dep’t of Crim. Justice , 297 F.3d 361, 372 (5th Cir. 2002) (“Refusing to award prejudgment interest ignores th e time value of money and fails to make the plaintiff whole.”). As a general rule, district courts “should calculate interest on back pay and past damages bas ed on the date of the adverse employment action.” Thomas , 297 F.3d at 372 (holding that prejudgment interes t should start from the date employee would have rece ived her first pay check in the promoted position she was wrongfully denied). The purpose of making discrimination victims whole is limited, however, by recognition that prejudgment interest does not a ccrue until the victim actually sustains monetary injury. The Seventh Circuit’s op inion in Downes v. Volkswagen of America, Inc. , 41 F.3d 1132 (7th Cir 1994), an age discriminatio n case, is instructive. In Downes , an employee was informed of his impending wrongful termination in June of 1989. Id. at 1144. His termination did not actually take effect, however, until one year later , on July 1, 1990, and he thereafter received one year of severance pay from his employer. Id. As such,3 Mr. Reed’s brief suggests he was paid bi-weekly. See Aplee. Br. at 9. - 8 - the Downs court concluded that he did not actually suffer mo netary loss until his severance pay ended, two years after he was first “ injured.” Id. (quotation in original). And in turn, the Downs court reversed the trial court, which calculated interest from the date the employee was informed of his impending termination, and held that “the interest period should not [have ] start[ed] until the time of actual monetary injury , when [the] severance pay ceased.” Id. (emphasis added). Although the Downs court only addressed when the interest period shou ld start, its rationale applies here. The district co urt calculated prejudgment interest on the entire back pay award starting from the date of Mr. Reed’s termination, July 28, 1995. We recognize that Mr. Reed was inde ed injured on the date of his termination. He did not, however, actually suffer all $248,356 of monetary injury at that time. Rather, his monetary injuries were i ncrementally inflicted from the date of his termination through entry of judgment a s each pay period passed 3 and Mr. Reed went unpaid. Accordingly, prejudgment int erest should have been calculated to coincide therewith. For example, the component of prejudgment interest attributable to the $75,267 in wages lost during 2000 accrues from the date when each portion of that amount would have be en due and owing to Mr. Reed in 2000 had he not been the victim of unlawful discrimination. It does not accrue as of July 28, 1995.- 9 -

Mr. Reed argues that because the advisory jury awar ded a lump sum of back pay and the government did not seek a special interrogatory breaking the award down period by period, the district court was somehow precluded from calculating prejudgment interest from a date other than the date of termination. This is not a case where the advisory jury’s ration ale is not apparent, following as it does the report of Mr. Reed’s economist. Regard less, the district court’s award must be based on the evidence and the injury sustai ned, neither of which support the method of calculation employed by the district court. Mr. Reed also suggests that we should affirm the pr ejudgment interest award in part because the time period since judgmen t was originally entered, more than four years, “has inured greatly to the FAA’s b enefit, allowing it, in essence, to have a long-term interest-free loan.” Aplee. Br . at 22. This argument misses the point. Prejudgment interest, as the term sugge sts, accrues for the period before entry of judgment. Interest after entry of judgme nt is addressed through postjudgment interest, which accrues on the amount of a damage award, including prejudgment interest, from the date judgment was entered to the date of payment.
See Bancamerica Commercial Corp. v. Mosher Steel of Kansas, Inc. , 103 F.3d 80, 82 (10th Cir. 1996). Thus, although we generally afford the district cou rt great discretion in calculating prejudgment interest, it is clear that the district court applied an4 One method of calculating prejudgment interest her e, with the aid of a

computerized spreadsheet, is to calculate the futur e value of each payment (i.e., the amount that Mr. Reed would have been paid bi-we ekly) from the date each payment would have been owing to Mr. Reed to the date of judgment and then subtract the original value of each payment. By ca lculating the future value of a payment and then subtracting the original value of that payment, one is left with only the interest component. The sum of the intere st components from each of the foregoing calculations is the total prejudgmentinterest amount. Stated differently: 

## 3 Pmt 1 [(1+i) n -1] + Pmt 2 [(1+i) n-1 -1] + Pmt 3 [(1+i) n-2 -1] + . . . Pmt = Amount Mr. Reed would have been paid (i.e., b i-weekly) i = Interest Rate Per Period n = Number of Compounding Periods - 10 - erroneous legal standard in its decision to calculate prejudgment interest on Mr. Reed’s entire back pay award as of the date of his termination. We therefore remand for recalculation of prejudgment interest onMr. Reed’s back pay award in accordance with this opinion. 4
REVERSED and REMANDED

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