Chattem, Inc. v. Bailey

Background

A private plaintiff sued a defendant in a diversity case claiming fraud and breach of contract. A jury first awarded damages to the plaintiff, but on appeal that judgment was vacated because the jury instructions were inadequate. After a second trial, a new jury again favored the plaintiff with a larger award, and that second judgment was affirmed on appeal. The plaintiff asked the trial court to calculate postjudgment interest from the date of the original judgment; the defendant opposed, citing 28 U.S.C. § 1961’s phrase that interest “shall be calculated from the date of the entry of the judgment.” The trial court sided with the defendant, but the Sixth Circuit reversed and used the original judgment date.

Reasoning

The core question is whether interest under § 1961 should run from the first judgment date or only from the later judgment after a vacated judgment and retrial. The opinion explains that some federal appeals courts read § 1961 narrowly and refuse to count a judgment later vacated on appeal, while others, including the Sixth Circuit here, read the statute broadly and award interest from the first judgment in the plaintiff’s favor. The text shows this disagreement among several circuits, citing specific circuit decisions on both sides.

Real world impact

Because the Supreme Court declined review, this disagreement among appeals courts remains. The choice of which appeals court rule applies can affect how much interest a prevailing plaintiff can collect and what defendants may ultimately owe. The split creates uneven results in different federal circuits and ongoing uncertainty for litigants.

Dissents or concurrances

Justice White dissented from the denial of review and stated he would have granted certiorari to resolve the circuit split over § 1961.