Arbitration & Mediation

Second Hand Smoke / Flight Attendant Case Determines Pre-Judgment Interest When Proposal for Settlement is Valid

By Christopher B. Hopkins, Esq.

A class action case involving plaintiff flight attendants suing tobacco companies for second-hand smoke exposure has resulted in an appellate decision which sets out the period for pre-judgment interest when a plaintiff serves a valid Proposal for Settlement.

In Lorillard Tobacco Company v. Lynn French, the plaintiff airline attendants served a low-value $2,676 Proposal for Settlement in 2002, which the defendant did not accept. Ultimately, she was awarded a half million dollars. The parties settled on the amount of attorney's fees and costs owed. It appears, at some point five years later in the case, the defendants fought the Proposal as not in good faith, but lost. There was no discussion in the opinion about the validity of the wording of the Proposal, which is unusual for appeals of Proposals.

The Third DCA (Gersten, Cortinas and Salter) held that the general rule is that prejudgment interest begins to accrue on the date the entitlement to attorney's fees is fixed through agreement, arbitration award or court determination. The Third District Panel opined that Rule 1.442 and Florida Statute 768.79 made it clear that entitlement to fees occurred when the following qualifying conditions were met: (1) written Proposal for Settlement and (2) in case of a plaintiff, the plaintiff recovers 125% of the offer. Hence, in this case, the qualifying conditions occurred in 2002 and prejudgment interest ran from that year.

For more information on Proposals for Settlements, see the 2008 article, "Building A Better Proposal for Settlement" at FloridaLawCommentary.com (right column, under Articles).

Full post as published by Florida Arbitration Law on May 10, 2009 (boomark / email).