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Damages

(1) Damages
(a) Damages discusses how we measure harm.
(b)Relate to negligence, strict / product liability, intentional harm.

(c)

Two Types:

(i) Compensatory Damages


(1)Purpose: To make party whole
(ii) Punitive Damages
(1)Purpose: To punish / deter

(d)

Damages at Issue

(i) In cases where damages are issue, there is a conflict between the three large
policy guidelines behind tort law.
(1)e.g., sometimes compensation doesn't match with deterrence.

(2)

Compensatory Damages

(a) The overarching principle echoes the corrective justice theme in tort law.
(i) Defendant has taken something from plaintiff so defendant must restore plaintiff
to status before the injury, often talked about as making plaintiff whole.
(b)Courts must calculate what already happened and predict what will happen.
(i) Issue: Calculating what has already happened easier than predicting future
damages.

(c)

Three Typical Components:

(i) Medical Expenses (economic, pecuniary damages, sometimes called specific),


(ii) Lost Income,

(iii) Pain and Suffering (non-economic damages, general damages)

(d)

Property Damage

(i) Loss of Value = Market Value Before Market Value After


(ii) If Destroyed:
(1)Market value after is salvage value
(2)Plaintiff may also recover for loss of use

(e)

Medical Expenses and Lost Income

(i) (Economic / Pecuniary / Specific Damages)


(1)Economic / specific damages easier to calculate.
(ii) Past Expenses
(1)Past medical expenses, income what was lost up to the point of the trial /
settlement.
(2)For past medical expenses and lost income, there is usually a bill or some
record or documentation.
(iii) Future Expenses
(1)Courts must anticipate what the plaintiff will incur going forward.
(iv) Sentimental Value
(1)Courts say you cannot consider sentimental value but consider actual,
intrinsic value to the plaintiff.

(f)Future Expenses
(i) Discounting to Present Value When damages are for impaired future
earning capacity, damages must be discounted to the present value to avoid
excess awards. $35,000 today is less than $35,000 tomorrow but $35,000 can
be invested and earn interest.
(ii) Two Approaches
(1)Total Offset Method (pg. 721)

(a) P will lose 35,000 income for the next five years. No cost of living
increases in salary, no merit raises etc.
(b)Court says that because there is inflation, plaintiff could earn interest,
which cancels cancels out the lower future value.
(c) There is no calculation.
(d)Plaintiff gets 35k per year, lump sum.
(2)Offset Present Value
(a) D = Lost Income / (1 + Discount rate (.02)) ^ t (year #) -1
(b)If Ps attorney, want LOWER discount rate (equals higher damages)
(c) Carne case (pg. 721) - makes this point about how much the discount rate
matters in how the plaintiff will win (damages)
(d)

Life Expectancy

(i) Could be based on education


(ii)
Book discusses race specific life expectancy tables. There are
some concerns with this. For example, the Eastern District of NY
worried race-specific tables were discriminatory.

(g)

Rationale for Lump Sum Future Damages:

(i) Want plaintiffs to get money, not sure defendants will stay solvent / alive
(ii) Want defendants to be able to move on
(iii) Burden on judicial system
(iv) Encourages plaintiff to heal

(h)

Pain and Suffering

(i) Non-economic damages, General damages


(ii) It's hard to define what damages for pain and suffering should be. May vary
greatly.
(iii) Pain & suffering requires awareness.
(iv) There is a lack of specific guidelines in law, jury instructions etc.
(1)

Per diem Approach:

(a) Looked at amount per year and multiplied.


(b)Court say this may result in higher damages, some courts do not allow.
(v) Excessive Damages:
(1)Seffert v LA Transit: P. was properly entering D. bus when the doors suddenly
closed, catching her right hand and left foot. The bus started and she was
dragged, thrown on the pavement. Total financial loss is $53,903.75. P.
claims $134,000 her pain and suffering past and future. Award not excessive.
(vi) Standard of Review:
(1)An appellate court can hold a judgment excessive only on the ground that
the verdict is so large that, at first blush, it shocks the conscience and
suggests passion, prejudice or corruption on the part of the jury.
(2)Issue: Who's conscious are we shocking? When is the conscious shocked?
(vii) Dissent (Traynor):
(1)Worried about consistency. If we have any test, it needs to be consistent consistent jury awards for pain and suffering.
(a) If inconsistent, unfair, parties in like situations should be treated similarly.
(b)Consistency helps parties have an idea of liability for deterrence reasons.
(2)Pain and suffering normally does not exceed economic losses.
(viii) Rationale for Pain / Suffering Damages:
(1)The whole point of compensatory damages is to make a party whole. Pain
and suffering is a real loss and to make them whole again, we ought to
compensate them for that.
(2)Because of contingency fee system, we need pain and suffering to keep
plaintiffs from paying portion of economic loss to lawyer - not fully
compensated without pain and suffering.
(ix) NY Statute:
(1)Appellate division will determine that an award is excessive or inadequate if
it deviates materially from what would be reasonable compensation.
(a) Has reasonable language but doesn't seem more specific than shocking
conscious.
(b)Terms like "materially" and "reasonable" lean more to the comparative
idea of Traynor dissent.

(x) Statutory Caps on Pain and Suffering


(1)Another way states try to deal with issues of unpredictability - limiting pain
and suffering through statutory caps.

Excessive Damages
Majorit
y

An appellate court can hold a judgment excessive only on the ground that the
verdict is so large that, at first blush, it shocks the conscience and suggests
passion, prejudice or corruption on the part of the jury.

Dissen
t

Emphasizes consistency with previous awards.

NY
(N6)

Passed statute that stated appellate division will determine that an award is
excessive or inadequate if it deviates materially from what would be
reasonable compensation.

(3) Loss of Enjoyment of Life


(a) Pain and Suffering but with Loss of Enjoyment wrinkling.
(b)If family is suing on behalf of their relationship, loss of consortium would be better.
(c) Tension between compensation and deterrence.
(d)McDougald v. Garber - P. was left in coma by Ds medical malpractice. P. is entitled
to damages for pecuniary matters, but not for pain and suffering unless the P. was
aware of the pain. Loss of enjoyment not separate from pain / suffering.

(e)

Awareness

(i) Issue: Is awareness required for loss of enjoyment of life?


(ii) Required:
(1)Award has no meaning, doesn't return loss of life if not aware
(2)Without awareness, award is punitive.
(iii) Not Required:
(1)Not punitive because Loss of Enjoyment of Life is something real that we
compensate plaintiffs for losing. If we compensate at the right level, it is not
punitive.
(2)Loss of Enjoyment of Life is objective, pain and suffering is subjective.

(a) Pain and Suffering requires awareness and has no meaning without it
because you have to be aware of suffering to experience it. Loss of life
does not require awareness to experience it.
(3)Majority approach bad: worse you mess someone up, the less you have to
pay them for.
(4)Without compensation, under deterring negligent conducts.

(f)Separate from Pain / Suffering


(i) Plaintiffs have everything to gain and nothing to lose by distinguishing the two.
This could cause incorrectly large damages.

Loss of Enjoyment of Life


Cognitive Awareness

Pain and Suffering / Loss of


Enjoyment

Majori
ty

Cognitive awareness is a prerequisite


to recover for loss of enjoyment.

There are no separate awards for


pain and suffering and loss of
enjoyment

Dissen
t

Cognitive awareness not required to


recover for loss of enjoyment.

Pain and suffering and loss of


enjoyment are distinct. Separate
awards will be more accurate

(4) Survival and Wrongful Death Damages


(a)
In common law, no cause of action once the potential plaintiff died. Wrongful
death, survival actions based on statutes.

(b)
In both survival actions and wrongful death damages, the victim is dead or
will die.

(c)

Fact Patterns:

(i) P. killed instantly


(1)

Wrongful death action, no survival action

(ii) P. injured, hospitalized / suffers (awareness), dies


(1)

Wrongful death and survival action

(iii) P. injured, coma, dies


(1)

Wrongful death, no survival action.

(d)
Difference between wrongful death, survival can be determined by looking at
who suffered loss of enjoyment of life.
(i) If the victim suffered, it is survival.
(ii) If the victims beneficiaries suffered, it is wrongful death.

(e)

Survival

(i) Harm
(1)
Recovery of damages the deceased could have obtained (personally
enforced) before death (eg. medical bills, pain / suffering)
(ii) Party
(1)

They are about compensating victim for what happened to victim.

(iii) Notes
(1)
Survival actions are actions the deceased would have had if he was
alive and concerns damages victim suffered while alive.

(f)Wrongful Death
(i) Harm
(1)
(a)
(ii) Party

Recovery of the losses the deceaseds beneficiaries suffered


(e.g. close relatives economic, emotional loss etc.)

(1)
They are about compensating victims beneficiaries for what happened
to victim (not for victims loss of life)
(iii) Notes
(1)
Wrongful death is different than loss of consortium because in wrongful
death, person must have actually died
(2)
Based on tort, not separate action (e.g. wrongful death based on
battery, wrongful death based on negligence)

(g)

Loss of Life

(i) Injury is the victims death


(ii) Not normally compensable

(h)

Loss of Enjoyment of Life

(i) Injuries incurred pre-death

(5)

Insurance

(a)
act.

Most insurance will cover you even if you are injured by anothers tortious

(b)

Three rules for insurance.

(c)

Collateral Source Rule

(i) Plaintiff gets medical benefits covered by her insurance and full damages from
the defendant.
(ii) Defendant cannot introduce evidence of plaintiffs insurance.
(iii) Justifications:

(1)

If D. doesnt pay full amount of damages, there is less deterrence.

(2)
Courts dont want to punish plaintiff for doing what they are supposed
to do (have insurance)
(iv) Problems:
(1)

(d)

Plaintiff gets double recovery

Collateral Source Rule with Subrogation

(i) When plaintiff receives judgment, insurer is reimbursed for expenses paid. Most
insurance policies have a subrogation clause.
(ii) Problems:
(1)

Insurers dont always collect on their subrogation rights

(2)
Its not always clear what is paid to insurer when the case is settled
(what if P. settles for less?)
(3)
It does not always address future payments and that will be paid out
(judgment, insurance paid out, future medical expenses continue and are
billed to insurance).

(e)

No Collateral Source Rule

(f) Either:
(i) Plaintiffs damages are reduced by the amount the insurance will pay, or
(ii) Defendant can introduce evidence that plaintiff has insurance and let jury
determine payment
(1)Duty to Settle in Good Faith

(g)

Duty to Settle in Good Faith:

(h)Insurance companies limit policies to a certain amount and are less at risk than
insured for anything over the policy limit and insurance co. has control over
litigation by contract.
(i) State Farm v. Campbell Case where insurance company didnt settle in good
faith. Company was unreasonable to not settle in good faith because they opened
their client to the full range of liability.
(i) Campbell (and single-digit ratio) is boldest restriction on state law for punitive
damages.
(ii) Constitutional limitations on punitive damages - due process prohibits excessive
awards.

(6) Punitive Damages

(a)

Majority:

(i) Punitive damages are appropriate when the defendant has been guilty of
oppression, fraud, or malice, express or implied.
(1)

Malice is the conscious disregard for the safety of others

(ii) Punitive damages can be awarded without intentional harm.


(iii) The purpose of punitive damages is to punish or deter defendant.
(iv) Repeat offenses strengthen case for punitive damages
(v) Taylor v. Superior Court D. alcoholic for a substantial period of time with
tendency to drive drunk. Hes caused serious accidents while driving drunk
before, has been arrested and convicted for drunk driving numerous times, just
completed probation for drunk driving and at time of accident was facing
another criminal drunk driving charge. Case is about punitive damages in drunk
driving.
(1)

(b)

Policy concerns may limit to drunk driving, similar types of harm

Minority:

(i) Punitive damages are not necessary and should be awarded with greatest
caution in accident cases
(ii) Concerns with Majority Rule:

(1)
Insurance not paying out when there are punitive damages, which
would harm plaintiff
(2)
Interferes with trial procedures as the court would have to examine
finances to decide whether or not punitive damages should apply
(3)
Unjust Enrichment - plaintiff will be overly compensated if they get
punitive damages (unfair, not just compensation)

(c)

Statutory Changes:

(i) California eventually revise the law to require malice be proven by clear and
convincing evidence. Redefined malice, oppression, fraud.
(ii) Malice
(1)
intended by defendant to cause injury to plaintiff or despicable conduct
carried only defendant with willful and conscious disregard for rights and
safety of others
(iii) Oppression
(1)
despicable conduct that subjects person to cruel and unjust hardship in
conscious disregard of persons rights
(iv) Fraud
(1)
intentional misrepresentation, deceit or concealment of material fact
known to defendant with intention on part of defendant of thereby depriving
a person of property or legal rights otherwise causing injury.
(v) Many states are taking action to constrain punitive damages.
(vi) Abolished
(1)

Handful have abolished punitive damages.

(vii) Changed Burden


(1)

20 or so increased the burden of proof to clear and convincing

(viii) Statutory Caps


(1)

12 or so set maximum dollar amounts or ratios

(ix) Sharing Wealth


(1)

Some states require plaintiff share punitive damages with state

(a) e.g. OR state statute requires 60% of punitive damages awarded go to


state fund to compensate victims of crime.

(d)

Product Liability

(i) Ford Pinto Evidence that company could have corrected hazardous design
defects at minimal cost but deferred correction by cost-benefit analysis
balancing human lives and limbs against corporate profits. Massive punitive
damages awarded.
(1)

Paradox, as tort law balances life and utility but public finds it immoral.

(ii) Hillrichs Upheld compensatory damages against manufacturer of corn picking


machine when farmers hand was caught in machine. Manufacturer knew of
danger but argued dependency hypothesis he consciously decided not to
install emergency stop-device to keep farmers from unreasonable dependence
on device despite dangers.
(1)
Punitive damages inappropriate where room exists for reasonable
disagreement over relative risks and utilities of the conduct and device at
issue. No showing defendants disregard of risk made harm highly probable.

(e)

Vicarious Liability & Punitive Damages

(i) Various approaches for punitive damages on employers who are vicariously
liable.
(ii) Issue: Some states allow for punitive damages. Other states use Second
Restatement
(iii) Restatement justifies limited approach as rationale for punitive damages
make it improper to award against party who is innocent (not negligent) and
only vicariously liable.
(1)
Third Restatement observes difference between this rule and rule
allowing for punitive damages may not be that great. .
(iv) Second Restatement:
(1)
Punitive damages can be properly awarded against a master or other
principle because of an act by an agent, but only if:
(a) the principal or managerial agent authorized the doing and manner of
the act, or
(b) the agent was unfit and the principal or managerial agent was reckless
in employing or retaining him, or

(c) the agent was employed in a managerial capacity and was acting in
the scope of employment, or
(d) the principal or managerial agent of the principal ratified or approved
the act.

(f)Excessive Punitive Damages


(i) Campbell case with single digit ratio (not dispositive) most restrictive standard
(ii) Damages cannot violate constitutional rights

(iii) TXO Production Corp Pre-Campbell case, Court upheld punitive award of $10
million (526 x larger than compensatory award of $19,000). Court rejected
constitutional challenge based on ratio as there was no maximum ratio set.
(1)
Reasoned if a man fired into crowd and only damaged a $10 pair of
glasses, the compensatory damages may only be $10 but thousands of
dollars in punitive damages may be allowed to discourage further conduct.

(iv) Gore Guideposts for Excessive Punitive Damages


(1)

The degree of reprehensibility of the defendants misconduct

(a)

Including:

(i) Physical or economic harm,


(ii)
Indifference to or a reckless disregard of health or safety of
others,
(iii)

Target of the conduct had financial vulnerability,

(iv)

Conduct involved repeated actions or an isolated incident,

(v)

Intentional malice, trickery or deceit or mere accident

(2)
The disparity between the actual or potential harm suffered by
the plaintiff, and the punitive damages award
(a) Few awards exceeding a single digit ratio between punitive and
compensatory damages to significant degree, will satisfy due process
(b)Single digit ratio is considered the biggest part of this case and the only
SCOTUS decision on how much punitive damage should be
(c) The difference between the punitive damages awarded by the jury and
the civil penalties authorized or imposed in similar situations

(g)

Harm to Other Parties

(i) Williams - SCOTUS follows on Campbell, issue is role of harm to other persons in
punitive damages. SCOTUS found due process barred consideration of harm to
others in awarding punitive damages.
(ii) Defendant cannot be punished for harm to others.
(iii) Harm to others may be considered in:

(h)

(1)

assessing reprehensibility of defendants conduct,

(2)

deciding proper ratio between compensatory and punitive damages

(3)

(Judge Stevens: This nuance eludes me.)

Defendants Wealth

(i) If a defendant is wealthy, juries are not prohibited from considering wealth as a
factor. However, defendants wealth does not make unconstitutional awards
unconstitutional. Generally, courts focus more on conduct in question.
(ii) Bifurcation
(1)

Many states.

(2)
First, the jury hears evidence determines if punitive damages are
appropriate.
(3)
Secondly, evidence of wealth or prior awards (in repetitive award
cases).

(i) Repetitive Damages


(i) When defendants actions harm more than one person, courts allow awards of
punitive damages to each plaintiff.