486 U.S. 330 (1988)

MONESSEN SOUTHWESTERN RAILWAY CO.
v.
MORGAN

No. 86-1743.

Supreme Court of United States.

Argued February 22, 1988 Decided June 6, 1988 APPEAL FROM THE SUPREME COURT OF PENNSYLVANIA

*331 Paul A. Manion argued the cause for appellant. With him on the briefs was James G. McLean.

*332 Thomas Hollander argued the cause for appellee. With him on the brief was Michael F. Campanella.^[*]

JUSTICE WHITE delivered the opinion of the Court.

This case concerns the application of state-law rules affecting the measure of damages in an action brought in state court under the Federal Employers' Liability Act (FELA), 35 Stat. 65, as amended, 45 U. S. C. § 51 et seq.

I

Appellee was employed by appellant as a railroad brakeman and conductor. In August 1977, appellee fell while alighting from a railroad car and suffered a permanent injury to his back. He returned to work in February 1979 in the less physically demanding position of radio and supply clerk.

Appellee brought an FELA action in the Court of Common Pleas of Allegheny County, Pennsylvania, alleging that his fall was attributable to appellant's negligence. He claimed that his future earning power had been impaired as a result of his injury because he could not obtain certain incentive and shift differential payments in his new position.

The trial judge refused to instruct the jury that any damages award for loss of future earnings would have to be reduced to present value. Instead, she informed the jury that "[t]he law now provides that there need not be such a reduction." App. 61. The judge apparently was referring to the Pennsylvania Supreme Court's decision in Kaczkowski v. Bolubasz, 491 Pa. 561, 583, 421 A. 2d 1027, 1038-1039 (1980), which had instructed state courts to cease discounting future lost earnings to present value because "as a matter of law . . . future inflation shall be presumed equal to future interest rates with these factors offsetting."

The jury found in favor of appellee and awarded damages of $125,000. The trial judge assessed an additional $26,712.50 as prejudgment interest pursuant to Rule 238 of the Pennsylvania *333 Rules of Civil Procedure. Rule 238 requires state courts in personal injury actions to "add to the amount of compensatory damages . . . , damages for delay at ten (10) percent per annum, not compounded," from "the date the plaintiff filed the initial complaint in the action or from a date one year after the accrual of the cause of action, whichever is later," to the date of the verdict.^[1] The judge rejected appellant's contention that Rule 238 could not be applied to FELA actions.

A three-judge panel of the Pennsylvania Superior Court affirmed. 339 Pa. Super. 465, 489 A. 2d 254 (1985).

The Pennsylvania Supreme Court granted appellant's petition for allowance of appeal and subsequently affirmed by a narrow margin. 513 Pa. 86, 518 A. 2d 1171 (1986).

The court characterized Rule 238 as a mere "rule of procedure" designed to encourage meaningful settlement negotiations and thereby alleviate congestion in the trial courts. Id., at 98-99, 518 A. 2d, at 1177. The court concluded that, as neither the "worthy goal" nor the specific provisions of Rule 238 contravened the purposes and provisions of the FELA, the Pennsylvania courts could apply Rule 238 to award prejudgment interest in FELA cases as well as in cases involving only state law. Ibid.

The court recognized that whether the trial judge had properly refused to instruct the jury to discount future damages to present value, and instead applied the so-called "total offset" method, was a question of federal law. See St. Louis Southwestern R. Co. v. Dickerson, 470 U. S. 409, 411 (1985) (per curiam). The court noted our discussion of a Federal District Court's use of Pennsylvania's total offset rule in Jones & Laughlin Steel Corp. v. Pfeifer, 462 U. S. 523 (1983), a case brought under the Longshoremen's and Harbor *334 Workers' Compensation Act (LHWCA), 33 U. S. C. § 904. We held in Pfeifer that "whatever rate the District Court may choose to discount the estimated stream of future earnings, it must make a deliberate choice, rather than assuming that it is bound by a rule of state law." 462 U. S., at 552-553. Here, the trial judge's use of the total offset rule was held to have been permissible under Pfeifer because the reviewing court had itself "deliberately selected" that rule in Kaczkowski v. Bolubasz "after a thorough consideration of various present worth theories and rules." 513 Pa., at 92-93, 518 A. 2d, at 1174. Nor did the court find any inconsistency between the trial judge's use of the total offset rule and our holding in Dickerson that "an utter failure to instruct the jury that present value is the proper measure of [an FELA] damages award is error." 470 U. S., at 412. Here, reasoned the court, "the trial judge did instruct the jury on present value by charging on the total offset method." 513 Pa., at 94-95, 518 A. 2d, at 1175.^[2]

We noted probable jurisdiction, 484 U. S. 813 (1987), and now reverse.

II

We first consider whether state courts may award prejudgment interest pursuant to local practice in actions brought under the FELA.

*335 A

State courts are required to apply federal substantive law in adjudicating FELA claims. Dickerson, supra, at 411; Chesapeake & Ohio R. Co. v. Kuhn, 284 U. S. 44, 46-47 (1931). It has long been settled that "the proper measure of damages [under the FELA] is inseparably connected with the right of action," and therefore is an issue of substance that "must be settled according to general principles of law as administered in the Federal courts." Chesapeake & Ohio R. Co. v. Kelly, 241 U. S. 485, 491 (1916); see also Dickerson, supra, at 411; Norfolk & Western R. Co. v. Liepelt, 444 U. S. 490, 493 (1980).

The question of what constitutes "the proper measure of damages" under the FELA necessarily includes the question whether prejudgment interest may be awarded to a prevailing FELA plaintiff. Prejudgment interest is normally designed to make the plaintiff whole and is part of the actual damages sought to be recovered. West Virginia v. United States, 479 U. S. 305, 310, and 310-311, n. 2 (1987); General Motors Corp. v. Devex Corp., 461 U. S. 648, 655-656 (1983); Poleto v. Consolidated Rail Corporation, 826 F. 2d 1270, 1278 (CA3 1987); Wilson v. Burlington Northern R. Co., 803 F. 2d 563, 566 (CA10 1986) (McKay, J., concurring), cert. denied, 480 U. S. 946 (1987). Moreover, prejudgment interest may constitute a significant portion of an FELA plaintiff's total recovery. Here, for example, the trial court's award of $26,712.50 in prejudgment interest under Rule 238 increased appellee's total recovery by more than 20 percent. Accordingly, the Pennsylvania courts erred in treating the availability of prejudgment interest in FELA actions as a matter of state law rather than federal law.^[3]

*336 The Pennsylvania courts cannot avoid the application of federal law to determine the availability of prejudgment interest under the FELA by characterizing Rule 238 as nothing more than a procedural device to relieve court congestion. In Dice v. Akron, C. & Y. R. Co., 342 U. S. 359 (1952), the Ohio courts had applied a state procedural rule in an FELA action that permitted the judge rather than the jury to resolve factual questions as to whether a release had been fraudulently obtained. We reversed on the ground that "the right to trial by jury is too substantial a part of the rights accorded by the Act to permit it to be classified as a mere `local rule of procedure' for denial in the manner that Ohio has here used." Id., at 363. See also Brown v. Western R. Co. of Alabama, 338 U. S. 294, 298-299 (1949). Similarly, prejudgment interest constitutes too substantial a part of a defendant's potential liability under the FELA for this Court to accept a State's classification of a provision such as Rule 238 as a mere "local rule of procedure."^[4] We therefore turn to the issue whether federal law authorizes awards of prejudgment interest in FELA actions.

B

Neither the FELA itself nor the general federal interest statute, 28 U. S. C. § 1961, makes any mention of prejudgment interest. It is true that Congress' silence as to the availability of interest on an obligation created by federal law does not, without more, "manifes[t] an unequivocal congressional *337 purpose that the obligation shall not bear interest." Rodgers v. United States, 332 U. S. 371, 373 (1947).

We can discern a sufficiently clear indication of legislative intent with regard to prejudgment interest under the FELA, however, when we consider Congress' silence on this matter in the appropriate historical context. In 1908, when Congress enacted the FELA, the common law did not allow prejudgment interest in suits for personal injury or wrongful death. See C. McCormick, Law of Damages § 56 (1935); 1 T. Sedgwick, Measure of Damages § 316 (9th ed. 1912).^[5] This was the rule in the federal courts. Pierce v. United States, 255 U. S. 398, 406 (1921);^[6]Mowry v. Whitney, 14 Wall. 620, 653 (1872); see also Poleto, supra, at 1276, 1278; Wilson, supra, at 565; Louisiana & Arkansas R. Co. v. Pratt, 142 F. 2d 847, 848 (CA5 1944). Congress expressly dispensed with other common-law doctrines of that era, such as the defense of contributory negligence, see 45 U. S. C. § 53, in order "to provide liberal recovery for injured workers" under the FELA. Kernan v. American Dredging Co., 355 U. S. 426, 432 (1958). But Congress did not deal at all with the equally well-established doctrine barring the recovery of prejudgment *338 interest, and we are unpersuaded that Congress intended to abrogate that doctrine sub silentio.^[7]

Moreover, we have recognized that Congress' failure to disturb a consistent judicial interpretation of a statute may provide some indication that "Congress at least acquiesces in, and apparently affirms, that [interpretation]." Cannon v. University of Chicago, 441 U. S. 677, 703 (1979); see also Gulf Oil Corp. v. Copp Paving Co., 419 U. S. 186, 200-201 (1974); Flood v. Kuhn, 407 U. S. 258, 283-284 (1972). The federal and state courts have held with virtual unanimity over more than seven decades that prejudgment interest is not available under the FELA. See, e. g., Poleto, 826 F. 2d, at 1279; Wilson, 803 F. 2d, at 566; Kozar v. Chesapeake & Ohio R. Co., 449 F. 2d 1238, 1244 (CA6 1971); Pratt, supra, at 848-849; Chicago, M., St. P. & P. R. Co. v. Busby, 41 F. 2d 617, 619 (CA9 1930); Carmouche v. Southern Pacific Transportation Co., 734 S. W. 2d 46, 47 (Tex. App. 1987); Melin v. Burlington Northern R. Co., 401 N. W. 2d 418, 420 (Minn. App. 1987); Wicks v. Central R. Co., 129 N. J. Super. 145, 147, 322 A. 2d 488, 489, cert. denied, 66 N. J. 317, 331 A. 2d 17 (1974); Murmann v. New York, N. H. & H. R. Co., 258 N. Y. 447, 450, 180 N. E. 114, 115 (1932) (per curiam); Mobile & O. R. Co. v. Williams, 219 Ala. 238, 249, 121 So. 722, 731 (1929); Bennett v. Atchison, T. & S. F. R. Co., 187 Iowa 897, 903-904, 174 N. W. 805, 807 (1919); Grow v. Oregon Short Line R. Co., 47 Utah 26, 29, 150 P. 970, 971 (1915). Congress has amended the FELA on several occasions since 1908. See 36 Stat. 291 (1910); 53 Stat. 1404 (1939); 62 Stat. *339 989 (1948). Yet, Congress has never attempted to amend the FELA to provide for prejudgment interest.^[8] We are unwilling in the face of such congressional inaction to alter the longstanding apportionment between carrier and worker of the costs of railroading injuries. If prejudgment interest is to be available under the FELA, then Congress must expressly so provide.^[9]

III

We turn now to the question whether the trial court acted consistently with federal law in instructing the jury not to discount appellee's future lost earnings to present value.

We have consistently recognized that "damages awards in suits governed by federal law should be based on present value." Dickerson, 470 U. S., at 412. The "self-evident" reason is that "a given sum of money in hand is worth more than the like sum of money payable in the future." Kelly, 241 U. S., at 489; see also Dickerson, supra, at 412. And, as *340 Kelly and Dickerson demonstrate, the rule governs in FELA cases. Hence, a "failure to instruct the jury that present value is the proper measure of a damages award is error." 470 U. S., at 412.

Here, the trial court instructed the jury that although it "used to be" that juries were to reduce an award to "something called present worth," the law now provided that there need not be such a reduction. Tr. 701-702. The "law" referred to was the Pennsylvania Supreme Court's decision in Kaczkowski v. Bolubasz, 491 Pa. 561, 421 A. 2d 1027 (1980), which held that future inflation would be conclusively presumed to equal future interest rates and that state courts in Pennsylvania therefore were not to reduce damages to present worth. It was error for the court to have refused on the basis of this state rule to allow an FELA award to be reduced to present value, just as it was error for the court in Pfeifer to have failed to make "a deliberate choice" as to how an LHWCA award was to be reduced to present value and to have "assum[ed] that it [was] bound by a rule of state law." 462 U. S., at 553.

Under the Court's FELA cases, the jury has the task of making the present value determination. It was observed in Kelly, for example, that "it may be a difficult mathematical computation for the ordinary juryman to calculate interest on deferred payments, with annual rests, and reach a present cash value." 241 U. S., at 491. We declined to decide in that case "[w]hether the difficulty should be met by admitting the testimony of expert witnesses, or by receiving in evidence the standard interest and annuity tables in which present values are worked out at various rates of interest and for various periods covering the ordinary expectancies of life." Ibid. We did not suggest that the difficulty could also be met by permitting the present value calculation to be made by the judge rather than the jury.

The question was addressed more directly two years later in Louisville & Nashville R. Co. v. Holloway, 246 U. S. 525 *341 (1918), which held that an FELA defendant was not entitled to a jury instruction that the present value of future losses must as a matter of law be computed at the State's 6 percent legal interest rate. The state trial court had properly refused to give an instruction that "sought to subject the jury's estimate to [such a] rigid mathematical limitatio[n]." Id., at 528.^[10]

There is nothing in Pfeifer to suggest that the judge rather than the jury is to determine the discount rate in FELA actions. There, we repeatedly indicated that the present value calculation is to be made by the "trier of fact." See 462 U. S., at 534, 536, 538, 547-548, 550-551, n. 32. Of course, because Pfeifer was tried to the bench, the "trier of fact" in that case was a judge rather than a jury.

We do not mean to suggest that the judge in an FELA action is foreclosed from assisting the jury in its present value calculations. Indeed, because " `[t]he average accident trial should not be converted into a graduate seminar on economic forecasting,' " id., at 548 (quoting Doca v. Marina Mercante Nicaraguense, S. A., 634 F. 2d 30, 39 (CA2 1980)), the judge has an obligation to prevent the trial proceedings on the *342 present value issue from becoming unnecessarily prolonged and the jury from becoming hopelessly mired in "difficult mathematical computation." It is therefore permissible for the judge to recommend to the jury one or more methods of calculating present value so long as the judge does not in effect pre-empt the jury's function.^[11] A trial judge's instructions to the jury with regard to discount methods — provided that they do not "subject the jury's estimate to . . . rigid mathematical limitatio[n]," Holloway, supra, at 528 — are entitled to substantial deference on appellate review.

In the present case, however, the trial judge instructed the jury that a zero discount rate was to be applied as a matter of law to appellee's future damages. This instruction improperly took from the jury the essentially factual question of the appropriate rate at which to discount appellee's FELA award to present value, and therefore requires reversal.

IV

We conclude that Pennsylvania's prejudgment interest and "total offset" rules were improperly applied to this FELA action. The judgment of the Pennsylvania Supreme Court is therefore reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

JUSTICE BLACKMUN, with whom JUSTICE MARSHALL joins, concurring in part and dissenting in part.

I agree with the Court's conclusion that the availability of prejudgment interest in a suit under the Federal Employers' Liability Act (FELA), 35 Stat. 65, as amended, 45 U. S. C. § 51 et seq., is governed by federal law, and that the state trial court therefore was not at liberty to supplement appellee's judgment on the basis of Rule 238 of the Pennsylvania *343 Rules of Civil Procedure. I also agree with the Court's conclusion that the trial court erred in refusing to instruct the jury on present value pursuant to federal law. Accordingly, I join Parts I, II-A, and III of the Court's opinion. Because the Court's hasty decision that prejudgment interest is uniformly unavailable in FELA actions fails to follow the teaching of our prior cases and undermines the FELA's system of compensation, I dissent from Part II-B.

I

Section 1 of the FELA, 45 U. S. C. § 51, provides that a railroad "shall be liable in damages to any [employee] suffering injury . . . from the negligence" of the railroad or its employees. Enacted to ensure compensation for railroad workers injured by the negligence of their employers or of their fellow employees, the FELA uses broad language that, in turn, "has been construed even more broadly" by this Court, consistent with its assessment of congressional intent. Atchison, T. & S. F. R. Co. v. Buell, 480 U. S. 557, 561-562 (1987); see Kernan v. American Dredging Co., 355 U. S. 426, 432 (1958). This Court has "accepted [a] standard of liberal construction in order to accomplish" the "Act's humanitarian purposes." Urie v. Thompson, 337 U. S. 163, 180 (1949); Atchison, T. & S. F. R. Co. v. Buell, supra, at 562. In accord with these principles, appellee is entitled under the FELA to interest on the money awarded to him as damages for his economic losses, here lost earnings, between the time of his injury and the time of trial.^[1]

*344 A

Although the FELA allows recovery of "damages," it does not specifically state that "damages" includes interest. Nonetheless, "in the absence of an unequivocal prohibition of interest . . . , this Court has fashioned rules which granted or denied interest on particular statutory obligations by an appraisal of the congressional purpose in imposing them and in the light of general principles deemed relevant by the Court." Rodgers v. United States, 332 U. S. 371, 373 (1947). Plainly, the "congressional purpose" in providing a damages award under the FELA was to compensate a worker for his injury. Nothing in the legislative history or in our decisions suggests that this compensation was intended to be anything less than what was required to compensate him fully. The relevant "general principle" employed by this Court in interpreting the FELA is the provision of liberal recovery under flexible remedies. See Kernan v. American Dredging Co., 355 U. S., at 432 ("[I]t is also clear that Congress intended the creation of no static remedy, but one which would be developed and enlarged to meet changing conditions and changing concepts of industry's duty toward its workers"). Together, purpose and principle indicate the allowance of interest in FELA cases.

To compensate an injured rail employee fully for income lost prior to trial, it is necessary to award not only the amount of the lost income, but also interest on that income for the time the employee did not have the use of it. "The interest foregone on lost income or on money spent for out-of-pocket expenses from the date of loss to the time of compensation is as much a part of making an injured party whole as is the calculation of her wage rate." Wilson v. Burlington Northern R. Co., 803 F. 2d 563, 566 (CA10 1986) (concurring *345 opinion), cert. denied, 480 U. S. 946 (1987). In recognition of the principle that an interest award may be necessary to provide full compensation, this Court, in other contexts, repeatedly has authorized prejudgment interest for economic injury when the purpose of the overall award is to make the plaintiff whole. See General Motors Corp. v. Devex Corp., 461 U. S. 648, 654-656 (1983) (patent infringement); Jacobs v. United States, 290 U. S. 13, 16-17 (1933) (eminent domain); Waite v. United States, 282 U. S. 508, 509 (1931) (patent infringement); Miller v. Robertson, 266 U. S. 243, 256-259 (1924) (contract). In short, it cannot be denied that an award of interest on pretrial economic losses in an FELA case is necessary to make the injured worker whole, and that making the worker whole is the purpose of the FELA.^[2] It would seem apparent, therefore, that, under our normal method of deciding such questions, a prejudgment interest award is appropriate in an FELA case.

B

In reaching the opposite conclusion, the Court relies principally on a common-law rule that barred prejudgment interest in suits for personal injury or wrongful death. Ante, at 337-338.^[3] From the combination of this common-law rule *346 and the FELA's silence on interest, the Court would discern a congressional intent to disallow interest awards entirely in FELA cases — an intent, in effect, to deny full compensation to workers covered by the FELA.^[4] Closer scrutiny of the development of interest and damages law, however, reveals the flaws in this facile analysis.

The common law's hostility to interest awards usually is traced to the medieval view of interest as an evil thing. See D. Dobbs, Law of Remedies § 3.5, p. 165 (1973); C. McCormick, Law of Damages § 51 (1935). Before the time of Henry VIII, English common law prohibited the payment of interest even for the lending of money. 1 T. Sedgwick, Measure of Damages § 283 (9th ed. 1912). The abhorrence of all forms of interest gradually receded, so that, by the time of the FELA's enactment, it was "almost universally held in this country that interest is in the proper case given as damages by the common law." § 293; 1 T. Sedgwick, Measure of *347 Damages § 293 (8th ed. 1891). Thus, to an authority writing in 1891, 17 years before the passage of the FELA, "[t]he gradual extension of the principles allowing interest as damages [was] clear." § 297.

To be sure, claims for interest often were summarily dismissed in personal injury and wrongful-death suits. See McCormick § 56, p. 224. It was, nonetheless, "the prevailing view [that] interest may be allowed in all actions of tort where the loss is pecuniary," 1 T. Sedgwick, Measure of Damages § 316, p. 630 (9th ed. 1912), and, even prior to the FELA, interest sometimes was allowed on economic losses that had resulted from personal injury. See Washington & Georgetown R. Co. v. Hickey, 12 App. D. C. 269, 275-276 (1898); Georgia R. & Banking Co. v. Garr, 57 Ga. 277, 280 (1876); see also Ell v. Northern Pacific R. Co., 1 N. D. 336, 353, 48 N. W. 222, 227 (1891) (pursuant to statute). However, because claims for lost earnings in personal injury suits frequently were joined with claims for noneconomic injury, such as pain and suffering, interest usually was not awarded. McCormick § 56, p. 224. Thus, the generalization about the unavailability of interest was criticized by Professor McCormick as "hasty and injudicious": "It seems clearly desirable that the jury should at least be permitted, if not required, to add interest as compensation for delay in payment of those purely pecuniary losses which result from an injury to the person." Ibid.

Against this background, one might conclude that, in mandating that railroads "shall be liable in damages," Congress actually intended not to provide a blanket award of prejudgment interest on personal injury and wrongful-death awards under the FELA. Certainly, many FELA remedies, such as recovery for past pain and suffering and for future damages, are widely viewed in the context of personal injury litigation as inappropriate objects for an interest award even today. See, e. g., Poleto v. Consolidated Rail Corporation, 826 F. 2d 1270, 1278, n. 14 (CA3 1987); Comment, Prejudgment *348 Interest: An Element of Damages Not To Be Overlooked, 8 Cumberland L. Rev. 521, 536-537 (1977). This is so because interest on these elements of damages is not necessary to full compensation.^[5] It should not be concluded, however, that Congress intended to deny interest on past economic losses, such as the lost wages that are a part of the recovery appellee seeks here. Therefore, the Court's departure from our normal inquiry into the relation between an allowance of interest and Congress' purpose in creating an obligation, and the Court's indifference to the policy of liberal recovery under the FELA, are without justification.

C

The Court's conclusion about the unavailability of interest in FELA actions is particularly curious coming, as it does, in a case which also involves the method of discounting an award of future damages to present value. Awarding prejudgment interest and discounting to present value are really two sides of the same coin. For precisely the same reason that " `a given sum of money in hand is worth more than the like sum of money payable in the future,' " ante, at 339, quoting Chesapeake & Ohio R. Co. v. Kelly, 241 U. S. 485, 489 (1916), a given sum of money in hand is worth less than the like sum of money had it been paid in the past. It is hard to see how the Court can recognize that the meaning of "damages" under the FELA requires that future lost earnings be discounted to present value, but fail to recognize that the same term encompasses a mandate that past lost earnings be increased to present value, through the use of prejudgment *349 interest. In effect, the Court thus only half-recognizes the principle that an FELA plaintiff is entitled to recover " `the damages . . . [that] flow from the deprivation of . . . pecuniary benefits.' " Norfolk & Western R. Co. v. Liepelt, 444 U. S. 490, 493 (1980), quoting Michigan Central R. Co. v. Vreeland, 227 U. S. 59, 70 (1913).

Indeed, in previous discussions of present-value calculations, we have recognized the symmetry between discounting to present value and awarding prejudgment interest. In Jones & Laughlin Steel Corp. v. Pfeifer, 462 U. S. 523, 538, n. 22 (1983), the Court instructed:

"It is . . . more precise to discount the entire lost stream of earnings back to the date of injury — the moment from which earning capacity was impaired. The plaintiff may then be awarded interest on that discounted sum for the period between injury and judgment, in order to ensure that the award when invested will still be able to replicate the lost stream."^[6]

This Court has held that the present-value principles of Pfeifer apply in FELA actions. See St. Louis Southwestern R. Co. v. Dickerson, 470 U. S. 409, 411-412 (1985) (per curiam).

II

In sum, I conclude that prejudgment interest on past economic loss is available as part of the damages award in FELA *350 cases. This reading of the statute comports with the congressional intent to provide liberal recovery under the FELA. Of cou