• Kevin Osborne

Ending Damages Discrimination

The following post was presented by Kevin Osborne as a part of the San Francisco Trial Lawyers series on cross-examining defense expert witnesses on June 16, 2020.


Overview


This post provides a brief background of the concepts of “life expectancy” and “work life expectancy” as used in civil litigation. The post will explain what the terms mean, the data that work and life expectancy testimony comes from, and how these concepts are used in trial.


The bulk of the post, however, describes a new, first-of-its-kind California law that eliminates a long-accepted practice of reducing damages by factoring race, ethnicity, and gender into work and life expectancy calculations. This statute, while imperfect, should serve as a model for other state and federal rules.


Sources and Use of Life and Work Expectancy Data – The Old Way


Historically, in any civil litigation where a plaintiff claimed special damages, the parties would call economists (or some other expert) to calculate and testify about the precise amount of special damages.


In a tort case, a defendant would call an expert economist who would use a discount rate and reduce any future damages. In other words, the economist would argue that if the plaintiff's future damages were $100, then the jury should only award $95, because $95 invested today will be $100 in the future. In finance, this reduced number is called the present value. To rebut (usually preemptively) the defendant’s expert, the plaintiff would call an economist of her own who would argue the discount rate shouldn’t reduce the $100 to $95, but should only reduce it to some other number, like $99 … or shouldn’t reduce it at all.


In practice, these experts tend to focus narrowly on defending their discount rate, arguing their opponent is unreasonably considering the wrong treasury note or ignoring current fed interest rates.


There is, however, another input needed to calculate the future damages, which is often ignored or less controversial. This input is time. An expert who calculates future damages has to make certain assumptions to predict how long the future is.


For example, if an expert is calculating the value of a plaintiff’s future medical needs, the expert first has to know how long she will have those needs. And if the treatment is one the plaintiff will need for the rest of her life, how long will she live? This is the plaintiff’s life expectancy.


Similarly, if the expert is calculating the value of the plaintiff’s future wage loss, the expert must predict how long the plaintiff would have worked had it not been for the subject of the litigation. This prediction is the plaintiff’s work life expectancy.


Defendants’ and plaintiffs’ experts usually disagree on these numbers. The reason for the disagreement relates to the different sources they can draw from when predicting the future.


A common source for this data is the Vital Statistics of the United States, a publication of the National Center for Health Statistics. The Vital Statistics are cited in the Judicial Council of California Civil Jury Instructions (“CACI”) at 3921 and 3922, relating to wrongful death, and 3932, relating to life expectancy generally. Other sources include the Social Security Administration’s Actuarial Life Tables (relating only to life expectancy) and U.S. Bureau of Labor Statistics data (relating to work life expectancy).


These sources offer both general data and specific data. For example, knowing only that a plaintiff is a 30-year-old male, the Bureau of Labor Statistics and the Actuarial Tables would indicate the likely number of years the plaintiff would work and live. These numbers draw from the general data for males in the U.S. of age 30.


But the sources offer much more granular data as well, allowing experts to splice averages by level of education, income, marital status, sex, race, ethnicity, and much more. So an expert could, for example, calculate the work and life expectancy of a married 30-year-old black male with a college degree who earns $100,000 annually.


An Obvious Discriminatory Effect


Since splicing the data can give you a number higher or lower than the general average, a plaintiff’s economist will cite whichever work and life expectancy is higher, and a defendant’s expert will cite whichever is lower. Not surprisingly, splicing data has a discriminatory effect tending to favor whites and men (especially regarding work life expectancy) and working against minorities and women.


This is a common practice. Approximately 44% consider race when calculating future earnings and 92% consider gender, according to a recent study by the Lawyers’ Committee for Civil Rights.[1]


Jennifer Wriggins, a Professor at the University of Maine School of Law has argued the use of these types of statistics is unconstitutional.[2] One federal judge, Hon. Jack B. Weinstein of the Eastern District of New York, has noted and rejected the practice of incorporating race in work and life expectancy damages calculations.[3] Nevertheless, before 2020 there was no law prohibiting the use of such data to reduce a plaintiff’s damages estimates.


The California Legislature Enacts SB41, Designed to End Discriminatory Damages Calculations


In 2019, the California Legislature passed SB41 with urging from the California Association of Black Lawyers, the Consumer Advocates of California, and other organizations. SB41 acknowledges that race-based and gender-based reductions in future wage loss are discriminatory and potentially unconstitutional.


The law added section 3361 to the California Civil Code on January 1, 2020. Section 3361 reads,


Estimations, measures, or calculations of past, present, or future damages for lost earnings or impaired earning capacity resulting from personal injury or wrongful death shall not be reduced based on race, ethnicity, or gender.

The legislative history of the law cites the Equal Protection Clause of the U.S. Constitution and its California counterpart as authority. It also cites a history of discriminatory practices in the civil justice system that have compounded the problem of unequal pay for women and minorities.


The statute seems to have received little fanfare. As of the time of this post, the statute has not been cited in any reported opinions and has been cited only in publicly available trial court documents twice, both in the same case (both by the author). This is understandable, given the law is new. But even legal commentators, scholars, journalists, and bloggers seem to have let the law pass unnoticed. As of the time of this post, the author could find only one article about the law, posted on the website of a firm that practices insurance defense (written by a defense attorney that I, the author, know and respect).


Some Shortcomings of 3361


The statute is short, only 34 words. It should probably be shorter. By including the clause “resulting from personal injury or wrongful death,” the statute needlessly limits itself. There is no reason a personal injury plaintiff should benefit from a law based on the concept of equal protection, but other plaintiffs, such as those in wrongful termination claims, should not.


Another way the law is unnecessarily self-limiting is in the clause “for lost earnings or impaired earning capacity.” Again, presumably other types of damages (i.e. lost profits) can be reduced based on race, ethnicity, or gender. Deleting this language would broaden the law’s scope.


Strategy and Use


As always, a lawyer should take great care to be sensitive to issues of race, ethnicity, and gender, both in court and elsewhere. But if a defendant’s expert has taken a position that, in the words of the California legislature, “compounds discrimination,” do not hesitate to draw attention to that position.


Chances are, expert economists on both sides of a case will be white men.[4] If a defendant argues for a reduction in a plaintiff’s damages based on race or ethnicity, point it out. For example, ask, “is it your opinion the plaintiff should recover less in this case because of her [race/ethnicity/gender]?” A defense attorney would be wise to withdraw an expert who answers in the affirmative.


If a defendant’s economist wades into the politics of race, drown them in it. The Bureau of Labor Statistics uses the term “Hispanic” to describe a segment of the work force. If the defendant’s economist adopts this term, have him define it. Simply ask, “what does ‘Hispanic’ mean?” No matter the answer, there are follow up questions.[5] Press the issue. Ask, “what is it about my client that defines him as ‘Hispanic’ to you?”


While damages cannot be “reduced” under the statute, they may be increased. If the data show your minority or female (or both) client would work or live longer than the average American, encourage your economist to use that data. The defendant’s economist may allege the plaintiff is “playing the __ card,” but that could backfire. Stripping a plaintiff of her race, ethnicity, or gender in order to reduce her damages could easily offend a judge or jury.


Lastly, expect defense experts to shift. An economist who has been called out for using race, ethnicity, or gender improperly once will not do it again. Instead, defendant’s economists will use data based on other factors to reduce work and life expectancy. Press them on the source of such data. Misinformation and unreliable sources have never been easier to come by. An expert who bases an opinion on faulty or unreliable sources may not offer opinions based on such sources.


Footnotes

[1] Dariely Rodriguez & Hope Kwiatkowski, How Race, Ethnicity, and Gender Impact Your Life’s Worth: Discrimination in Civil Damage Awards (July 2018) Lawyers’ Committee for Civil Rights Under Law, https://lawyerscommittee.org/wp-content/uploads/2018/07/LC_Life27s-Worth_FINAL.pdf. [2] Jennifer B. Wriggins, Constitution Day Lecture: Constitutional Law and Tort Law: Injury, Race, Gender, and Equal Protection (2010) 63 Me. L.Rev. 263, [3] See McMillan v. City of New York (E.D.N.Y. 2008) 253 F.R.D. 247, 255, (stating, “Courts are increasingly troubled by “race”- and gender-based figures for calculating loss of future income.”). [4] Ben Casselman and Jim Tankersley, Economics, Dominated by White Men, Is Roiled by Black Lives Matter, N.Y. Times (Jun. 10, 2020), https://www.nytimes.com/2020/06/10/business/economy/white-economists-black-lives-matter.html [5] Mark Hugo Lopez, et al., Who is Hispanic?, Pew Research Center (Nov. 11, 2019), https://www.pewresearch.org/fact-tank/2019/11/11/who-is-hispanic/

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