Supplemental Brief — International Business Machines Corp. v. United States

@ FILED

No. 00-482 |

IN THE

Supreme Court of the Anited States

INTERNATIONAL BUSINESS MACHINES CORP.,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

On A Petition For A Writ Of Certiorari To The

United States Court Of Appeals For The Federal Circuit

SUPPLEMENTAL BRIEF FOR THE PETITIONER

Concerning the December 19, 2000 Decision of the

United States Court of Appeals for the Fourth Circuit in

Mary Helen Coal Corp. v. Hudson

SUSAN G. BRADEN

Counsel of Record

WILLIAM D. OUTMAN, II

KEVIN M. O’BRIEN

TERESA A. GLEASON

MICHAEL E. MURPHY

Baker & McKenzie

‘815 Connecticut Avenue, N.W.

Washington, D.C. 20006

(202) 452-7075

Counsel for Petitioner

Balmar Legai Publishing Services, Washington, DC 20005 (202) 682-9829

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TABLE OF CONTENTS

TABLE OF AUTHORITIES

SUPPLEMENTAL BRIEF

SOPOT S OSES E SE OEESES EES ESOSESESE SEE SEE SEES ESESESES ESE SESESEEEES

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TABLE OF AUTHORITIES

CASES: Pages

Eastern Enterprises v. Apfel, 524 U.S. 498 (1998) ................ 2

Koon v. United States, 518 U.S. 81 (1996) ....... ssiatleihdiepaniaietee 3

International Business Machines Corp. v. United States,

Bek FO Te GO GRE, QP cnncctinicncatiacimniccens 1,4

Mary Helen Coal Corp. v. Hudson,

ST FP. SU. Ce FEO Ca, VR FD evccicicatihccietateinins 2

Mary Helen Coal Corp. v. Hudson, 2000 WL 1854053

CH COR, BIOS. BD, Bi sivnecihersiecisedavnssncenaaanocii passim

Osterneck v. Ernst & Whinney, 489 U.S. 169 (1989). ........... 3

Phillips v. Washington Legal Foundation,

FOS Te. RATA) wcsvnisccarsssiniacteienelacaabianbadeanal ,

Webb's F abulous Pharmacies, Inc. v. Beckwith, .

GOD TE: BS CEB sencvctsencistncivisavatstaneniaceadaeaiaiaaedl 2

STATUTES:

Coal Industry Retiree Health Benefit Act of 1992 ..........0...... 2

Harbor Maintenance Tax, enacted as part of the Water

Resources Development Act of 1986, 26 U.S.C.

TRIES oiscesscsinssintncintininnonnaiaaipaddannaiais 3

No. 00-482

IN THE

Supreme Court of the United States

INTERNATIONAL BUSINESS MACHINES CORP.,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

On A Petition For A Writ Of Certiorari To The

United States Court Of Appeals For The Federal Circuit

SUPPLEMENTAL BRIEF FOR THE PETITIONER

Concerning the December 19, 2000 Decision of the

United States Court of Appeals for the Fourth Circuit in

Mary Helen Coal Corp. v. Hudson

On December 19, 2000, Chief Judge Harvey Wilkinson

issued an unanimous decision for the United States Court of

Appeals for the Fourth Circuit in Mary Helen Coal Corp. v.

Hudson, 2000 WL 1854053 (4th Cir. Dec. 19, 2000)' that

stands in direct conflict with the decision of the United States

Court of Appeals for the Federal Circuit in this case, for

which a petition for a writ of certiorari has been filed, and is

scheduled for this Court’s consideration on January 5, 2001.

See International Business Machines Corp. v. United States,

201 F.3d 1367 (Fed. Cir. 2000), petition for certiorari filed,

' This case is also reported at http://www.law.emory.edu/4circuit/

dec2000/992181.P.html.

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69 U.S.L.W. 3259 (U.S. Sept. 28, 2000) (No. 00-482). The

relevance and importance of Mary Helen Coal Corp. to the

pending petition cannot be overstated.’

As a result of Eastern Enterprises v. Apfel, 524 U.S. 498

(1998), a federal district court awarded Mary Helen Coal

Corp. payment of all outstanding premiums collected under

the Coal Industry Retiree Benefit Act of 1992, because this

Court held that act was unconstitutional. See Mary Helen

Coal Corp. v. Hudson, 57 F. Supp. 2d 318 (E.D. Va. 1999).

The district court, however, declined to award Mary Helen

Coal Corp. prejudgment interest. Id. On December 19, 2000,

the United States Court of Appeals for the Fourth Circuit,

reversed holding that where money is collected under a law

that subsequently is determined to be unconstitutional, the

award of prejudgment interest “would simply give full effect

to the Supreme Court’s decision . . . by providing full

compensation for the harms suffered.” Mary Helen Coal

Corp. at 2000 WL 1854053 at *2. That appellate court

further reasoned:

The usual rule that “interest follows principal”

is long and well established. See Phillips v.

Washington Legal Foundation, 524 U.S. 156

(1998). See also Webb’s Fabulous Pharmacies, Inc.

v. Beckwith, 449 U.S. 155, 162 (1980). ... Read

together, therefore, Eastern and Phillips indicate

that Mary Helen receive pre-judgment interest on

the premiums it paid. It is undisputed that after

Eastern the Trustees had to refund the principal

amounts paid. ... Since the principal belonged to

Mary Helen, so too did the interest earned. That the

Trustees collected the premiums in good faith does

not change the fact that doing so violated Mary

Helen’s constitutional rights. Thus, to deny an

Petitioner filed its Reply Brief on December 15, 2000, prior to the

issuance of Mary Helen Coal Corp. on December 19, 2000.

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award of prejudgment interest would undercut the

Supreme Court’s jurisprudence.

Prejudgment interest is simply “an element of ”

Mary Helen’s “complete compensation.” Osterneck v.

Ernst & Whinney, 489 U.S. 169, 175 (1989). ... Thus,

an award of prejudgment interest is a critical

component of Mary Helen’s recovery.

Mary Helen is thus presumptively entitled to an

award of prejudgment interest.

Mary Helen Coal Corp., 2000 WL 1854053 at **2-3

(citations omitted).

The United States Court of Appeals for the Fourth

Circuit also specifically overruled the district court’s refusal

to award prejudgment interest in the absence of specific

statutory authority, holding that “prejudgment interest is

mandated if we are to give meaning to the rule that ‘interest

follows principal.’ Phillips, 524 U.S. at 165.” Mary Helen

Coal Corp., 2000 WL 1854053 at *3. Moreover, the appellate

court further declared that “the district court’s denial of

prejudgment interest was an abuse of discretion ‘guided by

erroneous legal conclusions.’ Koon v. United States, 518 U.S.

81, 100 (1996).” Mary Helen Coal Corp., 2000 WL 1854053

“3.

In short, the United States Court of Appeals for the

Fourth Circuit in Mary Helen Coal Corp. has unanimously

and unequivocally held that this Court’s jurisprudence in

Eastern and Phillips requires that prejudgment interest must

be awarded as a “critical component” of recovery, when

monies have been collected pursuant to a law that violates a

constitutional mandate.’ Jd. By contrast and in direct conflict,

In the instant case, petitioner is seeking prejudgment interest from

1987 to June 17, 1998, the date of the judgment awarding interest by the

United States Court of International Trade in this docket. In addition,

petitioner seeks post judgment interest on monies paid under the Harbor

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the United States Court of Appeals for the Federal Circuit has

unanimously and unequivocally held that no _ interest,

including prejudgment interest, should be awarded where

monies have been collected pursuant to a law that violates a

constitutional mandate without specific statutory authority

from Congress. See International Business Machines

Corp. v. United States, 201 F.3d 1367 (Fed. Cir. 2000).

Therefore, the Court should grant the petition for a writ

of certiorari for all the reasons set forth in petitioner’s prior

briefs and also now resolve a significant and intolerable

division among the federal circuit courts of appeal concerning

the scope of redress required to remedy a violation of the

United States Constitution.

Respectfully submitted,

SUSAN G. BRADEN

Counsel of Record

WILLIAM D. OUTMAN, II

KEVIN M. O’BRIEN

TERESA A. GLEASON

MICHAEL E. MURPHY

Baker & McKenzie

815 Connecticut Avenue, N.W.

Washington, D.C. 20006

(202) 452-7075

Counsel for Petitioner

Dated: January 2, 2001

Washington, D.C.

Maintenance Tax On exports that were unlawfully retained by Government

from June 17, 1998 to date.

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