Manko v. U.S.

Decision Date10 December 1987
Docket NumberNos. 86-1933,86-2114,s. 86-1933
Citation830 F.2d 831
Parties, 9 Fed.R.Serv.3d 127 Louis H. MANKO, Appellee/Cross-Appellant, v. UNITED STATES of America, Appellant/Cross-Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

Jeffrey Axelrad, U.S. Dept. of Justice, Washington, D.C., for appellant/cross-appellee.

Charles M. Thomas, Kansas City, Mo., for appellee/cross-appellant.

Before ARNOLD, Circuit Judge, HENLEY, Senior Circuit Judge, and MAGILL, Circuit Judge.

ARNOLD, Circuit Judge.

This is an action brought by Louis H. Manko against the United States under the Swine Flu Act of 1976, Pub.L. 94-380, 90 Stat. 1113, originally codified as 42 U.S.C. Sec. 247b(j) et seq. 1 The Swine Flu Act established a national program of immunization for a disease popularly known as swine flu. In order to induce private companies to manufacture the needed vaccine, the United States stepped into the shoes of the manufacturer, so to speak, and assumed all liability for damages, incorporating as a remedy the provisions of the Federal Tort Claims Act, 28 U.S.C. Sec. 1346(b). See 42 U.S.C.A. Sec. 247b(k)(2)(A). Instead of suing a drug company, a recipient of the vaccine claiming to have been injured would sue the United States.

The plaintiff received his vaccination on October 20, 1976. He began feeling ill about ten days later. (We recite the facts in the light most favorable to the plaintiff, who won in the District Court.) Plaintiff's condition worsened, and on January 15, 1977, he was diagnosed as having Guillain-Barre Syndrome (GBS), a paralytic disease known to result from swine-flu vaccinations in a very small number of cases. In this action, plaintiff claims that his GBS, from which he has only partially recovered, did in fact result from the vaccination. As the case was tried in the District Court, the only issue as to liability was the question of causation: was Mr. Manko's GBS caused by the vaccination, or did it result, as the government contends, from a viral illness wholly unrelated to the vaccination? The District Court 2 found the facts for the plaintiff, 636 F.Supp. 1419 (W.D.Mo.1986), and the United States appeals. Plaintiff cross-appeals, claiming that the damages (the District Court awarded $1,171,442.01) were inadequate in one respect. Also before us is the appeal of Sylvia Manko, plaintiff's wife, who claims that she should have been allowed to intervene to assert a claim for loss of consortium.

We affirm the judgment of the District Court in all respects, subject to a remand to that Court on one relatively small aspect of the award of damages.

I.

On the main appeal, the government spends a good deal of time arguing that the District Court erred in imposing certain sanctions on it in connection with what the Court held to be an unjustified failure on the part of the United States to comply with a discovery order. The government argues, in brief, that the District Court's action was inconsistent with an order entered at an earlier stage of the litigation by the United States District Court for the District of Columbia, to which this action, along with many others, had been transferred for pretrial proceedings under 28 U.S.C. Sec. 1407, the statute establishing special procedures for multidistrict litigation. The effect of the District Court's action was to preclude the government from contesting certain assertions of fact made by plaintiff in connection with records of other people's claims under the Act--records the government claimed it did not have to produce. This order of preclusion, the government contends, crippled its entire factual defense. A new trial should therefore be ordered. The plaintiff replies that the District of Columbia order is not inconsistent with the later action of the trial court, and that, in any event, the trial court was not bound by the previous order of the transferee forum.

We find it unnecessary to resolve this dispute. The plaintiff's contention that his GBS was caused by the vaccination was supported by three separate and distinct lines of proof. The District Court described these three factual approaches as follows:

Plaintiff argues that the evidence presented at trial establishes that plaintiff's GBS was a reasonable and probable consequence of plaintiff's swine flu vaccination because:

a) plaintiff demonstrated GBS symptoms in the fall of 1976 shortly after plaintiff received the swine flu vaccination and these symptoms smoldered until early January 1977, when plaintiff became acutely ill; or

b) even if the symptoms of plaintiff's GBS were first manifested in early January 1977, there is a causal relationship between plaintiff's GBS and the swine flu vaccination based on a proper epidemiological analysis of available data; or

c) based on cases that were deemed long onset cases of GBS pursuant to discovery sanctions imposed in the Court's November 29, 1983, Order, there is a causal relationship between plaintiff's GBS and his swine flu vaccination regardless of whether plaintiff's analytical approach or defendant's analytical approach is used.

636 F.Supp. at 1427.

The District Court found for the plaintiff on each of these three theories. In particular, it found that plaintiff in fact developed GBS within three weeks of the vaccination, and that the disease "smoldered" for a while before breaking out in full force in January of 1977. This finding was made after a careful, comprehensive, and thorough review of the plaintiff's own testimony, medical records, and expert opinions. Having reviewed the record with the care commensurate to the subject-matter and importance of this case, we hold that this finding is not clearly erroneous. We are therefore bound by it. The discovery dispute briefed by the parties--the dispute that ultimately led to the sanctions we have alluded to--had nothing to do with this branch of the case. The District Court's finding in favor of plaintiff's "smoldering" theory does not depend at all on the preclusion order of which the government complains, and that finding would remain good even if we agreed with the government's argument that the District Court abused its discretion in this matter of discovery. The "smoldering" theory is an adequate and independent ground for the Court's finding on the issue of causation, and the finding in favor of that theory is affirmed. 3 The liability of the United States, then, is established, and we pass to other issues.

II.

The United States urges error in the computation of damages in a number of respects: it says that the judgment should have been reduced to take account of the fact that plaintiff would have owed income tax on his earnings had he continued to work (a portion of plaintiff's award was for lost earnings); that Medicare and social-security benefits should have been offset against Manko's damages; and that the inclusion in the judgment of income that would have been earned on pension benefits that would have accrued had Manko continued to work violated the prohibition on the award of prejudgment interest in Federal Tort Claims Act cases. We address each of these arguments in turn. 4

A.

A large portion of the judgment--$576,664--represented lost income--money that Mr. Manko would have earned in salary between 1977 and 1982, the period between the onset of his GBS-caused disability and the time when he would have retired in the normal course of events. Some income tax would of course have been due on these earnings. The United States claims that failure to reduce the award by the amount of plaintiff's putative tax liability amounts to an award of punitive damages, which is forbidden in Federal Tort Claims Act cases by 28 U.S.C. Sec. 2674. One circuit has so held. Hollinger v. United States, 651 F.2d 636, 642 (9th Cir.1981).

The Tort Claims Act incorporates, as the substantive standard to be applied, the law of the state in which the tort was committed, in this case Missouri. Under Missouri law, damages awards for lost income are not reduced for taxes. Dempsey v. Thompson, 363 Mo. 339, 251 S.W.2d 42, 45 (1952). This is one of the rules for determining compensation in tort cases. There is nothing inevitable about it, and a good argument can be made that it is unfair to defendants, but it is the law of Missouri, and we must therefore apply it in this Federal Tort Claims Act case unless to do so would amount to an award of "punitive damages" within the meaning of that statute. We agree with the plaintiff that such a holding would "require[ ] a broad and unprincipled definition of the term 'punitive damages.' " Brief of Appellee/Cross-Appellant 41.

Whether to deduct income taxes is simply one of many issues courts face in deciding what is fair compensation for an injury. Other such issues are whether to apply the collateral-source rule, whether to award prejudgment interest, how certain a forecast of future earnings must be, how to value pain and suffering, and so forth. Different jurisdictions resolve these issues in different ways, but they have nothing to do with "punitive damages" as that term is traditionally used in the law. They do not depend on a finding of wanton or malicious conduct, they are not imposed to punish a defendant, and they have nothing to do with a defendant's net worth--all questions that customarily arise when punitive damages are sought or awarded. We conclude that Congress did not mean to outlaw all variations from some ideal norm of compensation when it forbade "punitive damages." It was referring only to that concept in its traditional sense. It was not error for the District Court to follow Missouri law on the proper treatment of tax liability on hypothetical lost earnings.

B.

In calculating Manko's past and future medical expenses, the District Court refused to subtract sums which he had received as Medicare benefits. 636 F.Supp. at 1449-51....

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