Milwaukee v. Cement Div., National Gypsum Co. - Oral Argument - April 24, 1995

Milwaukee v. Cement Div., National Gypsum Co.

Media for Milwaukee v. Cement Div., National Gypsum Co.

Audio Transcription for Opinion Announcement - June 12, 1995 in Milwaukee v. Cement Div., National Gypsum Co.

Audio Transcription for Oral Argument - April 24, 1995 in Milwaukee v. Cement Div., National Gypsum Co.

William H. Rehnquist:

We'll hear argument next in Number 94-788, the City of Milwaukee v. Cement Division, National Gypsum Company.

Mr. Strauss.

David A. Strauss:

Thank you, Mr. Chief Justice, and may it please the Court:

The question in this case is whether a district court in an admiralty collision case may in the exercise of its discretion withhold prejudgment interests on the ground that the plaintiff was the party predominantly at fault, and that the defendant, throughout much of the litigation, had reason to believe it would not be held liable at all.

The collision involved in this case occurred on Christmas Eve, 1979, when a storm blew up in Lake Michigan near Milwaukee.

A ship called the EM FORD, loaded with cement, broke away from its mooring, crashed into its berth, took on water, and sunk.

The respondents are the owners and insurers of the ship, and they sued in admiralty for $6.5 million.

They claim that the city was negligent in not warning of the danger of storms.

The city denied negligence and said that the accident had been caused by the negligence of the ship's master in leaving the ship essentially unattended in its berth, without any means to monitor the weather or to call for help.

The city also counterclaimed for a quarter of a million dollars in damage to its dock.

The suit didn't come to trial until 1986, at which point the issue of liability was tried.

The district court decided the liability issue in 1989, and it ruled at that point that the respondents were almost entirely at fault.

Specifically, the city was liable for only 4 percent of the damages.

That ruling of the district court, 10 years after the accident, was reversed by the Seventh Circuit a year later.

The Seventh Circuit held that the district court had inadequately explained its apportionment of liability.

Instead of remanding, however, the Seventh Circuit itself reapportioned the liability, still assigning the bulk of the share to respondents, two-thirds to respondents, one-third to the city.

At that point, the parties entered into a settlement agreement on the liability issue.

The city agreed to pay $1.67 million, compared to the $6.5 million initially sought, to the respondents.

The parties further agreed in this settlement that the district court would determine whether prejudgment interest was to be awarded, and if so, in what amount.

The district court then denied the respondents' request for $5.3 million in prejudgment interest.

The district court recognized, and it is common ground here, that in admiralty the presumption is in favor of awarding prejudgment interest, but the district court denied prejudgment interest in this case on the ground that the plaintiff was far more at fault than the city, and that throughout most of the litigation, nearly all of the litigation, there was a good chance that the city would not be held liable in any way.

The Seventh Circuit again reversed, holding that the district court may never exercise discretion to withhold prejudgment interest on the grounds that the plaintiff was at fault, and this Court then granted certiorari.

Now, there is no general Federal prejudgment interest statute.

Instead, judge-made rules govern prejudgment interest in Federal courts in admiralty, and in cases arising under Federal statutes that are silent on the matter of prejudgment interest.

The one constant in these--

William H. Rehnquist:

Are you saying there's no Federal statute governing prejudgment interest, period, or prejudgment interest in admiralty cases?

David A. Strauss:

--There is no Federal statute governing prejudgment interest in admiralty cases.

There's also no umbrella Federal statute, as there is for postjudgment interest.

There are prejudgment interest provisions in certain specific Federal programmatic statutes.

In the judge-made cases that govern admiralty and also the Federal statutes that are silent on prejudgment interests, the one constant has been that an award of prejudgment interest is by no means automatic, as this Court said in its most recent such case.