LIBRARY OF CONGRESS, ET AL., PETITIONERS V. TOMMY SHAW No. 85-54 In the Supreme Court of the United States October Term, 1985 On Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit Reply Brief for the Petitioners Respondent has failed to challenge most of the legal propositions established in our opening brief. He barely contests, for example, our submission (Gov't Br. 11-17) that Congress must be found to have clearly and affirmatively contemplated an award of interest against the United States before the "no-interest rule" may be deemed waived. He does not deny that Congress's usual approach, when it has wished to make interest available against the government, has been to do so in terms, spelling out the applicable procedures and rates (see Gov't Br. 21-25). He does not suggest that Congress -- in either the language or the legislative history of Title VII -- so much as adverted to the availability of interest (see Gov't Br. 17-21). And he makes virtually no attempt to defend the analysis propounded by the court of appeals in this case: that 42 U.S.C. 2000e-5(k) is an express waiver of the government's sovereign immunity as to interest. Yet the arguments that respondent offers in the place of that thesis are uniformly unconvincing. 1. a. Respondent's principal legal contention (Br. 14-24) is that the "no-interest rule" simply does not apply to claims for prejudgment interest; he insists that "virtually all" of the cases cited in our opening brief relating to the operation of the rule involved post-judgment interest (Br. 22). But this simply is not so. To the contrary, virtually all of the decisions cited in our brief stand for the proposition that "no interest can be allowed upon any claim against the government up to the time of the rendition of judgment" (United States v. Verdier, 164 U.S. 213, 218 (1896) (emphasis added)) -- and many refused to award prejudgment interest despite delays prior to judgment that were far longer than the one in this case. See, e.g., United States v. Alcea Band (Tillamooks), 341 U.S. 48, 49 (1951) (although liability accrued in 1855, prejudgment interest not allowed when judgment awarded in 1950); United States v. North American Co., 253 U.S. 330, 335-336, 338(1920) (interest unavailable where liability accrued 20 years prior to judgment). Accord United States v. N.Y. Rayon Importing Co., 329 U.S. 654, 658(1947); United States v. Thayer-West Point Hotel Co., 329 U.S. 585, 588-590(1947); United States v. Goltra, 312 U.S. 203, 205, 207(1941); United States v. Worley, 281 U.S. 339, 340, 343-344(1930); United States v. Commonwealth & Dominion Line, Ltd., 278 U.S. 427, 428(1929); Verdier, 164 U.S. at 218; Tillson v. United States, 100 U.S. 43, 47(1879). See generally United States v. Louisiana, 446 U.S. 253, 261-265 (1980); Albrecht v. United States, 329 U.S. 599, 601, 603 (1947); Smyth v. United States, 302 U.S. 329, 354 (1937). /1/ Similarly, the early Attorneys General Opinions (see Gov't Br. 12) propounding and applying the "no-interest rule" to claims paid by Executive Departments had no occasion at all to discuss post-judgment interest. /2/ Indeed, to our knowledge, no court ever has accepted -- or even discussed -- the distinction between pre-and post-judgment interest advanced by respondent. /3/ As the decisions cited above indicate, this Court has not recognized any such dichotomy. The same is true of the courts of appeals, which informly have held that interest on back pay awards is unavailable to Title VII plaintiffs (see cases cited at Gov't Br. 20-21). /4/ And it is true even of the court below, which explicitly recognized that the "no-interest rule" would be applicable here in the absence of a sufficiently clear waiver (Pet. App. 13a-14a). b. That the courts have failed to distinguish between pre-and post-judgment interest for purposes of the "no-interest rule" is hardly surprising, for the policy and historical differences between the two forms of interest that are postulated by respondent have no basis in fact. Respondent asserts that post-judgment interest traditionally was understood to serve as a penalty for failure to make timely payment on a fixed judgment (Br. 20), while prejudgment interest instead served as "a part of the calculation of the judgment itself" (Br. 19). Because, in respondent's view, the "no-interest rule" was created in response to the principle that the government may not be penalized without its consent (Br. 21), he suggests that the rule as originally formulated did not apply to prejudgment interest. In fact, however, the traditional view, which prevailed in the nineteenth and early twentieth centuries when the "no-interest rule" already was in full force, saw not only post-judgment interest, but also "prejudgment interest as a penalty awarded on the basis of the defendant's conduct." General Motors Corp. v. Devex Corp., 461 U.S. 648, 655-656 n. 10 (1983). See Recent Developments, Prejudgment Interest as Damages: New Application of an Old Theory, 15 Stan. L. Rev. 107 (1972); Comment, Prejudgment Interest: An Element Not to be Overlooked, 8 Cum. L. Rev. 521, 522 (1977); Developments in the Law -- Damages, 61 Harv. L. Rev. 113, 137 (1947). See also Note, Interest in Judgments Against the Federal Government: The Need for Full Compensation, 91 Yale L.J. 297, 299-301 (1981). /5/ There is thus no historical basis on which to distinguish between the two forms of interest. Conversely, no ground of policy exists to set pre- and post-judgment interest (or, for that matter, interest on liquidated as opposed to unliquidated claims) apart from one another; both serve to compensate a plaintiff for "the foregone use of the money" between the time of the injury and the date of payment. General Motors Corp., 461 U.S. at 656. Respondent's historical analysis is, in any event, overly simplistic. While interest often was characterized as a penalty during the nineteenth century, the "equitable principle that interest is an incident to the debt" plainly was understood at the time. 4 Op. Atty. Gen. 136, 137 (1842). And the "no-interest rule" was justified not only on the ground offered by respondent, but also "by the policy of society * * * for the protection of the public." 4 Op. Atty. Gen. at 137. See Verdier, 164 U.S. at 218-219; United States v. North Carolina, 136 U.S. 211, 216 (1890). As noted above (note 1), the Court accordingly has applied the "no-interest rule" routinely -- and consistently -- in cases involving prejudgment interest on both liquidated and unliquidated debts. Indeed, whatever the original justification for the rule, Congress has been aware of the rule's existence for over a century. Legislation enacted in such a setting must be interpreted with the "no-interest rule" in mind. 2. Respondent's second argument (Br. 24-35) -- that the statutory purpose would be served were interest available -- is premised on the proposition that the "no-interest rule" is inapplicable to claims for prejudgment interest. That a policy consideration of this sort may suffice to make interest available against private Title VII defendants, however, simply has no bearing here. The very purpose of the "no-interest rule" is to permit the government to "occupy an apparently favored position" (Verdier, 164 U.S. at 218-219) by protecting it from claims for interest that would prevail against private parties; the rule comes into play only when the statute at issue is of the sort that would (or does) make interest available against nongovernmental entities. See Blake v. Califano, 626 F.2d 891, 893 (D.C. Cir. 1980). Cf. Boston Sand Co. v. United States, 278 U.S. 41, 49 (1928) (in the adjustment of mutual claims, the government may obtain interest on its award while interest is unavailable to the other party) (dictum); North American Co., 253 U.S. at 336 (same); Verdier, 164 U.S. at 218-219 (same). Similarly, respondent may not obtain interest through the semantic device of claiming that an adjustment to compensate for delay is a necessary element of a reasonable attorneys' fee (Resp. Br. 24-25). Because the "no-interest rule" protects the government from liability for delay (see United States v. Sherman, 98 U.S. 565, 568 (1878)), any portion of a fee award that compensates for the "belated receipt of (funds)" is barred by sovereign immunity. Saunders v. Claytor, 629 F.2d 596, 598 (9th Cir. 1980), cert. denied, 450 U.S. 980 (1981). This is a principle that routinely has been applied by the Court. The term "just compensation," for example, ordinarily is understood to involve an interest component; where "takings" in the constitutional sense are involved, the Taking Clause requires payment of interest. See note 3, supra. Pointing to the "no-interest rule," however, the Court consistently has held that interest is unavailable under statutes or contracts directing the United States to pay "just compensation" to private parties, reasoning that Congress should not be deemed by the use of general language to have waived the government's immunity against claims grounded on delay in payment. See, e.g., Tillamooks, 341 U.S. at 49; Albrecht, 329 U.S. at 605; Thayer-West Point Hotel Co., 329 U.S. at 586; Goltra, 312 U.S. at 204 n.2, 207-211. It is worth adding that the policy concerns articulated by respondent are overstated; this is not a case in which the statutory scheme simply cannot function if interest is unavailable. The ultimate purpose of Section 2000e-5(k) is not to provide employment for attorneys, but rather to ensure that Title VII plaintiffs will be able to obtain representation and thus access to the courts. See New York Gaslight Club, Inc. v. Carey, 447 U.S. 54, 63 (1980); Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 420 (1978). Compare, e.g., General Motors Corp., 461 U.S. at 654-655. While the payment of interest certainly would more handsomely compensate plaintiffs' lawyers, its unavailability in Title VII suits against the government evidently has not, as a practical matter, made it difficult for plaintiffs to obtain adequate representation. /6/ The impact of the "no-interest rule," moreover, may be minimized through the use of other devices, such as interim awards of the undisputed portions of attorneys' fees (see Resp. Br. 5, 33), that do not run afoul of the government's sovereign immunity. But however that may be, respondent's policy arguments are, in the final analysis, simply offered in the wrong forum: "(T)he immunity of the United States from liability for interest is not to be waived by policy arguments of this nature. Courts lack the power to award interest against the United States on the basis of what they think is or is not sound policy." N.Y. Rayon Importing Co., 329 U.S. at 659. 3. Respondent finally maintains that Congress did in fact intend to waive the "no-interest rule" in Title VII suits against the federal government (Br. 39-60). This contention evidently is grounded on two propositions: that sovereign immunity is now a disfavored doctrine, so that strict application of the rule is inappropriate (Br. 39-40); and that Congress, in manifesting an intent to make equivalent relief available to federal and to private sector Title VII plaintiffs, spoke with sufficient clarity to overcome the rule (Br. 43-60). Neither of these propositions has merit. a. Respondent's assertion that purported waivers of sovereign immunity no longer are to be judged under the traditional standard is insupportable. The Court has recently -- and repeatedly -- reaffirmed the principle that "(w)aivers of immunity must be 'construed strictly in favor of the sovereign,' McMahon v. United States, 342 U.S. 25, 27 (1951), and not 'enlarge(d) . . . beyond what the language requires,' Eastern Transportation Co. v. United States, 272 U.S. 675, 686 (1927)." Ruckelshaus v. Sierra Club, 463 U.S. 680, 685-686 (1983). See Lehman v. Nakshian, 453 U.S. 156, 161 (1981). Franchise Tax Board v. United States Postal Service, No. 83-372 (June 11, 1984), upon which respondent relies, did not signal a break with this precedent; that decision is simply the most recent in a line of cases holding that, "'when Congress launche(s) a governmental (entity) into the commercial world and endow(s) it with authority to "sue or be sued," that agency is not less amenable to judicial process than a private enterprise under like circumstances would be.'" Slip op. 5, quoting FHA v. Burr, 309 U.S. 242, 245 (1940). See Nagy v. United States Postal Service, 773 F.2d 1190, 1192 (11th Cir. 1985). /7/ b. Viewed under the proper standard, respondent's argument fails to show the manifest congressional intent necessary to overcome the "no-interest rule." As we explained in our opening brief (at 13-14), a waiver of the rule must be express; indeed, under the predecessor to 28 U.S.C. 2516, which codifies the traditional "no-interest rule," the Court has held that even "an intent on the part of the framers of a statute or contract to permit the recovery of interest" does not "suffice where the intent is not translated into affirmative statutory or contractual terms." N.Y. Rayon Importing Co., 329 U.S. at 659. Yet respondent's lengthy recitation of Title VII's legislative history fails to divulge any evidence that Congress ever considered the interest question, let alone formed -- or expressed -- an affirmative desire to make interest available. /8/ To be sure, the language and legislative history of the Equal Employment Opportunity Act of 1972 demonstrate Congress's plain intent to open courthouse doors to federal-employee Title VII plaintiffs, thus permitting them to obtain the same substantive relief from discrimination as their private sector counterparts. See generally Brown v. GSA, 425 U.S. 820, 827-828 (1976); id. at 836 & n.2 (Stevens, J., dissenting); Chandler v. Roudebush, 425 U.S. 840, 848 (1976). But the "no-interest rule" applies even to remedial statutes that are intended to provide "just compensation" (see page 7, supra), or the "amount equitably due" (Tillson, 100 U.S. at 46), or "'any * * * equitable relief * * * the court deems appropriate'" (Blake, 626 F.2d at 893 (citation and footnote omitted)) -- although identical language makes private defendants liable for interest (see Gov't Br. 15). And Title VII, despite its remedial ends, must be read against the background of the government's sovereign immunity (see Brown, 425 U.S. at 833; cf. Nakshian, 453 U.S. at 163); for that reason, the courts of appeals uniformly have held that Title VII plaintiffs may not obtain interest on back pay awards against the government. Because it is indisputable that Congress did not affirmatively contemplate an award of interest against the government under Section 2000e-5(k), the same conclusion is applicable here. /9/ For the foregoing reasons and the reasons stated in our opening brief, the judgment of the court of appeals should be reversed. Respectfully submitted. CHARLES FRIED Solicitor General FEBRUARY 1986 /1/ Respondent evidently takes the position that, because the government's liability in some of these cases was liquidated, interest on that liability would have had "the character of post-judgment interest" (Br. 18 n.10; see id. at 21-22). The fact that the underlying debt involves a sum certain, however, hardly converts interest on that debt for the period prior to the entry of judgment into post-judgment interest. In any event, many of the cases cited above involved unliquidated liabilities. See, e.g., Tillamooks, 341 U.S. at 48; Thayer-West Point Hotel Co., 329 U.S. at 587; Goltra, 312 U.S. at 205; Commonwealth & Dominion Line, 278 U.S. at 428; North American Co., 253 U.S. at 332-333. /2/ Similarly, respondent is simply incorrect in asserting (Br. 22-23) that 28 U.S.C. 2516 reaches only post-judgment interest; as this Court has explained, that statute's predecessors provided that "no interest (was) allowed on any claim up to the time of the rendition of judgment." Goltra, 312 U.S. at 207. See N.Y. Rayon Importing Co., 329 U.S. at 661; Tillson, 100 U.S. at 47. /3/ Respondent relies principally on cases requiring the payment of interest as part of the just compensation due after an exercise of the government's eminent domain power (Br. 17-18, citing Seaboard Air Line R.R. v. United States, 261 U.S. 299 (1923); Brooks-Scanlon Corp. v. United States, 265 U.S. 106 (1924); Liggett & Myers Tobacco Co. v. United States, 274 U.S. 215 (1927); Phelps v. United States, 274 U.S. 341 (1927); Albrecht v. United States, 329 U.S. 599 (1947)). As the Court repeatedly has explained, however, those cases turn entirely on the nature of the Fifth Amendment's Taking Clause and have no application outside the constitutional context. See Tillamooks, 341 U.S. at 49; Albrecht, 329 U.S. at 602-605; Smyth, 302 U.S. at 353-354. Respondent also relies upon Waite v. United States, 282 U.S. 508 (1931), in which prejudgment interest was awarded against the United States in a patent infringement action. But the Court's two-paragraph decision in Waite was not well-considered; the government did not contest its liability for interest (ibid.), and the Court relied principally upon inapposite Taking Clause decisions (see id. at 509). In these circumstances, it is doubtful that Waite can be reconciled with this Court's otherwise consistent application of the "no-interest rule." And Waite does not, in any event, adopt the distinction between pre- and post-judgment interest contended for by respondent. /4/ At the time that our opening brief was filed, five circuits -- including two panels of the District of Columbia Circuit -- had held interest unavailable on Title VII back pay awards against the federal government. Since then, another court of appeals has reached the same conclusion. Loeffler v. Carlin, No. 84-2553 (8th Cir. Dec. 30, 1985) (relying on Cross v. United States Postal Service, 733 F.2d 1327, aff'd by an equally divided en banc court, 733 F.2d 1332 (8th Cir. 1984), cert. denied, No. 84-979 (Mar. 18, 1985)). /5/ This evidently was the origin of the common law rule that prejudgment interest is available only on liquidated claims: "Because a defendant could not be expected to pay an obligation of uncertain magnitude, it was thought improper to penalize him for withholding payment pending adjudication." Note, supra, 91 Yale L.J. at 301 (footnote omitted). See Developments, supra, 61 Harv. L. Rev. at 137. See generally General Motors Corp., 461 U.S. at 651-652 & n.5. /6/ To our knowledge, the first case even to suggest that compensation for delay might be available against the government in Title VII litigation was Copeland v. Marshall, 641 F.2d 880, 892-893 (D.C. Cir. 1980), and that suggestion has not been followed by other courts of appeals. For most of the period of its application, and in most parts of the country, interest accordingly has not been available on Title VII attorneys' fees against the federal government. Moreover, for the beginning practitioner or small firm attorney identified by respondent as "the typical civil rights lawyer" (Br. 29), factors wholly independent of the "no-interest rule" -- such as the contingent nature of the fees awarded under Title VII and the likelihood that the lawyer will have no steady stream of income (Br. 29-31) -- are likely to create considerably greater practical difficulties than will the unavailability of interest. /7/ Similarly, as we explained in our opening brief (at 17 n.8), Standard Oil Co. v. United States, 267 U.S. 76 (1925) (cited by respondent at Br. 41), stands only for the proposition that the "no-interest rule" may be inapplicable to claims against a federal instrumentality operating as a commercial enterprise. See Pet. App. 49a n.8 (Ginsburg, J., dissenting). Indeed, it is unsettled whether even the Postal Service's "sue or be sued" clause suffices to overcome the "no-interest rule" in suits against the Service. Compare Nagy, 773 F.2d at 1192-1193, with Loeffler v. Carlin, No. 84-2553 (8th Cir. Dec. 30, 1985), slip op. 9 & n.3. /8/ Although respondent mentions the language of Section 2000e-5(k) in passing (Br. 44), he does not suggest -- as did the court below -- that the language amounts to an express waiver of the "no-interest rule." In fact, as we explained in our opening brief (at 19-20), the statute's "same as a private person" proviso represented a threshold waiver of the government's immunity against fee awards in its role as a Title VII plaintiff, rather than an affirmative decision to waive the "no-interest rule." Although respondent challenges the persuasiveness of this statutory analysis as applied to support other arguments in other cases (Br. 57), he fails even to suggest why it should not be dispositive here. /9/ Despite respondent's assertion to the contrary (Br. 58-59), this position does not represent a departure from the Justice Department's prior views. The Attorney General's memorandum cited by respondent indicated that the same standards should be applied, and the same types of relief should be available, in federal and private sector Title VII suits. It did not indicate, however, that every element of such relief must be identical in the two categories of cases; indeed, in the very year in which the memorandum was issued -- and in the years immediately following -- the government contended in the courts that interest should not be available to Title VII plaintiffs. See Richerson v. Jones, 551 F.2d 918, 925 (3d Cir. 1977); Fischer v. Adams, 572 F.2d 406, 411 (1st Cir. 1978); de Weever v. United States, 618 F.2d 685, 686 (10th Cir. 1980); Blake, 626 F.2d at 894 (1980); Saunders v. Claytor, 629 F.2d at 598 (1980); Segar v. Smith, 738 F.2d 1249, 1296 (D.C. Cir. 1984), cert. denied, No. 84-1200 (May 20, 1985).