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.

       Wrongful Termination

Pollard v. E. I. Du Pont De Nemours & Company, 532 U.S. 843; 121 S. Ct. 1946 (2001). This decision of the United States Supreme Court held that front pay is not a compensatory damage in a wrongful termination case, but an equitable remedy that serves in lieu of reinstatement in the job from which an individual was wrongfully terminated. This was relevant to the size of an plaintiff’s award in that compensatory damages were subject to a statutory cap on compensatory damages. The Court defined front pay as follows: “[F]ront pay is simply money awarded for lost compensation during the period between judgment and reinstatement or in lieu of reinstatement. For instance, when an appropriate position for the plaintiff is not immediately available without displacing an incumbent employee, courts have ordered reinstatement upon the opening of such a position and have ordered front pay until reinstatement occurs.”

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.”

Elk v. United States, 2009 U.S. Claims LEXIS 102 (U.S. Ct. Claims 2009). This decision involved the sexual assault of a member of the Sioux tribe on a reservation for damages under the “bad man” clause in Article I of the Fort Laramie Treaty of April 29, 1868. Judge Francis Allegra provided extensive discussion of how he reached his conclusions about the plaintiff’s damages.  Donald Frankenfeld was the economic expert for the plaintiff. Judge Allegra disagreed with Mr. Frankenfeld’s use of U.S. Treasury securities for his calculation of the earnings loss of the plaintiff, saying: “Mr. Frankenfeld did not adequately account for risk in selecting his discount factors. He set his discount rates extraordinarily low, using safe rates associated with Federal Treasury notes of varying securitites, rather than say, for example, the rates associated with a riskier form of corporate bond. Yet, in no way does the minimal risk associated with the payment of a Treasury bond reflect the risks that Ms. Elk would: (i) remain continuously employed for a period of thirty-three years from age 24.5 through 57.5, (ii) be employed in geographical areas of the country that track the national averages for salaries; and (iii) receive annual salary increases in lock-step with the average projected growth rate for salaries. Nor do the rates Mr. Frankenfeld selected account for the fact that the income being projected here is not for a person who already has a salary history in an established career, but rather for someone who, but for the assault, likely would have embarked on such a career. In the court’s view, to reflect these and other risks in the receipt of the income stream, the discount rate employed here must be substantially higher than that associated with the safest form of public investments, albeit with the admitted effect of diminishing the present value of the income that Ms. Elk is projected to lose as the result of the assault.  While defendant did not provide an alternative to the discount rate that Mr. Frankenfeld employed, the court is not bound to accept the rate offered by plaintiff, even if unchallenged. . . Finding the situation here is more comparable to that of a Baa corporate bond and further increasing the historic rates associated with such bonds to reflect Ms. Elk’s lack of a work history in the nursing field, the court finds that the discount rate here should be twelve percent.”   

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.”

Eaton v. Hancock County, 2010 U.S. Dist. LEXIS 28817 (D. Maine 2010). This is an order of John A. Woodcock, Jr., chief federal district judge of the District of Maine upholding a granted motion in limine of a U.S. magistrate judge. The magistrate judge had granted a motion in limine to bar testimony of vocational expert Peter Mazzaro and economist Dr. Robert Strong that was based on the assumption that the plaintiff Ronald Eaton would have become a licensed master plumber with corresponding earnings. At the time of his injury, Eaton was an unlicensed plumber’s helper with limited work history. The magistrate judge had allowed testimony based on the plaintiff’s actual work history, but barred testimony based on the plaintiff becoming a licensed plumber in the future. There was testimony that Eaton had completed a twelve-month trainee program as a plumber and was supposed to start as an apprentice. Judge Woodcock said: “Even conceding Mr. Eaton’s facts, to conclude that Mr. Eaton would have become a licensed plumber still requires speculation about his successful completion of a multi-step process, involving thousands of hours of fieldwork under ongoing supervision and a passing grade on a master plumber’s written examination. . . The brief answer to these objections is that even though Mr. Eaton had taken the very first step along this difficult course, had demonstrated an interest and aptitude in plumbing, and might at some point achieved his aspiration, to assume at trial that he would have done so would be to speculate. 

      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.” 

United States v. Pearson, 2009 U.S. App. LEXIS 14555 (2nd Cir. 2009). This is a decision in the appeal of the restitution award in a child pornography case. Dr. Kenneth Reagles had projected life care costs of counseling for two female child victims of the child pornographer.  Reagles was described as: “the owner of K.W. Reagles & Associates, L.L.C., a company that provides ‘[f]orensic vocational, rehabilitation, and economic consulting services, as well as employee assistance, case management, and psychological counseling services.’ Gov’t App. at 65, 132. Reagles concluded that each victim ‘has a number of mental health issues that will require treatment and services, presently and into the future, some of the rest of her life’ as a result of her sexual assault by Pearson. He estimated the future cost to Pearson’s victims of obtaining medical care to be $2,002,732 and $921,976 for Jane Doe #1 and Jane Doe #2, respectively.” The District Court reduced those amounts to $667,577 and $307,325, respectively, arguing that although Reagles “who is a very good economist, [is] qualified to make diagnoses in the case of severe psychological impediments caused by the defendant,” the Court did not believe Reagles had the ability to determine the amount attributable to the girls’ pre-existing conditions. “The court concluded also that the victims’ future medical expenses should not be discounted to present value because restitution could not be paid presently.”  The 2nd Circuit also held that: “Where further losses are likely but the amount cannot be calculated with reasonable certainty at the time of the initial sentence, a victim may nevertheless be able to secure compensation for further losses pursuant to 18 U.S.C. § 3664(d)(5). The court remanded the decision to the District Court for further explanation of the amounts awarded by the District Court, vacating the amounts so that the District Court could change the amounts if it felt that such changes were warranted.

        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. 

Rofail v. United States, 2009 U.S. Dist. LEXIS 51540 (E.D.N.Y. 2009). This is an unpublished decision of Judge Carol Bagley Amon in a Jones Act personal injury case. Plaintiff’s damages had been calculated by economic expert Michael Soudrey, who had found $153,378 in past earnings loss damages and $605,293 in future earnings loss damages for an age 65 retirement. (Soudrey has indicated that his tables provided year to year analysis.) Judge Bagley asserted the following differences with Soudry’s calculations: First, Soudry’s calculations were based on the plaintiff working a full six months of each year and reduced expected work days to 114 days. Second, Soudry had projected losses on the basis of the salary of oilman and junior engineer rather than an oilman alone. Judge Bagley held that the plaintiff had failed to meet his burden of showing that he would have been hired as an unlicensed junior engineer with another ship for three months of another year. Third, Soudry and projected losses to age 65 and the plaintiff had argued for age 67. Judge Bagley cited previous injuries in holding that Rofail would have worked to “his statistical retirement age of 60.7” and not to age 67.  Judge Bagley did not make the specific calculation of damages herself, but ordered that counsel for plaintiff should provide a proposed Judgment making calculations based on the changes indicated by Judge Bagley within 30 days of the order, saying: “Plaintiff shall accompany the proposed Judgment with an affidavit setting forth the calculations he used to arrive at the amount of damages. In setting forth the salary of an oiler, plaintiff is directed to cite the exhibits and testimony in the record that support his position.”

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. 

McNamara v. Kmart Corporation, 2010 U.S. Dist. LEXIS 865 (D. Virg. Isl.). This opinion upheld a trial court decision not to admit the testimony of economic expert Robert Johnson and to severely limit the testimony of vocational rehabilitation expert Susan McKenzie. The Court rejected the testimony of physiatrist Dr. Gary Jett, upon whose testimony much of the testimony of McKenzie and all of the testimony of Johnson rested. The Court said: Johnson’s conclusions were premised on his understanding of McNamara’s future medical and non-medical expenses provided to him by McKenzie. Because future medical needs and costs were beyond McKenzie’s expertise and her calculation of medical expenses were derived from Dr. Jett’s unreliable chart, the basis for Johnson’s opinions were faulty. There was simply nothing for him to reduce to present value. His testimony would have been a mere reiteration of Dr. Jett’s suspect numbers.” The Court’s description of Dr. Jett’s methods and opinions was very negative.
 
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). The trial court decision was 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." Sosa v. Lago Izabal, 735 F.2d 1028 (5th Cir. 1984) as authority. The court said: “As in Sosa, we cannot determine from the trial court’s opinion whether part of the medical expense award may duplicate part of the award for intangible harms. For instance, the former award included equestrian and aquatic therapy, which the court described in terms suggesting that it was at least in part compensating for emotional harms caused by the defendant’s negligence. We therefore remand for a determination of which items were compensable medical expenses and which duplicated intangible awards.” 

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). This decision involved a Mexican national who was a seaman. “Lost earnings and future lost earning capacity” were based on Mexican pay rates, but the awards for past and future medical expenses were based on American standards based on the district court’s determination that Sosa would not receive adequate medical care in Mexico. The district court had awarded $10,000,000 for “pain and suffering, bodily injury, mental anguish and the loss of capacity for the enjoyment of life.” The district court also awarded Sosa $5,995.03 per year for rehabilitation services, which consisted of 39 items “such as a speaker telephone service, an electric toothbrush, and a beverage holder” that would increase Sosa’s personal comfort. The defendant argued that this award duplicated the portion of the award that related to pain and suffering. The 5th Circuit agreed and said: “To the extent that these rehabilitative items are not medical expenses but merely serve to alleviate physical suffering or mental anguish, they duplicate the $10,000,000 pain and suffering award. Some items, such as the therapy weights, certainly seem to be medical expenses; others, such as the electric toothbrush, more likely serve only to alleviate suffering. Thus, we remand for the district court to determine which items are compensable medical expenses and which duplicate the award for pain and suffering. The decision also discusses how to account for taxation of a future earnings award. The 5th Circuit 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 tax exempt instruments as considered in Flannery v.United States. The decision was determined under Culver I, not Culver II.

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).

Welch v. Leavey, 397 F.2d 189 (5th Cir. 1968). Welch was injured on November 24, 1961 and was determined by the Commissioner under the Longshoreman Act to have suffered a permanent partial-disability to his back. Welch had subsequently been promoted and had an increase in salary from $10,790 in 1959 to $14,927 in 1964. The Longshoreman Act 33 U.S.C. § 908(c)(21) required compensation equal to 66 2/3 percentum of the difference between his average weekly wages and his wage-earning capacity thereafter in the same employment or otherwise. Because the Deputy Commissioner had determined that Welch’s wage-earning capacity had increased rather than fallen, no permanent award was made. Welch appealed. In denying Welch’s appeal, the 5th Circuit cited section 908 (h) of the Longshoreman Act as follows: “The wage-earning capacity of an injured employee * * * shall be determined by his actual earnings if such actual earnings fairly and reasonably represent his wage-earning capacity; provided, however, that if the employee has no actual earnings or his actual earnings do not fairly and reasonably represent his wage-earning capacity, the deputy commissioner may, in the interest of justice, fix such wage earning capacity as shall be reasonable, having due regard to the nature of the injury, the degree of physical impairment, his usual employment, and other factors or circumstances in the case which may affect his capacity to earn wages in his disabled condition including the effect of disability as it may naturally extend into the future.” 

                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.” 

Taylor v. Progressive Security Ins. Co., 09-701 (La.App. 3 Cir. 04/07/10); 2101 La. App. LEXIS 506 (La. App. 2010). The Court said: “The evidence in the record demonstrates that Ms. Taylor has incurred almost $ 65,000.00 in medical expenses in a four-year period, without yet having an expensive neck surgery recommended by her physician. Ms. Taylor's future expenses (including a possibility of two costly surgeries and a multitude of additional treatments) were established with some degree of certainty. Thus, the jury did not err in awarding Ms. Taylor $180,000.00 for future medical expenses, and we will not disturb that award (italics added for emphasis).”

           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.” 

Catania v. Anco Installations, 2009 U.S. Dist. LEXIS 107337 (M.D. La. 2009). This order denied a motion to exclude the expert opinion of Shael Wolfson. Wolfson had based his calculations of the lost financial support of Barbara Catania for Michael Cantania in a wrongful death action under Louisiana law on her income, but not the family income of the Catanias. Wolfson’s calculations were based the Ruble Nelson Patton Tables, which are based on family income. The Court said: “Wolfson used a factor of 30% based on a chart of such factors published by Ruble, Patton & Nelson in the Journal of Forensic Economics, which takes into account both family size and family income (“Ruble Method”). Wolfson then multiplied that factor by $36,587, Decedent’s income in 2004, to reach a personal maintenance of $10,976, resulting in a loss of support of $25,611.  Pharmacia argues that the Ruble Method actually calls for a personal maintenance factor of 15.6% of total gross family income. Multiplying Pharmacia’s factor by the $124,219 earned by Decedent’s family in 2004 equals a personal maintenance of $19,378 and a loss of support of $17,209, roughly $8,000 less than computed by Wolfson. . . Pharmacia argues that [Wolfson] violates Rule 26 of the Federal Rules of Civil Procedure. . . Contrary to Phamacia’s assertions, Wolfson has complied with the rule. Not only did he provide a complete statement of opinions that he plans to express and the reasons for giving them, but he also cited the Ruble Method as the date that he has considered in forming his opinions. Even though his ultimate method did not strictly follow the Ruble Method, he clearly considered that method. Therefore, the Court finds that Plaintiffs have complied with Rule 26.”

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’s economic expert answered on cross examination that federal income tax was approximately 7% of Mr. Perkins’ wages and that his state withholding w as approximately 3%. Dr. Bryant also testified that the tax on retirement benefits would have been “a half of a percent, maybe a percent would be appropriate.” The 6th Circuit said: “In our view, the evidence of future taxation did not have the degree of specificity and certainty that   would have required the district court to reduce the award for lost income damages. The 6th Circuit affirmed the district court decision in all respects. 

        FELA/Maritime   

Perkins v. American Electric Power Fuel Supply, Inc., 2004 U.S. App. LEXIS 398 (6th Cir. 2004).  This is an admiralty case under the Jones Act. The trial court refused to reduce the lost income award to reflect taxation in spite of Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523 (1983) on the grounds that the only evidence of Perkins’ federal income tax liability was too speculative to be relied upon. Plaintiff’s economic expert, Harold Bryant, Ph.D. had stated under cross examination that Perkins’ federal income tax was approximately 7 percent of his wages and state income tax withholding was 3 percent and that the tax on Perkin’s retirement benefits was “certainly a half a percent, maybe a percent would be appropriate.” This decision also contains an interesting and somewhat amusing discussion of prejudgement interest.

Rachel v. Consolidated Rail Corporation, 891 F.Supp. 428 (N.D.Ohio 1995). In projecting damages, an economist must calculate loss of actual future benefits and cannot use amounts of employer and employee  Tier I and Tier II  and Medicare taxes as equivalent to lost income. This decision makes it clear that Tier I, Tier II and Medicare taxes are taxes in meaning of Liepelt.

Rischmiller v Dahl, 505 F.2d 517 (6th Cir. 1974). This decision holds that the decision of the United States Supreme Court in Moragne v. States Marine Lines, 397 U.S. 375 (1970), “created for the first time a non-statutory cause of wrongful death based on unseaworthiness.” The Rischmiller  court adopted a standard of loss to survivors and rejected loss to the estate as the standard for this new non-statutory federal cause of action. In one of  the cases at hand the nearest relative was a brother of the decedent who was not receiving financial support from the decedent. In the other paired case, suit was brought by the administrator on behalf of two brothers and four sisters, none of whom was receiving financial support from the decedent. In both cases, the 6th Circuit upheld trial court decisions not to allow pecuniary damages.

        Admission of Expert Testimony

Leap v. Malone, 1996 U.S. App. LEXIS 33965 (6th Cir. 1996). The 6th Circuit affirmed the jury decision to award Christina Leap $100,000 for lost earning capacity. Dr. Anthony Gamboa had projected her earnings loss at between $906,000 and $1.4 million. The Court noted that the former figure had been described as “extraordinarily optimistic.” One of the sources for the appeal was that “Dr. Gamboa’s testimony was ‘unimpeached [and] uncontradicted.’” The court rejected that argument, say: “Defense counsel conducted an effective cross-examination of Dr. Gamboa, exposing apparent weaknesses in his position. And the jury could reasonably have concluded that the dismal picture of Miss Leap’s future presented by Dr. Gamboa was contradicted by other evidence.”  

        Wrongful Termination

Arban v. West Publishing Corp., 345 F.3d 390 (6th Cir. 2003).  The 6th Circuit upheld the trial court decision not to award front pay because the evidence for front pay loss was based entirely on statements of the plaintiff and thus “purely speculative.” The decision cited a testimonial exchange between the trial court judge and economist William King to establish that calculations of front pay loss were based entirely on statements by the plaintiff.  

Hamlin v. Charter Township of Flint, 165 F.3d 426 (6th Cir. 1999). There is reference in this decision to the fact that if an employer paid for insurance that provided benefits after an injury, the value of that insurance can be treated as an offset. However, the thrust of the decision was to hold that the collateral source rule precluded use of disability benefits from Hamlin’s pension from being treated as an offset to earnings loss based on a holding of disability discrimination. Hamlin had suffered a heart attack, but had been able to function as an Assistant Fire Chief afterwards. A new fire chief ordered Hamlin to perform the duties of a front-line firefighter, which he was unable to do. He was then fired and began to receive disability benefits from his pension. The trial court had treated those benefits as an offset, but the 6th Circuit held that this was in error ordered that the trial court not use those benefits as an offset. Suggested by George McLaughlin.

Pollard v. E. I. Dupon de Nemours, Inc. 2005 U.S. App. LEXIS 11949; 2005 FED App. 0274P (6th Cir. 2005). “Pollard explained in considerable detail at the District Court hearing in July 2003 that she would have ‘remained [at DuPont] until I couldn’t perform my duties any longer,’ and went into detail about her 401(K) plan and her need to work to age 65. Dupont’s own expert economist, Dr. Mary Baker, conceded from the statistical chart offered by DuPont concerning retirement that one could not tell when Pollard would have retired and that there was no certainty that Pollard would not have worked to age 65. Based on the testimony before the District Court, we cannot say that its finding on this issue was clearly erroneous.” Pollard had been awarded front pay to age 65 rather than age 58 as DuPont had argued in this wrongful discharge matter.

Burden v. Evansville Materials, Inc., 636 F. Supp. 1022 (W.D.Ky 1986). In this case, Robert Ancell was the vocational expert for the plaintiff and Robert Pulsinelli was the economic expert for the plaintiff. Anthony Gamboa was the vocational expert for the defense, but the defense did not offer an economic expert. The judge provided extensive discussion of Dr. Pulsinelli’s calculations. 

E.E.O.C. v. Freemen, 2009 U.S. Dist. LEXIS 50844 (M.D. Tenn. 2009). This was an order of Judge John T. Nixon denying a motion in limine to bar the testimony of Dr. Mark Cohen of Vanderbilt University as an economic expert. The defendant argued for denial on two grounds. The first ground was that Dr. Cohen’s report was incomplete under Rule 26(a)(2)(B). The second ground was that his testimony failed to meet the standards of Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993) and progeny. The first claim was based on the fact that Cohen had not identified an article he had found on the internet describing the labor market in Rutherford County. The court pointed out that this article was made into an exhibit at Dr. Cohen’s deposition. The court went on to say: “[T]he Sixth Circuit held that, ‘Section 26(a)(2)(B) does not limit an expert’s testimony to simply reading his report. No language in the rule would suggest such a limitation. The rule contemplates that the expert will supplement, elaborate upon, explain and subject himself to cross-examination upon his report,’” taking this language from Thompson v. Doane Pet Care Co., 470 F.3d 1201, 1203 (6th Cir. 2006). The Daubert portion of the motion focused on Dr. Cohen’s use of retirement at age 67 as an upper bound for loss of earnings and, allegedly, an average work-life expectancy figure taken from Skoog and Ciecka, “The Markov (Increment Decrement) Model of Labor Force Activity: Extended Tables of Central Tendency, Variation and Probability Intervals,” Journal of Labor Economics (sic), Vol. 11, No. 1, Spring/Summer 2001. The Court described Dr. Cohen’s testimony as follows: “It was clear from Dr. Cohen’s testimony that there is a dearth of published material based on contemporary data with respect to the work life of women. Dr. Cohen testified that the article he used to identify a lower boundary was the best research available, but that it was still unsatisfactory because it was based on historical data. Accordingly, the Court finds that the Daubert factors are not helpful here. A theory about which little has been published cannot have been tested, subjected to peer review  or publication, or analyzed with respect to error rate. However, the Court notes that Dr. Cohen testified to the dearth of available research, and to the phenomenon of women working longer in today’s society, as generally accepted in the labor economics community. Moreover, the Court notes that Dr. Cohen is highly qualified to make hypotheses as to work life expectancy on the bais of his considerable experience and expertise. The record is clear that Dr. Cohen has worked in the field of labor economics for over twenty years as a scholar, professor and private consultant. In the course of his work for bodies such as the United States Sentencing Commission, he has always employed the methodology whcih he used in the current case. (Tr. 422). On that basis, given that the Daubert factors are not entirely applicable to the issue in question, the Court considers Dr. Cohen’s selection of 67 as an upper boundary for Freemen’s work life expectancy to be reliable.”  

          Life Care Plans and Reasonable Value of Medical Expense

Brown v. United States, 2007 U.S. Dist. Lexis 96694 (W.D. Tenn. 2007). The United States had retained Dr. David Sharp as its economic expert. Both sides stipulated before trial to Dr. Sharp’s values for the lost earning capacity of Melody Brown and to Dr. Sharp’s present valuation of the life care plans prepared by Dr. Robert Voogt for the plaintiff and Mr. Robert Jackson for the defendant United States. Judge McCalla’s comparison of the two life care plans was specific and therefore interesting. Since this was an FTCA case, it was tried before a judge without a jury.

Huss v. King Company, 2001 U.S. Dist. LEXIS 19293. (W.D. Mich. 2001). This is a Jones Act case involving Dr. Robert Ancell as a rehabilitation expert and Dr. William King (unrelated) as expert witnesses for the plaintiff. The injury occurred when a boat was dropped on the plaintiff while on land. The plaintiff was held 60 percent responsible for the accident because of negligence for walking under the boat while suspended. The court’s analysis that the case fit under the Jones Act is detailed and useful. The court’s conclusion that the plaintiff was malingering, intended to sue the King Company from the outset, and able to return to work is detailed and sometimes caustic. The court’s manner of indicated that it had little respect for Dr. Ancell’s opinions, pointing to the frequence with which Dr. Ancell testifies and the fact that Dr. Ancell had made no effort to help the plaintiff find alternative employment. There was no criticism of Dr. King, whose opinions depended on the conclusions of Dr. Ancell.  The court held that the plaintiff had not established any loss of past or future earning capacity.  The court held that past pain and suffering had a value of $25,000, future pain and suffering had a value of $5,000 and that there was a past loss of medical expenses of $234.73. 

      Legal Procedure

Cheese v. United States, 2007 U.S. Dist.LEXIS 36045 (E.D.Mich. 2007). The plaintiff was awarded damages in this Federal Tort Claims Act case. This memorandum extensively discusses what expenses are allowed and not allowed under the FTCA. The plaintiff’s economist was John Hanieski. The defendant argued against “expert witness fees” sought by the plaintiff for three witnesses including Hanieski. The Court held that such fees were not provided for in the FTCA other than $40 per day for each day’s attendance at the trial. The Court awarded that amount instead of $21,530 requested by the plaintiff for expert witness fees.

Neview v. D.O.C. Optics Corporation, 2009 U.S. Dist LEXIS 5918 (E.D. Mich. 2009).  From the decision: “Defendant requests that the Court exclude the testimony of Plaintiffs' proposed expert economist, Dr. Calvin Hoerneman. While Defendant suggests that his testimony is unnecessary because it addresses an uncomplicated subject, DefeDavis v. CSX Transportation, Inc., 2008 U.S. Dist. LEXIS 108204 (E.D. Tenn, 2008). CSX requested to the Court that “evidence regarding employer-paid Tier I and Tier II taxes be excluded from evidence pertaining to Plaintiff’s damages.” CSX also wanted the plaintiff to deduct “federal income taxes, social security taxes and railroad retirement board taxes from his damage request. Because Plaintiff did not enroll in CSXT’s health insurance plans, but rather enrolled in his girl-friend’s insurance plans, CSXT seeks the exclusion of health insurance premiums from Plaintiff’s request for damages. Finally, CSXT requests that Plaintiff be required to deduct the business costs and expenses that he will not incur by not working for CSXT from his request for damages.” The Court cited several federal decisions in noting that Social Security taxes should be deducted.  The court then cited a number of decisions regarding whether or not Tier I and Tier II taxes should be deducted, noting that this depends on whether or not the plaintiff was requesting any lost pension benefits. The Court granted the requests regarding taxes and business expenses other than Tier I and Tier II taxes, reserving its decision with respect to those taxes until it sees exactly what fringe benefits the plaintiff has claimed.
Davis v. CSX Transportation, Inc., 2008 U.S. Dist. LEXIS 108204 (E.D. Tenn, 2008). CSX requested to the Court that “evidence regarding employer-paid Tier I and Tier II taxes be excluded from evidence pertaining to Plaintiff’s damages.” CSX also wanted the plaintiff to deduct “federal income taxes, social security taxes and railroad retirement board taxes from his damage request. Because Plaintiff did not enroll in CSXT’s health insurance plans, but rather enrolled in his girl-friend’s insurance plans, CSXT seeks the exclusion of health insurance premiums from Plaintiff’s request for damages. Finally, CSXT requests that Plaintiff be required to deduct the business costs and expenses that he will not incur by not working for CSXT from his request for damages.” The Court cited several federal decisions in noting that Social Security taxes should be deducted.  The court then cited a number of decisions regarding whether or not Tier I and Tier II taxes should Davis v. CSX Transportation, Inc., 2008 U.S. Dist. LEXIS 108204 (E.D. Tenn, 2008). CSX requested to the Court that “evidence regarding employer-paid Tier I and Tier II taxes be excluded from evidence pertaining to Plaintiff’s damages.” CSX also wanted the plaintiff to deduct “federal income taxes, social security taxes and railroad retirement board taxes from his damage request. Because Plaintiff did not enroll in CSXT’s health insurance plans, but rather enrolled in his girl-friend’s insurance plans, CSXT seeks the exclusion of health insurance premiums from Plaintiff’s request for damages. Finally, CSXT requests that Plaintiff be required to deduct the business costs and expenses that he will not incur by not working for CSXT from his request for damages.” The Court cited several federal decisions in noting that Social Security taxes should be deducted.  The court then cited a number of decisions regarding whether or not Tier I and Tier II taxes should be deducted, noting that this depends on whether or not the plaintiff was requesting any lost pension benefits. The Court granted the requests regarding taxes and business expenses other than Tier I and Tier II taxes, reserving its decision with respect to those taxes until it sees exactly what fringe benefits the plaintiff has claimed.

      FELA/Maritime Cases

Davis v. CSX Transportation, Inc., 2008 U.S. Dist. LEXIS 108204 (E.D. Tenn, 2008). CSX requested to the Court that “evidence regarding employer-paid Tier I and Tier II taxes be excluded from evidence pertaining to Plaintiff’s damages.” CSX also wanted the plaintiff to deduct “federal income taxes, social security taxes and railroad retirement board taxes from his damage request. Because Plaintiff did not enroll in CSXT’s health insurance plans, but rather enrolled in his girl-friend’s insurance plans, CSXT seeks the exclusion of health insurance premiums from Plaintiff’s request for damages. Finally, CSXT requests that Plaintiff be required to deduct the business costs and expenses that he will not incur by not working for CSXT from his request for damages.” The Court cited several federal decisions in noting that Social Security taxes should be deducted.  The court then cited a number of decisions regarding whether or not Tier I and Tier II taxes should be deducted, noting that this depends on whether or not the plaintiff was requesting any lost pension benefits. The Court granted the requests regarding taxes and business expenses other than Tier I and Tier II taxes, reserving its decision with respect to those taxes until it sees exactly what fringe benefits the plaintiff has claimed.

Huss v. King Company, 2001 U.S. Dist. LEXIS 19293. (W.D. Mich. 2001). See under Life Care Plans.

      Hedonic Damages and Emotional Services

Hein v. Merck & Co., Inc., 868 F.Supp. 230 (M.D.Tenn. 1994).  This decision granted a motion in limine to bar hedonic damages testimony by Dr. Richard Palfin. The decision quoted Palfin’s report at length, indicating that Palfin had stated the opinion that the reasonable range for the value of an average person’s enjoyment of life was between $2,079,377 and $4,158,753, with a midpoint at $3,119,065. Since this was a personal injury and Birgit Hein was still alive, Palfin opined that the jury should chose a percentage reduction in the midpoint value of life and gave examples for reductions of 25% and 15%. Judge Wiseman used Daubert criteria to evaluate Palfin’s report of hedonic damages, saying: “First, the court must determine whether Dr. Palfin’s theories have been or can be tested. Many of the predictions or assumptions of economists in damages testimony can be validated in retrospect, if not otherwise.  For instance, predicted rates of inflation, predicted salary escalations, average life expectancies, average work life expectancies, average interest rates can all be looked at years down the line to determine if we were correct in allowing expert estimates of economic loss. Such an evaluation after time is a comforting response to the criticism that courts’ decisions to accept or exclude novel scientific evidence may be ‘behind the curve’ or may have a dampening effect on scientific development. No such retrospective validation is possible in Dr. Palfin’s thesis of the valuation of hedonic damages. Speculative assumptions remain speculation.” Judge Wiseman went on to look at the entirety of the Value of Life literature and criticisms of the use of that literature, particularly in Parker Cashdollar and Marsha Cope Huie, “Reliability and Validity of Hedonic Damage Testimony: Judicial Logic about Economic Science in Merrell Dow and Mercado, 3-DEC J. Legal Econ 57, 67 (1993). Judge Wiseman said: “Even at my somewhat advanced age, I’m not ready or willing to put a price on my continued existence. Honest answers to hypothetical questions of this kind are not possible. This methodology is subject to criticism for being based on unreliable, untrustworthy hearsay. It fails the common sense test, as well.”

Kurncz v. Honda Motor Company, Ltd., et al., 1996 U.S.Dist. Lexis 6132 (W.D.Mich.1996). A motion in limine was granted to preclude the hedonic damage testimony of Stan V. Smith.

Pomella v. Regency Coach Lines, 899 F.Supp. 335 (E.D. Mich. 1995). Cites Ayers v. Robinson in rejecting an "eyeballing" selection of a value with a range. The Pomella Court cited Ayers as saying that: "(Court would not accept choosing a midpoint value of $3.5 million as a "benchmark" measure of hedonic, or pleasure, value of life for the statistically average life, the true value of which was estimated to lie somewhere between $500,000 and $9,000,000.) As in that case, the data on which plaintiff relies 'goes to one thing' (friction on snow-covered pavement) while a jury would need information of a very different sort (the abilty to stop on I-94's uneven and potentially icy pavement)." 

     Admissibility of Expert Testimony

Birge v. Dollar General Corporation, 2006 U.S. Dist. LEXIS (W.D.TN 2006). This is a decision of a U.S. District Judge affirming the decision of a Magistrate Judge’s order to exclude the testimony of Dr. David Ciscel. The Magistrate Judge had found that Dr. Ciscel was qualified to offer expert testimony concerning lost future income, but conclude “that Dr. Ciscel’s testimony was too speculative and unreliable to be admissible at trial because it was based on insufficient information about Dexter Birge’s income, both past and future, and B’s Quick Shop’s payment of wages to the decedent. The Magistrate Judge had recited testimony from Dr. Ciscel that $50-a-day wage data provided by Robert Birge, the decedent’s father, was “useless information.” However the appeal requested that Dr. Ciscel be permitted to testify based on either $50-a-day or minimum wage. This request was denied as “untimely.” 

Ogden v. St. Mary’s Medical Center, 2007 U.S. Dist. LEXIS 41853 (E.D. Mich. 2007).  This is a order from Judge Thomas Luddington denying without prejudice a motion to strike plaintiff’s proposed economic expert, Dr. Frank Stafford of the University of Michigan. The memorandum details of the methodology used by Stafford to project losses in an employment discrimination case. Stafford had assumed an earnings basis of “about” $25,000, an assumed rate retirement age of 65, and an inflation rate of 3% which was added to his projection of annual salaries, and a 24 percent fringe benefit rate. Defendants raised a variety of objections under Daubert-Kumho, including his use of a flat 24% rate for fringe benefits, double counting involved with both salary increases and the addition of inflation at 3% and use of a retirement age of 65 instead of work-life expectancy tables. Judge Luddington said: “Although Defendants criticize the selection of certain assumed values or the selection of a particular financial information as relevant over other data, Defendants have not suggested that the fundamental approach taken by Plaintiff’s proposed expert departs from accepted practice in the field of economics. Defendants have not offered any affidavit from another economist, for example, that the proposed expert’s methodology represents a departure from accepted discipline. The proposed expert has not articulated the algorithm employed to produce his projection, but neither have Defendants identified any defect on that point.”

Ogden v. St. Mary’s Medical Center, 2007 U.S. Dist. LEXIS 69181 (E.D. Mich. 2007). This follows a memorandum from Judge Ludington on June 11, 2007 dismissing the motion of defendants to bar the economic testimony of Dr. Frank Stafford without prejudice. This allowed defendants to try to provide a foundation for their motion. They did so in the form of an affidavit from Dr. Calvin Hoerneman, a member of the “National Association of Forensic Economists” (sic), a qualification cited in this memorandum. Judge Ludington said: “Hoerneman, a professor of economics at Delta College in Michigan, attests to all of the purported defects previously argued by Defendants, such as the use of flat rates for fringe benefits and wage increases, almost without elaboration. He states that, in his professional opinion, Plaintiff’s proposed expert’s report ‘is not based upon scientifically valid reasoning and methodology and is not based on sufficient factual data that pertains to . . . Plaintiff’s actual facts, making it misleading and unreliable expert testimony’. . . He further states that the proposed expert ‘appears to be using a data set that is over 25 year sold and, to my knowledge, is not being used by forensic economists in calculating future economic wage losses for a party when actual data on a person’s work life and earning history is known. . .Beyond those statements, Hoerneman offers no further explanation of his disagreement with Plaintiff’s proposed expert.” After some discussion of Daubert and Kumho, Judge Ludington dismissed Defendant’s motion in limine, saying: “At best, Defendants have identified an individual who might offer competing economic testimony. Defendant’s sole substantiated basis for challenging Plaintiff’s proposed expert, Hoerneman’s affidavit, provides the Court little assistance in its role as gatekeeper, with an obligation to assess the reliability of scientific testimony or evidence. The terse contrary assertions of Defendants’ affiant do not, in the Court’s view, prevent the conclusion that Plaintiff’s proposed expert’s report is supported by validation appropriate to the field of economics. On that basis, the Court will deny Defendants’ motion to strike Plaintiff’s expert.” 

Pinkston v. Accretive Health, 2010 U.S. Dist LEXIS 3163 (E.D. Mich. 2010) This was an order granting summary judgment to the defendant. As a part of that order the court said: “Defendant has filed a motion in limine to exclude the expert report and testimony of Plaintiff's expert, Dr. Frank P. Stafford, from trial. Generally, Defendant contends that Dr. Stafford's testimony and report do not meet the reliability requirements of Federal Rule of Evidence 702 and Daubert, and that the report fails to conform to the requirements of Federal Rule of Civil Procedure 26(a)(2)(B). Defendants contends that Dr. Stafford is an economist who is not qualified to provide an expert opinion as a vocational expert, that his report is based on inaccurate data and makes assumptions that have no basis in fact, and that he has not provided the reasons or basis for his opinions. Plaintiff responds that Dr. Stafford's methodology is an accepted methodology among economists and that Defendant's failure to submit expert testimony challenging the methodology is fatal to Defendant's motion. Based on the fact that Defendant is entitled to summary judgment on Plaintiff's claims, this motion will be denied as moot.”

Sokol v. Akron Gen. Med. Ctr., 1997 U.S. Dist. Lexis 22078 (N.D.Ohio 1997). This decision related to the admissibility of an affidavit by David M. Eisenstadt, Ph.d., the plaintiff’s economic expert in an antitrust action.  The court cited Ohio v. Louis Trauth Dairy, 925 F.Supp. 1247 (S.D.Ohio 1996) as applying “a modified Daubert analysis to an economist’s testimony based on a statistical multiple regression analysis” and In re Aluminum Phosphide Antitrust Litigation, 893 F.Supp. 1497 (D.Ka. 1995), in which the court applied a modified Daubert analysis and held that an economist’s testimony regarding price declines attributable to a conspiracy was admissible. The court then concluded that it would review Eisenstadt’s affidavit to determine whether Eisenstadt’s testimony is based on valid economic reasoning, saying, “The court’s focus is on the principles and methodology used by Eisenstadt and not on the resulting conclusions.”

       Annuities, Periodic Payments and Reversionary Trusts

      Legal Procedure

Carter v. United States, 2003 U.S. App. LEXIS 12743 (7th Cir. 2003). This Richard Posner decision upholds the trial court decision that Maryland law applies because that is where the injury to the Illinois resident occurred. At issue was the Maryland cap on intangible damages, which substantially reduced the amount of the jury award.  This decision is a good example of the biting wit of Richard Posner. (Submitted by Gerald Martin.) 

Gregory v. Oliver, 2002 U.S. Dist. Lexis 24730 (N.D.Ill. 2002). Judge Milton Shadur granted a motion to strike the reports of two experts tendered by the plaintiff that failed to comply with Fed. R. Civ. P. 26(a). The fact that the opposition can depose the witness to discover what he or she was obligated to disclose is beside the point because the purpose of the rule is to give the recipient of the report, not the party that offered it, the option of deposition.

Johnson v. ExxonMobil Corporation, 2005 U.S. LEXIS 22384 (7th Cir. 2005). The 7th Circuit held that a plaintiff’s filing for Social Security Disability (SSDI) benefits was inconsistent with his also maintaining a claim for damages under the Americans with Disability Act (ADA) and the Age Discrimination in Employment Act (ADEA), affirming the trial court’s decision to grant summary judgement to the employer, sua sponte. 

MacGregor v.  Rutberg, 2007 U.S. App. LEXIS 4245 (7th Cir. 2007).  This is a Richard Posner ruling in which one neurosurgeon testified against another neurosurgeon in a medical malpractice suit. MacGregor sought to sue Rutberg for defamation and breach of contract during his testimony, claiming that Rutberg’s prior membership in a professional association created an implied right among members to sue each other for breach of the association’s rules. Subsequently, Rutberg was expelled from the organization, which was not an issue in the current opinion. The district court dismissed MacGregor’s claims and dismissed her case. The 7th Circuit affirmed the dismissal. Suggested by Ralph Frasca.

      Miscellaneous

Indiana Lumbermens Mutual Insurance Company v. Reinsurance Results, Inc. 2008 U.S. App. LEXIS 882 (7th Cir. 2008). This is a Richard Posner decision that ends with a quote economists may wish to use: “A note, finally, on advocacy in this court. The lawyers' oral arguments were excellent. But their briefs, although well written and professionally competent, were difficult for us judges to understand because of the density of the reinsurance jargon in them. There is nothing wrong with a specialized vocabulary--for use by specialists. Federal district and circuit judges, however, with the partial exception of the judges of the court of appeals for the Federal Circuit (which is semi-specialized), are generalists. We hear very few cases involving reinsurance, and cannot possibly achieve expertise in reinsurance practices except by the happenstance of having practiced in that area before becoming a judge, as none of us has. Lawyers should understand the judges' limited knowledge of specialized fields and choose their vocabulary accordingly. Every esoteric term used by the reinsurance industry has a counterpart in ordinary English, as we hope this opinion has demonstrated. The able lawyers who briefed and argued this case could have saved us some work and presented their positions more effectively had they done the translations from reinsurancese into everyday English themselves.” The suggestion for highlighting this passage came from David Jones.

      FELA/Maritime Cases

Howard v. S. Ill. Riverboat Casino Cruises, Inc., 2004 U.S. App. LEXIS 6919 (7th Cir. 2004). This decision interprets the Jones Act not to apply to workers on riverboat casinos that are permanently moored. The district court had ruled that even though the riverboat in question was permanently moored it was capable of navigation and that the Jones Act therefore applied. The 7th Circuit reversed that decision. Submitted by David Jones.   

O'Shea v. Riverway Towing Company, 677 F.2d 1194 (7th Cir. 1982). This decision by Judge Richard Posner may have provided the basis for the Pfeifer decision later that year. The Margaret O’Shea worker had never earned more than $3600 in a full year, but the trial court judge had held that she could have earned $7200 in the first year after her accident. Judge Posner found this reasonable based on changes in O’Shea’s life changes just prior to her injury. Judge Posner also explains his reasoning in finding O’Shea almost totally disabled. The plaintiff economist (apparently Leroy Grossman) had projected inflation (wage increases?) at six to eight percent and used a discount rate of 8.5 percent, based on Municipal bonds.

White v. Indiana Harbor Belt Railroad Co., 1998 U.S. Dist. LEXIS 8994; 1998 WL 323625  (N.D.Ill. 1998). This is a memorandum from Judge Milton Shadur requiring that a calculation of lost earnings of a railroad worker in an FELA case must be net of Tier I and Tier II taxes, based on the decision in Edwards v. Atchison, T. & S.F. Ry., 291 Ill. App. 3d 817 (1997). Suggested by James Ciecka.

     Hedonic Damages and Emotional Services

Arpin v. United States, 521 F.3d 7 69 (7th Cir. 2008). This is a Richard Posner decision holding that an award for non economic losses in a decision by a trial court judge was not adequately explained in the trial court judge’s decision. Posner pointed out that: “When a federal judge is   the trier of fact, he, unlike a jury, is required to explain the grounds of his decision. . . One cannot but sympathize with the inability of the district judge in this case to say more than he did in justification of the damages that he assessed for loss of consortium. But the figures were plucked out of the air, and that procedure cannot be squared with the duty of reasoned, articulate adjudication imposed by Rule 52(a). Posner went on to explain how that should be done: “The first step in taking a ratio approach to calculating damages for loss of consortium would be to examine the average ratio in wrongful death cases in which the award for damages was upheld on appeal. The next step would be to consider any special factors that might warrant a departure in the case at hand. Suppose the average ratio is 1:5–that in the average case, damages awarded for loss of consortium are 20 percent of the damages awarded to compensate for other losses resulting from the victim’s death. The amount might be adjusted upward or downward on the basis of the number of the decedent’s children, whether they were minors or adults, and the closeness of the relationship between the decedent and his spouse and children. . . . We suspect that such an analysis would lead to the conclusion that the award in this case was excessive.” The 7th Circuit affirmed the trial court decision on every issue but the award for lost consortium and remanded that part of the decision back to the trial court judge.

Bell v. City of Milwaukee, 746 F.2d 1205 (7th Cir. 1984). This was the decision before Sherrod v. Berry that created an argument under Section 1983 of the 1964 Civil Rights Act for recovery for the value of lost enjoyment of the life of a decedent, even in states that do not allow recovery for that category of damages in state cases. It covers cases before 1984 that had interpreted Section 1983. The importance to Sherrod v. Berry was that Illinois, like Wisconsin, has no recovery for loss of enjoyment of life in death cases. Thus, the rationale for allowing enjoyment of life damages was the precedent of Bell v. City of Milwaukee. The issue of whether Section 1983 creates a class of cases in which loss of enjoyment of life in death cases supercedes state law standards is still an unresolved matter.

Mercado v. Ahmed, 756 F. Supp. 1097 (N.D.Ill. 1991), aff'd 974 F.2d 863 (7th Cir. 1992). Hedonic damages testimony by Stan V. Smith was properly not admitted.

Sherrod v. Berry, 629 F. Supp. 159 (N.D.Ill. 1985), aff'd, 827 F.2d 195 (7th Cir. 1987), vacated, 835 F.2d 1222 (7th Cir. 1987), rev'd on other grounds, 856 F.2d 802 (7th Cir. 1988). First case in which Stan Smith was permitted to testify about hedonic damages. The trial court judge and the first appeals court judge commented favorably about Smith's testimony, but the case was ultimately reversed on other grounds.

      Admissibility of Expert Testimony

Huey v. United Parcel Service, 165 F.3d 1084 (7th Cir. 1999). This decision affirms a trial court decision not to permit the testimony of Q. R. Verdier, referred to by Judge Easterbrook in quotes as a “forensic vocational expert.” Verdier had written a letter to the plaintiff attorney, who had turned it over in discovery as the report of the expert. Easterbrook continued: “As far as this letter reveals, Verdier did nothing but talk to Huey, read documents that Huey’s counsel sent, and write a letter. Verdier does not describe the reasoning used to reach his conclusion. During an offer of proof, Verdier was clear about the limits of his inquiry and the basis of his opinion. Asked if he did more than accept Huey’s view that UPS retaliated, Verdier replied: ‘I think he’s the one that [sic] best knows what happened in the situation.’ This will not do as the work of an expert.” 

In Re Brand Name Prescription Drugs Antitrust Litigation, 186 F.3d 781 (7th Cir. 1999).  This is a classic Richard Posner decision on an appeal of the trial court decision in which the trial court judge excluded most of the testimony of Dr. Robert Lucas, a Nobel prize winning economist under a Daubert standard. Judge Posner wrote: “But what was objectionable about his evidence actually had nothing to do with Daubert, it was that the evidence mainly concerned a matter not in issue – that the manufacturers of brand name prescription drugs engage in price discrimination, showing that they have market power. Everyone knows this. The question is whether the market power owes anything to collusion. (Even if it did, we remind that to obtain damages the plaintiffs would have to separate the price effects of collusion from the price effects of the plaintiff’s lawful market power. Blue Cross & Blue Shield United of Wisconsin v. Marshfield Clinic, 152 F.3d 588, 593-94 (7th Cit. 1998). On that, Lucas had virtually nothing to say. It is irrelevant, therefore, that, as the plaintiffs point out, the district judge erred in excluding Lucas’s testimony on the grounds that he did – that Lucas had not studied the prescription drug industry in depth and had formulated his tentative opinion after working on the case for only 40 hours. His opinion that there is price discrimination in the prescription drug industry is one that an economist of Lucas’s distinction should have been able to reach in even less time. Indeed the existence of price discrimination should have been removed as an issue at trial by a stipulation of the parties. 

Large v. Mobile Tool International, Inc., 2007 U.S. Dist. LEXIS 55463 (N.D. Ind. 2007). This opinion and order of Judge William C. Lee rejected defendant’s motion for summary judgment with respect to a number of issues. One of those issues was that “Large’s claim for future wage loss fails because he has not identified a forensic economist and has not identified any witness who will present admissible testimony regarding a present value calculation of his future economic loss.” The plaintiff identified Mr. Peder Melberg, a vocational rehabilitation expert, regarding future economic loss.  The opinion identified the methods uses by Melberg, which did not include a reduction to present value. Judge Lee held that Large had presented sufficient evidence to meet his initial burden, that the defense was free to demonstrate the weakness of Melberg’s opinions, that 7th Circuit law did not require reduction of a loss claim to present value, and indicated that the defendant could challenge Melberg’s credentials in a Daubert hearing. Judge Lee added: “If the defendants desire present value calculations, the better reasoning is to require them to present such evidence.” “Them” in this context appears to refer to the defendants.

      Hedonic Damages and Emotional Services

Ayers v. Robinson, 887 F. Supp. 1049 (N.D.Ill. 1995). This decision rejected hedonic damage testimony by Stan V. Smith. It quoted extensively from Brookshire and Smith, Economic/Hedonic Damages (1990) and extensively evaluated Ted Miller’s “The Plausible Range for the Value of Life–Red Herrings among the Mackerel,” Journal of Forensic Economics, 1990, 3(3) in performing a Daubert test of the admissibility of Stan Smith’s version of hedonic damages testimony.  The Daubert analysis considered Smith’s proffered testimony on the basis of five factors: (1) benchmark, (2) adjustments, (3) pedigree, (4) empirical data and (5) underlying assumptions.  The decision pointed out that the $3.5 million “central tendency” benchmark was based on results “rang[ing] from the high several hundred thousands well into several millions.” The Court said: “In sum, neither the $3.5 million or the $2.5 million benchmark rests upon any scientific method or procedure, so that testimony regarding either one is inadmissible under the scientific knowledge prong of Rule 702.” With respect to adjustments, the Court said: “[T]he low probative value of such testimony (ill fitting data) is substantially outweighed by the danger of unfair prejudice (a false appearance of tailoring to the individual case).” With respect to “pedigree,” the Court criticized Stan Smith for claiming that the source for hedonic damages testimony was Adam Smith. The Court said: “Unfortunately for Stan Smith, the surname Smith seems to be about the only thing they have in common.” The Court went on to suggest that the “willingness to pay” methodology only goes back to Thomas Schelling. With respect to “empirical data” the Court said: “[I]t is franky bogus to massage numbers [from the Value of Life literature], as both Hedonic Damages [Brookshire and Smith] and Plausible Result [Miller] have done, to create a deceptive appearance of precision rather than the true picture of an enormous spread in ‘value,’” which the Court found fatal under Rule 702 and a basis for exclusion under Rule 403. The Court also criticized the underlying assumptions of the “willingness to pay” model. 

Birdsell v. Board of Fire and Police Commissioners of the City of Litchfield, 1990 U.S. Dist. LEXIS 14961. The court granted defendant’s motion in limine to bar the hedonic damages testimony of Stan Smith, saying: “The Court agrees with the Defendants that the testimony on hedonic damages would confuse or mislead the jury and furthermore, would not be relevant. The real basis of the Court’s opinion is that this Court is not aware of any valid legal basis or authority for extending hedonic damages from death civil rights cases to this case, where it is alleged the Plaintiff was terminated from his job without due process. Simply state evidence of such damages is not relevant. Suggested by David Jones.

Bramlette v. Hyundai Motor Company, 1992 U.S. Dist. LEXIS 13080 (N.D.Ill. 1992). Rejected hedonic damage testimony by Stan V. Smith.

Crespo v. City of Chicago, 1997 U.S. Dist. LEXIS 12820. Rejected hedonic damage testimony by Stan V. Smith.

Johnson v. Inland Steel Company, 140 F.R.D. 367 (N.D.Ill. 1992).  Interpreting both Indiana and federal standards for wrongful death damages by a two magistrate judge panel, the court said: “We find that any evidence relating to loss sustained by survivors such as ‘hedonic damages,’ going beyond pecuniary loss are appropriate matters for inclusion in this law suit. Since these matters are appropriate, expert testimony by qualified individuals would certainly be allowed into evidence. Moreover, taking into account that hedonic value of human life is difficult to measure, expert testimony becomes exceedingly important and may be of particular use to the trier of fact in this case. Sherrod v. Berry, 827 F.2d 195 (7th Cir. 1987). Accordingly Inland’s motions seeking to bar expert testimony as to damages for decedent’s loss of quality of life, and for the value of decedent’s services are, DENIED.”

Wanke v. Lynn’s Transportation Company, 836 F.Supp. 587 (N.D.Ind 1993). The court ruled that the defendant had not shown that the hurdles to preventing the hedonic damage testimony by Dr. James Bernard were insurmountable. The decision went on to say, however, that the hurdles the plaintiff had to showing that Dr. Bernard was an expert in the area of the economic value of love and affection were “unlikely” to be overcome. The court also made the memorable remark earlier:  “That Dr. Bernard is an economist does not entitle him to state an opinion on every conceivable issue of economics.”

       Admissibility of Expert Testimony

United States Equal Employment Opportunity Commission v. Rockwell International Corporation, No. 95 C 3824, Memorandum and Opinion Order issued by Judge Robert Gettleman of the U.S. District Court for the Northern District of Illinois, 8/13/99.  This memorandum rejects the vocational testimony of Michael Brethauer on the bases of absent evidence of disability.  This memorandum has no address in case reporting systems that would make it easy to acquire, but copies of this memorandum are widely circulated and commented upon.

White v. Indiana Harbor Belt Railroad Co., 1998 U.S. Dist. LEXIS 8994 (N.D.Ill.1998).  The calculations of past damages by plaintiff’s economic expert Jonathan Crane were challenged on the basis that they included an adjustment of past nominal wages to a higher figure “and that increase appears to be equivalent to an effort to collect prejudgment interest on those claimed past lost earnings. Federal District Judge Milton Shadur held that this appeared to be consistent within the evolution of Indiana’s Roper rule and denied the defense motion.

Mattenson v. Baxter Healthcare Corporation, 2004 U.S. Dist. LEXIS 10260 (N.D. Ill. 2004). This decision issued findings of fact and conclusions of law on the issue of front pay damages in an age discrimination case involving a 54 year old plaintiff. Dr. Larry DeBrock was the plaintiff’s economic expert. He calculated front pay damages to retirement at age 65 without mitigation earnings. Dr. Roger Skurski was the defendant’s economic expert. He calculated front pay damages to age 62 and also projected mitigation earnings. The decision provides rates and amounts used by both experts in calculating damages. The court stated: “A plaintiff seeking front pay must provide the court with ‘the essential data necessary to calculate a reasonably certain front pay award’. . . This information includes the amount of the proposed award, the length of time the plaintiff expects to work for the defendant, and the applicable discount rate. . .While front pay awards are often speculative, such awards cannot become unduly speculative. The longer the prospective front pay period, the more speculative damages become. . .Based on the lack of evidence before the court to reasonably calculate front pay, an award of front pay would be unduly speculative.”

Sykes v. Target Stores, 2002 U.S. Dist. LEXIS 6627 (N.D.Ill. 2002).  This is an employment discrimination case. The court said: “Sykes argues that he is entitled to discover the value of the insurance benefits he would have received had he been promoted. In support, Sykes cites an unpublished Sixth Circuit case, Tramill v. United Parcel Serv., 2001 U.S. App. LEXIS 4305, Nos. 99-6297, 996298, 2001 WL 278697, at 2 (6th Cir. Mar. 12, 2001), holding that a successful employment discrimination plaintiff ‘may recover the value of his insurance fringe benefits.’ Target argues that this information is not relevant because the correct measure of damages in the Seventh Circuit is the amount of out-of pocket expense incurred by the plaintiff to replace the coverage. The Court concludes that Target is correct. Best v. Shell Oil Co, 4. F. Supp. 2d 77 0,774 (N.D.Lll. 1998; Muchin v. Lincolnshire Bath & Tennis Club, Inc., 1991 U.S Dist. LEXIS 17950, No. 91 C 746, 1991 WL 254605 at 2 (N.D Ill. Dec. 6, 1991) (denying motion to compel discovery related to fringe benefits on ground that correct measure of damage is plaintiff’s out-of-pocket expenses).” It is not clear how this decision would apply to lost retirement benefits.

    Court of Appeals

          Basis Income and Fringe Benefits for Projecting Earnings Loss

Villa v. Burlington Northern Santa Fe Railway Company, 2005 U.S. App. LEXIS 1876 (8th Cir. 2005). Villa had two strokes subsequent to his back injury in railroad work. At issue was whether damages should be calculated only to the date of his strokes, or that Villa would have been able at a minimum to do light duty work in spite of the back injury. The 8th Circuit held that since the medical evidence was disputed on this question, this was a question for the jury. However, the 8th Circuit also said that if the evidence was undisputed that a subsequent condition unrelated to an injury would have prevented a worker from working, damages would end at that point, citing previous cases from the First and Sixth Circuits in Harris v. Illinois Central R.R. Co., 58 F.3d 1140, 1144-55 (6th Cir. 1995) and Stevens v. Bangor and Aroostook R.R. Co., 97 F.3d 594, 599 (1st Cir. 1996). Submitted by Gerald D. Martin.

           Wage Growth and Discount Rates

C.M. v. United States, 2006 U.S. Dist. LEXIS 82127 (E.D. MO 2006). This is a memorandum by Judge Steven N. Limbaugh, describing his opinion in a case involving an injured minor child. In the damages section, the life care plans of Robert Voogt and Christy L. Gibson and the economic calculations of Charles Linke for the plaintiff and Thomas Ireland for the defense were described.  Linke had prepared calculations based on a 0% and 1% net discount rates, while Ireland had used a net discount rate of 3%. Judge Limbaugh indicated that the Court found “the rationale of Dr. Ireland more persuasive.”

Harrington v. United States, 2005 U.S. Dist. LEXIS 16185 (S.D. Ia 2002). This decision provides a detailed discussion of the calculation of damages under Iowa law from Judge Robert Pratt. Judge Pratt discusses the assumptions, data considered, and calculations of Dr. Peter Matilla for the plaintiff and Dr. Newkirk for defendants, neither of whose opinions were regarded as satisfactory. The judge agreed that the discount rate used should be based on U.S. Treasury bonds, but did not agree with either expert about the maturity to be used.  Dr. Matilla relied upon a three month discount rate, while Dr. Newkirk relied upon a three year Treasury Bond. Judge Pratt decided that the rate be used is the one year Treasury rate. Judge Pratt’s discussion of how life tables should be used if life expectancy is shortened is particularly thoughtful. Revised listing.

           Worklife Expectancy

           Treatment of Taxes

Lindsey v. Commissioner of Internal Revenue, 2005 U.S. App. LEXIS 19027 (8th Cir. 2005). Paul Lindsey had received $2 million “‘in settlement of his claims for tortious interference with contracts, for personal injury including injury to Mr. Lindsey’s personal reputation and emotional distress, humiliation and embarrassment.” He did not declare the $2 million for tax purposes and the Internal Revenue Service sought back taxes and penalties. The 8th Circuit held that Linsey had not identified what percentage of the settlement damages was allocable to physical injury or physical sickness and “the record lacks any evidentiary basis for concluding a specific portion of the $2 million settlement is allocable to Lindsey’s injury or physical illness,”“opting for an all-or-nothing approach.” The 8th Circuit upheld the tax court in charging taxes on the whole amount of the award. Submitted by David Jones.

            Legal Procedure

Caldwell v. TACC Corporation, 2005 U.S. App. LEXIS 19025 (8th Cir. 2005). The plaintiffs filed for and received personal injury and wrongful death damages in a court settlement. Because plaintiffs were not “made whole,” the federal district court held that the right to subrogation by an insurance carrier did not apply, based on the Arkansas Supreme Court decision in General Insurance Co. of America v. Jaynes, 343 Ark. 143, 33 S.W.3d 161 (Ark. 2000). That decision held that the worker’s compensation carrier was not entitled to subrogation lien on the settlement proceeds because the plaintiff had not been “made whole” by the settlement amount. The 8th Circuit upheld the federal district court. Submitted by David Jones.

Williams v. National Medical Services, Inc., 2005 U.S. App. LEXIS (8th Cir. 2005).  This decision interprets Missouri law, which had previously held that a side in litigation employing an expert witness in medicine could sue that witness for malpractice based on professional inadequacy. This decision held that the same cannot be done by opposition parties to whom the expert witness owed no professional duty. Submitted by David Jones. 

           Hedonic Damages and Loss of Society

Westcott v. Crinklaw, 133 F.3d 658 (8th Cir. 1998).  The district court interpreting Nebraska law had refused to instruct the jury that Arden Westcott’s estate could be awarded hedonic damages, relying on Anderson v. Nebraska Dep’t of Social Services, 248 Neb. 651, 538 N.W.2d 732 (Neb. 1995).  Westcott argued that the application of Anderson was in error because Anderson was not a wrongful death case. The 8th Circuit held that the trial court was correct in its interpretation that Nebraska law prohibits treating loss of enjoyment of life as a separate category of nonpecuniary damages.

            Admissibility of Expert Testimony

Children’s Broadcasting Corporation v. The Walt Disney Company, 245 F.3d 1008 (8th Cir. 2001). The trial court had granted a new trial based on its own failure under a Daubert standard to have excluded the testimony of Stephen Willis, apparently an accountant. The trial court found that the testimony of Willis was based on an incomplete model and constituted nothing more than speculation based on the ipse dixit of the expert. The 8th Circuit upheld the decision of the trial court judge to grant a new trial on this basis. (Submitted by Frank Tinari.)

Concord Boat Corp. v. Brunswick, 207 F.3d 1039 (8th Cir. 2000). This was an antitrust action, but the trial court judge had admitted the testimony of Dr. Robert Hall.  The 8th Circuit Court of Appeals found that Dr. Hall's model was unreliable for several reasons. This is notable because the "Reference Guide on Estimation of Economic Losses in Damages" in the Reference Manual on Scientific Evidence, first and second editions (1994 and 2000) was written by Robert Hall and Victoria Lazear. Even this kind of credential is not sufficient to avoid not being allowed to testify under Daubert standards.

Johnson v. Serra, 521 F.2d 1289 (8th Cir. 1975). Economist Edward Foster’s projections of future inflationary increases in earnings through the year 2002 should have been inadmissible under Minnesota law according to the 8th Circuit. The court said: “His testimony on future inflationary projections through the year 2002 should . . . have been excluded as speculative and the excessive verdict obviously derived from it must be reduced or, in the alternative, a new trial granted.” The 8th Circuit cited federal cases not allowing inflationary projections to be made, as in Johnson v. Penrod Drilling Co, 510 F.2d 234 (5th Cir. 1975) (en banc).

Meterlogic, Inc. v. KLT, Inc., 2004 U.S. App. LEXIS 10149 (8th Cir. 2004). The 8th Circuit reviewed for abuse of discretion the trial court’s decision to exclude the damages testimony of Lawrence Redler. “Redler was to testify regarding the discounted present value of Meterlogic’s now-defunct business of providing remote monitoring services for business machines. He predicted financial results ten years into the future even though the parties’ contract extended only two years and allowed for termination at any time; he assumed that Meterlogic would be the sole representative of the appellees, even though the contract was a non-exclusive agreement; he assumed that the parties would have 30% market share in the remote monitoring and metering market, but admitted that he had no market research to support that estimate; he assumed 15% annual growth without any data indicating that the estimate was realistic; he admitted to having no data on how many remote monitoring and metering devices would be sold; and he admitted that he based his analysis on the so-called Metzler report, which was prepared for KLT only as an investment planning tool. . . We conclude that the district court did not abuse its discretion by excluding Redler’s testimony.”  Submitted by both David Jones and Ralph Frasca.

Peitzmeier v. Hennessy Industries, Inc., 97 F.3d 293 (8th Cir. 1996).  This 1996 decision of the 8th Circuit Court of Appeals rejected the notion that engineering principles were not novel scientific testimony and therefore not subject to the standards of Daubert v. Merrell-Dow Pharmaceutical, Inc., 509 U.S. 579.  Thus, the 8th Circuit had anticipated the conclusion reached by the United States Supreme Court in Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999).

        Wrongful Termination
        
Voeltz v. Arctic Cat, Inc., 2005 U.S. App. LEXIS 8221 (8th Cir. 2005).  This decision of the 8th Circuit discusses both back pay and front page issues under the American with Disabilities Act (ADA) and reverses a trial court decision to award actual and front pay damages except for “nominal damages on the reasonable-accommodation” verdict.

                 Basis Income and Fringe Benefits for Projecting Earnings Loss

               Legal Procedure

Crane v. Crest Tankers, Inc, 47 F.3d 292 (8th Cir. 1995). The trial court permitted a “Future Damages Calculator” produced by Lawyers & Judges Publishing Company to be taken into the jury room as an exhibit. The 8th Circuit held that this constituted reversible error, saying: “It should be noted that of the three components of the exhibit, the “present value table” section is the most troubling. Future damages, in the form of future pain and suffering and (importantly) future lost wages were at issue in the case. There are numerous ways of presenting a case involving future damages. Typically, the district court will, as here, take judicial notice of the plaintiff’s life expectancy. If the case involves an issue of future lost wages, generally an expert witness is employed who, once qualified, opines on various issues including work life expectancy, future damages, and methods for discounting the same to present value. In the present case, no expert was used by appellee regarding future economic damages. Nor was an instruction given about them, other than the fact that the jury was able to award  future damages if the facts dictated” (emphasis in the original). Suggested by John O. Ward.

Lane v. Stevens Transport, Inc., 2007 U.S. Dist. LEXIS 58964 (E.D. Ark. 2007). Lane had stipulated past medical damages of $109,173.40. Economist Dr. Ralph Scott projected loss of wages and fringe benefits of $663,469.85 and future medical expenses of from $321,868.19 to $638,498.84 for Bruce Lane. Lane settled is claim for $750,000. The Court made a determination that the amount of money necessary to make Lane whole would have been $1,750,000.  The parties were in disagreement about which state’s law applied, Arkansas or Indiana. Lane had accepted worker’s compensation benefits for which a lien on his recovery of damages existed. The question was whether the lien was enforceable given that Lane had not been made whole by the amount of the award he accepted.  The court held that Indiana law applied and that Indiana law required that the lien be reduced by the same proportion as the settlement amount was of the “make whole” amount, or 42.86%. The lien was for $183,028.79 for past worker compensation benefits, which was reduced to $78,446.13.  

Town and Country Appraisals, LLC v. Hart, 2007 Mo. App LEXIS 1617 (Ed. Mo. 2007). The plaintiff appraisal firm sued attorney Alexandra M. Hart for $3,700 in services rendered during a dissolution of marriage action. The client of the attorney did not pay for the services of the appraisal company and the attorney and her corporation argued that the attorney was not obligated to make payment. The trial court ruled in favor of the attorney. The Court of Appeals reversed the trial court and remanded for further proceedings to determine compensation to be made to the appraisal firm. The basis for the decision of the appeals court was a legal principle called quantum meruit, which means that “a plaintiff must show: (1) a benefit was conferred upon a defendant by a plaintiff, (2) appreciation by a defendant of such benefit, (3) acceptance and retention by the defendant of the benefit under circumstances in which such retention without payment is inequitable.” Suggested by Greg Aubuchon.    

Wheeler v. Carlton and Marten Transport, LTD, 2007 U.S. Dist. LEXIS 24594 (D.AR 2007 ). The jury did not hold the defendants liable for the death of Yolanda Wheeler, resulting in Defendants submitting a Bill of Costs. The Court entered a Judgment in favor of Defendants and dismissed the Complaint with prejudice. Plaintiff filed a Motion to Quash the Bill of Costs. Three items in the Bill of Costs were the bill of Robert E. Marsh, the plaintiff’s economist of $490.20, for his deposition, $298.50 for the court reporter’s attendance fee, and $91 for Federal Express mailing of the deposition transcript. Defendants stated that they had used Marsh’s deposition transcript for purposes of cross examination. The court awarded $788.70, which apparently excluded the $91 charge for Federal Express mailing. The Court accepted parts of Defendants Bill of Costs and rejected other parts. This description provided here includes only the Court’s evaluation of costs associated with Plaintiff’s economist.

White v. Cooper Tools, Inc., 2010 U.S. Dist. LEXIS 45730 (D.S.D. 2010). In this case, Dr. George Langelett was the economic expert for the plaintiff and Linda K. Graham was the life care planning expert for the plaintiff. The defense had offered no damages experts, contesting the case primarily on liability. After the testimony of a liability expert for the plaintiff, the defense petitioned for a continuance that included obtaining economic expert Dr. Kenneth Boudreaux and rehabilitation expert Mr. Larry Stokes, whose reports were filed five days after the new deadline. Plaintiff submitted a motion in limine to bar defense experts based on timeliness. The Court held that the delay was “harmless error” and did not impose sanctions on the defense or exclude the testimony of defense experts. 

            Lost Chance of Survival/Recovery

Boody v. United States, 706 F. Supp. 1458 (D. Kan 1989). This is a decision in a case involving lost chance of survival. Judge Theis said: “The most logical approach is to compensate plaintiffs for what they have lost. For example, if a person would have had a thirty percent chance to survive a heart attack with proper treatment but died because of a negligent treatment, the plaintiff recovers thirty percent of the value placed on the decedent’s life. Thus if the jury believed decedent’s life was worth two million dollars, plaintiff would recover $600,000.”

Borgren v. United States, 723 F. Supp. 581 (D. Kan. 1989). Judge Dale E. Saffels held that the appropriate approach for valuing damages when there is a lost chance of survival in a personal injury is “for the court to arrive at a compensatory figure which the court finds would justly and adequately compensate  plaintiff for her damages,” which Judge Saffels describes as the first of three methods. He identified the second method as “to provide full compensation for the loss of life, regardless of the chance of survival,” which he felt was too onerous for defendants. The third method was “to calculate damages by taking the value of the plaintiff’s life and multiplying it by the chance of survival lost,” as had been done in the case of Boody v. United States, 706 F.Supp. 1458, 1465 (D. Kan. 1989). Judge Saffels rejected the third approach as requiring a highly subjective opinion, saying: “We are unconvinced that the mathematical discounting of the subjective value of human life somehow makes that approach any more precise and more accurate than the approach we have chosen (the first approach).”

            FELA and Maritime

Walsh v. Union Pacific Railroad, 2007 U.S. Dist. LEXIS 77379 (D. Neb. 2007). This is an order from Judge Thomas D. Thalken denying defendant’s motion for a new trial. The second of six grounds in the defendant’s the motion for a new trial was that “the court erred in giving jury instruction No. 20 which failed to instruct the jury to reduce any non-economic damages to present value.” The plaintiff contended that both plaintiff’s economic expert Dr. Opp and the defendant’s economic expert Dr. Pflaum had reduced only economic damages to present value. The plaintiff also argued that if the defendant believed that non-economic damages should be reduced to present value, Dr. Pflaum should have addressed that issue. The Court held that the defendant had not objected to jury instruction No. 20 at trial and therefore that the defendant could not now claim that the Court had erred. The Court also cited Chesapeake & Ohio R.  Co. v. Kelly, 241 U.S. 485, 489 (1916) as authority for not reducing non-economic damages to present value.

              Hedonic Damages and Emotional Services

Hernandez v. Flor, 2003 U.S. Dist. LEXIS 1732 (D.Minn. 2003). “Champion and Central Turf challenge Trevino’s testimony because they contend that Trevino, an economist, is not qualified to testify as to the dollar value of emotional services that Cruz provided and would have provided to his family. . . The Court notes that determining damages amounts in a wrongful death case frequently requires a valuation in dollars of the loss of relationship or companionship. . . In many respects, every attempt to calculate damages in a wrongful death suit hinges upon great speculative leaps and assumptions. The Court denies Defendants’ Motions to exclude Trevino’s testimony in its entirety and will determine at trial whether his testimony lacks the requisite foundation or is admissible. 

Sullivan v. United States Gypsum Company, 862 F. Supp. 317 (D.Kan. 1994). Rejected hedonic damage testimony by Stan V. Smith.

Walsh v. Union Pacific Railroad, 2007 U.S. Dist. LEXIS 77379 (D. Neb. 2007). This is an order from Judge Thomas D. Thalken denying defendant’s motion for a new trial. The second of six grounds in the defendant’s the motion for a new trial was that “the court erred in giving jury instruction No. 20 which failed to instruct the jury to reduce any non-economic damages to present value.” The plaintiff contended that both plaintiff’s economic expert Dr. Opp and the defendant’s economic expert Dr. Pflaum had reduced only economic damages to present value. The plaintiff also argued that if the defendant believed that non-economic damages should be reduced to present value, Dr. Pflaum should have addressed that issue. The Court held that the defendant had not objected to jury instruction No. 20 at trial and therefore that the defendant could not now claim that the Court had erred. The Court also cited Chesapeake & Ohio R.  Co. v. Kelly, 241 U.S. 485, 489 (1916) as authority for not reducing non-economic damages to present value.

             Admissibility of Expert Testimony

Hammes v. Yamaha Motor Corp. U.S.A., 2006 U.S. LEXIS 26526 (D.MN 2006). Dr. Paul Estenson was permitted to testify under Daubert-Kumho standards. The court cited the following credentials: “Estensen is a trained economist with a Ph.D. in economics from the University of Nebraska-Lincoln. He has taught college-level courses, worked in the research department of the Federal Reserve Bank of Minneapolis, and been a member of the research department of the Federal Reserve Bank of Minneapolis.” The court also said: “The methods employed by Estensen have been utilized by other economists. Furthermore, Estensen’s failure to employ a specific test, the “Worklife Estimates by Occupation” which assumes that individuals do not change careers, does not undermine the reliability of his methods. . . Estensen’s technique has been tested and employed by other expert economists; it has been subject to peer review; does not have a known rate of error; and is generally accepted in the economics community.” The Court also ruled that Estensen’s failure to incorportate such factors as the possibility of a previous injury and his use of a Monte Carlo simulation to verify the accuracy of his analysis did not disqualify him. Finally, the Court held that Estenson’s projection that value of Hammes’ household services will increase over time did not undermine the reliability of his conclusions. “This is an issue of fact that goes to the weight of the evidence, not to admissibility.”

Hernandez v. Flor, 2003 U.S. Dist. LEXIS 1732 (D. Minn 2003).  Defendants sought to exclude testimony about the valuation of emotional services by economist, Dr. Gene Trevino, based on the arguments that emotional services are not a proper topic for expert testimony and that Dr. Trevino was not qualified to testify as to the dollar value of emotional services that the decedent Cruz would have provided to his family. The District Court allowed the testimony saying that “Defendants can make their objections through cross-examination,” but indicated that it would determine at trial whether various parts of Trevino’s testimony lacks the requisite foundation or is admissible.

Kinnaman v. Ford, 2000 U.S. Dist. LEXIS 235, (E.D.Mo 2000). The court denied the admissibility of vocational expert Sherry Browing under the Daubert standard, saying: [T]here is simply no corroborating evidence of Browning's testimony and exhibits that the methodology she has employed to develop her conclusions is an acceptable methodology and has been tested and is generally accurate. There is nothing in the record to support Browning's methodology other than that she promulgated it, and that it is used by other persons in her discipline. The expert's bald assurance of validity is not sufficient to show that her methodology meets a proper standard of reliability.”

Norwest Bank v. K-Mart, 1997 U.S. Dist. LEXIS 3426 (N.D. Ind. 1997). The Judge Robert L. Miller granted defendant’s motion in limine to exclude the testimony of Dr. Robert Voogt, a life care planning expert. Judge Miller said: “Dr. Voogt’s ‘forecasts’ of Mrs. Frick’s present and future medical needs are not admissible. This leaves the other class of opinions plaintiffs wish to offer through Dr. Voogt: his cost valuation of the life plan he outlined. Cost evaluation does not require medical expertise, and Dr. Voogt plainly has the requisite experience to make his opinion relevant to the trier of fact. It does not appear, however, that those opinions are based on any evidence other than Dr. Voogt’s inadmissible opinions on the care Mrs. Frick will need.  It does not appear from the record that any health care provider will testify that Mrs. Frick will need the course of treatment upon which Dr. Voogt based his cost valuations. Dr. Voogt testified that he has not discussed the plan’s components with Mrs. Frick’s treating physicians, either before or after devising the plan. No other health care provider has recommended all of the plans components, and it does not appear that any other health care provider recommended any single component of the plan other than Mrs. Frick’s current pharmaceutical prescriptions. An opinion without foundation in the record has no probative value, and so is neither relevant with the meaning of Rules 401 and 402 nor helpful to the trier of fact within the meaning of Rule 702.”

Self v. Equilon Enterprises, LLC, 2007 U.S. Dist. LEXIS 47381 (E.D. Mo 2007).  This memorandum grants a motion to strike the reports of two damages experts of the plaintiff. The report of Richard Berliner, a petroleum marketing executive, about the scope of competition between gasoline retail outlets. The court cited Berlyn, Inc. V. The Gazette Newspapers, Inc, 214 F. Supp. 2d 530, 536 (D. Md. 2002) as holding that general business experience unrelated to antitrust economics does not render a witness qualified to offer an opinion on complicated antitrust cases such as defining relevant markets. The court said: “Applying the foregoing to the Berliner report, the undersigned finds that Berliner is not qualified and even if qualified, his opinion is not reliable, in that it is based on insufficient facts and unsound methodology for the reasons set forth. Berliner is not an economist. As noted by Defendants, the Court finds that Plaintiffs concede that Berliner is not qualified to render an opinion as to the relevant geographic market by arguing that they do not ‘rely on Mr. Berliner’s expertise for complicated issues such as defining relevant markets.’ Thus, Berliner’s expert report clearly purports to render an expert opinion defining the relevant geographic market in contradiction to Plaintiffs’ concession that he is unqualified to offer such opinions.”

    Court of Appeals

                 Basis Income and Fringe Benefits for Projecting Earnings Loss

Simeonoff v. Hiner, 249 F.3d 883 (9th Cir. 2001). This was a Jones Act decision involving an injury to the foot of Simeonoff while crab fishing. “Here, the district court made detailed factual findings to support its economic damage awards. These included assessments of the injury’s impact on Simeonoff’s ability to crab and salmon fish; ability to fish in alternative fisheries that were previously unavailable to him because of an overlap in fishing seasons with crab and salmon fishing; and ability to participate in work unrelated to fishing. The district court also assessed the economic experts’ estimations of lost past and future economic damages. At trial, Simeonoff’s economist estimated economic loss at $500,000. Hiner’s economist estimated economic loss at zero. After considering the evidence, particularly the expert economists’ testimony, the court found that neither expert ‘has presented an entirely reasonable assessment of plaintiff’s past  lost earnings and future loss of earnings.’ The court disregarded the experts’ estimations and, after noting defendant’s payments for maintenance, cure, unearned wages, and an advance payment for loss of the 1996 salmon season, found lost earnings, reduced for taxes, to lie between the experts’ estimates at $6,500 past lost wages and $130,000 in future lost wages.

               Life and Worklife Expectancies

United States v. Theodore Cienfuegos, 462 F.3d 1160 (9th Cir. App. 2006). This decision held that the district court abused its discretion by awarding only $11,629.87 in restitution to the estate of a decedent killed by the defendant under the Mandatory Victims Restitution Act of 1996 (MVRA). The decision held that lost income should be considered in a manner similar to civil wrongful death, but that restitution cannot depend on amounts received by a victim’s estate “from insurance or any other source.”  The 9th Circuit pointed out that “Any amount paid to a victim under an order of restitution shall be reduced by any amount later recovered as damages for the same loss by the victim in – (A) any Federal civil proceeding; and (B) any State civil proceeding, to the extent provided by the law of the State.” The 9th Circuit, however, went on to specify that: “Speculative losses are incompatible with the MVRA’s statutory theme because ‘[o]ne cannot bear the burden of proving the amount of a loss by a preponderance of the evidence when it is no more than possible that the loss will occur at all.’ United States v. Follet, 259 F.3d 996, 1002 (9th Cir. 2001). Suggested by Paul Bjorklund.

               Life and Worklife Expectancies

Holscher v. Olson, 2008 U.S. Dist. LEXIS (E.D.Wash.  2008). This decision denied defendant’s motion in limine under Daubert-Kumho standards to preclude the economic testimony of economic expert Robert Moss and held that retirement benefits are a collateral source that cannot be introduced to show a failure to mitigate earnings loss damages. Judge Edward Shea denied defense arguments to bar testimony by  Moss on the basis that his use of a male work-life expectancy from Bulletin 2254 for Kathleen Holscher on the basis of the facts of her career, on the basis that Moss had used a rounded 15% to estimate loss of fringe benefits, and on the basis that Moss used a 0% net discount rate for reducing future earnings loss calculations to present value, saying: “Defendants’ challenges are appropriately addressed through vigorous cross-examination and presentation of contrary evidence.”

Norris v. Arizona, 671 F.2d 330 (9th Cir.1982). Held that use of sex-segregated life expectancy tables for calculating refund annuity payments (funded solely by employees) violated Title VII of the Civil Rights Act of 1964. See also Henderson v. State of Oregon, 405 F.Supp. 1271 (Ore. 1975); Manhart v. City of Los Angeles, 553 F.2d 581; Reilly v. Robertson, 266 Ind. 29 (Ind. 1977), cert. denied, U.S. Supreme Court; Spirt v. TIAA/CREF, 691 F.2d 1954 (1982); Peters v. Wayne State University, 691 F.2d 330 (1982). Jerry Martin worked as an expert in all of these cases except Norris and his statistical analysis was used in Norris.

Sutton v. Earles, 26 F.3d 903 (9th Cir. 1994). The 9th Circuit held that loss of society awards were available to parents in the death of an adult child even if there was no record to show that they were dependent on the adult child for financial support. This decision goes counter to decisions in the 2nd, 5th, and 6th Circuits. The Court also held, however, that loss of society awards must be based on the presumable shorter life expectancies of survivors and not on the presumably longer life expectancies of decedents, as the trial court had held in this action.

                Wage Growth and Discount Rates

McCarthy v. United States, 884 F.2d 1280 (9th Cir. 1988). This is the second in a string of three cases holding that generalized wage increases could not be used in cases involving an infant. This would arguably include age-earnings data. Trevino v. United States, 804 F.2d 1512 (9th Cir. 1986) had held that: “A plaintiff may be compensated for projected future increases in his wages due to increases in his productivity if he proves that he would have been likely to receive wage increases by reason of his increased productivity. . . Because Sophia [an infant] made no such showing, the district court erred when it used the historical rise in wages as a measure of inflation for the purpose of calculating the discount rate for the lost wage portion of Sophia’s award.” In McCarthy, the 9th Cir. held: “Because Kyile has made no proof of individualized or societal factors, the district court erred if it increased the lost stream of income by the historical growth in wages.  In Scott v. United States (9th Cir. 1989), the 9th Cir held: “Because Jonathan [an infant] made no proof of individualized or societal factors, the district court erred when it used the historical increase in wages as a measure of inflation rather than the generic rate of inflation and the real rate of interest approach analysis for purpose of calculating the discount rate for Jonathan’s lost wage award.”  Suggested by Paul Taylor.

Shaw v. United States, 741 F.2d 1202 (9th Cir. 1984). See under Treatment of Taxes.

Trevino v. United States, 804 F.2d 1512 (9th Cir. 1986). Identifies the 1970's and early 1980's as an anomalous period in American Economic history that should not be used to develop future projections. Rejects total offset. Applies the standards of Pfeifer to FTCA (Federal Tort Claims Act) cases.

                Treatment of Taxes

Biehl v. Commissioner of Internal Revenue, 2003 U.S. App. LEXIS 25119 (9th Cir. 2003). The 9th Circuit upheld the decision of the United States Tax Court in Biel v. Comm’r, 118 T.C. 467, 2002 U.S. Tax Ct. LEXIS 29 (2002). This decision reaffirms the position of the 9th Circuit that federal income taxes must be paid on the entirety of an award for lost earnings due to wrongful termination without regard to amounts paid in attorney fees. Amounts paid in attorney fees may be deducted as an itemized deduction, but doing so frequently triggers the Alternative Minimum Tax, under which itemized deductions are not allowed. This imposes a sizable tax cost on an award winner. The federal circuits are divided on this issue. 

Banaitis v. Commissioner of Internal Revenue, 2003 U.S.App. LEXIS 17913. (9th Cir. 2003). The 9th Circuit, which had ruled in previous cases from Alaska and California that attorney fees could not be deducted from an award for purposes of determining tax liability of an award recipient, ruled that this could be done in Oregon based on differences between Oregon law specifying the rights of law firms to contingency fees and those in Alaska and California. The 9th Circuit goes on to consider at some length decisions by the 5th Circuit in Cotnam v. Commissioner, 263 F.2d 119 (5th Circuit 1959), which was based on Alabama law and the 6th Circuit in Estate of Clarks v. United States, 202 F.3d 854 (6th Cir. 2000), which was based on Michigan Law. The 9th Circuit saw the distinction in the strength of the law firm’s property rights in the award. Submitted by David Jones. 

DeLucca v. United States, 670 F.2d 843 (9th Cir. 1982).  A damages award should be increased by the amount necessary to offset tax obligations created by interest within the loss replacement fund.

Felder v. United States, 543 F.2d 657 (9th Cir. 1976). As a matter of law, income taxes should be deducted from an FTCA (Federal Tort Claims Act) award for lost compensation. Felder held that while substantive state law governs FTCA awards, the calculation of damages is a question of fact. “In this context the state standard is not binding upon a federal court.” The court also added, “We note in passing that most FTCA cases (28 U.S.C. § 2402), one of the main reasons for disfavoring deduction of taxes is avoided, namely, that calculation of the tax would be too confusing for the jury.” Revision suggested by Ed Foster.

Furumizo v. United States, 381 F.2d 965 (9th Cir. 1967). This case was tried under the Federal Tort Claims Act (FTCA), under which the judge made the ruling without a jury. Among other issues on appeal, Mrs. Furumizo argued that her loss should not have been calculated on the basis of after tax earnings. The 9th Circuit said: “Here the question is, what support would have been available to Mrs. Furumizo from her husband’s earnings, if he had lived. The old saw about the certainty of taxes is still good. It is reasonably certain that what would have been available would have been after-tax dollars, not pre-tax dollars. See Southern Pacific Co. v. Guthrie, 9 Cir., 1951, 186 F.2d 926. We think that, at the least, the court could take this fact into consideration, although it might not have erred if it had refused to do so.” 

Hollinger v. United States, 651 F.2d 636 (9th Cir. 1981).  A damages award should be increased by the amount necessary to offset tax obligations created by interest within the loss replacement fund.

Rivera v. Baker West, Inc., 2005 U.S. App. LEXIS 27170 (9th Cir. 2005). The plaintiff appealed tax withholding by the defendant in a wrongful dismissal action on the grounds that the settlement was intended to reimburse the plaintiff for physical injuries and therefore should be excluded from the plaintiff’s gross income. The 9th Circuit held that the district court had reasonably classified the award as for back pay and thus subject to withholding and affirmed the trial court decision. Suggested by Jerry Martin.

Shaw v. United States, 741 F.2d 1202 (9th Cir. 1984). This case evaluates the treatment of taxes in the 9th Circuit. Taxes on the interest on an award must be taken into account. However, a district court may not assume that the failure to deduct taxes on lost compensation will offset taxes on the income generated by the lump sum award unless two conditions have been met: First, the state whose law otherwise applies must also have adopted the offset approach. Second, the district court must be unable to arrive at its own reliable estimates of future inflation from the testimony of expert witnesses.

                  Annuities, Periodic Payments and Reversionary Trusts

Scott v. United States, 884 F.2d 1280 (9th Cir. 1989). “Relying on Taylor v. Burlington N. R.R. Co, 787 F.2d 1309 (9th Cir. 1986), the district court excluded all testimony by the government’s expert on present value as estimated by the costs of annuities. In that case, however, the district court’s decision to reject expert testimony was upheld because the proffered expert ‘was not qualified to testify on the appropriate inflation rate.’ Id. at 1316. Here, the government’s expert, Mr. Walsh, was qualified and testified as to the present value calculation and, contrary to the appellee’s contention, the evidence is relevant to the present value determination. Accordingly, the district court abused its discretion in excluding it.” This decision also discussed at some length how present value should have been calculated in this case. The plaintiff’s economic expert, Dr. Lowell Bassett, had used an historical wage growth rate of 6.3 percent with a market discount rate of 6.4 percent. The court pointed out that this set of rates was flawed under the ruling in Trevino v. United States, 804 F.2d 1512 (9th Cir. 1986) because the historical period used by Dr. Bassett from 1954 to1984 was unrepresentative. Revised listing.

                  Legal Procedure

Schneider v. County of San Diego, 285 F.3d 784 (9th Cir. 2002). Discusses proper procedure for calculation of prejudgement interest in the 9th Circuit. (Submitted by Jerry Martin.)

United States v. 40.50 Acres of Land, 612 F.2d 459 (9th Cir. 1980). Discusses proper procedure for calculation of prejudgement interest in the 9th Circuit. (Submitted by Jerry Martin.)

                  FELA/Maritime and Warsaw Convention Cases

Burlington Northern, Inc. v. Boxberger, 529 F.2d 284 (9th Cir. 1975). This decision explicitly accepts testimony by an economic expert as to future earnings of a decedent in a death case, the amount the decedent would have spent on personal consumption, and the amount of time the decedent would probably have engaged in nonmarket family services. The decision makes it clear that the measure of damges is pecuniary loss to beneficiaries in FELA litigation.  Taxes should be discussed, but the decision leaves it to the jury where damages should lie between pre tax and after tax earnings, given that future tax rates cannot be predicted. This decision is of  historical interest, but was superceded by Jones & Laughlin Steel  Co. v. Pfeifer, 103 S. Ct. 2541; 462 U.S. 523 (1983). 

Folkestad v. Burlington Northern, Inc., 813 F.2d 1377 (9th Cir. 1987). The issue was whether the district court properly refused to permit an offset of approximately $57,000 that had already been paid to the employee through the railroad industry’s health and welfare plan to which Burlington Northern was a party. The court drew a sharp distinction between insurance coverages whose purpose was to indemnify the employer against FELA liability and other benefits that might be provided to employees as part of compensation. The key to the distinction was whether a stipulation exists to the effect that the insurance benefits are intended to indemnify the employer. If such a stipulation exists, as was true in the Folkestad case, a setoff should have been allowed. If no such stipulation exists, the benefits should be treated as a collateral source that cannot be considered.

Howard v. Crystal Cruises, 41 F.3d 527 (9th Cir. 1994). This decision requires that spousal income be included in a  determination of personal consumption by a decedent in a wrongful death action under the Death on the High Seas Act.  The district court had applied a 30 percent personal consumption rate from the Cheit Table to reduce family income and the decedent’s household services by that percentage. The plaintiff widow argued that the 30 percent rate should not be applied to her income under the collateral source rule and that the 30 percent should not have been applied at all to the calculation of lost household services even though it was the plaintiff economist who introduced the Cheit 30 percent rate. The 9th Circuit upheld the district court’s calculation of damages as not exhibiting clear error. 

Saavedra v. Korean Air Lines, 93 F.3d 547 (9th Cir. 1996).  This relatively short decision discusses the connection between the Warsaw Convention, the Death on the High Seas Act (DOHSA), the U. S. Supreme Court decision in Zicherman v. Korean Air Lines, 116 S. St. 629, 133 L. Ed. 2d 596 (1996), and general maritime law in concluding that loss of society damages were not available, vacating a holding of the district court decision.

Sestich v. Long Beach Container Terminal, 289 F.3d 1157 (9th Cir. 2002). This decision upheld a Benefits Review Board’s decision affirming the Administrative Law Judge’s determination of disability benefits under § 908(c)(21) of the Longshore and Harbor Worker’s Compensation Act (LHWCA). The Act provides compensation payable “in respect of disability” which “results from an injury” and provides benefits equal to two thirds of the difference between an injured worker’s pre-injury “average weekly wages” and his post-injury “wage-earning capacity.” Sestich appealed on the grounds that his pre injury earning capacity was much greater than his pre injury average weekly wages.  The 9th Circuit denied the appeal.

                  Hedonic Damages and Emotional Services

Dorn v. Burlington Northern Santa Fe Railroad Company, 397 F.3d 1183; 2005 U.S. App. 1887 (9th Cir. 2005). This was an appeal of a wrongful death decision under Montana law, not an FELA action. The trial court judge had permitted Stan V. Smith to present hedonic damages testimony, but had not allowed Thomas R. Ireland to testify in opposition to the validity of hedonic damages testimony. As one a number of errors that resulted in a reversal of the trial court decision, the 9th Circuit held that it was in error for the trial court not to have admitted Ireland’s testimony. The 9th Circuit evaluated Montana’s position on hedonic damages and the admissibility of expert testimony on hedonic damages as ambiguous and therefore did not hold that the admission of Smith’s hedonic damages testimony was reversible error. It did, however, express concerns about the validity of that testimony. 

Sutton v. Earles, 26 F.3d 903 (9th Cir. 1994). The 9th Circuit held that loss of society awards were available to parents in the death of an adult child even if there was no record to show that they were dependent on the adult child for financial support. This decision goes counter to decisions in the 2nd, 5th, and 6th Circuits. The Court also held, however, that loss of society awards must be based on the presumable shorter life expectancies of survivors and not on the presumably longer life expectancies of decedents, as the trial court had held in this action.

                  Admissibility of Expert Testimony

Cooper v. Travelers, 113 Fed. Appx. 198, 2004 U.S. App. LEXIS 21324 (9th Cir. 2004). Robert Johnson’s testimony in breach of implied covenant case was properly excluded by the district court under Rule 702. “Johnson himself testified during voir dire that in his normal professional practice he would verify client-provided data before relying on it to reach a conclusion. Yet, Johnson, who intended to base his opinion solely on data provided by Cooper, failed to follow this procedure. Because Johnson’s testimony was not based on the type of data on which experts in economics would reasonably rely, and Johnson admitted as much during voir dire, the district court did not abuse its discretion when it excluded the testimony.”

Daubert v. Merrell Dow Pharmaceuticals, Inc, 43 F.3d 1311 (9th Cir. 1995)(Daubert II). This is the decision following remand from the United States Supreme Court back to the 9th Circuit Court of Appeals. It emphasizes the value of demonstration that theories underlying testimony are used for purposes other than litigation and lays out a more complete list of Daubert standards.

Trevino v. Gates, 99 F.3d 911 (9th Cir. 1996), an unnamed economist projected the lost earnings of decedent Juan Bahena on the basis of an assumption that Bahena was employed as a full time mechanic when he was killed. The plaintiff was Behena’s infant child, whose last name was Trevino and with whose mother Bahena lived.  The court said: “The only foundation laid for this assumption was testimony that (1) Bahena left in the morning and returned in the evening; (2) he gave Trevino’s mother money at fairly regular intervals; and (3) he was observed on a few occasions working on cars.” The economic expert’s testimony was not admitted.

            Basis Income and Fringe Benefits for Projecting Earnings Loss

Harris v. San Jose Mercury News, Inc., 2006 U.S. Dist. LEXIS 32176 (N.D.CA 2006). The defendant hired a number of experts, including a statistician and an economist, in a copyright infringement case involving a plaintiff photographer who had very limited financial resources. The Court held that the defendant must bear the costs of depositions of the statistician and the economist “if they are kept short” to serve “the integrity of the truth seeking process.”

              Annuities, Periodic Payments and Reversionary Trusts

Peterson v. United States, 469 F. Supp. 2d 857 (D. Hawaii 2007). The Court denied a motion from the United States to place the portion of an award for life care into a reversionary trust. The Court argued that the two sides had agreed to an award for a reduced life expectancy of 27 years such that the award would run out after 27 years even if the plaintiff survived past that age. Unlike an annuity, which shifts the burden of more than expected longevity to the defendant or to an annuity company, a reversionary trust would give the government a benefit from a shortened life expectancy, but would not hold the government responsible for years of life beyond the 27 year life expectancy.

             Legal Procedure 

Gray v. United States, 2007 U.S.  Dist LEXIS 17937 (S.D.CA 2007).  This is an order from Judge Napoleon Jones denying motions in limine to preclude the testimony of defendant’s economist Laura Fuchs Dolan, plaintiff’s vocational expert Carol Hyland, and plaintiff’s economic expert Robert Johnson. Plaintiff’s motion was based on Dolan’s report was not simply a rebuttal report within the meaning of Federal Rule of Civil Procedure 26(a)(2)(C), but introduced new evidence after the joint disclosure date. The rule allows rebuttal reports within 30 days after both sides mutually disclose expert reports. Although Dolan’s report did not specifically mention Johnson’s report, the Court held that its subject matter contradicted and rebutted information in Johnson’s report and was therefore valid. The defendant charged that Hyland had not expressed any vocational opinions of her own but merely summarized the opinions of other people. The challenge to Johnson’s opinions was based on the fact that his opinion directly relied upon Hyland’s report and that if that report was not admitted there was no foundation for Johnson’s opinion. The Court determined that Hyland had expressed opinions of her own based on her own efforts and that her testimony was therefore admissible, also making Johnson’s testimony admissible.

Lake Union Drydock Company v. United States, 2007 U.S. Dist. LEXIS 65386 (W.D.Wash. 2007). This is a memorandum in response to a Daubert motion in limine challenging the admission of Alan Nierenberg on the basis that Nierenberg is not an economist or a certified public accountant and that the formula he used to calculate plaintiff’s damages lacks an adequate foundation. The Court denied the motion to exclude Nierenberg’s testimony (and the testimony of two other experts) saying: “[T]his case is being tried to the Court, and as numerous courts have observed, ‘the Daubert gatekeeping obligation is less pressing in connection with a bench trial’ where ‘the gatekeeper and trier of fact [are] one and the same.’” The memorandum cites three prior decisions that have reached that conclusion.

Mannick v. Kaiser Foundation Health Plan, Inc., 2006 U.S. Dist. LEXIS 38430 (N.D. CA, 2006).  An objection to the testimony of Robert Johnson, Plaintiff’s economic expert, was sustained to the extent that Johnson’s opinions went to the issue of whether the removal of a physical barrier (to a disabled person) was “readily achievable” by the defendant. The court said: “Testimony as to ultimate issues is not permitted when it consists of legal conclusions or opinions.”

                  FELA/Maritime Cases

Sharian v. United States, 2002 AMC 2089 (N.D.Cal. 2002). This maritime decision held that it is proper to deduct Social Security and Medicare taxes from a calculation of lost earnings. It also held that a 0% net discount rate used by Dr. Thaddeus Whalen was improper and substituted a net discount rate of 1.5 % used by Jerry Udinsky for the 0% used by Whalen. 

                  Warsaw Convention

             Admissibility of Expert Testimony

    Court of Appeals

        Annuities, Periodic Payments and Reversionary Trusts

Deasy v. United States, 99 F.3d 354 (10th Cir. 1996). The trial court awarded plaintiff $3,993,971, to be placed in a reversionary trust to provide for his future medical expenses outside the VA Hospital system, with any balance at the plaintiff’s death reverting to the United States. The United States appealed the amount and the courts award of free lifetime medical and psychiatric care. The 10th Circuit affirmed the trial court decision.

Hill v. United States, 81 F.3d 118 (10th Cir. 1996). The United States challenged an award of $1,017,500 to the parents of Tasha Hill, a minor child, for services they had provided to Tasha during years in which they were unable to afford professional medical care on the basis that the parents did not have the skills to provide care of that value. The 10th Circuit affirmed the trial court award to the parents. The United States also argued that the entire award to Tasha herself for lost earnings and future care should be put into a reversionary trust, to be returned to the United States if Tasha should die before her normal life expectancy. The 10th Circuit allowed the award for life care to be put into a reversionary trust, but required that Tasha’s lost future earnings be awarded separately. (Revised description after submission by Boyd Fjeldsted.)

Hull v. United States, 971 F.2d 1499 (10th Cir. 1992).  The decision discusses a reversionary trust set up to provide for the care of a handicapped child. The 10th Circuit remanded this case to the trial court because there was no discounting to present value and specifically rejected an argument that total offset could by used as a 0% net discount rate. This case came back to the 10th Circuit in 1995 in Hull v. United States, 53 F.3d 1125 (10th Cir. 1995). After three years, the parents of the handicapped child tried to challenge the reversionary trust arrangement, which was supported by the guardian ad litem.  The court ruled that the parents lacked legal standing to assert this claim and dismissed the appeal. 

           Legal Procedure

Pace v. Swerdlow, M.D., 2008 U.S. App. LEXIS 4631 (10th Cir, 2008). In this case, the plaintiff's expert had issued an affidavit based on his review of medical evidence providing support for the plaintiff's claim of medical malpractice. When confronted with the deposition transcript of the defendant doctor just prior to trial, however, it appears that the plaintiff's doctor decided he was in over his head and recanted his affidavit, causing the judge to grant summary judgment to the defendant doctor. Plaintiff attorneys then sued the recanting expert witness for damages. The federal district court issued summary judgment in favor of the expert witness now acting as defendant. The 10th circuit reversed the district court and remanded the case for further decision. A  parallel situation might be that a forensic economist discovered an error in his calculations on the eve of trial that changed his professional opinion from an opinion of significant damages to an opinion that there were no damages, thus rendering the plaintiff’s case irrelevant. Suggested by Ralph Frasca.

           Collateral Source Rule

Green v. Denver & Rio Grande Western Railroad Company, 59 F.3d 1029 (10th Cir. 1995).  The trial court judge had allowed evidence of Railroad Retirement Board disability payments as an offset to lost earnings of a railroad worker. The 10th Circuit, citing the United States Supreme Court in Eichel v. New York Central R.R., 375 U.S.253 (1963), reversed the trial court decision, indicating that the collateral source rule prevented RRB disability payments from being mentioned. The Court offered an extended justification for the collateral source rule and specified circumstances when it does not apply: “The collateral source rule allows a plaintiff to seek full recovery from a tortfeasor even though an independent source has compensated the plaintiff in full or in part for the loss. The rationale for the rule is at least two-fold: First, public policy favors giving the plaintiff a double recovery rather than allowing a wrongdoer to enjoy reduced liability simply because the plaintiff received compensation from an independent source. (Citation omitted). Second, by assuring a plaintiff’s payments from a collateral source will not be reduced by a subsequent judgment, the rule encourages the maintenance of insurance. Quinones v. Pennsylvania Gen. Ins. Co., 804 F.2d 1167, 1171 (10th Cir. 1986). The collateral source rule generally does not apply ‘when the collateral source is somehow identified with the tortfeasor . . in a suit against the tortfeasor.’ Id. at   1171. Under those circumstances the additional compensation will be used to offset tortfeasor liability because ‘it is as if the tortfeasor himself paid.’ Id. at 1172.”   Revised listing suggested by George McLaughlin.
 
Whatley v. Skaggs Companies, Inc. 707 F.2d 1129 ( 10th Cir. 1983). This was an employment discrimination case. After being discharged, the plaintiff had requested other employment, which the plaintiff subsequently left two years later. The trial court found that “under these circumstances, Whatley’s tenure in the Skaggs warehouse had the same legal effect as if he had permanently left Skagg’s employ on September 17, 1971, and had found employment elsewhere on the same day. Therefore, it was within the court’s discretion to award plaintiff back pay for the period subsequent to June 1973. Plaintiff was injured after being terminated. The Court held that the trial court had not erred in awarding back pay during the period when the plaintiff was disabled an unable to work based on the fact that the plaintiff would not have been disabled if his employment had not been terminated. However, the court also held that it was in error not to deduct plaintiff’s disability benefits from defendant’s back pay liability in making this calculation. Suggested by George McLaughlin.          

          FELA/Maritime Cases

Green v. Denver & Rio Grande Western Railroad Company, 59 F.3d 1029 (10th Cir. 1995).  The trial court judge had allowed evidence of Railroad Retirement Board disability payments as an offset to lost earnings of a railroad worker. The 10th Circuit, citing the United States Supreme Court in Eichel v. New York Central R.R., 375 U.S.253 (1963), reversed the trial court decision, indicating that the collateral source rule prevented RRB disability payments from being mentioned. The Court offered an extended justification for the collateral source rule and specified circumstances when it does not apply: “The collateral source rule allows a plaintiff to seek full recovery from a tortfeasor even though an independent source has compensated the plaintiff in full or in part for the loss. The rationale for the rule is at least two-fold: First, public policy favors giving the plaintiff a double recovery rather than allowing a wrongdoer to enjoy reduced liability simply because the plaintiff received compensation from an independent source. (Citation omitted). Second, by assuring a plaintiff’s payments from a collateral source will not be reduced by a subsequent judgment, the rule encourages the maintenance of insurance. Quinones v. Pennsylvania Gen. Ins. Co., 804 F.2d 1167, 1171 (10th Cir. 1986). The collateral source rule generally does not apply ‘when the collateral source is somehow identified with the tortfeasor . . in a suit against the tortfeasor.’ Id. at   1171. Under those circumstances the additional compensation will be used to offset tortfeasor liability because ‘it is as if the tortfeasor himself paid.’ Id. at 1172.”   Revised listing suggested by George McLaughlin.

        Admission of Expert Testimony

        Hedonic Damages and Emotional Services

Baron v. Sayre Memorial Hospital, 2000 U.S. App. LEXIS 17731 (10th Cir. 2000).  The 10th Circuit Court of Appeals quoted the trial court decision: "It takes a 'discerning mind . . . to make a strict differentiation between hedonic damages and the loss of pleasure of life as a pain and suffering -- mental pain and suffering component, but certainly damages are contemplated in law for the latter.'" This did not involve the admissibility of an expert witness to testify about hedonic damages. 

City of Hobbs v. Hartford Fire Insurance Company, 162 F.3d 576 (10th Cir. 1998). References an hedonic damages report by Brian McDonald being called "bullshit" by defense counsel. The issues, however related to whether an insurance company had bargained in good faith.

Smith v. Ingersoll-Rand, 214 F.3d 1235 (2000). The 10th Circuit described the trial court decision in detail in affirming the trial court decision to allow Stan V. Smith to explain the concept of hedonic damages, but without providing specific calculations for the plaintiff. The 10th Circuit indicated that the trial court had been in error in assuming that Daubert v. Merrell Dow Pharmaceutical, Inc., 509 U.S. 579 (1993) did not apply to Smith’s testimony, but that this was not reversable error because Smith had not provided specific numbers in explaining the conceptual meaning of hedonic damages. The 10th Circuit said: “The concept of hedonic damages is premised on what we take to be the rather noncontroversial assumption that the value of an individual’s life exceeds the sum of that individual’s economic productivity. In other words, one’s life is worth more than what one is compensated for one’s work. The assumption that life is worth more than the sum of economic productivity leads to the equally noncontroversial conclusion that compensatory awards based solely on lost earnings will under-compensate tort victims. The theory of hedonic damages becomes highly controversial when one attempts to monetize that portion of the value of life which is not captured by measures of economic productivity. Attempts to quantify the value of human life have met considerable criticism in the literature of economics as well as in the federal court system. Troubled by the disparity of results in published value-of-life studies and skeptical of their underlying methodology, the federal courts which have considered expert testimony on hedonic damages in wake of Daubert have unanimously held quantifications of such damages inadmissible. . . Here, Stan Smith only testified to the definition of loss of enjoyment of life, which he described as ‘an estimate of the value of a person’s being for enjoyment of life as opposed to the value of a person’s doing or their economic productive capacity, whether it’s in the marketplace, in the business, or in the household as a service.’ . . As the district court correctly noted, New Mexico state law permits both recover of hedonic damages and allows ‘an economist to testify regarding his or her opinion concerning the economic value of a plaintiff’s loss of enjoyment of life. . . The district court also made an appropriate decision regarding reliability, excluding the quantification which has troubled both courts and academics, but allowing an explanation adequate to insure the jury did not ignore a component of damages allowable under state law.”  

         Wrongful Termination

Reed v. Mineta, 2006 U.S. App. LEXIS 4383 (10th Cir. 2006). The 10th Circuit rejected the trial court's method of determining prejudgment interest on back pay in a wrongful termination case. The trial court judge had awarded Colorado's statutory 9% interest on the entire amount of Donald Reed's back pay award from the date of his termination. The FAA did not dispute the Colorado statutory interest rate, but held that prejudgment interest must be calculated from the date the earnings would have been paid, not from the date of the termination.

Whatley v. Skaggs Companies, Inc. 707 F.2d 1129 ( 10th Cir. 1983). This was an employment discrimination case. After being discharged, the plaintiff had requested other employment, which the plaintiff subsequently left two years later. The trial court found that “under these circumstances, Whatley’s tenure in the Skaggs warehouse had the same legal effect as if he had permanently left Skagg’s employ on September 17, 1971, and had found employment elsewhere on the same day. Therefore, it was within the court’s discretion to award plaintiff back pay for the period subsequent to June 1973. Plaintiff was injured after being terminated. The Court held that the trial court had not erred in awarding back pay during the period when the plaintiff was disabled an unable to work based on the fact that the plaintiff would not have been disabled if his employment had not been terminated. However, the court also held that it was in error not to deduct plaintiff’s disability benefits from defendant’s back pay liability in making this calculation. Suggested by George McLaughlin.

     Basis Income and Fringe Benefits for Projecting Earnings Loss

Griffith v. Mt. Carmel Medical Center, 842 F.Supp. 1359 (D.Kan. 1994). This district court decision interpreted Kansas law regarding pecuniary damages in terms of Wentling v. Medical Anesthesia Services, P.A., 237 Kan 503 (1985) and Cerretti v. Flint Hills Rural Electrical Co-op Ass’n, 251 Kan. 347 (1992). These decisions allow loss of guidance and moral training of a father to be treated as a pecuniary damage. This decision is also of interest because of the way in which the testimony of the plaintiff’s economist, Dr. John Morris, was used to reduce the level of damages.  The court referred to Dr. Morris’ testimony that the total loss of financial support resulting from the death of Jimmy Griffin as “quite credible.” The jury, however, awarded $1,350,00 for lost support and the court reduced damages to the $800,000 testified to by Dr. Morris. How credible his testimony was, however, may be questioned by forensic economists. Jimmy Griffith’s highest earnings in the four years prior to his death, including unemployment compensation, is cited as $9,034. Dr. Morris’ projection depended on the assumption that Mr. Griffin would continue in the profession of truck driver and, in four years, would be working full time and earning average wages for a truck driver. 

Hernanadez-Cortez v. Hernandez, 2003 U.S. Dist LEXIS 19780 (D. Kan. 2003). This is a memorandum by Judge J. Thomas Martin granting summary judgement to the defendant in the case with respect to one of two illegal aliens, not allowing Hernandez-Cortez to recover lost earnings based on projected earnings in the United States, but allowing Hernandez-Cortez to pursue his claims for injuries and related damages against the defendants. Dr. Gary Baker, as the plaintiff’s economist,  had prepared calculations based on a life expectancy and future earnings in the United States, while neglecting to consider plaintiff’s illegal status.

      Standards for Wrongful Death Calculations

Fanning v. Sitton Motor Lines, 2010 U.S. Dist. LEXIS ( D. Kan. 2010).  This decision granted plaintiff’s argument that the existence in the household of a grandchild who was not adopted until after the decedent’s death should be taken into account in calculating the decedent’s self consumption even though the child did not qualify as an “heir” under Kansas law. Plaintiffs argued that exclusion of testimony regarding N.F. would create an "inaccurate self-consumption rate" for the decedent and lead to a gross underestimation of the pecuniary losses to the decedent's survivors. The court said: “The plaintiffs' economic expert calculated the decedent's self-consumption rate based upon the number of individuals in the household, including N.F. Thus, while the plaintiffs state that they do not seek to make an official claim for damages on behalf of N.F., they argue that they should be permitted to reference N.F. in calculating their own damages, because her presence in the household affected the decedent's self-consumption rate, and because Ms. Fanning must now provide support for N.F. that would previously had been provided by the decedent.” The court went on to say: “[T]he plaintiffs argue that testimony regarding N.F. is necessary to properly calculate damages related to health insurance costs. The decedent provided health insurance for those within the household  and such expenses must now otherwise be taken care of. Therefore, the plaintiffs intend to include N.F. in their calculation of Ms. Fanning's own damages insofar as Ms. Fanning must now provide for her insurance expenses that previously would have been taken care of by the decedent. In sum, while the plaintiffs concede that they do not seek to assert damages claims on behalf of N.F. as an ‘heir,’ they assert that her presence in the household is relevant and affects the amount of damages suffered by Ms. Fanning.”

      Wage  Growth and Discount Rates

Palmer v. ASARCO Inc., 2007 U.S. Dist. LEXIS 59205 (N.D. Okla. 2007).  This is a memorandum and order by Judge Claire V. Eagan precluding testimony by economist Thomas H. Mayor of the University of Houston that was based on a “negative” discount rate of 1 %. Dr. Mayor had provided one calculation at a “discount rate of 1 %” and one calculation at a “negative” (more than offset) “discount rate” of 1%. The memorandum reviewed other court cases that spoke to this issue. “Discount rate” is defined in the memorandum as the difference between the annual rate of salary growth and the rate of return on safe investments so it is a net discount rate and not a real discount rate. Mayor was permitted to provide testimony based on a net discount rate of 1%. 

     Life Care and Cost of Medical Services

Simpson v. Saks Fifth Avenue, Inc., 2008 U.S. Dist. LEXIS (N.D. OK 2008). Judge Claire V. Eagan held that medical bills that were written by Medicare are admissible to prove damages and that payments made by Medicare toward those bills are a collateral source that is not admissible. In what is presumably dicta, however, Judge Eagan suggested that evidence of Medicare payments is admissible in a suit against the United States, citing Overton v. United States, 619 F.2d 1299 (8th Cir. 1980).

      Household Services

Morgan v. Guaranty National Insurance Company, 1999 U.S. Dist. Lexis 1714 (D.Wyo. 1999). Due to injured child’s unpaid medical bills, Mrs. Morgan was forced to take a part time job. She argued that this resulted in a loss of household services at 32 hours per week for 15 months. Economist Jerome Sherman valued this loss at approximately $12,000. The U.S. District court ruled that this argument and calculation should be submitted to the jury. 

       Collateral Source

Watson v. Taylor, M.D., 2007 U.S. Dist. LEXIS 16210 (D. KS 2007). The Court rejected the plaintiff’s appeal for a new trial. One of the grounds for the appeal was a claim that the Court erred in overruling plaintiff’s objections to a line of questioning during the cross examination of economist, Kurt Krueger, Ph.D. The challenged line of questioning involved whether Dr. Krueger was making the assumption that plaintiff was actually paying the drug costs of the medicine she was receiving when he calculated her future costs for prescription medicine. The plaintiff claimed that these questions violated the collateral source rule and were unfairly prejudicial. The Court held that the questions were proper. The extended discussion of the collateral source rule in this decision would be of interest to many forensic economists.

       Treatment of Taxes

Sears v. The Atchison, Topeka & Santa Fe Railway Company, 749 F.2d 1451 (10th Cir. 1984). The 10th Circuit held that adding amounts (gross-up) to an award for back pay based on higher tax rates  applicable to a lump sum payment was within the discretion of the trial court. The Court said: [W]e hold that the district court did not abuse its discretion when it included a tax component in the back pay award to compensate class members for their additional tax liability as a result of receiving over seventeen years of back pay in one lump sum.”

       Legal Procedure

Beller v. United States, 2003 U.S. Dist. LEXIS 25562 (D.N.M. 2003). The plaintiff challenged the defendant’s intention to offer both David Johnson, a C.P.A., and George Rhodes, a Ph.D. economist, as economic experts. Johnson was to testify about lost earnings and household services while Rhodes was to testify about hedonic damages and aggravating circumstances. The Court refused to rule that the defendant could not use two economic experts, saying: “Any prejudice to Plaintiff, and any confusion he may be experiencing at this point, is most likely due to the fact that he has chosen not to depose either Mr. Johnson or Dr. Rhodes, rather than to Defendants’ identification of both these experts, even if they were both to testify on the same category of damages.”  

Kansas Penn Gaming v. HV Properties of Kansas, 2009 U.S. Dist.  LEXIS 103145 (D. Kan. 2009). This is a memorandum by Judge K. Gary Sebelius ruling on whether an $890 per hour billing rate charged by Hugh Stephen Wilson during his deposition was reasonable. Wilson had been retained as an expert witness to testify “about whether Penn reasonably decided not to proceed with the planned Cherokee County casino project. HV Properties had challenged whether $890 per hour was a reasonable fee. Judge Sebelius found that neither party had provided sufficient evidence of the prevailing rates of comparably available experts. Counsel for HV Properties argued that economists, CPA’s and other consultants charge between $250 and $450 per hour and that he was “aware of a sophisticated national financial and economic consulting firm with a rate not exceeding $500 per hour.” HV Properties’ expert was charging $180 per hour. Both sides acknowledged that Wilson was charging his own client the same $890 hourly rate charged to the opposing side for his deposition. Wilson was not a regular expert witness and HV Properties therefore could not find indications of what Wilson had been paid in other cases, but Penn argued that Wilson was being paid at greater than that hourly rate in his regular employment. Judge Sebelius also called attention to the fact that Wilson had not charged HV Properties any amount for deposition preparation even it was customary for experts to do so in that area. 

Spencer v. United States, 2003 U.S. Dist. LEXIS 25277 (D. Kan. 2003). This memorandum partially grant’s Plaintiff’s motion to strike the testimony of life expectancy expert Robert Shavelle, who had refused to answer how much money he made as an expert witness, but had acknowledged that 95% of his income came from litigation consulting. The court held that Shavelle had to provide this information in order to be allowed to testify in that earnings information was relevant to Shavelle’s bias and credibility as an expert witness. The judge indicated, however, that the information would be subject to a protective order.

United States v. Bedonie, 317 F.Supp. 2d 1285 (D. Ut. 2004).  This long decision explains the Mandatory Victims Restitution Act (MVRA), which applies to crimes of violence. It concludes that the MVRA requires a restitution award in homicide cases for lost income of victims and reviews issues relating to the calculation of the award. The court appointed Dr. Paul Randle, an economic expert, to prepare projections of future lost income, which are reviewed in some detail. Dr. Randle’s projections were race and sex neutral. This is a decision any economic expert would need to read before becoming involved in MVRA calculations. Suggested by Paul Bjorklund.

United States v. Redd Rock Serawop, 2004 U.S.Dist. LEXIS 2856 (D.Utah 2004). This memorandum explains the Court’s appointment under Rule 706 of expert economist Paul A Randle to prepare an expert report of lost income of two criminal victims for use of the judge in ordering restitution under the Mandatory Victims Restitution Act of 1996.

Wheeler v. FDL, Inc., 2003 U.S. Dist. LEXIS 21459 (D. Kan. 2003). This is a procedural ruling not striking the testimony of vocational expert Terry Cordray and economist John O. Ward even though their reports were not submitted by a designated deadline. The plaintiff successfully argued that since no oral discovery had taken place between the deadline and submission of the reports and that they had been submitted before the deadline for the defendant to name experts, the defendant “had suffered no legitimate prejudice or surprise by Plaintiff’s failure to disclose the reports in a timely manner.” 

     Admissibility of Expert Testimony

Alvarado v. Loftus, 2007 U.S. Dist. LEXIS 19245 (D. Co. 2007). Judge Blackburn denied defendant’s motion to exclude the testimony of economist John O. Ward. This case involved the wrongful deaths of two Mexican nationals who were visiting the United States. One was a 10 year old male child and the other was a seventy one year old female. Ward had used data from the United States for growth rates, employment data, wage data, and mortality tables. Ward used an “average adjustment factor to deflate potential losses to standards in Mexico.” Judge Blackburn questioned the adjustment factor, but held that: “[T]his conversion constitutes the application of reasonably reliable principles and methods to the facts known to Dr. Ward, and other analyses made by Dr. Ward. Under these circumstances, vigorous cross examination, presentation of contrary evidence, and careful instruction on the burden of proof are the appropriate means for challenging the principles and methods used by Dr. Ward.”

Hayes v. Wal-Mart Stores, Inc., 294 F. Supp. 2d 1249 (E.D. Okla 2003). The court granted defendant’s motion in limine to bar proposed economic expert testimony by Dr. Will Clark on punitive damages. Clark had suggested using total dividends of Wal-Mart as a measure of punitive damages that would not cause irreparable financial harm to Wal-Mart. Citing Voilas v. General Motors Corp., 73 F. Supp. 2d 452, 464 (D. N.J. 1999), the court said: “[H]is opinion amounts to little more than speculation as to what the effect on Wal-Mart will be if the jury were to calculate an award of punitive damages as equal to or less than dividends paid. Such a conclusion (so far as the present record reflects) has not been tested or subjected to peer review, has no known error rate and has not been accepted in the community of economists. There is no methodology revealed by which he reaches his conclusion. Indeed, the Court speculates that if Dr. Clark could, in fact, accurately predict the financial consequences of the suggested punitive damages, he would be making millions by conulsting for Wall Street investment banks. His curriculum vitae, however, does not record such experience

Law v. National Collegiate Athletic Association, 1998 U.S. Dist. LEXIS 6640 (D. Kan. 1998). The testimony of Dr. Robert Tollison was challenged in a motion in limine under a Daubert standard in an antitrust action. Tollison was the plaintiff’s expert and Dr. John R. Umbeck was the defendant’s economic expert. The court began by noting that Dr. Tollison’s credentials “are both undisputed and beyond dispute.” The decision is detailed in its description of Tollison’s methods and the challenges made to them by Umbeck. The court’s treatment of Umbeck is less respectful, noting various things that Umbeck did not do that would have been warranted by his criticism, saying at the end of which: “Therefore, except to the limited extent discussed below, we are left with a hodge-podge of miscellaneous attacks on so-called ‘absurd results’ and ‘faulty assumptions,’ cute rhetorical strategems, and unsubstantiated speculation about problems that may or may not infect Dr. Tollison’s work.” 

North v. Ford Motor Company, 2007 U.S. Dist. LEXIS 4869 (D.UT 2007). Ford had filed an evidence spoliation claim and five motions in limine under a Daubert standard in a wrongful death action governed by Utah law. Judge Stewart provided citations to10th  Circuit decisions regarding the interpretation of Daubert and rejected all but one of the motions in limine, dealing with each of them separately. The memorandum does not give the first names of the experts. The one motion in limine that was granted was for a “Dr. Jorgenson,” who is a psychologist. Vocational expert “Ms. Wilson” an economist “Dr. Philips” were allowed to testify. The judge wrote: “Dr. Philips is an economist. Ford sees to exclude the opinion of Dr. Phillips regarding Steven North’s future economic losses on essentially the same grounds as it challenged Ms. Wilson’s opinion–that it disregards the real facts of Steven North’s employment, education, earnings and training. Ford also seeks to exclude Dr. Philips’ opinion on Nicole North’s economic losses on the ground of lack of foundation. This Court finds that Ford’s objections are matters relating to the credibility of this witness and the weight that the jury may give to his opinions. Having reviewed the record on this Motion, the Court finds that Dr. Phillips’ opinions as to future economic losses meet the Daubert standard for admissibility.”   

Palmer v. ASARCO Inc., 2007 U.S. Dist. LEXIS 59205 (N.D. Okla. 2007).  This is a memorandum and order by Judge Claire V. Eagan precluding testimony by economist Thomas H. Mayor of the University of Houston that was based on a “negative” discount rate of 1 %. Dr. Mayor had provided one calculation at a “discount rate of 1 %” and one calculation at a “negative” (more than offset) “discount rate” of 1%. The memorandum reviewed other court cases that spoke to this issue. “Discount rate” is defined in the memorandum as the difference between the annual rate of salary growth and the rate of return on safe investments so it is a net discount rate and not a real discount rate. Mayor was permitted to provide testimony based on a net discount rate of 1%. 

Sunlight Saunas, Inc. v. Sundance Sauna, Inc., 2006 U.S. Dist. LEXIS 20318 (D.Kan.2006). This is a memorandum by U.S. District Judge Kathryn Vratil, granting a Daubert motion to preclude the economic testimony of Plaintiff’s economic expert Charles Fitch based in part on criticisms of the report of Mr. Fitch by Dr. Christopher C. Pflaum, the economic expert for the defense. Suggested by Robert Taylor. 

     Hedonic Damages and Emotional Services

Anderson v. Hale, 2002 U.S. Dist. LEXIS 28281 (W.D. Ok. 2002).  This memorandum evaluates the admissibility of an economic damages report by Dr. James Horrell that provided projections for lost earnings, lost household services and hedonic damages. Judge Friot sets out a 12 step process for evaluating the admissibility of the lost earnings and lost household services projections of Dr. Horrell under F.R.Civ.P. Rule 26(a)(2). Judge Friot found that the requirements for those calculations were met, however inadequately. Judge Friot then applied Daubert-Kumho standards to Dr. Horrell’s hedonic damages calculation. That calculation consisted of assuming that the value of enjoyment of life had a value of $3,000,000 and that the plaintiff had lost 20% of that amount based on his injury, with a corresponding loss of $600,000. Judge Friot concludes: “[N]either Dr. Horrell’s equation or the numberts he plugs into that equation are substantiated by his report. Moreover, the approach to hedonic damages which Dr. Horrell advocates is demonstrably lacking in “fit” with either the facts of the case or Oklahoma law.”

Garay v. Missouri Pacific Railroad Company, 60 F.Supp.2d 1168 (D. Kan. 1999). The federal district court of Kansas granted a motion in limine to exclude the expert testimony of economist Gary Baker on the lost earnings and the specific value of lost guidance and counsel of a Mexican national who was illegally in the United States when wrongfully killed in Kansas. Baker’s testimony about lost earnings assumed that the decedent would have remained in the United States and Baker admitted knowing very little about earnings in Mexico. Baker’s projection of lost guidance and counsel was rejected on the basis that Baker had no knowledge of the specific amounts of such services the decedent was providing. Baker was permitted to testify as to the unit value (per hour) of such services.

Harris v. United States, 2007 U.S. Dist. LEXIS 96157 (D. N.M 2007). Judge James A. Parker granted a Motion to Preclude Testimony by Plaintiff’s Economic Expert Regarding Computation of Hedonic Damages.” The precluded economic expert was Dr. Brian McDonald. Judge Parker said: “Generally, to be considered reliable, the expert’s proposed testimony must be based on more than a subjective belief or unsupported speculation. Daubert, 509 U.S. at 590.  While the United States Supreme Court in Daubert, 509 U.S. at 592-594, established basic standards by which courts may assess reliability, the Court here need not reach those factors as Dr. McDonald’s description of the proposed benchmark evinces the speculative and subjective nature of that proposed benchmark.” McDonald’s report was described as follows: “Much of Dr. McDonald’s report focuses on various studies concerning the value of a statistical life studies (sic) and the valuation figures contained therein. The brief discussion of the benchmark figure ($50,000 per year for life expectancy) is intermingled with the discussion of statistical life studies despite having ‘no connection’ to them. The report contains no discussion of how Dr. McDonald generated the proposed benchmark figure or any citation to credible sources that support such a figure. As such, the basis of the benchmark figure appears largely arbitrary.” Judge Parker then cites decisions of two other judges in unreported cases as having arrived at similar conclusions with respect to Dr. McDonald’s approach.

McGuire v. City of Santa Fe, 954 F.Supp. 230 (D.N.M. 1996). This order of Judge Bruce D. Black granted defendant’s motion in limine to bar the testimony of Dr. Patricia Murphy, a psychologist, and Dr. John Myers, an economist on hedonic damages in a wrongful termination case. At a Daubert hearing, Dr. Murphy did not testify, but the Court said: “Dr. Myers testified that Dr. Murphy interviewed Plaintiff to determine the extent of Plaintiff’s lost enjoyment of life. Dr. Murphy than applied the data she collected from her interview to her Lost Pleasure of Life Scale and arrived at a percentage value of Plaintiff’s lost enjoyment of life. Dr. Myers testified that it was Dr. Murphy’s role to ‘determine the part of the enjoyment of life that has been lost,’ while it was his role to address what the monetary value of the lost enjoyment is worth.” Dr. Myers testified that the value of a human life varied f rom $928,000 to $18,464,000, and that the reduction in the value of Plaintiff’s enjoyment of life caused by Defendant’s alleged harassment and termination was between $1,430,000 and $2,300,000. Judge Black subjected this method to Daubert tests. He pointed out that neither of the experts had suggested any widely suggested standards for uniformly measuring the value of lost pleasure. The Court also pointed out that the foundations for such analysis had been assailed as lacking any verifiable basis by respected economists, including W. Kip Viscusi, Ted Miller and Thomas Havrilesky, citing papers by those authors in the Journal of Forensic Economics. The Court pointed out that Dr. Murphy’s “Lost Pleasure of Life Scale” had no known error rate. He finally determined by reference to a number of articles that the theory underlying the hedonic damage calculations had not been “generally accepted.  The Court also noted that: “Permitting ‘expert’ testimony on hedonic damages would seem particularly inappropriate in a wrongful termination suit like that at bar.”

     Wrongful Termination

Gray v. Oracle Corp., 2007 U.S. Dist. LEXIS 87637 (D. Utah 2007). This is a memorandum by Judge Ted Stewart granting a motion in limine to bar the testimony of Dr. Gren (first name not given). The defendant argued that Dr. Gren was not qualified because he was not a labor economist and had never performed a front pay or back pay analysis. Judge Stewart held that Dr.  Gren was qualified “by his statistical and business expertise,” but held that no issues of front pay were relevant “at this stage of the proceedings” and therefore Dr. Gren’s front page analysis was excluded as irrelevant. Dr. Gren had presented two models of lost back pay. The court reserved its decision with respect to Dr. Gren’s back pay analysis.

Greco v. Woodcrest Homes, Inc, 2006 U.S. Dist. LEXIS 43662 (D.Co. 2006). This is a short decision in a wrongful termination case. A jury rejected the claim of discrimination based on the worker’s pregnancy, but found in favor of the plaintiff on a claim of promissory estoppel. Both parties had stipulated in advance that the Court would determine damages if the jury found for any of the plaintiff’s claims. The Court rejected any claim for front pay as “entirely too speculative,” but awarded back pay with prejudgment interest of $39,914. An economist had projected fringe benefits on the basis of a national average of 28.9%. The plaintiff sought to add to that percentage a home purchase benefit that was unique to the employment. The Court pointed out that the expert had testified that it would be improper to tailor the national average by deleting benefits that were not provided in the Defendants’ plan. The court considered it inconsistent to then add a benefit not included in the national average and also found that it was “entirely too speculative” to assume that this home purchase benefit would have been used during the past loss period.

     Punitive Damages

Hayes v. Wal-Mart Stores, Inc., 294 F. Supp. 2d 1249 (E.D. Okla 2003). The court granted defendant’s motion in limine to bar proposed economic expert testimony by Dr. Will Clark on punitive damages. Clark had suggested using total dividends of Wal-Mart as a measure of punitive damages that would not cause irreparable financial harm to Wal-Mart. Citing Voilas v. General Motors Corp., 73 F. Supp. 2d 452, 464 (D. N.J. 1999), the court said: “[H]is opinion amounts to little more than speculation as to what the effect on Wal-Mart will be if the jury were to calculate an award of punitive damages as equal to or less than dividends paid. Such a conclusion (so far as the present record reflects) has not been tested or subjected to peer review, has no known error rate and has not been accepted in the community of economists. There is no methodology revealed by which he reaches his conclusion. Indeed, the Court speculates that if Dr. Clark could, in fact, accurately predict the financial consequences of the suggested punitive damages, he would be making millions by conulsting for Wall Street investment banks. His curriculum vitae, however, does not record such experience

    Court of Appeals

        Standards for Recovery in Wrongful Death

Hiatt v. United States, 910 F.2d 737 (11th Cir. 1990). The 11th Circuit affirmed a 50 percent personal consumption reduction in a wrongful death action under Florida law. See under Florida. 

          Hedonic Damages and Emotional Services

Robertson v. Hecksel, 2005 U.S. App. LEXIS 17201 (11th Cir. 2005). The mother of a 30 year old adult decedent brought an action for her own loss of support, loss of companionship, and pain and suffering resulting from the death of her son in a 42 U.S.C. § 1983 action on the basis of a deprivation of her Fourteenth Amendment right to a relationship with her adult son. This claim was dismissed by the trial count. The dismissal was affirmed by the 11th Circuit on the grounds that there is no constitutionally-protected liberty interest in a continued relationship with an adult child. The 11th Circuit pointedly did not minimize the value of the loss of such a relationship, but said: “[I]t is the province of the Florida legislature to decide when a parent can recover for the loss of an adult child. We will not circumvent its authority through an unsupported reading of the Fourteenth Amendment.”  

Tucker v. Fearn, 2003 U.S. App. LEXIS 11536 (11th Cir. 2003). This decision holds specifically that loss of society damages resulting from the death of a minor child cannot be recovered by a parent under general maritime law. The implication, however, is that loss of society damages are not allowable under any circumstances in maritime law. The decision reviews the different maritime acts that authorize wrongful death litigation and the decisions that have previously been reached to preclude loss of society damages under those acts. In 1978, the U.S. Supreme Court disallowed loss of society damages under the Jones Act in Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978) and under the Death on the High Seas Act (DOHSA) in Miles v. Apex Marine Corp., 498 U.S. 19 (1990). 

       FELA/Maritime Cases

Bravo v. United States, 2005 U.S. Dist. LEXIS (S.D. Florida 2005). [fn. 52.] “Plaintiffs presented testimony by Dr. David Williams, an economist, who performed economic calculations based on Mr. Foreman’s report. The Court found Dr. Williams to be credible and adopts his report and many of his calculations.” [fn 53.] “Defendant United States presented testimony by Dr. Kenneth Clarkson, an economist, whose report the Court finds flawed and inaccurate in many respects. For example, he relied on government data which government openly disclaims in writing on its website as being unreliable for for the very purpose for which Dr. Clarkson used it. He underestimated the 2005 inflation rate by more than 50 percent (estimated 2 percent v. the actual 5 percent) even though the Consumer Price Index information providing the correct numbers was readidly available. He also failed to deduct appropriate exemptions on Kevin’s projected income, which were necessary to reach the accurate tax rate. Because of this failure, he calculated a markedly incorrect tax rate that was more than triple what the actual tax rate should have been, blaming the error on his “Turbo Tax” computer program. As a result, his calculation on this point was wrong – by more than 300 percent.” The decision goes on to describe Dr. William’s damages methodology in some detail. 

       Tax Treatment

Purdy v. Belcher Refining Company, 781 F. Supp. 1559 (S.D.Ala. 1992). Social Security/Medicare payroll taxes should be deducted from lost earnings.

E.E.O.C. v. Joe’s Stone Crab, 15 F. Supp. 2d 1364 (S.D. Fla 1998). This decision in a wrongful discrimination case did not award front pay because the Court determined that each of the claimants would have voluntarily terminated employment prior to the entry of judgment. Back pay was determined through the period when claimants were have been likely to work for Joe’s Stone  Crab. The decision went on to say that it would have been appropriate to take into account negative tax consequences of lump sum payments for back pay. However, the Court also pointed out that the E.E.O.C. failed to provide the Court with “sufficient competent foundation evidence” to make appropriate calculations. Therefore, the Court declined “to award money damages to offset whatever tax liability a claimant will experience by receiving a lump sum.”

       Legal Procedure

Pickett v. IBP, Inc., 2000 U.S. Dist. LEXIS 19500 (M.D.Al 2000). Plaintiff had retained Drs. Robert Taylor and Bernard Siskin to develop econometric models that would produce testimony in support of plaintiff’s position. To establish that the models were both “relevant and reliable,” plaintiffs had submitted the models to other economic experts for evaluation. The defendant contended that the plaintiffs were “shopping” for favorable peer review of the models and intending to use only the experts who were favorable to the models. The defendant therefore wanted to discover the identity of all experts with whom the plaintiff consulted. The Court was not convinced that the plaintiff had engaged in “expert shopping” and held that the defendant could have hired its own experts to examine the models and thus denied the defendant’s motion to compel discovery of the identity of the experts hired by the plaintiff for evaluation.

     Admissibility of Expert Testimony

Kearney v. Auto-Owners Insurance Company, 2007 U. S. Dist. LEXIS 80378 (M.D.Fla. 2007). This memorandum from magistrate judge Thomas G. Wilson recommends denying a motion in limine by the plaintiff to deny the testimony of Dr. Michael Piette. The memorandum discusses Dr. Piette’s methods at some length. Judge Wilson indicated that the arguments used by the plaintiff are arguments that go to the weight of Dr. Piette’s testimony, not its admissibility. One argument made by the plaintiff was that Dr. Piette’s testimony should be excluded because “[t]he determination of a plaintiff’s loss of earning capacity is not something beyond the understanding of the average citizen.” About this argument, Judge Wilson said: “The notion that the testimony of an experienced economist would not assist the jury in determining the plaintiff’s pre-accident earning capacity is, on its face, preposterous, and it is belied by the plaintiff’s proffer of his own expert economist on this issue.”

Matter of the Adventure Bound Sports, Inc. and Andre Smith, 858 F.Supp. 1192 (D.Ga. 1994).  This case was tried under the Death on the High Seas Act (DOHSA). It involves complex issues of lost earnings and fringe benefits based on the projection that the decedent would have remained in the military until eligible for military retirement. He would then have gone to work in the private sector. The court assesses the impact of the death on the family’s access to various military benefits and then the projection of the plaintiff economic expert, Dr. Costen that private employment fringe benefits should be calculated at 15 percent of wages. There is a claim by another woman that the decedent was the father of her child, a child from a previous marriage, claims for lost college educations by the children of his marriage, claims of lost household service, loss of nurture and guidance (which was allowed), gifts to the child from the previous marriage, claim of loss of college education by that child, loss of inheritance, collateral source issues, calculations of taxes, an prejudgement interest. The court also provides an assessment of the impact of Culver II and the fact that it was overridden by Monessen S.W. Ry Co. v. Morgan.  This is a decision that is twenty two pages in single spaced text, but all of which is concerned with matters of damages relevant to a forensic economist. 

      Illegal Aliens

Vincente v. City of Rome, 2005 U.S. Dist. LEXIS 46154 (N.D. Ga. 2005). This was an extended memorandum responding to defendant’s Daubert motions in limine to exclude the testimony of a number of plaintiff’s experts. Plaintiff’s economist, Dr. Bruce Seaman of the economics department at Georgia State University was one of the experts who was challenged. The memorandum provides extensive discussion of Dr. Seaman’s calculations and the basis for those calculations, which included “whole time” loss calculations that cite the symposium issue 14(1) of the Journal of Forensic Economics on that topic. Dr. Seaman’s calculations were premise on the decedent, Hector Lopez, remaining in the United States even though Mr. Lopez had been deported to Guatemala and that Dr. Seaman had assumed that Hector Lopez had only been convicted of a DUI, rather than multiple defenses. The Court said: “The Court directs Plaintiffs to submit a corrected expert report from Dr. Seaman that reflects Hector Lopez’s deportation. At a minimum, Dr. Seaman’s corrected expert report should explain why Dr. Seaman did not calculate Hector Lopez’s lost wages as if Hector Lopez would remain in Guatemala, even though Hector Lopez had been deported to Guatemala prior to his death.”

       FELA/Maritime Cases

Kuithe v. Gulf Caribe Maritime, Inc., 2010 U.S. Dist LEXIS 89661 (S.D. Alabama 2010). The defendant challenged the trial court decision on the ground that the report of the plaintiff economic exert’s reduction of the plaintiff's lost future earnings to present value did not employ the below-market discount method required  by Culver v. Slater Boat Co., 722 F.2d 114 (former 5th Cir. 1983) (en banc) ("Culver II"). The court said: “It is clear that the report of the plaintiff's expert does not employ the below-market discount rate method required by Culver II. Instead, it uses a nominal interest rate of 4.5%. However, the expert in his deposition testimony made clear that he utilized an inflation rate of 3.5% in calculating the plaintiff's lost future income and that, had he used the below-market discount method, he would have used the same inflation rate and a below-market discount rate of 1%. He also testified that, had he used the below-market discount rate method, his figures for the present value of lost income would have been exactly the same (because the 3.5% would have been deducted from both the future income stream and the discount rate). The plaintiff thus presented expert evidence of a below-market discount rate and of lost income using that method. The defendant's motion for judgment on partial findings is due to be denied in this respect.”

      Hedonic Damages and Emotional Services

      Discrimination in Employment

Hudson v. Chertoff, 2007 U.S. Dist. LEXIS 9928 (S.D. FL 2007). This case was tried under the Discrimination Act of 1973, 29 U.S.C. 701 and under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e. A jury returned a verdict in the plaintiff’s favor and recommended $220,000 in back pay, $780,000 in front pay, and $1,500,000 in non-economic damages. The District court increased Back Pay to $264,314. The parties were instructed to confer and attempt to reach agreement as to a sum for eighteen months of front pay. The Court indicated that $47,030 per year should be subtracted from front pay for failure to mitigate. The Court also reduced non-economic damages to $300,000.

    Court of Appeals

        Basis Income and Fringe Benefits for Projecting Earnings Loss

Hill v. Iraq, 356 U.S. App. D.C. 142; 328 F.3d 680 (D.C. App. 2003). This case involved a suit brought by six former hostages against the Republic of Iraq and Saddam Hussein under the Foreign Sovereign Immunities Act (FSIA). The trial court had ruled that plaintiffs projections of economic damages were too speculative. The D.C. Court of Appeals reversed on the grounds that the trial court had not applied the normal standard for economic loss, citing Story Parchment Co. v. Patterson Parchment Paper Co., 282 U.S. 555; 75 L.Ed. 544; 51 S.Ct. 248 (1931): “Where the tort itself is of such a nature as to preclude the ascertainment of the amount of damages with certainty, it would be a perversion of justice to deny all relief to the injured person, and thereby relieve the wrong-doer from making any amend for his acts. In such case, while the damages may not be determined by mere speculation or guess, it will be enough to show the extent of damages as a matter of just and reasonable inference, although the result may be only approximate.” Damages must be shown to be “more likely than not,” but the plaintiff need only provide “some reasonable basis on which to estimate damages,” quoting Romer v. District of Columbia, 449 A.2d 1097, 1100 (D.C. 1982). “More probable than not” is defined specifically as more than fifty percent likely.  Submitted by Jerry Martin and Jim Rodgers.

        Standards for Wrongful Death

        Life and Worklife Expectancies

        Wage Growth and Discount Rates

Sandstrom v. Principi, 358 F.3d 1376 (D.C. Cir. 2004). Sandstrom had appealed a decision of the Department of Veteran Affairs that Sandstrom was not entitled to be compensated in real dollars for past losses. Rules for the VA prohibit interest on past losses. The Federal Circuit ruled that since cost of living adjustments are part of past interest, past lost dollars cannot be adjusted for changes in the cost of living. 

        Treatment of Taxes

Dashnaw v. Pena, 304 U.S. App. D.C. 247; 12 F.3d 1112 (D.C. Cir. 1994). The D.C. Circuit rejected grossing up an award to account for tax effects. The Court said: “Dashnaw . . . argues that the District Court should have granted him additional compensation to help cover the higher taxes he will have to pay becaus he will receive his backpay in a lump sum rather than as a salary paid out over a period of years. Absent an arrangement by voluntary settlement of the parties, the general rule that victims of discrimination should be made whole does not support “gross-ups” of backpay to cover tax liability. We know of no authority for such relief, and appellee points to none. Given the complete lack of support in existing case law for tax gross-ups, we decline so to  extend the law in this case. We therefore reject Dashnaw’s request for additional compensation to cover his tax liability. 

Fogg v. Gonzales, 407 F. Supp. 2d 79 (D.D.C. 2005). This decision related to protracted litigation involving employment discrimination that had begun in 1995. The District Court reached this decision on remand from the D.C. Circuit. Thus the back pay award in this case was for a ten year period. The Court said: “Fogg requests that any back pay award be grossed up by 14 percent to reflect the adverse tax consequences of a lump sum award. Similarly, Fogg acknowledges that the amount of worker’s compensation payments deducted from the award should be increased by 30% to reflect the tax free nature of those payments. . . Considering that inclusion of a tax component in a back pay award may be appropriate where, as here, the litigation is protracted . . . the court finds it appropriate to adjust both the back pay award and the deduction for workers’ compensation payments received, in accordance with Fogg’s request.”

Murphy v. Internal Revenue Service, 2007 U.S. App. LEXIS 15816 (D.C. Cir. 2007). Reversing a decision from last year, the D.C. Circuit has reversed itself on the question of whether awards for “non-physical” damages in personal injury matters could be taxed. The D.C. Circuit had ruled last year that emotional distress damages could not be taxed, but has now reversed itself in ruling that such damage awards can be taxed. Submitted by Tony Riccardi.  

        Admissibility of Expert Testimony

Frye v. United States, 293 F. 1013 (D.C. Cir. 1923). The source of the Frye test that was replaced by Daubert-Kumho standards as the basis for admissibility of expert testimony.

Joy v. Bell Helicopter Textron, Inc, 999 F.2d 549 (D.C. Cir 1993). Dr. John Glennie had projected four earnings loss scenarios for the decedent, Mr. Joy. Tax returns indicated that prior to his death, Mr. Joy and his wife operated a toy store and had reported $14,680 on his tax returns, with an equal amount reported by his wife.  The lowest of four future earnings rates used for future projections was $35,907, with values ranging up to $97,536 based on a consulting career Mr. Joy had mentioned thinking about on one occasion. The court found all of Dr. Glennie’s projections speculative and did not allow him to testify.

Oldham v. Korean Airlines Co., LTD., 127 F.3d (D.C. Cir. 1997). Testimony by an economic expert was admitted. The trial court had mistakenly treated this case as falling under the Warsaw Convention treaty and held that it should have been decided under the Death on the High Seas Act (DOHSA). The court held that no award for loss of society could be made in a DOHSA case. The decision provides detailed discussion of projections of loss of inheritance calculations of Dr. Thomas C. Borzilleri for the plaintiff and Dr. John John Glennie for the defense.It also provides guidance for loss of guidance, training and advice that decedent parents might have provided to adult children, holding that there had been no evidence in the record to show that the loss of such guidance, training and advice after 1983 had caused any loss to the adult children after the death of their parents. However the court indicated that such an award might be appropriate for the minor child of the parents in a retrial. 

      Basis Income and Fringe Benefits for Projecting Earnings Loss

Calva-Cerqueira v. United States, 281 F. Supp. 2d 279 (D.D.C. 2003). This decision in an Federal Torts Claim Act (FTCA) action identifies rehabilitation experts for plaintiff and defense, life care planning experts for plaintiff and defense, and three economists, Dr. Richard Lurito for the plaintiff, and Dr. Alan Frankel and Mr. Thomas Walsh. Judge Urbino indicates why he finds the plaintiff’s experts in each instance more credible than the defense experts after detailed discussions of the differences in their methodologies. Judge Urbino also rejects both an annuity approach and a reversionary trust approach based on resistance to those approaches from the plaintiff.  In that sense, this decision is almost a textbook case on damages analysis. 

      Annuities, Periodic Payments and Reversionary Trusts.

Calva-Cerqueira v. United States, 281 F. Supp. 2d 279 (D.D.C. 2003).  See under Basis Income and Fringe Benefits for Projecting Earnings Loss.

Friends For All Children, Inc. v. United States, 563 F.Supp.552 (D.D.C. 1983).  Judge Oberdorfer strongly advocated the instrument of a reversionary trust to fund catastrophic medical payments of a child, saying, “the Court is convince that, contrary to the views of this vocal minority of parents, some children are at risk of substantial future increase in their crash-related symptions. Precise prediction of which children will be affected and to what extent they will be in need of future catastrophe assistance is impossible . . .” The judge advocated setting up a central trust to deal with those costs, with any amounts remaining in the fund after some period reverting to the defendant. 

Wheeler Tarpeh-Doh v. United States, 771 F. Supp. 427  (D.D.C.1991). Provides discussion of annuities and reversible trusts as desirable ways to provide life care plans.

       Legal Procedure

Alabama

     Basis Income and Fringe Benefits for Projecting Earnings Loss

Carnival Cruise Lines v. Snoddy, 457 So. 2d 379 (Ala 1984). The Alabama Supreme Court held that the fact that the plaintiff suffered a 13-15% impairment to his body as a whole did not constitute evidence of lost earning capacity.

Ensor v. Wilson, 519 So. 2d 1244, 82 A.L.R.4th 925 (Ala. 1987).  The Defendant had challenged the projection of lost earnings on the basis of the speculativeness of the Plaintiff minor child’s future lost earnings. The Alabama Supreme Court provided a transcript of a portion of the testimony of Dave Saurman, Ph.D, an economist at Auburn University, and affirmed the decision of the trial court. . 

      FELA/Maritime Cases

CSX Transportation, Inc., v. Day, 613 So. 2d 883 (Ala 1993). The plaintiff testified that he had not gotten a pension and his attorney repeated that he doesn’t get a pension in closing argument. CSX argued that this was prejudicial since evidence indicated that Day would be eligible for a pension at age60. The Alabama Supreme Court held that since CSX did not object to plaintiff’s pension testimony at the time and thus the issue was not preserved for appeal.

Drexler v. Seaboard System Railroad, Inc., 530 So. 2d 754 (Ala.1988).  Plaintiff’s economist projected economic damages based on a 2 percent net discount rate. Defendant’s economist projected damages based on a 5.67 percent net discount rate. Defendant’s based his calculations on information about inflation given to him by an unnamed individual in the Government Records Department of the Birmingham Public Library. The Alabama Supreme Court ruled that use of information from this telephone call was “hearsay” evidence that should not have been permitted.  The trial court decision, which had been contested on the basis of a small award by the Plaintiff, was reversed and remanded.

Illinois CentralGulf Railroad Company v. Russell, 551 So. 2d 960 (Ala.. 1989). Evidence was presented indicating that Russell had a 12% anatomical disability rating. Plaintiff’s attorney argued in closing arguments that 12% was a reasonable basis for calculating damages. The defendant railroad argued that this was in error even though the jury’s verdict was considerably less than the amount of damages requested in closing argument. The Alabama Supreme Court said: “[W]e hold that it was permissible for he jury to determine from the evidence, in its fair and enlightened discretion, Russell’s loss of future earnings, and that it was not error for the trial court to allow Russell’s lawyer to suggest, in his closing arguments, that 12% was a reasonable basis for calculating damages. There is discussion in the decision of how Plaintiff’s economist calculated the present value of Russell’s future earnings, but the economist apparently did not make an argument that lost future earnings should be reduced by 12% to determine damages.

Norfolk Southern Railway Company, Inc., v. Bradley, 772 So. 2d 1147 (Ala 2000). The Norfolk Southern raised on appeal the fact that calculations of lost earnings by economist Ted Johnson did not deduct for Tier I and Tier II taxes. The railroad had asked questions of Johnson about these taxes during testimony, as well as deductions for Medicare taxes and union dues. The Alabama Supreme Court therefore concluded that the jury had an opportunity to consider those taxes. During redirect examination, Johnson testified that Tier I and Tier II taxes are retirement benefit concepts that should not be considered in calculating future losses. The trial court decision was affirmed.

Reusch v. Seaboard System Railroad, 566 So. 2d 489 (Ala 1990). “Reusch offered evidence that he had earned an average annual salary of $24,400 in the five years he had worked for the railroad preceding the accident. He testified that in 1984, the year of the accident, he had earned $30,000. He offered no other evidence in support of his claim for lost earnings. He offered no evidence of the future economic value of his future employment, so there was no conclusive evidence of any lost stream of earnings. He did not offer any testimony or other evidence of the amount of income tax he was paying or the effect of taxation on any stream of earnings that he might havae had. Although Reusch did offer mortality tables, he did not offer evidence of worklife expectancy. Furthermore, Reusch did not offer evidence of the interest rate on the best and safest investments as well as an application of a discount rate on any stream of earnings he may have had. At most, Reusch produced only a portion of the evidence necessary to ascertain his stre