Court Opinion

ID: 6932256
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:09:23.196805+00
Date Added: 2024-06-11T16:07:15.123567
License: Public Domain

MORRIS SHEPPARD ARNOLD, Circuit Judge,
concurring and dissenting.
I join in the court’s opinion except so much of it as denies Pioneer a recovery for prejudgment interest.
*1247Under Iowa law prejudgment interest is apparently mandatory. Iowa Code § 535.B. This statute has been held to apply to awards of lost profits. Mercy Hospital v. Hansen, Lind & Meyer, P.C., 456 N.W.2d 666, 673-74 (Iowa 1990). The Supreme Court of Iowa has recognized five possibly relevant exceptions to the statute. See In re Marriage of Baculis, 430 N.W.2d 399, 402-403 (Iowa 1988), for a discussion of these. The exceptions are (1) punitive damages, (2) damages for injuries that occurred after the action was filed, (3) damages for injuries or losses occurring after the entry of judgment, (4) damages owed by the state under the Iowa Tort Claims Act, and (5) certain divorce decrees. In each of the exceptions, except for damages under the Iowa Tort Claims Act, the right to recovery of the money did not arise at the time the action was filed, but rather at some later time, such as the date that an additional injury occurred or the date of entry of judgment. The statute does not apply to damages awarded under the Iowa Tort Claims Act because that Act prohibited awards of prejudgment interest against the state (the state did not consent to be liable for prejudgment interest). The instant ease does not fall within the exceptions to the statute because Holden got the benefit of misappropriated property, and Pioneer lost the benefit of that property, when Holden infringed Pioneer’s property rights in its trade secret. If Pioneer is entitled to lost profits (and I believe it is), it ought to be entitled to prejudgment interest under Iowa law.
An alternative ground for denying prejudgment interest might be, as the court suggests, that because a federal court could deny prejudgment interest in a ease brought under the Lanham Act, a court might be able to deny interest where a general verdict awarded recovery under both the Lanham Act and state law. The court cites for this proposition an opinion of the First Circuit, Wojtkowski v. Cade, 725 F.2d 127, 129 (1st Cir.1984), that is apparently contradicted (as the court notes parenthetically) by another, more recent ease of that Circuit, Doty v. Sewall, 908 F.2d 1053, 1063 (1st Cir.1990). Both of those cases were tried to a jury. Wojtkowski was brought under federal and state law for violation of the plaintiffs civil rights. State law required prejudgment interest. The plaintiff appealed the denial of prejudgment interest on damages (and also on attorney fees, the denial of which is not directly relevant here). The court noted that the plaintiff might have been entitled to prejudgment interest had the jury returned separate verdicts on the state and federal claims. “But here all claims, both federal and state, were sent to the jury together, resulting in a general verdict. We cannot tell to what extent, if any, the jury’s awards of damages ... were based on the state law claims.” The trial court’s application of the federal rule was, therefore, correct, and the construction of that rule, namely that denial of interest was required, was proper. In Doty, which cited Wojtkowski and distinguished it summarily (908 F.2d at 1063 n. 10), the plaintiff made identical claims under state and federal law. That court concluded that although a plaintiff is not entitled to' recover under two theories, one could choose the body of law under which the damages would be paid. 908 F.2d at 1063. The court therefore reversed the trial court’s denial of prejudgment interest.
One could try to distinguish those two eases to extract a rule (mandatory as opposed to permissible interest might be an avenue to explore), but we need not because they do not bind us since they are not our own cases, and, more importantly here, because those cases were tried to juries and the juries rendered general verdicts. In the instant case, the finder of fact was the trial court. The district court made detailed findings of fact, and these make clear that the basis for the award of damages is the Iowa law of trade secrets. Iowa law mandates prejudgment interest. The conclusion, therefore, is that prejudgment interest is required because (as I believe) this case does not fall within one of the exceptions to the Iowa statute and the principles underlying those exceptions seem not to justify the creation of an additional exception here.