Opinion ID: 1890354
Heading Depth: 3
Heading Rank: 3

Heading: Present value instruction

Text: CSX tendered the following instruction on present value: If you should find that the plaintiff is entitled to a verdict, and further find that the evidence in this case establishes either: (1) a reasonable likelihood of future medical expense, or (2) a reasonable likelihood of loss of future earnings, then it becomes the duty of the jury to ascertain the present worth in dollars of such future damages, since the award of future damages necessarily requires that payment be made now for a loss that will not actually be sustained until some future date. Under these circumstances, the result is that the plaintiff will in effect be reimbursed in advance for the loss, and so will have the use of money, which he would not have received until some future date, but for the verdict. In order to make a reasonable adjustment for the present use, interest free, of money representing a lump-sum payment of anticipated future loss, the law requires that the jury discount or reduce to its present worth, the amount of the anticipated future loss, by taking (1) the interest rate or return which the plaintiff could reasonably be expected to receive on an investment of the lump-sum payment, together with (2) the period of time over which the future loss is reasonably certain to be sustained; and then reduce, or in effect deduct from, the total amount of anticipated future loss whatever that amount would be reasonably certain to earn or return, if invested at such rate of interest over such future period of time; and include in the verdict an award for only the present-worththe reduced amountof anticipated loss. CSX asserts that the plaintiff in a FELA action has the burden to prove the present value of future lost wages. [50] Relying on Jones & Laughlin Steel Corporation v. Pfeifer [51] CSX also asserts that the trial court committed reversible error in this case by refusing to instruct the jury that damages for future wage loss must be reduced to present value. We disagree. The Sixth Circuit has rejected arguments by railroads that damages for future wage loss are prohibited absent proof of a discount rate. In other words, the plaintiff is not required to produce evidence concerning the present value of future lost wages [52] in order to be entitled to damages for future wage loss. We adhere to the Sixth Circuit's view. The U.S. Supreme Court determined in Kelly [53] that federal law requires future damages to be reduced to present value but considered the evidence admitted to assist the jury in making the computation to be a matter of procedure and evidence... to be determined according to the law of the forum. In Pfeifer , [54] a Jones Act case, the court acknowledged that because the lost stream [of earnings] can never be predicted with complete confidence, any lump sum represents only a `rough and ready' effort to put the plaintiff in the position he would have been in had he not been injured. [55] The court explained that the calculation of damages resulting from an injury begins with the assumption that the plaintiff would have continued to work until retirement. The calculation then attempts to compensate for the stream of income lost due to the injury, which depending on the proof may include not only present wages but fringe benefits as well as anticipated future wage increases due to inflation or cost-of-living adjustments, likely promotions, seniority, and merit raises. [56] In order to compensate only for the plaintiffs actual pecuniary loss, the calculation must account for the fact that most or all of the items in the earnings stream would be subject to income tax. [57] Likewise, the calculation must account for the fact that the plaintiff will receive the award in a lump sum rather than in periodic payments. That is accomplished by discounting the lump sum at a rate that is based not only on the return from investing the sum in the best and safest investments but also on the extent to which that return is likely to be offset by taxes and inflation. [58] The Pfeifer court refused to specify a mandatory formula for choosing the discount rate but rejected the application of a state's total offset rule as a matter of law, stating that the trier of fact must make a deliberate choice. [59] The court noted, however, that nothing would prevent parties interested in controlling litigation costs from stipulating to the total offset method before trial. [60] The trial court did not err in refusing CSX's present value instruction. It mentioned only some relevant factors and was not supported by any evidence. Pfeifer makes it clear that an appropriate discount rate considers three factors: the interest likely to be earned on the best and safest investments; the applicable tax rate on the interest; and the extent to which inflation would be likely to reduce the return further. Neither Pfeifer nor St. Louis Southwestern Railway Co. v. Dickerson [61] or Monessen Southwestern Railway Company v. Morgan, [62] both of which applied Pfeifer to FELA claims, addressed the evidentiary foundation necessary to require an instruction directing the jury to discount future wage loss damages. Neither party introduced evidence concerning any of the factors comprising a discount rate in the present case or indicating that the interest likely to be earned would exceed taxes and inflation. Thus, no evidentiary basis existed to support an instruction that referred specifically to any of the factors. The trial court's Instruction No. 7 and Verdict Form No. 4 directed the jury to determine from the evidence a sum of money that will fairly and reasonably compensate Troy Moody for future lost wages. As the Sixth Circuit has observed: Jurors are presumed to be intelligent people, generally aware, from today's economy and their own experience with it, of the earning value of money when placed in safe investments. [63] Jurors are also aware from their own experience that interest is taxed and that inflation reduces the value of money. The trial court could have said more on the subject than it did, but the instructions were adequate under the circumstances.