Back to the Future: A $16 Million Problem in Retroactive Award of Post-Judgment Interest

This article previews the issues and arguments in Kaiser Aluminum & Chemical Corp. v. Bonjorno, on the Supreme Court’s 1989-90 appellate docket. After many years of bitter litigation, Bonjorno and the Kaiser companies are still seeking a just settlement of their accounts with each other. The Supreme Court has consolidated two cases between the parties. The first lawsuit concerns a 1982 amendment to a federal statute (28 U.S.C. § 1961), which changed the interest standard on judgments. The Court is being asked to decide whether the new interest standard should be applied retroactively to lawsuits begun before 1982 but still pending when the new law went into effect. The narrow issue for the disputing parties is, "Which interest statute applies to our case? The old one or the new one?" The broader issue for the Court concerns the rules governing the retroactive application of statutes.In the second lawsuit, the Court is being asked to resolve issues relating to the calculation of interest on a judgment. What is the proper time period for determining such interest, and what is the proper rate? Are the federal courts at liberty to exercise equitable discretion in determining such interest, to assess what might be fair, or are the courts bound by statutorily mandated standards?This is a tale of corporate America, of big fish and little fish, and of the travails of 15 years of complex antitrust litigation. It is about time and big money, and the time value of that big money. It is about fabricated aluminum culvert pipe. The dispute in these consolidated cases concerns the right to collect interest and how such interest is to be calculated. It is a legal dispute as old as the Code of Hammurabi, which, as early as 1800 B.C., recognized in written statute the right to interest on legal obligations: a then customary rate of 33.3 percent per year for grain loans and 20 percent for silver loans. Joseph Bonjorno and his friends are not claiming interest on a loan of grain or silver, but they do claim interest on the loan of the judgment they won in court against the Kaiser corporations.Interest on judgments, generally, is governed by Federal Rule of Appellate Procedure 37. This rule provides that interest is payable from the date of entry of a judgment with the court. The rule further states that if a judgment is modified or reversed with a direction that a money judgment be entered in the district court, such an appellate mandate shall contain instructions with respect to allowance for interest.The problem raised by the parties in Kaiser is that there is now an array of inconsistent case law permitting the award of interest from the date of the verdict, from the entry of judgment, and from the reinstatement of judgment after appeal. Adding further confusion are scattered cases permitting lower federal courts to exercise discretion under Rule 37 to equitably adjust or determine post-judgment interest awards. In short, both sides capably marshal favorable but nonetheless inconsistent judicial rulings for marking the appropriate time period to determine interest owed on a judgment. At a minimum, the At a minimum, the Kaiser case demonstrates the need for a clear rule for setting post-judgment interest. The differing stakes ― $18.6 million dollars versus $2.6 million dollars ― dramatically suggests the malleability of both current Rule 37 and the lower court interpretations. The Court not only has the opportunity to clarify the principles governing retroactive application of new statutes, but also to provide clear benchmarks for post-judgment interest liability.