Expert Testimony On "Earning Capacity" Was Not “Unreasonable Speculation”

In a diversity personal injury suit by business invitee who fell into a hole at defendant's music festival campground, plaintiff expert's testimony on her resulting loss of earning capacity, based on estimating plaintiff's average salary level and her “pre-injury earning capacity” (which was several thousand dollars higher than what her actual pre-injury annual pay had been) was not “unreasonable speculation” under FRE 702 and should have been admitted, in Andler v. Clear Channel Broadcasting, Inc., __ F.3d __ (6th Cir. Feb. 29, 2012) (Nos. 10–3264, 10–3266)

A rather common issue that is often handled with expert testimony arises in calculating damages for personal injury or wrongful death. The amount of plaintiff's recovery is a fundamental part of the case and yet it is also troubled with the matter of how to reliably calculate the damages. A recent Sixth Circuit case presents some of the difficulties in ensuring expert testimony on a party's lost earning capacity through life (rather than lost earnings) is not an exercise in "unreasonable speculation."

In the case, plaintiff Andler sought damages for her lost earning capacity as a result of falling into a grass-covered hole while visiting friends at defendant Clear Channel's music festival campground. In a diversity action based on Ohio tort law, the plaintiff sought damages for her medical expenses and her loss of earning capacity. In her diversity trial in federal court, she claimed that as a result of the accident she began to suffer arthritis in her feet and that it “forced her to switch jobs.” She wished to recover from the defendant an amount that would cover her life-time reduced earning capacity as a result of the fall into the hole.

Before the injury, she had been a part-time child care center worker, earning between $9,000-$10,000 per year. After the accident, she shifted to work as a full-time manicurist and pedicurist, earning about $10,000 in one year and $25,000 two years later. Andler, __ F.3d at __. The difficulty at trial was to compare apples to apples and oranges to oranges -- here, how to calculate out of a pre-injury part-time worker what she could earn in the future had she been able to work full-time. This calculation necessarily involved the assistance of an expert witness.

While the plaintiff prevailed in her suit against the defendant on liability, she received less in recovery than she sought. She seemed to attribute this to the trial court erroneously excluding her expert witness's testimony “that her injuries prevented her from performing certain procedures that would have earner her an additional $50 per week.” According to the plaintiff, over the course of her work life, this came to a “difference between a pre-injury earning capacity figure of $323,688 and a post-injury figure of $91,342 … of what Andler would earn over the course of her working life, assuming that she would retire at age 67.” Andler, __ F.3d __ n.1.

The trial court refused to admit the expert's testimony believing that her expert witness unreasonably used a statistical average salary in calculating her pre-injury earning capacity. This average figure happened to be several thousand dollars higher than what the plaintiff's actual pre-injury annual salary had been. The district court found the expert's methodology was based on “unreasonable speculation” and was inadmissible. Andler, __ F.3d at __.

The Sixth Circuit reversed, finding the exclusion of the expert witness's testimony was “premised on a misunderstanding of the concept of lost earning capacity.” The circuit remanded the case for a partial new trial on the damages issue. Applying Ohio law, the circuit noted the state allowed recovery of future economic damages for loss of earning capacity, upon proof that a party's earning capacity had "suffered a future impairment.” The circuit admitted that it was “somewhat speculative” to determine a persons' future earning potential. The test was rarely one of “exact calculation of what the plaintiff could have earned but for the injury.” Rather the plaintiff needed to show damages with “reasonable certainty.” This was an impact of FRE 702 which barred expert testimony “ based on “unsupported speculation.” Unlike the trial court, the Circuit did not find the expert's analysis plagued by “unrealistic assumptions regarding the plaintiff's future employment prospects,” or by “facts that [a]re clearly contradicted by the evidence.” It should have been admitted. Andler, __ F.3d at __.

The circuit rejected the trial court's finding that the plaintiff's expert testimony calculating plaintiff's future earning capacity was “unsupported speculation.” The circuit found that the expert's analysis was not troubled by “unrealistic assumptions regarding the plaintiff's future employment prospects,” or “facts that [a]re clearly contradicted by the evidence.” Rather, in applying Ohio law the expert calculated “what an injured plaintiff could have earned,” taking “into account factors such as the plaintiff's age, employment record, training, education, ability to work, and opportunities for advancement.” The circuit noted that in the field of calculating earning capacity “experts often consult actuarial tables, Bureau of Labor Statistics figures, or other averages along with the plaintiff's historical earnings,” as did the plaintiff's expert here. Andler, __ F.3d at __ (citing Cappello v. Duncan Aircraft Sales of Florida, 79 F.3d 1465, 1476 & n.18 (6th Cir. 1996) (Calculating lost earning capacity based on the plaintiff's actual average income for the previous five years was unreasonable, in that the figure was inconsistent with the average lifetime earnings profile for someone in the plaintiff's position.))

As important as these general factors, the circuit was not troubled with adjustments made by the expert by using reasonable “depart[ures] from historical earning patterns in light of changed circumstances that occurred prior to the injury but were not yet reflected in the plaintiff's actual salary.” Rather, the circuit concluded the trial judge erred by excluding the plaintiff's expert on lost earning capacity because the trial judge concluded that the expert's use of “a statistical average salary in calculating Andler's pre-injury earning capacity ...was several thousand dollars higher than Andler's actual pre-injury annual salary,”and constituted “unreasonable speculation.”

The expert properly adjusted the general factors in its calculation, employing reasonable “depart[ures] from historical earning patterns in light of changed circumstances that occurred prior to the injury but were not yet reflected in the plaintiff's actual salary.” The circuit disputed the trial judge's “concern with the use of BLS averages rather than Andler's actual historical earnings," finding that it

"suggests a confusion of the concepts of lost earnings and lost earning capacity.... [L]ost earning capacity does not necessarily rely on a plaintiff's historical earnings. What matters is what Andler would have earned over the course of her working life, not what she earned in any given year. Andler's historical earnings are relevant, but the fact that she did not meet her earning capacity in the two years prior to her injury does not necessarily render Selby's projections inaccurate or even unreasonable.”
Andler, __ F.3d at __.

As explained by the circuit, the expert's calculations were not too speculative:

“[Plaintiff's expert]Selby's testimony that Andle would have earned more over the course of her working life than the earning capacity suggested by her salary in the two years prior to her injury is not unreasonable as a matter of law. … Andler maintained regular employment and worked all the hours that were available to her at the childcare center. The shift from part-time to full-time, especially for a mother as her children grow older, is not as speculative as the shift from seasonal employment to a regular 40–hour workweek with full benefits [that had been allowed in other cases]. Selby's testimony involves a degree of speculation, as does all analysis of future damages, but not unrealistic speculation. The factual basis for using full-time averages in Selby's pre-injury earning capacity calculation may not be particularly strong, but “it is not proper for the Court to exclude expert testimony ‘merely because the factual bases for an expert's opinion are weak.’”
Andler, __ F.3d at __ (quoting Joy v. Bell Helicopter Textron, Inc., 999 F.2d 549, 567 (D.C.Cir. 1993)). This was particularly so where, as in this case, “[t]he jury could have weighed [expert] Selby's opinion, informed by Clear Channel's vigorous cross-examination.” In short, the expert's testimony was methodologically sound despite the facts that the expert might have had better facts to work with. But this did not undermine the calculation as reasonable, particularly in light of the defendant's ability to challenge and test the expert testimony.


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