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GERALD L. MORGAN v. MONESSEN SOUTHWESTERN RAILWAY COMPANY (12/12/86)

decided: December 12, 1986.

GERALD L. MORGAN, APPELLEE,
v.
MONESSEN SOUTHWESTERN RAILWAY COMPANY, A CORPORATION, APPELLANT



Appeal from the March 8, 1985 Order of the Superior court at No. 849 Pittsburgh, 1982, Affirming the Order Dated July 22, 1982 and Judgment Entered July 27, 1982, of the Court of Common Pleas, Civil Division, of Allegheny County at No. GD 79-23765 399 Pa. Super 465, Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Hutchinson, J., filed a dissenting opinion joined by McDermott and Zappala, JJ.

Author: Larsen

[ 513 Pa. Page 87]

OPINION OF THE COURT

The issues raised in this appeal are: (1) whether in an action for personal injuries under the Federal Employers Liability Act (FELA), 45 U.S.C. § 51, et seq., the "total offset method," established as the law in this jurisdiction by

[ 513 Pa. Page 88]

Railroad Company, 328 Pa. Super 119, 476 A.2d 919 (1984), the Superior Court held that the use of the total offset method for determining present value of future damages was correct in this case. Further, the Superior Court concluded that "[T]he trial court's addition of delay damages to the jury's verdict was proper."

II.

In St. Louis Southwestern Railway Co. v. Dickerson, 470 U.S. 409, 105 S.Ct. 1347, 84 L.Ed.2d 303 (1985), the United States Supreme Court said:

As a general matter, FELA cases adjudicated in state courts are subject to state procedural rules, but the substantive law governing them is federal. Although the Court's decisions in this area "point up the impossibility of laying down a precise rule to distinguish 'substance' from 'procedure,'" Brown v. Western R. of Alabama, 338 U.S. 294, 296, 70 S.Ct. 105, 106, 94 L.Ed. 100 (1949); it is settled that the propriety of jury instructions concerning the measure of damages in an FELA action is an issue of "substance" determined by federal law. Norfolk & Western R. Co. v. Liepelt, 444 U.S. 490, 493, 100 S.Ct. 755, 757, 62 L.Ed.2d 689 (1980).

The question then of whether it was error for the trial court to refuse to instruct the jury that an award for future damages must be reduced to present worth, and to charge instead on the total offset method, is governed by federal law. Citing the United States Supreme Court's Opinions in Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523, 103 S.Ct. 2541, 76 L.Ed.2d 768 (1983) and St. Louis Southwestern Railway Company v. Dickerson, supra., the appellant argues that, as a matter of federal law, awards of future damages in FELA actions must be reduced to present value. The appellant insists that the trial court's charge to apply the total offset rule of Kaczkowski v. Bolubasz, supra. in calculating future damages in this case is contrary to federal law and constitutes reversible error.

[ 513 Pa. Page 90]

The case of Jones & Laughlin Steel Corp. v. Pfeifer, supra. involved a claim for injuries under the Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1426, 33 U.S.C. § 904. The District Court, citing Kaczkowski, applied the total offset method for the calculation of damages and the Third Circuit Court of Appeals approved its use. The United States Supreme Court reversed and remanded, rejecting the Third Circuit's conclusion that the total offset method was a mandatory rule in the federal courts. The Court refused to adopt the total offset rule or any other rule as the exclusive method for calculating future damages in federal trials. The Supreme Court said:

The litigants and the amici in this case urge us to select one of the many rules that have been proposed and establish it for all time as the exclusive method in all federal trials for calculating an award for lost earnings in an inflationary economy. We are not persuaded, however, that such an approach is warranted. (Citation omitted.) For our review of the [relevant] cases leads us to draw three conclusions. First, by its very nature the calculation of an award for lost earnings must be a rough approximation. Because the lost stream [of income] can never be predicted with complete confidence, any lump sum represents only a "rough and ready" effort to put the plaintiff in the position he would have been in had he not been injured. Second, sustained price inflation can make the award substantially less precise. Inflation's current magnitude and unpredictability create a substantial risk that the damage award will prove to have little relation to the lost wages it purports to replace. Third, the question of lost earnings can arise in many different contexts. In some sectors of the economy, it is far easier to assemble evidence of an individual's most likely career path than in others.

These conclusions all counsel hesitation. Having surveyed the multitude of options available, we will do no more than is necessary to resolve the case before us. We limit our attention to suits under § 5(b) of the Act, noting

[ 513 Pa. Page 91]

    that Congress has provided generally for an award of damages but has not given specific guidance regarding how they are to be calculated.

Id. 103 S.Ct. at 2555. The court went on to observe:

In 1976, Professor Carlson of the Purdue University economics department wrote an article in the American Bar Association Journal contending that in the long run the societal factors, excepting price inflation -- largely productivity gains -- match (or even slightly exceed) the "real interest rate." Carlson, Economic Analysis v. Courtroom Controversy, 62 ABAJ 628 (1976). He thus recommended that the estimated lost stream of future wages be calculated without considering either price inflation or societal productivity gains. All that would be considered would be individual seniority and promotion gains. If this were done, he concluded that the entire market interest rate, including both inflation and the real interest rate, would be more than adequately offset.

Although such an approach has the virtue of simplicity and may even be economically precise, we cannot at this time agree with the Court of Appeals for the Third Circuit that its use is mandatory in the federal courts.

Id. 103 S.Ct. at 2556, 2557. The court further stated:

We do not suggest that the trial judge should embark on a search for "delusive exactness." It is perfectly obvious that the most detailed inquiry can at best produce an approximate result. And one cannot ignore the fact that in many instances the award for impaired earning capacity may be overshadowed by a highly impressionistic award for pain and suffering. But we are satisfied that whatever rate the District Court may chose to discount the estimated stream of future earnings, it must make a deliberate choice, rather than assuming that it is bound by a rule of state law.

Id. 103 S.Ct. at 2558.

In summary, the United States Supreme Court in Pfeifer: held that the total offset method adopted for use in Pennsylvania negligence cases is not a mandatory rule in federal

[ 513 Pa. Page 92]

    trials; declined to adopt the total offset rule, or any rule, as the mandatory method for determining future damages in federal court cases; ruled that use of the total offset rule is not prohibited if the trial court finds it to be the appropriate method under the circumstances; and held that the trial court "must make a deliberate choice, rather than assuming that it is bound by a rule of state law." Id. Thus, in final analysis, the Supreme Court, limiting its attention to suits arising under § 5(b) of the Longshoremen's and Harbor Workers Compensation Act, refused to adopt a mandatory rule and held that the total offset formula is a permitted method for calculating future damages in cases under that Act.

Even though Pfeifer involved a claim under Section 5 of the Longshoremen's and Harbor Workers Compensation Act, we believe the approval of the total offset rule as a permissive method in that case applies as well to the instant FELA ...


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