Monessen Southwestern Railway Co. v. Morgan

486 U.S. 330, 108 S. Ct. 1837, 100 L. Ed. 2d 349, 1988 U.S. LEXIS 2485, 2004 A.M.C. 459, 56 U.S.L.W. 4494

• Court: Supreme Court of the United States
• Decided: June 6, 1988
• Docket: 86-1743
• Status: Published

Opinions

Justice White

delivered the opinion of the Court.

This case concerns the application of state-law rules affecting the measure of damages in an action brought in state court under the Federal Employers’ Liability Act (FELA), 35 Stat. 65, as amended, 45 U. S. C. § 51 et seq.

H

Appellee was employed by appellant as a railroad brakeman and conductor. In August 1977, appellee fell while alighting from a railroad car and suffered a permanent injury to his back. He returned to work in February 1979 in the less physically demanding position of radio and supply clerk.

Appellee brought an FELA action in the Court of Common Pleas of Allegheny County, Pennsylvania, alleging that his fall was attributable to appellant’s negligence. He claimed that his future earning power had been impaired as a result of his injury because he could not obtain certain incentive and shift differential payments in his new position.

The trial judge refused to instruct the jury that any damages award for loss of future earnings would have to be reduced to present value. Instead, she informed the jury that “[t]he law now provides that there need not be such a reduction.” App. 61. The judge apparently was referring to the Pennsylvania Supreme Court’s decision in Kaczkowski v. Bolubasz, 491 Pa. 561, 583, 421 A. 2d 1027, 1038-1039 (1980), which had instructed state courts to cease discounting future lost earnings to present value because “as a matter of law. . . future inflation shall be presumed equal to future interest rates with these factors offsetting.”

The jury found in favor of appellee and awarded damages of $125,000. The trial judge assessed an additional $26,712.50 as prejudgment interest pursuant to Rule 238 of the Pennsylvania Rules of Civil Procedure. Rule 238 requires state courts in personal injury actions to “add to the amount of compensatory damages . . . , damages for delay at ten (10) percent per annum, not compounded,” from “the date the plaintiff filed the initial complaint in the action or from a date one year after the accrual of the cause of action, whichever is later,” to the date of the verdict.¹ The judge rejected appellant’s contention that Rule 238 could not be applied to FELA actions.

A three-judge panel of the Pennsylvania Superior Court affirmed. 339 Pa. Super. 465, 489 A. 2d 254 (1985).

The Pennsylvania Supreme Court granted appellant’s petition for allowance of appeal and subsequently affirmed by a narrow margin. 513 Pa. 86, 518 A. 2d 1171 (1986).

The court characterized Rule 238 as a mere “rule of procedure” designed to encourage meaningful settlement negotiations and thereby alleviate congestion in the trial courts. Id., at 98-99, 518 A. 2d, at 1177. The court concluded that, as neither the “worthy goal” nor the specific provisions of Rule 238 contravened the purposes and provisions of the FELA, the Pennsylvania courts could apply Rule 238 to award prejudgment interest in FELA cases as well as in cases involving only state law. Ibid.

The court recognized that whether the trial judge had properly refused to instruct the jury to discount future damages to present value, and instead applied the so-called “total offset” method, was a question of federal law. See St. Louis Southwestern R. Co. v. Dickerson, 470 U. S. 409, 411 (1985) (per curiam). The court noted our discussion of a Federal District Court’s use of Pennsylvania’s total offset rule in Jones & Laughlin Steel Corp. v. Pfeifer, 462 U. S. 523 (1983), a case brought under the Longshoremen’s and Harbor Workers’ Compensation Act (LHWCA), 33 U. S. C. §904. We held in Pfeifer that “whatever rate the District Court may choose to discount the estimated stream of future earnings, it must make a deliberate choice, rather than assuming that it is bound by a rule of state law.” 462 U. S., at 552-553. Here, the trial judge’s use of the total offset rule was held to have been permissible under Pfeifer because the reviewing court had itself “deliberately selected” that rule in Kaczkowski v. Bolubasz “after a thorough consideration of various present worth theories and rules. ” 513 Pa., at 92-93, 518 A. 2d, at 1174. Nor did the court find any inconsistency between the trial judge’s use of the total offset rule and our holding in Dickerson that “an utter failure to instruct the jury that present value is the proper measure of [an FELA] damages award is error.” 470 U. S., at 412. Here, reasoned the court, “the trial judge did instruct the jury on present value by charging on the total offset method.” 513 Pa., at 94-95, 518 A. 2d, at 1175.²

We noted probable jurisdiction, 484 U. S. 813 (1987), and now reverse.

II

We first consider whether state courts may award prejudgment interest pursuant to local practice in actions brought under the FELA.

A

State courts are required to apply federal substantive law in adjudicating FELA claims. Dickerson, supra, at 411; Chesapeake & Ohio R. Co. v. Kuhn, 284 U. S. 44, 46-47 (1931). It has long been settled that “the proper measure of damages [under the FELA] is inseparably connected with the right of action,” and therefore is an issue of substance that “must be settled according to general principles óf law as administered in the Federal courts.” Chesapeake & Ohio R. Co. v. Kelly, 241 U. S. 485, 491 (1916); see also Dickerson, supra, at 411; Norfolk & Western R. Co. v. Liepelt, 444 U. S. 490, 493 (1980).

The question of what constitutes “the proper measure of damages” under the FELA necessarily includes the question whether prejudgment interest may be awarded to a prevailing FELA plaintiff. Prejudgment interest is normally designed to make, the plaintiff whole and is part of the actual damages sought to be recovered. West Virginia v. United States, 479 U. S. 305, 310, and 310-311, n. 2 (1987); General Motors Corp. v. Devex Corp., 461 U. S. 648, 655-656 (1983); Poleto v. Consolidated Rail Corporation, 826 F. 2d 1270, 1278 (CA3 1987); Wilson v. Burlington Northern R. Co., 803 F. 2d 563, 566 (CA10 1986) (McKay, J., concurring), cert. denied, 480 U. S. 946 (1987). Moreover, prejudgment interest may constitute a significant portion of an FELA plaintiff’s total recovery. Here, for example, the trial court’s award of $26,712.50 in prejudgment interest under Rule 238 increased appellee’s total recovery by more than 20 percent. Accordingly, the Pennsylvania courts erred in treating the availability of prejudgment interest in FELA actions as a matter of state law rather than federal law.³

The Pennsylvania courts cannot avoid the application of federal law to determine the availability of prejudgment interest under the FELA by characterizing Rule 238 as nothing more than a procedural device to relieve court congestion. In Dice v. Akron, C. & Y. R. Co., 342 U. S. 359 (1952), the Ohio courts had applied a state procedural rule in an FELA action that permitted the judge rather than the jury to resolve factual questions as to whether a release had been fraudulently obtained. We reversed on the ground that “the right to trial by jury is too substantial a part of the rights accorded by the Act to permit it to be classified as a mere ‘local rule of procedure’ for denial in the manner that Ohio has here used.” Id., at 363. See also Brown v. Western R. Co. of Alabama, 338 U. S. 294, 298-299 (1949). Similarly, prejudgment interest constitutes too substantial a part of a defendant’s potential liability under the FELA for this Court to accept a State’s classification of a provision such as Rule 238 as a mere “local rule of procedure.”⁴ We therefore turn to the issue whether federal law authorizes awards of prejudgment interest in FELA actions.

B

Neither the FELA itself nor the general federal interest statute, 28 U. S. C. § 1961, makes any mention of prejudgment interest. It is true that Congress’ silence as to the availability of interest on an obligation created by federal law does not, without more, “manifes[t] an unequivocal congressional purpose that the obligation shall not bear interest.” Rodgers v. United States, 332 U. S. 371, 373 (1947).

We can discern a sufficiently clear indication of legislative intent with regard to prejudgment interest under the FELA, however, when we consider Congress’ silence on this matter in the appropriate historical context. In 1908, when Congress enacted the FELA, the common law did not allow prejudgment interest in suits for personal injury or wrongful death. See C. McCormick, Law of Damages § 56 (1935); 1 T. Sedgwick, Measure of Damages §316 (9th ed. 1912).⁵ This was the rule in the federal courts. Pierce v. United States, 255 U. S. 398, 406 (1921);⁶ Mowry v. Whitney, 14 Wall. 620, 653 (1872); see also Poleto, supra, at 1276, 1278; Wilson, supra, at 565; Louisiana & Arkansas R. Co. v. Pratt, 142 F. 2d 847, 848 (CA5 1944). Congress expressly dispensed with other common-law doctrines of that era, such as the defense of contributory negligence, see 45 U. S. C. § 53, in order “to provide liberal recovery for injured workers” under the FELA. Kernan v. American Dredging Co., 355 U. S. 426, 432 (1958). But Congress did not deal at all with the equally well-established doctrine barring the recovery of prejudgment interest, and we are unpersuaded that Congress intended to abrogate that doctrine sub silentio.⁷

Moreover, we have recognized that Congress’ failure to disturb a consistent judicial interpretation of a statute may provide some indication that “Congress at least acquiesces in, and apparently affirms, that [interpretation].” Cannon v. University of Chicago, 441 U. S. 677, 703. (1979); see also Gulf Oil Corp. v. Copp Paving Co., 419 U. S. 186, 200-201 (1974); Flood v. Kuhn, 407 U. S. 258, 283-284 (1972). The federal and state courts have held with virtual unanimity over more than seven decades that prejudgment interest is not available under the FELA. See, e. g., Poleto, 826 F. 2d, at 1279; Wilson, 803 F. 2d, at 566; Kozar v. Chesapeake & Ohio R. Co., 449 F. 2d 1238, 1244 (CA6 1971); Pratt, supra, at 848-849; Chicago, M., St. P. & P. R. Co. v. Busby, 41 F. 2d 617, 619 (CA9 1930); Carmouche v. Southern Pacific Transportation Co., 734 S. W. 2d 46, 47 (Tex. App. 1987); Melin v. Burlington Northern R. Co., 401 N. W. 2d 418, 420 (Minn. App. 1987); Wicks v. Central R. Co., 129 N. J. Super. 145, 147, 322 A. 2d 488, 489, cert. denied, 66 N. J. 317, 331 A. 2d 17 (1974); Murmann v. New York, N. H. & H. R. Co., 258 N. Y. 447, 450, 180 N. E. 114, 115 (1932) (per curiam); Mobile & O. R. Co. v. Williams, 219 Ala. 238, 249, 121 So. 722, 731 (1929); Bennett v. Atchison, T. & S. F. R. Co., 187 Iowa 897, 903-904, 174 N. W. 805, 807 (1919); Grow v. Oregon Short Line R. Co., 47 Utah 26, 29, 150 P. 970, 971 (1915). Congress has amended the FELA on several occasions since 1908. See 36 Stat. 291 (1910); 53 Stat. 1404 (1939); 62 Stat. (1948). Yet, Congress has never attempted to amend the FELA to provide for prejudgment interest.⁸ We are unwilling in the face of such congressional inaction to alter the longstanding apportionment between carrier and worker of the costs of railroading injuries. If prejudgment interest is to be available under the FELA, then Congress must expressly so provide.⁹

Ill

We turn now to the question whether the trial court acted consistently with federal law in instructing the jury not to discount appellee’s future lost earnings to present value.

We have consistently recognized that “damages awards in suits governed by federal law should be based on present value.” Dickerson, 470 U. S., at 412. The “self-evident” reason is that “a given sum of money in hand is worth more than the like sum of money payable in the future.” Kelly, 241 U. S., at 489; see also Dickerson, supra, at 412. And, as Kelly and Dickerson demonstrate, the rule governs in FELA cases. Hence, a “failure to instruct the jury that present value is the proper measure of a damages award is error.” 470 U. S., at 412.

Here, the trial court instructed the jury that although it “used to be” that juries were to reduce an award to “something called present worth,” the law now provided that there need not be such a reduction. Tr. 701-702. The “law” referred to was the Pennsylvania Supreme Court’s decision in Kaczkowski v. Bolubasz, 491 Pa. 561, 421 A. 2d 1027 (1980), which held that future inflation would be conclusively presumed to equal future interest rates and that state courts in Pennsylvania therefore were not to reduce damages to present worth. It was error for the court to have refused on the basis of this state rule to allow an FELA award to be reduced to present value, just as it was error for the court in Pfeifer to have failed to make “a deliberate choice”- as to how an LHWCA award was to be reduced to present value and to have “assum[ed] that it [was] bound by a rule of state law.” 462 U. S., at 553.

Under the Court’s FELA cases, the jury has the task of making the present value determination. It was observed in Kelly, for example, that “it may be a difficult mathematical computation for the ordinary juryman to calculate interest on deferred payments, with annual rests, and reach a present cash value.” 241 U. S., at 491. We declined to decide in that case “[w]hether the difficulty should be met by admitting the testimony of expert witnesses, or by receiving in evidence the standard interest and annuity tables in which present values are worked out at various rates of interest and for various periods covering the ordinary expectancies of life.” Ibid. We did not suggest that the difficulty could also be met by permitting the present value calculation to be made by the judge rather than the jury.

The question was addressed more directly two years later in Louisville & Nashville R. Co. v. Holloway, 246 U. S. 525 (1918), which held that an FELA defendant was not entitled to a jury instruction that the present value of future losses must as a matter of law be computed at the State’s 6 percent legal interest rate. The state trial court had properly refused to give an instruction that “sought to subject the jury’s estimate to [such a] rigid mathematical limitatio[n].” Id., at 528.¹⁰

There is nothing in Pfeifer to suggest that the judge rather than the jury is to determine the discount rate in FELA actions. There, we repeatedly indicated that the present value calculation is to be made by the “trier of fact.” See 462 U. S., at 534, 536, 538, 547-548, 550-551, n. 32. Of course, because Pfeifer was tried to the bench, the “trier of fact” in that case was a judge rather than a jury.

We do not mean to suggest that the judge in an FELA action is foreclosed from assisting the jury in its present value calculations. Indeed, because “ ‘[t]he average accident trial should not be converted into a graduate seminar on economic forecasting,’” id., at 548 (quoting Doca v. Marina Mercante Nicaraguense, S. A., 634 F. 2d 30, 39 (CA2 1980)), the judge has an obligation to prevent the trial proceedings on the present value issue from becoming unnecessarily prolonged and the jury from becoming hopelessly mired in “difficult mathematical computation.” It is therefore permissible for the judge to recommend to the jury one or more methods of calculating present value so long as the judge does not in effect pre-empt the jury’s function.¹¹ A trial judge’s instructions to the jury with regard to discount methods — provided that they do not “subject the jury’s estimate to . . . rigid mathematical limitatio[n],” Holloway, supra, at 528 — are entitled to substantial deference on appellate review.

In the present case, however, the trial judge instructed the jury that a zero discount rate was to be applied as a matter of law to appellee’s future damages. This instruction improperly took from the jury the essentially factual question of the appropriate rate at which to discount appellee’s FELA award to present value, and therefore requires reversal.

H-i <3

We conclude that Pennsylvania’s prejudgment interest and “total offset” rules were improperly applied to this FELA action. The judgment of the Pennsylvania Supreme Court is therefore reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

1 Rule 238 provides that, if the defendant made a pretrial settlement offer and the plaintiff’s recovery does not exceed 125 percent of that offer, the court cannot award “delay damages” for the period after the offer was made.

2 The three dissenting justices maintained that the trial court’s award of “delay damages” under Rule 238 contravened federal substantive law and “undermine[d] the national uniformity FELA was designed to achieve.” 513 Pa., at 102, 518 A. 2d, at 1179. They dismissed as “pure sophistry” the majority’s assertion that Rule 238 was a mere procedural device, observing that “[a]ny rule which increases a damage award by twenty-five percent has an undeniably material effect on damages.” Id., at 101-102, 518 A. 2d, at 1179. In addition, said the dissenters, the trial judge’s refusal to instruct the jury to discount any future damages to present value was inconsistent with federal law. The trial judge had “blindly applied” the Pennsylvania total offset rule, they asserted, and had not made the “deliberate choice” among present value theories required by St. Louis Southwestern R. Co. v. Dickerson, 470 U. S. 409 (1985). 513 Pa., at 100, 518 A. 2d, at 1178.

3 Other courts have uniformly recognized that the availability of prejudgment interest under the FELA is a question of federal law. See, e. g., Poleto v. Consolidated Rail Corporation, 826 F. 2d 1270, 1274 (CA3 1987); Louisiana & Arkansas R. Co. v. Pratt, 142 F. 2d 847, 848 (CA5 1944); Chicago, M., St. P. & P. R. Co. v. Busby, 41 F. 2d 617, 619 (CA9 1930); Carmouche v. Southern Pacific Transportation Co., 734 S. W. 2d (Tex. App. 1987); Wicks v. Central R. Co., 129 N. J. Super. 145, 147, 322 A. 2d 488, 489, cert. denied, 66 N. J. 317, 331 A. 2d 17 (1974); Mobile & O. R. Co. v. Williams, 219 Ala. 238, 249, 121 So. 722, 731 (1929).

4 The Court of Appeals for the Third Circuit recognized in an FELA action that Rule 238 is substantive in nature. Poleto v. Consolidated Rail Corporation, supra, at 1274. Indeed, even the Pennsylvania Supreme Court has acknowledged that Rule 238 has “both procedural and substantive elements.” Laudenberger v. Port Authority of Allegheny County, 496 Pa. 52, 66, 436 A. 2d 147, 154 (1981).

5 As Justice Blackmun’s dissent concedes, the authorities recognized even two decades after the enactment of the FELA that “interest usually was not awarded” in personal injury actions involving claims for both economic and noneconomic injury. Post, at 347 (citing McCormick § 56, p. 224).

6 In Pierce, the Government obtained a criminal judgment against a corporation, and a fine was imposed. The Government then brought a civil action against the corporation’s shareholders to satisfy the judgment. The Court held that the Government was entitled to interest only from the date of the civil judgment and not from the date of the prior criminal judgment. It was observed that “[a]t common law judgments do not bear interest; interest rests solely upon statutory provision.” 255 U. S., at 406. Accordingly, as the only applicable statute provided for postjudgment interest in civil actions, the Government could not obtain interest prior to the date of the civil judgment either as postjudgment interest in the criminal action or as prejudgment interest in the civil action.

7 Similarly, the Court refused in an early FELA ease to depart from the common-law rule that a right of action for personal injury was extinguished by the death of the injured party. See Michigan Central R. Co. v. Vreeland, 227 U. S. 59, 67-68 (1913). The Court noted that the FELA did not expressly provide for the survival of the injured employee’s right of action, and that state survival statutes were inapplicable because “[t]he question of survival is not one of procedure, ‘but one which depends on the substance of the cause of action.’” Id., at 67 (quoting Schreiber v. Sharpless, 110 U. S. 76, 80 (1884)).

8 Congress considered a proposal to authorize prejudgment interest under the general federal interest statute, 28 U. S. C. § 1961, during deliberations on the Federal Courts Improvement Act of 1982, Pub. L. 97-164, 96 Stat. 25. The proposal was omitted from the final legislation. S. Rep. No. 97-275, pp. 11-12 (1981).

9 Justice Blackmun’s dissent does not recognize the obvious difference between the instant case and previous cases in which the Court allowed prejudgment interest on certain pecuniary losses. See, e. g., General Motors Corp. v. Devex Corp., 461 U. S. 648, 654-656 (1983); Jacobs v. United States, 290 U. S. 13, 16-17 (1933); Waite v. United States, 282 U. S. 508, 509 (1931). In none of those cases did the plaintiff seek prejudgment interest on a cause of action arising under a statute that, like the FELA, was enacted at a time when prejudgment interest was generally unavailable on similar causes of action arising under the common law. The Court would have had no occasion in those cases to consider whether the Congress that adopted the statute under which prejudgment interest was sought intended to dispense sub silentio with a well-established common-law rule barring prejudgment interest on similar claims. Hence, we cannot accept the dissent’s characterization of our analysis as a “departure from our normal inquiry into the relation between an allowance of interest and Congress’ purpose in creating [the underlying] obligation.” Post, at 348.

10 A similar issue was presented in Vicksburg & Meridian R. Co. v. Putnam, 118 U. S. 545 (1886), a tort action brought against a railroad by an injured passenger. The trial judge had instructed the jury to calculate the present value of the plaintiff’s damages at the rate shown in standard annuity tables. This Court held that such an instruction “tended to mislead the jury ... by giving them to understand that the tables were not merely competent evidencé of the average duration of human life, and of the present value of life annuities, but furnished absolute rules which the law required them to apply in estimating the probable duration of the plaintiff’s life, and the extent of the injury which he had suffered. ” Id., at 557. The Court observed that “it has never been held that the rules to be derived from such tables or computations must be the absolute guides of the judgment and the conscience of the jury.” Id., at 554. The Court discussed this aspect of the Putnam decision in Chesapeake & Ohio R. Co. v. Kelly, 241 U. S. 485 (1916), without questioning its continued validity or intimating that a different rule might apply in FELA actions. See id., at 491-492.

11 Moreover, as we recognized in Pfeifer, “nothing prevents parties interested in keeping litigation costs under control from stipulating to [the ‘total offset’ method’s] use before trial.” 462 U. S., at 550.