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In product liability matters, the complexities of liability evidence can obscure the need for focused, comprehensive discovery on damages. However, in case after case, it has been shown that careful discovery on damages is critical to a reasonable settlement or verdict, both for plaintiffs and the defense. The basic economic-damages concept is simple: How did the injury affect the plaintiff’s economic situation? What is the difference between the plaintiff’s economic status before the tort and his or her economic status after the tort? Your job in presenting the damages phase of the case is to tell the story of how the injury affected the plaintiff. Preliminary discovery should be directed toward finding out what that story is. Subsequent discovery should be directed toward focusing in on that story — it is important to remember, in collecting evidence, that the damages case is a story, not a collection of data and statistics. It also helps, in starting the damages analysis, to remember that there are no absolute truths in damages assessments, only more-likely or less-likely assumptions. We can never know with certainty what an injured plaintiff would have accomplished had the injury not happened. Generally, the information you need to determine the extent of economic damages comes from three basic sources: plaintiff-specific evidence garnered from depositions of the plaintiff, the employer and other witnesses; government, industry and academic studies bearing on the plaintiff’s situation; and testimony from related damages experts. In most cases, you will need a team of experts to adequately assess damages. These include a vocational specialist, a medical specialist and an economist. A medical expert should be able to project the medical costs entailed by the injury at issue, and to segregate those costs from costs arising due to prior conditions. The vocational expert assesses the plaintiff’s job capabilities given the injury, and the economist guides damages discovery and composes the damages argument (in addition to searching for inconsistencies and errors in the opposition’s damages case). The economist needs detailed data, including the plaintiff’s: � Medical status before and after the injury; � Pre-injury employment and compensation; � Future employment capability; � Probable retirement age; and � Spending patterns (in death actions). Once the economist has a certain amount of data, he or she can begin to put together the story of how the tort affected the plaintiff’s economic situation. The main elements of loss fall into these categories: � Lost earning capacity; � Lost fringe benefits; � Lost household services; and � Medical costs. In wrongful death cases, maintenance — the personal expenditures of the decedent — are an offset to damages. EARNING CAPACITY The basic earning capacity question is: What is the difference in earning capacity prior to the injury, and what is the plaintiff’s post-injury capacity? Likely sources for pre-injury capacity include: � Actual earnings history; � Tax records; � Social Security records (the Social Security Administration, on request, can provide a detailed record of lifetime earnings, including the names and addresses of all employers); � Statistical earnings of demographic cohorts; � Trade associations; and � Headhunters. One key factor in earning capacity is worklife: how long the plaintiff could have expected to work, absent the injury. Sources for probable worklife include: � Statistical tables on worklife; � Life expectancy tables (active); � Academic and government studies on retirement age; � Personal and family considerations; and � Pre-injury medical status. Another factor in earning capacity is the plaintiff’s work habits and probable growth in earnings. Sources for this information include: � Employer’s records; � Records of hours and overtime; � Continuity of employment (history of job changes); � History of wage changes; and � Collective bargaining agreements. Post-injury earning capacity sources include: � Assessment by a vocational expert; � Disability studies; � Actual post-incident earnings; and � Medical status. FRINGE BENEFITS Fringe benefits are what an employee earns over and above straight salary; these frequently cost an employer as much as 40 percent of total compensation. Certain items generally do not count toward damages in personal injury or wrongful death cases. These items can include: � Sick pay (a disabled plaintiff is seeking lost pay anyway; recovery for sick pay would be double recovery); � Disability insurance premiums (an award for lost income is, effectively, paying the loss that insurance would pay; the plaintiff no longer needs disability insurance); and � Paid vacation — a plaintiff seeks to recover his or her entire annual salary; adding what he or she would have been paid while on vacation would be double recovery. Items that generally do count toward damages can include: � Company-paid health insurance; � Company-paid life insurance; � Pension; and � Household services. Household services are the value of services provided by plaintiff/decedent for the benefit of other family members. Sources for the amount of household services rendered and their value include: � Depositions of family members; � Government and private studies; and � Cost of services from commercial providers, e.g. maid services and contractors. MEDICAL COSTS Future medical expenses can include such items as: � Therapy; � Supplies; � Housing; � Transportation; � Daily care; � Institutional care; and � Special education. Evidence of the value of future medical costs is provided in a “life-care plan” formulated by a medical-cost expert. This expert provides the projected cost of care and equipment to the economist, who reduces these costs to present value. MAINTENANCE Maintenance is what a decedent would have spent on personal living expenses. In most jurisdictions, maintenance is deducted from lost future earnings. Personal expense items are not deducted if the decedent’s family would still pay for these items. For example, the family would still pay for housing, utilities and an automobile after the decedent’s death. Sources for personal maintenance values include: � Depositions as to expenditures; � Checking account records; � Tax records; and � Census and other statistical data. Items usually considered as personal maintenance include: � Food; � Alcohol; � Tobacco; � Housing (single decedents); � Clothing; � Transportation (excluding vehicle purchases for decedents from multiperson households); � Health care; � Personal care; � Recreation; � Reading; and � Education. Items generally excluded from personal maintenance can include: � Personal insurance; � Pension plan payments; � Gifts; and � Monies provided to various wrongful death heirs. CONCLUSION Careful, comprehensive damages discovery can be time consuming and expensive. However, an elegantly constructed liability case can be rendered totally useless by an inept presentation on damages. In personal injury litigation where the bottom line is, literally, the bottom line, careful attention to economic damages is a wise investment. Jerome M. Staller, Ph.D., an economist, is the president of the Center for Forensic Economic Studies, a Philadelphia-based national firm providing economic and statistical analysis and testimony. Telephone: (800) 966-6099; e-mail: [email protected].

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