This is a list of legal decisions that are likely to be of special interest to forensic economists or attorneys who are knowledgeable about forensic economics. It has been compiled by a forensic economist and will not indicate the precedential value of the cases being cited. The list is a work-in-progress, with decisions currently reflecting the research interests of Thomas R. Ireland, who is the webmaster for this page. Other forensic economists have been invited to submit cases they have encountered as important in their practices, as well. Case descriptions should be checked for accuracy before being used. Although efforts will continue to rectify that fact, important cases may not be included in this list. Decisions are listed alphabetically for each jurisdiction rather than chronologically, which means that some decisions that are listed are of historical interest, but are no longer good law. These same descriptions decisions are posted at a website maintained at Denison University. That website has several alternative organizational frameworks, but is not divided into as many subsections as this website. To get to that website, click on Denison Forensics.

Decision are listed by venue, beginning with the United States Supreme Court, then the United States Tax Court, followed by decisions within each of the Federal Circuits, and then decisions within the 50 states and territories. Federal district court decisions are listed within the circuits in which those district courts reside. Thus, federal district court decisions interpreting federal law include district court decisions from Maine, Massachusetts, New Hampshire, Puerto Rico, and Rhode Island, and so forth for the other circuits.

While the general structure is to list decisions by jurisdiction, federal decisions that intepret a given state's law will be listed under the state whose law is being interpreted. In some instances, as in Smith v. Ingersoll-Rand, a decision is relevant to both federal and New Mexico law. That case is listed under Federal Courts of Appeal, with a note to see this decision listed under New Mexico. The number of subcategories is limited and may be expanded in the future. Cases are listed alphabetically within each subcategory. Currently, subcategories are:

                        Basis Income and Fringe Benefits for Projecting Earnings Loss
                        Life and Worklife Expectancies
                        Wage Growth Rates and Discount Rates
                        Standards for Recovery in Wrongful Death
                        Household Services
                        Life Care Plans 
                        Lost Chance of Recovery or Survival
                        Collateral Source
                        Treatment of Taxes
                        Annuities, Periodic Payments and Reversionary Trusts
                        Legal Procedure
                        FELA/Maritime
                        Hedonic Damages and Emotional Services
                        Wrongful Birth, Wrongful Pregnancy, Wrongful Life
                        Admission of Expert Testimony
                        Wrongful Termination
                        Miscellaneous 

     Basis Income and Fringe Benefits for Projecting Earnings Loss

Flemming v. Nestor, 363 U.S. 603 (1960). Social Security benefits depend on the will of Congress and should not be included in projections of damages based on lost earnings.

Hisquierdo v. Hisquierdo, 439 U.S. 572; 99 S.Ct. 802; 59 L. Ed. 2d (1979). In a divorce action, Mrs. Hisquierdo sought an award for her spousal annuity under the Railroad Retirement Board Act. The California Supreme Court had ruled that she was entitled to such an award.  The U. S. Supreme Court reversed and ruled that a spousal annuity could not be anticipated under the Railroad Retirement Act of 1974 (45 USCS 231 et seq.) and that the federal constitution took precedence over the community property standards in California. This decision has been cited in FELA litigation as indicating that a claim for losses based on a spousal annuity, resulting from an injury, are precluded from consideration. 

Richardson v. Belcher, 404 U.S. 78 (1971). No right in Social Security benefits exist and projections of lost Social Security benefits should not be made in federal cases.

Weinberger v. Wiesenfeld, 420 U.S. 636 (1975). Social Security benefits are non contractual because "each worker's benefits are not dependent on the degree to which he was called upon to support the system by taxation.

            Disability

Toyota Motor Manufacturing v. Williams, 122 S.Ct. 681 (2002).  This ruling of the United States Supreme Court makes it clear that the Gamboa disability tables cannot be used in ADA cases because “It is insufficient for individuals attempting to prove disability statistics under this test to merely submit evidence of a medical diagnosis of impairment.” Disability must be analyzed in a “case by case manner” “in terms of their own experience,” in terms of “the effect of that impairment on the life of the individual” (quotes from the slip opinion).  Submitted by Gary Skoog.

            Life Care

Arkansas Dep’t of Heath & Human Servs. v. Ahlborn, 2006 U.S. LEXIS 3455 (U.S. 2006). This decision affirmed a decision of the 8th Circuit to the effect that the ADHS was only entitled to recover the portion of a judgment awarded to Heidi Ahlborn for medical services previously covered by Medicaid. The parties stipulated that Ahlborn’s entire claim was reasonably valued at $3,040,708.12 . She settled for one sixth of that amount. The parties stipulated that if Ahlborn’s construction of federal law was held to be correct, AHDS would only be entitled to one sixth of that amount, or $35,581.47. The District Court held that AHDS was entitled to the full amount of medical expenses covered by Medicaid, or $215,645.30. The 8th Circuit reversed and held that Ahlborn was correct.  “When a Medicaid recipient in Arkansas obtains a tort settlement following payment of medical costs on her behalf by Medicaid, Arkansas law automatically imposes a lien on the settlement in an amount equal to Medicaid's costs. When that amount exceeds the portion of the settlement that represents medical costs, satisfaction of the State's lien requires payment out of proceeds meant to compensate the recipient for damages distinct from medical costs--like pain and suffering, lost wages, and loss of future earnings. The Court of Appeals for the Eighth Circuit held that this statutory lien contravened federal law and was therefore unenforceable.” Other courts had held differently. In a unanimous vote, the U.S. Supreme Court upheld the decision of the 8th Circuit. Suggested by David Jones.

              Life and Worklife Expectancies

Vicksburg and Meridian Railroad Company v. Putnam, 118 U.S. 545; 7 S. Ct. 1 (1886). “In an action for a personal injury, the plaintiff is entitled to recover compensation, so far as it is susceptible of an estimate in money, for the loss and damage caused to him by the defendant’s negligence, including not only expenses incurred for medical attendance, and a reasonable sum for his pain and suffering, but also a fair recompense for the loss of what he would otherwise have earned in his trade or profession, and has been deprived of the capacity of earning, by the wrongful act of the defendant. . . In order to assist the jury in making such an estimate, standard life and annuity tables, showing at any age the probable duration of life, and the present value of a life annuity, are competent evidence.” 

              Treatment of Taxes

Commissioner of Internal Revenue v. Banks, 2005 U.S. LEXIS 1370; 73 U.S.L.W. 4117; 2005 WL 123825 (U.S. 2005). The United States Supreme Court held that prior to the American Jobs Creation Act of 2004, the portion of an award for lost earnings in a termination case must be treated as income for the purposes of taxation, thus reversing decisions of the 9th and 6th Circuits and supporting decisions of a number of other circuits. Under federal tax law before the American Jobs Creation Act of 2004, it was possible for applications of the Alternative Minimum Tax (AMT) to result in an award winner being worse off after an award than if a case had never been filed. After that Act, award winners can deduct attorneys fees before any application of taxes, including the AMT, occurs, eliminating the possibility of an award winner being made worse off after an award. However, the AJCA was not made retroactive and does not apply to previous awards.

Social Security Board v. Nierotko, 327 U.S. 358; 66 S. Ct. 637 (1946).  This decision held that a worker was entitled to include quarters for which pay was received in the form of back pay as quarters to be counted toward the 40 quarters needed for Social Security eligibility. This means that a forensic economic expert does not have to calculate the number of quarters as a possible source of loss to the plaintiff.  It also held that the IRS rule then in place that Social Security taxes should be based on earnings for years awarded back pay. This has since been changed to the year in which an award is received, as also upheld by the Supreme Court in United States v. English, 532 U.S. 200; 121 S. Ct 1433 (2001).       

United States v. Cleveland Indians Baseball Company, 532 U.S. 200; 121 S. Ct 1433 (2001). This decision held that for FICA (Social Security) and FUTA (Medicare) tax purposes, back wages should be attributed to the year in which they are actually paid, reversing a decision of the 6th Circuit on this issue.”  In other words, all back pay received in a current year is taxable under FICA and FUTA in the current year. This is parallel to how other income taxes are applied to back pay awards. The Court also said (quoting a brief from the “Company”): “Social security tax ‘contributions,’unlike private pension contributions, do not create a property right to benefits against the government, and wages rather than [tax] contributions are the statutory basis for calculating an individual’s benefits. Suggested by Jerry Martin.

          FELA/Maritime Cases

Chesapeake & Ohio R. Co. v. Kelly, 241 U.S. 485, 36 S.Ct. 630, 60 L.Ed. 1117 (1916). This decision establishes the principles that future damages should be reduced to present value, saying: “the putting out of money at interest is at this day so common a matter that ordinarily it cannot be excluded from consideration in determining the present equivalent of future payments, since a reasonable man, even from selfish motives, would probably gain some money by way of interest on the money recovered.” The decision gives as examples savings banks  for moderate sums at interest, possible sale of annuities, and, “for larger sums, state and municipal bonds and other securities of almost equal standing.” The court goes on to say that the kinds of investments used should not require unusual skill on the part of injured persons and that the rate of interest to be adopted should take into account “the best and safest investments, and those which require the least care (which) yield only a moderate return.” This is the source of the “best and safest” language in the Pfeifer decision, which quotes this decision. 

Eichel v. New York Central Railroad Co., 375 U.S. 253 (1963). Fact of disability payments cannot be introduced, even to demonstrate the extent and duration of the disability suffered by a plaintiff. Benefits received are not a function of payments by employer and thus cannot be considered in mitigation of lost earnings. "The Railroad Retirement Act is substantially a Social Security Act for employees of common carriers . . . The benefits received under such a system of social legislation are not directly attributable to the contributions of the employer, so they cannot be considered in mitigation of the damages caused by the employer." 

Jones & Laughlin Steel Corp. v. Pfeifer, 103 S. Ct 2541, or 462 U.S. 523 (1983). This is the single most important case in the field of forensic economics. Justice Steven delivered the opinion of the United States Supreme Court, which sets out a framework for how damages in a personal injury case should be presented by an economic expert.  The court is very careful not to specify a particular set of methods, as urged on it by various amici briefs that were filed, saying: “Because our review of the foregoing cases leads us to draw three conclusions. First, by its very nature the calculation of an award for lost earnings must be a rough approximation. Because a lost stream can never be predicted wtih complete confidence, any lump sum represents only a ‘rough and ready’ effort to put the plaintiff in the position he would have been in if not injured. Second, sustained price inflation can make the award substantially less precise. Inflation’s current magnitude and unpredictability create a substantial risk that the damages award will prove to have little relation to the lost wages it purports to replace. Third, the question of lost earnings can arise in many different contexts. In some sectors of the economy, it is far easier to assemble evidence of an individual’s most likely career path than others.”  Thus, instead of providing specific methods, the court provides a list of the issues that must be addressed in the report and the general framework for the methodologies that can be used to address those issues. The coverage in this case is quite detailed and multiple readings are recommended for forensic economists. 

Michigan Central Railroad Company v. Vreeland, 227 U.S. 59 (1913). This U.S. Supreme Court decision is a very early decision under the Federal Employers Liability Act (FELA), holding that a broad interpretation of household services is in order in FELA actions when calculating damages. The court indicates that: “It is not beyond the bounds of supposition that by the death of the intestate his widow may have been deprived of customary service from him [above and beyond support and maintenance], capable of being measured by some pecuniary standard, and that in some degree that service might include as elements ‘care and advice.’” The extended discussion of the meaning of the word “pecuniary” as “measurable by some standard” is thoughtful and extensive. 

Miles v. Apex Marine Corp., 498 U.S. 19 (1990). This decision provides a history evaluating differences between calculating damages between general maritime law and the Death on the High Seas Act (DOHSA) under both wrongful death and survival actions. It specifically precludes loss of society damages under DOHSA. 

Monessen Southwestern Railway Co. v. Morgan, 486 U.S. 330, 108 S.Ct. 1837 (1988). Reaffirms Pfeifer decision and implicitly rejects the Culver II decision of the Fifth Circuit Court of Appeals. The Court holds that Pennsylvania total offset standards cannot be imposed by judicial discretion. (Pfeifer had overturned the Pennsylvania Supreme Court in rejecting the use of Pennsylvania roles in a Jones Act case in 1982.) This decision holds that pre-judgment interest is not allowable in an FELA action. The modification of this description was suggested by Ronald Martinez.  

Norfolk & Western Railway Co. v. Liepelt, 444 U.S. 490; 100 S. Ct. 755; 62 L. Ed. 2d 689 (1990). In a 7 to 2 decision, the Supreme Court held that taxes should be subtracted from projections of lost earnings on a wrongful death action unless the amounts were de minimus and that trial court judges should permit a jury instruction that an award of damages is not taxable under federal income tax law. The court said: “The amount of money that a wage earner is able to contribute to the support of his family is unquestionably affected by the amount of the tax he must pay to the Federal Government. It is his after-tax income, rather than his gross income before taxes, that provides the only realistic measure of his ability to support his family. It follows inexorably that the wage earner’s income tax is a relevant factor in calculating the monetary loss suffered by his dependents when he dies. . . Admittedly there are many variables that may affect the amount of a wage earner’s future income-tax liability. The law may change, his family may increase or decrease in size, his spouse’s earnings may affect his tax bracket, and extra income and unforeseen deductions may become available. But future employment itself, future health, future personal expenditures, future interest rates, and future inflation are also matters of estimate and prediction. Any one of these issues might provide the basis for protracted expert testimony and debate. But the practical wisdom of the trial bar and the trial bench has developed effective methods of presenting the essential elements of an expert calculation in a form that is understandable by juries that are increasingly familiar with the complexities of modern life. We therefore reject the notion that the introduction of evidence describing a decedent’s estimated after-tax earnings is to speculative or too complex for a jury.”  

Sea-Land Services, Inc. v. Gaudet, 414 U.S. 573 (1974).  The U.S. Supreme Court “embraced a broad range of mutual benefits each family member receives from the others’ continued existence, including love, affection, care, attention, companionship, comfort and protection,” as recoverable under the Jones Act. There had been an earlier recovery by the injured seaman in a personal injury action. He had subsequently died and his widow brought a wrongful death action. The court held that lost financial support that would have come from lost wages that had already been awarded could not be claimed again in the wrongful death action, but that the widow’s loss of services and society with her husband could be recovered.  This decision explicitly affirmed that the right to recover lost earnings was based “on his prospective earnings for the balance of his life expectancy at the time of his injury undiminished by any shortening of that expectancy as a result of the injury (italics in original)” In evaluating damages for loss of society, the Court said, “insisting on mathematical precision would be illusory and the judge or juror must be allowed a fair latitude to make reasonable approximations guided by judgment and practical experience.” The court also indicated that recovery was permitted: “for the monetary value of services the decedent provided and would have provided but for his (the decedent’s) wrongful death. Such services include, for example, the nurture, training, education, and guidance that a child would have received had not the parent been wrongfully killed. Services the decedent performed at home or for his spouse are also compensable.”  This decision also contains a discussion of the meaning of “pecuniary damages,” but arrives at no definite interpretation of that term.
 
St. Louis Southwestern R. Co v. Dickerson, 470 U.S. 409 (1985). Reaffirmed requirement in Chesapeake & Ohio R. Co. v. Kelley (1916) that damages must be awarded in terms of present value.

Tipton v. Socony Mobil Oil Co., Inc., 375 U.S. 34; 84 S. Ct. 1 (1963).  This U.S. Supreme Court decision is a companion decision to Eichel v. New York Central Railroad Co, 375 U.S. 253; 84 S.Ct. 316 (1963), which held that railroad retirement benefits were a collateral source that could not be introduce to show malingering on the part of a worker who had not found employment after his injury. In Tipton, the trial court had admitted evidence of the plaintiff’s benefits under the Longshoremen’s Compensation Act to indicate that the plaintiff thought his status was not as a seaman or member of a crew within the meaning of the Jones Act. The 5th Circuit had ruled that this was in error, but harmless error. The U.S. Supreme Court ruled that it reversible error to have mentioned the collateral source benefits and remanded the case to the district court. 

       Admissibility of Expert Testimony

Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579; 113 S.Ct. 2786; 125 L.Ed.469 (1993)(Daubert I). This decision states that the Frye Test from Fry v. United States, 293 F. 1013 (D.C. Cir. 1923) had been superceded by Rule 702 of the Federal Rules of Evidence (FRE) that were adopted by Congress in 1975. It directed that trial court judges should act as “gatekeepers” to insure that evidence presented in court was scientifically reliable, subject to four general tests: (1) Whether the theory or technique underlying the testimony can be or has been tested; (2) whether the theory or technique has been subject to peer review; (3) the known or potential rate of error should be determined, as should the existence and maintenance of standards controlling the technique’s operation; (4) whether the theory or technique has been generally accepted by the relevant scientific community. 

General Electric Co. v. Joiner, 522 U.S. 136; 118 S.Ct 512 (1997). Deals with admissibility of expert testimony.Deals with admissibility of expert  testimony. Joiner is the second in the triumvirate of decisions of the United States Supreme Court elaborating the meaning of the Daubert decision. The 11th Circuit had reversed the decision of a trial court judge not to allow testimony of a medical expert, suggesting that the standards for excluding testimony were more stringent than the tests for admitting testimony. The Supreme Court made it clear that trial court judges have considerable discretion and reversed the 11th Circuit decision. Justice Bryer’s concurring opinion strongly encourages trial court judges to make use of Federal Rule 106, which allows court appointed experts.

Kumho Tire Co., Ltd v. Carmichael, 509 U.S. 579; 119 S.Ct. 1167 (1999). This decision made it clear that while none of the original four Daubert tests may apply in a given instance, the general test of scientific reliability applies to all types of expert testimony. 

Weisgram v. Marley, 528 U.S. 440; 120 S.Ct. 1011; 145 L.Ed. 2d 958 (2000). Held that if expert testimony that was the basis for a claim was held inadmissible, the cause of action could be dismissed without a right of appeal. 

Winans v. The New York and Erie Railroad Company, 62 U.S. 88, 16 L. Ed. 68, 1858 U.S. LEXIS 626 (1858). “Experience has shown that opposite opinions of persons professing to be experts may be obtained to any amount; and it often occurs that not only many days, but even weeks, are consumed in cross-examinations, to test the skill or knowledge of such witnesses and the correctness of their opinions, wasting the time and wearying the patience of both court and jury, and perplexing, instead of elucidating, the questions involved in the issue.”

      Hedonic Damages and Emotional Services

Molzof v. United States, 502 U.S. 301; 112 S. Ct. 711 (1992). The United States Supreme Court held that the prohibition of “punitive damages”under the Federal Tort Claims Act (FTCA) did not have the meaning attached that term by the 7th Circuit Court of Appeals. The 7th Circuit had held that an award for lost enjoyment of life in a wrongful death action and for future medical expenses for medical services that were being provide free by a veteran’s hospital were punitive to the United States under the terms of the FTCA. The Supreme Court held that “punitive” should be understood in its ordinary meaning of “intending to punish.” Damages other than damages specified as "punitive" should not be interpreted as other than “compensatory” if such damages could be compensated under Wisconsin state law. The case was remanded to the trial court to determine whether such damages would be compensated under Wisconsin law.

       Legal Procedure

Bigelow v. RKO Radio Pictures, 327 U.S. 251, 265 (1946). The United States Supreme Court said: “Even where the defendant by his own wrong has prevented a more precise computation, the jury may not render a verdict based on speculation or guesswork. But the jury may make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly. In such circumstances juries are allowed to act on probable and inferential as [upon] direct and positive proof. Any other rule would allow the wrongdoer to profit by his wrong doing at the expense of the victim. It would be an inducement to make wrong doing so effective and so complete in every case as to preclude any recovery, by rendering the measure of damages uncertain. Failure to apply it would mean that the more grievous the wrong done, the less likelihood there would be of recovery.”

Erie R. Co. v. Tompkins, 58 S.Ct. 817, or 304 U.S. 64 (1938). Held that except as otherwise specified, damages in federal courts would be awarded on the basis of state law in the state in which a trial was being held. 

Beech Aircraft Corp. v. Rainey, 488 U.S. 153; 109 S.Ct. 439 (1988). The dissent by Chief Justice Renquiest, joined by Justice O’Connor, discusses the “curative admissibility” doctrine as follows: “[O]ne doctrine which allows even a valid and timely objection to be defeated is variously known as ‘waiver,’ ‘estoppel,’ ‘opening the door,’ ‘fighting fire with fire,’ and ‘curative admissibility.’ The doctrine’s soundness depends on the specific situation in which it is used and calls for an exercise of judicial discretion.”

Hickman v. Taylor, 329 U.S. 495 (1947). This decision held that an attorney’s work product was protected. 

Winans v. The New York and Erie Railroad Company, 62 U.S. 88; 16 L.Ed. 68 (1858). This early U. S. Supreme Court decision defined the role of expert witnesses, saying: “Experts may be examined to explain terms of art, and the state of art, at any given time. They may explain to the court and jury the machines, models, or drawings, exhibited.  They may point out the difference or identity of the mechanical devices involved in their construction. The maxim of ‘cuique in sua arte credendum’ permits them to be examined to questions of art or science peculiar to their trade or profession; but professors or mechanics cannot be received to prove to the court or jury what is the proper or legal construction of any instrument of writing. A judge may obtain information from them, if he desire it, on matters which he does not clearly comprehend, but cannot be compelled to receive their opinions as matter of evidence. Experience has shown that opposite opinions of persons professing to be experts may be obtained to any amount; and it often occurs that not only many days, but even weeks, are consumed in cross-examinations, to test the skill or knowledge of such witnesses and the correctness of their opinions, wasting time and wearying the patience of both court and jury, and perplexing, instead of elucidating, the questions involved in the issue.”

       Punitive Damages

Philip Morris USA v. Williams, 2007 U.S. LEXIS 1332 (U.S. 2007). The U.S. Supreme Court held that a punitive damages award that is based in part on a jury’s desire to punish a defendant for harming nonparties amounts to a taking of property without due process. The Court emphasized that states my allow juries to award punitive damages to prevent a repetition of unlawful conduct, but held that states must set proper standards that prevent juries from depriving a defendant of “fair notice” of the penalties they may face. The Court also indicated that when awards are sufficiently large, one state may impose policy choices on neighboring states. This was a remand to the Supreme Court of Oregon in which the U.S. Supreme Court did not consider whether the size of the punitive damage award allowed by the Oregon Supreme Court was “grossly excessive.” 

State Farm v. Campbell, 2003 U.S. Lexis 2713 (2003). The U.S. Supreme Court held that punitive damages must bear some relationship to compensatory damages in a tort action. “Single-digit multipliers are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution, than awards with ratios in range of 500 to 1 . . . or in this case of 145 to 1.  The decision contains a good discussion of the differences between compensatory and punitive damages. 

       Workers Compensation

Metropolitan Stevedore Company v. Rambo, 521 U.S. 121; 117 S.Ct. 1953; 138 L. Ed. 327 (1997). In 1983 John Rambo had been awarded $80.16 per week for his permanent partial disability resulting from an injury in 1980 in an action under the Longshore and Harbor Workers’ Compensation Act (LHWCA). Subsequently, Rambo was trained as a heavy truck operator, with the result that his earnings increased to approximately three times as much as before his injury. His employer moved to modify the disability award. The administrative law judge (ALJ) terminated the disability award. The Benefits Review Board (BRB) upheld the termination. The 9th Circuit reversed the order, holding that an award could be modified only when there was a change in the claimant’s physical condition. The Supreme Court reversed the 9th Circuit decision, holding that a disability award could be modified where there was a change in the employee’s wage-earning capacity, even without a change in his physical condition, and remanded the 9th Circuit. The 9th Circuit again reversed the BRB and remanded for entry of a nominal award that reflected the worker’s disability. In this decision, the Supreme Court reversed the 9th Circuit decision for a second time, saying: “Disability is a measure of earning capacity lost as the result of a work-related injury. By distinguishing between the diminished capacity and the injury itself, and by defining capacity in relation both to the injured worker’s old job and to other employment, the statute makes it clear that disability is the product of injury and opportunities in the job market. Capacity, and thus disability, is not necessarily reflected in actual wages earned after an injury,. . . ., and when it is not, the fact-finder under the act must make a determination of disability that is ‘reasonable’ and ‘in the interest of justice,” and one that takes account of the disability’s future effects, § 8(h).” Justice Souter then provides extended comparison of the periodic payment method used in this case and the lump sum award method used in tort actions, pointing out that the need for finality is significantly reduced because awards made under “virtually all . . . workers’ compensation schemes” liberally permit modification, while tort awards require a single lump sum payment. Justice Souter wrote: “As the tripling of Rambo’s own earnings shows, a claimant’s future ability to earn wages will vary as greatly as opportunity varies, and any estimate of wage-earning potential turns in part on the probabilities over time that suitable jobs within certain ranges of pay will be open. In these calculations, there is room for error. . . That juries in tort cases must routinely engage in such difficult predictions (compounded further by discounting for present value) is the price paid by the common-law approach for the finality of a one-time lump-sum judgment.” Suggested by Kurt Krueger.

United States Tax Court

Dunkin v. Comm’r, 2005 U.S. Tax Ct. LEXIS 10 (U.S. Tax Ct. 2005). In a divorce, Mrs. Dunkin was awarded $2072 per month as her share of his defined benefit pension as of August 19, 1997. This slightly less than half of John Dunkin’s defined benefit pension based on California’s community property law. John Dunkin did not retire on August 19, 1997 and the California courts ordered John Dunkin to begin making payments of $2072 per month to his wife in lieu of the benefits she would have received if he had retired. He deducted the costs of her pension from his income for purposes of income taxation. The IRS argued that he should pay income taxes on all of his income. The tax court ruled in John Dunkin’s favor that he could deduct amounts paid to his ex-wife from his income for purposes of taxation. This is a clearly reasoned decision that is worth reading.   

Vincent v. Commissioner of Internal Revenue, T.C. Memo 2005-95 (U.S. Tax Court 2005). This decision involved a case in which the parties to an employment discrimination law suit had settled. As a part of the settlement agreement, the settlement was described as for ulcers created by the employment dispute. The IRS had sent a tax deliquency notice and Vincent appealed. The court held that: “While the underlying litigation was adversarial, once Whittier agreed to a settlement amount and negotiated the inclusion of indemnification and release of liability clauses, the negotiation as to the characterization of the settlement proceeds ceased to be adversarial. Petitioner wanted a large portion of the recovery connected to a tortlike peronsl injury so that she could avoid taxes under section 104(a)(2).” Tax Court held that Vincent was liable for taxes on the entire amount of the settlement.   

United States Court of Claims

Bedell v. Secretary of the Department of Heath and Human Services, 1992 U.S. Ct. Cl. Ct. Lexis 458 (U.S. Court of Claims 1992). This is a Vaccine Act Case in which Judge George Hastings, Jr., provides his assessment of life care plans produced by the petitioner (the plaintiff in Vaccine Act Cases) by Drs. Robert Voogt and for the respondent (the defendant United States in Vaccine Act cases) by Jacqueline Peterson. Judge Hastings said of the petitioner’s experts: “I note that after listening to their testimony, I cannot conclude the Dr. Voogt and Dr. Walicke were particularly candid witnesses. To the contrary, while both are highly qualified in their professional fields, I conclude that they are also likely inclined to slant their testimony in a fashion designed to maximize the potential award to their clients.” Judge Hastings found the opinions of Ms. Peterson more “persuasive.”

Brown v. Secretary of the Department of Health and Human Services, 2005 U.S. Claims LEXIS 291.  This is a decision under the Vaccine Act. Both sides presented economic experts, Dr. Richard J. Lurito for the petitioner and Dr. Patrick F. Kennedy for Respondent. The decision reviews net discount rates that have been adopted by the Office of Special Masters in past cases and in the Pfeifer decision (1983).  Special Master Richard Abel preferred Dr. Kennedy’s net discount rate, saying: “In the end, Dr. Lurito’s reliance on present day interest rates of various instruments does not seem like a reasonable formula for making future projections. In fact, on several occasions, Dr. Lurito altered his calculations to account for fluctuations in his proposed portfolio. . .That is not to say that Dr. Lurito’s approach is entirely without merit. Were this case dealing with a shorter time period, Dr. Lurito’s methodology might be acceptable. As it stands, however, the Court is attempting to discern a net discount rate that will accommodate roughly the next 25 years. While Dr. Lurito’s calculations present one picture of what a safe return might look like today, they are too mercurial to be relied upon in making a future projection.”

Euken v. Secretary of Health and Human Services, 34 F.3d 1045 (Fed. Cir. 1994). This decision of the Federal Circuit Court of Appeals held that FICA taxes are “appropriate taxes” to deduct under the Vaccine Act. The petitioner claimed that since the vaccine injured child would never collect Social Security retirement benefits, FICA taxes should not be deducted from the child’s lost earnings. The Court said: “[T]he argument that Cory would not receive any Social Security benefits is simply not pertinent to the question of whether FICA taxes are appropriate taxes to deduct from the average gross weekly earnings of a private sector worker. . . Accordingly, we conclude that FICA tax, like federal and state income taxes, is an appropriate tax to deduct in determining a lost earnings award under the Vaccine Act. It should be noted that this decision applies only to Vaccine Act cases, but other federal courts in other types of cases have ruled in a similar fashion with respect to including FICA taxes as a type of income tax that needs to be deducted when deducting income taxes.

Paul v. Department of Health and Human Services, 2007 U.S. Claims LEXIS 408 (U.S. Ct. Claims 2007). This was a Vaccine Act decision in which payment of experts, annuity contracts and attorney contingency fees in Vaccine Act cases was discussed at length.

Watkins v. Secretary of Health and Human Services, 1999 U.S. Claims 62 (Ct. Claims 1999). The is a decision of Gary J.  Golkiewicz, Chief Special Master, in an Vaccine Act Case. This decision goes into considerable detail about how a child’s lifetime loss of earning capacity should be calculated if being compensated under the Vaccine Act. TheVaccine Act, 42 U.S.C. § 300aa-10 et seq. (Supp. V 1987). The Act states as a formula: “compensation after attaining the age of 18 for loss of   earnings determined on the basis of the average gross weekly earnings in the private, non-farm sector, less appropriate taxes and the average cost of a health insurance policy. . .” Both the plaintiff and the respondent had obtained economic experts, who were generally in agreement regarding average weekly earnings of $28,392 as of 1997 with subtraction of 11.40% for federal income taxes, 6.04% for Utah income taxes, 7.65% for FICA taxes and $248.93 per month for health insurance. The Special Master addressed the following measurement questions: “Should self-employed workers be considered in the base wages portion of the forumula? . .; Is “non-farm sector” equivalent to the government’s exclusion of ‘all workers in agricultural production (crops and livestock)? . . .; Should 15-17 year olds be excluded from the data since the Act awards lost earnings post-18 years of age? . . ; Should the tax offset include personal exemptions for dependents and thus reduce the applicable marginal rate? . . ; Should social security payments upon retirement be considered as part of compensation since FICA is being deducted?  After addressing those questions, the Special Master considered how the discount rate should be determined. The plaintiff expert, Dr. James Everson, argued for a net discount rate of 0.2% based on an historical comparison of figures from 1950-57. The defense expert, Dr. Patrick Kennedy, for a net discount rate of 2.0% based on an extended discussion of economic history that involved special weighting for “historic events.” The Special Master found Dr. Kennedy’s approach much more persuasive and pointed out a number of prior decisions using a 2.0% net discount rate. The Special Master also quoted “delusive exactness” language from the decision in Jones & Laughlin Steel Corp. v. Pfeifer, 103 S.Ct. 2541 (1983).

1st Circuit

    Court of Appeals

      Discount Rates

Conde v. Starlight I, Inc., 103 F.3d 210 (1st Cir. 1997). In this decision, the 1st Circuit concluded that the trial court had made an error and had not discounted a total lost future income stream of $254,176 to present value. The 1st Circuit calculated present values at discount rates of 1%, 2% and 3%, citing these values as rates coming from Jones & Laughlin Steel Corp. v. Pfeifer, 103  S.Ct 2541 (1983) as calling for less scrutiny. The Court used 1% as the rate most favorable to the plaintiff. 

      FELA/Maritime Cases

McGrath v. Consolidated Rail Corporation, 136 F.3d 838 (1st Cir. 1998). The First Circuit held that the trial court had made no reversible error in allowing admission of testimony about a worker’s occupational disability benefits for the purpose of showing that the worker had no financial incentive to resume working, but not as an offset to lost earnings. The First Circuit interpreted the U.S. Supreme Court decision in Eichel v. New York Cent. R.R. Co, 375 U.S. 253 (1963) as narrowly upholding the trial court’s discretionary ruling and not a bright line decision barring the admission of collateral source information that bears on the issue of malingering. The First Circuit held that there should be a balancing between the possibility of misuse by the jury of such information and the probative value of such information.

      Admissibility of Expert Testimony

Coastal Fuels of Puerto Rico, Inc. v. Caribbean Petroleum Corp., 175 F.3d 18 (1st Cir. 1999). Ruled specifically that Daubert and Kumho applied to economic analysis, stating: "the district court's gatekeeping function extendes to all expert evidence, including economic analysis, not merely to evidence involving scientific conclusions.

Cummings v. The Standard Register Company, 265 F. 3d 56 (1st Cir. 2001). This decision responds in part to an error in testimony initially made by economic expert Martin Duffy.  After being cross examined, Duffy realized that he had made an error in calculating front pay at $656,867. After correcting his figures, Duffy then testified to front pay losses of $494,712. His figures for back pay were deemed correct. Duffy’s report was not entered into evidence and the jury awarded $665,000  for front pay. The 1st Circuit determined that the jury had probably been confused by the initial error in Duffy’s calculation and offered Cummings the option of accepting $494,712 or a new trial. The court also determined under a Daubert standard that the district court had been correct in determining that Duffy’s testimony was admissible and that the district court did not abuse its discretion in refusing to strike the testimony of Duffy.

Quinones-Pancheo v. American Airlines, Inc., 979 F.2d (1st Cir. 1992)  Economic expert Mario Puchi based his projections on the assumption that the injured plaintiff had intended to reenlist in the military and remain there until eligible to retire on a military pension. The economic expert also assumed that the plaitiff had a total and permanent disability, which was not borne out by the facts of the case. The economic expert was not permitted to testify.

Stevens v. Bangor and Aroostook, R.R., 97 F.3d 594 (1st Cir. 1996). The plaintiff's vocational expert was permitted to testify. 

Torrez-Ocasio v. Texaco Puerto Rico, Inc., 2007 U.S. Dist. LEXIS 56102 (D. Puerto Rico, 2007). This is was a decision by Judge Juan M. Perez-Gimenez to grant a motion in limine to bar the testimony of plaintiff’s Life Care Planner, Gerri Pennachio, and economist Francisco E. Martinez based on the fact that the plaintiff had admitted that the testimony of plaintiff’s expert witness Dr. Jaime Zorba did not meet Daubert standards. Since the proposed testimony of the economist depended on the testimony of the Life Care Planner and the testimony of the Life Care Planner depended on the testimony of Dr. Zorba, the failure of his testimony to meet Daubert standard rendered the testimonies of Life Care Planner and economist inadmissible.

      Wrongful Termination

Lussier v. United States Postmaster General, 50 F.3d 1103 (1st Cir. 1995). The Court held that it is within the trial court’s discretion to tailor a front pay award to take account of collateral benefits in a discrimination case.

    District Courts in the 1st Circuit (MA, ME, NH, RI and Puerto Rico)

         Basis Income and Fringe Benefits for Projecting Earnings Loss

Bouchard v. United States, 2007 U.S. Dist. LEXIS 59265 (D. Me. 2007). Interpreting the decision of the Maine Supreme Court in Lovely v. Allstate Ins. Co., 658 A.2s 1091 (Me. 1995), the court applied “the single injury rule” to a personal injury to Bouchard, a plaintiff with significant pre-injury conditions. Under the “single injury rule” the burden is on the defendant to apportion damages between pre injury conditions and the injury itself. The court held that the United States had failed in its burden to do so. The decision provides extensive discussion of the opinions and calculations of Jack Bobb, vocational expert for the plaintiff, Eileen Kalikow, vocational expert for the defendant, and Dr. Alan McCausland, economist for the plaintiff. Among other details discussed, Dr. McCausland used a real discount rate of 2.25 percent and made no calculation of lost Social Security retirement benefits because he anticipated that Bouchard would receive Social Security disability payments. The court noted that Dr. McCausland’s calculation had melded lost past wages and future earning capacity even though “the law distinguishes between lost past wages and future earning capacity.”

      Legal Procedure

Johnson v. Spencer Press of Maine, Inc., 2004 U.S. Dist. LEXIS 16560 (D.Me. 2004). This decision imposes sanctions on the defendant for actions forcing increases in the plaintiff’s trial expenses. One part of the sanctions involved payment of parts of the expert witness fees of Allan McCausland, the economic expert for the plaintiff. The reasoning of the judge in awarding reimbursement to the plaintiff for some of the economic expert’s bills, but not others is of interest. 

      Hedonic Damages and Emotional Services

Saia v. Sears Roebuck and Co., 47 F.Supp. 23 141 (D. Ma.1999). Hedonic damanges testimony by Stan V. Smith was not allowed.

       Treatment of Taxes

Pappas v. Watson Wyatt & Company, 2008 U.S. Dist. LEXIS 34 (D. Conn. 2008). This decision cited Sears v. Atchison, Topeka & Santa Fe Ry, 749 F.2d 1451, 1456 (10th Cir. 1984) and other cases allowing tax grossups in requesting a tax adjustment based on adverse tax consequences apparently arising from her attorney fees. The court held that the cited decisions did not apply because: “Unlike the plaintiffs in cases that she cites, nowhere does she express any concern that a lump sum damage award would place her in a higher tax bracket. Instead, the Plaintiff is effectively asking the Court to review the tax code and fashion a remedy where the provisions of the tax code fail ro allow her to deduct her damages from her gross income.”  

       Admission of Expert Testimony

Griffith v. Eastern Maine Medical Center, 2009 U.S. Dist. LEXIS 16236 (D. Me. 2009). The court granted a defense motion to exclude the economic testimony of Dr. Ray Neveu based on his failure to issue a complete report of his opinions by the scheduling deadline. Dr. Neveu’s report indicated that he would provide details of his opinions in a “timely fashion,” which the judge did not regard as meeting the requirements of the Court. The Court said: “This court has already specified what "a timely fashion" is in this case in its scheduling order. That is not a matter to be determined at the convenience of the expert witness, particularly when no reason is given why the expert cannot comply with the deadline set in the court's scheduling order. An expert's complete report is due at a specific time during the discovery period in order to allow opposing counsel to depose the expert, if desired, and to allow the opposing party's expert witness time to respond to the opinions expressed in the report, also within the discovery period, so that the plaintiff's counsel will also have an opportunity to explore those opinions before the end of discovery and the deadline for the filing of dispositive motions. See Thibeault v. Square D Co., 960 F.2d 239, 244 (1st Cir. 1992) (Rule 26 promotes fair play in discovery and at trial). Allowing an expert to express his opinions "before trial" at a time chosen by the expert would throw in disarray the orderly procedure that the civil rules are designed to promote. See Ortiz-Lopez v. Sociedad Espanola de Auxilio Mutuo y Beneficiencia de Puerto Rico, 248 F.3d 29, 35 (1st Cir. 2001). An expert can always supplement his or her opinions after submitting a report, should the need arise. What the expert cannot do is dictate the timing and progress of the case; that is a matter solely within the court's control.”

Harding v. Ciambro Corporation, 2007 U.S. Dist. LEXIS 32849 (D.ME 2007). This is a legal memorandum in response to a motion for reconsideration in a wrongful termination case.  The judge had not ordered front pay because Harding was to be reinstated. However, Harding was not compensated between August 22, 2006 and February 20, 2007, when he was reinstated. Judge Woodcock awarded the additional front  pay in the amount of $56,843.67 for this period. Footnote 6 of this memorandum included the following language: “During the trial, Sheldon Wishnick, Mr. Harding’s economist, testified that his total economic loss from September 9, 2002 to August 1, 2006 was $563,897.00. Tr. at 336:1-22, 357:17-19. The jury’s back pay award of $563,000 is generally consistent with Mr. Wishnick’s testimony.” This decision provides significant detail about how back pay and front pay were handled between the parties, subject to the judge’s approval.

2nd Circuit

    Court of Appeals

Wage Growth Rates and Discount Rates

Ammar v. United States, 342 F.3d 133 (2nd Cir. 2003). The trial court judge had failed to discount an award for lost earnings, lost pension and life care costs. An appeal from the United States resulted in the trial court decision being remanded for reduction to present value at a 2 percent discount rate. The 2nd Circuit accepted the 2 percent rate proposed by the United States, saying: “Additional discounting may be needed to account for inflation where the award has been increased to anticipate an inflationary effect on, for example, higher wages, see, e.g., Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. at 538-39; but where there has been no such increase, there need be no deeper discounting, and the discount rate should reflect only the time value of money. . .” 

        Treatment of Taxes

Raymond v. United States, 355 F.3d 107 (2nd Cir. 2004). The court ruled that the entire amount of an award for lost earnings in a wrongful termination case must be declared as income for the purposes of income taxation. While a worker can treat an attorney's contingency fee as a deduction, this triggered the Alternative Minimum Tax in Raymond's case, increasing the amount of tax he owed on his award significantly. The district court had ruled that Raymond's income for taxation was the net value of the award after subtraction of the attorney fee. The 2nd Circuit overruled the District Court's decision. 

Tesser v. Board of Education, 2004 U.S. App. LEXIS 10450 (2nd Cir. 2004). This decision involved the issue of gross-ups to take account of tax consequences of a lump sum award for back pay in a wrongful discrimination case. The trial court judge ruled that tax returns of the Plaintiff could be admitted to impeach the testimony of a witness who “opens the door” to the subject. In this case, the argument that the award should be “grossed up” to account for higher taxes on a lump sum was treated by the trial court judge to opening the door to showing that the Plaintiff and her husband were already in the highest marginal tax bracket so that such consequences did not exist. The Plaintiff appealed on the basis that there was nothing in the tax returns that showed that she and her husband were in the highest tax bracket so that the tax returns were not “actually” inconsistent with the Plaintiff’s testimony. The 2nd Circuit did not resolve the differences between the parties, holding that the admission of tax returns was harmless error if it was error. There is substantial discussion in the decision about the definition of “harmless error.”

        Legal Procedure

Person v. Association of Bar, 554 F.2d 534 (2nd Cir. 1977). In a New York case, a judge had ruled that New York law precluding contingency fees for economic testimony was unconstitutional. The second circuit reversed the decision of the New York judge and held that the the New York prohibition against contingency fees for experts was constitutional. Submitted by Jerry Martin.

       FELA/Maritime Cases

Doca v. Marina Mercante Nicaraguense, S.A., 634 F.2d. 30 (2nd Cir. 1980). This pre-Pfeifer decision held that the real discount rate should not be less than 2 percent unless litigants offer evidence to the contrary.  The decision said: “A 2% discount rate appears to be the estimate of the true cost of money for use in a computation whose purpose is to determine the present value of lost future wages.” The Doca Court went on to say, however, that: “We emphasize that we are not requiring the use of an adjusted discount rate, nor specifying that when such a rate is used, it must be set at 2%. Litigants are free to account for inflation in other ways, or, if they use the adjusted discount rate approach, to offer evidence of rate more appropriate than 2%. But in the hope that disputes about the appropriate rate may be minimized, we simply suggest that the 2% rate as one that would be normally fair for the parties to agree upon, and we authorize district judges to use such a rate if the parties elect not to offer evidence on the subject of either inflation or present value discount. This decision rejected a 1% adjusted rate used by the district judge. 

McWeeney v. New York, N.H. & H.R.R. Co, 282 F.2d, 282 F.2d 34 (2nd Cir. 1960), cert. denied, 365 U.S. 870 (1960). This decision advanced a practice that is still maintained in Washington state law that taxes are not ordinarily subtracted from lost earnings, but an exception is made in cases of very high wage earners. The rationale for not subtracting taxes was: (1) taxes on interest on the fund would partially offset taxes on earnings; and (2) a significant portion of lost earnings of the plaintiff would be taken by the attorney's contingent fee. This decision was rendered moot in FELA cases by Norfolk & Western v. Liepelt, 444 U.S. 490 (1980) which mandated tax  reductions for all wage earners.

      Admissibility of Expert Testimony

Amorgianos v. National Railroad, 2002 U.S. App. Lexis, 17792 (2nd Cir. 2002). This decision affirms a trial court decision that had reversed a jury verdict in favor of a plaintiff, followed by a Daubert hearing to preclude testimony by two plaintiff experts and a summary judgement in favor of the defendants following the decision in the Daubert hearing. The decision of the trial court was 137 F.Supp.2d 147 (E.D.N.Y. 2001).  This is a short decision that discusses all four of the United States Supreme Court cases from Daubert to the present that involve admissibility of expert testimony. The discussion begins from Daubert v. Merrell Dow, 509 U.S. 579 (1993), proceeds through Gen. Elec. Co. V. Joiner, 522 U.S. 135 (1997), Kumho Tire Co. V. Carmichael, 526 U.S. 137 and Weisgram v. Marley Co, 528 U.S. 440 (2000), before upholding the decision of the trial court judge.  It also cites its own decision in McCullock v. H.B. Fuller Co, 61 F.3d 1038 (2nd Cir. 1995) to the effect that the abuse of discretion standards, which is the standard used to challenge a trial court judge on admissibility issues, is based on how the trial court went about determining reliability as much as it ultimate decision.  The 2nd Circuit cited In re Paoli R.R. Yard PCB Litig., 35 F. 3d 717 (3rd Cir. 1994) as saying: “[T]he reliability analysis applies to all aspects of an expert’s testimony: the methodology, the facts underlying the expert’s opinion, the link between the facts and the conclusion, et alia.” (Submitted by Jerry Martin.) 

Boucher v. U.S. Suzuki Motor Corp., 73 F3d 18 (2nd Cir. 1996). Dr. Kenneth Reagles, a vocational expert and not an economist, projected the lost future earnings of John Boucher. Mr. Boucher had a sporadic work history, having earned $10,393 in 1983, $5,800 in 1984, $4,600 in 1985 and $7,800 in 1985.  Dr. Reagles assumed that Mr. Boucher had an earning capacity as of 1988 of $12,480 per year plus 19 percent for fringe benefits, based on fringe benefits Mr. Boucher did not have at the time of his injury.  The court did not find this reasonable.

Shatkin v. McDonnell Douglas Corp., 727 F. 2d 202 (2nd Cir. 1984). The economist, Dr. Mantell for the plaintiff made calculations on behalf of a parent suing for damages in the death of a child. The court felt that there was no foundation for an assumption that the child would have supported the parent in the future and "noted a number of assumptions and assertions made by Dr. Mantell that were so unrealistic and contradictory as to suggest bad faith."

      Hedonic Damages and Emotional Services

In Re Korean Airlines Disaster of September 1, 1983, 807 F.Supp. 1073 (S.D.N.Y.1992). This decision interprets the relevance of the terms of the Warsaw Convention, ruling that hedonic damage claims do not survive in a death action. Lost earnings may not be recovered for a decedent but may be considered in determining lost financial support or loss of inheritance. 

Saffrani v. TheWerner Company, 1997 U.S. Dist. LEXIS 18589 (S.D.N.Y. 1997). In admitting expert testimony by a mechanical engineer, the decision cited United States v. Starzepyzel, 880 F.Supp. 1027 (1995), quoting that decision : "Yet, as distinguished from such discredited ventures as hedonic damage expertise, clinical ecology, trauma-cancer expertise or the Benedictin plaintiffs' statistical machinations, forensic document examination does involve true expertise, which may prove helpful to a fact finder."

United States v. Starzepyzel, 880 F.Supp. 1027 (S.D. N.Y.1995). Accepted testimony by document examiner.  Said: "Yet, as distinguished from such discredited ventures as hedonic damage expertise, clinical ecology, trauma-cancer expertise or the Benedictin plaintiffs' statistical machinations, forensic document examination does involve true expertise, which may prove helpful to a fact finder."

         Basis Income and Fringe Benefits for Projecting Earnings Loss

Dunn v. United States, 2007 U.S. Dist. LEXIS 26900 (S.D.N.Y. 2007). This decision provides a detailed consideration of the methods used by economists Dr. David Kennet for the plaintiff and Dr. Leonard Freifelder for the defendant by Judge Mark D. Fox.  Kennet’s present value of earnings loss was $474,760 while Freifelder’s was $320,668. Kennet had a work-life expectancy to age 62.9 (sic), while Freifelder was to age 60. Kennet projected wage growth at 3.8%, while Freifelder projected 3.0%. They used different tax rates from different tables. Freifelder added 9% for future benefits from plaintiff’s secondary occupation, while Kennet opined that this addition was speculative. Freifelder made reducation for 7.2% for work expenses, while Kennet did not. There were also differences in how social security benefits were calculated and the value of fringe benefits in post injury employment. The judge noted that neither economist had calculations consistent with an increase in earnings called for in the plaintiff’s pre-injury contract. 

Smith v. Boyer, 2006 U.S. Dist. LEXIS 48379 (N.D.N.Y. 2006).  This is a memorandum from Judge Peebles explaining his decision in a case that apparently did not involve a jury. The case was tried under Pennsylvania law. The judge was asked to exclude the testimony of Dr. David Eng, a neurosurgeon, whom the judge did not find very credible, under a Daubert standard. The judge declined to do so. The judge also indicated that he did not find the testimony of Dr. Kenneth Reagles persuasive that the plaintiff was unable to work at any job and found the plaintiff’s subjective complaints to be “exaggerated and not fully credible.” As such, the judge did not award future damages. The judge described the assumptions made by Dr. William Blanchfield, a forensic economist, leading to a projection of a diminution in earning capacity of $1.8 million. The judge awarded $69,109.32 for past lost wages.  The judge said in footnote 15: “Remarkably, Dr. Blanchfield did not calculate the present value of that lost income stream, even though it would extend for several years into the future.” It is possible, however, that Dr. Blanchfield was simply following the Pennsylvania rule that inflation is assumed to be equal to the discount rate.

Tivoli v. United States, 1997 U.S.Dist Lexis 23356 (S.D.N.Y. 1997). See under Household Services.

         Discount Rates

Ramirez v. New York City Off-Track Betting Corp., 112 F.3d 38 (2nd Cir.1997). The 2nd Circuit used a 2.0% net discount rate to determine damages, citing several of its own previous decisions and saying: “Where, as here, the parties have adduced no evidence relating to the discount rate, and have made no showing that the undiscounted lost wages figure has been adjusted upward to cover future inflation, we have suggested a discount rate of 2% per year.”  

         Life and Worklife Expectancies

In Re Joint Eastern and Southern District Asbestos Litigation. Rummo v. Celotex Corporation, 726 F.Supp. 426 (E.D.N.Y. 1989). This decision interprets New York law in a diversity action. It provides a thorough discussion of shortened life expectancies and the treatment of lost years in damages analysis across the United States as well as in New York. The decision also discusses the fact that in most states a personal injury action brought while an injured person is still alive precludes a wrongful death action when the injured worker eventually dies. It cites Iowa (Ehlinger v. State, 237 N.W.2d 784) as the one state that awards damages based on post injury worklife expectancy and points out that British law deals with shortened life expectancy by treating “abbreviation of life expectancy” as a separate element of damages. This decision held clearly that damages for lost earnings are to be based on pre injury life and worklife expectancy. Suggested by Gerald Martin.   

In the Matter of the Complaint of The Connecticut National Bank, 733 F.Supp. 14. (S.D.N.Y. 1990). This decision involves an award for damages to Louanna Duffy for the wrongful death of her husband James Duffy under the Death on the High Seas Act (DOHSA). Her economist was Dr. Richard Palfin. Judge Robert L. Carter indicates: “My problem with Dr. Palfin’s testimony is that he used abstract figures without reference to the actuality of the Duffy’s situation. He calculated the decedent’s household services based on information supplied by the United States Department of Agriculture for all males in a 1982 publication “Family Economics Review” (T.80), and without reference to information supplied on the subject supplied by the widow.” The judge then considered the decedent seaman’s time at home and time at sea to come up with his own value for lost household services. The decedent apparently had a work schedule of 56 days at sea and six days at home. 

Tivoli v. United States, 1997 U.S.Dist Lexis 23356 (S.D.N.Y. 1997). This case involves a judge talking about the reliability of testimony about lost earnings from Dr. Goldberg, a vocational expert for the defense and Dr. Les Seplaki, an economic expert for the plaintiff. Dr. Goldberg’s lost earnings projections were based on an assumption that the plaintiff could continue working and are dismissed out of hand by the judge. Dr. Seplaki’s calculations will need to be redone to include the impact of taxes. The defense had also retained Dr. Thomas Fitzgerald as an economic expert and deficiencies in his calculations are also discussed in the context of the life care plans. Both sides had life care planning experts and the judge comments on the credibility of both life care planning experts. Finally, he disallowed the plaintiff’s claim for the past value of homemaker services “since there is no proof that such services were actually utilized or that expense for such services was actually incurred.  Judge Fox did allow recovery for the future costs of such services as needed for her full life expectancy. 

     Life Care Plans

Tivoli v. United States, 1997 U.S.Dist Lexis 23356 (S.D.N.Y. 1997). See under Household Services.

       Legal Procedure

Barney v.  Consol. Edison Co., 2007 U.S. Dist. LEXIS 22494 (E.D.N.Y. 2007). An angry sounding federal judge precluded the report and testimony of the plaintiff’s economic expert, Dr. Frank Tinari because the plaintiff failed to comply with a court order to provide first names of Dr. Tinari’s previous clients and because plaintiff’s counsel had repeatedly failed to provide plaintiff’s tax returns to the defendant. “First, plaintiff was ordered to produce the first names of the clients for whom her expert, Dr. Tinari, had testified in previous litigations. . . If Dr. Tinari did not have the names, plaintiff was instructed to go to the court records in order to obtain them. . . Second, defendant was to send plaintiff blank authorization forms to acquire plaintiff’s tax returns from the IRS. . . Plaintiff was to sign these authorizations and send them back to defendant.” A year and a half later, the two sides were still arguing about these discovery issues and the judge was apparently quite angry at plaintiff counsel about the delay.   

Baum v. Village of Chittenango, 2003 U.S. Dist. LEXIS 18393 (N.D.N.Y. 2003). An attorney was compelled to disclose letters providing information about a case to the opposing party since the letters were relied upon by the expert in forming the expert’s opinions. The attorney had attempted to prevent disclosure on the grounds of attorney work product. This decision provides discussion of Hickman v. Taylor, 329 U.S. 495 (1947), which established the protection of attorney work product, and subsequent rule changes and conflicting decisions concerning the disclosure of attorney records that may be required. It determines that Rule 26(a)(2)(B) is paramount over attorney work product rules. (Submitted by Joseph Agrusa.) 

       FELA/Maritime

In the Matter of the Complaint of The Connecticut National Bank, 733 F.Supp. 14. (S.D.N.Y. 1990). See under Household Services. 

Wright v. United States, 2003 U.S. Dist. LEXIS 2598 (S.D.N.Y. 2003). This is a Judge McKenna’s memorandum that discusses the calculations of economists Patrick A. Gaughan for the defense and A. E. Rodriguez for the plaintiff. Gaughan had used a net discount rate of 3% based on the historic rate of return on long-term Treasuries, while Rodgriguez had arrived at 2% based on the three-month treasury bill yield. Citing the Pfeifer decision, Judge McKenna accepted the rate proposed by Rodriguez because it was allegedly based on “more conservative investments.” The case also involved the issue of how the award for pain and suffering should be reduced to present value. After reviewing legal decisions that might have given guidance, Judge McKenna decided to use the same 2% that he used with lost earnings. 

      Admissibility of Expert Testimony

Coleman v. Dydula, 190 F.R.D. 316 (W.D.N.Y. 1999). This decision is cited in some law books as interpreting the requirement for experts under FRCP 26(a)(2)(B) to list prior testimonies during the previous four years. The district court said: “Plaintiffs are precluded from introducing the testimony of their vocational expert, Herbert Weber, because they failed to comply with this court 's previous order of April 26, 1999. As to Dr. Reiber, plaintiffs shall provide defendants with a list of all cases in which Dr. Reiber has testified in the past four years in compliance with Rule 26. This list should include the name of the court, the names of the parties, the docket number (if available), and whether the testimony was given during a deposition or at a trial.” This decision was submitted by Jerry Martin. 

Coleman v. Dydula, 139 F.Supp.2d 388 (W.D.N.Y. 2001). The testimony of Dr.  Ronald Reiber was challenged under a Daubert motion and upheld. Dr. Reiber had projected lost future wages, future costs of health care coverage and worklife expectancy.  Dr. Reiber used growth rates of 3 percent and 7.3 pecent for both damages categories using a “sum of annuity” formula. Reiber cited the 1996 NAFE Survey as justifying “the theory that historical CPI data can be used to estimate future inflation” (Question 2 from that survey) .  Reiber was challenged because he did not say “how far back” he went in deriving his 3 percent growth rate, with defendant’s insisting that this was precisely the kind of thing that made Reiber’s testimony unreliable. He also justified his 7.3 percent growth rate based on Question 4 in the 1996 NAFE Survey.  Reiber’s worklife expectancy assumption was that the plaintiff would work to age 66, based on the fact that she did not have a pension in her current employment and had stated an intention to work to her 66th birthday. 

Hough-Scoma v. Wal-Mart Stores, Inc., WL 261857 W.D.N.Y.; 1999 U.S. Dist. LEXIS 7046. Testimony based on Gamboa tables was rejected because of lack of foundation.

Israel v. Spring Industries, 2006 U.S. Dist. LEXIS 80863 (E.D.N.Y. 2006). Judge Robert M. Levy’s memorandum denied the admissibility of the testimony of Dr. Leonard Freifelder, Ph.D., president of Freifelder & Associates. Freifelder had projected an eleven year old child’s loss of future earnings and cost of future life care. Judge Levy noted that Dr. Freifelder had never studied labor economics or medical economics and had never held an academic teaching position in economics, and said: “An expert may incorporate assumptions into his or her opinion, but those assumptions must be ones that a reasonable juror could find correct based on admissible evidence. . . In other words, the expert’s underlying assumptions must be evaluated for accuracy. Dr. Freifelder’s underlying assumptions are problematic in a few respects. First, in determining Joseph’s pre-incident earning capacity, he assumes that, had Joseph not been exposed to polyester in the crip sheets, he would have had a normal work life expectancy, meaning that he would have been ‘able to work as a typical male[.]’ . . .His calculations do not take into account the possibility that some of Joseph’s medical conditions were pre-existing and would have affected Joseph’s work life regardless of his purported exposure to polyester. . . Dr. Freifelder testified that he knew that both of Joseph’s parents and one of Joseph’s siblings had received high school diplomas and not continued on to college, but he did not know whether any of Joseph’s other siblings had plans to attend college. . .Nor did he know what percentage of white males in the American population complete high school or attend college. . . Again, Dr. Freifelder does not claim to be a vocational or educational specialist; he has no expertise in evaluating personal skill sets or predicting a particular individual’s vocational or educational prospects. . . In making his calculations, he did not take into account Joseph’s individual characteristics or his family’s socioeconomic status . . . In short, his assumption that, had Joseph been healthy, he would have graduated from high school or completed some college is speculative.” 

Lava Trading, Inc., v. Hartford Fire Insurance, 2005 U.S. Dist LEXIS 4566 (S.D.N.Y., 2005). This decision contains extensive discussion of the expert report and methods used to develop that report by Dr. Eric Clemons, the plaintiff’s principle damages expert. Sanctions were awarded to the defendant based on way Dr. Clemons report was handled. The Court said about Dr. Clemons’ report: “It failed . . to identify either (1) the specific facts or factual assumptions on which Dr. Clemons relied to generate his opinions or (2) the methodology that he used (other than in the most general and unhelpful terms) or (3) his actual calculation of the losses or (4) the basis for the dramatic alteration of his loss numbers frm the first to the second report. In short, the report – in all of its manifestations and supplementations – did not disclose any of the essential details needed to understand and assess Dr. Clemon’s conclusions.” Dr. Clemens was precluded from testifying.

Mastrantuono v. United States, 163 F. Supp. 2d 244 (S.D.N.Y. 2001). The court rejected the report of economist Andrew Weintraub, Ph.D., regarding Samantha Bellantoni’s claim for lost future wages, saying: “Weintraub was not given Bellantoni’s W-2 forms for the years 1998, 1999, and 2000, but instead had to estimate her annual earnings by averaging her 1995 to 1997 annual income (Tr. at 134-35.) Dr. Weintraub admitted that this rendered his report incomplete. (Id.) Additionally, Dr. Weintraub unaccountably assumed that Bellantoni’s future wages would grow at 4%, and used the same 4% rate in discounting the future wage loss to present value, as if the interest rate would ever be as low as the rate of inflation. Because we reject this report, we find that plaintiff has failed to prove her future loss of wages by a preponderance of the evidence.” 

Pouliot v. Paul Arpin Van Lines, Inc., 2006 U.S. Dist. LEXIS 32564 (D.CT, 2006). This decision involved Dr. Tony Gamboa for the Plaintiff and Dr. Allan McCausland for the defendant. It appears that Dr. Gamboa used a total offset method, which the defense challenged as not reducing damages to present value. The judge held that Connecticut law “requires that the parties by allowed to present evidence on the proper method of calculating damages, and that the jury be permitted to choose whether or not to credit any evidence presented. He also wrote that “[a]lthough Arpin argues that Dr. McCausland’s testimony as to the appropriate discount rate was more correct than that of Dr. Gamboa, the jury may well have credited Dr. Gamboa’s testimony above Dr. McCausland. The court does not find it necessary to disturb this credibility assessment.”

Queen v. International Paper Company, 2006 U.S. Dist. LEXIS 26725 (N.D.N.Y. 2006). This is Memorandum-Decision and Order by U.S. Magistrate Judge David Homer, holding that an expert witness report by Dr. James Lambrinos would not be precluded in the ground that Dr. Lambrinos initial report was not signed and failed to include Lambrinos’ compensation or llist of cases in which Lambrinos had testified as an expert. These materials were served to the defendant six weeks after the close of discovery. The court held that the substance of the disclosures was made prior to the discovery deadline and therefore that the error had been harmless.

Shatkin v. McDonnell Douglas, 565 F.Supp.93 (S.D.N.Y. 1983). This is one of two decisions excoriating the testimony of Dr. Edmund Mantell in related litigation from two different federal judges.  The other is Shu-Tao Lin v. McDonnell Douglas, 574 F.Supp. 1407 (S.D.N.Y. 1983). Dr. Mantell used the same methods used in that case, as described in that listing. Judge Pollack said: “This court finds that Dr. Mantell’s assumptions and techniques of calculation involve gross error at almost every step. The testimony is not competent, has no evidentiary value and no reasonable juror would be justified in relon on or according any weight to it whatsoever. To permit the jury to hear it would amount to irretrievable prejudicial projections of an unfounded character and hopelessly prejudice the fairness of the trial.”

Shu-Tao Lin v. McDonnell Douglas, 574 F.Supp. 1407 (S.D.N.Y. 1983). This is one of two decisions excoriating the testimony of Dr. Edmund Mantell in related litigation from two different federal judges. The other is Shatkin v. McDonnell Douglas, 565 F.Supp.93 (S.D.N.Y. 1983). Dr. Mantell used total offset, 25 percent increases in income for the first four years after the wrongful death, $125,000 as an extrapolation from actual earnings in the five months prior to the death, compared with annual earnings in the previous year of $56,000, a 13 percent tax rate. However, the award was increased by 50 percent for the interest income to Mrs. Lin resulting from the damage award.  Judge Sweet quoted Judge Pollak from the Shatkin decision as saying: “This court finds that Dr. Mantell’s assumptions and techniques of calculation involve gross error at almost every step. The testimony is not competent, has no evidentiary value and no reasonable juror would be justified in relon on or according any weight to it whatsoever. To permit the jury to hear it would amount to irretrievable prejudicial projections of an unfounded character and hopelessly prejudice the fairness of the trial.” The discussion of the inadmissibility of this testimony because of internal contradictions under Rule 703 is very interesting.

Supply & Building Co. v. Estee Lauder International, 2001 U.S.Dist. Lexis 20737 (S.D.N.Y. 2001). This is an order admitting the testimony of the defense economic expert Theodore Martens and denying the testimony of the plaintiff’s expert Robert Sherwin. Both were CPA’s and this was a business damages case. The order places heavy reliance on the Daubert and Kumho decisions. 

United States v. Starzecpyzel, 880 F. Supp. 1027 (S.D.N.Y. 1995). Judge Lawrence M. McKenna allowed the testimony of Forensic Document Examiner (FDE) Mary Wenderoth Kelly in a criminal action. At 1029, Judge McKenna said: “Yet, as distinguished from such discredited ventures as hedonic damages expertise, clinical ecology, trauma-cancer expertise or the Benedictin plaintiffs’ statistical machinations, forensic document examination does involve true expertise, which may prove helpful to a fact finder.

           Legal Procedure

The Cadle Co. v. Ogalin, 2007 U.S. Dist. LEXIS 47977 (D. Conn. 2007).  The jury in this case had found that transfers from Frank Ogalin to his wife Christina constituted fraudulent transfers under bankruptcy law instead of legitimate payments for services rendered. The Court said: “The evidence for evaluating Christina Ogalin’s annual salary payments was the testimony of economist Arthur Kenison and plaintiff’s Exhibit 104, a statistical table of national salary averages based on worker’s age and education level[.] . . While Kenison did not purport to have specific knowledge of the particular tasks that . . . Christina Ogalin performed, he explained to the jury that the figures represented salary averages, which were subject to adjustment for exceptionally skilled employees or employees who performed beyond the scope of their expected duties.” The court upheld the jury verdict that payments to Christina Ogalin represented fraudulent transfers.

           Wrongful Termination

McGrory v. City of New York, 2004 U.S. Dist. LEXIS 20425 (S.D.N.Y. 2004). This is decision in an employment discrimination action. Economic damages were established through the testimony of the City’s former chief actuary, Jonathan Schwartz based on an assumption that the plaintiff would never work again. The jury awarded front pay damages for six years, but did not subtract for Social Security disability payments that both sides agreed should have been subtracted. The judge offered a remittitur, reducing back and front pay damages and the amount awarded for emotional distress. The decision provides detailed discussion of the modifications in the remittitur.

Pappas v. Watson Wyatt & Company, 2007 U.S. Dist. LEXIS 86077 (D .Conn. 2007).  A Title VII victim of unlawful retaliation was allowed to claim as damages taxes and penalties she had paid on amounts withdrawn from her retirement account to pay for expenses after being fired. However, the Court did  not allow a claim losses of interest and capital appreciation that would have occurred on the amount that was withdrawn. This portion of the award was in addition to back pay, which the parties had stipulated were $51,000 plus COBRA contributions in the amount of $6,063.36. The Court described damages in a Title VII case as “tort-like” and considered the issue of “proximate cause” in reaching its decision. The Court held that the defendant could reasonably have foreseen the consequence that the plaintiff would need to withdraw money from her retirement account, but could not reasonably have foreseen that increases in the stock market during the period from her firing and recovery would have been as fortuitous as they were.

Thomas v. iStar Financial, Inc, 2007 U.S. Dist. LEXIS 67856 (S.D.N.Y. 2007). This legal memorandum provides a detailed consideration of how the judge arrived at a remittatur for front pay damages and punitive damages awarded by the jury in a racial discrimination case. Two factors stand out: First, the plaintiff had misrepresented his educational credentials to his employer. This was not discovered until after the case was in litigation, but affected how the judge thought about mitigation of damages. Second, the plaintiff had purchased a home that would have required a three hour commute to work, which the judge thought would not have indicated a long period of front pay with the plaintiff’s existing employer. There is discussion of the opinions of economic experts on both sides of this case.

Colaio v. Feinberg, 2003 U.S. Dist. LEXIS 7626 (S.D.N.Y. 2003). This decision held in summary judgment that the rules developed by Kenneth Feinberg for the Victims’ Compensation Fund for providing compensation to victims are consistent with the intent of the legislation. The decision includes extensive discussion of the history of the legislation and the rules used to determine damages. 

    Court of Appeals

        Annuities, Periodic Payments and Reversionary Trusts

Godwin v. Schramm, 731 F.2d 153 (3rd Cir. 1984). Deals with how attorney fees were determined in a case involving a reversionary trust.  This was an FTCA action that also involved the United States as a defendant. 

       Legal Procedure

Bucks County v. Commonwealth of Pennsylvania, 2004 U.S. App. LEXIS 17231 (3rd Cir. 2004). “We hold that under the particular circumstances of this case, where a trained service provider was not available and the parent stepped in to learn and perform the duties of a trained service provider, reimbursing the parent for her time spent in providing therapy is ‘appropriate’ relief. A child was eligible for state provided therapy, but no qualified therapist was available. The mother of the child took training to be able to provide the necessary therapy. The third circuit held in a precedential decision that she should be compensated at $22 per hour even though she had no out of pocket expenses. Suggested by David Jones.

      Treatment of Taxes

Eshelman v. Agere Systems, Inc., 2009 U.S. App. LEXIS 1947 (3rd Cir. 2009). The 3rd Circuit held that it was not an abuse of the trial court’s discretion to have provided an additional monetary award to offset the negative tax consequences of the plaintiff’s back pay award. The Court said: “A chief remedial purpose of employment discrimination statutes such as the ADA is ‘to make persons whole for injuries suffered on account of unlawful employment discrimination. . .  Congress armed the courts with broad equitable powers to effectuate this ‘make whole’ remedy. . . District courts are granted wide discretion to ‘locate a just result’ regarding the perameters of the relief granted in the circumstances in each case.” The Court added: “[E]mployees may be subject to higher taxes if they receive a lump sum back pay award in a given year, meaning the employee would have a greater tax burden than if he or she were to have received the same pay in the normal course. This is the origin of Enshelman’s argument that she should receive an additional sum of money to compensate her added tax burden.” The decision further explained that Enshelman had: “submitted an affidavit from an economic expert who calculated the amount of tax-effect damages based on the back pay award, the applicable tax rates, and Enshelman’s tax returns for the appropriate years. . . Having reviewed the record, we hold that the District Court did not abuse its discretion in awarding Enshelman $6,893 as compensation for the negative tax   consequences of receiving her lump sum back pay award.” 

Gelof v. Papineau, 829 F.2d 452 (3rd Cir. 1987). This decision reaffirmed that unemployment compensation cannot be used to offset an award for back pay, even if the unemployment compensation came from the state of Delaware that was the defendant employer in this case. The decision also dealt with the tax consequences of the lump sum award for back pay in a wrongful discrimination case. The Court pointed out that both parties had agreed that adjustment for tax consequences was relevant so that the legitimacy of such an adjustment was not a question before the court. The plaintiff economic expert had projected the amount to be added to the award for tax consequences was $85,031. However the amount was calculated on the basis of a back pay award $23,331 higher than actually awarded and was based on 1986 tax rates instead of 1987 tax rates when the award was made. There was also an issue about whether the part of the award for prejudgment interest should have been included in the tax adjustment calculation. The Court pointed out that it was unable to determine from the District Court’s finding the precise basis for the plaintiff’s economic experts tax consequence calculation or $85,031. The Court therefore vacated the $85,031 and remanded for further findings of the district court on that issue. 

      Hedonic Damages and Emotional Services

Broome v. Antler's Hunting Club, 595 F.2d 921 (3rd. Cir. 1979). Held that loss of enjoyment of life damages are not available in a wrongful death because "only a living person whose faculties have been impaired through injury may recover damages for life's amenities." 

Williams v. Dowling, 318 F.2d 642 (3rd Cir. 1963). The 3rd Circuit reversed the decision of a Virgin Islands trial court to award $5,000 to the plaintiff mother of a decedent minor child for losses arising from the death of her minor son. The reasoning of the 3rd Circuit is based on the fact that the Virgin Islands Wrongful Death Act was modeled after the California Wrongful Death Act, so that California rules and decisions were applicable to the case at hand. The 3rd Circuit said, “a careful reading of the record in this case fails to disclose any evidence whatever bearing upon the pecuniary damage which the plaintiff claims to have sustained or might be expected to sustain as a result of her son’s death, or which would furnish support for a finding of such damages.”

      Admissibility of Expert Testimony

Benjamin v. Peter’s Farm Condominium Owners Association, 820 F.2d 640 (3rd Cir. 1987).  The lost earnings projection of Leonard Chasen, a certified public accountant, had been admitted by the trial court judge. It was rejected by the Third Circuit Court of Appeals on the grounds that the only foundation for an assumption that the plaintiff’s post injury earning capacity was $10,000 per year was “Benjamin’s personal belief as to how much money he could earn together with his personal records reflecting money recived and disbursed during the three month period after the injury.  Likewise the only foundation for pre injury earnings was business earnings of $24,500, based on Benjamin’s 1984 tax return.  The court said, “We agree with PFCA’s position that, on this record, Chasen’s calculation is a “castle made of sand.” 

Donlin v. Philips Lighting North America Corp., 2009 U.S. App. Lexis 8408; 106 Fair Empl. Prac. Cas. (BNA) 1 (3rd Cir. 2009). This decision affirmed the district court as to liability, but remanded for a new trial on damages. Several issues were involved with why the damage portion of the district court decision was remanded. One of those issues was that the district court permitted the plaintiff to testify at length about back pay and front pay. The 3rd Circuit said: “[W]e find that the District Court should have barred portions of Donlin's testimony requiring technical or specialized knowledge. Donlin admitted that she was "not a professional," nor a finance major or forensic economist. . . . Donlin's testimony regarding facts within her personal knowledge (such as her current and past earnings) was appropriate. But, much of Donlin's testimony went beyond those easily verifiable facts within her personal knowledge and instead required forward-looking speculation for which she lacked the necessary training. For instance, in calculating her front pay, Donlin speculated that Philips would provide a 3% annual pay raise; in fact, the company did not provide an increase of more than 1.3 % in the years immediately prior to the trial. Additionally, having no experience with retirement benefits, Donlin misinterpreted Philips's definition of "pensionable earnings" and erroneously assumed a flat 5% per year on pension earnings based only on an example in the Philips pension manual. After admitting that she had never performed a present-value discounting calculation prior to the day before trial, Donlin testified that she received instructions from her lawyer the night before regarding the proper discount rate. Finally, Donlin misapplied the life expectancy charts and therefore did not properly account for the probability of her death. In sum, Donlin's testimony crossed  the line into subject areas that demand expert testimony.” Suggested by Marc Weinstein.

Elcock v. KMART Corporation, 233 F.3d 734; 2000 U.S. App. LEXIS 34822 (3rd Cir. 2000). This decision provides extensive discussion reasons why the 3rd Circuit reversed the trial court decision to admit the vocational testimony of Dr. Chester Copemann and the economic testimony of Dr. Bernard Pettingill. It cites eight Daubert factors from In Re: Paoli Railroad Yard PCB Litigation (Paoli II), 35 F.3d 717, 742 (3rd Cir. 1994) and finds numerous faults with the testimony of Dr. Copemann. It also discussed at length the degree to which the fact that Dr. Copemann had pled guilty to embezzlement could be introduced to impeach the crediblity of his testimony. The discussion of reasons for not admitting the economic damages testimony of Dr. Pettingill was not as extensive, saying: “In sum, we believe that Pettingill’s economic damages model relied on several empirical assumptions that were not supported by the record. Although Pettingill suggested to the jury that it might discount the 100 percent disability figure he plugged into his economic model, this suggestion is not sufficient to change the result. In the absence of clearer instructions or emphasis by the witness or the court, a jury is likely to adopt the gross figure advanced by a witness who has been presented as an expert. Accordingly, the District Court abused its discretion in admitting Pettingill’s model as evidence.”

Gumbs v. International Harvester, Inc., 718 F.2d 88 (3rd Cir. 1983).  S. Jones-Hendrikson, the economist for the plaintiff, had projected lost earnings based on the life expectancy of the plaintiff without consideration of worklife factors and had used a base income figure more than double the plaintiff's average income in the four years prior to the accident. 

Oddi v. Ford Motor Company, 234 F.3d 136 (3rd Cir. 2000). This case does not directly evaluate economic damages, but cites Elcock v. K-Mart and provides Elcock's set of eight Daubert tests for admission of testimony.

Williams v. Rene, 72 F.3d 1096 (3rd Cir. 1995). The decision of the trial court was reversed by the 3rd Circuit for several reasons. Among those reasons, the plaintiff had presented an unnamed actuarial expert to project lost earnings.  The 6th Circuit found “two serious deficiencies” that undermined the testimony of the actuarial expert. First, “there was no evidence on which the expert could properly base an opinion that plaintiff’s gross earnings would triple in the remaining seventeen years of his service before retirement. Second, the loss was not reduced to present value, “an obligation that plaintiff must shoulder.” 

      Wrongful Termination or Employment Discrimination

Collins v. Prudential Investment and Retirement Services, 119 Fed Appx. 371 (3rd Cir. 2005). This was an employment discrimination case based on the plaintiff having been diagnosed with Attentin Deficit Hyperactivity Disorder (ADHD) two months after being terminated. The trial court ruled for the defense and the third circuit upheld that decision under the framework of Toyota Motor Manufacturing, Inc. v. Williams, 534 U.S. 184; 122 S.Ct. 681 (2002). The second to last paragraph of the decision may be of interest to forensic economists: “Collins did not claim that she was substantially limited in the major life activity of working during the trial. However, she now suggests as much in her appeal. She now claims that Calvin Anderson testified as her expert that she could not do corporate taxes on a full-time, long-term basis and that corporate taxes are associated with a broad range of jobs associated with her associate degree in accounting. She fails to mention that Anderson was her economic expert, not a vocational expert or medical expert. Accordingly, even if we were to entertain this argument for the first time on appeal, we would find it has no merit.

     FELA/Maritime Cases

Berryman v. Consolidated Rail Corporation, 1995 U.S. Dist. LEXIS 12768 (E.D.Pa.1995). This is the third of three decisions reached by judges for the U.S. District Court for the Eastern District of Pennsylvania within one month, all of which had relied on Maylie v. National Railroad Passenger Corporation, 791 F.Supp. 477 (1992).  The other two decisions were Sparklin v. Consolidated Rail Corporation, 1999 U.S. Dist LEXIS 10857, and Troy v. National Railroad Passenger Corporation, 1995 U.S. Dist. LEXIS 10596. In each of these decisions, including Maylie, the plaintiff had not claimed any lost retirement benefits. Correspondingly, the court held that Railroad Retirement Board taxes paid to fund those retirement benefits could not be subtracted from lost earnings.   

Maylie v. National Railroad Passenger Corporation, 791 F.Supp. 477 (E.D.Pa. 1992). The judge ruled in this case that "Because defendant did not consent to the inclusion of the value of the [Railroad Retirement] pension, it was not error to refuse to reduce plaintiff's lost wages by the amounts he would have had to pay in railroad retirement taxes."

     Admissibility of Expert Testimony

Booth v. Black & Decker, 2001 U.S. Dist. Lexis 4495 (E.D.Pa. 2001).  This decision did not involve economic testimony, but cited the eight Daubert factors used in Elcock v. K-Mart. The decision excluded the testimony of Richard B. Thomas about toaster defects, saying: "there was no evidence that the method he applied was subject to peer review, had a known or potential rate of error, could be measured by existing standards, or was generally accepted. Futhermore, there was no establishiment of the relationship beteen the technique and the methods. Though Thomas may be qualified to testify on these matters, he did not take sufficient care in supporting the credibility or reliability of the methodology he applied . . ."

Bowman v. International Petroleum Corporation, 1995 U.S. Dist. LEXIS 10873 (E.D.PA 1995). The defendant appealed based in part on the trial court having permitted the testimony of economic expert David Bunin, which was based on a flawed methodology. The Court emphasized the fact that the defense had time to retain its own economic expert, but had not done so in rejecting this part of the appeal.

Gutierrez v.  Johnson & Johnson, 2006 U.S. Dist. LEXIS 80834 (D.N.J. 2006).  This memorandum by Judge William M. Walls rejects motions in limine under a Daubert standard to strike the reports of economists Dr. Janice Madden on behalf of the plaintiff and Dr. David Wise on behalf of the defendant in an employment discrimination at the stage of class certification. Dr. Madden has her Ph.D. from Duke University and is a professor at the University of Pennsylvania. Dr. Wise is an economist at Harvard University. Regarding Dr. Madden’s report, Judge Walls said: “The Court is unpersuaded that Dr. Madden’s choice of variables renders her analysis so fatally flawed that it should be stricken as a matter of law. Generally, decisions regarding what control variables to include in an expert report go to weight, not admissibility. . . Since the expert accounted for experience and seniority within the company and tracked the employees over time, the data was not so incomplete to be rendered irrelevant and any inadequacies in the methodology could be addressed in cross examination.” Regarding Dr. Wise’s report, Judge Walls said: “Plaintiffs raise some serious limitations to Dr. Wise’s approach. However, this Court is mindful that under Daubert, a court is directed to focus on principles and methodolgy, not on the conclusions they generate. Daubert, 509 U.S. at 595. Plaintiffs do not dispute the validity of the statistical tests Dr. Wise performed, nor could they. As Nobel Laureate Dr. Daniel McFadden stated in his declaration, the Chow test, fixed affects models, f-tests, and t-tests are all standard, peer reviewed tests with acknowledged reliability. . .Rather, Plaintiffs challenge Dr. Wise’s interpretation of the results as they relate to the legal concept of commonality. However, disagreements about the conclusions to be drawn from a particular test affect the weight of a report, not its admissibility. . . Plaintiffs’ concerns about the significance or lack of significance of the Wise Report can be adequately addressed through cross-examination.”

JMJ Enterprises, Inc. v. Via Veneto Italian Ice, Inc, 1998 U.S. Dist. LEXIS 5098 (E.D.Pa. 1998). Leon A. LaRosa, Jr., who had a Bachelor’s Degree in Business Administration and a Master’s in Taxation, had his testimony ruled inadmissible because: (1) He did very little to verify his sales projection; (2) Did not attempt to verify information in the tax return; (3) Did not consider the owner’s experience with respect to the company’s potential success; (4) Did not conduct industry research; and (5) Found sales would rise dramatically but expenses would not increase.  There is a good discussion in this decision of Daubert standards and how they should apply in a business valuation context.  (Submitted by Holly Sharp.) 

Montgomery v. Mitsubishi Motors Corp., 2006 U.S. Dist LEXIS 24433 (E.D. PA 2006).  In this judicial memorandum, Judge Pratter denied Mitsubishi’s move to preclude the testimony of Dr. Anthony Gamboa. Judge Pratter denied the motion without prejudice, meaning that the issue can be raised again later. At least one error in Mitsubishi’s brief was a claim that Dr. Gamboa had assumed that Montgomery would work to age 89 based on the LPE-type calculation Dr. Gamboa had made.

Polymer Dynamics, Inc., v. Bayer Corporation, 2005 U.S. LEXIS 7945 (E.D.Pa. 2005). Defendant Bayer filed motions in limine under a Daubert standard to exclude the testimony of various plaintiff experts, including Dr. A. Lawrence Kolbe. The court found that Dr. Kolbe was qualified to offer the jury an opinion on damages, that his methodology was reliable and that Dr. Kolbe’s testimony fit the facts of the case.

Schieber v. City of Philadelphia, 2000 U.S. Dist. Lexis 17952 (E.D. Pa. 2000). LPE methods used by Gary French were discussed in detail. French was permitted to present estimates based on most probable earnings scenario for Shannon Schieber as a teacher, but not for a less probable private sector career. Tried under federal standards. 

      Punitive Damges

Voilas v. General Motors Corp., 73 F. Supp. 2d 452 (D.N.J. 1999). In addition to other aspects of his proposed testimony, Dr. Frank Tinari had been proffered to present three alternative approaches for the jury to consider in awarding punitive damages (463).  Judge Wolfson found Dr. Tinari to have had “a distinguished professional career in the field of economics.” She upheld his ability to testify about general characteristics of the General Motors Corporation and about personal injury damages of the variety usually addressed by forensic economists. She did not, however, allow his testimony about punitive damages, saying (at 464): “[T]he court finds there are no credentials that could qualify an individual as a punitive damages expert, primarily because the area of assessing punitive damages, implicative of various societal policies and lacking any basis in economics, rests strictly within the province of the jury and, thus, does not necessitate the aid of expert testimony. . . Indeed, courts have characterized the jury’s assessment of punitive damages as “an almost unconstrained judgment or policy choice about the severity of the penalty to be imposed, given the jury’s underlying factual determinations about the defendant’s conduct.” In this respect, Judge Wolfson compared testifying about punitive damages as having parallels with testifying about hedonic damages. 

Alphonso v. Pitney Bowes, Inc, 2004 U.S. Dist. LEXIS 13704 (D.N.J. 2004). The defendant was awarded sanctions based, in part, on maintenance of a wage loss claim even though a terminated worker was unquestionably earning more after his termination. Andrew Verzilli was brought in as an economic expert at the last minute by the plaintiff. Jerome Staller was hired by the defense to state that there was no earnings loss.

    Court of Appeals

        Basis Income and Fringe Benefits for Projecting Earnings Loss

Simo v. Mitsubishi, 2007 U.S. App. LEXIS 19421 (4th Cir. 2007). Simo was an 18 year old passenger in a 2000 Mitsubishi P45 Montero Sport that rolled over, causing severe injuries to Simo and ending his potential career as a soccer player. The district court awarded $6,050,000 in damages to Simo. One of the appeals made by Mitsubishi was that verdict was excessive and that the district court erred in admitting the expert testimony of Patrick McCabe, a sports agent, and the testimony of economist Ken McCoin based on McCabe’s testimony. The 4th Circuit conducted a Daubert-Kumho review and held that the district court was within its discretion in admitting testimony from McCabe and McCoin. The ruling that McCabe’s testimony was admissible also rested on South Carolina law. The 4th Circuit said: “While neither McCabe nor anyone else could predict with certainty what the future would have held for Simo, South Carolina damages law did not require such certainty. See South Carolina Fin. Corp. of Anderson v. W. Side Fin. Co., 236 S. C. 109, 113 S.E.2d 329, 336 (S.C. 1960 ) (‘The law does not require absolute certainty of data upon which lost profits are to be estimated, but all that is required is such reasonable certainty that damages may not be based wholly upon speculation and conjecture, and it is sufficient if there is a certain standard or fixed method by which profits sought to be recovered may be estimated and determined with a fair degree of accuracy.’ (internal quotation marks omitted). McCabe explained that his projections encompassed ‘a range of averages,’ rather than a precise prediction of Simo’s future. J.A. 2025. And, it is noteworthy that even Mitsubishi’s expert testified that he was sufficiently informed to offer a ‘probable career path’ for Simo. Id. At 1092; cf. Correa v. Cruisers, 298 F.3d 13, 26 (1st Cir. 2002) (‘Acceptance of the methodology by the other party’s expert may give additional credence to the reliability of proffered testimony.’) 

                Treatment of Taxes

Flannery v. United States, 718 F.2d 108 (4th Cir. 1983). This decision included several important holdings about the application of the Federal Tort Claims Act (FTCA). First, it held that taxes must be subtracted from lost earnings regardless of state law concerning subtraction of taxes. Second, it held that the discount rate used to reduce future values to present values must be a tax adjusted rate. Third, it held that lost enjoyment of life damages were not allowed in an FTCA action as punitive to the United States (this holding was later overturned in Molzof v. United States, 502 U.S. 301; 112 S. Ct. 711, 1992). Fourth, it held that the medical costs in a life care plan for a comatose person must be subtracted from lost earnings.

                  Admissibility of Expert Testimony

Balance v. Wal-Mart Stores, Inc., 1999 U.S. App. LEXIS 7663 (4th Cir. 1999). This decision involved a slip-and-fall case in Wilson, North Carolina. At issue on appeal was whether the medical testimony of Dr. David Tomaszek and the corresponding life plan testimony of Anthony Sciara, Ph.D. should have been admitted. A Daubert hearing had been conducted by the District Court judge and the 4th Circuit Court of Appeals upheld the District Court judge. 

Berlyn Inc. v. Gazette Newspapers, Inc., 2003 U.S.App. LEXIS 16814 (4th Cir. 2003). From footnote 3: “Appellants also seek to rely on the the testimony of their proposed exert witness, Mr. James Shaffer. The district court correctly ruled, however, that Shaffer is unqualified to offer expert testimony as an economist on the establishment of relevant product or geographic markets. While Shaffer has an MBA and significant executive experience in the newspaper industry, he subscribes to no economics journals, has not published any economics-related articles. He is also unfamiliar with basic terminology and concepts used by economists who work on antitrust cases. Furthermore, Shaffer admitted that he had never conducted a relevant market analysis, and that any reading he had done on the subject came from materials provided to him by Appellant’s attorneys.” 

         Basis Income and Fringe Benefits for Projecting Earnings Loss

         Hedonic Damages and Emotional Services

Livingston v. United States, 817 F.Supp. 601 (E.D.N.C. 1993). Rejected hedonic damage testimony by Gary Albrecht.

Sterner v. Wesley College, Inc., 747 F.Supp. 263 (D.De.1990). Rejected hedonic damage testimony by Stan V. Smith.

     Admissibility of Expert Testimony

Berlyn Inc., et al. v. The Gazette Newspaper, Inc., 214 F.Supp. 2d 530 (D. Maryland). The district court excluded the antitrust economics testimony of James B. Shaffer, but allowed Shaffer to testify about lost profits on the basis of his experience in the newspaper industry. Shaffer’s proposed opinion about market power was rejected because: “Shaffer is not qualified to offer this opinion. Shaffer’s background is completely devoid of specific education, training, or experience in economics or antitrust analysis. His education is in engineering and business administration. He has never performed a relevant market analysis for antitrust purposes, and at the time he was retained as an expert n this case, he was entirely unaware of how an economist would perform such a study. Clearly, Shaffer cannot qualify under the general requirements of Rule 702, which requires ‘knowledge, experience, training or education.”

McMillan v. Weeks Marine, Inc., 2007 U.S. Dist. LEXIS 20833 (D.DE 2007). A new trial on damages was granted because Royal A. Bunin had been admitted to testify about the plaintiff’s lost earnings, but went beyond the scope of his expertise in his testimony. “During trial, Mr. Bunin, an actuarial economist expert witness, was permitted to testify, over Defendant’s objection, about the employment frequencies, hours worked, and employment experiences of workers in the dredging industry. He testified that ‘while earlier on in a person’s career there may be fluctuation as they’re known in the industry picking up work, but once they’re known in the industry, they get picked up and their work seems to be more solid year round. (D.I. 95 at 11). He also testified that this opinion derived from other reports he had prepared for other workers in the dredging industry who were members of the Union of Operating Engineers Local 25. Id. After reviewing Mr. Bunin’s expert reports, the Court finds that these opinions were not disclosed as required, nor did Mr. Bunin provide any bases to support them. Moreover, the Court concludes that Mr. Bunin’s testimony on Plaintiff’s future prospects for employment in the dredging industry reflects vocational experience outside the scope of his expert report, discipline and prior experience as an actuarial-economist.”

TFWS, Inc. V. Schaefer, 183 F. Supp. 789 (Dist. of Maryland 2002). Drs. Frank Chaloupka and David Levy for the defendant and Thomas Overstreet for the plaintiff were all found qualified to offer expert opinions in an antitrust matter, with the court emphasizing the Kumho decision in its ruling. The court went on to say that it found the testimony of Drs. Chaloupka and Levy more persuasive than that of Dr. Overstreet.

    Court of Appeals

        Basis Income and Fringe Benefits for Projecting Earnings Loss

Knight v. Texaco, Inc., 786 F.2d 1296 (5th Cir. 1986). The decision examines the calculations of Dr. George Rice in holding that the trial court was not in error in its final opinion of damages in a Jones Act case. Rice used a base earnings rate of $13.06 per hour, projected 1.5 percent productivity increases and used a below market discount rate pursuant to Culver II of 3.0 percent to project lost earnings. Most of the decision involves assessing the reasonableness and foundation for Dr. Rice’s projections. Suggested by Gerald D. Martin.

Smith v. Harrah’s New Orleans Management, 2007 U.S. App. LEXIS 893 (5th Cir. 2007). This is an unpublished opinion. Kenneth Boudreaux was the economic expert for the defendant, but there was no economic expert for the plaintiff. Boudreaux’s calculations are described in the decision and were accepted by the Court. The Court said: “Awards for lost earnings ‘are inherently speculative and intrinsically insusceptible of being calculated with mathematical certainty.’ Melancon v. Lafayette Ins. Co., 926 So. 2d 693, 708 (La. Ct. App. 2006) (internal quotation omitted). Accordingly, such damages need only be shown with ‘such proof as reasonably establishes the plaintiff’s claim.’ Id.; see also Gunn v. Robertson, 801 So. 2d 555, 565 (La. Ct. App. 2001) (‘Future loss of earnings, which [is] inherently speculative, must be proven with a reasonable degree of certainty, and purely conjectural or uncertain future loss of earnings will not be allowed.’) This decision also discusses awards for “loss of life enjoyment” in Louisiana at some length, indicating that “loss of enjoyment of life” awards are normally smaller than “pain and suffering” awards. The decision distinguishes between “special damages” and “general damages” under Louisiana law. “Loss of earnings is a “special damage” because it can be calculated with relative certainty, while “loss of enjoyment of life is a “general damage.” Because general damages are “not susceptible to monetary quantification,. . . the jury necessarily has broad leaway.” (Citation omitted).

        Wrongful Death

Benavides v. United States, 497 F.3d 526 (5th Cir. 2007). The 5th Circuit held “that 26 U.S.C. § 104( c) does not exclude punitive damages from the gross income of the survivors of a deceased worker when the wrongful death laws of the state in question do not limit recovery to punitive damages, even if, as here, some other law of the state, such as its Workers’ Compensation Act, might restrict wrongful death recovery to punitive damages” in affirming the decision of the district court. (This language is directed at the fact that Alabama only allows punitive damages in wrongful death cases.) 

        Life and Worklife Expectancies

Crador v. Louisiana Department of Highways, 625 F.2d 1227 (5th Cir. 1980). “The evidence suggests that Ccrador was 48 years old and had a work life expectancy of 14 years and a life expectancy of 22 years at the time of the accident.” Suggested by Gerald D. Martin.

Osburn v. Anchor Laboratories, 825 F.2d 908 (5th Cir. 1987). This was a diversity action tried under Texas law. Osburn contracted leukemia, which he claimed was the consequence of a drug manufactured by the defendants. The defendants claimed that his earnings losses should be based on his life expectancy of from 2 to 5 years.  The 5th Circuit held that the plaintiff was entitled to recover for his lost earnings “on the basis of his work life expectancy at the time of his injury, ‘undiminished by any shortening of that expectancy as a result of the injury.” Suggested by Gerald D. Martin.

        Household Services

Hernandez v. M/V Rajaan, 841 F.2d 582 (5th Cir. 1988).  This decision provides an interesting discussion of whether in injured Mexican worker who was illegally in the United States could recover for lost earnings in the United States. The corrections made by the 5th Circuit Court of Appeals to damages of the trial court judge on lost earnings based on the worker’s earnings record is also interesting. The decision ruled clearly that social security taxes are taxes that must be subtracted in the meaning in federal maritime cases. Of greatest interest, however, was the rejection of household service losses and the consideration of double counting between damages awarded for loss of household services and the provision therefore in a life care plan. The court said: “It is indisputable that Hernandez, a paraplegic, has lost his ability to perform household services in the future. However, the trial court is not at liberty to grant damages for lost household services in the absence of any evidence that Hernandez performed household services in the past. . . In addition, because Hernandez received an award for attendant care, the additional recovery for lost household services would constitute double recovery.”  Submitted by Stephen Horner. 

          Life Care Plans and Reasonable Value of Medical Expense

Lebron v United States, 279 F.3d 321 (5th Cir. 2002). Remanded on the basis of possible duplication between life care award for rehabilitative items to alleviate suffering or mental anguish in a life care plan and a separate award for "pain and suffering, bodily injury, mental capacity, and loss of the capacity for the enjoyment of life." Cited Sosa v. Lago Izabal (1984) as authority.

Miller v. Wladyslaw Estate, 2008 U.S. App. LEXIS 22283 (5th Cir 2008). This decision held that a hospital is not required by law to seek payment from Medicaid simply because an uninsured patient later becomes eligible for Medicaid.  The hospital was seeking payment from an award won in a tort action. The 5th Circuit affirmed the trial court decision that the hospital had the right to do so. At issue is the fact that Medicaid and other insurance sources routinely have agreements such amounts paid are much smaller than amounts billed. The court held that since the hospital had accepted no money from Medicaid, it had the right to seek full payment from the patient who had won an award that included medical expenses. The court indicated Medicaid has specific provisions to prevent a medical care provider from trying to recover more than was initially paid by Medicaid, but did not preclude a hospital seeking payment from trying to collect directly from a patient. The decision provided definitions for two billing practices that are specifically not allowed under 42 U.S.C. § 1396a(a)(25)(C), “balance billing” and “substitute billing.” “Balance billing occurs when a provider accepts payment from Medicaid and then seeks to recover from the patient the balance between that payment and its customary fee.” “Substitute billing occurs when a provider accepts payment from Medicaid and then tries to return the payment in order to recover its entire customary fee from the patient.” The court pointed out that neither of these practices could occur without the medical care provider having tried to first bill Medicaid. Suggested by David Jones.

       Treatment of Taxes

Blue v. The Western Railway of Alabama, 469 F.2d 487 (5th Cir. 1972). This decision provides extensive discussion of methods for calculating tax liabilities just prior to Norfolk & Western Railway Company v. Liepeldt, 100 S.Ct. 755 (1974). The 5th Circuit held that it was reversible error that the plaintiff had not been permitted to give evidence based on gross earnings and remanded for a new trial. In Liepeldt, the U.S. Supreme Court held that taxes must be subtracted, rendering the decision in Blue moot. Suggested by Jerry Martin. 

Hernandez v. M/V Rajaan, 841 F.2d 582 (5th Cir. 1988). See under Household Services.

Johnston v. Harris County Flood Control District, 869 F.2d 1565 (5th Circuit 1989). This decision involved a plaintiff who won an jury award under Title VII of the Civil Rights Act and 42 U.S.C.S. Section § 1983 for wrongful termination. The decision includes extensive discussion that would assist a forensic economist in understanding the nature of awards in wrongful termination cases. The 5th Circuit held that the decision about whether or not to treat Social Security disability benefits as a deductible offset from an award for back pay was within the discretion of the trial court judge. It held that the plaintiff by ceasing to search for new employment had failed in his duty to mitigate damages, requiring offset for that purpose. It also discussed the difference between back pay and past earnings loss that is “personal-injury-like” in character in that the former are subject to federal income taxes and the latter are not. This suggests that front and back pay can be coupled into the same decision with past and future earnings loss and that tax treatment of front and back pay is subject to tax while past and future earnings loss are not.  The court also held that a plaintiff is liable for the Social Security taxes that would have accrued in the  year the wages were due.  This latter holding was subsequently overruled by United States v. Cleveland Indians Baseball Company, 532 U.S. 200; 121 S. Ct 1433 (2001). Based on that decision Social Security taxes are currently based on the year in which back pay is received. Suggested by Jerry Martin. 

Madore v. Ingram Tank Ships, 732 F.2d 475 (5th Cir. 1982). Social security taxes were properly deducted from earnings in projecting lost future earnings.

Smith v. United States, 2004 U.S. Dist LEXIS 23903 (5th Cir. 2004). The estate of Louis R. Smith brought suit claiming that it was owed a refund of federal estate taxes based on the fact that retirement accounts held by the decedent were overvalued because the valuation of those accounts did not take into account the future income tax liability of beneficiaries deriving from those accounts. The trial court granted summary judgement on the grounds that beneficiaries were not entitled to such a tax reduction. The 5th Circuit upheld the trial court.  

      Legal Procedure

Gonzales v. Chrysler Co., 2002 U.S. App. LEXIS 17163 (5th Cir. 2002). Gonzalez attempted to bring an action for the death of his three year old son in an accident in Mexico. He had purchased his automobile in Mexico, allegedly after seeing advertisements in Texas on a trip to Houston. Gonzalez argued that the remedy for tort harms in Mexico was inadequate even though the automobile had been purchased in Mexico and the accident had taken place in Mexico. The district court ruled that the action could not be brought in Texas and should be brought in Mexico and the 5th Circuit affirmed. 

        FELA/Maritime

Culver v. Slater Boat Company, 688 F.2d 280 (5th Cir. 1982) (Culver I). Culver I overruled the prohibitions in Johnson v. Penrod Drilling Co, 510 F.2d. 234 (5th Cir. 1975) which had prohibited taking inflation into account. The 5th Circuit said: “The goal is not, it must be made clear at the outset, to protect the lump-sum award from the effect of inflation. Rather, before determining how much now needs to be paid, the goal is to assure the plaintiff of the equivalent of his future wages, including those likely to be given/received in the form of cost of living increases in response to inflation.” Culver I provides an extensive review of cases before 1982 in other circuits that considered how to deal with inflation or discount rates.  The details in this decision make it very worthwhile for a forensic economist to read, even the 5th Circuit changed its own procedures in Culver II. 

Culver v. Slater Boat Company, 722 F.2d 114 , (5th Cir. 1983) (Culver II). Culver I had been decided shortly before the United States Supreme Court had reached its decision in Jones & Laughlin Steel Co. v. Pfeifer, 103 S.Ct. 254 (1983). This rendered portions of the Culver I decision invalid and the 5th Circuit reached a new decision in light of the parts of Culver I that were invalid.  In making those changes, the Culver II court specifically mandated economic damages calculated in the 5th Circuit must follow the “below market” discount rate method, with rates falling between 1 and 3 percent, that was one of three methods allowed in the Pfeifer decision. Current jury instructions for the 5th Circuit indicate that the requirements of Culver II have been overridden by the United States Supreme Court decision in Monessen Southwest Railway Co. v. Morgan, 486 U.S. 86 (1988). However, Culver II is still cited and generally followed in the 5th Circuit and to a lesser extent in the 11th Circuit which split from the 5th Circuit after he Culver decisions had been reached. The decision also stated that treating employer contributions to Social Security in a computation of lost fringe benefits was "clearly erroneous." 

Hernandez v. M/V Rajaan, 841 F.2d 582 (5th Cir. 1988). See under Household Services.

Johnson v. Penrod Drilling Co., 510 F.2d 234 (5th Cir. 1975). This decision is five years before Liepelt seven years before Pfeifer and was rendered moot by those decisions. However, it provides useful historical insight into federal rules regarding lost earnings prior to 1980. From the Federal Reporter headnotes: "Such contingencies, variables and predictions as the impact of income taxes, taxe effect of contingent attorney's fees and taxability of interest earnings were to be withheld from jury's consideration in determining award of damages for future lost earnings.  Award for damages was to be based on predicted gross earnings lost . . . In determining award of damages for future lost earnings, triers of fact should not be instructed with respect to future inflationary or deflationary trends, and should not be advised to consider such alternative descriptions of inflationary or deflationary trends as purchasing power of the dollar or the consumer price index." This case also provides a useful review of differenced between the federal circuits that existed in 1975 and good descriptions for earlier federal decisions relating to inflation and taxes.

Law v. Sea Drilling Corporation, 510 F.2d 242 (5th Cir. 1975). Ruled that the personal expenses of a decedent husband were  within 10 to 15 percent range. 

Madore v. Ingram Tank Ships, 732 F.2d 475 (5th Cir. 1982). Social security taxes were properly deducted from earnings in projecting lost future earnings.

Pickle v. International Oilfield Drivers, Inc., 791 F.2d 1237 (5th Cir. 1986). Social Security/Medicare payroll taxes should be subtracted from projections of lost earnings.

Sosa v. M/V Lago Izabal, 736 F.2d 1028 (5th Cir. 1984). Concluded that to the extent that certain items were not medical expenses but devices to alleviate physical suffering or mental anguish, they duplicated a separate award for "pain and suffering, bodily injury, mental anquish, and loss of the capacity for the enjoyment of life." Discusses taking into account taxation of a future earnings award. This could would have allowed either an addition to the lump sum award to take into account taxes on the interest on a fund as suggested in DeLucca v. United States or Hollinger v. United States or by using lower tex exempt instruments as considered in Flannery v. United States. 

Tallentire v. Offshort Logistics, Inc., 754 F.2d 1274 (5th Cir. 1985). “In computing future earnings, the defendant’s economist deducted social security taxes for the decedent’s life span. Taylor in essense argues that social security payments are similar to payments to a pension plan, and that in any case social security deductions are matched by the employer’s contribution, so there is no loss of income. Although this argument has a certain amount of superficial appeal, our cases establish that social security taxes should be deducted in computing future earnings. See Culver v. Slater Boat Co., 688 F.2d 280, 302 (5th Cir. 1982), modified in other respects Culver v. Slater Boat Co., 722 F.2d 114 (5th. Cir. 1983); Madore v. Ingram Tank Ships, Inc., 732 F.2d 475 (5th Cir. 1984).

                Hedonic Damages and Emotional Services

Smith v. Harrah’s New Orleans Management, 2007 U.S. App. LEXIS 893 (5th Cir. 2007). This is an unpublished opinion. Kenneth Boudreaux was the economic expert for the defendant, but there was no economic expert for the plaintiff. Boudreaux’s calculations are described in the decision and were accepted by the Court. The Court said: “Awards for lost earnings ‘are inherently speculative and intrinsically insusceptible of being calculated with mathematical certainty.’ Melancon v. Lafayette Ins. Co., 926 So. 2d 693, 708 (La. Ct. App. 2006) (internal quotation omitted). Accordingly, such damages need only be shown with ‘such proof as reasonably establishes the plaintiff’s claim.’ Id.; see also Gunn v. Robertson, 801 So. 2d 555, 565 (La. Ct. App. 2001) (‘Future loss of earnings, which [is] inherently speculative, must be proven with a reasonable degree of certainty, and purely conjectural or uncertain future loss of earnings will not be allowed.’) This decision also discusses awards for “loss of life enjoyment” in Louisiana at some length, indicating that “loss of enjoyment of life” awards are normally smaller than “pain and suffering” awards. The decision distinguishes between “special damages” and “general damages” under Louisiana law. “Loss of earnings is a “special damage” because it can be calculated with relative certainty, while “loss of enjoyment of life is a “general damage.” Because general damages are “not susceptible to monetary quantification,. . . the jury necessarily has broad leaway.” (Citation omitted).

Transco Leasing Corporation v. United States, 896 F.2d 1435 (5th Cir. 1990). This decision holds that an FTCA action being tried under Louisiana law was not bound to follow the 5th Circuit rule requiring use of a “below market” discount rate as set forth in Culver v. Slater Boat Co., 722 F.2d 114 (5th Cir. 1983). There is extended analysis of why Louisiana law rather than Texas law should apply in this matter. The decision also provides an extended comment about valuing the loss of love, affection and guidance. The 5th Circuit said: “‘The loss of a loved one is not measurable in money. Human life is, indeed priceless. Yet the very purpose of the lawsuit for wrongful death is to fix damages in money for what cannot be measured in money’s worth.’ Caldarera v. Eastern Airlines, Inc., 705 F.2d 778 (5th Cir. 1983). When we discuss the loss of love in terms of money, we feel more than a little ghoulish in engaging in such surreal exercises. This fiction of reducing love to a monetary figure is a difficult and distasteful task for a court.”

      Admissibility of Expert Testimony

In re Air Crash Disaster at New Orleans, Louisiana on July 9, 1982, 795 F.2d 1230 (5th Cir. 1986). The Fifth Circuit Court of Appeals reversed the trial court decision in a wrongful death matter because: “We are persuaded that the evidence in support of the claimed loss of inheritance was too speculative and that the remaining awards of the jury were so excessive as to require a new trial.”  The unnamed economist had projected that the decedent’s salary would grow at an annual real rate of 8 percent and would have paid only 5 percent of his income in income taxes. The court pointed out that this was extremely unrealistic and also noted evidence in the case that suggested “increasingly significant sums had been spent in previous years in gambling junkets to Las Vegas.” On the inheritance issue, the 5th Circuit said: “In sum, we find the assumptions of plaintiff’s economist so abusive of the known facts, and so removed from any area of demonstrated expertise, as to provide no reasonable basis for calculating how much of Ted Eymard’s income would have found its way into assets or savings to be inherited by his children.”

Marcel v. Placid Oil Company, 11 F.3d 563 (5th Cir. 1994). The district court had precluded the testimony of economic expert Dr. Kenneth Boudreaux based on the worklife expectancies of oil field workers that had been prepared by Richard Camus & Associates. Plaintiffs criticized the Camus study as outdated, statistically suspect, and untrustworthy. The 5th Circuit said: “In presenting the testimony of Dr. Boudreaux, Placid did not tender any evidence comparing the worklife in the oilfield with the national average or with the worklife in any other occupation. Without some indication of how oilfield worklife differs from that of other occupations, however, there are several bases upon which the district court could have excluded the evidence, for example, a finding that the probative value of the Camus study did not outweigh the prejudice of its admission or that it was not sufficiently reliable in the present context. Upon the record before us, we cannot hold that it was an abuse of discretion to exclude the tendered evidence.” In a footnote, the 5th Circuit noted that “Plaintiffs contend that Placid failed to preserve this issue for appeal because it did not proffer either the Camus study or the testimony of Dr. Boudreaux.” 

Randolph v. Laeisz, 896 F.2d 965 (5th Cir. 1990). A trial court decision was reversed in part on the basis of the unreasonable calculations of an unnamed economist.  Randolph had worked as a clerk/checker for two unions that had merged in 1983, after which there was a loss of hours worked by Randolph. This loss of hours had been ignored by plaintiff’s economist. The court also noted that: “[T]he record does not support the validity of the economist’s actual mechanical calculations. His testimony on direct and cross examination was confusing at best and nothing else in the record clarifies how the economist reached his end result figures.” 

          Wage Growth Rates and Discount Rates

Hogans v. United States, 2005 U.S. Dist. LEXIS 32359 (W.D.Tex. 2005). This case involved Dr. Don Huddle as an economic expert for the plaintiff and Dr. Stan Smith as an economic expert for the defendant. The Court held that Dr. Huddle’s method: “followed the ‘below market’ rate method required by the Fifth Circuit as stated in Culver v. Slater Boat Co., 722 F.2d 114 (5th Cir. 1983). His discount rates of 1.2 percent for future medical cost and 1.0% for future lost earnings fall squarely within the example of proper below-market discount rates set forth in Culver.” The Court said of Dr. Smith: “The methodology employed by defendant’s economic expert, Dr. Smith, violates Culver because Dr. Smith relied primarily on a market methodology specifically disapproved by the Fifth Circuit Court of Appeal’s below market requirements. Dr. Smith’s high discount rate of 7.42% fails the Culver test because Dr. Smith’s methodology employs a 2/3 (65%) reliance on the stock market’s average over the highest performing period in the market’s history, and Culver maintains a below  method that distinguishes a seriously injured plaintiff’s need to sustain his or her future economic needs after suffering a serious injury from speculating investors willing and able to accept some risk for a potentially higher return on their investments.”

          Treatment of Taxes

Tallentire v. Offshort Logistics, Inc., 754 F.2d 1274 (5th Cir. 1985). “In computing future earnings, the defendant’s economist deducted social security taxes for the decedent’s life span. Taylor in essense argues that social security payments are similar to payments to a pension plan, and that in any case social security deductions are matched by the employer’s contribution, so there is no loss of income. Although this argument has a certain amount of superficial appeal, our cases establish that social security taxes should be deducted in computing future earnings. See Culver v. Slater Boat Co., 688 F.2d 280, 302 (5th Cir. 1982), modified in other respects Culver v. Slater Boat Co., 722 F.2d 114 (5th. Cir. 1983); Madore v. Ingram Tank Ships, Inc., 732 F.2d 475 (5th Cir. 1984).

          Life Care Costs and Reasnable Value of Medical Expenses

Richardson v. United States, 2007 U.S. Dist. LEXIS 71159 (W.D. La. 2007). This opinion by Judge Dee D. Drell provides a determination of damages in a automobile accident cause by a federal employee in an FTCA action. The decision discusses earnings loss calculations that were prepared by Dr. G. Randolph Rice in the amounts of $46,594 in lost past wages and $18,520 in lost future wages “based on evidence that Mr. Richardson could return to his pre-accident rate of pay after an 18-month period of retraining.” The Plaintiff claimed future medical expenses for surgeries that treating indicated would not be useful because of the Plaintiff’s “obesity, diabetes and hypertension.” The Court said: “The court finds that it is more probable than not that the future surgical procedures will not occur. Thus, Mr. Richardson has failed to satisfy the burden of  proof under Louisiana law for these expenses. Thus, we will award no damages for future medical expenses relating to the surgeries.”  

           Treatment of Taxes

Bell v. New Hampshire Insurance Company, 2008 U.S.  Dist. Lexis 43322 (E.D.La. 2008). The plaintiff had not been previously filing income tax returns, but presented as evidence of amounts deposited in his checking account prior to the accident, as well as a signed letter from his employer estimating his income per week to be $720. The plaintiff had presented an economic expert.  The Court said: “A plaintiff need not produce an economist to testify as to the probability or improbability that Plaintiff would have earned similar amounts during the remainder of his work life . . . Louisiana law does not indicate that in order to prove the income asserted by Plaintiff, Plaintiff must present tax returns as proof of income . . . While tax returns serve as the best single source of evidence on the subject of future earnings and earning capacity, Plaintiff’s uncorroborated testimony is sufficient to prove a loss of past wages as long as such proof reasonably establishes the claim . . . While Defendant correctly points out that 26 U.S.C. 1402(b) requires a self employed person to file a federal income tax return if his annual income exceeds $400, Plaintiff is not presently on trial for a violation of this federal law. . . Sans income tax returns, the trier-of-fact must determine if the amount claimed by Plaintiff proves reasonable in light of the evidence proffered and testimony presented at trial.” The decision also discusses how Louisiana law deals with the intersection of workers’ compensation liability and uninsured motorist coverage.  

           Legal Procedure

B. J. Tidwell Industries, Inc. v. Diversified Home Products, Inc., 2007 U.S. Dist. LEXIS 78227 (W.D. Texas 2007).  This is a memorandum denying motions in limine to exclude the testimony of Dr. Gregory Faulk, a finance professor at Belmont University, for the defendant and Gerald Hill, a CPA, for the plaintiff. Dr. Faulk was retained first and Mr. Hill was retained later to comment on Dr. Faulk’s report. The Court held that Dr. Faulk was not required to verify the accounting information provided to him by the defendant.   

In Re: Vioxx Products Liability Litigation, 2007 U.S. Dist. LEXIS 40612 (E.D. La. 2007).  The plaintiff was granted a new trial on the ground that a defense witness, Dr. Barry Rayburn, had testified that he was a board certified cardiologist when, in fact, he was not a board certified cardiologist.

Melendez v. BP Oil Company, USA, 2005 U.S. Dist. LEXIS 30878 (S.D. Texas 2005). This decision allowed the defendant to transfer venue from the federal Southern District of Texas to the federal Southern District of California. Plaintiff had argued against the transfer on the ground that plaintiff’s economist and treating physicians reside in in the Southern District of Texas and that plaintiff could not compel them to attend trial in California. Judge Kent rejected plaintiff’s argument and transfered the case to the Southern District of California. 

Wise v. Kan. City Life Ins. Co., 2006 U.S. Dist. LEXIS 36875 (N.D. Miss. 2006). “Plaintiffs carry the burden of proving their damages with reasonable certainty, and expert economist testimony is often preferred in cases involving the present value of future damages. As the Plaintiffs properly note, however, "the right to recover is not precluded by uncertainty regarding the exact amount of damages." The court finds that the evidence presented at trial by the Plaintiffs regarding their actual damages, while not presented through expert economist testimony, was sufficient to demonstrate to the jury a "benefit of the bargain" damage calculation, and allowed the jury to reasonably ascertain the actual damages suffered by the Plaintiffs. As the jury was instructed by the court prior to entering deliberations, the benefit of the bargain rule provides that each Plaintiff is entitled to receive the value that he would have received if the insurance premium paid, and benefit received, for his policy was as represented by the Defendant's agent, Nowlin. The Plaintiffs presented evidence at trial concerning each Plaintiff's individual situation and how each failed to receive the value that was promised by Nowlin. The court finds that this damages formula was sufficient to permit the jury to accurately calculate each Plaintiff's actual damages, even though the testimony was not presented by an expert economist.”

Thomas v. S.H.R.M. Catering Servs., 2007 U.S. Dist. LEXIS 14059 (S.D.TX 2007). This was a decision transferring venue to the Eastern District of Louisiana, New Orleans Division. The decision was opposed by the plaintiff largely on the grounds that the plaintiff’s economist lived in Houston even though most of the witness doctors lived in New Orleans. The change of venue was granted. 

          Hedonic Damages and Emotional Services

Am. River Transp. Co. v. US Maritime Servs (In re Am. River Trans. Co), 2007 U.S. App. LEXIS 14464 (5th Cir. 2007).  The 5th Circuit held that parents of a 24 year old man wrongfully killed while working as a longshoreman in territorial waters could not recover under maritime law for loss of society with their decedent son. This decision provides a review of the evolution of maritime law on the question of loss of society between adult children and parents and points out a conflict between other federal circuits and the 9th Circuit on this question.

Augustin v. Hyatt Regency of New Orleans, 1992 U.S.Dist. Lexis 1061 (E.D.La. 1992). Melville Wolfson was not permitted to present hedonic damage testimony based on an interpretation of Louisiana law. 

Badeaux v. Rowan Companies, 1991 U.S.Dist. Lexis 13532 (E.D.La. 1991). Held that: "Damages for loss of the enjoyment of life or 'hedonic' damages are not recognized as a separate element of recovery in the Fifth Circuit. They are not a factor to be separately measured as an independent ground of damges," but must be included as part of pain and suffering. Testimony of Melville Wolfson was not permitted.

Craft v. Matlack, Inc., 1992 U.S.Dist. Lexis 7978 (E.D.La. 1992). Rejected hedonic damage testimony by Melville Wolfson based on 5th Circuit rules.

Davis v. Rocor International, 226 F.Supp.2d 839 (S.D.Miss. 2002). A Daubert standard was applied to the proffered expert testimony of Dr. Stan Smith in several areas. The hedonic damages testimony of Stan Smith was rejected on the grounds of not assisting the trier of fact to understand or determine an issue in this case. The loss of society testimony of Stan Smith was rejected on the basis of lack of evidence showing loss of society based on percentages in this personal injury action and on the basis that Smith, as an economist, has not been shown to be qualified as an expert with respect to relationship values. The loss of household services testimony of Stan Smith, projected on the basis of 40 percent, was rejected because there was no showing that Smith, as an economist, is independently qualified to make that determination and that Plaintiffs had not shown that Smith’s opinion would assist the trier of fact in understanding the evidence presented at trial. 

Faciane v. Rhodes, 1997 U.S.Dist. Lexis 17361 (E.D.La. 1997). Melville Wolfson was not permitted to testify about hedonic damages. 

Trabucco v. Hilton Hotels Corporation, 1994 WL 419846 (E.D.LA). Granted motion in limine to preclude hedonic damage testimony by Melville Z. Wolfson.

      Admissibility of Expert Testimony

Albert v. Jordan, 2007 U.S. Dist. LEXIS 85368 (W.D. La 2007). Judge James T. Trimble, Jr., granted a defense motion in limine to exclude testimony of vocational expert Glen Hebert, MRC and R. Douglas Womack, Ph.D. that was based on occupations and earnings that Hebert claimed represented the earning capacity of plaintiffs Paul Reed and Keith Dorn. Judge Trimble held that amounts being projected were far in excess of the earning capacity demonstrated by the two plaintiffs in their earnings record and said that “Plaintiffs have presented no evidence is to either plaintiff’s aptitude or earnings history that would indicate support for the opinions proffered by Mr. Hebert. He also held that the Court “will allow these experts to testify as to Mr.Reed and Mr. Dorn’s loss of earning capacity based on a wage scale proven by their work history.”

Arreola v. Epic Divers, Inc, 2006 U.S. Dist. LEXIS 88275 (E.D.LA 2006). The Plaintiff challenged the admissibility of testimony by the defense economist, Kenneth Boudreaux, that Plaintiff’s work-life expectancy as a commercial diver was five years baed on a July 1993 case study compiled by Louisiana State University’s Department of Quantitative Business Analysis for the benefit of the Association of Diving Contractors, Inc. Boudreaux’s report noted that “if Plaintiff’s alleged impairment precludes him only from diving for a living, as opposed to undertaking a non-diving occupation, then any future wage loss calculation should be based on Plaintiff’s remaining expected worklife as a diver. . .  The Plaintiff argued that the LSU study did not meet the requirements of Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993), because no other court has ever ruled on its admissibility, and because it has never been published or subject to peer review. Plaintiff also argues that the time frame reflected in the report (1975-1992), which was supposedly one of very unfavorable economic conditions for buyers, does not correlate with today’s conditions.” The Court went on to discuss the nature of the LSU study in some detail and said: “[G]iven Boudreaux’s impressive credentials, if the jury learns about the LSU study from his lips then it will surely give more credence to the report than what it could ever garner on its own. It would simply be unfair to allow the Defendants to use the study to put the burden on Plaintiff to convince the jury that unlike other divers in past years he would not have voluntarily dropped out of diving. Again, unlike other divers who might voluntarily choose to end their careers, the Plaintiff’s career had ended not by choice but by necessity given his injury. He is entitled to a presumption that he would have spent his entire career as a diver.”  Boudreaux was not allowed to testify regarding any type of reduced worklife expectancy for divers “because that is not his area of expertise” and any testimony about the LSU study was specifically excluded because the judge did not consider it reliable.

Butler v. MBNA Technology, Inc., 2003 U.S. Dist LEXIS (N.D.Tex. 2003).  A motion to exclude the expert opinion of Dr. James T. McClave, an economist for the plaintiff, was granted in part and denied in part. “Dr. McClave’s opinion is traceable to a specific, identifiable source,” which satisfied the court that “expert opinion must be founded on facts and data that are capable of independent verification.”  However, Dr. McClave’s comparison of plaintiff’s annual salary increases with those of job candidates who hold degrees in computer science was rejected as unreliable. The plaintiff had a job grade of Senior Software Engineer, based on a bachelor’s degree in Management Information Systems, which the court did not consider as equivalent to degrees in computer science.” 

Garcia v. Columbia Medical Center of Sherman, 996 F.Supp. 617 (E.D.Tex. 1998).  The plaintiff had retained Daniel J. Slottje as its economic expert. The defense had retained Ygnacio D.Garza as its economic expert.  Defense moved to bar the testimony of Slottje.  The court said: “[T]he methods and principles used by Slottje in reaching his opinions certainly have a sound basis in the field of economics. . . The question of whether Slottje’s opinions are accurate in light of his use of United States figures for worklife expectancy is a question that goes to the weight, not the admissibility, of this evidence. In fact, Columbia’s own expert . . . used the same methodology as Slottje in reaching his opinions regarding Garcia’s past and future earnings. . . he too substituted data for worklife expectancy in the United States for the unavailable Mexican data.” 

In Re: Vioxx Products Liability Litigation, 2007 U.S. Dist. LEXIS 40612 (E.D. La. 2007).  The plaintiff was granted a new trial on the ground that a defense witness, Dr. Barry Rayburn, had testified that he was a board certified cardiologist when, in fact, he was not a board certified cardiologist.  

Jack v. Schlumberger Technology Corp., 2008 U.S. Dist. LEXIS 13530 (W.D.La. 2008) This is a one page memorandum responding to plaintiff’s motion for a Daubert hearing to determine whether Dr. Kenneth Boudreaux could testify based on the Camus study. The judge denied the motion as not needed because he was ruling that Boudreaux’s testimony was excluded to the extent that it relied upon the Camus study, for which Dr. Boudreaux’s testimony had been excluded fourteen years earlier in Marcel v. Placid Oil, 11 F.3d 563 (5th Cir. 1994). The Camus study allegedly measured worklives over oilfield workers. The defendant did not oppose this ruling.  

Miller v. Burlington Northern, 2001 U.S.Dist. Lexis 16650 (N.D.Tex 2001). This is a short, very well written memorandum Robert K Roach, U.S. Magistrate Judge, admitting the economic damages testimony of Jeffrey Opp, the economic expert for the plaintiff under the Daubert standard. Judge Roach said: “The knowledge and skills used by Opp in assembling and compiling the data, performing mathematical calculations, selecting the formulae (functions) to be applied to the data, charting the results, and then summarizing the end figures in mathematics do not require special college courses or post-graduate education. The methodology is not a proper subject for peer review. The bachelor’s degree in economics which Opp holds reflects the degree of mastery of basic mathematical, statistical and language skills necessary to perform the compilations, calculations and formulae selections used by Opp in his analysis and making his report. Brain surgery, it ain’t. . . . Mathematics is not junk science. Defendant’s Daubert motion is overruled. Opp can testify.” 

Owens v. Excel Management Services, Inc., 2003 U.S. Dist LEXIS 20296 (N.D.Texas 2003).  The testimony regarding back pay and front pay damages of economist J. Herbert Burkman, Ph.D., was permitted after a Daubert hearing. Dr. Burkman’s testimony was challenged on the grounds of his assumption that she would maintain her earnings if she had transitioned with fellow employees to a new department and because he had projected her earnings to age 70.  The court said regarding his age 70 projection: “Nor does Dr. Burkman’s decision to project plaintiff’s future lost wages to age 70 dictate that his testimony be stricken. Dr. Burkman based his estimate of front pay damages on plaintiff’s stated desire to work until age 70, if possible. . . . Although worklife expectancy tables estimate that a 54-year old college educated woman will likely retire in her mid-sixties, nothing in Daubert or its progeny requires an expert’s testimony to be circumscribed by statistical averages when evidence in a particular case supports a different conclusion. A jury can easily recalculate earnings if it finds that retirement at an earlier age is warranted.” 

Ostrowiecki v. Agressor Fleet, Ltd., 2008 U.S. Dist. LEXIS 59586. This is a memorandum denying a plaintiff motion in limine to preclude the defense testimony of economist Dr. Kenneth Boudreaux and a defense motion in limine to preclude the plaintiff testimony of economic expert Holly Sharp. Daubert standards were used. Judge Lance M. Africk rejected each defense and plaintiff argument by saying that vigorous cross examination was the correct method to deal with the issues being raised, not the barring of expert testimony. Sharp had projected several damages not projected by Boudreaux, one of which was loss of accumulations to an estate. Boudreaux argued that any such calculation was inherently too speculative for him to project. Sharp had provided a projection. One other key difference between the experts was that Sharp had projected a loss from the sale of the decedent’s business after the decedent’s death, while Boudreaux had not done so.

Scardina v. Maersk Line, LTD., 2002 U.S. Dist. LEXIS 13468 (E.D.LA. 2002). This legal memorandum responds to motions to limit the testimony of Dr. G. Randolph Rice, an economist, and to strike the report and testimony of Dr. Fereydoun Aghazadeh, an Industrial Engineer/Ergonomist. Both motions were granted. The Court said of Dr. Rice: “Dr. Rice, plaintiff’s expert economist, is expected to testify as to plaintiff’s economic damages, that is lost past and future income. In a report dated December 12, 2001, Dr. Rice set forth various projections using an annual wage base of approximately $30,000.00. Plaintiff’s average annual earnings in the three to five years preceding the accident were approximately $26,000. His annual earnings for the five years from 1994 through 1999 varied from a low of $15,895 to a high of $39,536.06 in 1996. On April 29, 2002, Dr. Rice produced a second report at the request of plaintiff’s counsel. This report based plaintiff’s ‘impairment of earning capacity’ on projected annual incomes of $38,481.00 and $76,962.00, which of course produced much higher economic damages. . . It is the provenance of the Court to assure that an expert’s testimony is not based on evidence that is speculative and conjectural, but is sufficiently tied to the facts of the case so that it will actually assist the trier of fact in resolving a factual dispute or to understand the evidence. Daubert, 113 S.Ct at 2795. The court concludes that Dr. Rice’s testimony as to his supplemental opinion based on projected annual incomes of $38,000 and nearly $77,000 is not sufficiently tied to the facts or supported by the evidence available to the Court at this time, and is therefore excluded, subject to the Court’s reconsideration of the issue should evidence be introduced at trial provide sufficient factual basis for such testimony.”

Stewart v. Rowan Companies, Inc., 2002 U.S. Dist. LEXIS 4135 (E.D.LA 2002). This is a memorandum allowing Shael Wolfson was permitted to testify about economic damages. The defendant had challenged the admissibility of Wolfson’s testimony on the basis that only a Ph.D. in economics is qualified to offer an opinion of plaintiff’s economic damages. The court said: “Wolfson possesses a masters of science degree in economics from Florida State University, and is currently pursuing a doctorate in economics at Louisiana State University. In addition, he has published journal articles on the topic of calculating economic damages. He has been qualified in state court cases. . .The absence of a doctorate does not compel the conclusion that he is not qualified to testify as an expert economist. . . . Indeed, defendant gives no reason why a person with a master’s degree in economics is not sufficiently schooled in economics to estimate economic losses. The Court finds Wolfson sufficiently qualified to render an opinion on plaintiff’s economic losses.” 

Taylor v. Air Logistics, Inc., 1988 U.S. Dist. Lexis 7409 (E.D. LA 1988). This memorandum and order discusses the litigative history of a decision that was originally reached on April 21, 1983 and therefore fell under Culver I and not Culver II.  The decision went through appeals to the 5th Circuit Court of Appeals and came back again with instructions that the trial court set damages for lost household services.  The plaintiff’s economist was a “Dr. Goodman,” while the economist for the defense was Kenneth Boudreaux.  It is indicated that damages were based on a wage growth rate of 5.3 percent and the discount rate was 10.25 percent, as used by both economists, who nevertheless came up with slightly different present values for lost earnings based on differences in the way taxes were calculated. Dr. Goodman came up with $294,747.02 and Dr. Boudreaux came up with $294,002.00. With respect to household services, Dr. Goodman found $34,075.48 and Dr. Boudreau found $25,002.00 The judge accepted Dr. Goodman’s figure in determining final damages. There was also a long discussion of the amount to award for pre judgement interest. 

Utsey v. Olshan Foundation Repair Company, 2007 U.S. Dist. LEXIS 85918. (E.D. La 2007). This memorandum by Judge Helen G. Berrigan denied a motion to exclude the testimony of economic expert Dr. Randolph Rice. This is a Daubert-Kumho review. Defendants had charged that Louisiana law required the testimony of a vocational expert as a foundation for an expert opinion of earnings loss by an economist.  Judge Berrigan wrote: “Although defendants’ argument may be correct regarding the amount of money the plaintiffs could recover in state court, the defendants have not provided any federal authority to support their argument to exclude Rice’s expert report under the federal rules of evidence . . . Therefore, the defendant’s concern about the factual basis of Rice’s report is best resolved by vigorous cross examination and the presentation of contrary evidence.” 

Vienne v. American Honda Motor Company, Inc., 2001 U.S. Dist. LEXIS 606 (E.D.La. 2001). 
The District Court held that Barney Hedgewood, a vocational rehabilitation expert, had sufficient training and experience to be allowed to testify about his life care plan for the plaintiff after a consideration of Daubert standards.

Vogler v. Blackmore, 2003 U.S. App. LEXIS 24020 (5th Cir. 2003). This decision affirms a trial court decision to admit the testimony of “grief expert” in “thanatology,”Dr. Phyllis Silverman, who had a bachelor’s degree in psychology and sociology, a master’s degree in social work, and a Ph.D. in public health. The court added the following: “Further, even if we were to find that the district court abused its discretion in admitting Dr. Silverman’s testimony, the admission of that testimony was harmless. The facts of this case are tragic: a mother and child are dead, leaving a grieving father to care for his wife’s children from a prior marriage while attempting to care for himself. Evidence presented by the collective Plaintiffs at trial included pictures of a happy family and the mangled, flattened remains of Mrs. Vogler’s car. It is highly unlikely that Dr. Silverman’s testimony aided the jury’s resolution of this case or in its awards to Mr. Vogler.”  There is also discussion of a 50 percent multiplier between a jury’s award of economic damages and the allowable size of an award for future mental anguish and future loss of companionship. The 5th Circuit seemed to be saying that the multiple was between economic damages that the jury could have awarded and the allowable size of the award for future mental anguish and loss of companionship. The economic expert had testified to future earnings loss between $455,000 and $700,000, with an addition of $200,000 for the value of household services. Thus, the 5th Circuit said that $900,000 could have been awarded. Submitted by Jerry Martin.

Walker v. Yellow Freight Systems, Inc., 1999 U.S.Dist. LEXIS 15012 and 1999 U.S.Dist LEXIS 16128 (E.D.La 1999). In the first order (9/23/99) defendant’s motion to prohibit testimony by economic expert Robert Johnson was denied in a Daubert hearing. Kenneth Boudreaux was the economic expert for the defense. Of major focus was Johnson’s assumption that the decedent had contributed 35 hours per week of household services based on the Peskin study, which projected 15.1 hours per week. It appears that Johnson had used the value per hour from the Peskin study. The court said: “Because the Peskin study itself is reliable, the Court assumes that any figures it provides are reliable. In his affidavit, Dr. Boudreaux is admittedly unfamiliar with the Peskin study and the Court does not give weight to his objections. The Court also discussed other questionable assumptions in Johnson’s report, but said that went to the weight of the evidence. The second order (10/19/99), interpreting Louisiana law, held that “loss of earning capacity may be factored into a loss of support calculation, since earning capacity is relevant to ‘the possibility of a decrease or increase in earnings.’ 

        FELA/Maritime

    Court of Appeals

        Basis Income and Fringe Benefits for Projecting Earnings Loss

Reed v. PST Vans, Inc., 1998 U.S. LEXIS 17928 (6th Cir. 1998). Michael Brookshire was the economic expert for the plaintiff and “had valued the decedent’s life at $1,161,339, controlled for inflation, discounted to present value, and taking into account other variables such as unemployment, life expectancy, and early retirement. . . In reaching his total pecuniary value calculation, Dr. Brookshire opined that the decedent’s lost earning capacity was $788,741 and that this amount should be reduced by $75,796 for personal maintenance costs, to the amount of $712,945. He also opined that the decedent’s military pension had a value of $31,868 ($21,000 per year), and that the replacement cost of household services that the decedent performed for his spouse was $116,526.” The jury awarded $300,000 and the plaintiff appealed.  The 6th Circuit said: “Under Tennessee law, the assessment of damages in a wrongful death suit ‘is not governed by fixed rules of mathematical precision, but the matter is left to the sound discretion of the jury.’  [Giving citations.] Defendants presented evidence that tended to discredit Dr. Brookshire’s calculations, in particular those relating to deductions for personal maintenance as defined by Tennessee law. For example, it is reasonable to think that if at the time of his death the decedent had accumulated $34,000 of credit card debt, his habits and expenditures exceeded the $8,000 per year deducted by Dr. Brookshire. Similarly, it is reasonable not to include the $116,526 that Dr. Brookshire added for the replacement cost of household services provided by the decedent when Mrs. Reed never testified to the actual extent of the decedent’s services. Likewise, the jury could reasonably find that because of his particular employer, the decedent had a chance of unemployment greater than the national average figure used by Dr. Brookshire.” The 6th Circuit upheld the trial court decision. 

            Life and Worklife Expectancies

Rogers v. Norfolk Southern Railway Company, 2005 U.S. App. LEXIS 4337 (6th Cir. 2005). The 6th Circuit said: “At trial, Rogers offered the expert testimony of an economist, Dr. Francis Rushing, who presented an analysis of the salary and benefits Rodgers would have received over the expected course of his work life had he not injured his knee. The jury apparently relied heavily on Dr. Rushing’s testimony, since its award for future lost earning capacity was identical to the estimate given by Dr. Rushing, a figure based on Rogers’s pre-injury work life expectancy of 28 years. Dr.Rushing’s estimate did not account for any future income Rogers might earn to offset his financial loss, even though Dr. Rushing testified that Rogers still possessed 10.7 years of work life expectancy despite his knee injury. In light of this testimony, Rogers’s attorney conceded during closing argument that the jury should reduce Rogers’s work life expectancy by 10.7 years and award Rogers only 61 percent of $1,159,808, the estimated amount of future earning capacity given by Dr. Rushing. Although the jury apparently ignored counsel’s request and awarded the full amount to Rogers, the award is not necessarily unsupported by the evidence or the result of a mistake. Rogers testified that as a result of his injury, he has been unable to secure employment and has been rejected by over 70 different employers, including Norfolk.”

             Treatment of Taxes

Estate of Clarks v. United States, 202 F.3d 854 (6th Cir. 2000). In this decision, the 6th Circuit interpreted Michigan law on attorneys’ fees as creating a lien on interest from an award for a personal injury, such that the recipient bore no tax liability for interest paid to the attorney as attorneys’ fees.  Clarks had died after winning the award, but before it was paid. There was no issue about taxation of the $5,600,000 award itself because it was for a personal injury and not taxable. However, the $5,707,837.55 of interest on the award in the interim was taxable and the issue related to the tax owed on the portion of that interest that was paid to attorneys. The 6th Circuit determined that the IRS should refund taxes paid by Clarks’ estate  to the estate. The decision also discusses differences between the circuits on this matter. 

        Legal Procedure

Doren v. Battle Creek Health System, 187 F.3d 595 (6th Cir. 1999). This is a decision under the Americans with Disabilities Act. The plaintiff alleged she was disabled because of a series of medical conditions. The court’s ruling was that she was not disabled under the meaning of the ADA.  The decision discusses an affidavit issued by Dr. Robert Ancell stating that the plaintiff “was not able to perform the duties (of a nurse) on the adult floor.” The court pointed out that Dr. Ancell’s affidavit did not offer “specific facts showing that there is a genuine issue for trail.”  Suggested by Penelope Caragonne. 

Equal Opportunity Employment Commission v. Watkins Motor Lines, Inc., 2006 U.S. App. LEXIS 23177 (2006). The 6th Circuit ruled that morbid obesity which is not related to any physiological cause is not an "impairment" under the Americans with Disabilities Act. 

L & W Supply Corporation v. Acuity, 2007 U.S. App.  LEXIS 1393 (6th Cir. 2007).  This decision reversed a lower court decision awarding all of an expert witness’ fees to the plaintiff. It covers Supreme Court decisions holding that expert witness fees can only be recovered by an opposing party on the basis defined in a statute. This decision involved two different federal statutes, the relevant statute being 28 U.S.C. § 1821. Under that statute, a witness may be paid an attendance fee of $40 per day, actual travel expenses for a witness who travels by common carrier or a travel allowance for a witness who travels by privately owned automobile, and a subsistence allowance when an overnight stay is required. The district court had awarded all fees paid to the expert. The decision required that the amounts be determined consistent with the requirements of 28 U.S.C. § 1821. Submitted by Ralph Frasca and Bill King.

Regional Airport Authority v. LFG, LLC, 460 F.3d 697; 2006 FED App. 0302P (6th Cir. 2006). The 6th Circuit reviewed minority and majority opinions of previous courts about whether Rule 26 requires a testifying expert to disclose all documents provided to the expert, regardless of attorney work product aspects of those documents. The court held with the majority of previous decisions that: “Rule 26 creates a bright-line rule mandating disclosure of all documents, including attorney opinion work product, given to testifying experts.” Suggested by Ralph Frasca.   

        Treatment of Taxes

Perkins v. American Electric Power Fuel Supply, Inc., 91 Fed. Appx. 370; 2004 U.S. App. LEXIS 398 (6th Circuit, 2004). This was a Jones Act admiralty case in which the district court awarded $2,394,887.40 for pain and suffering, based on $200 per day from the date of injury to the date of judgment, plus the present value $200 per day from the date of judgement to the end of Mr. Perkin’s life. The district court also awarded $598,721.85 for loss of enjoyment of life based on $50 per day from the date of judgement to the end of Mr. Perkin’s life. The district court also awarded $7500 for loss of household services, $48,274 for lost income through date of trial, $742,887 for lost income from the date of trial to age 60.4 and $56, 483.66 in prejudgment interest. AEP argued that the award should have been reduced to take income taxation into account. The district court refused to do so because “the only evidence of Mr. Perkins’ future tax liability was too speculative to be relied upon.” Dr. Harold Bryant, the plaintiff&rsquo