Forms attorneys can use to get the plaintiff's IRS and SSA information

Useful forms for attorneys needing to obtain tax return and social security earnings:

The first is IRS Form 4506 which is a request for copy or transcript of tax returns.  It can be found here.   Note there is a charge for this service, but certainly worth the cost to document earnings.

IRS Tax returns: http://www.irs.gov/pub/irs-fill/f4506.pdf

The second is the form SSA-7050.pdf which is the form for requesting a social security statement of all earnings.  

Social Security statement of earnings: http://www.socialsecurity.gov/online/ssa-7050.pdf

This makes it much easier for the attorney.  All that is needed is for him or her to fill out the form.  The form only needs the signature of the plaintiff.  Defense attorneys can also use it.  One thing the defense could do to show a good effort to obtain the information, is to  fill the form out and present it to the plaintiff attorney. 

What would Daubert say about those economic damages? 7.28.04

Case background:

A 52 year old male construction worker, Mr. Tom Moore, is killed while dismantling a large above ground storage tank.   The family has filed a wrongful death suit against the city and the construction company.

At the time of his death, the construction worker was earning about $30,000 a year.  He was divorced and paying child support of $150 per week to his ex-wife.  His youngest child was 13 at the time of his death.  He did not live with the children at the time of his death.

The defense expert has claimed that the economic damages are equal to the present value of the remaining 5 years of child support payment which total about $38,000. 

Q1: What would Daubert say about the defense expert's claim? 

A. The defense expert has correctly estimated the deceased economic damages?
B. The defense expert has missed the boat with his economic damage estimate?

Answer:

B. The defense expert has missed the boat!  In this case, a more accurate analysis would have considered the economic value of the money and/or assets that Mr. Moore's could have left to his family or estate.

In this case, the economic damage calculation should be done in two parts.

Part I: The economic value of the child support payments
 
Clearly the family has lost the child support payments that he was making to the mother of his children.  The present day value of these lost payments, equal to about $38,000, should be figured in to the analysis.   Monthly compounding should be used to make the calculation.

Part II: The economic value of  Mr. Moore's assets
 
Even though Mr. Moore was not living with his children, he would have in all statistical certainty, would not have personally consumed all his assets before he died.  The amount left upon his death would have been relatively small.  This is because given his income level he would have most likely have spent the majority of income on his personal needs.  However, there would have been in all likelihood some assets that should have been incorporated into the defense expert's analysis.

There are two scenarios that should be considered when calculating the value of the assets Mr. Moore could have left to his children had he not been killed.  The first scenario calculates the economic value of the money that Mr. Moore would have NOT consumed on himself.  Conceivably, the money not spent on himself could have been spent on his children or alternatively by his estate.  For Mr. Moore it is estimated that given his income level and family structure,  about 30% of his income, or about $9,000 per year, would be available to his children or the estate.

The second scenario calculates the economic value of the total sum of money and/or assets that Mr. Moore could have had at the time of his natural death.  Instead of calculating the annual present day value , i.e. in each year of the analysis, of the money that he could have accumulated, the analyst calculates the present day value of the accumulated assets at the time of his death.  In other words, the present value of all his possible 'savings' at the time of his natural death. 

In both analyses, you must account for changes in spending during retirement.    
   

 

Those economic damages are criminal....

Schick v. Illinois Dept. Human Svcs, 307 F.3d 605, 90 FEP 78 (7thCir. 2002)

$300,000 front-pay award was based on claim that Plaintiff robbed a convenience store due to mental and emotional stress caused by Defendant-employer's alleged sex and disability discrimination.

7th Circuit reversed the case on appeal, holding that the plaintiffs' incarceration was their own fault, therefore, no front pay or emotional-distress damages should have been awawrd.  No damages.

Depo humor

From a colleague's , in a book entitled “Disorder in the Court”.   Probably one of the person's first depos?

[Attorney] Q: Is your appearance here this morning pursuant to a Deposition Notice which I sent to your attorney?
 
[Expert] A: No, this is how I dress when I go to work.

Are NCAA Coaches different from the rest of us?

David A. Conners, Ph.D., an senior economist at Brueggeman & Johnson, P.C.  recently posed a very interesting question to a forensic economist list serve.  Brueggeman and Johnson Capital, PC is a CPA firm specializing in business valuation and dispute resolution services in Seattle Washington.

Dr. Conners asked:

What key differences – if any – would you consider in evaluating an alleged wrongful termination lawsuit involving a big-time NCAA coach against his/her former employer?  In other words, in what important ways would this particular wrongful termination suit be different than any other?  

Assume that the coach in question was not fired because of a poor record of “wins and losses.” 
Assume further that the coach in question made relatively “big bucks” before his/her job was terminated.
 
Professor Michael J. O'Hara, J.D., Ph.D., who is an economist and attorney at University of Nebraska at Omaha in the department of Finance, Banking, and Law responded with the following useful advice:

In short, yes, a NCAA coach can be wrongfully terminated; but, the damages are previously estimated and paid for in the liquidated damages clause.  

You will need to press your engaging attorney hard on the law and which losses are recoverable as damages, and limit your estimate to those losses.  Now, if you are talking about a Graduate Assistant Coach with zero bargaining power and zero representation and abused by an adhesion contract, then that liquidated damages clause might be an unenforceable penalty and you are back to vanilla wrongful discharge.

More specifically, he stated:

Most such coaches have contracts with a liquidated damages clause that is quite generous (e.g., between 12 and 60 months pay) and serves the purpose of eliminating claims by either party for termination by either party prior to the contract's stated duration.  The school hires the coach for a stated duration and the coach agrees to work for the school for astated duration; but, both parties hope the coach is so good there is areal risk that the coach will breach, and both parties reasonably fear that the coach will be so bad that the school will breach.  

Between sophisticated parties with sophisticated representation it is nigh on impossible to get beyond the liquidated damages clause merely because the magnitude of loss exceeds the parties' contractually manifested forecast.  Any wrongful termination losses first are paid out of the liquidated damages clause.  Double counting is a real risk. 

To get beyond the liquidated damages clause limits because of the reason for termination that reason must be beyond the expected range of termination justification, or far more likely source of damages, the school's related termination behavior  (e.g., press releases) is beyond the expected range of termination behavior.  The parties ordinarily draft the termination press release when drafting the hiring contract and append that termination press release to the contract as part of the hiring contract.  Both parties expect both parties to walk away quietly. 

If the employer's pre-termination process or post-termination process (e.g.,whispers) did not equate with the reasonably expected "walk away quietly",then the reputational damages could be significant.  Unless the coach was fired because the coach reported NCAA violations at the school, or unless the coach was fired because the coach's behavior was squarely within that jurisdiction's very limited list of "public policyprotected terminations" (e.g., reported a felony public health violation bythe school [e.g.,  known tainted meat donated to the training table knowing used in the dorms]), give it up.

By The Numbers 7.22.04

13 forensic economists for every 19,564 attorneys in the U.S.

90 percent of forensic economists in 2004 voted 'yes' to the adoption of a uniform statement of professional ethics.

1 is the number of former fortune 500 CEO's indicted for financial misconduct in the Enron scandals that held a Ph.D. in economics (Ken Lay)

'Diminution of Life Expectancy' calculations in injury and wrongful death cases

Who is qualified to make 'diminution of life expectancy' calculations in injury and wrongful death cases?  Should it be a MD or an actuary?

In most cases the training and experiences of a life actuaries are better suited for making 'diminution of life expectancy calculations.  In underwriting; underwriters (andtherefore actuaries) have as a part of their job to rate life insurance applicants to see whether because of health issues or risky behavior their insurance premium should be rated.  From the underwriters' point of view, MDs are the technicians who tell them the facts about a given client, the underwriter is the expert who translates those facts into the impact on the average person's life expectancy.

There are no doubt some MDs who have the required expertise, but given the day to day experiences of most MDs you are not likely to find to many MDs who can claim that they are experts on making diminution of life expectancy calculations.

What to look for when hiring an economist

What should you look for when you are evaluating the CV of a potential economic damages expert witness in your injury, wrongful death or employment case?

1. Education.  In most cases involving wage and compensation losses, you should choose an expert with a Ph.D. in economics.   Although, in some types of cases especially those involving losses that are specific to a particular business , a CPA or MBA can be used, in cases involving individual losses or employment matters, your case will involve projecting compensation levels many years into the future.   A  Ph.D. economist will have more general knowledge on the labor market factors that effect an individual workers  salary and retirement benefits levels. 

2. Professional Experience.  An economist with prior undergraduate teaching experience is usually the best fit in litigation settings.  The experiences of trying to relay complicated ideas in a simple way that comes from teaching at the undergraduate level are the same as those required in a court  room setting.   Experts with teaching experience are also usually more comfortable talking in front of a diverse group of people.

3. Experience.  In many situations, the economist with NO court room experience makes the best expert.  Economists that are new to litigation support will tend to bring new ideas to the table.  Economists that are new to litigation support will also be less likely to be viewed as a hired gun by the jury

A vicious cycle of employment discrimination damages?

Something to consider
 
Some researchers suggest that the filing of a employment discrimination lawsuit may actually hurt an applicants chance of obtaining employment.  Conceptually, this could set off a 'vicious cycle' of future damages.   Here is how:

Many employers now do regular background checks on potential hires, not only for human resources purposes (truthfulness of resume, litigation propensity, etc.) but also under security protocols.  As we all know, any applicant's litigation history can be easily obtained through public information on-line. Thus, the stigma of having sued a former employer follows the employee if the potential employer wants to know the applicant’s litigation history. 
 
Roberta Spoon and Seth Ellis wrote an article in HR Focus (1993), entitled ”Litigation Stigma: Lawsuits Come Back to Haunt”. They surveyed 1100 human resources professionals and found that a great majority would not give equal consideration to hiring an applicant who had previously sued an employer, regardless of the merits of the case, other qualifications remaining equal.
 

Social security benefits for the (much) younger spouse?

Below is an interesting question that we were asked to answer. 
 
Question:
 
In most circumstances,  the widow of someone on Social Security will receive their pension plus one half of the deceased pension.   My question is, however, what if he is 66 and the widow 45?  She would not be receiving the normal pension for a number of years.  What, if anything, will she receive at age 45?
 
Answer: 
  
A widow must be age 60 to receive a SS pension, unless she is disabled,when the earliest age is 50. She can get nothing at age 45 unless she isreceiving a benefit on behalf of a minor child. 
 
When she is age eligible she has the choice of receiving a pension on her own earnings record or on that of her husband's.  She will recieve the benefit based on whichever is higher. 
 
(More reason to get the social security statement for all the plaintiff and the deceased in these types of cases) 

What would Daubert say about those damages?

In a recent personal injury case we reviewed two economists, one hired by the defense and one hired by the plaintiffs, presented expert reports on the economic losses that were suffered by a commercial real estate broker. The real estate broker was injured in car wreck and was out of work for nearly 3 years. The broker, who was independently employed (technically organized as a 'S' corporation) and worked out of his home. In the year before the accident, the broker showed taxable income, all from his commercial broker activities, of $371,290 on his IRS 1040 tax return.

Although both economists based their lost income projections on the plaintiff's most recent pre-injury income tax return, the economists arrived at radically different annual lost income estimates. In fact the plaintiffs' economist estimate of the broker's lost income was over 50% higher than the defense economist's estimate.

Upon closer inspection, the difference between the two economists boiled down to how the economists incorporated the equipment depreciation shown on the plaintiff's income tax return. (See INSERT LINK to tax return) The defense economist took the bottom line adjusted income tax shown on Line # of the broker's income tax return (and shown above). The plaintiff's economist took the bottom line income tax return number shown on Line # and added back in the depreciation amount shown on Line # of the tax return. The broker had total depreciation of about $155,000 in the year before his accident.

What would Daubert say about the two economist's economic damage estimates?

A. The defense's economist is correct in taking the bottom line income number as the lost income and not adjusting for depreciation.

B. The plaintiff's economist is correct for adding back in the depreciation into the lost income number to calculate the lost income number.

Check back in the coming days for the answer.

Eliminate time wasters from your damage case

As economic experts who deal with attorneys on a very regular basis, we have noticed that the most precious and scarce thing for most attorneys is time. Most plaintiff attorneys for example are juggling an incredible number of cases, deadlines, and meetings. It is safe to say that there are few, if any, professions with the same level of demands on a person's time.

The amount of time spent, and unfortunately many times wasted, by an attorney who handles a number of cases that involve economic damages can substantial. The amount of wasted time could actually be even higher for an attorney who only does a few damage related cases a year because they tend not to be as familiar with the required documents as attorneys who handle these types of cases a lot.

How can you eliminate time wasters from your damage case?

A: Adopt a streamlined approach for collecting and handling the documents required to prove up the plaintiffs economic damages. A streamlined approach means:

1. Develop a checklist of the documents that you need to get during discovery.

2. Make a list of the questions that you need to ask at a deposition of the relevant persons. For example in an injury case, list all the questions that you will need to establish (or probe) the level of household services performed by the plaintiff before and after the accident.

3. Consult with someone familiar with the economic damage particulars in your case, as early as possible in the case. This initial 'discovery' could be as simple as sending a damage checklist to the plaintiffs (or asking the plaintiffs employer about benefits).

4. Think about economic damages as early as possible in your case. Too many attorneys, even ones representing the plaintiff, we work with only think about damages as an after thought. Thinking about damages early tends to produce more credible economic damage assessments.

Who pays for expert depos in CA?

Expert Witness Depos in CA:

What are the CA rules for expert depositions, and who pays the bills, and when?

In a nutshell, the deposing attorney pays for the depo time. All depositions must be paid for in advance. If the attorney underestimates the time, they must remit the balance to you within 5 days of receiving your bill.

Sidenote: Some economic experts in CA will handwrite a bill for the balance and hand it to the attorney at the end of the depo to make sure that they get paid.

The expert's attorney pays for the travel time and expenses. The expert must be produced within 75 miles of the courthouse unless both parties mutually agree to meet elsewhere.

Click here for California Code of Civil Procedure, Section 2034 covering expert depositions.

Do you actually need an economic damage report?

The work that the economist performs in an injury case, or any case for that matter, should add value to the retaining attorneys case. As an attorney there are certain questions that you can ask yourself that will help you ensure that you are getting the most out of your engagement with economic expert.

Questions plaintiff attorneys with injury cases should ask before engaging an economist:

1. [Pre-Injury Earnings Capacity] Do I have financial documents and descriptions of benefits for the complete work history of the injured person for at least the last 5 years?

2.[Pre-Injury Earnings Capacity] If it the person's employment history is checkered can the plaintiff provide enough information to fill out the gaps in employment?

3. [Post-Injury Earnings Capacity] Do you have a vocational report to support the claims of future impairment?

4. [Household Services] Do you have a medical document that buttresses the plaintiffs loss of ability to perform household services? If the plaintiff has been deposed, did he or she provide deposition answers that discuss the loss of household services?

5. [Household Services] If the spouse of the plaintiff has been deposed, did they provide any useful responses that could help establish the plaintiffs' loss of household services.


Questions defense attorneys with injury cases should ask before engaging an economist:

1. What is the purpose of economist's report? Is it to help impeach the plaintiff's economist? Is it to provide an alternative set of damage numbers to the jury? A clear objective allows your economist to focus their energy in the areas that will be most useful for your case.

2. If the plaintiff has been deposed, did I ask the right questions concerning wages, benefits, and household services (see questions above) at the deposition? For example, is it clear what the plaintiff claims that they can no longer do around the house?

3. Have I collected all the relevant employment records, including job performance and social security statements for the plaintiff?

How to help your economic expert deal with 'impeachment nuggets'

In an interesting article posted on, The Illinois Trial Practice Weblog, the author discussed how to ask questions at a deposition that can be used to impeach a witness if they change their story at trial. The weblog said:

...An impeachment nugget is a question and answer in a deposition about a single fact, which can be easily used at trial to impeach a witness who tries to change his story. A very simple example:

Q. The light was green, correct?

A. Yes....

How can you help your economic expert deal with these types of questions?

Answer: Make sure that she or he is telling the whole truth on the first go round!

This may be simple advice, but it can not be stressed enough. Provide them with enough information to make a complete and accurate economic assessment as early as possible. It also helps to make the economic expert feel comfortable that there are 'no secrets' and everything has been disclosed fully to the opposing counsel.

Do NOT try this at home!

The popularity of home improvement shows, like 'Trading Spaces' are at a all time high. When you watch these shows the professionals on the show make everything from building a shelf to a deck look so easy. Many of us have taken the ease at which the people on the show handle the different building tasks as a sign that we could do it ourselves.

The outcomes from many of these do-it-yourself attempts have been disastrous at best!

Unfortunately, many attorneys both plaintiff and defense take this same approach when either calculating economic damages or rebutting claims of economic loss. Instead of hiring the right professional for the job, they do-it themselves or in some cases try to get the plaintiff to prove up their own damages. As the last post on the exclusion of economic damage evidence in the 10th circuit demonstrates this approach can lead to disaster.

Generally, we have observed:

* Economic evidence rejected because the plaintiff did not actually provide a sound economic justification for the loss. This is particularly problematic in business torts since even when an economist is retained, the owner (and plaintiff) will provide many of the insights and assumptions used in the economic damage assessment. (Who knows the business better than the owner?)

*Economic reports thrown out because the expert did not have the qualifications to do the analysis presented to the court.

*Economic damage claims rejected altogether for not using an economic expert at all.

When all else fails, remember a hammer drives in a nail better than the heel of a shoe.

The Importance of Good Credentials

The recent decision 10th circuit decision clearly shows the importance of using a qualified economist to calculate economic damages. The Court found in Lifewise Master Funding v Telebank that:

[The Plaintiffs' expert] was not an expert in damages analysis or in any of the techniques used to create the September 13, 2002, damages model. He admitted that he had never used the methods used to create the September 13, 2002, damages model; he even confessed that "I am not a [damages] modeler." IX Aplt. App. at 3994; see also XI Aplt. App. at 4850 ("I'm not an accountant and I'm not an academic"); id. at 4851 ("I'm not an expert on regression analysis."); id. at 4852 ("I am not a statistician and I'm not an expert about regression analysis."). Indeed, [The Plaintiffs' Expert] took a single undergraduate class in economics. But he took no accounting or finance courses, had no training in damage analysis, had never testified as a damages expert or prepared an expert damages report, had never taught a course or lectured on damages, and has never been published in the field. Id. at 4855-56. As the district court noted, Mr. Livingston is "not a trained economist and cannot legitimately educate a jury on many of the complex economic aspects of [the damages model] such as 'S-curves.'"

The published opinion further stated:

(1) the expert exhibited an "utter lack of any familiarity, knowledge, or experience with damages analysis";
(2) his methods were "misleading, not reliable, and unsupported by use in any other comparable setting" and did not fit the facts of the case; and
(3) the testimony would have confused the jury rather than assisting it. See Lifewise Master Funding v. Telebank, No. 03-4086 (10th Cir. June 29, 2004) (Ebel, Kelly, & McConnell, JJ.).

(Thanks Blog 702)