DeWeese v. United States

• Decision Date: 05 August 1976
• Docket Number: Civ. A. No. C-3097,No. MDL-88-1,C-3799.,MDL-88-1
• Citation: 419 F. Supp. 170
• Parties: Robert E. DeWEESE, Plaintiff, v. UNITED STATES of America, Defendant. J'Ette Marie FRIZZELL and Alva Jolyn Faull, Plaintiffs, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Colorado

419 F. Supp. 170

Robert E. DeWEESE, Plaintiff, v. UNITED STATES of America, Defendant.

J'Ette Marie FRIZZELL and Alva Jolyn Faull, Plaintiffs, v. UNITED STATES of America, Defendant.

No. MDL-88-1, Civ. A. Nos. C-3097, C-3799.

United States District Court, D. Colorado.

August 5, 1976.

Kenneth N. Kripke, Denver, Colo., Lundy, Butler, Wilson & Hall by John L. Butler, Eldora, Iowa, Law Offices of Floyd A. Demanes by Joseph E. Russell, Burlingame, Cal., for plaintiffs.

Mark A. Dombroff, Dept. of Justice, Washington, D. C., for defendant.

MEMORANDUM OPINION ON DAMAGES

WINNER, Judge.

After the first opinion which found liability in this case was filed, 419 F.Supp. 147, a trial was held to determine the amount of damages. I have delayed making the damage determination awaiting guidance from the United States Court of Appeals for the Tenth Circuit on two questions which have troubled me in these and in other cases. I anticipated receiving that guidance from the Court of Appeals in Sanchez v. Denver & Rio Grande Western Railroad Company, 538 F.2d 304. After that case was briefed and set for oral argument, it was partially remanded for me to hear a motion for new trial based on allegedly newly discovered evidence. I did so and denied the motion. This postponed the argument of Sanchez before the Court of Appeals, and it was not decided until July 22, 1976. To me, the case clearly decides one of the troublesome questions; i. e., the question of whether I should consider gross or "take-home" pay in awarding damages, but we still have no Tenth Circuit opinion which passes squarely on the "inflation factor" question which bothers me so much.

In Sanchez, the Court said:

"In the present posture of the case the defendant does not complain of the many assumptions made by the expert witness in arriving at his conclusions and the plaintiff cannot so complain except as to the consideration of tax impact. The many complexities noted by Judge Friendly's opinion in McWeeney v. New York, N.H. and H. R.R., 2 Cir., 282 F.2d 34, cert. denied, 364 U.S. 870, 81 S.Ct. 115, 5 L.Ed.2d 93, and further complicated and confounded by a multitude of subsequent cases within the circuits, although argued and presented to us in briefs, are not here pertinent. The single issue is whether the court erred in insisting that the tax impact be considered by the expert, not the broad question of the acceptability of the expert's total approach. "The trial court premised its ruling and its firmness, and properly so, on United States v. Sommers, 10 Cir., 351 F.2d 354, in which this court approved consideration of future tax impact in a wrongful death case stating:

"`Undoubtedly situations may arise in which the failure to take into account income tax liability would produce an unconscionable result, and conversely a similar result could be obtained if too great a deduction were applied. When dealing with such an imprecise and speculative subject the best that can be hoped for is reasonableness. It is a determination best left to the exercise of sound discretion of the trial Judge, whether with or without a jury.'"

In accordance with my own convictions and with my understanding of Sanchez, I do take income taxes into account and I award damages in these cases on the bases of "take-home" pay. It is argued vigorously in the briefs that gross pay should be the base, but I just simply can't buy that argument. As I understand damage theory, the award for lost income should be for the income the plaintiffs have lost, and what they have lost is the amount left over after the government takes its inevitable bite. I think that an award of gross pay would be a windfall to the plaintiffs, although I recognize that where, as in Sanchez, the suit is against the employer, the employer is given a break because the employer would have been paying the gross amount to Sanchez and his "partner", the IRS. In this sense, under the circumstances of Sanchez, the employer benefits from computing damages on a "take-home" pay basis, but even the IRS hasn't figured out how to intervene to claim in a wrongful death or personal injury suit that it should be compensated for the loss of future withholding taxes. Here, though, the employer is not the tort feasor, and the reasons for using "take-home" pay are even more compelling than they were in Sanchez.

The claim for an inflation factor is a claim for something which is to me too speculative to figure out. I know that in McWeeney v. New York, N.H. & H. Railroad Company, (1960) 2 Cir., 282 F.2d 34, mentioned by Judge Lewis in Sanchez Judge Friendly said:

"Though some courts have sanctioned instructions permitting the jury to take into account inflation between the injury and the trial, there is little or no authority in favor of charging the jury to take future inflation into account, see 2 Harper and James, The Law of Torts, § 25.11 (1956). Yet there are few who do not regard some degree of continuing inflation as here to stay and would be willing to translate their own earning power into a fixed annuity, and it is scarcely to be expected that the average personal injury plaintiff will have the acumen to find investments that are proof against both inflation and depression—a task formidable for the most expert investor. The effect of inflation of 1% a year over McWeeney's 29-year expectancy at trial would go a long way toward offsetting any excess in the verdict due to failure to deduct income tax."

There will probably be inflation, but how much and at what rate are matters too elusive for me to predict or to calculate in awarding damages which are uncertain to start with. In this case, the "econometrist's" calculations were before me, and I found them to be totally unconvincing. After long study, I have concluded that such speculative predictions should not be presented to a jury. I am unconvinced that anyone can foretell economic conditions 45 years down the road, and to permit an alleged expert to do so is to permit testimony which is nothing but crystal ball gazing. It is to be remembered that 45 years ago we were at the bottom of the Great Depression. In 1931, a transcontinental telephone call cost about $20, and for that same $20 one could mail 1,000 letters. Today, the call can be made for less than $1.50, but only 155 letters can be mailed for $20.00. In other words, some costs go up and some go down, and I hope that the fact that Ma Bell is investor owned and the Postal Service is government owned is not the only reason telephone rates have gone down and postal rates have gone up. Forty-five years ago, one of the largest of the building trades was that of the plasterers. Today plasterers are almost a curiosity. The "econometrist's" predictions assume that there will be a continuing and a growing demand for ever more high priced airline pilots. With the rapid development of automation, who is to say that by the year 2021 commercial airline pilots will not be an occupation of the past. During the last 45 years coal miners have found out a lot about automation just as have the members of many other trades.

I fully agree with Judge Lumbard's comments in dissent in McWeeney:

"We can only deal in today's dollar. On any other basis any trial would soon be out of hand with only the sky as the limit. Defendants too must live with inflation, be they railroads or individuals; indeed railroads seem to have even more difficulty with inflation than do individuals. A plaintiff receiving a large amount will invest the money in all likelihood in such a manner that he will have some protection against both inflation and deflation."

I grant that if an investor follows the "prudent man rule", full protection against inflation will not be accomplished, but there are so many imponderables in fixing damages in wrongful death and personal injury actions that I think it would be a serious mistake to venture into the wild blue yonder of permitting "econometrists'" testimonial guesstimates of inflation. Any trial judge who has listened with amazement to a forecast by an "econometrist" knows how right Judge Lumbard was when he said that testimony on future inflation would mean that a "trial would soon be out of hand with only the sky as the limit." Since I let the evidence in during the trial of these cases which I shall not do in the future when I come to the award of damages I shall mention just how high "econometrists" can soar when turned loose on forecasting inflation. I do this to demonstrate the morass in which trials would wind up in any case involving future income or profits.

I think that much of the uncertainty in the cases has come from confusing inflation and reasonable job progression to be anticipated by a particular young employee. This is essentially the conclusion reached by the Third Circuit 485 F.2d 132 and by Judge Herman in Hoffman v. Sterling Drug, Inc., (1974) D.C.M.D.Pa., 374 F.Supp. 850, on remand after the Third Circuit's decision in the same case:

"As difficult as it might be to separate (in the actuarial sense) the earnings increase factor of a particular plaintiff from future economic trends, separate they must be. Therefore, this court concludes that at the upcoming re-trial on the merits, the plaintiff will be allowed to argue the earnings increase factor to the jury only insofar as the evidence applies to the plaintiff Clinton Hoffman. This court will not allow into evidence any testimony regarding future inflation or deflation, regardless of the foundation laid for it."

Plaintiffs argue that because only present value of a future income stream can be awarded, inflation should be taken into account as an offset. This is not a first time for the argument, and I reject it as did the Sixth Circuit in Sleeman v. Chesapeake and Ohio Railway Company, (1969) 414 F.2d 305:

"The District Judge did, as appellant asserts, decide to award damages without reducing them to present worth. He did so because he held that

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