Culver v. Slater Boat Co.

Citation688 F.2d 280
Decision Date22 September 1982
Docket NumberNo. 79-3985,79-3985
PartiesRuth CULVER, et al., Plaintiffs-Appellants Cross-Appellees, v. SLATER BOAT CO., et al., Defendants-Appellees Cross Appellants, EUROPIRATES INTERNATIONAL, INC., et al., Defendants-Appellees and Cross- Appellees-Appellants, v. ODECO DRILLING, et al., Defendants-Appellees Cross Appellants. . *
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

W. James Kronzer, W. W. Watkins, Houston, Tex., Frederick J. Gisevius, Jane M. Gisevius, New Orleans, La., for Ruth Culver et al.

Leonard Fuhrer, Alexandria, La., for amicus curiae Louis Ober.

Patrick A. Juneau, Jr., Lafayette, La., for amicus curiae Penrod Drilling.

Richmond M. Eustis, New Orleans, La., for Slater Enterprises, Europirates, Etc.

Drury, Lozes & Curry, Felicien P. Lozes, New Orleans, La., for Gulf Overseas Ser. Corp.

J. Walter Ward, New Orleans, La., for Ocean Drilling.

Mat M. Gray, III, New Orleans, La., for St. Paul Fire.

Appeals from the United States District Court for the Eastern District of Louisiana.

ON REHEARING EN BANC

Before GODBOLD, Chief Judge, BROWN, CHARLES CLARK, RONEY, GEE, TJOFLAT, HILL, FAY, RUBIN, VANCE, KRAVITCH, FRANK M. JOHNSON, Jr., HENDERSON, REAVLEY, POLITZ, HATCHETT, ANDERSON, RANDALL, TATE, SAM D. JOHNSON, THOMAS A. CLARK and WILLIAMS, Circuit Judges. **

JOHN R. BROWN, Circuit Judge:

This case comes before us on rehearing en banc to consider whether the holding of this Court in Johnson v. Penrod Drilling Co., 510 F.2d 234 (5th Cir. 1975) (en banc), that neither proof, nor argument, nor jury instructions concerning inflationary factors may be considered or used in maritime, Jones Act, and FELA personal injury and wrongful death actions, should be overruled. 1 After careful consideration of this singular issue, we overrule Penrod and remand this case to the District Court.

I. Bound by Penrod

The facts leading up to this appeal have already been outlined by this Court in the panel's opinion, 644 F.2d 460, 462-63 (5th Cir. 1981). Briefly, Curtis Culver was killed while working on a vessel owned by Slater Boat Company. The vessel upon which the accident took place was engaged in moving the drilling barge OCEAN QUEEN from its location on the Outer Continental Shelf to a new location. The fatal injury occurred before the barge was actually moved. Culver's widow and children brought suit under the Jones Act, 46 U.S.C. § 688, the Death on the High Seas Act (DOHSA), 46 U.S.C. § 761 et seq., and the general maritime tort and negligence theory. The jury found negligence on the part of Gulf Overseas Marine Corporation (Culver's employer), Euro-Pirates International (the charterer of the vessel), and Ocean Drilling & Exploration Company (the owner of a barge involved in the fatality), and no contributory negligence on the part of Culver.

On the issue of damages, the District Court allowed testimony concerning discount rates and the earning power of money invested in low risk bonds. The jury was instructed to "discount the total amount" of any award by a percentage that represented an appropriate rate of interest. In answer to the special interrogatory submitted asking what discount percentage rate was applicable, the jury filled in "25%". The trial judge, on the basis that the jury obviously misunderstood the interrogatory, substituted 9.125%, the only other rate put into evidence by the defendant. In accordance with Penrod, the District Court did not allow testimony, charges, or interrogatories to be submitted on the effects of inflation on probable loss of future income.

In short, Culver was not permitted to show any likely increase in future earnings due to inflation. But the award was to be discounted by an interest factor reflecting anticipated inflation.

Culver initially appealed the judgment, raising five issues: (i) should Penrod be overruled?; (ii) if Penrod is not overruled, should evidence of probable non-inflationary future wage increases (e.g. merit raises) be prohibited?; (iii) can a District Court disregard a jury finding regarding the discount rate and apply one based on opinion testimony?; (iv) was the testimony of Culver's adverse witness sufficiently clear that the court could apply that witness' opinion of the discount rate?; and (v) can a District Court enter a final judgment for damages applicable to all beneficiaries in a maritime death action that is incapable of apportionment among the various beneficiaries? 2 Cross-appeals were brought by all of the defendants raising several additional issues. 3

Oral argument was heard by a panel of this Court, and the District Court judgment was affirmed as slightly modified. Specifically, the panel considered itself bound by Penrod 's holding that "the influence on future damages of possible inflation or deflation is too speculative a matter for juridical determination," 644 F.2d at 643, quoting Penrod, 510 F.2d at 241. And in accordance with Byrd v. Reederei, 638 F.2d 1300 (5th Cir. 1981) (rehearing en banc granted), the panel rejected Culver's argument that the Supreme Court overruled Penrod in Norfolk & Western Railway v. Liepelt, 444 U.S. 490, 100 S.Ct. 755, 62 L.Ed.2d 689 (1980). 4 Likewise, the panel found no error in the trial judge's refusal to allow Culver to argue likely future wage increases on the basis of merit, because no evidence was offered to show that such an argument was warranted and, in addition, such evidence was "merely an indirect way of putting inflation factors into evidence before the jury (which is) not allowed under Penrod." 644 F.2d at 464. 5 Culver filed a petition for panel rehearing, 6 and a separate petition for rehearing en banc, as required by our rules, raising two closely related issues: (i) should Penrod be overruled and (ii) does Penrod prohibit a trier of fact in this Circuit to receive evidence of non-inflationary factors, such as probable merit raises and productivity increases, in arriving at future losses? This Court, voting for rehearing en banc, determined that the time was ripe for reconsideration of the rule in Penrod pertaining to the "inflation factor" in damages awards. Although Culver's brief to this court on rehearing en banc addressed primarily issue (i), whether proof and argument concerning inflationary factors should be permitted in this Circuit, issue (ii) is also involved since automatic exclusion of evidence of probable merit raises has resulted from a misreading of Penrod. The defendants argue that Penrod should be upheld, and, in addition, contend that Culver waived the right to relief on the inflation issue by failing to make an offer of proof regarding the likelihood of inflation.

A.

Briefly, we will address the defendants' claim that Culver waived the right to raise the issue of inflation by his failure to make a formal proffer at trial. The defendants called as a witness an investment banker who specialized in bonds. On cross-examination, Culver's attorney attempted to ask whether people earned more money over the years of their employment due only to productivity. An objection to the question was sustained. After several more questions, all counsel approached the bench where the judge made it clear that the type of evidence excluded by Penrod would not be permitted in court. The jury was then temporarily excused, and Culver's attorney told the judge that he wanted to ask the expert whether the principal of a bond would be worth less in the future. The trial judge replied that deflation was as likely as inflation, and any testimony as to such factors would be pure speculation. The judge concluded that "I will not permit you to introduce any evidence before the jury relative to inflation in view of the present law that I am bound by which is the Penrod case." Before closing argument, and before the jury returned, the judge explained that:

Plaintiff's counsel will not be permitted to argue that the jury should take into consideration inflation, nor will it be permitted to make an indirect argument which would achieve the same purpose of permitting him to argue inflation by attempting to indicate that it could be expected that plaintiff would receive job promotions or merit increases.

Again, the judge mentioned the prohibitions of Penrod. Given this flat prohibition against introducing testimony (or making argument) as to future inflationary trends on the basis of Penrod, it makes no sense to argue that Culver may not raise this issue on appeal simply because he did not proffer an expert on inflation. Reading the trial transcript, it is obvious that a record was being created to challenge or at least find an exception to Penrod. We find that the matter was sufficiently presented to the judge at trial and that all parties understood the dilemma-Culver wanted the jury to consider inflation, and Penrod stood in the way.

B.

The most problematic issue on this appeal remains: Should Penrod be overruled so as to allow parties to present proof and argument concerning inflationary factors to the trier of fact? Our analysis will begin with a brief review of the Penrod decision. In order to illustrate graphically the implications of Penrod and why it has to be overruled, we will discuss many of the cases in this Circuit where Penrod 's prohibitions were effective. Next, we will summarize the criticisms of Penrod which come from other circuits as well as commentators. As our analysis proceeds, it will become clear that the problem is one of fairness to plaintiffs as well as defendants in the trial process. Personal injury awards, once they have been calculated on the basis of projected income and life expectancy, are paid immediately to the plaintiff. It is well-known that if a plaintiff (or his beneficiaries) receives a lump-sum award, totaling the income that the plaintiff would have received throughout the rest of his work life, that money can be invested so as to yield a far greater amount than the initial award. This would be unfairly liberal to the...

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