Metz v. United Technologies Corp.

• Decision Date: 24 January 1985
• Docket Number: Nos. 153,s. 153
• Citation: 754 F.2d 63
• Parties: Timothy W. METZ, Plaintiff-Appellee Cross-Appellant, v. UNITED TECHNOLOGIES CORP., General Electric Credit Corporation of Georgia and New York Airways, Inc., Defendants-Appellants Cross-Appellees. to 155, Dockets 84-7204, 84-7206, 84-7282.
• Court: U.S. Court of Appeals — Second Circuit

Page 63

754 F.2d 63

53 USLW 2400

Timothy W. METZ, Plaintiff-Appellee Cross-Appellant, v. UNITED TECHNOLOGIES CORP., General Electric Credit Corporation of Georgia and New York Airways, Inc. Defendants-Appellants Cross-Appellees.

Nos. 153 to 155, Dockets 84-7204, 84-7206, 84-7282.

United States Court of Appeals Second Circuit.

Argued Sept. 19, 1984.

Decided Jan. 24, 1985.

Charles F. Krause, New York City (Speiser & Krause, P.C., New York City, of counsel), for plaintiff-appellee cross-appellant.

Harold V. McCoy, Mineola, N.Y. (Jerome C. Murphy, McCoy & Agoglia, P.C., Mineola, N.Y., of counsel), for defendant-appellant cross-appellee, United Technologies Corporation.

Leonard Weinstock, New York City (Ronald A. Bartolucci, Garbarini, Scher & DeCicco, P.C., New York City, of counsel), for defendants-appellants cross-appellees, General Electric Credit Corporation of Georgia and New York Airways, Inc.

Before VAN GRAAFEILAND and CARDAMONE, Circuit Judges, and MacMAHON, District Judge. ^*

CARDAMONE, Circuit Judge:

Defendants appeal on the grounds that the district court in this negligence case failed to charge the jury that plaintiff's damages for future lost wages, pain and suffering and medical expenses should be reduced to present value. Although a charge to a jury on future damages should not contain a cap, neither should it allow the jury to make an award like the golden fleece. In charging a jury on future damages, there is a principled middle ground between placing a ceiling on the award, and making the sky the limit, that is to discount all awards for future lost dollars to their present value. Because the failure to so charge is plain error, we reverse and remand the case for a new trial.

I

Timothy Metz, a citizen of Louisiana, brought this diversity action in the United States District Court for the Eastern District of New York (Wexler, J.) to recover damages for personal injuries he suffered while a passenger on a commercial helicopter when it crashed in 1979 at Newark International Airport. Defendants are United Technologies Corporation, the manufacturer of the helicopter, General Electric Credit Corporation of Georgia, the owner, and New York Airways, the operator. Defendants conceded liability. At the trial on damages a jury found for plaintiff in the sum of $2,089,000, to which the court added prejudgment interest of $870,799. This appeal is from the $2,959,799 judgment entered on that verdict. The defendants' principal arguments on appeal are that the trial judge's failure to charge present value to the jury was prejudicial error, that references to the profitability of a corporation of which he was a majority stockholder led the jury to apply an incorrect measure of damages, and that the award was excessive as a matter of law. Plaintiff cross-appeals arguing that, in the event a new trial is ordered, the jury should be permitted to consider corporate profitability.

The accident occurred in April 1979. The 36 year old plaintiff was president of D & J Manufacturing Company ("D & J") a Louisiana corporation engaged in the business of manufacturing and selling foam-insulated metal wall panels. Plaintiff and a business associate, Frank Hesser, formed D & J in 1976 and had begun making and marketing their product in 1977. Plaintiff owned 60% of D & J through Datco, a corporation of which he was the sole stockholder. His chief duties were to bid on contracts and to sell the wall panels, for which he received a salary representing the fair value of his services. Hesser owned 40% of D & J and was in charge of production. Metz sustained serious injuries including a compound, comminuted fracture of both legs and a severe compression fracture of the fourth lumbra vertebra. His doctor testified that permanent disability would be about 70%. Although plaintiff's physical condition has improved, he still has not been able to resume regular employment. D & J and Datco have ceased operations.

Although plaintiff's recovery was substantially for future damages, the district court excluded expert testimony on interest and inflation rates and present value calculations, and gave no jury instruction on present value. Before trial plaintiff deposed an economist who testified as to present value and estimated plaintiff's loss. At the outset of the trial and through its duration, defendants objected to the economist testifying because of their disagreement with the data upon which he based his opinion. Defendants made no objection to his testimony on present value. The trial judge granted defendants' motion on the ground that the testimony plaintiff proposed to introduce was based on data unsupported by the evidence, hence confusing and prejudicial. As a result, plaintiff never presented his testimony on present value.

Defendants' efforts to introduce evidence on present value were similarly unsuccessful. They called an economist who answered a few questions on interest rates, but was not permitted to testify on present value. The trial court excluded this testimony on the ground that it was not in the pretrial order. In his summation, defense counsel briefly mentioned present value. Counsel took exception to the court's failure to charge on this issue. Since the trial court's refusal to admit evidence and instruct the jury on present value requires a remand and a new trial, it is unnecessary to address defendants' other arguments for reversal.

Originally, the case came before Judge Bramwell. In the middle of 1983 it was reassigned to Judge Wexler. Prior to the reassignment discovery had been completed, a number of motions had been made and a pretrial order had been written and revised. Judge Bramwell had ruled that the case should be tried pursuant to the Louisiana law of damages. He had also made a pretrial ruling that future lost profits of D & J were highly speculative and not a proper element of plaintiff's damages. This ruling, which is the subject of plaintiff's cross-appeal, is affirmed.

II

Present value calculations are a basic and necessary element of all awards for future earning capacity. Nearly 70 years ago the Supreme Court stated the importance of discounting in order to achieve an economically sound result. Chesapeake & Ohio Railway Company v. Kelly, 241 U.S. 485, 36 S.Ct. 630, 60 L.Ed. 1117 (1916). In Kelly, a railroad liability case, the Court vacated the judgment appealed from because the trial court refused to charge present value, id. at 488, 36 S.Ct. at 631, stating:

We are not in this case called upon to lay down a precise rule or formula, and it is not our purpose to do this, but merely to indicate some of the considerations that support the view we have expressed that, in computing the damages recoverable for the deprivation of future benefits, the principle of limiting the recovery to compensation requires that adequate allowance be made, according to circumstances, for the earning power of money; in short, that when future payments or other pecuniary benefits are to be anticipated, the verdict should be made up on the basis of their present value only.

Id. at 491, 36 S.Ct. at 632. Louisiana law also requires that awards for future loss of earnings be discounted. See Philippe v. Browning Arms Co., 395 So.2d 310, 315-16 (La.1980); Johnson v. Dufrene, 433 So.2d 1109, 1114 (La.App.1983); Holmes v. Texaco, Inc., 422 So.2d 1302, 1304-05 (La.App.1982).

The law on discounting of awards for future pain and suffering is less clear. The parties have not cited and our research has failed to uncover any Louisiana law governing or even addressing this precise issue. Under these circumstances, our task is "to reach the correct result by looking to the decisions of other jurisdictions." Chiarello v. Domenico Bus Service, 542 F.2d 883, 887 n. 5 (2d Cir.1976); See generally C. Wright, Law of Federal Courts 370-77 (4th ed. 1983). Some courts have held that awards for future pain and suffering are not to be discounted and that it is error to instruct the jury to reduce such an award to its present worth. See, e.g., Taylor v. Denver and Rio Grande W.R.R. Co., 438 F.2d 351, 352-53 (10th Cir.1971); Annot., 60 A.L.R.2d 1347, 1352-53 (1958). These courts reason that since pain and suffering cannot be measured with any mathematical precision, reduction to present worth would be arbitrary as well as artificial. See 22 Am.Jur.2d Damages Sec. 108 (1965).

For several reasons we agree with the courts that subscribe to the view that it is proper to discount awards for future pain and suffering to present value. See, e.g., Abbott v. Northwestern Bell Telephone Co., 197 Neb. 11, 16, 246 N.W.2d 647, 650 (1976) (Nebraska's highest court affirmed a trial court's instruction that the jury calculate the present cash value of future general damages, rejecting older Nebraska case law to the contrary). First, the history of damages for pain and suffering supports their limitation. Damages for pain and suffering, which originated with Roman Law, were first awarded as retribution for the insult plaintiff incurred. See B. Nicholas, An Introduction to Roman Law 215-16 (1982); cf. T. Plucknett, A Concise History of the Common Law 330-31 (2d ed. 1936). Understandably, the law viewed an injured plaintiff as the only person interested in the award and in assuring that the award is as high as possible. Today, the law is concerned not only with the pain and suffering of the injured individual, but also with the loss society shoulders, which includes the increased costs of insurance and the lost productivity of the individual. Thus, after adequate provision has been made for an injured plaintiff, the goal is to achieve a fair and reasonable allocation of loss. Discounting awards of future damages to their present value results in a more reasonable allocation of loss. See O'Connell and Carpenter, Payment for Pain and Suffering Through History, 1983 Ins.Couns.J. 411-17.

Strong policies expressed in decisional laws also support...