how and why the jury used the $ 790,779 figure, considering that the jury's final award was supported by the evidence and the jury's mathematical calculations were correct. Accordingly, the defendants' request for a reduction of the front-pay award is denied.
The defendants next claim that the jury's award of back-pay should be reduced by $ 53,295 to reflect income tax that the plaintiff would have had to pay on the award had he not been discriminated against. In the Third Circuit, ADEA judgments for back-pay are not taxable under the federal income tax laws because such judgments redress tort-like injuries.
See Rickel v. C.I.R., 900 F.2d 655 (3d Cir. 1990); Abrams v. Lightolier Inc., 841 F. Supp. 584 (D.N.J. 1994); Murtha v. Forest Elec. Corp., 1992 U.S. Dist. LEXIS 10476, 1992 WL 174606 (E.D. Pa. July 14, 1992). Although insulating ADEA back-pay judgments from taxes in essence gives the plaintiff a windfall, the Third Circuit explained that the ADEA and basic principles of tort law favor a successful plaintiff in an ADEA suit making "out better vis-a-vis federal income tax liability, than if the plaintiff had not been discriminated against in the first place." Rickel, 900 F.2d at 664. Certainly, it would be contrary to the policies underlying the ADEA to reward the windfall to a defendant who was found to have intentionally discriminated. See Abrams, 841 F. Supp. at 597; Murtha, 1992 U.S. Dist. LEXIS 10476, 1992 WL 174606 at * 11 ("The traditional rule is that the wrongdoing party pays damages to the injured party and the injured party gets the 'windfall.' Defendants' suggested approach to the issue -- to reward the discriminating employer by allowing it to withhold federal taxes from the judgment without remitting the tax amount to the government -- is certainly unique, but we are not persuaded that it is a sound method of deterring discrimination."). Accordingly, defendants' request to reduce the jury's back-pay award to reflect income taxes that the plaintiff would have had to pay on the award is denied.
C. Plaintiff's Motion To Mold The Verdict
In this motion, the plaintiff requests that the Court order (i) prejudgment interest on the jury's award, (ii) post-judgment interest on the jury's award, (iii) an award to compensate for negative tax consequences the plaintiff will incur as a result of a lump sum payment of the award, and (iv) an award to compensate plaintiff for investment losses he incurred in attempting to mitigate damages.
It is well-settled that the award of prejudgment interest on a backpay award in an ADEA case is left to the discretion of the court. See Gelof v. Papineau, 829 F.2d 452 (3d Cir. 1987); Berndt v. Kaiser Aluminum & Chemical Sales, Inc., 789 F.2d 253, 259 (3d Cir. 1986); Wilson v. S & L Acquisition Co., L.P., 940 F.2d 1429, 1435 (11th Cir. 1991); E.E.O.C. v. U.S. Steel Corp., 728 F. Supp. 1167, 1169 (W.D. Pa. 1989). "'The purpose of prejudgment interest is to reimburse the claimant for the loss of the use of the its investment or its funds from the time of loss to the time of judgment.'" Berndt, 789 F.2d at 259 (quoting ARCO Pipeline Co. V. SS Trade Star , 693 F.2d 280, 281 (3d Cir. 1982). Thus, prejudgment interest is limited to backpay and other types of remuneration that the plaintiff would have received before the verdict. Indeed, prejudgment interest should be presumed in backpay awards under the ADEA unless the equities require otherwise. U.S. Steel Corp., 728 F. Supp. at 1169.
In this case, the defendants were found to have intentionally discriminated, and the defendants have failed to provide any credible reasons why it would be inequitable to award prejudgment interest on the plaintiff's back-pay award. Thus, the defendants shall pay prejudgment interest on the $ 190,339 award for backpay.
The applicable prejudgment interest rate is left to the discretion of the Court. Gelof, 829 F.2d at 456-57; Sun Ship, Inc. v. Matson Navigation, 785 F.2d 59, 63 (3d Cir. 1986). The Court finds persuasive the suggestion of the Third and Sixth Circuits that the district court look to the post-judgment interest rate contained in 28 U.S.C. § 1961 when determining the applicable prejudgment interest rate. See Sun Ship, Inc., 785 F.2d at 63; E.E.O.C. v. Wooster Brush Co., 727 F.2d 566, 579 (6th Cir. 1984). Accordingly, the prejudgment interest rate in this case shall be the 52-week Treasury Bill rate on the day of the judgment, which was 5.31%. See 28 U.S.C. § 1961(a). The interest shall be compounded annually. See 28 U.S.C. § 1961(b)
Contrary to § 1961, however, the interest rate shall be applicable only to the amount the plaintiff would have earned each year before the verdict plus interest and salary the plaintiff would have earned in all of the preceding years (i.e compounded), instead of interest on the whole award annually. This distinction from § 1961 is necessary because a plaintiff's backpay award grows incrementally each year, whereas a plaintiff becomes entitled to the amount subject to post-judgment interest on the day of the verdict. Accordingly, the plaintiff is entitled to $ 18,573 in prejudgment interest.
Plaintiff next requests post-judgment interest on the jury's award. Defendants do not contest the awarding of post-judgment interest.
Post-judgment interest is governed by 28 U.S.C. § 1961. As mentioned above, § 1961 states that the interest rate to be used is the 52-week Treasury Bill price on the day of the verdict. On July 8, 1994, the rate was 5.31%. Accordingly, the plaintiff shall receive post-judgment interest at a rate of 5.31% compounded annually from July 8, 1994 on the award of $ 496,609.
Plaintiff next requests that this Court grant an additional amount of money to compensate for negative tax consequences associated with receiving payment of the verdict in a lump sum. This claim is without merit. As this Court held above, ADEA awards are not subject to Federal Income Taxes. See Rickel, 900 F.2d 655. Thus, the plaintiff's award will not be subject to any negative tax consequences. Accordingly, plaintiff's request for an award for negative tax consequence is denied.
Plaintiff next requests that he be awarded $ 50,000 to cover a loss he incurred when attempting to mitigate damages by investing in a business venture. This claim is ipse dixit that must be denied for two reasons. First, there is no basis in law or fact for this Court to grant this type of motion. The issue was not submitted to the jury and the Court cannot sua sponte increase a jury award based on an alleged investment loss that was not litigated. Second, in any event, plaintiff waived this claim by failing to disclose this alleged investment loss during the three year history of this case.
D. Plaintiff's Motion for Attorneys' Fees
Pursuant to a stipulation entered into by the parties on July 21, 1994, the plaintiff shall have ten days from the date of this Memorandum and Order to file a more complete motion containing proper supporting documentation of his claim for attorneys' fees and costs, and the defendants shall have the time provided by the local rules to respond to plaintiff's motion. Accordingly, plaintiff's present motion for attorneys' fees is denied with leave to renew.
An appropriate Order follows.
AND NOW, this 22nd day of November, 1994, upon consideration of the Defendants Lukens Steel Company and Lukens, Inc.'s Motion For A New Trial, or In The Alternative, For A Judgment As A Matter Of Law; Defendants' Motion To Alter Or Amend Judgment, Or In The Alternative, Motion For Relief From Judgment; Plaintiff's Motion To Mold The Verdict; Plaintiff's Motion For Attorneys' Fees; and opposition thereto, IT IS HEREBY ORDERED that the Defendants' Motion For A New Trial, or In The Alternative, For A Judgment As A Matter Of Law is DENIED.
IT IS FURTHER ORDERED that:
(1) Defendants' Motion To Alter Or Amend Judgment, Or In The Alternative, Motion For Relief From Judgment is DENIED ;
(2) Plaintiff's Motion To Mold The Verdict is GRANTED in part and DENIED in part;
(3) Defendants shall pay an additional $ 18,753 for prejudgment interest on the jury's back pay award;
(4) Defendants shall pay post-judgment interest on the verdict at a rate of 5.31% compounded annually; and
(5) Plaintiff's Motion For Attorneys' Fees is DENIED with leave to renew.
BY THE COURT:
HERBERT J. HUTTON, J.