Opinion ID: 492502
Heading Depth: 2
Heading Rank: 2

Heading: Other Federal Issues

Text: 50 Several other issues pertaining to the federal securities judgment have been raised by the parties. First, appellant Kellar contends that there was insufficient evidence to support the judgment against him. After carefully reviewing the record, we conclude that there was sufficient credible evidence of Kellar's direct liability to allow a jury to enter judgment against him, 29 and that this issue warrants no further discussion. 51 Appellant Talley raises two additional issues on appeal: (1) whether the district court improperly shifted to him the burden of rebutting the Osternecks' bill of costs; and (2) whether the district court erred in permitting his codefendants to cross-examine him at trial. We have closely examined these questions and find that the assignments of error are without merit and warrant no discussion. 52 The final federal issue posed is the Osternecks' contention that the district court abused its discretion in awarding prejudgment interest only in the amount of $945,512.85. 30 In making this award, the district court exercised two forms of discretion. First, the court chose to award prejudgment interest at the rate of 7% annually, not compounded. This required a total interest award of over 2.8 million dollars. Though this interest award exceeded the principal judgment of $2,632,234, it was, nonetheless, the smallest interest award the trial court could have rendered. Other methods of calculation, for example compounding the principal in three-month certificates of deposit for the entire period of this litigation, would have produced interest awards of over 7 million dollars. 53 In its second exercise of discretion, the district court then determined that its initial interest award of some 2.8 million dollars should be reduced by two-thirds. This reduction reflected the district court's conclusion that: (1) an interest award in excess of the principal sum would be punitive; and (2) that a substantial portion of the delay in bringing this suit to a conclusion could be attributed either to actions the plaintiffs had taken or to delays inherent in the federal judicial system. Thus, the district court concluded that the defendants, having been responsible for no more than one-third of the delay in bringing this suit to trial, were responsible for only one-third of the prejudgment interest which might be awarded. Consequently, the district court awarded prejudgment interest on the federal securities claim in the amount of $945,512.85. The Osternecks challenge only this second exercise of discretion. 54 It is clear that whether prejudgment interest should be awarded on a damage recovery in a [federal securities] action is a question of fairness resting within the District Court's sound discretion. Wolf v. Frank, 477 F.2d 467, 479 (5th Cir.), cert. denied, 414 U.S. 975, 94 S.Ct. 287, 38 L.Ed.2d 218 (1973). Moreover, in awarding prejudgment interest, the district court must insure that the award is not punitive in nature. Norte & Co. v. Huffines, 416 F.2d 1189, 1191-92 (2d Cir.1969), cert. denied, 397 U.S. 989, 90 S.Ct. 1121, 25 L.Ed.2d 396 (1970). Finally, because the award of prejudgment interest is compensatory rather than punitive, the award must be tempered by an assessment of the equities. Id. at 1191. It is apparent to us that the factors relied upon by the district court are precisely the sorts of equitable considerations which should be evaluated in making a prejudgment interest award. Therefore, we cannot conclude that the district court abused its discretion in awarding the Osternecks only $945,512.85 in prejudgment interest. 55 For the reasons stated in the foregoing analysis, the federal securities judgment in the amount of $2,632,234 entered in favor of the plaintiffs and against Barwick Industries, Kellar and Talley with prejudgment interest in the amount of $945,512.85 is, in all respects, affirmed. 31