Calculating the Damages

For decades, courts have considered factors such as race and socio-economic status when calculating the amount of damages to be awarded in civil actions. Specifically, in the realm of tort law, courts have utilized actuarial tables and other data compilations in estimating, among other things, future earning potential and life expectancy in both simple negligence and medical negligence cases.

In recent times, however, the use of such evidence in damages calculations has gained wide criticism and scrutiny. While some courts have allowed the use of race- and socio-economic-based statistical evidence when computing damages in tort actions, others have expressly rejected the use of such statistical evidence, questioning the appropriateness, reliability, and fairness of this evidence when used in this way. Consideration of these factors has also been controversial in light of recent tort reform laws, as courts have recognized the effect of damages caps on minorities, women, and those of lower socio-economic status.

Race and Socio-Economic Considerations at a Glance

The use of race and socio-economic status in damages calculation is certainly not a novel concept in U.S. jurisprudence. Dating back to the early 1900s, courts have allowed race-based evidence of life expectancy in the calculation of damages. For example, in a 1905 decision involving a steamship collision that resulted in the deaths of both Caucasian and African-American passengers and crewmembers, the United States District Court for the Southern District of New York permitted the use of census data summarizing differences in “White” and “Colored” life expectancies to justify reduction of awards for the “Colored” decedents. See In re Clyde S.S. Co., 139 F. 906 (S.D.N.Y. 1905).

A more recent illustration of the consideration of race-based statistics when computing an individual's life expectancy can be found in Smith v. U.S. Dep't. of Veterans Affairs, 865 F. Supp. 433 (N.D. Ohio 1994). In that medical malpractice action, the court considered the life expectancy of a psychiatric patient who was rendered quadriplegic while hospitalized. The court admitted testimony in which an expert based his calculation of the plaintiff's life expectancy on factors such as the plaintiff's age and race.

A Shift in Thinking

Unlike In re Clyde and Smith, a federal district court recently barred the use of race-based statistics in computing the life expectancy of a quadriplegic man seeking damages for pain, suffering, and cost of medical care. McMillan v. City of New York, 253 F.R.D. 247 (E.D.N.Y. 2008) (“McMillan II“). It is important to examine this decision to understand the court's rationale for barring the use of such evidence, and how this decision could, if at all, impact tort reform law.

In McMillan, James McMillan, the claimant who was rendered a quadriplegic in the crash of a ferryboat operated by the City of New York, brought a negligence suit against the City, seeking to recover damages for pain, suffering, and cost of necessary medical care. An advisory jury empanelled by the court recommended an award of over $22.9 million for McMillan's past and future damages. See McMillan v. City of New York, Nos. 03-CV-6049, 08-CV-2887, 2008 WL 4287573 (E.D.N.Y. Sept. 17, 2008) (“McMillan I“). Accepting some, but not all, of the jury's findings, the court awarded a total of approximately $18.3 million. Id. In making its arguments during the trial with respect to McMillan's damages, the City introduced statistical evidence suggesting that an African-American with spinal cord injuries was less likely to survive for the same number of years as persons of other races with similar injuries. The court, therefore, was faced with deciding whether such race-based statistics may be relied upon to find a shorter life expectancy for persons characterized as “African-American” as opposed to those in the general American population of mixed ethnic and racial backgrounds. The court answered this question in the negative, finding that the use of race in this context would be problematic.

To support its conclusion that race-based life expectancy and related data may not be used to find a reduced life expectancy for a claimant in computing damages, the court first examined the deeply rooted history of “racial mixing” among individuals of various racial and ethnic backgrounds in the United States. The court also recognized the reality that “people do not fall naturally into discrete racial groupings” and “[l]egal classifications of race tend to be unrefined and often reflect ignorance of differences within a given category.” McMillan II, 253 F.R.D. at 256 (citing Martha Chamallas, Questioning the Use of Race-Specific and Gender-Specific Economic Data in Tort Litigation: A Constitutional Argument, 63 Fordham L. Rev. 73, 113 (1994)). Given such history of “racial mixing,” and considering the unreliability of race-based statistics, the court concluded that “[r]eliance on 'race'-based statistics in estimating life expectancy of individuals for purposes of calculating damages is not scientifically acceptable in our current heterogeneous population.” Id. at 249.

Second, the court noted that the use of life expectancy tables ignores important socio-economic factors such as education, place of residency, and employment, thus collapsing all members of a racial group into a single number. Hence, the court recognized the possibility that the changing of a person's socio-economic status may have an impact upon his or her life expectancy.

Third, the court discussed the ramifications of employing race-based statistics in the context of the Equal Protection and Due Process Clauses of the Fourteenth Amendment. With respect to the Fourteenth Amendment, the court held that “[e]qual protection in this context demands that the claimant not be subjected to a disadvantageous life expectancy estimate solely on the basis of 'racial' classification.” Id. at 255. The court further explained that “[t]he legal system does not work fairly and with due process if one class of litigants is unduly burdened in litigation through the application of inappropriate race-based statistics.” Id. at 256.

Even though McMillian was not a medical malpractice case, its findings regarding the use of race-based statistics in damages calculations is significant. McMillan could arguably spawn future challenges to the use of certain classification-based statistical evidence when used for the purpose of calculating damages in any personal injury action, including medical malpractice actions.

Race, Socio-Economic Status And Tort Reform

In addition to considerations of race and socio-economic status in the context of economic damages, courts have taken such factors into account when resolving challenges to non-economic damage caps, particularly those caps instituted by recent tort reform laws. Often regarded as the “darling” of tort reformers, non-economic damage caps have proven to be not so endearing to discrete groups of people: namely, women, minorities, and those individuals of a lower socio-economic status. In fact, courts have recognized the disproportionate effect that these caps have on these groups.

For example, in an order issued in April 2008, a Georgia state court judge struck down the state's $350,000 cap on non-economic damages, which was enacted in 2005 as part of a comprehensive tort reform bill. See Park v. WellStar Health Sys., Inc., No. 2007CV135208 (Fulton County Ga. Super. Ct. Apr. 28, 2008). Although ultimately holding that the cap violated the equal protection requirement in the Georgia Constitution, the court also recognized the implications that Georgia's non-economic damages cap had on economic status. Specifically, the court expressed concern that the cap effectively limits the rights of the poor and middle class to recover large damage awards while allowing the wealthy to recover virtually unlimited damages in the form of lost income because high-wage earners' economic recoveries are not capped.

While there is no mention of race in the Park decision, the court's discussion of the limitations of rights of the “poor and middle class” is certainly applicable to discussions of race and socio-economic status, as these characterizations are undeniably linked. As demonstrated by historical as well as current data, there is a high degree of consistent overlap of race and poverty in this society. Thus, in recognizing the negative impact non-economic damages caps may have on the poor, one could argue that non-economic damage caps also negatively affect minorities, as evidence proves that minorities are disproportionately poor.

The Park decision could possibly ignite a trend of challenges to state non-economic damages caps based on limitations of rights of disadvantaged groups. This decision also reflects recent challenges to the impact of non-economic damages caps on these groups. Opponents of these caps argue that factors such as race, gender, and socio-economic status play a huge role in tort reform. Because of the unique harms that affect minorities and women, particularly when considered in the context of damages calculations, these groups are almost inevitably disadvantaged by caps on non-economic damages.

Conclusion

The recent decisions in both McMillan and Park are likely to spur the growth of challenges to the calculations of economic damages as well as caps on non-economic damages, particularly in instances involving an individual's race or socio-economic status. While the relevance of these factors has not been as obvious in the context of tort reform, the Park decision illustrates that such factors arguably should be considered by courts. In light of the McMillan and Park decisions, courts might be more inclined to prohibit the use of race- or socio-economic-based evidence to substantiate the calculation of economic damages and more likely to consider the implications of these factors with respect to caps on non-economic damages.

Debra Sydnor, a member of this newsletter's Board of Editors, is a Partner in the Atlanta office of Alston & Bird LLP. She practices in the firm's Products Liability Group and concentrates her practice on the defense of toxic tort and pharmaceutical products claims. In addition, she has over 13 years of experience defending medical malpractice cases. Shirlethia Franklin is an Associate in the firm's Atlanta office and also practices in the Products Liability Group, focusing her practice on the defense of medical malpractice and products liability litigation.

For decades, courts have considered factors such as race and socio-economic status when calculating the amount of damages to be awarded in civil actions. Specifically, in the realm of tort law, courts have utilized actuarial tables and other data compilations in estimating, among other things, future earning potential and life expectancy in both simple negligence and medical negligence cases.

In recent times, however, the use of such evidence in damages calculations has gained wide criticism and scrutiny. While some courts have allowed the use of race- and socio-economic-based statistical evidence when computing damages in tort actions, others have expressly rejected the use of such statistical evidence, questioning the appropriateness, reliability, and fairness of this evidence when used in this way. Consideration of these factors has also been controversial in light of recent tort reform laws, as courts have recognized the effect of damages caps on minorities, women, and those of lower socio-economic status.

Race and Socio-Economic Considerations at a Glance

The use of race and socio-economic status in damages calculation is certainly not a novel concept in U.S. jurisprudence. Dating back to the early 1900s, courts have allowed race-based evidence of life expectancy in the calculation of damages. For example, in a 1905 decision involving a steamship collision that resulted in the deaths of both Caucasian and African-American passengers and crewmembers, the United States District Court for the Southern District of New York permitted the use of census data summarizing differences in “White” and “Colored” life expectancies to justify reduction of awards for the “Colored” decedents. See In re Clyde S.S. Co., 139 F. 906 (S.D.N.Y. 1905).

A more recent illustration of the consideration of race-based statistics when computing an individual's life expectancy can be found in Smith v. U.S. Dep't. of Veterans Affairs , 865 F. Supp. 433 (N.D. Ohio 1994). In that medical malpractice action, the court considered the life expectancy of a psychiatric patient who was rendered quadriplegic while hospitalized. The court admitted testimony in which an expert based his calculation of the plaintiff's life expectancy on factors such as the plaintiff's age and race.

A Shift in Thinking

Unlike In re Clyde and Smith, a federal district court recently barred the use of race-based statistics in computing the life expectancy of a quadriplegic man seeking damages for pain, suffering, and cost of medical care. McMillan v. City of New York , 253 F.R.D. 247 (E.D.N.Y. 2008) (“ McMillan II “). It is important to examine this decision to understand the court's rationale for barring the use of such evidence, and how this decision could, if at all, impact tort reform law.

In McMillan, James McMillan, the claimant who was rendered a quadriplegic in the crash of a ferryboat operated by the City of New York, brought a negligence suit against the City, seeking to recover damages for pain, suffering, and cost of necessary medical care. An advisory jury empanelled by the court recommended an award of over $22.9 million for McMillan's past and future damages. See McMillan v. City of New York, Nos. 03-CV-6049, 08-CV-2887, 2008 WL 4287573 (E.D.N.Y. Sept. 17, 2008) (“McMillan I“). Accepting some, but not all, of the jury's findings, the court awarded a total of approximately $18.3 million. Id. In making its arguments during the trial with respect to McMillan's damages, the City introduced statistical evidence suggesting that an African-American with spinal cord injuries was less likely to survive for the same number of years as persons of other races with similar injuries. The court, therefore, was faced with deciding whether such race-based statistics may be relied upon to find a shorter life expectancy for persons characterized as “African-American” as opposed to those in the general American population of mixed ethnic and racial backgrounds. The court answered this question in the negative, finding that the use of race in this context would be problematic.

To support its conclusion that race-based life expectancy and related data may not be used to find a reduced life expectancy for a claimant in computing damages, the court first examined the deeply rooted history of “racial mixing” among individuals of various racial and ethnic backgrounds in the United States. The court also recognized the reality that “people do not fall naturally into discrete racial groupings” and “[l]egal classifications of race tend to be unrefined and often reflect ignorance of differences within a given category.” McMillan II, 253 F.R.D. at 256 (citing Martha Chamallas, Questioning the Use of Race-Specific and Gender-Specific Economic Data in Tort Litigation: A Constitutional Argument, 63 Fordham L. Rev. 73, 113 (1994)). Given such history of “racial mixing,” and considering the unreliability of race-based statistics, the court concluded that “[r]eliance on 'race'-based statistics in estimating life expectancy of individuals for purposes of calculating damages is not scientifically acceptable in our current heterogeneous population.” Id. at 249.

Second, the court noted that the use of life expectancy tables ignores important socio-economic factors such as education, place of residency, and employment, thus collapsing all members of a racial group into a single number. Hence, the court recognized the possibility that the changing of a person's socio-economic status may have an impact upon his or her life expectancy.

Third, the court discussed the ramifications of employing race-based statistics in the context of the Equal Protection and Due Process Clauses of the Fourteenth Amendment. With respect to the Fourteenth Amendment, the court held that “[e]qual protection in this context demands that the claimant not be subjected to a disadvantageous life expectancy estimate solely on the basis of 'racial' classification.” Id. at 255. The court further explained that “[t]he legal system does not work fairly and with due process if one class of litigants is unduly burdened in litigation through the application of inappropriate race-based statistics.” Id. at 256.

Even though McMillian was not a medical malpractice case, its findings regarding the use of race-based statistics in damages calculations is significant. McMillan could arguably spawn future challenges to the use of certain classification-based statistical evidence when used for the purpose of calculating damages in any personal injury action, including medical malpractice actions.

Race, Socio-Economic Status And Tort Reform

In addition to considerations of race and socio-economic status in the context of economic damages, courts have taken such factors into account when resolving challenges to non-economic damage caps, particularly those caps instituted by recent tort reform laws. Often regarded as the “darling” of tort reformers, non-economic damage caps have proven to be not so endearing to discrete groups of people: namely, women, minorities, and those individuals of a lower socio-economic status. In fact, courts have recognized the disproportionate effect that these caps have on these groups.

For example, in an order issued in April 2008, a Georgia state court judge struck down the state's $350,000 cap on non-economic damages, which was enacted in 2005 as part of a comprehensive tort reform bill. See Park v. WellStar Health Sys., Inc., No. 2007CV135208 (Fulton County Ga. Super. Ct. Apr. 28, 2008). Although ultimately holding that the cap violated the equal protection requirement in the Georgia Constitution, the court also recognized the implications that Georgia's non-economic damages cap had on economic status. Specifically, the court expressed concern that the cap effectively limits the rights of the poor and middle class to recover large damage awards while allowing the wealthy to recover virtually unlimited damages in the form of lost income because high-wage earners' economic recoveries are not capped.

While there is no mention of race in the Park decision, the court's discussion of the limitations of rights of the “poor and middle class” is certainly applicable to discussions of race and socio-economic status, as these characterizations are undeniably linked. As demonstrated by historical as well as current data, there is a high degree of consistent overlap of race and poverty in this society. Thus, in recognizing the negative impact non-economic damages caps may have on the poor, one could argue that non-economic damage caps also negatively affect minorities, as evidence proves that minorities are disproportionately poor.

The Park decision could possibly ignite a trend of challenges to state non-economic damages caps based on limitations of rights of disadvantaged groups. This decision also reflects recent challenges to the impact of non-economic damages caps on these groups. Opponents of these caps argue that factors such as race, gender, and socio-economic status play a huge role in tort reform. Because of the unique harms that affect minorities and women, particularly when considered in the context of damages calculations, these groups are almost inevitably disadvantaged by caps on non-economic damages.

Conclusion

The recent decisions in both McMillan and Park are likely to spur the growth of challenges to the calculations of economic damages as well as caps on non-economic damages, particularly in instances involving an individual's race or socio-economic status. While the relevance of these factors has not been as obvious in the context of tort reform, the Park decision illustrates that such factors arguably should be considered by courts. In light of the McMillan and Park decisions, courts might be more inclined to prohibit the use of race- or socio-economic-based evidence to substantiate the calculation of economic damages and more likely to consider the implications of these factors with respect to caps on non-economic damages.

Debra Sydnor, a member of this newsletter's Board of Editors, is a Partner in the Atlanta office of Alston & Bird LLP. She practices in the firm's Products Liability Group and concentrates her practice on the defense of toxic tort and pharmaceutical products claims. In addition, she has over 13 years of experience defending medical malpractice cases. Shirlethia Franklin is an Associate in the firm's Atlanta office and also practices in the Products Liability Group, focusing her practice on the defense of medical malpractice and products liability litigation.