Opinion ID: 2260150
Heading Depth: 2
Heading Rank: 2

Heading: Fallacy of Havens

Text: Ideally, a damage award computation should achieve the tripartite goals of accuracy, efficiency, and predictability. Freeport Sulphur Co. v. S.S. Hermosa, 526 F.2d 300, 308-12 (5th Cir. 1976). Commentators note that the Pennsylvania method of calculating lost future earnings achieves the efficiency goal by precluding expert testimony on inflation and productivity while confining the relevant inquiry to determining wages at the date of the debilitating event. Comment, Inflation and Damages, 63 Va.L.Rev. 105, 108 (1977); Note, Considering Inflation in Calculating Lost Future Earnings, 18 Wash.L.J. 499, 500 (1979), Fleming, Inflation and Tort Compensation, 26 Am.J.C.L. 51, 65 (1977). Since the inflation and productivity variables are removed from consideration in calculating the damage award, the award is more predictable and the possibility of settlement out of court is enhanced. However, even assuming the premise that simplification is synonymous with efficiency and predictability, the Pennsylvania method sacrifices accuracy to the prejudice of the victim by failing to compensate the victim to the full extent of the injury sustained. By an obstinate refusal to give any recognition to inflation and productivity, we ignore our responsibility to attempt to graduate the amount of the damage award exactly to the extent of the loss. Forsyth v. Palmer, 2 Harris 96, 97 (1850). We are aware that [T]he orderly development of the law must be responsive to new conditions and to the persuasion of superior reasoning. Griffith v. United Air Lines, 416 Pa. 1, 23, 203 A.2d 796, 806 (1964). [W]hen a rule, after it has been duly tested by experience, has been found to be inconsistent with the sense of justice or with the social welfare, there should be less hesitation in frank avowal and full abandonment. . . . There should be greater readiness to abandon an untenable position when the rule to be discarded may not reasonably be supposed to have determined the conduct of the litigants, and particularly when in its origin it was the product of institutions or conditions which have gained a new significance or development with the progress of the years. Cardozo, The Nature of the Judicial Process, 150-51 (1921). Despite the uninformed belief of the Haven's court, inflation and productivity factors are not speculative and are capable of definition and prediction by economic experts. For decades, economists have been refining tools to forecast economic growth and have used these tools with proven accuracy. Sophisticated economic forecasts are relied upon by every major government agency, corporation, and financial institution. These forecasts are based upon all that is known in the American economy and despite small tolerances of error, these projections have been accurate in the past. See, District of Columbia v. Barriteau, D.C.App., 399 A.2d 563, 566 (1979). Thus, there exists a reasonable basis in fact for this court to consider the impact of inflation and productivity on lost future earnings. A court has a responsibility to the citizenry to keep abreast of changes in our society. In light of the recognized acceptance of the science of economics, the courts of this Commonwealth can no longer maintain their ostrich-like stance and deny the admissibility and relevancy of reliable economic data concerning the impact of productivity and inflation on lost future earnings. Indeed, to ignore economic realities and presume that there will be no changes in an individual's future earnings because of such factors is further removed from reality than any variance that may result from our efforts to predict these factors.
It would be ludicrous for this Court to cling to the Haven Court's conclusion that the presence of inflation in our economy is a temporary and passing phenomenon, influenced by war and other unusual circumstances. [11] Information gathered by the United States Bureau of Labor Statistics demonstrates that the American economy has been experiencing a steady increase in the cost of living over its history. Even though the rate of inflation has not been numerically the same for the past 40 years, the presence of inflation as a factor in our economy has been constant. [12] Purchasing Power of the Dollar : 1940-78, U.S. Bureau of the Census, Statistical Abstract of the United States: 1978 (99th Edit.). [13] Thus, while the rate of inflation may vary during any given period, its long term presence as a fact of life in our economic picture is certain.
Moreover, the assertion that productivity factors are too speculative to consider in computing lost future earnings is also fallacious. [14] An individual's future earning capacity is capable of estimation based upon objective factors of age, maturity, education and skill. [15] Henderson, Consideration of Increased Productivity and Discounting of Future Earnings to Present Value, 20 S.D.L.Rev. 307, 312 (1976). A determination of an individual's future earning capacity based on objective criteria is far less speculative than most other estimates made by the trier of fact. See e.g., Hamil v. Bashline, 481 Pa. 256, 392 A.2d 1280 (1978) (what might have happened to the decedent had he received proper medical care); Wallace v. Pa. R.R., 222 Pa. 556, 561, 71 A. 1086 (1909) (future pain and suffering is recoverable if it is likely or probable to ensue); Yost v. West Penn Railways Co., 336 Pa. 407, 410, 9 A.2d 368 (1939) (future medical expense can be recovered if they can be estimated). [16] Admittedly, predicting lost future earnings entails some degree of speculation. However, that alone does not justify excluding reliable economic evidence since imprecision is inherent in any computation of lost future benefits. In view of our acceptance of the reliability of the science of economics, the victim's lost future earning capacity should be treated like any other question of fact [17] and should be submitted to the trier of fact after a proper foundation and expert testimony. This Commonwealth now joins the growing number of jurisdictions which consider inflation and productivity as integral factors to be included in computing lost future earnings. See Beaulieu v. Elliott, 434 P.2d 665 (Alaska 1967); Richmond Gas Corporation v. Reeves, 302 N.E.2d 795 (Ind.App. 1973); Resner v. Northern Pacific Railway, 161 Mont. 177, 505 P.2d 86 (1973); Plourd v. Southern Pacific Transportation Co., 266 Or. 666, 513 P.2d 1140 (1973); Willmore v. Hertz Corp., 437 F.2d 357, 359-60 (6th Cir. 1974); Schnebly v. Baker, 217 N.W.2d 708 (Iowa 1974). See also Bach v. Penn Central Transportation Co., 502 F.2d 1117 (6th Cir. 1974); Weakley v. Fishbach & Moore, Inc., 515 F.2d 1260 (5th Cir. 1975) (interpreting Texas law); United States v. English, 521 F.2d 63 (9th Cir. 1975); Tenore v. Nu Car Carriers, Inc., 67 N.J. 466, 341 A.2d 613 (1975); Seaboard Coast Line R.R. Company v. Garrison, Fla.App., 336 So.2d 423 (1976); Markham v. Cross Transportation, Inc., 376 A.2d 1359, 1364 (R.I. 1977); Ossenfort v. Associated Milk Producers, Inc., 254 N.W.2d 672, 683-84 (Minn. 1977); Lumber Terminals, Inc. v. Nowakowski, 36 Md.App. 82, 373 A.2d 282, 290-91 (1977).