Willie Evans v. Lorillard Tobacco Company

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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