Bars to the payment of prejudgment interest: The Supreme Court and the Federal Employers' Liability Act

Date06 September 2000
Published date06 September 2000
AuthorDavid E Ault,Gilbert L Rutman
David E. Ault and Gilbert L. Rutman
In Monesson Southwestern Railway Co. v. Morgan, 1 the
U.S. Supreme Court,
hereafter referred to as the Court, stated clearly that prejudgment interest was
not permitted in cases brought under the Federal Employers' Liability Act
(FELA). The Court's opinion rests upon its interpretation of common law on
personal injury cases and Congressional intent when FELA was first enacted.
In its opinion, the Court states that common law did not permit the payment of
prejudgment interest in personal injury cases at the time that FELA became
law. Further, had Congress wished to do so, it could have done so by explicitly
permitting the payment of prejudgment interest in the legislation or in any of
the subsequent amendments to the original 1908 law. The fact that the law is
silent on this matter indicates that Congress did not wish to make the payment
of prejudgment interest possible when awarding damages in FELA cases.
The effect of the Court's refusal to permit the payment of prejudgment
interest, in effect, creates an unrequited loan that is made by the plaintiff to the
defendant. Regardless of the amount of time that lapses between the date upon
which the plaintiff's damages occurred and the date upon which judgment as
to damages is awarded, the Court does not permit the payment of interest to
compensate for the loss of the use of these funds by the plaintiff during the
prejudgment period. The Court, however, has never made it clear as to the
Research in Law and Economies, Volume 19, pages 113-137.
Copyright O 2000 by JAl/FJsevier Inc.
All Hghts of reproduction in any form reserved.
ISBN: 0-7623-0308-5
interest concept that is being considered in these cases. Is the Court referring
to nominal rates of interest or 'real' rates of interest, that is, nominal rates of
interest adjusted for expected inflation?
In this paper, we will examine the Supreme Court's arguments with respect
to the payment of prejudgment interest within the context of precedents
established in U.S. common law. FELA addresses the recovery of damages as
the result of injuries incurred while participating in interstate commerce. While
the law itself deals only with injuries incurred while working on the railroads,
the law and the body of decisions that have resulted from the interpretation of
the law have influenced the entire body of law regarding the recovery of
damages as the result of personal injury or death. 2
While FELA was enacted in 1908 and involved railroads, at that time one of
the most important, if not the most important, employer in the U.S., the law
remains one of the most important guides to the recovery of damages resulting
from most forms of personal injuries. Recent precedent decisions, for example,
have involved the calculation of damage awards when retirement benefits and
contributions are not directly tied to one another. 3
The Court's position that prejudgment interest is prohibited in FELA cases
rests on the nature of common law and an understanding of the development of
the concepts of tort, negligence, 'nominalism', and usury. The transition of the
U.S. economy from one based primarily upon agriculture to one based on its
industrial sector also appears to play a significant role in the Court's decisions
with respect to the issue of the payment of interest in damage cases. This paper
begins with a discussion of the Federal Employers' Liability Act, analyzes the
Supreme Court's position on prejudgment interest in light of common law and
the role of nominalism in personal injury cases, and concludes with some
remarks on the rationale for this exclusion.
The Federal Employers' Liability Act was enacted in 1908. The act repealed
the provisions of the Masters and Servants Acts and the body of common law
associated with these acts and restructured the conditions under which damages
could be awarded as the result of death or injury while working on a railroad. 4
At the time the law was enacted, Congress could, had it desired to do so, have
permitted the payment of prejudgment interest. The Court has argued that
common law prohibited the payment of prejudgment interest at the time FELA
was passed; and the fact that other aspects related to common law were
changed is an indication that Congress never intended for prejudgment interest
to be paid. The Court's position that Congress never intended for prejudgment

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