Example

Plaintiff wins a jury verdict in her favor on an employment discrimination suit. The district court enters judgment, awarding plaintiff $90,000 in damages.The court also awards attorney’s fees, but postpones setting the fees until a later time (presumably after the court reviews the attorneys’ billing records).Because of court backlog and delay, the court determines the fees and related expenses 16 months after the judgment date.

When should the time period for the postjudgment interest on the attorney’s fees begin to run: at the time of the original judgment, or later, only after the court has actually quantified the fee amounts?

This issue has divided the federal circuit courts in recent years. At issue is 28 U.S.C. 1961 (a), which provides that “[i]nterest shall be allowed on any money judgment.” (emphasis added).

The Third Circuit has reasoned that the plain meaning of the term “money judgment” requires that there be “definite and certain designation of the amount which plaintiff is owed by defendant.” Eaves v. County Cape May, 239 F.3d 527 (2001). The court explained that post-judgment interest on an award of attorney fees runs from the date the award is quantified, not the date that the plaintiff became entitled to the award.

The Fifth, Sixth, Eighth, Ninth, Eleventh and Federal Circuits, however, have held that postjudgment interest on an attorney’s fee award runs from the date that the district court enters a judgment that the prevailing party is merely entitled to such an award—a definite amount need not be set. These courts hold that this approach serves the underlying purpose of § 1961, which “is to compensate the successful plaintiff for being deprived of compensation for the loss from the time between the ascertainment of the damage and the payment by the defendant.” Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 835-36 (1990) (quoting Poleto v. Consol. Rail Corp., 826 F.2d 1270 (3d Cir. 1985)). Because a dollar today is worth more than a dollar in the future, the only way a party can be made whole is to grant interest from the time of the award of fees. “Any other rule would effectively reduce the judgment for attorneys' fees.” Associated Gen. Contrs. of Ohio, Inc. v. Drabik, 250 F.3d 482 (6th Cir. 2001) (stating the majority rule and criticizing the minority approach of the Eaves court).

See a related article by Shannon Duffy,“3rd Circuit Takes Minority View on Legal Fee Interest,” in The Legal Intelligencer(January 21, 2001).