Short v. United States

MICHEL, Circuit Judge,

dissenting.

I join the majority opinion, except with respect to the prejudgment interest award, as to which I respectfully dissent. The trial court concluded that the plaintiffs are entitled to prejudgment interest, having interpreted three sections of Title 25 of the United States Code as waivers of sovereign immunity from liability on that score. Short V, 25 Cl.Ct. 722, 727 (1992); Short IV, 12 Cl.Ct. 36, 43 (1987). This conclusion, at odds with decisions of the Supreme Court and this court alike, awards to plaintiffs monies to which they have demonstrated no entitlement. It should not go uncorrected.

Discussion

All the parties to this litigation acknowledge that, as a matter of both statutory and case law, the Court of Federal Claims may not compel the United States to pay interest on a judgment for damages in a non-contract case unless a statute clearly authorizes the payment of such interest. 28 U.S.C. § 2516(a) (1988 and Supp.V 1993) (“Interest on a claim against the United States shall be allowed in a judgment of the United States Court of Federal Claims only under a contract or Act of Congress expressly providing for payment thereof.”); Library of Congress v. Shaw, 478 U.S. 310, 314, 106 S.Ct. 2957, 2961, 92 L.Ed.2d 250 (1986) (“In the absence of express congressional consent to the award of interest separate from a general waiver of immunity to suit, the United States is immune from an interest award.”) (emphasis added). Indeed, the roots of this legal principle run deep, reaching back to both the creation of the United States Court of Claims and the late 19th century decisions of the Supreme Court. See Act of Mar. 3, 1863, ch. 92, § 7, 12 Stat. 765, 766 (1863) (“[N]o interest shall be allowed on any claim up to the time of the rendition of the judgment by said court of claims, unless upon a contract expressly stipulating for the payment of interest____”); United States ex rel. Angarica v. Bayard, 127 U.S. 251, 260, 8 S.Ct. 1156, 1160-61, 32 L.Ed. 159 (1888) (“[T]he United States are not liable to pay interest on claims against them, in the absence of express statutory provision to that effect.”); Tillson v. United States, 100 U.S. 43, 47, 25 L.Ed. 543 (1879) (same).

The rule against prejudgment interest awards against the United States absent clear statutory authorization for the payment of such interest “provides an added gloss of strictness” on the usual rule that waivers of sovereign immunity are to be construed strictly in favor of the sovereign. Shaw, 478 U.S. at 318, 106 S.Ct. at 2960. As the Supreme Court has cautioned,

there can be no consent by implication or by use of ambiguous language. Nor can an intent on the part of the framers of a statute or contract to permit the recovery of interest suffice where the intent is not translated into affirmative statutory or contractual terms. The consent necessary to waive the traditional immunity must be express, and it must be strictly construed.

Id. (quoting United States v. New York Rayon Importing Co., 329 U.S. 654, 659, 67 S.Ct. 601, 603-04, 91 L.Ed. 577 (1947)). Congress has amply demonstrated its ability to waive sovereign immunity from awards of prejudgment interest by such express terms. See, e.g., 28 U.S.C. § 2411 (1988) (“In any judgment of any court rendered ... for any overpayment in respect of any internal-revenue tax, interest shall be allowed ... from the date of the payment or collection thereof to a date preceding the date of the refund cheek by not more than thirty days, such date to be determined by the Commissioner of Internal Revenue.”); 40 U.S.C. §§ 258a, 258e-1 (1988) (Declaration of Taking Act, providing for prejudgment interest in eminent domain cases). We cannot relax this rule of strict construction, nor assume that Congress has lost its power to speak clearly on the subject, simply because we face sympathetic plaintiffs.

None of the statutes that the trial court cited and on which the plaintiffs rely contain the affirmative and unequivocal language necessary to entitle them to an award of interest running from the date of wrongful distribution to the date of judgment. The code sections at issue are three: 25 U.S.C. §§ 161a, 161b, and 162a (1988). To read them is to know that they do not waive the government’s immunity from an award of prejudgment interest.¹ Indeed, we held as much regarding 25 U.S.C. § 161a in Rogers v. United States, 877 F.2d 1550, 1555-56 (Fed.Cir.1989), as did our predecessor court regarding all three sections in Mitchell v. United States, 664 F.2d 265, 274-75, 229 Ct.Cl. 1 (1981), aff'd, 463 U.S. 206, 103 S.Ct. 2961, 77 L.Ed.2d 580 (1983).

In Mitchell, the Court of Claims, one of our predecessor courts, held that 25 U.S.C. §§ 406-407 (1976), governing the sale of timber on unallotted tribal lands, waived the government’s immunity from suit for damages due to an alleged breach of its fiduciary duty in the management of such Indian property. 664 F.2d at 271. The court described the limit of recovery under these sections as follows: “[P]laintiffs can recover the difference between the actual proceeds and the greatest appropriate revenue which should have been obtained.” Id. The plaintiffs in Mitchell, like those in the case at bar, also claimed entitlement to prejudgment interest on their damages awards under sections 161a, 161b, and 162a. Id. at 274. The court rejected this claim for interest, reasoning that, while “proceeds actually paid to plaintiffs under [sections 406 and 407] obviously should include interest which should have been earned or allowed on those underlying proceeds,”² interest could not be paid on any damages the claimants might recover because “[t]hose sums or their equivalent were never held by the Government for plaintiffs, were not subject to the specific interest provisions we have just discussed, and there is no statute awarding back-interest on such unpaid compensation now awarded by the court in this suit.” Id. at 275. Despite the majority’s refusal to acknowledge it, majority op. at 999, Mitchell not only provides “support” for the government’s position in this case, it compels our assent to that position.

Our holding in Rogers conforms to Mitchell in a factual setting that cannot be distinguished from the instant case. In Rogers, we recounted the facts as follows:

All of the claimants in whose favor the district court entered judgment contend, that, in addition to the $5,162.52 they received, they were entitled to interest on that amount from the date of the original distribution of the Northern Paiute fund in April 1980. They state that the government held the funds appropriated to make the Northern Paiute payments as trust funds, note that 25 U.S.C. § 161a required the government to invest all funds it held as trustee for Indian tribes in public interest-bearing debt securities, and conclude that because they were wrongfully excluded from the Northern Paiute trust fund, they are entitled to the interest the money would have earned.

The government states, and the.claimants do not deny, that the funds Congress appropriated to pay the Northern Paiute awards were invested and drew interest [from 1961] until their distribution [in 1980], and that the $5,162.52 distributed to each participant in the fund included interest earned to the date of distribution. Since each of the appellants received that same amount, they received the interest earned by the trust fund to the time of distribution.

What the appellants are seeking is additional interest from the time of. distribution to the date of judgment. The district court held, however, that because the fund had been distributed to the beneficiaries in 1980, there were no trust funds for the [wrongfully excluded] Northern Paiutes that could have earned interest.

877 F.2d at 1555-56. We affirmed the district court’s conclusion, reasoning, as it did, that “no contract, treaty, or Act of Congress that the appellants have cited, or of which we are aware, ... expressly, or even by implication, provides for the payment of interest on the awards the district court made to the appellants.” Id. at 1556. No intervening change in positive law has undermined our holding in Rogers, and, though fidelity to it surely requires reversal of the trial court’s prejudgment interest award in this case, the majority prefers a result more “consistent with the government’s high fiduciary duty to the Indian tribes.” Majority op. at 999. However high the executive’s fiduciary duty to the Indian tribes, it should not get the better of our duty to follow precedent.

Neither Coast Indian Community v. United States, 550 F.2d 639, 213 Ct.Cl. 129 (1977), nor United States v. Gila River Pima-Maricopa Indian Community, 586 F.2d 209, 218 Ct.Cl. 74 (1978), both of which the majority cites, conflict with Mitchell or Rogers. Coast Indian Community arose from allegations that the government had sold Indian trust lands worth approximately $57,000 for only $2,500. 550 F.2d at 641. Having concluded that the government was indeed liable for negligent misvaluation of the land in suit, id. at 654, the Court of Claims turned to the plaintiff’s claim for interest from the date the land was sold to the date of payment of judgment in the litigation. Because the record in the case did not indicate whether the $2,500 actually received in payment for the sale had been held in a trust account or, instead, disbursed to or for the benefit of the members of the Coast Indian Community, the court could not then determine whether the government was liable for interest. Id. at 655. It observed, however, that “[i]f the payment received was held in the U.S. Treasury in a trust account for Coast Indians Community members, or if it can be shown that part of a larger realized amount would have been so held, it may be that interest should be awarded under sections 161 and 161a.” Id. The holding of Coast Indian Community thus extends no further than Mitchell and provides no support for the majority’s decision in this case. In Gila River, a suit to recover monies wrongfully collected, 586 F.2d at 211, rather than wrongfully disbursed, the Court of Claims held that the plaintiffs should recover both the monies wrongfully collected and the interest that accrued on these funds while they were held in an IMPL fund, consistent with section 161b. Id. at 216-17. Again, this result, consistent with Coast Indian Community, Mitchell, and Rogers, provides no support for the majority’s decision.

Both the Supreme Court’s sovereign immunity jurisprudence and our holding in Rogers require that the trial court’s decision be reversed to the extent that it awards prejudgment interest on supposed statutory grounds. Short et al. do not allege any mismanagement of the IMPL fund as a result of which less than the statutorily required 4% interest was earned or less than obtainable principal was realized. They allege, instead, that the government breached its duty by wrongfully excluding them from distributions to reservation residents, distributions that included both properly managed principal and satisfactory interest. The majority’s opinion fails to observe this critical difference between the instant case and those such as Peoria Tribe and Cheyenne-Arapaho, which involve pre-distribution, rather than post-distribution, interest. Judge Margolis, by contrast, explicitly ruled that he was awarding interest “from the date of each distribution.” Short IV, 12 Cl.Ct. at 44 (emphasis added). He clearly did so, however, based on an erroneous supposition that the facts here were as those in cases such as Peoria Tribe: “But for the defendant’s wrongful distribution, the plaintiffs’ shares of the unallotted income would have continued to accrue interest.” Id. at 43. But they would not.

The distribution was wrongful because it included too few people, not because it was too early or included too little money. “But for” the wrongfully discriminatory distribution, plaintiffs’ shares would have gone to plaintiffs rather than to unjustly augment the awards of others. Those shares would not and could not, as Judge Margolis supposes, have collected interest after disbursement, as the cited statutes require only that interest be paid while money is or should have been in government-controlled bank accounts. Thus, the only interest due the original distributees, and now also the plaintiffs, is that which actually accrued before distribution. It is beyond peradventure that Judge Margolis’ manner of calculating damages already included just such interest. Short IV, 12 Cl.Ct. at 41 (“[E]ach qualified plaintiff alive at a given date of distribution will receive a share equal to the total amount of money distributed per capita (principal and interest ), divided by the total number of eligible ‘Indians of the Reservation’ who received, or should have received, a payment[.]”) (emphasis added). Such interest is all the statutes cited by and relied on by the majority authorize. To go still further by authorizing post-distribution, prejudgment interest would require another statute, but neither Judge Margolis nor the majority cites one. Indeed, it does not exist.

Short et al. object to this position, arguing that the government’s ability to escape liability for prejudgment interest would be fundamentally unfair in this context. Unfairness, if it be, was deliberately legislated. Of course, this is precisely the favored position the “no interest” rule is meant to preserve. The rule’s purpose is now, as it has always been, to “permit the Government to occupy an apparently favored position by protecting it from claims for interest that would prevail against private parties.” Shaw, 478 U.S. at 315-16, 106 S.Ct. at 2961-62 (internal quotations and citations omitted).

Conclusion

I understand and would like to support the policy argument the majority advances, as eager as we all are to halt the Dickensian march of these 31-year old cases.³ But such a policy argument cannot overcome the force of precedent requiring that the trial court’s prejudgment interest decision be reversed. Therefore, I would reverse-in-part.

1 . According to section 161a, “All funds held in trust by the United States and carried in principal accounts on the books of the United States Treasury to the credit of Indian tribes shall be invested by the Secretary of the Treasury, at the request of the Secretary of the Interior, in public debt securities with maturities suitable to the needs of the fund involved, as determined by the Secretary of the Interior, and bearing interest at rates determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities."

According to section 161b, "All tribal funds arising under section 155 of this title on June 30, 1930, included in the fund 'Indian Money, Proceeds of Labor’, shall, on and after July 1, 1930, be carried on the books of the Treasury Department in separate accounts for the respective tribes, and all such funds with account balances exceeding $500 shall bear simple interest at the rate of 4 per centum per annum from July 1, 1930.”

Finally, section 162a provides, in relevant part, that the "Secretary of the Interior is hereby authorized in his discretion, and under such rules and regulations as he may prescribe, to withdraw from the United States Treasury and to deposit in banks to be selected by him the common or community funds of any Indian tribe which are, or may thereafter be, held in trust by the United States and on which the United States is not obligated by law to pay interest at higher rates than can be procured from the banks.”

2 . In this regard, Mitchell accords with Peoria Tribe v. United States, 390 U.S. 468, 88 S.Ct. 1137, 20 L.Ed.2d 39 (1968), and Cheyenne-Arapaho Tribes of Indians v. United States, 512 F.2d 1390, 206 Ct.Cl. 340 (1975). In all three cases, a treaty or statute established a duty of the United States that the government violated to the fiscal detriment of one or more tribes. Instead of obtaining $X (e.g., market value for a parcel of land sold at public auction), the government breached its duty and accordingly obtained $(XY) (e.g., a private sale price greatly discounted from market value). Damages, properly calculated, included both $Y, to make up the difference in principal, and interest on $Y that the government would have been required to pay from the time it wrongfully failed to obtain $Y to the time the total was disbursed. The inclusion of this kind of interest merely makes the complainant whole.

3 . Charles Dickens, Bleak House 52 (Norman Page ed., Penguin Books 1971) (1853) (‘‘Jamdyce and Jamdyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means---Innumerable children have been bom into the cause; innumerable young people have married into it; innumerable old people have died out of it.... [B]ut Jamdyce and Jamdyce still drags its dreary length before the Court, perennially hopeless.”).