No. 116 March Term, 1979, Appeal from the Order of the Superior Court of Pennsylvania Filed May 4, 1979 at No. 755 April Term, 1978 affirming the Order of the Court of Common Pleas of Allegheny County, Pennsylvania, Civil Division at No. 1246 April Term, 1973
Seymour Sikov, Sikov & Love, Pittsburgh, for appellant.
Cosmos J. Reale, Warren D. Ferry, Pittsburgh, for appellee.
Stephen M. Feldman, Feldman & Feldman, Philadelphia, for amicus curiae Pa. Trial Lawyers.
Eagen, C. J., and O'Brien, Roberts, Nix, Larsen, Flaherty and Kauffman, JJ. Roberts, J., filed a concurring opinion. Flaherty, J., filed a concurring and dissenting opinion.
Appellant instituted a complaint in trespass in Allegheny County Court of Common Pleas. The suit arose from an
automobile accident in which the decedent, Eric K. Kaczkowski, was riding as a passenger in a vehicle operated by appellee. At the original trial of this matter, the jury established the liability of the appellee. Upon appellant's Motion For a New Trial, the case was returned to the trial court for a retrial on the issue of damages.
During the retrial of the question of damages, the jury was presented with the following facts: the decedent was a white male, twenty years of age at the time of his death; he attended Alliance College, Cambridge Springs, Pennsylvania for two years; and at the time of his death, he was attending the Institute of Computer Management, a division of Litton Industries. Decedent's close friends and relatives testified that decedent was in good health, industrious, and interested in his course of study in computer operations.
The Director of Placement at the Institute for Computer Management testified to his familiarity with the decedent, that his progress was good for a beginning student, and that the decedent evidenced motivation and willingness to learn. Based upon his professional contact with employers and experience in placing graduates, the Placement Director testified to the range of salaries for which the decedent would have been qualified. He stated that in the private sector, the average salaries ranged from $538.36 to $585.77 per month, and in the public sector, the average salaries ranged from $600 to $900 per month.
During an in-chambers discussion, appellant's counsel offered to call as an expert witness, Doctor Reuben E. Slesinger, an Economics Professor at the University of Pittsburgh. By the testimony of Doctor Slesinger, counsel offered to prove a projection of the potential earning capacity of the decedent.*fn1 Although the trial court did not prohibit Dr.
Slesinger from testifying as to his projection of future lost earnings reduced to present value, the court refused to allow Dr. Slesinger to use a four percent (4%) annual increment to the victim's base salary to represent the combined impact of inflation and productivity gains on the future increases in the victim's earnings. The trial court's refusal was based upon the recently decided case of Havens v. Tonner, 243 Pa. Super. 371, 365 A.2d 1271 (1976),*fn2 which the trial court interpreted to mandate that "an annual increment percentage whether called a productivity factor or inflation factor is not permitted to be used by a witness projecting future loss of earnings reduced to present worth." Kaczkowski v. Bolubasz, No. 1246 April Term, 1978, Court of Common Pleas of Allegheny County, at 3 (February 22, 1978).
Rather than have Dr. Slesinger project the future loss of earnings without the four percent (4%) annual increment, the plaintiff chose not to use any of Dr. Slesinger's testimony. Instead, the plaintiff relied upon the trial court's charge of impairment of future earning power for the guidance of the jury. The lower court charged the jury to consider the decedent's personal characteristics to: calculate the potential gross earnings of the decedent for the period of decedent's work life expectancy; to determine the maintenance costs of the decedent for the period of decedent's work life expectancy; to deduct the personal maintenance costs from the gross earnings to produce net earnings; and to discount the net earnings to present value by six percent (6%) simple interest. Based upon the judge's instructions, the jury returned a verdict of $30,000. on behalf of the estate of Eric K. Kaczowski. The appellant's Motion for a New Trial was denied. The appellant appealed to the Superior Court which per curiam affirmed the lower court based upon the Superior Court's prior decision in Havens v. Tonner. Kaczkowski v. Bolubasz, No. 755 April Term, 1978 (Superior Court of Pa.,
May 4, 1979). Appellant filed a Petition for Allowance of Appeal with this Court and we granted allocatur.*fn3
The issue raised by appellant is whether the trial court erred in excluding reliable economic testimony showing the impact of inflation*fn4 and increased productivity*fn5 on decedent's future earning power.*fn6 In order to address this issue, we must consider current Pennsylvania law and reassess its effectiveness in light of the purported objective of awarding full compensatory damages for loss of future earnings. To the victims of negligence or their survivors, the law of damages is of at least the same concern as the substantive law of torts. We have been quick to change substantive tort law where it has been determined that the needs of a changing society so dictated. See e. g., Sinn v. Burd, 486 Pa. 146,
A.2d 672 (1979); Azzarello v. Black Bros. Inc., 480 Pa. 547, 391 A.2d 1020 (1978); Mayle v. Pa. Dept. of Hwy., 479 Pa. 384, 388 A.2d 709 (1978); Fadgen v. Lenker, 469 Pa. 272, 365 A.2d 147 (1976); Ayala v. Phila. Bd. of Education, 453 Pa. 584, 305 A.2d 877 (1973). We are now called upon to determine whether the law of damages is in need of similar adjustments due to changes of circumstances occasioned by the passage of time and conclude that both a productivity factor and inflation should be reflected in an award of lost future earnings.
In this Commonwealth, we have consistently held that damages are to be compensatory to the full extent of the injury sustained. Incollingo v. Ewing, 444 Pa. 299, 307, 282 A.2d 206, 210 (1971); McLane v. Pittsburgh Rys. Co., 230 Pa. 29, 79 A. 237 (1911); Montgomery Bank v. Reese, 26 Pa. 143, 146 (1850). The rule "is to give actual compensation, by graduating the amount of damages exactly to the extent of the loss." Forsyth v. Palmer, 14 Pa. 96, 97 (1850). Loss of future earnings is a distinct item of damages, which if properly proved, may result in recovery for the plaintiff.*fn7
Inflation and productivity increasingly demand judicial attention, particularly with respect to personal injury action damages for lost future earnings. Traditionally, evidence of future inflation and productivity increases have been deemed too speculative to be included in calculating future damages even though inflation and productivity increases may drastically reduce an initially generous award. 18 Washburn L.J. 499 (1979). However, today, in light of clear scientific evidence of the fact that inflation and productivity have become an established part of our economy, it
becomes necessary that these factors be considered in such awards.
The "law does not require that proof in support of claims for damages or in support of compensation must conform to the standard of mathematical exactness." Lach v. Fleth, 361 Pa. 340, 352, 64 A.2d 821, 827 (1949). All that the law requires is that "(a) claim for damages must be supported by a reasonable basis for calculation; mere guess or speculation is not enough." Stevenson v. Economy Bank of Ambridge, 413 Pa. 442, 453-54, 197 A.2d 721, 727 (1964). See also, Small v. Flock, 407 Pa. 148, 180 A.2d 59 (1962); Getz v. Freed, 377 Pa. 480, 105 A.2d 102 (1954). "If the facts afford a reasonably fair basis for calculating how much plaintiff's entitled to, such evidence cannot be regarded as legally insufficient to support a claim for compensation." Western Show Co., Inc. v. Mix, 308 Pa. 215, 162 A. 667 (1932).
Personal injury awards are usually lump-sum payments, and are not paid in weekly or monthly installments.*fn8 Thus, all damages for personal injuries, including damages expected to accrue in the future,*fn9 must be proved and calculated at trial. D. Dobbs, Remedies, § 8.1 (1973). The loss of future wages is discounted to its present value by using the six percent (6%) simple interest figure.*fn10
Specifically, the principles relating to the limitation of the proof and consideration of the economic factors affecting lost future earnings have been articulated recently in Havens v. Tonner, 243 Pa. Super. 371, 365 A.2d 1271 (1976). In Havens, the appellant and the appellee were involved in an automobile accident. The appellee suffered whiplash, as well as a weakness in his right arm and leg. After his employer's reorganization of the corporate sales office, appellee's
employment was terminated. As of his termination date, appellee claimed a total and permanent disability.
In the common pleas court, the jury returned a verdict in favor of the appellee. On appeal to the Superior Court, the appellant objected to the admissibility of an economist's testimony on appellee's lost future earnings. During trial, the economist calculated lost future earnings based upon a projected work life of 20.69 years. He assumed that if appellee continued as an employee he would have earned $12,780. annually, plus fringe benefits. A 3 1/2 percent productivity factor was added to this figure.
The economist explained his calculation of the productivity factor as follows:
What I have taken into account here is the fact of productivity increases in the future, to try and allow for future increases in wages which would come about due to the fact that the economy over a long period of time has had a tendency to exhibit an increase in the propensity to produce goods and services at a faster more efficient rate. Namely, due to better technology. This, over the longrun [sic] is the principal cause or the principal reason why a person's wages rise; if he can produce twice as much in an hour after learning to do his job better, his employer can afford to pay him more because the employer has more goods that this individual produced that he can now offer for sale and, in fact, in the longrun [sic] in the American economy, productivity has increased or the ability of American workers to produce more goods and services in an hour somewhere around three and ...