Transcript

IN THE SUPREME COURT OF THE UNITED STATES

EASTERN AIR LINES, INC., Petitioner, v. ROBERT F. MAHFOUD

No. 83-1807

October 9, 1985

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 10:02 o'clock a.m.

APPEARANCES:

RICHARD M. SHARP, ESQ., Washington, D.C.; on behalf of Petitioner.

GEORGE EDWIN FARRELL, ESQ., Washington, D.C.; on behalf of Respondents.

PROCEEDINGS

CHIEF JUSTICE BURGER: We will hear arguments first this morning in Eastern Air Lines against Mahfoud. Mr. Sharp, you may proceed whenever you're ready.

ORAL ARGUMENT OF RICHARD M. SHARP, ESQ. OF BEHALF OF THE PETITIONER

MR. SHARP: Mr. Chief Justice, and may it please the Court:

The Warsaw Convention and the Montreal Agreement place limits on the liability of air carriers. The question presented by this case is whether courts may award prejudgment interest in excess of those limits.

In this case, Mr. and Mrs. Bernard Mahfoud purchased an airline ticket in Paris, France, that was to take them to their home in New Orleans and to return them to Paris, France. On the return leg of that trip, they were aboard Eastern Flight 66 which crashed near Kennedy Airport in New York. As a result, Mr. and Mrs. Mahfoud were killed, as were 111 other persons.

Mr. Mahfoud's brother initiated this action against Eastern Air Lines and the United States and several other Defendants. Prior to the trial of Mr. Mahfoud's damage claims, Eastern moved for partial summary judgment. It requested the district court to declare that, in accordance with the Warsaw Convention and the Montreal Agreement, Eastern's liability for Mr. and Mrs. Mahfoud's deaths was limited to the sum of $150,000 or $75,000 per person.

The district court granted that motion, but the district court also ruled that the Plaintiffs could recover prejudgment interest in excess of the limits contained in the Warsaw Convention and the Montreal Agreement.

Eastern appealed, the Court of Appeals confirmed, and we now contend before this Court that both of the courts below erred in their prejudgment interest ruling. The basis of our position rests on four points. They are:

First, the text of Article 22.1 of the Warsaw Convention;

Second, the text of Article 24 of the Warsaw Convention;

Third, the text of the Montreal Agreement;

And fourth, the negotiating history of both of those documents.

I'd like to turn now to the text of Article 22.1, which appears at page 3 of the blue brief. Before I read that text, I'd like to point out that this is the particular sentence in the Warsaw Convention that establishes the limit on liability. It also gives us some indication of the scope of that limit. In the second sentence of Article 22.1, we have the indication as to when the liability is to be valued so that the limit can be placed on it.

Turning now to the first sentence of Article 22.1, it provides that: "In the transportation of passengers the liability of the carrier for each passenger shall be limited to the sum of 125,000 francs."

Now, the liability is obviously specific. It's for 125,000 francs. And it's fixed or mandatory, that is the liability "shall be limited." I think the most important concept in this sentence is what the limit applies to, and that is the limit applies to the "liability of the carrier for each passenger."

It's our position that prejudgment interest is necessarily a part of this concept of liability of the carrier for each passenger. Prejudgment interest is an item of the Plaintiff's recovery. The function of prejudgment interest is simply to calculate the Plaintiff's damages so that the Plaintiff will receive full compensation at the date of judgment, and the Warsaw Convention itself sets up a system providing that a Plaintiff may bring a claim and reduce that claim to judgment in a court of law.

The Warsaw Convention system, then, necessarily contemplates that there will be a delay of some sort between the accident and the date of judgment when the Plaintiff is to be paid. It leaves to the law of the nation states whether or not they will take account of this delay.

And the standard way, the way this delay was taken account of here, was to provide prejudgment interest by method of a formula, that is, a fixed rate, percentage rate, over a period of time. But the same thing may be accomplished where a court or a legal system instructs its courts, its jurors, to simply value the Plaintiff's claim as of the date of the judgment.

Under either of those systems, some prejudgment interest passes to the Plaintiff, and under either of those systems that prejudgment interest in our view is part of the carrier's "liability for each passenger."

Now, I'd like to turn next to the second sentence of Article 22. This sentence indicates the time at which the limit is to be applied. It states: "Where, in accordance with the law of the court to which the case is submitted, damages may be awarded in the form of periodical payments, the equivalent capital value of said damages shall not exceed the sum of 125,000 francs."

Now, the first thing to point out about this sentence is that, as with the rest of the convention, this sentence presupposes that the liability of the carrier will be established in a judicial proceeding. The sentence speaks of there being a court of law to which the case is submitted.

But the sentence also indicates -- it deals now with a situation where the judgment will not be for a lump sum, but the judgment will be in the form of an order to pay out various payments over a period of time. And it indicates that the future periodic payments contemplated by this section are to be capitalized to the date of the award, and that capital amount of the award cannot exceed the limit. In effect, this sentence says that the equivalent capital value of the award shall not exceed 125,000 francs.

Now, we have some further help in this regard from the original version of the Warsaw Convention. The text that you have before you, the English text, uses the word "damages." The corresponding word that appears in the official French version of the convention is "indemnite."

If one consults the French legal dictionary that this Court relied upon in Sack's, a dictionary published in 1931, "indemnite" is defined as a reparation or compensation. That dictionary says that "indemnite" is "indemnity conferred by judgment," and that "it ordinarily takes the form of damages and interest."

If you fit this together, what we draw from this sentence is that, when damages and interest are awarded, not in the form of a single lump sump, but in the form of periodic payments, the capital value of that award shall not exceed 125,000 francs. So what we draw from that is that Article 22.1 indicates that the limit imposed by this convention is to be applied to the carrier's liability as of the date of the judgment.

I'd like to turn next to Article 24 of the convention. Article 24 --

QUESTION: Before you do that, Mr. Sharp, what has your research disclosed in the way of cases from other countries who are parties to the treaty with regard to their interpretation of Article 22 and its meaning?

MR. SHARP: Your Honor, I can report three cases, none of which have a reasoned opinion, but provide results. One case is reported by Professor Drion in his treatise, and I believe we have cited that case in our main brief. It is a case from Brussels, in which interest is awarded in a commercial case in excess of the limit.

There are two cases cited in our reply brief, one from France and one from Great Britain, in which interest is not awarded in excess of the limit. In none of those cases can we find any explanation for the court's reasoning or the result.

QUESTION: Have you found any cases since your briefs were filed?

MR. SHARP: We have not, Your Honor. We have consulted with various experts and we have looked at LEXIS.

At the same time, I must say to the Court that this is an area of research where one cannot be confident that nothing exists after one has looked. We simply do not have the tools to deal with these 120 signatory nations that may or may not be deciding this issue.

But we have nothing to offer the Court, either on behalf of the Plaintiff's position or on behalf of our position, that would be instructive to the Court.

I want to return to Article 24, then, of the convention, and that article is found at page 4 of our reply brief. This article in our view shows that the intended reach of the limit is all-inclusive. Now, in this article there is very elaborate cross-referencing, and I intend to omit that.

The core language of the article begins in the third line in the middle, an the core language is that: "Any action for damages, however founded, can only be brought subject to the conditions and limits set out in this convention."

Now, the key phrase in this sentence is the phrase "however founded." The sentence as we read it is saying that, whatever the local law may award to the Plaintiff in the way of a remedy, whatever Plaintiff's theory of the case may be of whatever the legal basis may be for Plaintiff's case, his suit is subject to the limits of liability set out in this convention.

Now, the provision also confirms that the liability that is regulated by the convention is a liability that is determined in a court of law. Here again, the official version in French is possibly more helpful than the English version.

The version you have before you speaks of "any action for damages." The French text refers to an action "en responsabilite," which translates, we think, one for one to "liability." In other words, the French text contemplates that there will be an action to establish liability or an action for liability.

And when we turn from the terms of the convention, which in our view show that the limit is to cover judicially determined liability, turn from the convention to the Montreal Agreement --

QUESTION: Before you do that, Mr. Sharp, did you find any discussion of this issue in the minutes of the convention or in earlier drafts of the convention?

MR. SHARP: Your Honor, there has never been to my knowledge in reading through these minutes a detailed discussion of the points that I am making at this time. The recorder for the convention that was held in 1929 -- that was Mr. Henri Deveaux -- prepared a memorandum, if you will, of explanation as to what the meaning of the draft proposal was that was before the conferees that were meeting in 1929.

In the course of Mr. Deveaux's explanation as to the limit on liability, Mr. Deveaux says that this limit is intended to apply to the carrier's "maximum liability." We think that is a strong indication that it was to be the liability judgment that was imposed upon the carrier.

There is in Mr. Drion's book a discussion of whether or not prejudgment interest, interest awards generally, are included within the limit or whether or not they can escape the limit. And Mr. Drion concludes that they are within the limit.

Those are the two sources that I would mention to you.

QUESTION: Well, I suppose there are other writers who disagree with that view and say it's an open question, isn't that so?

MR. SHARP: I think that there is a suggestion to that effect in the Shawcross and Beaumont text. I am trying to collect now all of the discussions. I think we have covered the principal discussions of the point.

I'd like to turn now to the text of the Montreal Agreement. The relevant provisions of that text are printed at page 4 of the blue brief, and it's the first three lines that begin at subparagraph (1), and those lines state:

"The limit of liability for each passenger for death, wounding, or other bodily injury shall be the sum of $75,000 inclusive of legal fees and costs."

Now, what happened here was that when the delegates met in Montreal they knew that some nations were awarding attorney's fees and costs to the passengers and that in some instances the awarding of attorney's fees and costs meant that the carrier was paying out a total that was greater than 125,000 francs.

It was based on that knowledge that the delegates provided that the limit that you see here should be increased to $75,000, but that limit should be inclusive of legal fees and costs. This action by the delegates, we submit, indicates that the limit contained in the Montreal Agreement is really intended to cover the waterfront.

Now, the Montreal Agreement also makes --

QUESTION: May I just ask this question? You don't deny that it might cover postjudgment interest, that postjudgment might be recoverable?

MR. SHARP: We do not deny that.

QUESTION: And I'm just wondering, would you think that a signatory state could decide for itself whether postjudgment interest should be set to run from the date the trial court judgment was rendered in one country and another one might decide it should be after all the appellate process has run its course, which might be a difference of a couple of years in some countries?

Could a country decide for itself the date from which postjudgment interest will run?

MR. SHARP: I think so, Your Honor. Our view is that once the convention has placed a judgment in the hands of the passenger, it has spent its course and whatever the --

QUESTION: Would a country be free to decide that postjudgment interest should run from the date that the lawsuit started?

MR. SHARP: I think not, because then I think you're in the period -- the liability of the carrier to each passenger in the period that the convention speaks to.

QUESTION: You'd say that the line would be drawn at -- they could fix the date when the judgment was rendered, but not some earlier date, such as the date the complaint --

MR. SHARP: That's right.

QUESTION: -- was filed or the date the Plaintiff's evidence went in or something like that?

MR. SHARP: That's right.

Now, the Montreal Agreement we submit also makes it clear that for purposes of applying the limit one should look at the carrier's liability as finally determined in a judicial proceeding. We say that because the fees and the costs do not exist at the time of the accident, and thus the limit cannot be read as applying simply to those items of liability that may be deemed to have arisen at the time of the accident.

There is in the negotiating history, then, further confirmation of our position. We think that negotiating history suggests that the limits in the Montreal Agreement and the Warsaw Convention were intended to cover the full extent of the carrier's liability.

As I responded to Justice O'Connor's question, one of the principal indications of the scope of this limit is contained in the explanation that Henri Deveaux gave to the conferees in 1929, when he described the limit as applying to the "maximum liability of the carrier."

Now, the courts below looked to the Montreal Agreement of 1966 and concluded that a new or different purpose sprang from that agreement. They found in the agreement of 1966 a purpose of expediting litigation and facilitating settlement, and they concluded that, in light of that new purpose, it was permissible to award prejudgment interest in excess of the limit.

QUESTION: Certainly the Montreal Agreement was motivated in part by a desire to speed settlement and provide for an earlier resolution of claims falling under the convention. If your position is correct, what is there left to encourage speedier resolution of claims?

This case is a rather good example of what some might call dilatory tactics on the part of the carrier, and I just wonder what you think is left for the encouragement of speedy settlements if your position on the treaty is correct?

MR. SHARP: Your Honor, if the limit on liability is recognized by the Plaintiffs and the Defendants as being a guillotine that cannot be escaped, you have created the ideal environment for settlement. It's when one or both of the parties do not know whether they can break the limit.

I would give you as an example this case, in which Eastern made an offer of judgment to the Plaintiff in 1978 in the sum of $150,000, which would be the equivalent of $75,000 for both Mr. and Mrs. Mahfoud. That offer of judgment was in the Defendant's view an offer to pay its maximum liability.

It was not accepted because in the Plaintiff's view, no doubt, it did not constitute what the Plaintiff thought was the maximum liability. It is -- if we have an absolute limit, that is the best hope for expediting settlement in these cases.

I might say that the minutes of the Guatemala convention point out there the delegates to that convention are discussing whether or not they should lift the willful misconduct exception to the limit so that they can then put before the parties an absolute limit that tells them really what they should settle against.

QUESTION: But if the carrier knows that it's likely to be hit with the maximum liability under the treaty and it can stall around with its defense of the lawsuit for years and not incur any interest as a result of it, I don' t understand why it's motivated to go ahead and pay it out right away.

MR. SHARP: Your Honor, if the carrier can walk away from one of these cases for $75,000 today, it's well advised to do so. The costs for litigation will greatly exceed that amount.

QUESTION: Well, Mr. Sharp, refresh my recollection. Did Eastern deposit $150,000 with the court?

MR. SHARP: They did. As soon as the district court said our liability was limited, we paid $150,000 into the registry of the court.

QUESTION: And it still sits in the court's hands?

MR. SHARP: It may have been paid out. We simply walked away from the case as soon as we discharged our liability.

QUESTION: Mr. Sharp, December of '82?

MR. SHARP: December of '28, Your Honor.

QUESTION: And no postjudgment interest was imposed?

MR. SHARP: That's correct.

QUESTION: Mr. Sharp, in connection with those questions, the Court of Appeals for the Second Circuit in its opinion that it handed down, as I recall in 1980, stated that Eastern did not deny liability for the $75,000 to the proper parties, is that correct?

MR. SHARP: That is correct.

QUESTION: Did Eastern consider then depositing $150,000 in the court, subject to the determination of who the proper parties were?

MR. SHARP: There is no indication of that. What I would say to you, Your Honor, is that Eastern offered every Warsaw Plaintiff an offer of judgment in an amount of $75,000.

QUESTION: That was an offer of settlement.

MR. SHARP: Pardon me?

QUESTION: That was an offer of settlement.

MR. SHARP: Yes.

QUESTION: Right. But my point is, what did Eastern have to lose by depositing the money earlier than it did if it took seven years before it finally deposited the money? Meanwhile, it had the use of that money. If it had been deposited and Eastern won the case eventually, it would have received its money back plus interest.

MR. SHARP: Your Honor, I don't know that it ever considered whether to deposit or not to deposit. I think that most defendants hold onto the money until they can get a discharge from the plaintiff. That's the one thing they have to win, is when they pay they want to leave the case, and that's what Eastern wanted.

QUESTION: The plaintiff doesn't get the money when it's with the registry of the court.

MR. SHARP: That's right.

QUESTION: But the interest on $150,000 over seven years is quite substantial.

MR. SHARP: That's right. Your Honor, the only thing I would point out there is that the Plaintiff has never moved for a complete summary judgment against Eastern, and if they had Eastern would have certainly, as its offer of judgment suggests, been prepared to pay the limit; and if the court had ruled that prejudgment interest also had to be paid in a summary judgment proceeding, that would have concluded the litigation.

QUESTION: Was that motion made in --

MR. SHARP: It was never made.

QUESTION: -- 1982, when the money was paid into the registry of the court?

MR. SHARP: No. The Plaintiff opposed our motion to fix the liability. The Plaintiff's position was in 1982 that the limits of liability were void in light of the Second Circuit's opinion in Franklin Mint.

If there are no further questions, I would like to reserve the balance of my time.

CHIEF JUSTICE BURGER: Mr. Farrell.

ORAL ARGUMENT OF GEORGE EDWIN FARRELL, ESQ., ON BEHALF OF PLAINTIFFS

MR. FARRELL: Mr. Chief Justice and may it please the Court:

The basis of Petitioner's argument seems to me to be that the limits of liability stated in Warsaw and Montreal can't be exceeded, no matter what. Now, this was never intended by the delegates at Warsaw or Montreal, nor by any of the high contracting parties who ratified the treaty.

The delegates at the Warsaw conference were not making a wrongful death statute. They were trying to establish air law. They full understood that the articles they promulgated were dependent upon national law for implementation.

Almost none of the operating articles in the Warsaw convention are self-executing, and of those making up the liability section, six directly require the use of national law. The European delegates and the high contracting European parties never considered that the liability limitations set forth in Article 22 could not be exceeded.

It was standard procedure for them to award legal fees and costs in addition to the damages limitation. No one outside the United States even knew this was going on until the Hague conference in 1955.

Mr. Sharp points out that Mr. Deveaux thought that the damages should be limited or that there should not be any way to exceed the damages limit. Yet, it was his country, as reported by Mr. Drion, who also awarded interest in addition to the costs and attorney's fees. Mr. Drion further said that the attorney's fees and costs are not damages arising from the conduct or the fact for which liability is imposed by the convention. Obviously, the same reasoning could apply to interest in excess of the Warsaw convention limitation, as interest is not an element of damages.

Thus, from the very beginning the Warsaw limitations were routinely exceeded. The very provision of Article 22 that was related to you provides that interest in excess of the Warsaw limit was permissible. That provision pertained to the periodical payments which were just discussed.

The Petitioner's brief says that these periodical payments which permitted an excess payment over and above the Warsaw limitation took into account the time value of money. Now, that can only be interest.

Article 22 further provides that the limitation could be exceeded by a special contract. Article 3 provides that if you don't give notice you can exceed the Warsaw limitation. Article 25 permits the limitation to be exceeded if the conduct of the carrier so requires.

The Hague -- yes?

QUESTION: For example, what? "If the conduct"; what kind of conduct?

MR. FARRELL: The words are the "willful misconduct pursuant to the law of the court that is hearing the case."

QUESTION: What about ordinary negligence?

MR. FARRELL: Ordinary negligence would not do it, Justice White.

QUESTION: Could I ask, Eastern filed an answer, I take it, to the complaint? And based on that answer, was there any issue at all that Eastern at least owed $150,000?

MR. FARRELL: Eastern alleged the defense of Warsaw-Montreal, saying that its liability was limited to $75,000.

QUESTION: Right, but its answer at least conceded its liability for 150?

MR. FARRELL: No, it did not concede its liability up to that amount. It said that it was defending, using that as a defense, that Warsaw-Montreal did apply.

QUESTION: How could they escape liability?

MR. FARRELL: Well, I don't think they could, because there were two deaths.

QUESTION: Well, I know. But could you read the answer? The Second Circuit said, as Justice Powell points out, that Eastern had never denied its liability up to the convention limits. Did its answer deny or not?

MR. FARRELL: Its answer did not deny, but it was not -- it was an affirmative defense, Your Honor. It didn't say that, we owe you $75,000. It says that the Warsaw-Montreal provisions are applicable.

QUESTION: Well, which would mean that their liability is limited.

MR. FARRELL: Yes, indeed. They were alleging their liability was limited, correct.

QUESTION: But they never denied liability?

MR. FARRELL: They never denied liability, no, that is correct.

They also -- as admitted by the Plaintiff, the defense of the improper party was not valid against this Plaintiff. There were others perhaps it may have been, but not this one. So that defense, which was carried on for many years, was a spurious defense.

QUESTION: Well, of course you were hoping to get a recovery in excess of the liability limits, I assume?

MR. FARRELL: Well, when you have two Defendants in it, Justice O'Connor, that is correct. We had a right to determine if we could get adequate damages for our Plaintiff.

QUESTION: But you wanted to recover amounts in excess of the limits of the $75,000 a person.

MR. FARRELL: I didn't particularly care whether I got it from Eastern or from the United States, Your Honor. But in fact, we did get $1,650,000, but principally from the United States, after Eastern made its motion almost seven years after the case began.

QUESTION: And you never filed for summary judgment against Eastern for the amount of $75,000 each, partial summary judgment?

MR. FARRELL: Specifically stating that, we did not. We filed for summary judgment on the issue of liability, and we were willing to permit Eastern to maintain whatever defenses it thought it had. And that was approved by the trial court.

QUESTION: When?

MR. FARRELL: That was in 1978, Your Honor.

QUESTION: So that as of 1978 liability had been established?

MR. FARRELL: No, Your Honor, it hadn't. There was a trial--

QUESTION: I thought you said your motion was granted.

MR. FARRELL: Well, the motion was granted, but it was later overturned by the Second Circuit on a procedural ground.

QUESTION: Well, I know, but there was a judgment in 1978.

MR. FARRELL: But only on liability.

QUESTION: Right, just liability.

MR. FARRELL: Yes. Later there was an all-out trial on liability against Eastern. Eastern was found negligent. But this case was not in it because of the ruling by the trial court that Eastern was liable, for liability only. So this case was not in the liability trial before the jury.

QUESTION: That's the judgment on page 37 of the appendix. It was entered September 26th, 1978.

MR. FARRELL: Yes, Your Honor. The first judgment entered was prepared by the defense firm that was defending in New York Eastern Air lines, and they for some reason included some Article 54 words, and it had to come back, although after they made up the order themselves they then appealed it.

QUESTION: And what was the later trial against Eastern on liability?

MR. FARRELL: The trial commenced --

QUESTION: Well, what was the issue there, liability?

MR. FARRELL: The issue was whether or not Eastern was negligent in causing this accident.

QUESTION: What if it had been?

MR. FARRELL: It was found negligent, Your Honor.

QUESTION: And does that escape the Warsaw limits?

MR. FARRELL: No, it did not, Your Honor, not for a Warsaw case like this one. We always agree that this is a warsaw case. The Warsaw Convention and Montreal Agreement apply to this case and we've never denied that, Your Honor.

QUESTION: And so why were you trying out negligence against Eastern?

MR. FARRELL: There were other cases in it, Justice White, many in which Warsaw did not apply.

QUESTION: I see.

QUESTION: Those were the domestic passengers?

MR. FARRELL: Yes, Your Honor.

In addition to the articles which I mentioned which permitted excess payments over and above the Warsaw limitation, there was also a dual payment, a system which came into being during the Hague conferences in 1955. This was after the United States discovered that the Europeans were exceeding the Warsaw limitation anyway.

So a dual system was brought into those discussions and, although the United States never ratified Hague, the dual system again was brought up during the Montreal conference and that is the provision that, in the countries that do not award fees and costs such as the United States, a limitation of $75,000 was reached, and otherwise it would be $58,000 plus attorney's fees and costs.

Of course, this permits the ceiling on damages to be exceeded, depending upon the length of time, again, that the litigation takes place, because the longer the time involved the more the attorney's fees and the more the costs.

Thus, there never has been any prohibition on exceeding the Warsaw-Montreal limits from the provisions of the documents and the conduct of the parties that drew up the convention. The framers, the Europeans who framed Warsaw, never considered that exceeding the limitation was any problem.

Now, we had some discussions of Articles 24 and 28, but before getting to those I would like to respond to Petitioner's comments from reading Article 22.1 and his finding of apparently a 1932 French dictionary which changes the words.

The Congressional Record, which reports the Senate's action on the Warsaw Convention, dated June 15 1934, has the word "damages" in it. It says that: "Where, in accordance with the law of the court to which the case is submitted, damages may be awarded in the form of periodical payments," and so forth.

We've had this treaty in effect for over 50 years, and I for one would assume that if we weren't using the right words that the French people would have told us by now. I don't think that this is the time to, on a reargument, to change the wording.

As previously in its brief, the Petitioner has agreed that this means that under 22.1 if you have periodical payments that the excess that's paid is for the use of money.

Now, probably the real key to this case is in Article 24, which provides that the law of the court that hears the case shall determine the elements of damages. Now, this is a wrongful death case. The Petitioner concedes that the proper wrongful death law to be applied is the law of Louisiana, where this case was brought, including its conflict laws as well as its law pertaining to judgment interest. His problem with it is that he doesn't think that prejudgment interest could be awarded.

Now, Louisiana, the recovery for wrongful death may be had for a loss of love and affection and that type of recovery, loss of support, loss of services, and funeral and medical expenses. The trial court determined the loss under each of these categories and awarded damages against the United States and Eastern Air Lines in the amount of $1,650,000, as I previously mentioned. Of that amount, $150,000 was assessed against Eastern for the two deaths.

In making its determination for the lost support portion of the damages award, the court first determined the loss from the time of death until the time of trial, using decedent's income at the time of death projected forward, and then determined future loss of support by using projected income from date of trial until date of majority of the three infants, reduced to present value.

Thus, the damages judgment was based upon the value of the human life at the time of death. The court then ordered the application of prejudgment interest from date of what they called judicial demand, or the time when the case was filed, and postjudgment interest as allowed by the specific Louisiana statute pursuant to the Louisiana procedure.

Thus the district court, pursuant to its law as the court before which the action was brought, determined that damages accrued at the time of death and Eastern was liable for $75,000 per decedent, the maximum damages pursuant to the Montreal Agreement.

The court then determined, pursuant to Article 28, that Eastern was further liable to pay interest from the date that the action was filed as compensation for the use of money rightfully belonging to the Plaintiffs over the nearly seven-year period between the time that the case was filed and the time that Eastern paid its $150,000 into the registry of the court.

QUESTION: Mr. Farrell, isn't that item normally considered part of the damages or compensation that would be contemplated under the terms of the treaty?

MR. FARRELL: I would say if you're using the --

QUESTION: Prejudgment interest?

MR. FARRELL: I would say no, Your Honor. The prejudgment interest to my knowledge, at least in the United States, is never a part of damages. It's something that is added. It's a ministerial function. It's pursuant to statute. It's never a part of damages that I know of in any of the jurisdictions in the United States.

Now, the proceeding in Louisiana is really no different from the provisions of Article 22.1 of Warsaw. That provision states: "Where, in accordance with the law of the court in which the case is submitted, damages may be awarded in the form of periodic payments, the equivalent capital value of the said payments shall not exceed 125,000 francs."

This provision specifically permits a court to add interest to a damages award when payment is delayed and, as admitted by Eastern, provides compensation for the use of money, or interest.

Petitioner admits by delaying payment rightfully due to three orphaned children it put $87,000 into the pockets of Eastern's insurance company. Instead of paying $75,000 per death, it actually paid approximately $31,000.

The action of the Louisiana district court was absolutely proper under its law, and it is not in violation of any articles, neither Warsaw nor Montreal. And if anything, the result is no different than the periodic payment provision of Article 22.

Now, the Petitioner in its briefs has gone to great length in an attempt to establish that interest is an integral part of compensatory damages. In some jurisdictions throughout the world, this may be correct, but as I -- in response to Justice O'Connor's question, the jurisdiction in which the action was brought, Louisiana, and whose laws were properly used, as admitted by Eastern, the practical application of the Louisiana procedure is to establish a starting point for compensation to be paid for the use of money at the time the Plaintiff files his lawsuit and a termination point when the judgment is paid.

The amount of interest to be paid is determined by the amount of the damages award and the length of time involved. The theory is simple: The Defendant owed the money at the time of death and must pay the Plaintiff for its use.

QUESTION: Well, in Louisiana, then, what would the judgment say? It would just give a total amount, wouldn't it? What would it say?

MR. FARRELL: This one broke the judgment down, Justice White, into loss of support, loss of services, and so forth.

QUESTION: And then did it have a separate item on interest?

MR. FARRELL: It says "interest pursuant to law," which later-- that was in its decision. Later in the judgment, it set out the Louisiana interest provisions.

Now, this action was a wrongful death action which, as you were told, arose from the crash of Eastern's Flight 66 at the John F. Kennedy International Airport on June 24, 1975. And it was not until December 2, 1982, that Eastern deposited $150,000, or $75,000 per decedent, into the registry of the court pursuant to its contract of carriage as established by the Montreal Agreement.

The reason for the delay stems from an agreement between Petitioner's insurance company and the United States under which the insurance company agreed to pay 60 percent and the United States 40 percent of any passenger recovery, with the specific provision that Eastern's insurance company was to have complete control over damages discovery, damages trial, appeals, and any decisions relating to the settlement or non-settlement of a particular case.

This is the Petitioner's fifth appeal, four of which relate to Montreal damages. The district court, as affirmed by the Court of Appeals, found that Eastern contributed to delaying the litigation to an extent that a smaller amount of money was invested in order to pay the $75,000 claims.

Petitioner admits that if this honorable Court rules in its favor it will pay only 62 or $63,000 for the two deaths, or about $31,000 each, instead of the $75,000 each, as ordered by the district court. Therefore, at least $87,000 rightfully belonging to the three Mahfoud children will go into the pockets of the insurance company.

This result was never intended by the framers or signatories of Warsaw or Montreal. Denying prejudgment interest in this case would fail to effect any purpose of the convention's framers or signatories. The decision of the district court, as affirmed by the Court of Appeals, ensures that Warsaw-Montreal recoveries will not be diminished by the simple strategy of delaying payment until the award diminishes in value.

The judgment should be affirmed.

CHIEF JUSTICE BURGER: Anything further, Mr. Sharp?

REBUTTAL ARGUMENT OF RICHARD M. SHARP, ESQ. ON BEHALF OF PETITIONER

MR. SHARP: Yes, Your Honors. I would like to address this problem of delay. Eastern in 1978 offered judgment in the full amount of the limits of liability. In 1982 Eastern twice moved to have the court declare what the amount of its liability was, and in the second motion the court did so and Eastern paid that liability into the court.

The Plaintiff opposed our motion to have our liability fixed. There are sound reasons why Warsaw Plaintiffs would not want to settle, to take the full maximum liability of the carrier and let the carrier leave the litigation. That would mean that only the United States is standing ready for the damage trial. The damage trial against the United States standing alone can only be before a judge. No jury would be involved. If the Co-Defendant Eastern is present, there is a right of a jury trial.

The second point is that if the United States is standing liable alone, prejudgment interest on that $1.7 million cannot be recovered. Federal law disallows the recovery of prejudgment interest against the United States. On the other hand, it does not disallow the recovery of prejudgment interest against a private defendant.

Accordingly, if a Plaintiff in the position of Mahfoud can, one, break the limit by alleging willful misconduct, which another Plaintiff, Mrs. Domangue, was doing in this case, or if a Plain tiff can break the limit, as Mr. Mahfoud tried to do, by relying on the Franklin Mint case when it had just come down from the Second Circuit Court of Appeals, that would allow the Plaintiff to recover prejudgment interest on $1.7 million.

Alternatively, the Plaintiff might be able to raise the limit, at least at this time during the litigation, by suggesting to the court that the market value of gold should be the conversion rate for purposes of fixing the limit. That notion was abroad since 1981 in a case called Boeringer-Mannheim, in which the district court in Texas decided that it would be the market price of gold that would set the limit.

What I'm suggesting to Your Honors is that there's a very, very sound reason why a Warsaw Plaintiff would not move for summary judgment and would not discharge the carrier of its liability. And in this case there was no motion by the Plaintiff for a complete summary judgment.

QUESTION: No, but there was a motion for summary judgment on liability.

MR. SHARP: Yes, Your Honor.

QUESTION: Which was granted, and then that judgment was reversed on purely procedural grounds.

MR. SHARP: That is true, Your Honor.

QUESTION: But the Court of Appeals for the Second Circuit didn't for a minute suggest that there was any question about liability.

MR. SHARP: That's right, and the Court of Appeals in that decision --

QUESTION: I just wonder -- the question Justice Powell asked you some time ago: Why didn't, at least in 1978, why didn't you deposit the $150,000 so that it would accrue interest in favor of the Plaintiff?

MR. SHARP: Well, I think the answer is because it was accruing interest in favor of the Defendant.

QUESTION: Well, that's right.

MR. SHARP: I mean, I can't state that as a fact --

QUESTION: So you just say that as long as we can keep the money, it's in our interest to keep the money as long as possible?

MR. SHARP: Yes. It's in our interest to keep the money unless we can be discharged from the litigation. That's the key to our exit from the litigation.

QUESTION: Well, that's an argument, all right.

MR. SHARP: Your Honors, our position boiled down is that the purpose and the text of the Warsaw Convention and the Montreal Agreement is to place a limit on the maximum liability of an air carrier, and prejudgment interest is part of that maximum liability.

CHIEF JUSTICE BURGER: Thank you, gentlemen. The case is submitted.

(Whereupon, at 11:59 a.m., argument in the above-entitled case was submitted.)