Neutral data to derail discriminatory damage awards

"A brakeman is not always a brakeman. A white brakeman is a brakeman; but a negro brakeman is most likely only a negro." - Smith R. Brittingham, "The Claim Agent and His Work: Investigation and Settlement of Claims for Personal Injuries."

The proliferation of railroads across America around the turn of the century invited thousands of lawsuits against railroad companies and served to form our nation's tort doctrine and practice - including Palsgraf. Racial disparities surfaced through the evaluation and payment of claims. Railroad companies employed claims agents to effectuate payments who, in turn, relied upon claims manuals to evaluate a victim's damages. An influential manual published in 1927 provided the above introductory quote.

Today's awards are often diminished based on race and gender as well.

In 1970, a court allowed defense counsel to assert that the 19-year-old plaintiff would have a shorter career than a man because of her likelihood of being married and raising children. Frankel v. U.S., 321 F.Supp. 1331 (E.D. Pa. 1970).

In 1978, the 6th U.S. Circuit Court of Appeals overruled an award which was based on an analysis that omitted the African-American girl's age, gender and race. The court reasoned that "the fact finder must 'keep such extrapolations within reasonable bounds and insure that they conform to the evidence.'" Drayton v. Jiffee Chemical Corp., 591 F.2d, 362 (6th Cir. 1978), quoting Bach v. Penn Central Transportation Co., 502 F.2d, 1117, 1122 (6th Cir. 1974).

In 2004, during a wrongful death action, a defendant's expert calculated the deceased's lost future earnings by using the average earnings of a high school graduate, and multiplying that figure by 58 percent - the average ratio of wages for male Native Americans to wages for white males. U.S. v. Bedonie, 317 F.Supp.2d 1285 (D. Utah 2004).

And in computing settlement figures for the September 11th Victim Compensation Fund, Special Master Kenneth Feinberg used gender-specific statistics. He relied on the typical method in calculating tort damages, employing gender-specific tables, which would have diminished the women's recovery. It was not until NOW Legal Defense Fund objected that Feinberg even considered using gender-neutral, or mixed statistics to determine awards. The court ultimately did use gender-specific tables, but it applied male tables to all victims - which, while beneficial to female victims, raises issues as well.

In a study by a Washington state task force of wrongful death damage awards between 1984 and 1988, the task force found that the average recovery award involving a male decedent was $332,166, while recovery for suits involving a female averaged $214,923. Similarly, a report published by the Rand Corporation found that between 1970 and 1979, African-Americans received awards that were 74 percent of white awards for the same injuries.

Paul Deutsch and Frederick Raffa, authors of "Damages in Tort Actions," suggest two ways in calculating lost future income: (1) determine the level of education that the victim would have attained by having the victim take an aptitude test - or in the case of a deceased victim, the victim's parents and siblings - using government data providing gender-specific average earnings for that educational level; or (2) examine the U.S. Commerce Department's data providing generalized educational attainment for that victim's gender.

Courts have "uncritically accepted such methods of damage calculation." (Sherri R. Lamb, "Toward Gender-Neutral Data for Adjudicating Lost Future Earning Damages: An Evidentiary Perspective," 72 Chi.-Kent L. Rev. 299, 323 (1996)). On one hand, economists strive to make projections as accurate as possible based on what data is available. On the other, judiciaries are holding that minorities and disadvantaged victims' lives are worth less than a white male's life - as a matter of law. By limiting a plaintiff's damages awards based upon race and gender, courts are institutionalizing discrimination.

Forensic economist Tamorah Hunt, in a phone interview, stated that when she prepares reports for a courtroom, she does not use race as a factor in determining life expectancy or future lost earnings. However, gender is often utilized as a factor, depending on the circumstances of the case, she said.

Laura Greenberg of Willkie Farr & Gallagher LLP advocates the adoption of race-neutral statistics in estimating future lost income. (Laura Greenberg, "Compensating the Lead Poisoned Child: Proposals for Mitigating Discriminatory Damage Awards," 28 B.C. Envtl. Aff. L. Rev. 429 (2001)). Such adoption, Greenberg argues, is supported by the "resiliency theory" - that is, optimism about American children's ability to overcome traditional risk factors, including both individual characteristics and environmental characteristics.

Limiting damage awards for minorities and the impoverished may incentivize environmental racism and other discriminatory practices. For example, the corridor between New Orleans and Baton Rouge, colloquially referred to as "Cancer Alley," is known for its numerous petrochemical plants and its residents' associated health problems such as asthma and birth defects. The region's residents are primarily minorities and lower-income residents. If courts limit damages based race or income status, they are encouraging polluters to come to these areas as opposed to another more affluent region where damage awards would be higher.

Indeed, applying Judge Learned Hand's calculus of negligence, a defendant could be found not to have breached any duty owed to a disadvantaged group or region. See United States v. Carroll Towing Co., 159 F.2d 169 (2d Cir. 1947). For instance, say Acme Corporation is deciding where to build an oil refinery, and they know of a safety device costing $800,000 that would decrease the probability of an explosion by half, from 20 percent to 10 percent. "An explosion would cause $10M in damages in Richtown, but only $7M in Poortown, because of differences in property values and future lost earnings. Thus, the savings in expected loss from installing the device in Poortown is only $700,000 (.1 x $7M), less than the cost of the device. However, the savings in expected loss in Richtown is $1M (.1 x $10M), more than the cost of the device." (Martha Chamallas, "Civil Rights in Ordinary Tort Cases: Race, Gender, and the Calculation of Economic Loss," 38 Loy. L.A. L. Rev. 1435, 1458 (2005), citing Tsachi Keren-Paz, "An Inquiry into the Merits of Redistribution Through Tort Law: Rejecting the Claim of Randomness," 16 Can. J. L. & Juris. 91, 94-95 (2003)). Hand would instruct the retrofit in Richtown, but not in Poortown. When there is an explosion in Poortown, Acme will be found to have breached no duty, leaving Poortown residents having "to absorb the $7M loss without the benefit of tort compensation, making Poortown that much poorer."

In 2008, Judge Jack B. Weinstein, of the U.S. District Court for the Eastern District of New York, refused to allow the usage of race-specific statistics to determine the victim's life expectancy. McMillan v. City of New York, 253 F.R.D. 247 (E.D.N.Y. 2008). "Racial mixing," he notes, has been occurring in the U.S. for more than 300 years. Thus the recognition of one-eighth black or white, while ridiculous in the days of Dred Scott, is simply absurd today.

Weinstein quotes French political historian Alexis de Tocqueville, who in the mid-19th century recognized that the concept of "innate and immutable racial characteristics ... are mere rationalizations for slavery and other forms of racial oppression." He sees disparities in earning power as reducible to socioeconomic factors masked by race. Sociologists have found that the key determining factor to life expectancy is access to superior health care - which is ultimately derivative of socioeconomic status.

We must curtail judicial discretion regarding the admissibility of expert opinion damages calculations based on race or gender. Experts are encouraged to use these characteristics as a tactical decision, even if they do not approve of the practice. State and federal legislation outlining evidentiary rules for the admissibility of what may be used to determine damages may be a sensible solution. Mandating the usage of average life expectancy and average income of all Americans - irrespective of race, gender, ethnicity, religion, sexual orientation, or any other seemingly arbitrary factor - would be a substantial step in achieving equality in our civil courts, and may have a resounding impact on other areas of social inequality.