Document: 444 U.S. 490 100 S.Ct. 755 62 L.Ed.2d 689 NORFOLK AND WESTERN RAILWAY COMPANY, Petitioner,v.Kandythe J. LIEPELT, Administratrix, etc. No. 78-1323. Argued Nov. 5, 1979. Decided Feb. 19, 1980. Rehearing Denied April 14, See 445 972, 1667. Syllabus Held: In a wrongful-death action brought under the Federal Employers' Liability Act (FELA) in an Illinois court, trial court erred excluding evidence offered by petitioner-defendant to show effect of income taxes on decedent's estimated future earnings, and refusing petitioner's requested jury instruction that "your award will not be subject any taxes, you should consider such fixing amount your award." Pp. 757-760. Ill.App.3d 653, 19 Ill.Dec. 357, 378 N.E.2d 1232, reversed remanded. Howard Trienens, Chicago, Ill., for petitioner. Richard S. Fleisher, respondent. Mr. Justice STEVENS delivered opinion Court. 1 cases arising Act,1 most judges refuse allow receive or concerning impact federal damages awarded. Because prevailing practice developed at time when were relatively insignificant, because some courts are now following different practice, we decided answer two questions presented certiorari petition this action: (1) whether it was error exclude payable past earnings; (2) judge instruct would taxation. 2 1973, fireman employed petitioner suffered fatal injuries collision caused negligence.2 Respondent, as administratrix fireman's estate, suit FELA recover his survivors result death. 1976, after full Circuit Court Cook County, awarded respondent $775,000. On appeal, Appellate held "not nontaxability award" also "[was] earnings decedent." 669, Ill.Dec., 370, 1245 (1978). The Supreme denied leave appeal.3 3 supporting included biographical data about decedent family expert testimony economist. decedent, 37-year-old man, living with second wife young children contributing support older first marriage. His gross 11 months prior death November 22, amounted $11,988. Assuming continued employment, those have $16,828.26 1977. 4 increased rate approximately five percent per year, which $51,600 year 2000, expected retirement. plus value services he performed family, less amounts spent upon himself, produced total which, discounted present trial, $302,000. 5 Petitioner objected use without deduction respondent's expert's prove through its own expert, actuary, during years 1973 2000 $57,000. Taking figure into account, making assumptions increases salary calculation computed net pecuniary loss $138,327. As already noted, returned verdict 6 argues must assumed taxation; otherwise, is argued, exceeded large amount.4 For reason, contends prejudiced judge's refusal 7 Whether instruction, well question properly excluded, matter governed law. It has long been settled measure character. See, e. g., Michigan Central R. Co. v. Vreeland, 227 59, 33 192, 57 L.Ed. 417. This true even if state court. Chesapeake & Ohio Kelly, 241 485, 491, 36 630, 632, 60 1117.5 case recognized then being followed change addresses issue.6 We do so now, considering proposed instruction. 8 * FELA, recovery "the . [that] flow from deprivation benefits beneficiaries might reasonably received " supra, U.S., 70, S.Ct., 196. money wage earner able contribute unquestionably affected tax pay Government. after-tax income, rather than before provides only realistic ability family. follows inexorably earner's relevant factor calculating monetary dependents dies. 9 Although consistently personal expenditures, see, Kansas City Leslie, 238 599, 604, 35 844, 846, 59 1478 required estimate reduced "taking account earning power presently awarded," 489, they generally considered payment tantamount expenditure regarded prediction consequences too speculative complex jury's deliberations. Johnson Penrod Drilling Co., 510 F.2d 234, 236-237 (CA5 1975), cert. denied, 423 839, 96 68, 46 58. 10 Admittedly there many variables may affect income-tax liability. law change, increase decrease size, spouse's bracket, extra unforeseen deductions become available. But employment itself, health, interest rates, inflation matters prediction. Any one these issues provide basis protracted debate. practical wisdom bar bench effective methods presenting essential elements form understandable juries increasingly familiar complexities modern life. therefore reject notion introduction describing jury.7 Respondent door opened, other equally received. example, she points out discounting value, earned omitted.8 Logically, certainly seem correct amount, like wages, basis. fact estimate, proper form, admissible does persuade us wrong figures instead projecting what financial contributions had tragic accident occurred. 12 costs litigation, including her attorney's fees, pertinent determination actually compensate their loss. sense is, course, true. argument fees added plaintiff's truly make him whole contrary applicable "American Rule." Alyeska Pipeline Service Wilderness Society, 421 240, 247, 95 1612, 1616, 44 141. however, unlike number statutes,9 authorize successful litigant. Only Congress them. event, surely Judiciary ignore demonstrably measuring order offset perceived undesirable unfair rule regarding fees.10 II 13 Section 104(a)(2) Internal Revenue Code 1954, 26 U.S.C. § 104(a)(2), taxable income.11 section construed apply awards; recipient.12 14 perfectly clear, entirely possible members assume kind taxation, substantially sure injured party fully compensated. Missouri expressed "[i]t reasonable average juror believe [that will] taxes." Dempsey Thompson, 363 Mo. 339, 346, 251 S.W.2d 42, 45 (1952). And Judge Aldisert, writing Third Circuit, agreed: 15 "We take judicial notice 'tax consciousness' American public. Yet, recognize, did 42 (1952), few general public aware special statutory exception injury awards contained Code. 16 '[T]here always danger today's tax-conscious (mistakenly course) judgment big enough plaintiff get think deserves imaginary taken it.' 17 "II Harper James, Law Torts 25.12, 1327-28 (1956)." (Footnote omitted.) Domeracki Humble Oil Refining 443 1245, 1251 (1971), 404 U. 883, 92 212, 30 165. 18 A commentators identified risk.13 witness $302,000, care training provided children; fanciful suppose erroneously believed portion Government improperly inflated recovery. speculation accurate, agree that, Ely wrote Ninth 20 "[t]o put simply, giving can no harm, help preventing inflating thus overcompensating erroneous assumption taxable." Burlington Northern, Inc. Boxberger, 529 284, 297 (1975). 21 hold case. That brief could easily understood. complicate additional qualifying supplemental instructions necessary. prejudicial either party, but merely eliminate area doubt improper computation damages. 22 reversed, remanded further proceedings inconsistent opinion. 23 ordered. 24 BLACKMUN, whom MARSHALL joins, dissenting. 25 wrongful Act, Stat. 65, amended, §§ 51-60, today holds granted, lost reduce award. request, instructed tax. I neither ruling. my view, mandating adjustment way reduction paid appropriates tortfeasor benefit intended conferred victim survivors. requiring tax, opens variety admonitions "misbehave," unnecessarily interjects administration 27 day substantial sorely tempted, accept propriety admitting tort victim's instructing tax-free. This, urged, common recognition realities. 28 Ordinarily, recipient real ultimate concern payer. Apart withholding, just payer's responsibility or, indeed, "any business." concept "net taxes" omnipresence collector, sure, facts life within constant awareness both factors basic character damages, surviving injury, deceased survivors, benefit, retained channel. Surely, operate assist perhaps windfall. 29 employer-petitioner argues, holds, subtracted computing Were set aside uncertainties, estimates, involved effectuating subtraction, unreasonable legislative proposition compensatory system. Neither nor Court, recognizes premise nontaxability, Code, itself. By taxing award, bestowed benefit.1 parties disagree over origin tax-free status award,2 clear taxed income. Cf. Commissioner Glenshaw Glass 348 426, 430-431, 75 473, 476-477, 99 483 (1955). M. Chirelstein, Income Taxation 39-40 (1977). why created statute deciding where allocated another enacted Congress.3 31 While articulated reasons highly unlikely confer tortfeasor. Two more probable purposes exclusion apparent. First, involve same uncertainties noted majority country reason taking simply worthwhile enact administratively burdensome system approximate treatment if, fact, period decedent. Second, humanitarian victims tort. One District reasoned: 32 "The divine societal purpose furthered awarding wrongdoing defendants Congressional largesse. served benefiting innocent tortious conduct. Indeed, since victims' chances needing relief thereby diminished, greater, less, death, capacity total. concludes Congress, all exemptions 104, '. relieve taxpayer who misfortune ill ..' Huddell Levin, 395 F.Supp. 64, 87 (N.J.1975),4 quoting Epmeier United States, 199 508, 511 (CA7 1952), quoted turn Haynes 353 81, 84-85, n. 3, 77 649, 651, 671 (1957). Comment, Tax Effects Personal Injury Recoveries, La.L.Rev. 672, 685 (1970); Note, 69 Harv.L.Rev. 1495, 1496 (1956); Damage Recoveries Litigation, 40 Cornell L.Q. 345, 346 34 Whichever concerns motivated transfer tortfeasor-defendant purpose. If felt worth effort prospective liability behalf fisc, want require away covered FELA. conclude, therefore, law, instructed, taxable. mandated, said, "it compensated." Ante, 496. finds "surely suppose" acted 497. purely cautionary nature. nothing call basically irrelevant attention, directs forget matter. Even admonition misbehave, seems me unwise unjustified, almost affront jury. 37 "entirely possible" "may" belief defendant insured, obligated (as federal) extraneous factors. Charging every conceivable misbehave miscalculate confusing. Yet Court's decision possibility. There record indicate likely act award's collateral suggests difference estimation represents ante, 496-498, pure surmise. experts place precise dollar these, instead, 38 "[Q]uestions procedure [are] determined according forum [in FELA]." 1117 (1916). asserted control incidents appear procedural, done concern, apparently, protecting rights plaintiffs. Brown Western Alabama, 338 294, 70 105, 94 (1949) (a State cannot apply, case, usual pleadings against pleader); Dice Akron, C. Y. 342 359, 72 312, 398 (1952) (FELA entitled notwithstanding rule); Wright, Courts 195-196 (3d ed. 1976); Hill, Substance Procedure Actions—The Converse Erie Problem?, St.L.J. 384 (1956). agree, rules interfere policy rejected, characterized "procedural." Enforcement Federally Created Rights, 73 1551, 1560-1561 (1960). Procedural Protection Rights Courts, U.Cin.L.Rev. 184 (1961). implicates interest. issue "ordinary procedure," Dickinson Stiles, 246 631, 633, 415, 416, 908 (1918), 39 Since Illinois, arose, Raines New York 51 Ill.2d 428, 430, 283 230, 232, 409 983, 93 322, 247 (1972), correctly excluded victim, affirm Illinois. et seq. vigorously contested extensive consideration First District. 1232 No aspect issue, us. App. Pet. Cert. A27-A28. excess adequately explained guidance, children. "create uniformity throughout Union" respect railroads' employees. H.R.Rep. 1386, 60th Cong., 1st Sess., (1908). 362, 314, 398; Brady Southern 320 476, 479, 64 88 239; States spoken issue. Absent authoritative pronouncement follow decisions our supreme Hall Chicago North Ry. (1955), 135, 149-52, 125 ." Ill.App.3d, 668-669, N.E.2d, 1245. say, permitted de minimis, cause confusion worth. Fed.Rule Evid. 403. McWeeney York, N. H. 282 34, (CA2 1960), 364 870, 81 115, 93. Civil 1964, Tit. VII, 706(k), 78 261, 2000e-5(k); Clayton 4, 731, 15; numerous others collected 260-261, 33, 1623-1624. dissent takes position see nn. 11, 12, infra, makes nontaxable, "appropriates survivors." Post, 498-499. language history suggest whatsoever action. Moreover, netting expenditures. Both subtractions determine 196, contains reimbursement medical expenses deduction. part: "Except attributable (and of) allowed 213 (relating medical, etc., expenses) include— "(2) (whether agreement) sickness Rev.Rul. 54-19, 1954-1 Cum.Bull. 179. Burns, Compensation Award Wrongful Death Is Tax-Exempt: Should Tell Jury?, DePaul L.Rev. (1965); Feldman, Awards: Tax-Exempt Status Be Ignored?, Ariz.L.Rev. 272 (1966); Nordstrom, Taxes Awards, 212 (1958). Of maintains "gross include sickness." Brief 8-9, 2. Petitioner, hand, not, words statute, "received injuries." early ruling Code's definition replace relatives I.T. 2420, VII-2 123 (1928); Cum.Bull Alternatively, Congress' enacting subsection aid victims. Rather, traced 1918 meaning Sixteenth Amendment, citing H.R.Rep.No. 767, 65th 2d 9-10 (1918). 31-32, 23. rest taxation "fundamentally alter forms compensation country," Reply 10-11, limited My position, policies embodied interpretation statute. explicit statement intent, infer congressional override States' traditional define state-created causes Vacated grounds, 537 726 (CA3 1976).

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