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Birmingham Bar Association Bulletin

Tort LAw Charles L. Baum II, Ph.D. DO I NEED AN ECONOMIST? WHEN TO USE AN ECONOMIST IN ALABAMA PERSONAL INJURY & WRONGFUL DEATH CASES In personal injury (PI) and wrongful death (WD) cases, attorneys may consider hiring a forensic economist (an economist serving as an expert in a legal matter) to calculate the present value of economic losses, such as from lost earnings. Th e economist is to assist the court by providing estimates that are to a reasonable degree of economic certainty, as the case permits. However, in Alabama PI and WD cases, an economist may or may not be useful. In this article, I fi rst suggest the instances in Alabama PI and WD cases when hiring an economist to calculate economic losses would be useful. Th en, I review the methods economists frequently use for addressing 10 key elements of economic losses, and I evaluate the extent to which these methods are accepted within Alabama’s legal framework. IS AN ECONOMIST NEEDED? Alabama statutes and case law for WD torts only allow for punitive—not compensatory—damages. When awarding damages, Alabama Pattern Jury Instructions preclude consideration of “the (pecuniary) (monetary) value of the life of the decedent,” as well as other fi nancial and pecuniary losses sustained by the survivors of the decedent as a result of the decedent’s death. Alabama courts acknowledge that this is designed to discourage future homicides rather than to compensate survivors for pecuniary losses. Th e result of this, though, is that an economist is essentially of no value, since Alabama WD damages are not based on economic losses. An important exception to this is for WD torts brought under the 1908 Federal Employers Liability Act (FELA) for railroad workers and the 1920 Jones Act for maritime workers in Alabama courts (where Alabama courts and Federal courts have concurrent jurisdiction). In these cases, compensatory losses for survivors are allowed, so an economist would have a role calculating the present value of economic losses. For example, jury instructions for Alabama FELA and Jones Act cases state that compensatory damages may include, among other things, “(a) benefi ts of monetary value, including money, goods and services, that the decedent customarily contributed to each survivor; (b) decedent’s present and future earnings; (c) other money or assets the decedent would have received in the future during his lifetime….” Similar to FELA and Jones Act cases, Alabama PI cases allow for compensatory damages for those injured. Alabama Pattern Jury Instructions explicitly mention “loss of earnings” as permissible compensation. Since the pecuniary value of economic losses may be included as damages, there is a useful role for an economist in Alabama PI cases. EARNINGS CAPACITY Forensic economists typically measure economic losses from lost earnings using “lost earnings capacity.” Earnings capacity is an individual’s ability to earn income when working to their potential, measured by the amount the individual is able to earn. Alabama courts allow recovery for the pecuniary value of lost earnings in PI cases and in FELA and Jones Act matters, and the appropriate measure in these instances appears to be lost earnings capacity: “In a personal injury action, a plaintiff is entitled to recover both the value of the work time lost prior to the trial (“lost earnings”) and the value of the reduction in his ability to earn a living (“impairment of earning capacity”).” Th is also illustrates that plaintiff s can recover back pay—defi ned as losses from the tort to the trial—and front pay— which are losses incurred after the trial. Th e courts, in their instructions to juries, provide factors to consider when awarding damages for what would reasonably have been earned absent an injury, which include “the plaintiff ’s earning capacity, his earnings, the manner in 14 Birmingham Bar Association


Birmingham Bar Association Bulletin
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