Lay Testimony Insufficient To Show Employment Discrimination Damages

In gender discrimination action, trial court erred in admitting plaintiff’s lay testimony about damages, including the pensions portion of her back pay and lost wages, which should have been the subject of expert testimony under FRE 702 where she was a temporary employee and lacked personal knowledge of “the company’s salary structure, advancement opportunities, pay raises, or employment patterns,” in Donlin v. Philips Lighting North America Corp., 581 F.3d 73 (3rd Cir. April 23, 2009) (No. 07-4060, 07-4081), as amended, (3rd Cir. Sept. 9, 2009)

In proving damages, often expert testimony is necessary, particularly if complex technical issues may be involved. For example, an expert may be helpful for the jury to understand trade secret valuation issues. However, lay testimony may be permitted where sufficient personal knowledge is established and the matter is “not based on scientific, technical, or other specialized knowledge within the scope of Rule 702,” as noted in FRE 701. As one example, a business owner may provide lay testimony about any business damages. The Third Circuit recently considered the form of testimony to show damages and concluded that expert testimony, not lay testimony, should have been offered to establish damages in an employment discrimination case.

In the case, plaintiff Donlin served as a temporary warehouse employee at a distribution center of Philips Electronics North America Corporation. She applied for a full-time position but was not selected. Her temporary position was concluded. She filed a gender discrimination action. The jury considered liability and compensatory damages. At trial, the plaintiff testified about “not only about her actual earnings, but also about her estimated lost earnings and pension benefits. With regard to front pay, Donlin’s testimony detailed the number of years she intended to work and the annual salary differential between Philips and the other companies where she was employed. In addition, Donlin estimated her future pension value, performed a probability of death calculation, and reduced her front pay award to its present value.” Donlin, 581 F.3d at 80. The jury ruled for the plaintiff and awarded $164,850 in compensatory damages. The defendant appealed claiming the damages should have been subject to expert testimony since it was “specialized or technical testimony regarding her compensatory damages.” Donlin, 581 F.3d at 80.

The Third Circuit affirmed the liability verdict but concluded the trial court erred in admitting the lay testimony about damages. The circuit noted that lay testimony about damages may be permitted where “a lay witness has particularized knowledge by virtue of her experience … — even if the subject matter is specialized or technical — because the testimony is based upon the layperson’s personal knowledge rather than on specialized knowledge within the scope of Rule 702.” Donlin, 581 F.3d at 81 (citing Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1175 (3d Cir. 1993) (owner of business “was not required to qualify as an expert to offer opinion testimony concerning Lightning Lube’s lost profits” based on personal knowledge of contracts, operating cots and competition)).

In particular, the circuit noted the case was distinguished from another where the plaintiff’s personal knowledge was based on nearly 40 years as a company employee. See Maxfield v. Sinclair International, 766 F.2d 788, 797 (3d Cir. 1985) (in age discrimination action, plaintiff who was employed at the company for nearly 40 years was permitted to provide lay testimony concerning projected earnings and to reduce the earnings to present value; the plaintiff “based his request for front pay only upon his former earnings history” and “[t]here were no projections in earnings for which expert testimony was required”).

In Donlin, the plaintiff lacked the required personal knowledge to provide lay testimony. Specifically, “[plaintiff] Donlin was only a temporary employee of Philips for a term of less than one year and did not develop in-depth knowledge of the company’s salary structure, advancement opportunities, pay raises, or employment patterns. Therefore, her testimony cannot be considered within her personal knowledge and she does not qualify for the personalized knowledge exception.” Donlin, 581 F.3d at 82. As the circuit explained:

"In sum, Donlin's testimony crossed the line into subject areas that demand expert testimony. Specifically, we find that Donlin's testimony regarding the pension component of her back pay damages was improper. On the issue of front pay, Donlin's lay testimony was inappropriate with regard to her estimate of the annual pay raises at Philips, her estimated pension value, and the discounts she made for the probability of death and to find the present value of the award. Because this testimony was of a specialized or technical nature and was not within Donlin's personal knowledge, the District Court abused its discretion in allowing her to offer it. A trial judge must rigorously examine the reliability of a layperson's opinion by ensuring that the witness possesses sufficient specialized knowledge or experience which is germane to the opinion offered. Here, the District Court erred in that regard.”
Donlin, 581 F.3d at 83 (footnote and citation omitted).

Federal Rules of Evidence