July 2013

interest rates for judgments in massachusetts

In Massachusetts, the interest rate for pre-and post-judgment interest is 12%, a number which was last revised in 1982 during the Reagan Administration.   See Mass. Gen. Laws ch. 231,§ 6B.   Massachusetts has not followed the lead of other states and federal district courts which use a floating rate or an economic benchmark for determining what the pre- and post-judgment interest rate should be and although six other states (see list to follow), which had set their interest rate at 12%, have recently lowered the percentage, Massachusetts remains an outlier on this issue.

Here’s a list of the six states that have recently lowered the interest rate for pre- and post-judgments:

At the time that the rate was set at 12%, it may have seemed reasonable given the market interest rates at the time, however given the current economic environment, providing a plaintiff with a significantly above market interest rate by which interest on damages is calculated may not serve the goal of compensating a plaintiff for his or her losses but instead serve to provide a plaintiff with a windfall.  See Sec’y of Admin. & Fin. v. Labor Relations Comm’n, 434 Mass. 340, 346 (2001).  At the time the rate was set it closely tracked the Federal Reserves’ annual one-year constant maturity Treasury Yield Rate of 12.27%, however that rate is currently 0.14%. Although Massachusetts utilizes a floating pre- and post-judgment interest rate and puts a cap on that rate, when calculating interest on damages to be paid by the Commonwealth to injured parties, it has not adopted the same floating rate for damages to be paid by private entities nor does a cap exist for damages to be paid by private entities.  See Mass. Gen. Laws ch. 231, §6I.

The Supreme Judicial Court arguably recently sent a signal to the defense bar that the court may be ready to evaluate the question of applying the 12% pre- and post-judgment interest rate to punitive damages in general when it sought briefs on the issue in the Willie Evans v. Lorillard Tobacco Company, et al. matter, SUCV-2004-02840 (pdf download).  In Lorillard, the jury awarded damages in the amount of $152 million, broken down into $71 million in compensatory damages and $81 million in punitive damages.  The trial judge reduced the compensatory damages to $35 million, but did not reduce the punitive damages award and Lorillard appealed.  Prior to issuing its opinion in Lorillard, the Supreme Judicial Court sought briefs on the question of the constitutionality of imposing the 12% interest rate on the punitive damages award in the case.

Ultimately, because the Supreme Judicial Court vacated the punitive damages award, in its opinion, the Court stated that it did not need to address the “various issues regarding the amount of interest on punitive damages.”  

One of the amicus briefs submitted to the Court was filed by the Massachusetts Defense Lawyer’s Association which included a review
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As previously reported on Defense Litigation Insider, the United States House of Representatives is presently considering the “Furthering Asbestos Claims Transparency (FACT) Act.” (H.R. 982) Since our last report, the bill was approved by the House Judiciary Committee by a 17-14 vote despite efforts to amend its original form.

The bill, introduced by Rep. Blake Farenthold (R-TX) and co-sponsored by Rep. Jim Matheson (D-UT), would require asbestos bankruptcy trusts to file publicly available reports that include demands made against the trusts as well as the names and exposure history of the claimants. Although Congress tracking website, govtrack.us, projects that the bill has only a 14 percent chance of passing, defense attorneys in many jurisdictions can still take steps to pursue the information during litigation.

Bankruptcy claim information is helpful to defense attorneys because, often, plaintiffs in litigation against non-bankrupt asbestos defendants conceal claims made against bankruptcy trusts in an effort to obtain “double compensation.” In many jurisdictions, relief afforded by a bankruptcy trust, if known, would reduce the liability exposure to the non-bankrupt asbestos defendants.

Some jurisdictions have attempted to eliminate the possibility of fraud, abuse, and double compensation legislatively or by judicial order. An Ohio statute, for instance, requires disclosure of bankruptcy claim information. In Delaware, a standing case management order of the Superior Court likewise calls for asbestos plaintiffs to identify bankruptcy trust claims.

If a given jurisdiction does not have a legislative remedy available, many state and federal courts have held that bankruptcy trust claim information is available through discovery. This discovery might include claim forms, which occasionally contain factual allegations that are inconsistent with the plaintiff’s pleadings. The Eastern District of Pennsylvania, home of federal multi-district litigation, has allowed such discovery. So, too, has the State of California.


Defense attorneys must be vigilant in protecting their clients from increased exposure as a result of concealed asbestos claims. Until a national solution is in place, defense attorneys can likely stay on guard of potential double compensation scenarios through focused discovery and subpoena practice.
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