Interest Accrual on Attorney's Fee Awards

I. INTRODUCTION

In 1984, MidAmerica Federal Savings & Loan Association sued Shearson/American Express, Inc. for violations of the Oklahoma Securities Act and breach of fiduciary duty in connection with MidAmerica's purchase of fifty million dollars in investment trusts from Shearson.1 MidAmerica prevailed, and on July 23, 1986, the district court entered judgment for MidAmerica and granted it the right to recover attorney's fees. On April 22, 1991, the court set MidAmerica's attorney's fee award at $512,197.15.3 Following the April 22, 1991 judgment, MidAmerica and Shearson disputed the proper date to begin interest accrual on the attorney's fee award4 under 28 U.S.C. 1961(a),5 the federal interest statute: the July 23, 1986 merits judgment or the April 22, 1991 attorney's fee judgment.6

Attorney's fee disputes, such as MidAmerica's and Shearson's, usually include two judgments.7 The first judgment, i.e., July 23, 1986, is the "merits judgment."8 At the merits judgment (also known as the judgment on the jury verdict),9 the court enters judgment for the prevailing party and grants the prevailing party the right to recover attorney's fees.10 The second judgment, i.e., April 22, 1991, follows a separate hearing by the court to determine the specific amount or quantum of attorney's fees to award.11 It is called the "exact quantum judgment," because this judgment determines the amount of attorney's fees to be awarded.12

The United States Courts of Appeals are split on whether interest accrual under 1961(a) begins on the date of the merits judgment or the exact quantum judgment.13 The split of authority results from the fact that 1961(a) does not distinguish between the two judgments in attorney's fee cases.14 The interest statute, 1961(a), provides that interest accrual begins on "the date of . . . judgment."15 The Fifth, Sixth, Eighth, Ninth, Eleventh, and Federal Circuit Courts of Appeals have held that interest accrual under 1961(a) begins on the date of the merits judgment.16 The merits judgment circuits have reasoned that 1961(a) compensates prevailing parties for delays in payment of damage awards from the date the prevailing party becomes fully entitled to its damage award.17 Furthermore, because the prevailing party becomes entitled to its attorney's fee award on the date of the merits judgment, the prevailing party is entitled to interest under 1961(a) from the date of the merits judgment.18 Under the merits judgment approach, MidAmerica would be entitled to approximately $200,000 in interest-at the then-prevailing rate of approximately 7%-for the delay in payment between the merits judgment and the exact quantum judgment.19

The Third, Seventh, and Tenth Circuit Courts of Appeals, conversely, have held that interest accrual under 1961(a) begins on the date of the exact quantum judgment.20 The exact quantum judgment circuits have reasoned that the term "judgment" in 1961(a) is short for "money judgment."21 Furthermore, because the exact quantum judgment is the judgment for a specific amount of money (in attorney's fee cases), interest accrual under 1961(a) begins on the date of the exact quantum judgment.22 Under the exact quantum judgment approach, MidAmerica would not have been entitled to collect the $200,000 in interest that accrued between the merits and exact quantum judgments.23

This Article argues that the date of the merits judgment is the correct date to begin interest accrual on attorney's fee awards under 1961(a). Part II introduces 1961(a), provides the statutory language relevant to the interest accrual dispute, and discusses the United States Supreme Court's interpretation of 1961(a). Part III defines the merits judgment and exact quantum judgment approaches to the interest accrual dispute.

Part IV argues that the merits judgment approach provides the correct solution to the interest accrual dispute, because the merits judgment approach remains consistent with the statutory language of 1961(a), advances the legislative intent behind 1961(a), and is supported by public policy. The statutory language of 1961(a) forces the losing party (in civil suits) to pay interest to the prevailing party for delays in payment of the prevailing party's damage award from the date of the judgment entitling the prevailing party to its award.24 The merits judgment approach is consistent with this requirement, because the merits judgment is the judgment entitling the prevailing party to its fee award in attorney's fee cases.25 The legislative intent behind 1961(a) was that 1961(a) be the exclusive means of compensating prevailing parties for delays in payment of damage awards.26 The merits judgment approach advances this intention by compensating prevailing parties with interest payments for the delay in payment between the merits judgment and the exact quantum judgment in attorney's fee cases.27 The exact quantum judgment approach, conversely, violates legislative intent by compensating prevailing parties through payments other than interest payments under 1961(a) (alternative compensation is necessary because, with this approach, interest payments under 1961(a) are prohibited until the exact quantum judgment).28 Public policy arguments also support the merits judgment approach. Requiring the losing party to pay interest from the date of the merits judgment deters the losing party from delaying the exact quantum judgment to avoid paying the fee award, to secure additional time to freely use the money owed or collect interest on it, or to hassle the losing party.29

II. BACKGROUND

A. Introduction to 1961(a)

The interest statute, 28 U.S.C. 1961(a), requires the losing party in suits decided in United States federal district courts to pay the prevailing party interest on damage awards from the date of judgment until the debt is satisfied.30 Congress's purposes for requiring such payments were twofold.31 First, interest payments compensate the prevailing party for the economic injury the prevailing party suffers as a result of delays in payment of its damage award; i.e., the damage award is worth less if paid in the future than if paid immediately upon judgment.32 Second, interest payments deter the losing party from filing unnecessary appeals to avoid payment of the damages owed or to delay payment and collect interest on the prevailing party's fee award.33

The text of 1961(a) provides in part:

Interest shall be allowed on any money judgment in a civil case recovered in a district court. Execution therefor may be levied by the marshal, in any case where, by the law of the State in which such court is held, execution may be levied for interest on judgments recovered in the courts of the State. Such interest shall be calculated from the date of the entry of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the judgment.34

The language of 1961(a) requiring the losing party to make interest payments includes two distinct parts.35 The first clause, "[ijnterest shall be paid on any money judgment . . . recovered in a district court," establishes recovery of a "money judgment" as the precondition to the right to collect interest under 1961(a).36 The second clause, "[s]uch interest shall be collected from the date of . . . judgment," sets "the date of . . . judgment" as the trigger date for interest accrual on damage awards.37 The remaining element of 1961(a) provides that the interest rate shall be set at the fifty-two week average of the Treasury yield, which historically ranges between 3.5% and 6%.38 Congress tied the interest rate under 1961(a) to the fifty-two week average of the United States Treasury yield to establish a uniform interest rate applicable to all damage awards recovered in United States federal district courts.39 Congress established a uniform interest rate to prevent variances in interest rates between federal district courts.40

B. United States Supreme Court's Interpretation of 1961(a)

In Kaiser Aluminum & Chemical Corp. v. Bonjorno,41 the United States Supreme Court interpreted 1961(a) in a context unrelated to the interest accrual dispute.42 Bonjorno, a small aluminum pipe production company, sued Kaiser Aluminum under the Sherman Antitrust Act for monopolizing the aluminum pipe industry and driving Bonjorno out of business.43 Bonjorno prevailed, and on August 21, 1979, the jury awarded Bonjorno $5,445,000 in damages.44 On August 22, 1979, the district court entered judgment for Bonjorno, but it vacated the damage award for lack of evidence and ordered a new trial to decide damages.45 On December 4, 1981, the district court entered judgment for Bonjorno for $9,567,939 in damages.46 The December 4, 1981 judgment triggered further litigation over the proper date to begin interest accrual on Bonjorno's damage award under 1961(a):47 the August 22, 1979 judgment or the December 4, 1981 judgment.48

The United States Supreme Court ruled that the purpose behind 1961(a) barred Bonjorno from collecting interest on its fee award from the August 22, 1979 judgment.49 The Court ruled that the purpose of 1961(a) is "'to compensate the successful plaintiff for being deprived of compensation for its loss [for] the time between the ascertainment of the damage and payment by the defendant.'"50 Included in the Court's statement are two distinct dates, between which the losing party is required to pay interest under 1961(a): the date of "ascertainment of the damage" and the date of payment.51 The date of ascertainment serves as the date the losing party must begin paying interest, and the date of payment or satisfaction of the debt operates as the date the losing party is released from its obligation to pay interest. Furthermore, the Court ruled that a damage judgment not supported by the evidence, such as the August 22, 1979 judgment, is not "ascertained," and therefore, interest cannot be collected on it under 1961(a).52

The United States Supreme Court's ruling in Bonjorno does not resolve the dispute over the proper date of interest accrual on attorney's fee awards under 1961(a) because the merits judgment in that case had been vacated for lack of evidence.53 However, the United States Courts of Appeals have disputed whether the Court's ruling that interest accrual under 1961(a) begins on the date of "ascertainment" of damages aids in resolving the interest dispute.54 Part III discusses this split of authority.

III. SPLIT OF AUTHORITY AMONG THE CIRCUITS

Attorney's fee cases usually result in two judgments:55 the merits judgment56 and the exact quantum judgment.57 At the merits judgment, the court grants the prevailing party the right to recover attorney's fees.58 At the exact quantum judgment, the court establishes the specific amount of attorney's fees owed to the prevailing party.59 The language of 1961(a)-interest accrual begins on "the date of . . . judgment"60-caused the split of authority among the United States Courts of Appeals over the proper date of interest accrual on attorney's fee awards, because the language does not discriminate between the two judgments in attorney's fee cases.61

This Article limits its discussion of the merits judgment and exact quantum judgment approaches to the Third and Sixth Circuit Courts of Appeals decisions in Eaves v. County of Cape May62 and Associated General Contractors v. Drabik,63 respectively, for two reasons. First, Eaves and Drabik are the most recent decisions on each side of the interest dispute, and they incorporate the holdings of the circuits that have previously ruled on the issue.64 Second, the Eaves and Drabik decisions include additional arguments regarding the effect of the United States Supreme Court's Bonjorno decision on the interest dispute.65

A. Exact Quantum Judgment Approach

In Eaves v. County of Cape May, the Third Circuit Court of Appeals used the exact quantum judgment approach and discussed the rationales supporting the approach.66 On July 8, 1994, the County of Cape May demoted Pamela Eaves, an American of Chinese descent, from County Treasurer to County Comptroller.67 Eaves responded by filing a complaint with the Equal Employment Opportunity Commission (EEOC) charging Cape May with discrimination. Cape May fired Eaves. Eaves then sued Cape May for retaliation under Title VII. Eaves prevailed on the Title VII claim, and on August 11, 1998, the district court entered judgment for Eaves and granted her the right to recover attorney's fees.68 On January 27, 2000, the district court set Eaves's attorney's fee award at $254,248.57.69

The Third Circuit ruled that interest accrual on Eaves's attorney's fee award under 1961(a) began on January 27, 2000-the date of the exact quantum judgment, or the judgment on the specific amount of attorney's fees to be awarded.70 The court's ruling prevented Eaves from collecting approximately $19,000 in interest on her fee award for the delay in payment between the merits judgment on August 11, 1998 and the exact quantum judgment on January 27, 2000.71

The Third Circuit reached its holding in Eaves in three steps.72 First, the court considered the language of 1961(a), including "[i]nterest shall be allowed on any money judgment," followed by "interest shall be calculated from the date of . . . judgment."73 The court ruled that "judgment" in the second clause references "money judgment" in the first.74 The court ruled, therefore, that the second clause in 1961(a) effectively reads as follows: interest shall be calculated from the date of the money judgment.75

Second, the Third Circuit defined "money judgment."76 Neither 1961(a) nor its legislative history provides a definition of "money judgment."77 The court, therefore, concluded that Congress intended for the phrase "money judgment" to be accorded its ordinary meaning.78 Furthermore, on the strength of the holdings of various Courts of Appeals, the court ruled that a money judgment constitutes a judgment for a specific amount of money.79 Thus, the court ruled that the second clause in 1961(a) effectively reads as follows: interest shall be calculated from the date of a judgment for a specific amount of money (the exact quantum judgment).80

Third, the Third Circuit used language from the decision in Bonjorno81 to support its holding.82 The Third Circuit focused on the Supreme Court's ruling that interest accrual under 1961(a) begins on the date of "ascertainment of the damage."83 The Third Circuit ruled that an "ascertainment" is an act of determining.84 Therefore, the Supreme Court's ruling requires interest accrual under 1961(a) to begin on the date of the "determination of damages," which does not occur until the judgment for a specific amount of money (the exact quantum judgment).85

B. Merits Judgment Approach

Other circuits, however, have rejected the exact quantum approach. In Associated General Contractors of Ohio, Inc. v. Drabik,86 the Sixth Circuit Court of Appeals adopted the merits judgment approach and explained the rationales supporting that approach.87 Associated General Contractors (AGC), a conglomerate of construction companies in Ohio, sued Sandra Drabik, the Director of the Ohio Department of Administrative Services, to obtain an injunction preventing her from following Ohio's Minority Business Enterprise Act on grounds that it was unconstitutional under the Equal Protection Clause of the Fourteenth Amendment.88 AGC prevailed, and on November 3, 1998, the district court entered an injunction for AGC and granted AGC's request for attorney's fees.89 On October 13, 1999, the district court set AGC's attorney's fee award at $113,915.48.90

The Sixth Circuit Court of Appeals ruled that interest accrual on AGC's fee award under 1961(a) began on November 3, 1998-the date of the merits judgment, when the court granted AGC's request for attorney's fees.91 The Sixth Circuit's ruling permitted AGC to collect approximately $5,700 in interest on its fee award for the delay in payment between the merits judgment on November 3, 1998 and the exact quantum judgment on October 13, 1999.92 The Third Circuit Court of Appeals, conversely, would have ruled that AGC could not collect interest on its fee award until the exact quantum judgment, and, therefore, would have prevented AGC from collecting the $5,700 in interest.93

The Sixth Circuit did not reach its holding in a stepwise manner like the Third Circuit did in Eaves. The Sixth Circuit held that the interest accrual on attorney's fee awards under 1961(a) begins on the date of the merits judgment94 and provided several supporting rationales.95 The Sixth Circuit's first rationale in support of the merits judgment approach was that a majority of the circuits that have decided the interest accrual issue, including the Fifth, Eighth, Ninth, Eleventh, and Federal Circuits, have adopted the merits judgment approach.

The Sixth Circuit's second rationale in support of its adoption of the merits judgment approach was that public policy required interest accrual under 1961(a) to begin on the date of the merits judgment.97 The court provided four public policy arguments in support of the merits judgment approach.98 First, requiring the losing party to make interest payments under 1961 (a) from the date of the merits judgment is necessary to offset the time differential decrease in the value of the prevailing party's fee award during the time between the merits judgment and the exact quantum judgment.99 Second, requiring the losing party to pay interest from the date of the merits judgment deters the losing party from delaying the exact quantum judgment to avoid paying the fee award, to secure additional time to freely use the money owed, or to hassle the prevailing party.100 Third, interest payments from the date of the merits judgment are necessary to fully compensate prevailing parties and, through them, their attorneys for the attorneys' successful efforts.101 Fourth, interest payments from the date of the merits judgment prevent the losing party from profiting on the prevailing party's fee award because such payments prevent the losing party from keeping any interest earned on the fee award between the merits judgment and the exact quantum judgment.102

The Sixth Circuit's third rationale in support of its adoption of the merits judgment approach was that the grant of attorney's fees made by courts at the merits judgment is a "money judgment" for purposes of 1961(a) in attorney's fee cases.103 The court reasoned, therefore, that interest accrual on attorney's fee awards begins on the date of the merits judgment under 1961(a).104 The court did not provide an explanation for its ruling. One can assume, however, that the court ruled that a grant of attorney's fees constitutes a "money judgment," because a grant of attorney's fees constitutes a judgment for money, distinguishable from other types of judgments, such as judgments for equitable or injunctive relief.

The Sixth Circuit's fourth rationale in support of its adoption of the merits judgment approach was that the common definition of "money judgment," i.e., a judgment entered upon the jury verdict, supported its holding.105 Because the merits judgment is the judgment entered upon the jury verdict, the court ruled that the merits judgment serves as the "money judgment" referred to in 1961 (a) and, therefore, the judgment triggering interest accrual under 1961(a).106

Finally, the Sixth Circuit considered the Supreme Court's Bonjorno decision.107 The Sixth Circuit did not use Bonjorno to support its holding as the Third Circuit did in Eaves.108 Instead, the Sixth Circuit analyzed the Bonjorno decision to prove that the decision did not influence its holding.109 The Sixth Circuit ruled that the Bonjorno opinion was inapplicable to the interest dispute because the opinion decided the unrelated question of whether interest accrual under 1961 (a) begins on the date of a judgment that is vacated for lack of evidence.110

IV. ANALYSIS

This Article argues that the merits judgment approach offers the correct approach to interest accrual on attorney's fee awards under 1961 (a). Three reasons explain why the merits judgment approach is better than the exact quantum judgment approach. First, the merits judgment approach remains consistent with the statutory language of 1961(a). Second, the merits judgment approach is consistent with the legislative intent behind 1961 (a). Third, public policy supports the merits judgment approach.

A. Statutory Language

The statutory language of 1961(a) supports the merits judgment approach as the correct solution to the interest accrual dispute.111 The pertinent statutory language in 1961 (a) consists of two clauses: "[i]nterest shall be allowed on any money judgment" and "interest shall be calculated from the date of . . . judgment."112 The United States Courts of Appeals involved in the interest dispute have agreed either explicitly or implicitly that "judgment" in the second clause refers to "money judgment" in the first, and, therefore, interest accrual under 1961(a) begins on the date of the "money judgment."113 However, the circuits disagree over the proper definition of "money judgment," and thus, over the proper date of interest accrual on attorney's fee awards."4 Neither the definitions section of 1961(a) nor the legislative history defines "money judgment."115

In Eaves, the Third Circuit ruled that the exact quantum judgment constitutes the "money judgment" for purposes of 1961(a) in attorney's fee cases and provided two arguments in support of its holding.116 First, the Third Circuit provided circuit-court precedent defining the phrase "money judgment" (as the term is used in other statutes) as a judgment for a specific amount of money or an exact quantum judgment.117 Second, the Third Circuit used the Supreme Court's Bonjorno ruling that interest accrual under 1961 (a) begins on the date of "ascertainment of the damage" to support its holding.118 The Third Circuit reasoned that the date of "ascertainment of the damage" is the date damages are determined or specifically quantified, which is the date of the exact quantum judgment.119

However, neither of the Third Circuit's justifications is convincing. First, the precedent the Third Circuit used to support its definition of "money judgment" defines "money judgment" in the context of other statutes,120 e.g., 362(b)(5) of the Bankruptcy Code,121 that are completely unrelated to 1961 (a). Second, the Third Circuit improperly used the United States Supreme Court's "ascertainment of the damage" language to support its holding.122 The Supreme Court specifically defined the phrase "ascertainment of the damage" as a judgment supported by the evidence or judgment on the merits,123 leaving no doubt that it did not mean an exact quantum judgment.

Conversely, in Drabik, the Sixth Circuit Court of Appeals ruled that the merits judgment constitutes a "money judgment" for purposes of 1961 (a) and supported its ruling with two arguments.124 First, the court argued that the grant to the prevailing party of its request for attorney's fees at the merits judgment equates to a judgment for money, i.e., attorney's fees, or "money judgment" for purposes of 1961(a).125 Second, the court argued that the phrase "money judgment" is commonly defined as the judgment entered upon the jury verdict, which is the merits judgment.126

The merits judgment approach remains most consistent with the statutory language of 1961(a) for three reasons. First, the grant of attorney's fees the court makes at the merits judgment constitutes a "money judgment," pursuant to 1961(a), because it involves a judgment for money, i.e., attorney's fees, distinguishable from other types of judgments, such as judgments for equitable or injunctive relief.127 Second, the United States Supreme Court has ruled that interest accrual under 1961 (a) begins on the date of "ascertainment of the damage," which-pursuant to the Court's definition of "ascertainment of the damage"-means the date of the merits judgment.128 Third, and most importantly, 1961(a) essentially aims to provide interest to prevailing parties for delays in payment on damage awards between the date the prevailing party becomes entitled to its fees and the date of payment.129 Because the date of entitlement in attorney's fee cases is the date of the merits judgment,130 interest accrual under 1961(a) begins on the date of the merits judgment.131

B. Legislative Intent

The legislative intent behind 1961(a) also supports the merits judgment approach as the correct solution to the interest accrual dispute.132 Congress tied the interest rate under 1961(a) to the fifty-two-week average of the United States Treasury yield to establish a uniform interest rate to be applied to all damage awards recovered in United States federal district courts.133 Congress established a uniform interest rate to prevent variances in interest rates and, therefore, variances in compensation to prevailing parties for delays in payment of their damage awards between federal district courts.134 Implicit in Congress's enactment of a uniform interest rate is its intention that interest payments, pursuant to 1961(a), be the exclusive means of compensating prevailing parties for delays in payment of their damage awards because using 1961(a) as the exclusive form of compensation would prevent variances in compensation between federal district courts.135 Any other method of awarding compensation on damage awards would violate Congressional intent by destroying uniformity in compensation among federal district courts.136 Congress's intent that interest payments under 1961 (a) be the exclusive means of compensating prevailing parties for delays in the payment of damage awards indicates that the merits judgment approach is the proper solution to the interest dispute.137

Following its holding that the exact quantum judgment approach provides the proper resolution to the interest dispute, the Third Circuit ruled in Eaves that the prevailing party in attorney's fee cases is entitled to some sort of compensation for the time that it is deprived of its money between the merits judgment and the exact quantum judgment.138 Included in this ruling is a sub-ruling that the compensation be something other than interest payments under 1961(a) because the Third Circuit's holding barred recovery of interest under 1961(a) until the exact quantum judgment.139 This sub-ruling expressly violates Congress's intent that interest payments under 1961(a) serve as the exclusive form of compensation to prevailing parties for delays in payment of damage awards. Thus, by ruling that the prevailing party in attorney's fee cases is entitled to compensation for the delay in payment of its attorney's fees between the merits judgment and the exact quantum judgment, the Third Circuit, in order to not subvert Congressional intent, inadvertently ruled that the prevailing party is entitled to interest payments under 1961(a) from the date of the merits judgment.140

C. Public Policy

In addition to the statutory language of 1961(a) and the legislative intent behind it, public policy supports the merits judgment approach as the correct solution to the interest accrual dispute.141 The lone policy argument supporting the exact quantum judgment approach suggests that requiring the losing party to pay interest under 1961 (a) from the date of the merits judgment unfairly prejudices the losing party by denying the losing party the opportunity to avoid the interest payments.142 The losing party cannot avoid paying interest on the fee award for the time between the merits judgment and exact quantum judgment by satisfying the fee award on the date of the merits judgment because the fee award is not quantified until the exact quantum judgment.143 This argument correctly assumes that the losing party cannot avoid the interest payment.144 However, the argument incorrectly describes the interest owed as a penalty or additional fee.145 To the contrary, the interest is a time differential adjustment to the value of the fee award, bringing the fee award up from its market value at the time of the merits judgment to its market value at the time of the exact quantum judgment.146 The economic fact that a certain sum of money paid in the future is worth less than that same sum would have been worth were it paid in the past makes this adjustment necessary.147 Money to be paid in the future is worth less than money paid in the past because of factors such as inflation and the ability of the person in possession of the money to earn interest on it or invest it and collect dividends.148 Therefore, because the losing party maintains possession of the fee award from the date of the merits judgment to the date of the exact quantum judgment, the losing party is not harmed by being required to pay interest on the fee award.149 Instead, in awarding the prevailing party interest on the attorney's fees from the date of the merits judgment, the losing party is prevented from being unjustly enriched by keeping the time differential increase in the value of the fee award.150

The following example clarifies this point. Assume that a court in an attorney's fee case entered the merits judgment on June 1, 2000. and the exact quantum judgment for $100,000 on June 1, 2001. The prevailing interest rate for that year was 5%, and the losing party possessed sufficient funds to satisfy the $100,000 award at the date of the merits judgment and any time thereafter. If the court required the losing party to pay interest on the fee award from the date of the merits judgment, then the losing party would owe $105,000 at the time of the exact quantum judgment. Advocates of the exact quantum approach would argue that this result lacks fairness because it denies the losing party the opportunity to satisfy the $100,000 award on the date of the merits judgment, thus avoiding the $5,000 interest payment.151 Imagine, however, that the losing party's bank account contains an interest-bearing sub-account containing $100,000 on the date of the merits judgment. After a year has passed and the exact quantum judgment is rendered, the subaccount will contain $105,000, having earned 5% interest during the year between judgments. The losing party could satisfy the fee award and the interest due on it by turning over the sub-account, and therefore, would have paid only $100,000 out of pocket. Conversely, if the losing party were required only to pay interest from the date of the exact quantum judgment, it would get to keep the $5,000 in interest it earned on the sub-account. Therefore it would effectively have to pay only $95,000 out of pocket to satisfy the damage award. Thus, to prevent the losing party from profiting on the prevailing party's fee award, one must require the losing party to pay interest from the date of the merits judgment.152

In contrast to the absence of legitimate policy arguments in support of the exact quantum approach, four policy arguments support the merits judgment approach.153 First, interest payments from the date of the merits judgment are necessary to deter the losing party from delaying the exact quantum judgment to avoid paying the fee award, to secure additional time to freely use the money owed, or to hassle the prevailing party.154 Second, interest payments from the date of the merits judgment are necessary to fully compensate prevailing parties and, through them, their attorneys.155 If prevailing attorneys are not made whole, they might become less willing to take on complex and expensive litigation, such as important civil rights cases.156 Third, interest from the date of the merits judgment is necessary to prevent the losing party from profiting on the prevailing party's fee award by collecting interest on it between the merits judgment and the exact quantum judgment.157 Fourth, awarding interest from the date of the merits judgment is needed to properly compensate the prevailing party for the time differential decrease in the value of the fee award during the time between the merits judgment and the exact quantum judgment.158

Overall, public policy supports the merits judgment approach as the proper solution to the interest dispute. This support, combined with the fact that the merits judgment approach, unlike the exact quantum judgment approach, stays consistent with the plain language of 1961 (a),159 advances the legislative intent behind the statute,160 and conclusively distinguishes the merits judgment approach as the correct solution to the interest dispute.161

V. CONCLUSION

The United States Courts of Appeals have split on the question of whether interest accrual on attorney's fee awards under 28 U.S.C. 1961(a) begins on the date of the "merits judgment" or the date of the "exact quantum judgment." The Fifth, Sixth, Eighth, Ninth, Eleventh, and Federal Circuits have held that interest accrual begins on the date of the merits judgment (the "merits judgment approach"). The Third, Seventh, and Tenth Circuits have held that interest accrual begins on the date of the exact quantum judgment (the "exact quantum judgment approach").

The merits judgment approach provides the correct solution to the interest accrual dispute because it remains consistent with the statutory language of 1961(a), advances the legislative intent behind 1961(a), and receives support from public policy. The statutory language of 1961(a) forces the losing party in civil suits to pay interest to the prevailing party for delays in payment of the prevailing party's damage award from the date of the judgment entitling the prevailing party to its award.162 The merits judgment approach remains consistent with this requirement because the merits judgment constitutes the judgment entitling the prevailing party to its fee award in attorney's fee cases.163 The legislative intent behind 1961(a) was that 1961(a) serve as the exclusive means of compensating prevailing parties for delays in payment of damage awards.164 The merits judgment approach advances this intention by compensating prevailing parties with interest payments under 1961(a) for the delay in payment between the merits judgment and the exact quantum judgment in attorney's fee cases.165 The exact quantum judgment approach, conversely, violates legislative intent by compensating prevailing parties through payments other than interest payments under 1961(a). Alternative compensation becomes necessary because interest payments under 1961(a) are prohibited until the exact quantum judgment.166 The merits judgment approach also finds support in the public policy argument that requiring the losing party to pay interest from the date of the merits judgment deters the losing party from delaying the exact quantum judgment to avoid paying the fee award, to secure additional time to freely use the money owed or collect interest on it, or to hassle the losing party.167 For all these reasons, courts should adopt the merits judgment approach to determining the date of interest accrual on attorney fee awards.