Damages

• Author: John Fabian Witt
• Pages: 635-714

CHAPTER 10. DAMAGES

O reader, to what shifts is poor Society reduced, struggling

to give still some account of herself, in epochs when Cash

Payment has become the sole nexus of man to men!

Thomas Carlyle, Chartism 61 (1840)

– The ones showing up in court demanding justice, all

they’ve got their eye on’s that million dollar price tag.

– It’s not simply the money no . . . . because the money’s

just a yardstick isn’t it. It’s the only common reference

people have for making other people take them as seriously

as they take themselves.

William Gaddis, A Frolic of His Own (1994)

So far in this book we have paid little attention to the endgame for torts claims. But of

course that will not do at all. Plaintiffs in tort suits bring claims to accomplish

something. Lawsuits are expensive and time consuming. Being in one can be a

miserable experience. (After a dozen years of watching litigation from the bench, the

great torts jurist Learned Hand remarked that “as a litigant I should dread a lawsuit

beyond almost anything else short of sickness and death.” Gerald Gunther, Learned

Hand: The Man and the Judge 122 (2d ed. 2010).)

Why, then, do plaintiffs assert claims? The reasons are many. But one thing we

can say for certain is that in the United States, the remedy in a successful tort suit is

virtually always the payment of damages, measured in dollars. Courts do not, for

example, require public apologies, or acts of service to the decedent’s family, or jail time

for the tortfeasor. Instead, the stated aim of damages in tort is to order money damages

sufficient to restore the plaintiff to his or her prior state.

Of course, this aspiration immediately begs more questions than it answers. Can

money ever restore the status quo ante? The notion is especially challenging in cases

involving the loss of life or limb. And what does it mean to treat money as a kind of

equivalent to such losses? Thomas Carlyle, a forceful nineteenth century English critic of

the market, objected that the “cash nexus” impoverished social relations among men.

Like-minded critics today observe that the regime of money damages risks

commodifying things like life and health that we would never allow to be sold in the

marketplace. (Some go on to note too the inequalities that can result from making the

market our measure of value.)

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The criticisms of money damages have great weight. And yet there is also

something extraordinary about money damages. In a liberal society in which we choose

our own values, in which each person gets to decide what matters to herself, money

serves as a common currency of value, connecting people with radically different values.

The oenophile may not share the same priorities as the NASCAR fan. The bridge player

may not see the world in the same fashion as the BASE jumper. But dollars translate

their divergent interests into a common coin. Cash, one might say, is the lingua franca –

the Esperanto -- of liberal value pluralism.

Or so the beginnings of a defense of money damages might run. The critics will

likely remain unmollified. And yet there is no gainsaying the centrality of money

damages in the law and social practice of damages in American tort law.

A. Compensatory Damages

Given that money is the currency in which tort damages are paid, how do courts figure

out how much money is required? The law typically treats compensatory damages as

coming in two flavors: pecuniary damages, on the one hand, and nonpecuniary, on the

other. Pecuniary damages aim to reproduce the amount of money lost by the plaintiff,

typically because of lost income and increased expenditures. The calculation, however, is

not always as easy as it might seem.

1. Pecuniary Damages

O’Shea v. Riverway Towing Co., 677 F.2d 1194 (7th Cir. 1982)

POSNER, J.

On the day of the accident, Margaret O'Shea was coming off duty as a cook on a

towboat plying the Mississippi River. A harbor boat operated by the defendant, Riverway

Towing Company, carried Mrs. O'Shea to shore and while getting off the boat she fell

and sustained the injury complained of. The district judge found Riverway negligent and

Mrs. O’Shea free from contributory negligence, and assessed damages in excess of $

150,000. Riverway appeals only from the finding that there was no contributory

negligence and from the part of the damage award that was intended to compensate Mrs.

O'Shea for her lost future wages.

. . .

The . . . substantial issues in this appeal relate to the computation of lost wages.

Mrs. O'Shea's job as a cook paid her $40 a day, and since the custom was to work 30 days

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637

consecutively and then have the next 30 days off, this comes to $7200 a year although, as

we shall see, she never had earned that much in a single year. She testified that when the

accident occurred she had been about to get another cook’s job on a Mississippi towboat

that would have paid her $60 a day ($10,800 a year). She also testified that she had been

intending to work as a boat’s cook until she was 70 -- longer if she was able. An

economist who testified on Mrs. O’Shea's behalf used the foregoing testimony as the

basis for estimating the wages that she lost because of the accident. He first subtracted

federal income tax from yearly wage estimates based on alternative assumptions about

her wage rate (that it would be either $ 40 or $ 60 a day); assumed that this wage would

have grown by between six and eight percent a year; assumed that she would have

worked either to age 65 or to age 70; and then discounted the resulting lost-wage

estimates to present value, using a discount rate of 8.5 percent a year. These calculations,

being based on alternative assumptions concerning starting wage rate, annual wage

increases, and length of employment, yielded a range of values rather than a single value.

The bottom of the range was $50,000. This is the present value, computed at an 8.5

percent discount rate, of Mrs. O'Shea's lost future wages on the assumption that her

starting wage was $40 a day and that it would have grown by six percent a year until she

retired at the age of 65. The top of the range was $114,000, which is the present value

(again discounted at 8.5 percent) of her lost future wages assuming she would have

worked till she was 70 at a wage that would have started at $60 a day and increased by

eight percent a year. The judge awarded a figure -- $86,033 -- near the midpoint of this

range. . . .

There is no doubt that the accident disabled Mrs. O'Shea from working as a cook

on a boat. . . . But Riverway argues that Mrs. O'Shea (who has not worked at all since the

accident, which occurred two years before the trial) could have gotten some sort of job

and that the wages in that job should be deducted from the admittedly higher wages that

she could have earned as a cook on a boat.

The question is not whether Mrs. O'Shea is totally disabled in the sense, relevant

to social security disability cases but not tort cases, that there is no job in the American

economy for which she is medically fit. [ ]. It is whether she can by reasonable diligence

find gainful employment, given the physical condition in which the accident left her. [ ].

Here is a middle-aged woman, very overweight, badly scarred on one arm and one leg,

unsteady on her feet, in constant and serious pain from the accident, with no education

beyond high school and no work skills other than cooking, a job that happens to require

standing for long periods which she is incapable of doing. It seems unlikely that someone

in this condition could find gainful work at the minimum wage. True, the probability is

not zero; and a better procedure, therefore, might have been to subtract from Mrs.

O'Shea's lost future wages as a boat's cook the wages in some other job, discounted (i.e.,

multiplied) by the probability-very low-that she would in fact be able to get another job.

But the district judge cannot be criticized for having failed to use a procedure not

suggested by either party. The question put to him was the dichotomous one, would she

or would she not get another job if she made reasonable efforts to do so? This required

him to decide whether there was a more than 50 percent probability that she would. We

cannot say that the negative answer he gave to that question was clearly erroneous.