Brief Fact Summary. O’Shea (Plaintiff) was injured when she fell getting off a boat operated by Defendant. Plaintiff was awarded money damages, which included a sum for inflation of lost future wages.
Synopsis of Rule of Law. It is appropriate to take inflation into account when determining damages for lost future wages.
Issue. In determining damages for lost future wages, is it appropriate to adjust for inflation?
Held. Yes. Judgment affirmed.
* There is no doubt that the accident disabled Plaintiff from working as a cook on a boat. Because of her condition, age, and mental abilities, and from the fact that Plaintiff was in constant pain, it would seem unlikely that she could find gainful employment even at minimum wage to offset the losses from her job as a cook on a boat.
* Plaintiff never earned over $3,600.00 per year and in the previous year had only earned $900.00. However, previous wages do not put a cap on an award of lost future wages.
* It is appropriate to take inflation into account when determining damages for lost future wages. There are at least two ways to deal with inflation with respect to present value computations. We can assume zero inflation and then assume an interest rate on investment that could be had for zero inflation. At a two-percent real interest that would amount to $5,906.00 as the compensation for lost earnings in 1990 on a present income of $7,200.00. An alternative approach would be to use a higher discount rate based on the current ten-year interest rate and then deduct the real interest rate and then assume what is left as the expected inflation rate. Either approach is acceptable.
* The court will not reverse an award for damages for lost wages because of questionable assumptions unless it yields an unreasonable result. Defendant did not offer any economic evidence and does not object to the questionable steps in Plaintiff’s economic analysis. The court cannot say that this result was unreasonable.
The standard that governs a plaintiffs earning potential is whether she can by reasonable diligence find gainful employment, given the physical condition in which the accident left her.View Full Point of Law