Court order clarifies start of post-judgment interest

In order issued by the Supreme Judicial Court in an employment discrimination case appears to settle the question of when post-judgment interest starts in Massachusetts.

By determining that accrual begins when the first judgment is entered after “all claims are adjudicated,” the SJC’s finding in Haddad v. Wal-Mart Stores will force both plaintiffs’ and defense counsel to reconsider their post-trial strategies, lawyers say.

Last October, the court in the high-profile case upheld a jury verdict awarding pharmacist Cynthia Haddad punitive damages in her gender bias suit against Wal-Mart. After the decision was issued, the defendant filed a motion arguing that the later of the two judgment dates should be used in calculating post-judgment interest.

On Dec. 21, the SJC rejected that argument, stating in a four-page order that interest should be calculated from “the date on which judgment entered on the jury verdict.” Any later date, the court wrote, “unfairly prejudices the plaintiff.”

That language will be a boon to plaintiffs, said Richard E. Fradette, a Manchester, N.H., lawyer who represented Haddad at the trial court level.

Fradette said defendants “seize upon” the accrual date of post-judgment interest as a strategy “time and time and time again. Wal-Mart is sued so often that, by challenging the interest in every case against it, it saves a lot of money.”

In the wake of Haddad, plaintiffs can block Wal-Mart from making such an argument in Massachusetts, he said. “Here, [the SJC] issued a very decisive order. Now I think the law is clear.”

Ellen J. Zucker, a litigator in Boston who was not involved in the case, agreed that the order sends a strong message “that the defendant should not be rewarded for the filing of post-trial motions if those motions are ultimately found to be without merit.”
If the claims involving the parties have been fully adjudicated, “judgment should enter for the purposes of post-judgment interest,” she said. “And then, in an orderly fashion, the trial court can consider post-trial motions. But that does not stop the running of post-judgment interest, if, in the end, that judgment and that verdict are deemed to be correct.”

‘All claims have been adjudicated’

On July 9, 2007, a Berkshire Superior Court jury awarded the plaintiff in Haddad $972,774 in compensatory damages and $1 million in punitives. When Wal-Mart moved for a judgment notwithstanding the verdict, Judge John A. Agostini issued a ruling on Jan. 31, 2008, vacating the punitive damages award but otherwise denying the motion.

Claiming that the January 2008 date was the appropriate point at which to begin calculating post-judgment interest, Wal-Mart’s lawyers argued before the SJC that an unnamed clerk outside of Berkshire County had determined that date as the final judgment, according to the ruling. They also cited cases in which interest accrued from a date after that of the initial judgment, including the SJC’s 1994 Shawmut Community Bank, N.A. v. Zagami, and a 2002 Appeals Court case, Karellas v. Karellas.

In its Dec. 21 order, the SJC found Wal-Mart’s argument unconvincing and its citations “inapposite.”

In Shawmut Community Bank, the court wrote, “the postjudgment interest accrued from the later of two dates because the date of final judgment was the date on which the judge entered a verdict on the defendant’s counterclaim, rather than an earlier date corresponding to the jury verdict on the plaintiff’s claim.
“In that case … we stated that, when there are multiple claims or multiple parties, the date of final judgment is when all claims have been adjudicated,” the court stated. “Here, all claims had been adjudicated on July 9, 2007.”

The SJC found the Karellas case irrelevant as well, because it involved a statute that “is not at issue in this case.”

Likewise, the court wrote, it was not persuaded by Wal-Mart’s assertion that it relied on statements from an unknown clerk that the date of the final judgment was in January 2008.
The SJC instead said it agreed with Haddad’s lawyers that two cases, the 2005 Appeals Court decision Nardone v. Patrick Motor Sales and the SJC’s Fontaine v. Ebtec Corp. in 1993, showed “the proper date from which to calculate postjudgment interest, including interest on attorney’s fees … is the date on which judgment entered on the jury verdict.”

‘On the hook’

The SJC’s order in Haddad makes it plain that “the moment we think as the correct moment to start post-judgment interest is the date upon which a correct judgment should have been entered,” Zucker said.

That gives the plaintiffs’ bar a potent new weapon and prevents defendants from minimizing the cost of a case in post-trial motion proceedings, said Robert S. Mantell of Boston, who was appellate counsel for the plaintiff in Haddad.

“A lot of times there are delays in the court’s handling of post-verdict motions,” Mantell, president of the Massachusetts Employment Lawyers Association, said. “This means that there is a long period in which interest may or may not accrue. And [the SJC’s order] makes it clear that the defendant is on the hook during that period so that they cannot delay interest by pursuing weak motions.”

Wal-Mart was trying to do just that when it moved for calculating the interest from a later date, Fradette said. If it succeeded, it would have avoided about $160,000 in additional liability.

“They’re classic manipulators of the system that we’ve created,” Fradette said. “By trying to push the judgment date out, [the defendant tried to ensure] that the punitive damages of $1 million and the future wages of $733,000 that was awarded by the jury would not be included in computing the interest.”

Wal-Mart’s counsel, David C. Casey of Boston, declined to comment on the case, as did a number of other defense lawyers contacted for this story.

‘By the seat of their pants’

The SJC order is a signpost in murky post-judgment territory that “isn’t subject to extensive appellate discussion,” Zucker said.

Litigators told Lawyers Weekly that they had little experience with post-judgment interest issues because most cases are settled long before trial.

Lisa G. Arrowood, a veteran Boston litigator who represents both plaintiffs and defendants, said she believes post-judgment matters such as the one in the Haddad case are litigated infrequently. “I think a lot of people are going by the seat of their pants,” she said, adding that the specter of 12 percent interest on a judgment motivates most defendants to pay promptly.

“If you have a big verdict … most insurers pay as fast as they can,” she said.

But while the SJC’s language in the order is clear, what is less evident is whether it carries any precedential weight.

While an assistant clerk at the SJC confirmed that the order is a published statement of the court, Clerk Susan Mellen, whose signature is contained on the order, declined to comment on whether it can be cited.

C. Clifford Allen, the SJC’s reporter of decisions, said though he did not know of any prohibition on citing orders issued by the SJC, “it would be unusual to do so. I don’t see those orders generally. They’re very rare.”

But Mantell said that he plans to cite the order in future cases and that he has already forwarded it to other practitioners facing similar post-trial issues.
As to whether the order will be persuasive to judges, Mantell said, “I cited an order like this in the Haddad case, in fact … and it resulted in the order you have in your hand.”