Sudhir P. Srivastava and Elizabeth S. Pascual - Page 23

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          damages,12 and the remaining $817,884 is allocated to prejudgment           
          and postjudgment interest.                                                  
               Finally, the $3 million paid by Columbia and Hudson to                 
          settle their liability for coverage between $12 million and $22             
          million is allocated entirely to prejudgment interest and                   
          punitive damages.  At this level, all of the $11,500,000 in                 
          actual damages has been exhausted, in addition to $500,000 of               
          prejudgment interest and all of the postjudgment interest.                  
          Furthermore, the settlement amount of $3 million for $10 million            
          of liability ($22 million minus $12 million) reflects the                   
          diminished likelihood of petitioner's recovering damages and                
          interest in an amount above $12 million if the case was appealed.           
               Extending respondent's alternative method of allocation, we            
          find that of the $3 million paid by Columbia and Hudson, $629,160           
          was paid in lieu of prejudgment interest, and $2,370,840 was paid           
          in lieu of punitive damages.13                                              

               12  This amount is calculated by multiplying the $2,400,000            
          paid by Harte-Hanks by $4,500,000 of remaining actual damages               
          divided by the sum of the $4,500,000 (actual damages), $500,000             
          (prejudgment interest), and $1,826,301 (postjudgment interest).             
               13  In the alternative allocation scheme, respondent assumed           
          that the prejudgment interest would be paid before the punitive             
          damages.  The prejudgment interest totaled $2,597,201, of which             
          $500,000 was already settled out of the $2,400,000 payment by               
          Harte-Hanks.  Columbia and Hudson would therefore pay the balance           
          of the prejudgment interest, $2,097,201, before they paid any               
          punitive damages.                                                           
               The portion of Columbia's and Hudson's payment allocated to            
          interest is calculated by dividing the balance of the prejudgment           
          interest by Columbia's and Hudson's total liability, $10 million,           
                                                             (continued...)           




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