Kaiser Aluminum Chemical Corporation v. Bonjorno/Dissent White

by Byron White

Justice WHITE, with whom Justice BRENNAN, Justice MARSHALL, and Justice BLACKMUN join, dissenting.

The Court today holds that the amended version of the federal postjudgment interest statute, 28 U.S.C. § 1961 (1982 ed.), does not apply to a judgment entered before the effective date of the amendment, even though the litigation was still pending when the amendment took effect and theDis trict Court calculated the amount of postjudgment interest long after the effective date. Because I cannot concur in the Court's decision denying effect to an important ameliorative federal statute in precisely the kind of situation demonstrating the need for the amendment, I respectfully dissent.

* I begin where the majority does, with the language of § 1961. In concluding that the plain language of the statute decides this case, the majority stresses that both versions of § 1961 provide that the interest due "shall be calculated from the date of the entry of the judgment." Ante, at 838 (emphasis omitted). But this clause only fixes the starting point from which interest is to be allowed; it indicates that § 1961 is in fact a postjudgment interest statute, not a prejudgment interest statute (or a postverdict interest statute, see ante, at 835). This clause does not direct the rate to be applied to money judgments. That matter is governed by the following clause of § 1961, requiring that interest be calculated at the Treasury bill rate settled immediately prior to the date of the judgment.

The majority's error results from a subtle but significant misreading of § 1961. The statute, as just noted, states that interest shall be calculated "from" the entry of the judgment. But the majority reads § 1961 as if it says that interest shall be calculated "at the date of the entry of the judgment" or "as if at the date of the entry of judgment." The majority essentially interprets § 1961 as commanding the district courts to transport themselves back in time to the judgment date to determine the rate of postjudgment interest, not because § 1961 directs the district courts to do so in ascertaining the Treasury bill rate (which it plainly does), but because § 1961 supposedly requires the district courts to apply the postjudgment interest law in effect at the judgment date.

This is too convoluted a reading of § 1961. ^[1] The Court reaches it because of its premise that "on the date of judgment expectations with respect to interest liability were fixed, so that the parties could make informed decisions about the cost and potential benefits of paying the judgment or seeking appeal." Ante, at 839. The Court fears it would be unfair to apply new § 1961 to a defendant that had already begun the process of challenging a money judgment because an important element defining the risk of appeal, the rate of postjudgment interest, changed upon the amendment of § 1961. But putting aside for the moment whether expectations about interest liability can ever settle before the end of litigation, I still do not understand why we should not apply new § 1961 to litigation in progress when we know that the principal reason for Congress' amendment of § 1961 was to change the risk of postjudgment litigation. The decision to appeal is not irrevocable. When new § 1961 took effect, Kaiser's motion for judgment notwithstanding the verdict was outstanding, and it was certainly within Kaiser's power then to offer a settlement based on its new perception of the risk in further proceedings. Kaiser also must have understood that Bonjorno would have contemplated an appeal if the District Court overturned or reduced the jury verdict. Nor was Kaiser unable to calculate the risk of protracting litigation under new § 1961 when it decided to seek certiorari.

Though the majority never uses the dreaded word, it clearly wants to say that Kaiser's right to a particular rate of postjudgment interest "vested" at the date of entry of judgment. Only the concept of "vestedness" fully explains the link that the majority makes between Kaiser's "fixed" expectations and its ability to make "informed" decisions. Ante, at 839. The majority overlooks the crucial point that Kaiser's liability for postjudgment interest could not be settled until the judgment against Kaiser became final. Until the end of litigation, a defendant must always evaluate the possibility that a judgment against it, and concomitantly the postjudgment interest that it must pay, may be vacated, decreased, or increased on appeal, in postjudgment proceedings before the District Court, or by a legislated change in the substantive law. (In this case, Kaiser's disastrous experience with its first attempt to overturn the jury verdict certainly made it aware of this possibility.) So whereas application of new § 1961 might have interfered with Kaiser's vested rights had Kaiser already paid the judgment and interest calculated under the old version of the statute, its expectations were not nearly so fixed before the case came to an end. ^[2]

Nor do I agree that the statutory language providing for a delayed effective date means that "the amended version [of § 1961] cannot be applied before the effective date." Ante, at 839. Amended § 1961 was but one small part of the Federal Courts Improvement Act of 1982 (FCIA), Pub.L. 97-164, 96 Stat. 25, an omnibus law effecting significant changes in the administration of the federal courts, including the abolition of the old Court of Claims and Court of Customs and Patent Appeals and the creation of the new United States Claims Court and the United States Court of Appeals for the Federal Circuit. ^[3] Congress had to establish some date to mark the end of business for the old courts and the beginning for the new courts, and that date could not be the date of enactment of the statute, given the need to provide for court personnel and facilities. See, e.g., Pub.L. 97-164, § 121, 96 Stat. 34-35 (authorizing United States Claims Court to appoint clerk, law clerks, secretaries, bailiffs, and messengers). ^[4]

Moreover, Congress is able to recognize a distinction that has eluded the majority: the difference between a statute taking effect on a certain date, in the sense that its provisions are not to be applied by a court before that date passes, and a statute having effect only after that date, in that its provisions may not be applied even to cases pending at that time. Indeed, Congress appears to have understood that the courts would presume that the provisions of FCIA would be applied to pending cases absent legislative direction to the contrary, because it specifically provided that the jurisdictional changes in FCIA should not be applied to certain classes of pending cases. In particular, § 403(e) of FCIA, 96 Stat. 58, provided that pending cases on appeal from the district courts to the courts of appeals should remain in the courts of appeals to which the appeals had originally been taken rather than be transferred to the Federal Circuit, as would have been otherwise required by the jurisdictional changes in FCIA. See, e.g., Weisberg v. Department of Justice, 246 U.S.App.D.C. 175, 763 F.2d 1436 (1985).

In other statutes, Congress has recognized that there might be a problem in applying new law to pending cases and has provided for those cases expressly. When Congress eliminated most of this Court's appellate jurisdiction in 1988, it delayed the effective date of the jurisdictional changes, but it also provided specifically that those changes should not "affect the right to review or the manner of reviewing the judgment or decree of a court which was entered before such effective date." Pub.L. 100-352, § 7, 102 Stat. 664. And when Congress recently increased the jurisdictional amount for diversity cases, it specifically provided that "[t]he amendments . . . shall apply to any civil action commenced on or after the 180th day after the date of enactment of this title." Pub.L. 100-702, § 201(b), 102 Stat. 4646 (emphasis added). Congress thus understands that the mere inclusion of a delayed effective date will not necessarily be understood by the courts as precluding the application of the new statute to pending cases; when circumstances have so required, it has gone further and told the courts not to apply the statutory changes. This is not surprising, because as I discuss infra, at 868, absent legislative direction to the contrary or constitutional objections, federal courts have generally applied statutes to cases pending at their effective date, particularly if the statutes govern the administration of the courts.

I do not suggest that a delayed effective date should never indicate that a statute is not to be applied to pending cases. I cannot agree, however, that a delayed effective date in a statute as complex as FCIA, which effected many changes in judicial administration requiring a transition period and having nothing to do with postjudgment interest, is particularly instructive about the temporal operation of new § 1961.

Because the plain language of FCIA does not state whether amended § 1961 is to be applied to cases pending on the statute's effective date, it is necessary to apply the rules of construction that the Court has followed for almost two centuries in determining the temporal operation of federal statutes.

The Court discerns an "apparent tension" between the rule of Bradley v. Richmond School Bd., 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974), and United States v. Schooner Peggy, 1 Cranch 103, 2 L.Ed. 49 (1801), requiring application of intervening statutory changes to pending cases, and the rule of Bowen v. Georgetown University Hospital, 488 U.S. 204, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988), against retroactive application of statutes. Ante, at 837. The tension is more apparent than real, for the rule against retroactivity has little to do with this case. This case does not involve true retroaction, in the sense of the application of a change in law to overturn a judicial adjudication of rights that has already become final. Cf. Bowen, supra; Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329 (1940).

Nor would application of amended § 1961 in this case require the courts to disturb a legal relation to which the parties have committed themselves, or that they have otherwise reached, in reliance on the state of the law prior to the amendment. Thus this case is unlike Claridge Apartments Co. v. Commissioner, 323 U.S. 141, 65 S.Ct. 172, 89 L.Ed. 139 (1944). There the Commissioner of Internal Revenue unsuccessfully argued for retroactive application of the 1938 Chandler Act, a bankruptcy statute that required the reduction of the basis of property transferred in the acquisition of an insolvent corporation to the fair market value of the property at the date of confirmation of a reorganization plan. At the time of the acquisition of the property involved in Claridge Apartments, the tax laws provided that the basis to the transferee would be the same as the (higher) adjusted basis in the hands of the transferor corporation. Id., 323 U.S., at 143, n. 2, 65 S.Ct., at 172, n. 2. Further, reorganization proceedings involving the transferor had closed before the Chandler Act became effective. In concluding that Congress intended the Chandler Act to apply only to reorganization proceedings pending on its effective date, the Court stressed that the Commissioner's construction would make the Chandler Act actually retroactive, in that it would require recalculation of definitely settled tax liabilities for past years. "Congress was not uprooting the whole tax past of reorganized debtors and their creditors." Id., at 156, 65 S.Ct. at 181. ^[5] No such uprooting is possible here; when amended § 1961 took effect, the parties were still contesting their obligations to each other. Application of amended § 1961 here does not require "altering the past legal consequences of past actions." Bowen, supra, 488 U.S., at 219, 109 S.Ct., at 477 (SCALIA, J., concurring).

What is even more important for present purposes is that in Claridge Apartments the Court also rejected the Tax Court's view that the Chandler Act did not apply to all tax years at issue in any reorganization proceedings pending at the statute's enactment, but only to 1938 and later tax years. Remarking that "the whole problem . . . was to give the Chandler Act as wide room as possible for future operation, notwithstanding the previous vesting of substantive rights or institution of bankruptcy or reorganization proceedings," 323 U.S., at 157-158, 65 S.Ct., at 182, the Court had little difficulty in concluding that the changes in the tax laws applied even to reorganization "plans already confirmed in pending proceedings." Id., at 158, 65 S.Ct. at 182. The Court ordered application of the Chandler Act even to past tax years as long as the past tax liability was relevant to the ongoing reorganization of a debtor corporation. The Court then stated the relevant rule of construction that should be applied today: "It is the normal and usual function of legislation to discriminate between closed transactions and future ones or others pending but not completed." Id., at 164, 65 S.Ct., at 185. Not only is it the normal and usual function of legislation to so discriminate; it is our obligation to do so as well, to give congressional policy as declared in federal statutes the widest application consistent with constitutional guarantees.

The evolution of the presumption in favor of application of new laws to pending cases was comprehensively reviewed in Bradley, supra, 416 U.S., at 711-715, 94 S.Ct., at 2016-2018. It is a rule that we have applied with consistency. By this I do not mean that we have applied it mechanically. As with all choice-of-law rules, the Bradley rule requires evaluation of the implicated interests. Thus we cautioned in Bradley that neither that decision nor prior ones purported "to hold that courts must always thus apply new laws to pending cases in the absence of clear legislative direction to the contrary," 416 U.S., at 715, 94 S.Ct., at 2018, and we discussed at length the conditions that might counsel against application of a new statute to a pending case. Id., at 717-721, 94 S.Ct., at 2019-2021. But this is not a difficult case if the teachings of Bradley are observed.

Bradley noted that the concerns expressed in prior cases "relative to the possible working of an injustice [by applying a new statute] center upon (a) the nature and identity of the parties, (b) the nature of their rights, and (c) the nature of the impact of the change in law upon those rights." Id., at 717, 94 S.Ct., at 2019. As for the nature and identity of the parties here, it is true that this lawsuit is between private parties. But as Bradley makes clear, our analysis must be more discerning than just distinguishing between private and public entities; we must also look to the public interests implicated by the statutory change as well as the lawsuit itself. Id., at 718-719, 94 S.Ct., at 2019-2020. ^[6] Congress enacted amended § 1961 as part of a comprehensive reform of the federal courts and designed new § 1961 itself as an essential counterweight to the normalin centives for delay in litigation. Our readiness to apply new statutes to pending cases has arguably been at its peak when the statutes involved the administration or jurisdiction of the federal courts. See Bradley, supra; Andrus v. Charlestone Stone Products Co., 436 U.S. 604, 607-608, n. 6, 98 S.Ct. 2002, 2004-2005 n. 6, 56 L.Ed.2d 570 (1978); United States v. Alabama, 362 U.S. 602, 80 S.Ct. 924, 4 L.Ed.2d 982 (1960) (per curiam ); Dickinson Industrial Site, Inc. v. Cowan, 309 U.S. 382, 60 S.Ct. 595, 84 L.Ed. 819 (1940).

As for the nature of the rights, it is here that my disagreement with the majority is the sharpest. Much significance is ascribed to Kaiser's purportedly fixed expectations about the rate of postjudgment interest, see ante, at 839-840, but these expectations deserve little credit, for Kaiser was not entitled to assume much of anything about its interest rate. Postjudgment interest "rests solely upon statutory provision," Pierce v. United States, 255 U.S. 398, 406, 41 S.Ct. 365, 368, 65 L.Ed. 697 (1921), ^[7] and both parties were on notice that Congress could alter the applicable interest rate if it wished. Furthermore, unlike the right to wages for services rendered, the right to postjudgment interest does not "vest" in discrete amounts as each day passes. The amount of postjudgment interest that a party will recover (or be required to pay) can never be known with certainty until the amount of the underlying judgment is known with certainty, and that amount in turn cannot be definitively ascertained until the process of appeal is completed. Indeed, Bonjorno's right to postjudgment interest would have evaporated had the Court of Appeals reversed its judgment against Kaiser. Thus one cannot speak meaningfully of a "matured" right to postjudgment interest before the amount of the judgment is finally established. ^[8] Bradley last requires us to consider "the nature of the impact of the change in law upon existing rights, or, to state it another way, . . . the possibility that new and unanticipated obligations may be imposed upon a party without notice or opportunity to be heard." 416 U.S., at 720, 94 S.Ct., at 2020. There is no claim here that Kaiser was unaware that its obligation for postjudgment interest could be altered during the pendency of litigation. Cf. Brinkerhoff-Faris Trust & Savings Co. v. Hill, 281 U.S. 673, 50 S.Ct. 451, 74 L.Ed. 1107 (1930). And Kaiser could have protected itself from fluctuation of the postjudgment interest rate by depositing the amount of the judgment with the District Court. See Fed.Rule Civ.Proc. 67. Nor did the amendment of § 1961 create a new substantive cause of action or eliminate a substantive defense in a way that would cause hardship to Kaiser. Cf. Union Pacific R. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 34 S.Ct. 101, 58 L.Ed. 179 (1913).

Finally, a more general word must be said about the element of "manifest injustice" that Bradley addressed. It is difficult to see how manifest injustice could be worked except by refusing to apply amended § 1961 to this case. As a result of the Court's decision today, Bonjorno is remitted to a postjudgment interest rate greatly lower than its cost of money during the pendency of the litigation, while Kaiser, an adjudicated violator of the antitrust laws, is permitted to escape the consequences of protracting litigation. This was precisely the result that Congress intended to prevent by amending § 1961.

I agree with the majority that the plain language of § 1961 compels us to conclude that postjudgment interest runs from the date of the entry of judgment, not the date of a jury verdict. Ante, at 835.

I also agree with the majority that postjudgment interest in this case did not begin to accrue upon entry of the August 22, 1979, judgment. Because the District Court's subsequent grant of a new trial was never overturned, we must accept the District Court's determination that the August 22, 1979, judgment on damages was not supported by the evidence, and that damages were not ascertained until the December 2, 1981, verdict. The Court's holding is necessarily limited to the facts of this case. The majority does not state whether August 22, 1979, would have been the proper commencement date for accrual of postjudgment interest had Bonjorno successfully appealed the order granting a new trial. ^[9] Cf. Turner v. Japan Lines, Ltd., 702 F.2d 752 (CA9 1983). Nor does the Court state any rule applicable to various other fact patterns not before us but commonly encountered by the lower courts, e.g., where the district court correctly ascertains total damages but improperly apportions them among the parties, Brooks v. United States, 757 F.2d 734 (CA5 1985), or where a judgment entered after a second trial necessarily cannot include interest accrued after the end of the first trial, Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282 (CA9 1984), cert. denied, 469 U.S. 1190, 105 S.Ct. 963, 83 L.Ed.2d 968 (1985), or where an interest award is reduced on appeal and a new judgment is entered on remand, Perkins v. Standard Oil Co. of Cal., 487 F.2d 672 (CA9 1973).

I respectfully dissent.

Notes