Havens v. Tonner , 243 Pa. Super. 371 ( 1976 )

VAN der VOORT, Judge.

This case arises on appeal by defendant Tonner from a judgment against him for $170,000 in an action of trespass arising from a motor vehicle collision.

The accident occurred December 12, 1969, on interstate highway 1-90 just southeast of Erie at a time when the highway was icy and partially snow cohered. The right lane of the highway was partially obstructed by a light truck which had gone out of control earlier in the day and ended up disabled and at right angles to the highway, blocking most of the right lane.¹ Appellant, operating a tractor-trailer unit heavily laden with steel sheet, was driving in the left-hand lane some distance behind appellee. Appellee, driving in the right-hand lane, testified that as he approached the obstruction he signaled his move into the left-hand lane with his turning light, but appellant testified that he saw no signal. Appellant was driving at a faster rate than appellee and was unable to brake or decelerate sufficiently as appellee’s auto pulled into the lane in front of him. As a consequence, appellant’s truck struck appellee’s car from the rear just after it had passed the disabled vehicle. The injuries to the appellee, which are the basis of this litigation, resulted.

Appellee was 38 years old at the time of the accident, employed by Jones and Laughlin Steel Corporation as a salesman in the Erie territory at a salary of $900 a month plus limited bonuses.

Appellee sustained a moderate to severe whiplash and a weakness in the right arm and leg which developed after the whiplash. He was hospitalized for ten days and then convalesced at home over the remainder of the Christmas holidays. Thereafter he went back to work. For the first two or three weeks his wife drove his car for him, but thereafter he was on his own. He continued in this employment until June 11, 1973, some three and one-half years after the accident, driving his own car a normal mileage of about 2,000 miles a month and working full time. He did this under some difficulty because of the impediment of a cervical collar which he wore because of the whiplash and a weakness in the right arm and leg which developed as a consequence of the accident.

On June 11, 1973, his employment was terminated because of a reorganization of sales territory, unrelated to any physical disability of appellee. Appellee’s supervisor testified that inasmuch as appellee’s territory involved only one large account the decision was reached that it could be handled by a product manager or from the central office without employing a salesman. The decision was not influenced by appellee’s physical condition, most of which was not even known to the supervisor.

It is as of this date of termination that appellee claims total and permanent disability. Appellee was earning $1,065 per month at the time of termination.

Between the time of the accident and the trial, a period of nearly five years, appellee's family doctor had him examined by several neurosurgeons and the Cleveland Clinic. These doctors have given appellee many tests, including the myelogram on several occasions, in an effort to locate the source of his difficulty. All tests have been negative.

Unrelated to the accident, the appellee suffers from diabetes, arthritis, gout and weight problems.

The liability of appellant and the nonliability of his co-defendants have been established by jury verdict and are not at issue on appeal. The appeal is addressed to the issue of damages and, specifically, to the testimony of an economist who was permitted to testify to a calculation made by him of appellee’s lost earnings based upon the premise of total and permanent disability over an estimated normal work life of 20.69 years, projected forward from the date of trial. This work life expectancy was calculated from work life tables published by the Bureau of Labor Statistics of the Department of Labor. The economist started his calculation on the assumption that had appellee continued as an employee of Jones and Laughlin he would have been earning at an annual rate of $12,780 at the time of trial, to which he added various fringe benefits incident to that employment and, finally, a cumulative annual increment of 3%% which he characterized as a “productivity factor”.

The result of these calculations was that the loss of future earnings would amount to $426,510 and that these lost earnings had a present value of $261,291 under the Pennsylvania 6% rule. The witness added $16,926 for bonuses that might have been earned between the date of the accident and the time of trial had appellee made more sales. The end result was a damage estimate of $278,217. Using the assumption of the Pennsylvania rule that this money could be invested at 6%, the result would be an annual income of $16,693 with the principal left intact.

The admissibility of this testimony is challenged on two grounds: (1) that there was no basis for the assumption that the appellee suffered a total and permanent disability; and (2) that there was no justification for adding and compounding a 31/2% increment as a “productivity factor.”

Total and permanent disability. The evidence relied upon to support a finding of total and permanent disability is found in the testimony of appellee’s family doctor who testified on direct examination that in his opinion appellee was not employable in any labor market at the present time. When the adequacy of this statement was challenged as a basis for the economist’s assumption of total and permanent disability, the doctor was recalled and asked whether appellee’s disabilities, which the questioner characterized as total and permanent, were the direct result of the trauma which appellee suffered in the accident. The doctor accepted the assumption of the question and replied that the accident was the cause of his present condition and caused his disability.² The doctor identified the injuries to which he was referring as the neck injury and weakness in the right arm and leg.

On cross examination, the doctor testified that full disability began when he lost his job on June 11, 1973. He explained this conclusion on the basis of his experience as medical advisor for two companies in Erie which he said would not even consider hiring a man in appellee’s condition, “not the way industry is set up now a days”.

There was no testimony that appellee was incapable of performing all the physical and mental functions necessary to full time employment as a salesman or that his condition was any different following termination of his employment three and a half years after the accident than it had been before termination. The medical testimony was to the effect that appellee’s condition resulting from the accident had apparently stabilized, neither improving nor worsening. The testimony from which total and. permanent disability is assumed rests on the conclusion of a doctor that a man with a neck problem resulting from a whiplash and a weakened right arm and leg was unemployable in the industrial market as presently set up. This was treated by the doctor as the equivalent of a total and permanent disability and so accepted by the trial court.

We cannot agree. Being industrially unemployable because of medium to large industry’s current reluctance to hire employees with medical problems does not equate with either total or permanent disability. The fact that appellee continued in his job as a steel salesman for three and one-half years after the accident demonstrates that there is a difference. Nor does industry, such as Jones and Laughlin or the doctor’s two client industrial firms, constitute the sole employment market. Appellee’s experience as a salesman would be relevant in any labor market where sales skill is a factor. Appellee’s only effort to find employment after his termination by Jones and Laughlin was a single application on which he declined to follow through because it involved a physical examination. The fact that the family doctor, who characterized appellee as unemployable by industry as he knew it, accepted this circumstance as the equivalent of total and permanent disability is a legal conclusion rather than medical evidence and one that we cannot accept.

It follows that the economist who calculated projected future loss of earnings should not have been permitted to make that calculation on the assumption of total and permanent disability without evidence of physical or medical disabilities which would prevent appellee from continuing work as a salesman or in some related capacity for which he was qualified.

The “productivity factor”. Nor can we accept the 3y%% productivity factor which was built into the calculation of lost future earnings. It was based upon nothing but the economist’s assertion that experience demonstrated that industrial productivity increased annually by at least that much due to improved technology and that this improvement was normally passed along in the form of increased wages.- No foundation for these assertions was offered, although data on the subject is doubtless calculated by the Bureau of Labor Statistics of the Department of Labor. Indeed, the entire topic of increased productivity came into the testimony after the witness was instructed by the court to make his calculation without including a wage inflation factor which he had originally used.

Steadily rising wage rates over the next twenty years, whatever the cause, are simply one face of the coin of inflation. It may be that inflation will become so much an established pattern of our economy that it should be recognized in estimating loss of future earnings. Certainly the erratic behavior of the economy over the past half dozen years, plagued by war and other unusual circumstances, is not a sufficient demonstration that inflation at any predictable rate will continue for another twenty years. Furthermore, even if inflation is a part of the pattern of the future, one certain consequence is that interest rates on money will reflect that fact. Consequently, a sum representing the present worth of future earnings will earn more in dollars in an inflationary period than would otherwise be the case. This may not wholly compensate for the effect of inflation but it is a closer and more certain approximation than any assumption of a certain rate of inflation over the next twenty years. We view the “productivity factor” as simply a substitute for inflation and equally speculative and inadmissible in a calculation of future earnings.

The appropriateness of including an inflation factor in a calculation of loss of future earnings, expressed in terms of an annual increase in all wage rates because of assumed escalating economic conditions, appears to be a matter of first impression in the appellate courts of this Commonwealth.

However, disapproval of such a practice was suggested in Hargrove v. Frommeyer & Co., 229 Pa.Super. 298, 313, 323 A.2d 300, where this court stated that it would be disposed to find error in the use of an inflationary increment had it not been for a charge to the jury which presumably corrected any misconception arising from the testimony.

The United States Circuit Court of Appeals for the Third Circuit, in each instance sitting as a Pennsylvania court, has three times ruled that the use of an inflationary factor expressed in terms of an assumed general increase in wages is improper: Hoffman v. Sterling Drug, 3 Cir., 485 F.2d 132, 142-144; Magill v. Westinghouse Electric Corporation, 3 Cir., 464 F.2d 294, 299-300, and Frankel v. Heym, 3 Cir., 466 F.2d 1226, 1229, affirming D.C., 321 F.Supp. 1331.

In Hoffman, an economist testified that the plaintiff, an architectural draftsman, could be expected to receive a 6% annual salary increase over a work life expectancy of 26 years. This was said to be the rate of increase for architectural draftsmen in the New York area over the previous five years. The court held that such a factor projected into the future over a long period of time was mere speculation and inadmissible.

In Magill, an annual earnings increase factor of SV&% based upon economic trends was held to be error in absence of evidence that the plaintiff, on his own merits and record, would probably have received certain promotions or pay raises.

In Frankel, a 5^4 % increase in the cost of institutional care was projected forward over a fifty year period on the basis of cost increases actually experienced over a ten year period. In rejecting such a factor, the court said 321 F.Supp. 1331, 1346—

“The projected inflationary trend is speculation. Plaintiff has used the decade of the 1960’s, one of the more inflationary times in the history of our country, as the basis for a projection of over fifty years. It is common knowledge that our Government is and has been attempting to control inflation, even to the point of considering wage and price controls. Economists differ on their predictions. Moreover, plaintiff will have money that can be invested and if inflation continues, the return on the money will be greater, and this would have an offsetting effect.”

These rulings of the Third Circuit Court of Appeals, while not binding upon us, are instructive and we find their reasoning convincing. Any estimate of future earnings over a substantial period of years based upon economic predictions is necessarily extremely speculative in nature. Much more satisfactory is evidence of the earning potential of the individual in question. As stated in Burgan v. Pittsburgh, 373 Pa. 608, 611, 96 A.2d 889, 890—

“The standard of remunerative capacity in any given case is not that of the average person but that of the particular individual involved. Otherwise, a wounded Hercules with his vast muscular potentialities would not be entitled to any more compensation for a serious disablement than an inj ured Lilliputian.”

We must, therefore, reverse the judgment of the court below because of the inadmissible assumptions of the economist who testified to the future earning potential of the appellee. However, there is no occasion to retry the issue of liability which has been determined by the jury and has not been contested on appeal. We, therefore, reverse the judgment solely on the issue of damages.

The judgment of the court below is reversed on the issue of damages and the case remanded for a new trial limited to that issue.

SPAETH, J., files a dissenting opinion in which HOFFMAN and PRICE, JJ., join.

1 . The owner and driver of the disabled vehicle were added by appellant as additional defendants, but were exonerated from liability by the jury.

2 . Transcript of testimony, pp. 451A and 452A. The doctor neither earlier or at this time ever testified that appellee was totally and permanently disabled.