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Mandate Recalled for Failure to Instruct District Court on Postjudgment Interest

March 09, 2009

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Last Month at the Federal Circuit - April 2009

Judges: Linn (author), Clevenger, Prost

[Appealed from: D.N.J., Senior Judge Lifland]

In Mars, Inc. v. Coin Acceptors, Inc., Nos. 07-1409, -1436 (Fed. Cir. Mar. 9, 2009), the Federal Circuit recalled its mandate issued in Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1374 (Fed. Cir. 2008). The original mandate failed to instruct the district court to award postjudgment interest, to which Mars, Inc. (“Mars”) was entitled under Fed. R. App. P. 37(b).

Mars requested recall of the mandate, alleging that it was deficient under Rule 37(b), which requires a mandate to contain instructions about the allowance of interest if the appellate court modifies or reverses a judgment. Here, the Federal Circuit reduced the amount of the district court’s damages award by holding that Mars lacked standing to recover damages from 1996 to 2003. It affirmed-in-part and reversed-in-part the judgment of the district court and remanded “for recalculation of damages for the period prior to 1996 and for further proceedings.” Slip op. at 1 (quoting Mars, 527 F.3d at 1374). While recognizing that the power to recall a mandate should be exercised sparingly, the Federal Circuit nonetheless found it appropriate here. Because the Court’s decision modified the district court’s judgment within the meaning of Rule 37(b), only it had the power to award postjudgment interest. The mandate erroneously did not contain any instruction concerning an award of interest, so the Court recalled the mandate to determine whether Mars was entitled to such an award.

To determine whether Mars was entitled to postjudgment interest, the Federal Circuit applied the law of the Third Circuit. In the Third Circuit, “determining whether post-judgment interest should run from the original judgment . . . turns on the degree to which the original judgment was upheld or invalidated.” Id. at 3-4 (alteration in original) (quoting Loughman v. Consol-Pennsylvania Coal Co., 6 F.3d 88, 97 (3d Cir. 1993)). Plaintiffs are generally entitled to postjudgment interest under Third Circuit law when a decision is closer to an affirmance than a reversal.

Here, the parties did not dispute that the Federal Circuit’s decision was closer to an affirmance. Thus, under Third Circuit law, postjudgment interest was appropriate from the date of the district court’s judgment—May 22, 2007. Coin Acceptors, Inc. (“Coinco”), however, offered two arguments against any award of postjudgment interest.

First, Coinco argued Mars unsuccessfully appealed an award of damages in its favor. In support of this argument, Coinco relied on various cases applying an old common law rule under which, “if a party takes an appeal from an award in his favor and is unsuccessful, he is not allowed interest pending the appeal upon what he got under the decree of the district court” because, by his appeal, he has made it impossible for the appellee to discharge the debt. Id. at 4 (citing Lauro v. United States, 168 F.2d 714, 716 (2d Cir. 1948)). The Federal Circuit rejected the argument, agreeing with the Second Circuit’s decision in Kotsopoulos v. Asturia Shipping Co., 467 F.2d 91, 94 (2d Cir. 1972), that Rule 37 supplanted the Lauro rule. The Federal Circuit concluded that, if the Third Circuit were confronted with Coinco’s argument, it would, like the Second Circuit, hold that Rule 37 abrogated the old common law rule.

Coinco next pointed out Mars’s six-month delay in filing its motion to recall as a basis to deny postjudgment interest. Although the Federal Circuit recognized that other circuits have cautioned that motions to recall a mandate for noncompliance with Rule 37(b) must be made “expeditiously,” it reminded that the Federal Circuit has taken a more lenient view and allowed an argument based on Rule 37(b) to go forward on appeal even when neither side pointed out the oversight when it occurred. The Court also found that Mars was not solely at fault for the delay because it was at least in part due to ongoing negotiations between the parties while Coinco unsuccessfully petitioned for certiorari. Accordingly, the Federal Circuit concluded that Mars’s motion to recall the mandate was timely and should be granted.