Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-00123/USCOURTS-caed-1_06-cv-00123-22/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-(Citizenship)

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

BRIAN N. HALL and JEAN M. HALL,

Plaintiffs,

v.

NORTH AMERICAN INDUSTRIAL

SERVICES, INC.,

Defendant.

 

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1:06-cv-0123 OWW SMS

MEMORANDUM DECISION AND

ORDER RE: JUDGMENT

This case brought by Plaintiffs Brian N. Hall and Jean

Hall against Defendant North American Industrial Services, Inc.

(“NAIS”) came on regularly for trial on October 30, 2007,

in Courtroom 3 of the above-entitled court, before United States

District Judge Oliver W. Wanger. A jury of eight persons was

duly empaneled and sworn. Witnesses were called, sworn and

testified. After hearing the evidence, the jury was duly

instructed on the law by the Court. After arguments of counsel,

the case was submitted to the jury. The jury deliberated and

returned a verdict in favor of Plaintiff Brian Hall in the amount

of $7,264,746.20 in economic damages and $20 million in

noneconomic damages. (Doc. 230.) It also returned a verdict in

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favor of Plaintiff Jean Hall for loss of consortium in the amount

of $250,000. The jury apportioned fault as follows: 5 percent

Brian Hall, 20 percent AES Mendota (Brian’s employer), and 75

percent NAIS. 

Plaintiff filed their proposed judgment on November 27,

2007, proposing a total award of $19,838,608 for Brian Hall and

$187,500 for Jean Hall. (Doc. 229.) Plaintiffs’ proposed total

award for Brian Hall is comprised of $5,288,476 in economic

damages (adjusted downward to account for Brian Hall’s 5 percent

share of fault and to account for his actual medical expenses)

and $15,000,000 in noneconomic damages, less the amount

Plaintiffs attributed to the offset for workers’ compensation

benefits, which is $449,868. Plaintiffs’ proposed total award of

$187,500 for Jean Hall represents 75 percent of the total jury

award of $250,000 to reflect NAIS’s comparative share of

liability.

Defendant NAIS filed its proposed judgment on November 30,

2007, specifying a total award of $19,049,981 for Brian Hall and

$187,500 for Jean Hall. (Doc. 235.) Defendant’s proposed award

for Brian Hall is comprised of $5,288,476 in economic damages

(also adjusted downward to account for Brian Hall’s 5 percent

share of fault and to account for actual medical expenses) and

$15,000,000 in noneconomic damages, less the full amount of

Hall’s workers’ compensation benefits of $1,238,495. The dispute

here concerns the method of calculating and applying the workers’

compensation benefit offset.

Proposition 51, Civil Code §§ 1431.1-1431.5, enacted in

1986, provides in part:

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“[e]ach defendant shall be liable only for the amount

of non-economic damages allocated to that defendant in

direct proportion to that defendant’s percentage of

fault, and a separate judgment shall be rendered

against that defendant for that amount.” 

The California Supreme Court held in DaFonte v. Up-Right, Inc., 2

Cal.4th 593, 596 (1992), that Proposition 51 “eliminates a third

party defendant’s joint and several liability to an injured

employee for unpaid noneconomic damages attributable to the fault

of the employer, who is statutorily immune from suit.” The court

stated that Proposition 51 “retains the joint liability of all

tortfeasors, regardless of their respective shares of fault, with

respect to all objectively provable expenses and monetary losses. 

On the other hand, the more intangible and subjective categories

of damage were limited by proposition 51 to a rule of strict

proportionate liability.” DaFonte, 2 Cal.4th at 600.

Witt v. Jackson, 57 Cal.2d 57 (1961), and its progeny

established the rule that where there is a concurrently negligent

employer, a third party Defendant can have its judgment offset by

the amount paid in workers’ compensation benefits. But these

cases were decided well before the enactment of Proposition 51

and did not take into account the elimination of joint and

several liability for noneconomic damages. The California

Supreme Court has not addressed the question of how to allocate

the workers’ compensation offset after Proposition 51. 

In calculating their proposed judgment, Plaintiffs rely on

Scalice v. Performance Cleaning Systems, 50 Cal.App.4th 221

(1996), and Torres v. Xomox Corp., 49 Cal.App.4th 1 (1996). To

determine the amount of workers’ compensation benefits to apply

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as an offset to a third party’s liability, these California

Courts of Appeal cases first determine the ratio of economic

damages to total damages the jury awarded and then apply that

ratio to the total workers’ compensation figure. The resulting

amount is that portion of the total workers’ compensation

benefits attributable to economic damages, which represents the

offset figure. This figure is then deducted from the total

economic damages to result in the total joint and several

judgment for economic damages against a third party tortfeasor.

Defendant argues that this calculation is incorrect and that

100% of the total workers’ compensation benefits paid to Hall

should apply to offset the economic damages total, because these

benefits are properly characterized as economic losses since they

represent medical expenses and temporary disability payments. 

Defendant cites Hernandez v. Badger Constr. Equipment Co., 28

Cal.App.4th 1791 (1994), and Poire v. C.L. Peck/Jones Brothers

Constr. Corp., Inc., 39 Cal.App.4th 1832 (1995), in support of

this assertion. In both cases, the respective courts upheld the

trial court’s offset of economic damages by the full amount of

workers’ compensation benefits paid and did not apportion or

reduce the benefits. In neither case was the calculation of the

workers’ compensation benefit offset at issue, nor was the

calculation of the offset analyzed. Neither decision explains

the rationale for such an offset allocation. 

Scalice and Torres found that workers’ compensation benefits

cannot be properly characterized solely as economic damages. 

Although they consist of monetary amounts, workers’ compensation

benefits do not directly correspond to the economic damages

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available in tort. Scalice, 50 Cal.App.4th at 229-30; Torres, 49

Cal.App.4th at 31 (“The benefits of [the workers’ compensation]

law are not provided as an indemnity for negligent acts committed

or as compensation for legal damages sustained, but as an

economic insurance measure. Thus the analogies of the common law

cannot be applied too closely to the workers’ compensation

scheme.”) Rather, these benefits take into consideration

intangible, subjective items like pain and, in some instances,

penalties. Id. at 229. Their account of lost earnings is also

different. Workers’ compensation law does not attempt to

determine actual wages lost to an employee but rather calculates

earnings through a series of statutory formulas that establish

floors and ceilings for such computations. Id. Accordingly,

Scalice treats workers’ compensation benefits in the nature of a

statutory settlement, noting the workers’ compensation system is

a “substitute for bringing an action against an employer, and the

benefits paid are akin to a compromise payment made to avoid

litigation.” Id. at 232. 

This reasoning is persuasive. Workers’ compensation

benefits do not fit neatly into either category of economic or

noneconomic damages. Nor are they intended to be the same as

such damages, because they reflect a fundamental social

compromise enacted by the California Legislature “which include

the same intangibles as do many other types of settlement.” 

Scalice, 50 Cal.App.4th at 232.

Scalice and Torres calculated the offset by: 1) determining

economic damages as a percent of total damages awarded, and 2)

applying that percentage to the total workers’ compensation

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benefits to get the amount of these benefits attributable to

“economic damages”. Here economic damages represent 21.7736

percent of the total damages, which is computed by dividing

$5,288,476 in economic damages by $24,288,476 in total damages

awarded, after reduction for the 50% comparative fault of the

Plaintiff. Applying this percentage to the $1,238,495 in total

workers’ compensation paid, the amount of the offset is

$269,664.94. Net economic damages after the workers’

compensation offset is applied total $5,018,811. 

Adding economic damages of $5,018,811 to net noneconomic

damages of $15,000,000, results in a total judgment of

$20,018,811 for Plaintiff Brian Hall.

CONCLUSION

For the reasons stated above, the net judgment for Plaintiff

Brian N. Hall shall be entered in the amount of $20,018,811.00. 

IT IS SO ORDERED.

Dated: December 11, 2007 /s/ Oliver W. Wanger 

emm0d6 UNITED STATES DISTRICT JUDGE

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