Hipp v. Liberty Nat. Life Ins. Co.
| Decision Date | 11 March 1999 |
| Docket Number | No. 95-1332-Civ-17A.,95-1332-Civ-17A. |
| Citation | 39 F.Supp.2d 1359 |
| Parties | David HIPP, Harry W. McKown, Jr., Brad Stein, Mike Stell, and All Others Similarly Situated, Plaintiffs, v. LIBERTY NATIONAL LIFE INSURANCE COMPANY, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
Ross Mathew Goodman, Robert Douglas Permenter, Troy Alan Rafferty, Mary E. Pilcher, Levin, Middlebrooks, Thomas, Mitchell, Green, Eachner, Proctor & Papantonio, Pensacola, FL, for plaintiffs.
Peter W. Zinober, D. Michael Pointer, II, Zinober & McCrea, P.A., Tampa, FL, Martha C. Perrin, Ogletree, Deakins, Nash, Smoak & Stewart, Atlanta, GA, William J. Beasley, Joel E. Dillard, Gregory J. Hare, Baxley, Dillard, Dauphin & McKnight, P.A., Birmingham, Margaret H. Campbell, Law Office of Margaret H. Campbell, Atlanta, GA, for defendants.
This cause comes before the Court on the following:
1. Plaintiffs' Submissions of Front Pay Calculations for Plaintiffs Agee, Carter, Lee, Stell, and Tuggle Pursuant to the Court's November 20, 1998, Order (Docket No. 366), filed December 30, 1998; and Defendant's Memorandum Opposing Plaintiff's Revised Front Pay Reports (Docket No. 370), filed January 19, 1999.
2. Plaintiffs' Motion for Leave to File a Reply Brief to Defendant's Memorandum Opposing Plaintiff's Revised Front Pay Reports (Docket No. 372), filed February 1, 1999.
3. Plaintiffs' Submission of Forms of Judgment Pursuant to the Court's November 20, 1998, Order (Docket No. 367), filed January 12, 1999; Defendant's Memorandum in Response to Plaintiffs' Submission of Forms of Judgment Pursuant to the Court's November 20, 1998, Order (Docket No. 371), filed January 28, 1999.
As a preliminary matter, Plaintiffs' motion to for leave to file a reply to Defendant's response to their revised front pay reports will be denied. The Local Rules allow the submission of such a response only upon request of the Court. Local Rule 3.01(b). The Court has made no such request here, and declines to do so.
In the November 20, 1998, Order in this case [hereinafter "Order"], this Court held that Plaintiffs Agee, Carter, Lee, Stell, and Tuggle could seek front pay awards. The Order noted, however, that the front pay awards calculated by Plaintiffs' expert were unduly speculative. Plaintiffs' expert had allowed Plaintiffs to provide estimates rather than actual figures for their earnings histories, savings plan contributions, and insurance costs, and did not seek documentation to verify these estimates. Moreover, even though Plaintiffs earnings were commission-based and fluctuated widely over the years, some Plaintiffs provided earnings information over only a few years. Despite the historic fluctuations in Plaintiffs' earnings, Plaintiffs' expert assumed a steady upward trend in earnings. Plaintiffs' expert also assumed that each Plaintiff would have contributed enough to the savings plan to receive the maximum 3% match from Defendant, without considering the individual Plaintiffs' contribution histories.
Rather than simply deny Plaintiffs' requests for front pay as being unduly speculative, however, the Court allowed Plaintiffs to provide revised front pay reports. The Order outlined specific requirements for the revised reports to ensure that they would not be speculative. Plaintiffs and their expert were instructed that Plaintiffs' earnings histories must be documented, and that the front pay projections in every area must be based on actual rather than estimated figures and supported by the appropriate documentation. Plaintiffs were directed that calculations of their lost earnings "should take into account the fact that Plaintiffs' earnings have fluctuated over the years and some have exhibited a decline." Order at 24. They were also told that calculations of lost savings plan contributions must be based on Plaintiffs' histories of contribution to the plan.
Plaintiffs have now submitted revised front pay reports, pursuant to the Order, that provide documentary support for their actual earnings histories. Unfortunately, however, these revised reports fail to comply with the specific instructions in the Order in numerous other ways. Plaintiffs' expert estimated lost future earnings without any adjustment for the fluctuations and trends in Plaintiffs' historic earnings. Historic participation in the savings plan was adequately taken into consideration and fully documented only with respect to two Plaintiffs. Plaintiffs provided no documentation to support their claimed insurance costs while employed by Defendant.
Plaintiffs' revised front pay reports estimate lost future earnings by simply taking the earnings from each Plaintiffs final year as a district manager and assuming a steady 2% increase thereafter. This method ignores the wide fluctuations in Plaintiffs' earnings as district managers. For instance, Plaintiff Carter's earnings history as a district manager is below:
Year Income Less Business Expenses Percent Change
1986 $51,867
1987 $52,986 2.16%
1988 $44,401 -16.2%
1989 $51,635 16.30%
1990 $54,665 5.87%
1991 $58,754 7.48%
1992 $68,714 14.49%
1993 $59,609 -13.25%
1994 $80,312 34.73%
Plaintiff Carter's average income between 1986 and 1994 was $58,105. As his earnings history shows, however, his income varied over a wide range during this interval, with the lowest being $44,401 in 1988 and the highest being $80,312 in 1994. Plaintiff Carter's income in 1994 was nearly $12,000 higher than his income in the next highest year, 1992. Rather than take account of these variations, Plaintiffs' expert used 1994 as the base year and assumed that Plaintiff Carter's income would have steadily increased at the rate of 2% per year thereafter had he remained in Defendant's employ. This falsely inflates Plaintiff Carter's expected earnings. Moreover, where a plaintiff was in an occupation characterized by wide fluctuations in earnings, the failure to adjust for the risk inherent in that occupation renders an estimate of front pay damages "unsound." Price v. Marshall Erdman & Assocs., Inc., 966 F.2d 320, 326-27 (7th Cir.1992).
Likewise, Plaintiffs' expert failed to take account of the trends in Plaintiffs' earnings, an appropriate consideration in calculating lost earnings. See Buckley v. Reynolds Metals Co., 690 F.Supp. 211, 217 (S.D.N.Y.1988). At least one Plaintiff's salary exhibited a downward trend. Plaintiff Agee's earnings history is below:
Income
Less
Business Percent
Year Position Expenses Change
1988 District Manager $55,947
1989 District Manager $55,541 -0.73%
1990 District Manager $50,779 -8.57%
1991 District Manager $52,911 4.20%
1992 District Manager: January — May $47,787 -9.67%
Sales Manager: May — December
1993 Sales Manager $51,281 7.31%
1994 Sales Manager: January — July $58,647 14.36%
District Manager: July — December
1995 District Manager $51,934 -11.45%
1996 District Manager: Jan — April $22,065
Whether the interval during which Plaintiff Agee was demoted to sales manager is included or excluded, Plaintiff Agee's earnings exhibit a distinct downward trend. Assuming a steady 2% per year increase in earnings is therefore inaccurate. Not only did Plaintiffs' expert assume such an increase, but he also used 1991, the year before Plaintiff Agee was demoted to sales manager, as the base year, even though Plaintiff Agee was later re-promoted to district manager. This falsely inflated Plaintiff Agee's expected earnings even further.
The failure to account for fluctuations and trends in Plaintiffs' earnings histories makes the revised front pay reports essentially useless to the Court. Taking a particular year of a person's earnings history as the base year and assuming a steady upward trend thereafter might provide a fairly accurate description of expected future earnings in many, even most, occupations. If the earnings histories of these Plaintiffs show anything, however, it is that Plaintiffs' earnings while employed by Defendant did not show this sort of pattern. The Court cannot rely on estimates of lost earnings based on an inaccurate and unsound method.
Plaintiffs Agee, Carter, Lee, and Stell each seek compensation for the amount Defendant would have contributed to their savings plans. The Court cannot rely on the estimates of lost employer contributions to the savings plan in Plaintiffs' revised front pay reports for two reasons. First, and most importantly, the estimates of lost employer contributions are directly tied to the estimates of lost earnings. Defendant matches half the amount its employees contribute to the savings plan, up to a maximum of 3% of the employee's earnings. Thus, without an accurate estimate as to lost earnings, there is no way for the Court to estimate lost contributions to the savings plan without engaging in speculation.
Second, with respect to Plaintiffs Agee and Lee, Plaintiffs' expert did not comply with the Court's requirement that the revised front pay reports base projections of lost savings plan contributions on the "actual histories of the individual Plaintiffs' previous contributions." Order at 24. Plaintiffs' expert assumes that Plaintiff Agee would have contributed 6% of his earnings to the savings plan, thus receiving a matching contribution from Defendant of 3% of his earnings. This assumption is based on earnings statements from September 1993 through December 1994, which show 6% participation. Defendant, however, provides the affidavit of Defe...
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