Echeverria v Estate of Lindner

[*1] Echeverria v Estate of Lindner 2005 NY Slip Op 50675(U) Decided on March 2, 2005 Supreme Court, Nassau County Warshawsky, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 2, 2005
Supreme Court, Nassau County

Juan Vicente Echeverria, Plaintiff,

against

THE Estate of Marvin L. Lindner, a partnership, NORMAN A. SHEFER, T&O ASSOCIATES LIMITED, JEK ENTERPRISES, INC., KENNY DOYLE, GEORGE ALBRO and PREFERRED BACKHOE SERVICE, Defendants. T&O ASSOCIATES LIMITED, Third-Party Plaintiff, ALWAYS EQUIPMENT INCORPORATED, Third-Party Defendant.



018666/2002

Ira B. Warshawsky, J.

In the instant case the court is not asked to address any issue beyond damages suffered by this undocumented day laborer in an accident under section 240 of the Labor Law (fall from scaffold). In fact, the matter was sent to the court as an inquest after all but the defaulting defendants had settled the matter immediately prior to the trial on October 27, 2004. No appearance was made by the defaulting defendants, JEK Enterprises, Inc. and Kenny Doyle, at any time in this case and no evidence was presented in opposition to the damage issue.

However, two issues have arisen which the court believes should be addressed. The first [*2]involves a company called LawCash which either loaned, "funded" or advanced to plaintiff or invested in plaintiff's action $25,000.00 as of November 25, 2003 at an obviously usurious rate of interest of 3.85% per month compounded monthly; this may or may not also constitute Champerty. The other is related to whether plaintiff's status as an undocumented alien (court translation - illegal alien) should have any effect on his recovery of future damages. Should such a decision be based on law or economics or on a Brandeisian view of both?

Initially, the court will set forth certain basic findings of fact as to the plaintiff's accident as well as the $25,000.00 received from LawCash.

Findings of Fact and Conclusions of Law After Inquest

This matter was assigned to this part from the Calendar Control Part on November 1, 2004 for the purpose of conducting an inquest as to defaulting parties JEK Enterprises, Inc. and Kenny Doyle.

History

The plaintiff, Juan Vincente Echeverria, who, according to counsel, was born on January 16, 1982, was injured in an elevation related construction accident on September 1, 2000. By order of the Honorable Thomas Phelan, dated June 4, 2003, a default judgment was granted against JEK Enterprises, Inc. and Kenny Doyle, deferring the inquest to the trial justice assigned to the action. By order of the Honorable Thomas Phelan, dated August 2, 2004, summary judgment on the issue of liability under Labor Law section 240 was granted to the plaintiff against defendants, the Estate of Marvin L. Lindner, a partnership, Norman A. Shefer and T&O Associates Limited. (As noted earlier, the actions against these answering defendants and a third-party defendant were settled just prior to jury selection on October 27, 2004.)

Inquest Testimony

On September 1, 2000, Juan Vincente Echeverria was severely injured when he fell from an elevated work platform (a per se violation of Labor Law section 240). His injuries consisted of: a) significant head trauma with loss of consciousness with frontal and occipital scalp lacerations which required staples and resulted in scarring;

b) fracture of the left 4th and 5th metacarpals requiring closed reduction;

c) compression fracture of L1;

d) lacerations of the front left torso resulting in striated scar deformities;

e) possible fracture at the base of the 3rd metacarpal;

f) possible dislocation of the coccyx; g) constant and daily pain, with aching, stiffness and decreased range of motion in the cervical and lumber spines with pain radiating into both arms;[*3]

h) low back pain with moderate intensity which is daily but prolonged

by sitting and standing; pain radiating into the back into legs;

subluxation complexes at L2-3, L3-4, L4-5 and T-10-11. The

foregoing vertebral subluxation complex was confirmed with

diagnostic ultrasound;

i) on December 8, 2003, plaintiff underwent a posterior spinal fusion

from T12 to L2 with application of 15 cc's of cancellous allograft

bone chips with posterolateral arthrodesis under general anesthesia

with all of the risks attendant to said general anesthesia with surgical

scarring.

In that three defendants settled and one defendant defaulted, there was no testimony to contradict the plaintiff or his medical records.

At the time of the plaintiff's injuries he was being paid by the defaulting defendants the sum of $80.00 per day, in cash. The plaintiff was injured on the second day of work for the defaulting defendants. He had been picked up by the defendant at a street corner where he "shaped up." The defendant employer, not surprisingly, did not have Worker's Compensation coverage on the plaintiff.

Following his injury, plaintiff received chiropractic care from Dr. Cappel Mayreis incurring bills totaling $37,080.43 for which reimbursement is requested (under other circumstances the court would question this bill).

When chiropractic care did not alleviate plaintiff's symptoms, he came under the care of orthopedic surgeon Philip Rafiy who ultimately performed the spinal fusion surgery noted above. The plaintiff testified that the surgery has left the plaintiff with an ongoing disability and recurring pain. This limits his ability, given his seventh grade education, to obtain employment for which he is qualified. However, the court has received no information that would indicate he is prevented from continuing his education and could not become employed in some other fashion than as a day laborer.

In order to pay for the surgery and ancillary expenses associated therewith, the plaintiff borrowed the sum of $25,000.00 from an entity known as LawCash at the rate of 3.85% per month compounded monthly. The agreement signed by the plaintiff declares this to be an investment and not a loan. LawCash is in the business of advancing "non-secured" funds. Their charges for "processing" and "funding fees" amount to the sum of $13,916.45 up to October 31, 2004 and increasing at a daily rate of $48.94 thereafter.

This court had little familiarity with this service (beyond a New York Law Journal article of June 23, 2004) or those of a similar nature until the instant case appeared in its courtroom. In many states an attorney may advance money to a client to finance the hiring of expert witnesses without which the case could not go forward or would be forced to settle for far less than its actual value. Not so in New York.

Attorneys in New York are barred from funding litigation expenses or maintenance (DR 5-103(b)) when repayment is contingent on the outcome of the case. The NYSBA in 1994 [*4]rendered an ethics opinion (Opinion 666 (73-93) 6/23/94) which allowed an attorney to refer a client to a lending institution that would lend the client money for living expenses where repayment is contingent on the successful outcome of the case.

Pursuant to DR 5-103(b)(1): [a] lawyer may advance or guarantee the expenses of litigation, including court costs, expenses of investigation, expenses of medical examination, and cost of obtaining and presenting evidence, provided the client remains ultimately liable for such expenses.

And without mentioning ultimate client responsibility, DR 5-103(b)(2) states: A lawyer representing an indigent client on a pro bono basis (emphasis supplied) may pay court costs and reasonable expenses of litigation on behalf of the client.

(Amended effective September 1, 1990)

None of the above, however, speaks to the issue of the interest rate charged by LawCash, only that an organization of its nature may be a valuable asset to a plaintiff attempting to prosecute an expensive litigation without independent wealth.

In June of 2004, the Attorney General announced an agreement with Cambridge Management Group, a leading player in this growing field of the "settlement advance" business. Without commenting on an interest rate that could run up to 60% per annum, the "Agreement" called for full disclosure of the total amount of the advance including all fees, interest rate and frequency of the compounding, a five day right-to-cancel, and a notarized statement from the client's attorney that the contract was reviewed with and explained to the consumer.

Proponents of the "settlement advance" business contend it allows an injured, often out of work party, to fight off the pressure for a quick settlement. Critics say the interest on the advance, obviously of sizeable nature, and $48.94 a day in the instant case, which continues to accrue while the case is pending, creates an added incentive to settle, rather than relieving the pressure (the sooner you settle the sooner you stop the interest).

Plaintiff argues that the defendants by their willful failure to provide Workers Compensation Insurance for the plaintiff placed him in a position of having to seek a lender of last resort, thus, they are likewise responsible to the plaintiff for the consequential damages and costs incurred in seeking funding for his necessary medical care. The court will address this issue in its conclusion.

Specific Damages

There are five elements of damages that were addressed upon inquest: past medical expenses; past lost earnings; future lost earnings; past pain and suffering; and future pain and suffering.

Plaintiff contends he should be awarded past medical expenses in the sum of $77,465.08 comprised of $37,080.43 (Dr. Cappell Mayreis' bill), $25,000.00 (Dr. Rafiy surgery hospitalization and after care bill), $13,916.45 (LawCash cost of financing medical care), and $1,468.20 for thirty days of interest at a rate of $48.94 per day until plaintiff receives funds from [*5]the settlement against other defendants and pays off this bill.

As to past lost earnings, plaintiff before his accident was an able bodied young man with minimal English language skills, a seventh grade education in El Salvador, and capable of performing construction work. The defaulting defendant set his earning rate at $80.00 per day. Plaintiffs' estimates are based on a more conservative $75.00 per day. Plaintiff was capable of working a five day work week, but for his accident, and an award of past lost earnings in the sum of $71,119.00, through December, 2004 ($75.00 per day, five day work week, forty-eight weeks per year, no benefits) is appropriate. However, is it impacted by whether the plaintiff could legally be employed in the United States?

As to future lost earnings, the analysis by Dr. David Kennett argues for an award of $1,645,275.00 presuming an actuarially reasonable work life expectancy.

Past pain and suffering of Mr. Echeverria, a now 23 year old man, includes required extensive medical care and surgery which has lead to restrictions of all of his usual and customary daily activities and warrants an award of $250,000.00.

Plaintiff requests an award for future pain and suffering, assuming an actuarial life expectancy of 49.1 years, of $2,500,000.00. The court finds a more appropriate award for future pain and suffering would be $1,000,000.00 based upon the evidence presented.

LawCash

Loan, Investment or Champerty

The instant agreement between Mr. Echeverria and LawCash, through which Mr. Echeverria received $25,000 from LawCash and in turn agreed to repay this principle amount at an interest rate of 3.85% compounded monthly to LawCash from any judgment awarded to Mr. Echeverria does not constitute Champerty as defined and applied in New York law. The common law of Champerty has been codified in New York under Judiciary Law, mainly sections 488 and 489. Champerty prohibits any attorney, person, co-partnership or corporation from directly or indirectly taking assignment of a chose in action "with the intent and for the purpose of bringing an action or proceeding thereon" (NY Jud. Law §478, 479).

LawCash's loan or investment, (whatever you may call it) to Mr. Echeverria can be viewed as a purchase of a chose in action; however, this advancement is still not considered Champerty. In order to constitute Champerty in New York law, the primary purpose of the purchase must be to bring suit or proceed with action upon the claim they received. Knobel v. Estate of Eugene A. Hoffman, 432 NYS2d 66, 68 (NY Sup. Ct., 1980) (see also Moses v. McDivitt, 88 NY 62, 65 (1881); Wightman v. Catlin, 981 N.Y.S. 1071 (NY App. Div., 1906)). In Knobel v. Estate of Eugene Hoffman, the defendant landlord moved for dismissal claiming that the plaintiff's attainment of power of attorney for the landlord's tenants constituted Champerty when the plaintiff used this power of attorney to bring suit against the landlord for a "proportional share of a tax assessment refund claimed by his tenants pursuant to tax escalation clauses in their commercial leases. (Id. at 67). The court found this action by the plaintiff to be a solicitation of a chose in action, but did not hold this to be Champerty. Id. Instead, the court noted that section 489 of the Judiciary Law applied to "the taking of claims with the intent to sue" and went on to state that if it was found that "the assignment or acquiring of an interest in the claim was intended to achieve a transfer for the 'sole and primary purpose of bringing an action' thereon without a legitimate reason, dismissal is required by section 489" Id. at 68 (citing [*6]Fairchild Hiller Corp. v. McDonnell Douglas Corp., 28 NY2d 325, 330; American Express Co. v. Control Data Corp., 50 AD.2d 749, Prudential Oil corp. v. Phillips Petroleum Co., 69 AD2d 763). After this the court referred the case to Trial term to hold hearings on the "key issue" of the intent and primary purpose of the agreement. Id.

In the case before this Court, the purpose and intent of purchasing the potential judgment in favor of Mr. Echeverria was not to bring an action based on LawCash's claim to a portion of the potential judgment, but simply to profit from its loan or investment. Any legal action that may be based upon receiving its payment would be a secondary purpose and not primary. The agreement between LawCash and Mr. Echeverria states that LawCash will collect the principle, plus interest, from Mr. Echeverria only in the event that Mr. Echeverria receives a judgment resulting from his lawsuit (the contract states that any proceeds received from the suit, whether a judgment, a settlement, or otherwise would be used by Mr. Echeverria to pay LawCash). If Mr. Echeverria does not obtain a judgment, LawCash does not collect. If Mr. Echeverria does receive a judgment, LawCash will collect its principle and interest from that judgment. As noted in the agreement LawCash is not acquiring Mr. Echeverria's right to sue, Mr. Echeverria had already commenced the lawsuit prior to signing the agreement and remained in control of the lawsuit pursuant to the agreement.

Although the agreement does suggest the possibility of LawCash engaging the services of an attorney to collect the sum due, it follows that this action would not be the primary purpose of the agreement since Mr. Echeverria agreed to voluntarily pay this sum back to LawCash after receiving a judgment and paying his attorney fee's. Therefore the primary purpose and intent of funding Mr. Echeverria the $25,000 and charging 3.85% interest was not to take action on their claim to the judgment, but to make a profit from their loan/investment. In other words, a chose in action has been defined as a right to recover money in a legal proceeding. If LawCash purchased Mr. Echeverria's recovery from this lawsuit with the intent of bringing a new lawsuit in order to collect that money from Mr. Echeverria, or the present defendants (whom we assume would be paying this judgment,) then we would have a champertous agreement, but this does not seem to be the intent of LawCash. LawCash has no primary intention of bringing legal action to collect the money Mr. Echeverria owes it.

While no New York court has published a decision on these facts, a very similar case was recently decided by the Supreme Court of Ohio. Rancman v. Interim Settlement Funding Corp., 99 Ohio St. 3d 121 (Ohio 2003). Rancman involved a women who was injured in a car accident, she filed suit against her insurance company seeking uninsured motorist benefits under a policy issued to her estranged husband. Id. at 122. About a month after filing the suit Rancman contacted Interim Settlement Funding Corp. in an effort to attain an advancement of funds secured by her pending claim against the insurance company. Id. The agreement through which Rancman received this advancement was structured in a fashion very similar to the agreement between Mr. Echeverria and LawCash. Rancman received a $6,000 advance from Interim Settlement Funding Corp. in exchange she would pay them $16,800 if she would recover within 12 months, the amount Rancman would return to Interim depended on how long it took for her case to be resolved, and similar to Mr. Echeverria, if Rancman did not receive a judgment from her claim, she owed Interim nothing. Id. at 122, 123. The lower and intermediate courts agreed in their findings that the transactions were loans for which Interim did not have a valid license [*7]under Ohio law, so they found the loans to be void, and prohibited interim from collecting any payment which was owed to them. Id. at 122. The issue which was argued before Ohio's Supreme Court was whether the principal advancement to Rancman was a loan or an investment. Rancman argued that it was a loan through which the lender was subject to almost no risk and that the loans were impermissible due to the extremely high interest rates. Id. The "lending institution" argued that the advancement was not a loan, but an investment through which there is no cap of the return on investment.[FN1] The Ohio Supreme Court chose not to decide the risk threshold necessary in order for the advancement to be treated as an investment instead of a loan. Rather the court held the agreement void under Champerty and maintenance.

While not bound by Ohio law, the Ohio Supreme Court is the highest court of that state and should be shown proper deference. However, the difference in opinion between the decision of the Ohio Supreme Court and the decision reached above in Mr. Echeverria's case can be attributed to the differences in Champerty statutes and their application in Ohio as opposed to New York. The Ohio court based its decision on prior decisions of Ohio courts holding the assignment of rights in a lawsuit to be void as Champerty, and that "the law of Ohio will tolerate no lien in or out of the legal profession, as a general rule, which will prevent litigants from compromising, or settling their controversies, or which, in its tendencies, encourages, promotes, or extends litigation." Id. at 123 (Quoting Davy v. Fid. & Cas. Ins. Co., 78 Ohio St. 256, 268-69 (Ohio 1908) and Citing Brown v. Ginn, 66 Ohio St. 316 (Ohio 1902)). The Ohio court also bases its decision on various policy considerations which will be addressed below. Id. at 124. The court in Rancman then concludes that because Interim sought profit from Rancman's case, and because they purchased a share of a suit to which they did not have an independent interest, that the agreement advancement constituted Champerty. Id.

While the facts and the agreements made by Interim and LawCash are very similar, it is not the facts that account for the differences of opinion, but rather it is the different law of the different states which allow us to differ in our conclusions. As mentioned above the Ohio decision is based on Ohio precedent that the assignment of rights in a lawsuit can be void as Champerty (Brown, 66 Ohio St. 316). Under New York law these assignments are allowed as long as the primary purpose and intent of the assignment was for some reason other then bringing suit on that assignment. Knoble, 432 NYS2d at 68. Therefore under Ohio law, taking an assignment of a judgment for profit by itself is enough to constitute Champerty, while under New York law the primary purpose and intent of taking the assignment would be to profit, and not to bring suit, which would prevent this action from being Champerty. Resting on the language of Judiciary Law 489, and the purpose and intent requirement, the Court is comfortable finding that the instant agreement is not Champerty.

All this being said, the court feels that the Ohio Supreme Court would agree with the statement that Champerty law was not written to deal with the situation that has developed from [*8]this modern form of business which advances plaintiffs' funding for their lawsuit in exchange for a portion of the judgment. The Ohio court in Rancman noticed that Champerty law has historically been used in cases where attorney's themselves have been Champertors. Rancman, 99 Ohio St. at 124. New York Champerty laws were historically aimed at attorneys in an attempt to prohibit attorneys from having an independent financial or economic interest in the lawsuit which might interfere with the attorney's judgment in representing his or her client. Brame v. Ray Bills Finance Corp., 85 F.R.D. 568, 578 (N.D.NY 1979). Since the time Champerty laws were used for regulating the conduct of attorneys, this law and policy was placed into the Code of Professional Responsibility under DR 5-103.

While Champerty has been a relatively inactive area of law in the past few years, its scope has expanded to cover champertous agreements in contract law and to prevent corporations engaging in the unauthorized practice of law. Knoble, 432 NYS2d at 67. The scope of Champerty law has been expanded primarily due to public policy against champertous agreements. It is important to discuss these policies as many of them are related to the case before this Court, and while some of these policy arguments may favor the continued operation of these funding institutions, others do not, and this Court would like to think that the legislature will look further into these counter balancing policy considerations in an effort to decide if the agreement before this court is one that should be considered Champertous, as it was under Ohio law. This Court does not disagree with the policy reasoning behind the Rancman decision, rather the Court tends to agree with the policy considerations adopted by that court; however New York law prohibits voiding the agreement here as champerty.

While LawCash has not had any control over the litigation, part of the policy behind Champerty is to prevent non-interested third parties from taking part in litigation. This policy is aimed at preventing strife, discord, and harassment that may follow from allowing these third parties to purchase claims for the purpose of bringing an action thereon. New York v. Milton Berlin, 317 NYS2d 191, 193 (NY County Court, 1971). While LawCash is not bringing suit or action based on its claim to the judgment, there is potential for this to become a problem in the future. In Rancman the court notes that Champerty was developed to prevent third parties ("officious intermeddlers") from "'stirring up strife and contention by vexatious and speculative litigation which would disturb the peace of society, lead to corrupt practices, and prevent remedial processes of law.'" Rancman, 99 Ohio St. at 123 (citing 14 Corpus Juris Secondum (1991), section 3.)

Another and potentially bigger problem is the effect these types of agreements will have on the settlement of cases. These types of agreements may lead to premature settlements, as well as possibly preventing settlements to occur. During settlement negotiations the plaintiff must consider the rapidly accruing interest he must return to the "lender". This interest will affect the amount the plaintiff will agree to settle out throughout the settlement conferences and litigation. (See Rancman, 99 Ohio St. 3d at 124, 125 for another example of how this process works)

These agreements do seem to have an upside, they do allow the plaintiffs to proceed with lawsuits that they ordinarily would not have the resources to bring. When speaking of low income plaintiffs we see how this can be a benefit. However, if just anyone can reach out to these advancement companies in order to receive cash to proceed with a lawsuit, more lawsuits may be filed. People who ordinarily wouldn't proceed with a lawsuit may view this new situation [*9]as "playing with the house's money" where it is now worth the time because anything they recover is more than what they would have recovered without this resource available, because without the funding the suit would have never been brought forward. And if they lose they pay neither the principle nor the interest back to the company who funded the money.

This leads to another potential problem. In the case before this court there was a very low probability that judgment would not be in favor of the plaintiff. It is a strict liability labor law case where the plaintiff is almost guaranteed to recover. There is low, if any risk. This is troubling considering the enormous profits that will be made from the rapidly accruing, extremely high interest rates they are charging. The Rancman court notes that "a lawsuit is not an investment vehicle. Speculating in lawsuits is prohibited by Ohio law. An intermeddler is not permitted to gorge upon the fruits of litigation". Id. at 125. While the Attorney General seems to have given these types of funding institutions his blessing through signing an agreement with them, the Court feels that the effects of these types of institutions on the legal system and the judiciary need to be examined in further detail in order to determine whether this type of business practice is more of a benefit or detriment to society as a whole.

The court finds that LawCash is lending money at usurious rates. Also, that it is ludicrous to consider this transaction anything else but a loan unless the court was to consider it legalized gambling. Is it a gamble to loan/invest money to a plaintiff in a Labor Law action where there is strict liability? I think not. In fact, it might be considered a "sure thing." In any event, the only gambling allowed in this state is run by the state or on Native American facilities. Thus, it is not a gamble, but a "sure thing", therefore, it is a loan, not an investment with great risk. If it is a loan, then the interest rate charged is usurious and the court could vitiate the agreement.

If the Attorney General was to formally legalize these arrangements by an "opinion letter" rather than merely allow them to operate pursuant to an "agreement" which makes their operation safer to the consumer, that would be appreciated by the court. Until then, the court will rely on the agreement signed by the plaintiff which contemplates the court finding it to be a loan (Exhibit 5, paragraph unnumbered 2, page 2), and the court awards pre-judgment interest at 16% per annum. Said interest, along with all additional costs of the transaction, will be recoverable from defendant in that it was defendant's failure to have Worker's Compensation insurance that required the borrowing of the $25,000. The clerk shall calculate the interest on $25,000 at 16% per annum from the date of the loan to October 31, 2004, and at a daily rate until said loan was repaid.

Future Lost Earnings

Mr. Kennett, the economist, submitted a report which was marked in evidence. He also testified via a conference call and answered questions put forth by the court and plaintiff's counsel. He determined future damages by determining a day laborer's wages over the next fifty years (plaintiff's life expectancy) and reduced it by a factor which combined probability of survival and probability of employment.

Professor David Kennett teaches in the Department of Economics at Vassar College. He has been a full professor since 1990 and prior to that was an associate professor since 1982. He [*10]chaired the Department of Economics from 1996 to 2000. The professor's undergraduate degree is from the University of Sussex with his Masters (1974) and Doctorate (1976) from Columbia University. He has published in a variety of areas with a concentration most recently in international economics and, more specifically, the eastern European front.

In his report he provides us with a snapshot view of the position of the undocumented worker in the United States. Juan Echeverria was employed as a day laborer in the New York, Long Island area. He was an undocumented immigrant. However, in deposition he has affirmed that he was in possession of a social security card. [08/19/03][After the close of the inquest a photocopy of an unsigned copy of a Social Security Card stamped "Valid for Work Only with INS Authorization" was provided for Juan V. Echeverria along with an "Employment Authorization Card" issued to "Echeverria, Juan V." (Exhibit 7). It is not valid for reentry into the United States. It bore validity dates from 09/10/03 to expiration on 03/09/05. It was apparently issued after the accident. For an alien to be "authorized" to work in the United States, he must possess a valid security account number card (Immigration Reform & Control Act (1986) § 1324a(b)(c).]

When the inquest was reopened on January 21, 2005, Mr. Echeverria testified that he entered this country via our southern borders. When he saw other immigrants such as himself getting work permits he also went to the Social Security Administration and made application. This was apparently how he obtained the documents referenced above. (Exhibits 7 and 8).

Professor Kennett continues: As an undocumented day laborer Mr. Echeverria was part of a substantial group of workers in the United States. The Urban Institute estimates that there are some 9.3 million undocumented immigrants in the United States representing 26% of the total foreign-born population. About six million of these persons are working, representing roughly 5% of the US workforce. Virtually all of the undocumented adults males present in the United States are active participants in the labor force and are generally in work. Such a substantial minority obviously is an important component of the total US workforce, and their role is more important in some states. These workers are concentrated in California, Texas, Florida and New York which together represent almost 60% of the total. In New York State in 2002 there were an estimated 700,000 undocumented immigrants, and a good estimate is that between 450,000 and 500,000 were labor force participants.

Professor Kennett further states that the above statistics . . . about undocumented workers are important because they show that undocumented workers are not a small and transitory part of the workforce but are an important component and one that must be here to stay if US industrial and agricultural output is to be sustained. This is recognized at the official level and [*11]the current Federal administration has proposed sweeping reform to regularize their status. Previous administrations have through amnesty essentially legalized the status of undocumented immigrants and Democratic Party policy favors this route again.

Kennett profers that . . . it is reasonable to suppose that the status of undocumented will be regularized within the next few years either through the implementation of a guest worker program or through amnesty. [It would appear that this is why the professor has not factored in the probability of the plaintiff leaving the country, voluntarily or involuntarily, in his future earnings conclusion.]Undocumented workers are at present paid considerably less than those enjoying legal status. A study by Francisco Rivera Batiz of the Department of Economics at Columbia University has found that legal immigrants from Mexico are paid some 41.8% more than those who are illegal. Part of this differential is attributable to the better education and language skills of the legal immigrant group but, after statistically controlling for these factors, about half of the 'wage gap' remains - suggesting that much of the shortfall is due purely to the illegal status which opens such workers to discriminative practices. It is more than probable that regularization of undocumented workers either through amnesty or guest worker programs would help to eliminate this differential. A change in the current law would therefore lead to an increase in the real income of undocumented workers. [In Appendix Table 2, the professor set forth the earnings for a full-time day laborer extrapolating out to the year 2056.]

The professor based these numbers on an inflation rate "which might be anticipated between now and the end of his work life." The rate he used was "equal to the rate of change of the consumer's price index." Neither source nor details are provided in his report.

Dr. Kennett states Mr. Echeverria's loss is conditional on the amount he would have been able to work each year and how long he would have continued "in work in the United States labor market." He combined the plaintiff's likely survival from year to year and the probability of his being employed at any time. Kennett draws his statistical information from the National Center for Health Statistics (survival data) and the New Work Life Expectancy Tables By Gender, Level of Educational Attainment and Level of Work Disability.[FN2]

He also takes into consideration in determining an annual amount that Echeverria would be expected to have worked to be 204 days (so states Kennett) per year in his twenties and a lesser amount over time. Thus, he assumed 48 out of 52 weeks of work in the tables which equals 240 working days, not 204. [*12]

Based on Dr. Kennett's calculations, the plaintiff would have suffered $71,119.00 in past losses and $1,645,278.00 in future losses.

The court has no quarrel with Kennett's calculations on past losses. The court will not factor in deportation when the INS has not bothered to pick him up to date. However, the foundation for his calculation on future losses appears to be suspect. He did not consider the fact that plaintiff could be deported, that he could leave the United States and return to his country of origin, or any place else, at any time in the future, that an individual here illegally might leave of his own free will or by official order, or that he might not have the same desire or incentive to continue to work in this country as the normal "model" the professor used for future earnings (especially after his debilitating injury and the financial recovery from the other defendants). Dr. Kennett did not consider any post-accident acts of the plaintiff nor any recovery he may have had in making his calculations. The court believes it must consider such factors in reaching an award. It cannot rely on the economist's report when it ignores these factors and also has him working as a day laborer into his 60's and 70's. Are there statistics on how long an illegal immigrant remains in this country? How many times they might leave, and re-enter and whether they become part of the welfare system?

As of the year 2000, there were seven million unauthorized immigrants residing in the United States. California had the most unauthorized residents in January 2000 (2.2 million), followed by Texas and New York (over 489,000). Mexico is the overwhelming source of these illegal immigrants followed by El Salvador (home of the plaintiff). Plaintiff testified that his father has been here four years in the same status and his brother for ten years.

Based on the last year of statistical information (1999) 7% of the unauthorized resident population left this status annually either by emigration, death, removed by INS, adjusted to legal status or left briefly and returned as LPR (Lawful Permanent Resident). The amount attributed to INS action was about 1%.

The amount of people leaving the unauthorized immigrant population to lawful resident status has gradually risen over the last decade to double the 1990 amount. These changes were due to legislative changes which increased the ability for the illegal immigrant to convert to legal status as well as increased INS funding. Thus, it appears clear that the possibility of Mr. Echeverria being deported from this country is slim. It is more likely that he would obtain some kind of quasi legal status. The percentage of illegal aliens removed by the INS would impact on the probability of recovery but in only a small way.

However, there remains the issue of whether future lost wages should be awarded to someone who cannot legally work in this country. Is this argument applicable to the plaintiff?

Initially, it should be clear that defendant's immigrant status would not have been a proper issue for a fact-finder on the issue of liability. Asgar Ali v. Hilton Hotels, 4 Misc 3d 1026(A), 2004 WL2127230 (Sup. Ct., NY County, 2004). However, does it have any relevance to future lost earnings?

The Supreme Court has determined that the NLRB was not authorized to award back pay to an undocumented alien because "such relief is foreclosed by federal immigration policy as expressed by Congress in the [IRCA]." Hoffman v. NLRB, 535 U.S. 137, 140 (2002). Simplistically put, if the individual could not lawfully work in the country pursuant to statute [*13](Immigration Reform and Control Act - Pub. Law No.-99-603), they could not be awarded back pay by the NLRB.

However, this would not impact on the New York State Department of Labor enforcing New York's wage payment laws on behalf of similarly situated immigrants. In that New York's wage laws do not implicate the concerns articulated by the Supreme Court in Hoffman (federal constitutional or statutory right), the ruling in Hoffman would not preclude our Department of Labor from their enforcement efforts. 2003 NY Op. Atty. Gen. No. F3, 2003 WL22522840 (NYAG).

There is authority that an injured worker's alien status does not prevent him from recovering compensatory damages for the defendant's violation of the New York Labor Law (scaffold law). Madeira v. Affordable Housing Foundation, Inc., 315 F. Supp. 2d 504.

The Madeira court found, however, that the plaintiff's alien status is relevant to determining whether he will remain in this country in futuro. Thus, this court believes it is completely appropriate to consider a claimant's immigration status in determining future loss of wages.

The court is well aware of how the unscrupulous employer hires illegal/undocumented aliens, underpays them and provides no medical insurance for them or even Worker's Compensation coverage. However, the court cannot make an award based on economics not supported by relevant statistical models. The court will make an award for future loss of earnings of $750,000.00 taking into consideration the plaintiff's current immigration status, the history of his father and brother in this country, and the possibility of his being educable in the future if he so desires.

Summary

The court finds for the plaintiff in the following amounts:

Medical Expenses:$ 62,086.43

Interest on $25,000.00 loan of 16% from November 25, 2003 to October 31, 2004.

Then a daily rate until repayment.

Past Lost Earnings:$ 71,119.00

Past Pain and Suffering:$ 250,000.00

Future Pain and Suffering:$1,000,000.00

Future Lost Earnings:$ 750,000.00

The plaintiff is directed to submit a judgment reflecting the above amounts.

The Social Situation

The court makes the award for past and future lost earnings with great reluctance. Should an individual who could not legally work in this country be able to receive an award for future loss of earnings when he could not be paid legally? Who is at fault here? The injured plaintiff [*14]who entered this country illegally and is seriously injured while working here, doing work he could not legally perform? The avaricious employer who knowingly is hiring undocumented workers (illegal aliens) probably "under paying" for their services and definitely not insuring them against accidents pursuant to our laws (Workers' Compensation)? The state or federal governments for not punishing at least more openly the employers who use undocumented aliens? The Immigration and Naturalization Service, which I understand is understaffed and underfunded, for not making deportation a real threat to those individuals who actually risk their lives to enter and work in this country?

We are all aware of the impact of the illegal alien on our local economies. Be it the school district or the local healthcare provider. The court would hope that the state and federal legislatures would address this issue with the seriousness it needs and not just let is slide to the "next session" or, perhaps, the session after that.

I have pontificated enough on a case that was merely sent to me for a quick "inquest." The judiciary cannot nor should it legislate. That is up to another branch of our government, and one can only hope they will address the multi-faceted issues I have raised in the near future.

Dated: March 2, 2005

J.S.C. Footnotes

Footnote 1: While there may be no cap on the return on an investment, most investors do not get to set the amount of that return. Usually, either the party receiving the investment tells the investor what the rate of return will be, or nobody knows. In this latter case investors will forecast their return, but they can't demand it. Banks set the return they expect from their loans, through interest rates, which is more comparable to what we have here.

Footnote 2:A.M. Gamboa, Lexington: Vocational Econometrics, Revised 2002. (Labor force participation and employment using current population survey, March 2001.)