The opinion of the court was delivered by: Hart, United States Magistrate Judge.
On January 25, 2000, after a five day trial, the jury returned a
verdict for the plaintiff in this age discrimination suit. The jury
awarded $106,736 in backpay, $130,596 in front pay, and $175,000 in
compensatory damages provided for by the Pennsylvania Human Relations
Act, ("PHRA"). In addition, the jury found the defendant's violation of
the Age Discrimination in Employment Act, "ADEA," willful. Therefore, the
court doubled the award for backpay, resulting in a total award of
$519,068. The Plaintiff has filed a Motion to Mold the Verdict to
prejudgment and post-judgment interest and damages resulting from the tax
consequences of receiving the economic damages in a lump sum, rather than
over the number of work years plaintiff would have worked, but for his
premature termination.*fn1 For the reasons that follow, the plaintiffs
Motion will be granted in part and denied in part.
"The Third Circuit has stated that there is `a strong presumption in
favor of awarding prejudgment interest, except where the award would
result in unusual inequities.'" Shovlin v. Timemed Labeling Systems,
Inc., No. 95-4808, 1997 WL 102523 *1 (E.D.Pa., Feb.28, 1997) (quoting
Booker v. Taylor Milk Co., Inc., 64 F.3d 860, 868 (3d Cir. 1995)). The
plaintiff seeks prejudgment interest on the backpay portion of the award,
only. The defendant argues that an award of prejudgment interest would be
inequitable because the plaintiff received an award of liquidated damages
and an award of compensatory damages. (Defendant's Response, at 2). The
Third Circuit's decision in Starceski v. Westinghouse Electric Corp.,
54 F.3d 1089 (3d Cir. 1995), directly addressed the relationship between
liquidated damages and prejudgment interest and provides guidance in
assessing the propriety of awarding prejudgment interest when an award of
compensatory damages was made.
In Starceski, the Third Circuit, relying on the Supreme Court's
decision in Trans-World Airlines v. Thurston, 469 U.S. 111, 105 S.Ct.
613, 83 L.Ed.2d 523 (1985), concluded that the purposes of liquidated
damages and prejudgment interest did not overlap. Therefore, an award of
prejudgment interest was appropriate in an ADEA case when liquidated
damages had previously been awarded.
We think the Supreme Court's decision in Thurston, 469
U.S. at 125, 105 S.Ct. at 623-24, guides us in
answering [the] question [whether prejudgment interest
may be awarded along with liquidated damages]. There
it stated that liquidated damages are punitive in
nature and designed to deter willful conduct. . . . We
have also recognized that the purpose of an award of
prejudgment interest is to reimburse the claimant for
the loss of the use of its investment or its funds
from the time of the loss until judgment is entered.
We are unable to reconcile Thurston's statement that
liquidated damages are punitive with a denial of
prejudgment interest designed to compensate for loss
of the time value of money.
Starceski, at 1101-02 (internal citations omitted).
Hence the court found that the purposes of the two awards were
different and concluded that an award of prejudgment interest was
appropriate when an award of liquidated damages had been made.
If awards of prejudgment interest are compensatory,
and liquidated damages are punitive, a concomitant
grant of both is appropriate because prejudgment
interest serves the statutory goal of making [the
Plaintiff] whole, i.e., it compensates him for the
discriminatory wrong that he has suffered, while
liquidated damages would punish [the Defendant] for
its willful violation of the ADEA.
Id., at 1101. See also, Shovlin v. Timemed Labeling Systems, Inc., No.
95-4808, 1997 WL 102523 *2 (E.D.Pa. Feb.28, 1997) ("In Starceski, the
Third Circuit made clear that in an ADEA case the district court may
award prejudgment interest to back pay loss even though the claimant was
awarded liquidated damages.").
Applying this analysis to a concomitant award of prejudgment interest
and compensatory damages pursuant to the PHRA brings this court to the
same result. As this court instructed the jury, "[c]ompensatory damages
include damages for emotional pain, embarrassment,
suffering, humiliation, inconvenience, mental anguish and other what we
call non-monetary or non-pecuniary losses." (N.T. 1/24/2000, 111). Since
compensatory damages pursuant to the PHRA refer specifically to
noneconomic losses, and prejudgment interest is an economic award to
compensate the plaintiff for the loss of the time value of money, a
concomitant award is not double compensation for the same loss.
Furthermore. the award of both is consistent with the "statutory goal of
making [the plaintiff] whole." Starceski, at 1101. Therefore, the court
will award prejudgment interest.
The plaintiff and defendant do not agree on the interest rate, at which
the prejudgment interest should be calculated. The plaintiff proposes
that this court utilize the Internal Revenue Service's rate of interest
for the time period in issue. The defendant argues that the court be
guided by the post-judgment interest statute, 28 U.S.C. § 1961.
"The decision to award prejudgment interest and the amount of interest
awarded are within the trial court's discretion.' Kraemer v. Franklin and
Marshall College, 941 F. Supp. 479, 487 (E.D.Pa. 1996) (citing Berndt v.
Kaiser Aluminum & Chem. Sales, Inc., 629 F. Supp. 768, 770 (E.D.Pa.
1985), aff'd, 789 F.2d 253 (3d Cir. 1986)). Although both bases for
calculation have support in our circuit, see Kraemer, Taylor v. Central
Pennsylvania Drup and Alcohol Servs. Corp., 890 F. Supp. 360, 368-70
(M.D.Pa. 1995); EEOC v. Reads, Inc., 759 F. Supp. 1150, 1162, n. 20
(E.D.Pa. 1991) (awarding prejudgment interest on back pay in Title VII
case using IRS rates and compounded quarterly), but see, Shovlin, at *2
(citing Sun Ship, Inc. v. Matson Navigation, Co., 785 F.2d 59, 63 (3d
Cir. 1986)); Young v. Lukens Steel Co., 881 F. Supp. 962, 977-978
(E.D.Pa. 1994) (awarding prejudgment interest on backpay utilizing the
postjudgment interest statute), the court is convinced by the defendant's
argument, utilizing the post-judgment interest statute, in light of the
district court's reasoning in Davis v. Rutgers Casualty Insurance Co.,
964 F. Supp. 560, 576 (D.N.J. 1997).
First, this rate is easy to determine from the federal
post-judgment interest rate charts following
28 U.S.C. § 1961. Second, the 52-week Treasury
bill rate has been found by Congress and by the
marketplace to be a suitable approximation of the
available return for a typical risk-free investment;
such a benchmark is a reasonable approximation of a
riskfree investment available throughout the period in
which the employer retained the employee's wages and
The post-judgment interest statute, 28 U.S.C. § 1961 (a), provides
for the ...