Document: 462 U.S. 523 103 S.Ct. 2541 76 L.Ed.2d 768 JONES & LAUGHLIN STEEL CORPORATION, etc., Petitioner,v.Howard E. PFEIFER. No. 82-131. Argued Feb. 28, 1983. Decided June 15, Syllabus Respondent was injured in the course of his employment while employed by petitioner as a loading helper on petitioner's coal barge. The injury made responden permanently unable to return job or perform other than light work. brought an action Federal District Court against petitioner, alleging that had been "caused negligence vessel" within meaning § 5(b) Longshoremen's and Harbor Workers' Compensation Act (LHWCA). found respondent's favor awarded damages $275,881.31, holding receipt compensation from under 4 LHWCA did not bar separate recovery for negligence. In calculating damages, court increase award take inflation into account nor it discount reflect present value future stream income. Instead, followed decision Pennsylvania Supreme Court, which held "as matter law shall be presumed equal interest rates with these factors offsetting." Appeals affirmed. Held: 1. A longshoreman may bring owner vessel who acts own stevedore, even though has received owner-employer 4. plain language 5(a), provides liability employer prescribed "shall exclusive place all such employee," appears support contention since, employer, paid him 4, 5(a) absolves responsibility respondent damages. But is undermined 5(b), authorizes whose caused third party, unless persons engaged providing stevedoring services vessel. If intended suits owner-employers, there would have no need put additional sentence barring owneremployers injuries fellow servants. And history further refutes bars suit 5(b). Pp. 528-532. 2. performing its calculation, erred applying theory mandatory federal rule decision. 533-553. (a) two elements determine calculation employee inflation-free economy are amount earned during each year he could expected work after injury, appropriate rate, reflecting safest available investment. 533-538. (b) inflationary economy, should ideally affect both stages described above. This however, will at this time select one many rules proposed litigants amici case establish method courts lost earnings economy. First, very nature must rough approximation. Second, sustained price can make substantially less precise. third, question arise different contexts. 538-547. (c) Respondent's cause rooted maritime law, thus fact adopted total offset cases forum controlling importance case. Moreover, reasons adoption State's entire judicial system necessarily applicable special class workers covered LHWCA. P. 547. (d) longshoreman's vessel's negligenc , rate chosen basis used estimate earnings. trier relies specific forecast inflation, if estimated calculated include along individual societal factors, then proper after-tax market rate. since forecasts remain too unreliable useful cases, normally costly ultimately unproductive waste longshoremen's resources centerpiece litigation On hand, used, necessary choose below-market As long continues, "offset" same full taken (excepting inflation) resulted wage increases, set off inflation. Pp.547-549 . (e) remand, whatever earnings, deliberate choice, rather assuming bound state law. Pp.552-553 678 F.2d 453 (3 Cir.1982), vacated remanded. Robert W. Murdoch, Pittsburgh, Pa., petitioner. Jerome M. Libenson, respondent. 1 STEVENS, Justice. 2 required compensate (the Act). 44 Stat. 1426, 33 U.S.C. 904. pro hac vice barge, also liable 5 Act. 86 1263, 905. We granted certiorari decide whether subject forms liability, consider correctly upheld trial court's computation 3 Petitioner owns fleet barges regularly operates three navigable rivers vicinity Pennsylvania. 19 years aid unloading those plants located shore Monongahela River. January 13, 1978, carrying heavy pump, slipped fell snow ice negligently failed remove gunnels His anything July 1, 1979. November 1979, $275,881.31. payments Court's predicated few undisputed facts. At earning annual $26,065. He remaining expectancy 121/2 years. date (October 1980), $33,079.14. obtained legal minimum hourly 1979 until 65th birthday, $66,350. 6 arrived final taking ($325,312 50), subtracting projected hypothetical ($66,352) ($33,079.14), adding $50,000 pain suffering. account, instead decided follow Pennsylvania, Kaczkowski v. Bolubasz, 491 Pa. 561, 583, 421 A.2d 1027, 1038-1039 (1980). Thus, although dispute receive regular cost-of-living increases retirement, refused explaining they provide "a double consideration inflation." App. Pet. Cert. 41a. For comparable reasons, disregarded changes computing mitigation attributable ability 7 It does appear either party offered any expert testimony concerning predicted appropriately value, possible connection between rates. did, offer how wages increased over time, based upon recent company's scale. 8 Pfeifer Jones Laughlin Steel Corp., (CA3 1982). relying prior Griffith Wheeling Pittsburgh Co., 521 31, 38-44 (CA3), cert. denied, 423 1054, 96 785, 46 643 (1975). issue, first noted relied case, controlled. next defining content account: 9 "Full prospective most difficult, impossible, attain blind realities consumer index historical decline purchasing power. Thus we recognize, must, worker entitled reimbursement loss honest accurate stark reality conditions." Id., 460-461.1 10 understood, task predicting quite speculative. concluded speculation properly avoided manner Court—by adopting Pennsylvania's "total method" approved way ffset respects twin goals considering discounting eliminating calculations about either, "because legally cancel another." 461. Accordingly, affirmed judgment. Liability Issue 11 Most longshoremen load unload ships independent stevedores, contracted owners services. directly owner. Under Act, specified employer's negligence.2 Section exclusive.3 reads, "The act employee. ." 905(a). Since benefits pursuant contends 12 Although is, indeed, supported vessel4 party. typical tripartite situation, only guaranteed statutory employer; recover tort prove vessel.5 second makes clear authorized when stevedore That provides, "If person services, permitted vessel." owner-employers servants.6 13 Prior 1972, construed authorize obtain excess schedule, contained today. Reed Yaka, 373 410, 83 1349, 448 (1963); Jackson Lykes Brothers Steamship 386 731, 87 1419, 18 488 (1967). 1972 Amendments changed character substituting unseaworthiness liability,7 Congress clearly preserve rights maintain action. House Committee Report unambiguous: 14 recognized provisions deal where longshoreman, shipbuilder, repairman notwithstanding S.S. Bros. 371, (1967), remedy believes longshoremen, shipbuilder depend contractor. Committee's intent principles apply determining employs shipbuilders repairmen contractor persons." H.R.Rep. 92-1441, 92d Cong., 2d Sess., reprinted [1972] U.S.Code Cong. Ad.News 4698, 4705 (footnotes omitted). 15 Edmonds Compagnie Generale Transatlantique, 443 256, 266, 99 2753, 2759, 61 (1979), observed post-1972 "all treated their shipowner-stevedore stevedores arm shipowner itself." right hold today Damages 16 disabled result therefore probable pecuniary duration career, reduced value. outset review measured alters analysis. Finally, committed reversible error 17 * assumed disabled, continued work, periodic intervals disability, death. An impaired capacity diminution income.8 form payments, but country traditionally lump sum, conclusion litigation.9 sum cannot computed without examining income purports replace. stream's length known certainty; killed different, non-work-related accident time. probability still working given constantly diminishing.10 Given complexity trying exact frequently relatively simple up certain. example, parties agreed age 65 (121/2 more years) injured. Each installment11 comprises several elements. significant course, actual wage. addition, enjoyed certain fringe benefits, included ideal evaluation worker's excluded simplicity's sake.12 diminished taxes. tax-free, relevant benefits. See Norfolk Western R. Co. Liepelt, 444 490, 100 755, 62 689 often incur unreimbursed costs, transportation uniforms, incur. These costs deducted estimating stream. 20 simplify litigation, presume installment other, except gross wages. However, attempting stylized installments wages, faces complex task. obvious begin injury. Yet "estimate lessened solely plaintiff injury." C. McCormick, (1935). Even economy—that say prices goods stable—a tend "inflate." "real" reflects number some linked broader forces.13 21 With passage becomes valuable employer. personal experiences h contributions firm profits. To heightened "seniority" "experience" raises, "merit" promotions.14 difficult when, whether, particular might see Feldman Allegheny Air Lines, 524 384, 392-393 (CA2 1975) (Friendly, J., concurring dubitante ), reliably demonstrated workers.15 22 Furthermore, Grunenthal Long Island 393 156, 160, 89 331, 333-334, 309 (1968). Through efficient interaction among labor, capital, technology, industrial productivity increase, workers' enjoy share growth.16 Such increases—reflected real national product per worker-hour—have permanent feature World War II.17 through collective bargaining, able negotiate "share" revenues, cost reducing shareholders' investments.18 Either forces plaintiff's proffered evidence predictable growth reflected influence factors. 23 summarize, stage involves what been. approximated series career. sufficient proof offered, figure individualized (such foreseeable promotions) industry).19 24 Of replace simply totaling payments. it—or part it—is invested, earn money. settled our Chesapeake Ohio Kelly, 241 485, 36 630, 60 L.Ed. 1117 (1916) "in reasonable suppose safely awarded, ascertained ought discounted making award." S.Ct., 632.20 25 "the best investments." 491, 632. Once definitely worked term years, risk-free wages; therefore, market's premium investors willing accept risk default. supra, terms, represent worker.21 26 notion damage representing rests fairly sophisticated economic concepts, stated easily. They are: (1) injury; (2) income, add award.22 II 27 Unfortunately triers fact, ours Inflation fixture decades, doubt previous section. problem do so practical context civil 28 shape workers, including respondent, contractual "cost-of-living adjustment" automatically percentage change Bureau Labor Statistics. contract factor—price inflation—in 29 calculat requires selection Price inflation—or precisely, anticipated inflation—certainly affects return. lender knows loan repaid later dollars advanced, charge high enough temporary use proceeds shrinkage value.23 30 incorporated See, e.g., Sleeman 414 305 (CA6 1969); Johnson Penrod Drilling 510 234 (CA5 (en banc). accepted lead were influenced predictions Higginbotham Mobil Oil 545 422, 434-435 1977). No allowed unreliably Sleeman, 308; Penrod, 240-241. applied Blue Alabama, 469 487, 496-497 1972). 31 effect holdings deny benefit impact giving defendant inflation's e rnings situation invest "inflated" interest, provided existing nominal income; economy.24 inequity minimal because low 32 remained low. There now consensus longer tolerated. United States English, 63, 75 (CA9 ("While administrative convenience ignoring appeal low, ignore reality"). all, regarding response take. generally Note, Future Inflation, Prospective Circuit Courts, 63 Va.L.Rev. 105 (1977). Our sister common nations continue adhere position speculative considered earnings; sought counteract danger systematically undercompensating plaintiffs below current Nevertheless, rates, slightly theories. England, Lord Diplock suggested allow ready way" 3/4%. Cookson Knowles, [1979] A.C. 565-573. roughly equivalent "[i]n times stable currency." Malett McMonagle, [1970] 166. Canada recommended seven percent, long-term investments minus government expert's prediction Andrews Grand Toy Alberta Ltd., [1978] S.C.R. 229, D.L.R. (3d) 452, 474. Australia, High 2% represents good approximation "real rate." Pennant Hills Restaurants Pty. Ltd. Barrell Insurances 55 A.L.J.R. 258 (1981); id., 260 (Barwick, C.J.); 262 (Gibbs, J.); 277 (Mason, 280 (Wilson, J.). 34 country, rate" approach Australia. Airlines, 388 1975), affirming 382 F.Supp. 1271 (1974) (1.5%); Doca Marina Mercanti Nicaraguense, S.A., 634 30, 39-40 1980) (2%, otherwise). endorsed suggesting components—an desired investment—and latter component essentially constant time.25 perfectly rat .26 35 Still preferred avoid undercompensation, shown least tentative willingness permit Schmitt Jenkins Truck Inc., 170 N.W.2d 632 (Iowa Bach Penn. Central Trans. 502 1117, 1122 1974); Turcotte Ford Motor 494 173, 186-187 (CA1 Huddell Levin, 537 726 1976); 74-76; Ott Frank, 202 Neb. 820, 251 (1979); Columbia Barriteau, 399 563, 566-569 (D.C.1979). Cf. Magill Westinghouse Electric 464 294, 301 1972) (holding open possibility establishing factual testimony); Resner Northern Pacific R., 161 Mont. 177, 505 P.2d (1973) (approving inflation); Taenzler Burlington Northern, 608 796, 801 (CA8 1979) (allowing Steckler States, 549 1372 (CA10 1977) (same). Within past year, Courts choice methods. Sitting en banc, Fifth overruled acceptable exclude attempt predict effects rate.27 Culver Slater Boat 688 280, 308-310 1982) panel Seventh similar position. O'Shea Riverway Towing 677 1194, 1200 (CA7 37 techniques loosely termed offset" What methods rate—the safe investment—is (to tolerable degree precision) completely assume offsets differ, assumptions contribute offset. 38 Beaulieu Elliott, 434 665 (Alaska 1967), regarded seminal Alaska ruled applied. fully factors: 39 671-672. Significantly, distinguish types sources inflation—individual societal—in order resolve before it.28 observed: 40 "It experience progresses occupation profession likely go by. nearly earner reasonably expect factor determined, definite come. extent offsetting reached value." 672. 41 deemed increases. 42 State Guinn, 555 530 1976), refined slightly. "small, automatic keyed employee's service company," 545, discounted. type "certain predictable" raise failure Th s, predictable." Gowdy 271 733 (W.D.Mich.1967) (price inflation), rev'd grounds, 412 525 Pierce New York 304 (W.D.Mich.1969) 43 1027 (1980), took approach. Feldman, 422 1977), concluding introduce bearing sources—both societal—of growth, 579-580, 1027. rejected courts' resulting Rather, 580-582, Schnebly Baker, 217 708, 727 Freeport Sulphur S/S Hermosa, 526 300, 310-312 1976) (Wisdom, concurring). urge us trials persuaded, warranted. Accord, 574 (Lord Salmon). foregoing leads draw conclusions. Because never complete confidence, "rough ready" effort Inflation's magnitude unpredictability create substantial little relation Third, sectors far easier assemble individual's career path others. 45 conclusions counsel hesitation. Having surveyed multitude options available, us. limit attention noting guidance calculated. narrow context, define general boundaries acceptable. III "is law." Pope Talbot, Inc. Hawn, 346 406, 409, 74 202, 204, 98 143 (1953). 1441, Sess. system—for broad encompassing variety claims affecting industries occupations—are 47 vessel, rate.29 Judge Newman warned, average converted graduate seminar forecasting." Mercante 1980). reason, discouraged pursuing 48 ask much again, approaches find distinctly inconclusive essential premise approaches,30 believe reversed adopts percent explains choice. 49 sound argument set-offs. 1976, Professor Carlson Purdue University economics department wrote article American Bar Association Journal contending run excepting inflation—largely gains—match (or exceed) Carlson, Economic Analysis Courtroom Controversy, ABAJ 628 (1976). gains. All seniority promotion done, adequately 50 virtue simplicity economically precise,31 agree Third courts. Naturally, require chose so. nothing prevents interested keeping control stipulating trial.32 prepared impose unwilling litigants, data judge closely patterns industry. legislative branch better equipped comprehensive analysis fashion rule. 51 result, judgment aside. Kaczkowski, decision, insisted "must worth." J.A. 60. seems colored evidence. point, adjustments. stated, "We disagree projections, feel inappropriate view Kaczkowski." 74. Later opinion, declared, plaintiff, inject 76. 52 reopen record left discretion court. bears mention already gives reason fair confidently many. practices longshoring industry predictable. seem difficulty arriving period expectancy, discloses determined bargaining agreement explicitly "cost living" 310, company "general" "job increment increase." irrelevant felt compelled study them remand assumption IV 53 suggest embark search "delusive exactness."33 detailed inquiry produce approximate result.34 instances overshadowed highly impressionistic suffering.35 satisfied 54 remanded proceedings consistent opinion. ordered. drew venerable Vermont Halloran England Telephone Telegraph 95 Vt. 273, 274, 115 A. 143, 144 (1921), decisions. McWeeney York, N.H. H.R. 282 34, (CA2) banc), 364 870, 81 115, 93 (1960); Yodice Koninklijke Nederlandsche Stoomboot Maatschappij, 76, 79 1971); 451 971, 101 2049, 68 351 1372, 1375-1378 1977); 308-311 concurring); 72-76 1975). provides: "(a) Every secure payment employees payable sections 7, 8, 9. subcontractor, subcontractor secured payment. "(b) irrespective fault text reads follows: section employee, representative, husband wife, parents, dependents, kin, anyone otherwise admiralty death, fails representative death results elect claim plead defense servant, employment, due contributory event person, thereof, accordance indirectly agreements warranties contrary void. ship building repair subsection warranty seaworthiness breach thereof occurred. remedies Act." 263, 'vessel' means suffers arising out said owner, vice, agent, operator, charter bare boat charterer, master, officer, crew member." 902(21). recovery, paying compensation, acquires lien 269-270, 2760-2761, (1979). acting "owner" capacity, "stevedore" capacity. Until supplement merely proving "unseaworthy" condition, Seas Shipping Sieracki, 328 85, 66 872, 90 1099 (1946), condition Mitchell Trawler Racer, 362 539, 549-550, 80 926, 932-933, 941 (1960). stevedore-employer stevedore's Ryan Stevedoring Pan-Atlantic 350 124, 232, 133 (1956). net absolutely protection established. amendments protect D. Dobbs, Handbook Law Remedies 8.1 (1973). one, loss. wrongful action, identical item harms survivors estate. S. Speiser, Recovery Wrongful Death 2d, ch. incorporating occasional reference actions cf. Uniform Periodic Payment Judgments U.L.A. (1982 Supp.). Elligett, Judgments, Ins.Couns.J. 130 Kolbach, Variable Payments Dam ges: Alternative Lump Sum Awards, 64 Iowa L.J. 138 (1978); Rea, Lump-Sum Versus Damage J.Leg. Studies 131 (1981). examples diminishing fall zero Fitzpatrick, Personal Loss Occasioned Nancy Hollander Feldman: Introduction Standard Valuation Procedure, [1977] Expert Litigation, 5, 25, 44-46 (Defense Research Institute) [hereafter Fitzpatrick]; Hanke, How Determine Lost Earning Capacity, Practical Lawyer 27, 29-33 Obviously, another distorting simplification being here. weekly biweekly installments, virtually pretend flowed large spurts, installments. insurance coverage, pension retirement plans, profit sharing, in-kind Fitzpatrick 27. become apparent, speaking "societal" primarily concerned macroeconomic encompass inflate regard characteristics. occupations completely. Stearns Coal Lumber Williams, 164 Ky. 618, 176 S.W. (1915). 33-39; Henderson, Income Over Life Cycle: Some Problems Estimation Measurement, Federation Ins.Couns.Q. (1974). Samuelson, Economics 738-756 (1976 ed.) Samuelson]. Consideration Increased Productivity Discounting Earnings Present Value, S.D.L.Rev. 307, 310-320 (1975) Henderson]. Samuelson 584-593, 737; Henderson 315, n. 15. shown, steadily increasing showing last most. seen ensuring lump-sum accurately trial, explained duty mitigate dam ges. U.S., 489-490, 631-632. arithmetic simplified so-called "present table," Wixon, Accountants' Handbook, 29.58-29.59 (1956 ed.), 8:4, 713-718 tables proposition i $1 n periods 1/(1 + i)n." 29.57. "periods" years; accordingly, "i " effective yield. thought compensating "for actually occurred trial" lose future." performed trial. §§ 86-87. precise back injury—the moment impaired. judgment, ensure invested replicate re Crash Disaster Near Chicago, Illinois, May 644 633, 641-646 1981); 8:6, 723 always future, existence adjustment big year. turns depends award. mixture short-term, medium-term, bonds, scheduled mature worklife. event, bonds immediately ensured predicted. receives. commentaries assumption, Jarrell Pulsinelli, Obtaining Ideal Discount Rate Injury Defense 191 (1983); Fulmer Geraghty, Appropriate Use Estimating Financial Loss, Fed.Ins.Couns.Q. 263 (1982). 37, exclusively short-term notes, reinvesting new whenever mature. important worker. Predictions calculation. commentary choosing Sherman, Projection Loss: Creighton L.Rev. (1981) Sherman]. perceive intrinsic prefer analyses adopt latter. 26, infra. Posner it: "But well prices. Therefore give Mrs. $2318 $7200 hence, rate—12 percent—that consists mainly allowance her she accident, keep pace 1199 dissenting opinion Restaurant 258, 266-267 (1981), Justice Stephen part, principal components: estimation fixed investment, 'real interest' component, which, absence demand borrower pay borrowed funds. alleged cent, fluctuations main expectation." meant expects award, 23, supra. assumes having maturity dates, difference subsequent (i.e., terms investments). called 1271, 1293-1295, 1306-1312 (D.Conn.1974). rest low-risk securities reinvest frequently. E.g., Several studies done measure difference. Sherman 731-732; Short-Term Interest Rates Predictors Inflation: Comment, 67 Amer.Econ.Rev. (1977); Gibson, Inflationary Expectations: Evidence, 854 (1972). However interprets rate," slight distortion introduced netting U.Chi.L.Rev. 1003, 1017-1018, (1982); Virginia 105, 111 replacing "average income." F.2d, 309. noted, If, show, steadily, averaging early lower step size unjustified windfall. 186, 1974). 535-536. key obviously stable, hotly disputed economists. cited Doca, 39, 10. classic Irving Fisher argued expectations influences rates) lag behind itself. I. Fisher, Theory (1930). March April, 1917, 70 percent!" 44. Consider observations Australia: "Past Australian concept interest.' Year calculated, figures numbers resemblance lenders supposed borrowers allowing official statistics twelve calendar consulted, Reserve Bank Australia's Statistical Bulletins supply two-year (non-rebatable) O.E.C.D. Outlook—July 1980, p. supplies prices, averages negative -1.46, widest positive 2.58 cent -6.61 cent. Nothing resembling cent-3 merges. equally random numbers, steady interest', Table 9.1 Interim Campbell Inquiry (Australian Government Publication Service—1980). thirty covers, 1950 'implicit rate' -. greatest -20.2 Restaurants, 267. note body literature suggests plaintiffs. Death, 36-37 (1970) (average 1% growth); Formuzis O'Donnell, Losses, Mont.L.Rev. 297, 299 (1977) (interest 1.4% Franz, Simplifying Earnings, Trial (Aug. (rate exceeds average); Coyne, Value Earnings: Sensible Simplistic Methodologies, (1982) (noting Carlson's 1.6%, recommending approach). 57 St. John's 316, 342-345 (1983). 1023, "apparent congruence" projections accurate). interesting 1194 1982), varies 1199, "it outlandish O'Shea's risen year," 1200. Depending Posner's (excluded computation), comments over-discounting percent. advance method, needed table values salaries positions levels ("steps") Presumably stipulation well. instructed spent step. multiply spend (as table) results. spared cope estimates, trends, tables. Friendly perceived relevance Holmes' phrase context. 392 dubitante), quoting Truax Corrigan, 257 312, 342, 133, 254 (1921) (Holmes, dissenting). Throughout approximations manageable sup a, 533-544, nn. 11, 30. awards suffering 72 litigation. Am.Jur. Trials

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