CSX TRANSPORTATION, INC. V. TROY MOODY
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2007-SC-000548-DG
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2009-SC-000048-DG
CSX TRANSPORTATION, INC .
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APPELLANT/ CROSS-APPELLEE
ON REVIEW FROM COURT OF APPEALS
CASE NO . 2005-CA-001494-MR
JEFFERSON CIRCUIT COURT NO . 02-CI-005094
V.
TROY MOODY
APPELLEE/ CROSS-APPELLANT
OPINION OF THE COURT
AFFIRMING
This appeal concerns an action filed by Troy Moody under the Federal
Employers Liability Act (FELA) . 1 Moody claimed that he developed a type of
permanent brain injury known as toxic encephalopathy from exposure to
fumes from solvents used in his work for CSX Transportation, Inc . in the 1970s
and 1980s. A jury returned a verdict in his favor and awarded damages, after
which CSX appealed . The Court of Appeals vacated the award of future
medical expenses, holding that the amount of the award was supported only by
supposition and speculation, but affirmed in all other respects.
1 45 U.S.C.A. §§ 51-60.
We granted CSX's motion for discretionary review to consider whether
the Court of Appeals erred by affirming the trial court's decision to admit
evidence concerning other employees' exposure to solvents as well as its refusal
to give instructions that CSX tendered concerning the foreseeability of harm,
non-taxability of damages, and reduction of damages to present value. We
granted Moody's cross-motion to consider whether the Court of Appeals erred
by holding that CSX filed a timely notice of appeal.
Moody began to work at CSX's South Louisville shops in August 1978 as
a service attendant and later worked as a machinist helper and machinist
apprentice . His duties included cleaning pits, ramps, tools, and anything else
that required cleaning, often in confined spaces . He stated that he used
various cleaning solvents, including brown soap, mineral spirits, and a
substance that he referred to as "Dowclene. "2
Although Moody received a protective rubber apron, hard hat, safety
goggles, and face shield, he stated that he was neither given a respirator nor
informed of the dangers involved in using solvents . He testified that Dowclene
emitted particularly strong-smelling fumes that resembled gasoline . He used
the chemicals daily and frequently became lightheaded, dizzy, and nauseated.
He would go outside for a "fresh air break" until his symptoms subsided but
did not report the symptoms to a nurse or physician. Moody was furloughed
2 The parties refer at various times to "Dow Clean," "Dow Cleaner," "Dowclene," and
"Dowclene ." "Dowclene," manufactured by Dow Chemical, consists of a mixture of
trichloroethane and perchloroethylene (PERC) . CSX records, OSHA inspection
records, and Jefferson County Pollution Control records also indicate that workers
used pure 1, 1, 1 trichloroethane at the South Louisville shops.
from December 12, 1982, until July 28, 1983, after which he returned to work
at the shop. At that time, he used brown soap and mineral spirits but not
Dowclene . Moody was transferred to work on a rail gang sometime in 1984
and worked repairing machinery. He quit working in 2002 after he developed
carpal tunnel syndrome .
Moody's claim alleged that CSX knew or should have known of the
dangers associated with using Dowclene but failed to take necessary safety
precautions, which caused him to be exposed to toxic fumes and develop toxic
encephalopathy. The injury produced memory loss, confusion, anxiety, mood
swings, and fatigue, which Moody alleged were permanent and disabling.
Moody's evidence included testimony from Dr. Douglas Linz, a specialist
in internal, occupational, and environmental medicine. Dr. Linz testified
concerning the long-term effects of using volatile chlorinated organic solvents
such as PERC and trichloroethane and mineral spirits. He stated that
symptoms of toxic encephalopathy generally require three to ten years'
exposure but can develop with as little as three months' exposure . The
occupational history he obtained from Moody indicated that he and nearby
workers used large quantities of the solvents in poorly-ventilated areas,
including pits. Dr. Linz stated that fumes from such chemicals are heavier
than air, which causes them to collect in areas such as pits, increasing the
intensity of an exposure when working in such an area. He opined that Moody
suffered from permanent brain damage due to toxic encephalopathy and that
the condition resulted from exposure to solvents in his work for CSX.
CSX made two motions for a directed verdict, the first after Moody rested
his case and the second after CSX rested its case . The trial court denied both.
The jury then returned a verdict in Moody's favor and awarded damages of
$200,000 .00 for future medical expenses ; $540,000 for future lost wages;
1,000,000.00 for past pain and suffering; and $1,000,000.00 each for future
pain and suffering.
I. Timely Appeal
The parties disagreed when arguing CSX's directed verdict motion about
proof of Moody's after-tax wages and about whether a collective bargaining
agreement permitted CSX to offset certain medical expenses . The trial court
denied the motion, noting that the issues could be resolved after the jury
returned its verdict but before judgment was entered, by means of post-trial
briefs and additional proof if required. The disagreement arose again when
discussing jury instructions concerning damages, at which time the parties
agreed to brief the issues as suggested earlier by the court.
CSX made an oral motion for judgment notwithstanding the verdict
(JNOV) immediately after the jury returned a verdict, raising four issues . The
trial court denied the motion to vacate as to negligence and the sufficiency of
evidence that disability from the injury caused Moody's wage loss. Consistent
with the parties' agreement, the court deferred a ruling and designated the time
within which the parties should brief whether damages for wage loss must be
based on after-tax earnings and whether CSX was entitled to offset future
medical expenses paid under its medical plan.
CSX filed its brief, albeit styled as a motion for JNOV, on October 10,
2003 and Moody filed a brief in response . The trial court determined after a
hearing that the record contained ample proof to support the verdict and
denied the balance of the oral motion on November 21, 2003 . A subsequent
order struck "final and appealable" language from the November 21 order.
The trial court entered judgment on the jury's verdict on December 18,
2003 . On Monday, December 29, 2003 CSX filed a motion for JNOV or, in the
alternative, a new trial, which included both the issues raised in the oral
motion and new issues . Although the trial court denied the motion for JNOV
on December 28, 2004, the order failed to address the new trial request. CSX
requested a ruling on the request on January 6, 2005, after which the trial
court entered an order acknowledging that it remained pending. The court
entered an order denying a new trial on June 27, 2005 and CSX filed a notice
of appeal on July 14, 2005 . Although Moody moved to dismiss, the Court of
Appeals denied the motion and affirmed the trial court.
Moody's cross-appeal asserts that the Court of Appeals erred by failing to
grant his motion to dismiss CSX's appeal as untimely. He argues that CR
59.02 and the first sentence of CR 50.02 permit a motion for JNOV and/or a
new trial to be made at any time after the jury returns a verdict but within 10
days after the entry of judgment . Moreover, they permit the motion to be made
orally, immediately after the jury renders its verdict, or filed in writing no later
than 10 days after judgment is entered . He concludes that CSX moved for
JNOV or, in the alternative, a new trial before judgment was entered.3 Moody
maintains, therefore, that CSX's postjudgment motion for JNOV or a new trial
amounted to a motion to reconsider the denial of the initial motion, which did
not toll the time for filing a notice of appeal . We disagree .
Although CR 73 requires a notice of appeal to be filed within 30
.02(1)(a)
days after the notation of "service of the judgment or order" being appealed, CR
.02(1)(e)
73 terminates the running of the time for appeal upon the filing of a
timely motion for JNOV or a new trial. The time commences to run when an
order granting or denying the motion is served under CR 77.04(2) .
CR 50.02, which authorizes a motion for JNOV, provides:
Not later than 10 days after entry of judgment, a party
who has moved for a directed verdict at the close of all
the evidence may move to have the verdict and any
judgment entered thereon set aside and to have
judgment entered in accordance with his motion for a
directed verdict; or if a verdict was not returned, such
party within 10 days after the jury has been
discharged may move for judgment in accordance with
his motion for a directed verdict. A motion for a new
trial may be joined with this motion, or a new trial may
be prayed for in the alternative . If a verdict was
returned the court may allow the judgment to stand or
may reopen thejudgment and either order a new trial
or direct the entry of judgment as if the requested
verdict had been directed. If no verdict was returned
the court may direct the entry of judgment as if the
requested verdict had been directed or may order a
new trial. (emphasis added) .
3
The prayer for relief in CSX's brief made an alternative request for a new trial on the
issue of damages.
CR 59 .02 provides:
A motion for a new trial shall be served not later than
10 days after the entry of the judgment .
The term "judgment notwithstanding the verdict" may be construed to
include an initial judgment that disregards the jury's verdict. The third
sentence of CR 50 .02 states specifically, however, that a trial court when ruling
on a motion for JNOV and/or a new trial may either "allow the judgment to
stand" or "reopen the judgment," either of which presumes that a judgment has
been entered. In other words, CR 50 .02 authorizes motions that request the
court to reconsider and reopen an existing judgment.
We do not view the oral motion made at the close of trial or the brief filed
in support of the oral motion as being premature motions for JNOV and/or a
new trial. 4 Unlike the situation in Cloverleaf Dairy v. Michels, 5 CSX filed only
one motion to reconsider a judgment . The motion tolled the time for taking an
appeal until 30 days after the notation of service of the order denying the
motion for a new trial. CSX's notice of appeal was timely because it was filed
within the 30-day period .
II. The Federal Employers' Liability Act
The Federal Employers' Liability Act ("FELA") 6 provides a uniform
method for compensating injured railroad workers and their survivors .? It is
4 See Harrison v. Clark, 431 S.W.2d 716 (Ky. 1968) (court retained jurisdiction to
consider JNOV and new trial motions filed one to two hours before judgment
entered where judgment did not consciously rule on them) .
s 636 S.W.2d 894 (Ky. App . 1982)
6 45 U.S.C.A. §§ 51-60.
remedial legislation and is to be construed liberally in order to accomplish its
humanitarian purpose .$ The FELA authorizes a federal cause of action, but
Congress gave state and federal courts concurrent jurisdiction over FELA
claims .9 The substantive law that governs a FELA action is federal, whether
brought in state or federal court, 10 but the law of the forum governs procedural
matters ." Forum law governs the admissibility of evidence subject to review
for an abuse of discretion . 12 It also governs the form of jury instructions . 13
III. Evidence of Similar Exposure to Solvents by Other Workers
CSX asserts that the trial court erred by admitting testimony from
Martine RoBards, a PhD neuropsychologist, 14 concerning a study that she
conducted on railroad workers who were exposed to solvents . Relying on
Brady v Southern Ry. Co., 320 U.S . 476 (1943) .
8 Urie v. Thompson, 337 U.S . 163, 180-81 (1949) .
45 U.S.C. § 56 .
9
1 0 Chicago, M. & St. P. Ry. Co. v. Coogan, 271 U.S. 472 (1926) .
11 See Central Vermont R. Co. v. White, 238 U .S . 507, 511 (1915) .
12
13
14
Norfolk & Western Ry. v. Liepelt, 444 U .S . 490 (1980) (whether evidence concerning
federal taxes on decedent's earnings was properly excluded is a federal question,
but a trial court is not required to permit such evidence where future tax impact is
de minimus); Lavender v. Kurn, 327 U.S. 645 (1946) (admissibility of evidence in
FELA action a matter for trial court absent abuse of discretion) ; Chesapeake & O.
Ry. Co. v. Kelly, 241 U.S. 485, 491 (1916) (forum law determines evidence
admitted to show method for calculating present value) .
,See, e.g., Pryor v. National R.R. Passenger Corp ., 703 N.E .2d 997, 1000-01 (111. App .
1998) ; Duren v. Union Pacific R. Co., 980 S.W.2d 77, 79 (Mo . App. 1998) .
Neuropsychology is "[a] specialty of psychology concerned with the study of the
relationship between the brain and behavior, including the use of psychological
tests and assessment techniques to diagnose specific cognitive and behavioral
deficits and to prescribe rehabilitation strategies for their remediation ." STEDMAN'S
MEDICAL DICTIONARY 1314 (28th ed. 2006) .
Burton v. CSX Transportation, Inc., 15 CSX complains that Moody failed to meet
his burden to demonstrate the substantial similarity of what amounted to
evidence of other claims. CSX argues that the evidence prejudiced its case
substantially and warrants a new trial because it posed an improper "risk of
encouraging the jury to think that if other CSX workers were making the same
sort of claims, then [Moody's] ailments must have also been caused by
workplace solvent exposure even if there was insufficient proof of his individual
exposure and a causal link to his symptoms ."16
Rulings on the admissibility of evidence in a FELA claim are left to the
sound discretion of the trial court absent an abuse of discretion. 17 Much of the
expert testimony in Burton concerned whether the plaintiffs symptoms resulted
from toxic encephalopathy due to solvent exposure at CSX or from multiple
sclerosis . Having failed to convince the jury that his symptoms resulted from
solvent exposure, Burton asserted on appeal that the trial court erred by
refusing to permit witnesses to refer to the fact that Dr. RoBards' study linked
solvent exposure to brain damage and cognitive impairment in CSX workers. 18
Dr. Linz testified that Burton's cognitive impairment resulted from his
exposure to solvents at CSX. He also testified concerning the findings of
numerous studies of "railroad workers" or "those affected by solvents." Burton
is 269 S .W.3d 1 (Ky. 2008) . See also Rye v. Black & Decker Mfg. Co., 889 F.2d 100,
102 (6th Cir. 1989) ; 31A C.J.S. EVIDENCE 8, 320 (2008) .
16 Burton, 269 S.W
.3d at 12 .
17 Lavender v. Kurn, 327
U.S . 645, 654 (1946) .
18 Dr. RoBards received a serious injury before the Burton trial and was unable to
appear and testify .
argued on appeal that Dr. Linz should have been allowed to refer to Dr.
RoBards' study subjects as "CSX workers," which would have emphasized that
the solvents he used at work could have caused his cognitive impairment .
We affirmed, convinced that the risk of undue prejudice outweighed the
evidence's probative value because Burton failed to lay a proper foundation
showing that Dr. RoBards' study subjects worked under conditions
substantially similar to his own. We noted that to identify them as "CSX
workers" might encourage the jury to conclude that Burton's symptoms
resulted from workplace solvent exposure, even if it considered his proof of
causation to be weak, because co-workers made similar claims . The present
claim differs from Burton because Moody laid a proper foundation for the
disputed evidence.
A. John Newell Claim
CSX filed a motion in limine to preclude any testimony or reference to
solvent claims and exposures of other railroad employees . The motion sought
specifically to preclude both a 1978 injury report by John Newell, who claimed
to suffer health problems after being exposed to Dow Cleaner, and the 1980
deposition of Tyrone Green in Newell's case. CSX argued at the hearing that
Newell's exposure and symptoms were not substantially similar to Moody's. It
conceded that it knew acute dizziness and headaches could result from an
overexposure to solvents at the time of Moody's exposure but asserted that it
did not know an overexposure could cause toxic encephalopathy.
Moody asserted that Newell's exposure as a service attendant was
substantially similar to his own . He argued that CSX planned to call its
industrial hygienist to testify that service attendants were not overexposed to
dangerous chemicals and did not require protective measures . Yet, Newell's
injury and 1980 lawsuit put CSX on notice that a service attendant became ill
from overexposure to dangerous chemicals while working in the South
Louisville shops. The trial court denied CSX's motion but warned Moody that
he must show a substantial similarity with respect to evidence concerning any
other worker or risk a mistrial. The record indicates that the court did not
abuse its discretion when admitting the evidence. 19
Moody offered evidence at trial showing a substantial similarity between
his exposure and symptoms and those of Green and Newell. The record
indicates that Newell became ill and was treated at the hospital for an
overexposure to Dowclene while working as a service attendant at the South
Louisville shops in 1978. His symptoms included abdominal pain and vomiting
as well as dizziness. Green's 1980 deposition indicated that he and Newell
used Dowclene together in the South Louisville shops; that they used Dowclene
during the same period and in the same manner as Moody; and that they
experienced some of the same symptoms as Moody.
Green testified that he had worked as a service attendant at the South
Louisville shops since 1974 and observed Newell experiencing nausea on
19
"The test for an abuse of discretion is whether the trial judge's decision was
arbitrary, unreasonable, unfair, or unsupported by sound legal principles ."
Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999) .
several occasions when using Dowclene . He stated that Dowclene came in
fifty-gallon drums and that he used it often, spraying it with a compressed air
tank and hose or pouring it on parts and machinery that he wanted to clean.
The chemical irritated his skin and caused him to be nauseated. Like Moody,
he took frequent fresh-air breaks to avoid the fumes. Green stated that his
symptoms lingered after he stopped using Dowclene ; that he was never given
any protective equipment; that he complained to his foreman about Dowclene's
effects; and that he knew of no one who inhaled Dowclene who did not
complain of symptoms like his own.
B . Dr. RoBards' Study
CSX's motion in limine sought to preclude Dr . RoBards from testifying at
trial on the grounds that she was not qualified to testify to causation, Moody's
ability to return to work, or whether he was disabled and that her testimony
lacked the degree of scientific validity and reliability that Daubert v. Merrell
Dow Pharmaceuticals, Inc.,20 requires . CSX reasoned that, as a psychologist,
Dr. RoBards' lacked the qualification "to opine as to the medical cause organic
brain damage - a neurological condition." Thus, her conclusions on the issue
"are the product of a flawed methodology, which relates back to [her] lack of
qualifications ." CSX stated at the hearing on the motion that while it did not
object to testimony from Dr. RoBards indicating that testing revealed Moody's
condition to be consistent with solvent-induced encephalopathy, she should
not be permitted to testify that solvent exposure caused his brain damage
20
509 U . S . 579 (1993) .
12
because she is not a physician . Moody asserted that Dr. RoBards' findings
were relevant to the question of foreseeability and agreed that she would not be
asked to testify to causation .
The Court of Appeals rejected CSX's Daubert challenge, noting that its
argument appeared to concern the sufficiency of the evidence of causation
rather than its admissibility. CSX disagrees, relying on Burton to argue that
the trial court erred in admitting Dr. Robards' testimony concerning her study
because Moody failed to show a substantial similarity in the circumstances of
the persons that she studied and also between them and Moody. CSX
concludes that her testimony was substantially prejudicial and warrants a new
trial. We disagree.
Unlike the situation in Burton, Dr. RoBards testified at Moody's trial.
She stated that she began her study with the case of a patient who suffered
from various neuropsychological deficits after working at CSX's South
Louisville shops . The study consisted of surveying others who worked at the
same place, at the same time, under the same working conditions, and with the
same job description to determine if they had similar symptoms . 21 She found
that they did. Dr. RoBards testified that Moody was one of the study
participants. She concluded after conducting a neuropsychological evaluation
that his symptoms were consistent with toxic encephalopathy . CSX did not
21
The symptoms included depression, anxiety, memory loss, and difficulties with
concentration, balance, dizziness, and gait.
13
object to the testimony. 22 Having failed to do so, CSX cannot complain that the
trial court erred by failing to exclude the testimony.
IV. Jury Instructions
The purpose of instructing a jury is to guide jurors in applying the law
correctly to the facts in evidence . Pattern jury instructions used in FELA cases
tried in federal court tend to be lengthy and detailed. 23 Kentucky state courts
take a "bare bones" approach to jury instructions, however, leaving it to
counsel to assure in closing arguments that the jury understands what the
instructions do and do not mean.24 A proper instruction correctly advises the
jury "'what it must believe from the evidence in order to return a verdict in
favor of the party who bears the burden of proof on that issue." 25 Regardless
of what form jury instructions take, they must state the applicable law
correctly and neither confuse nor mislead jurors . 26 A trial court has a duty to
give a correct instruction when a party offers an erroneous or misleading
instruction on a proper issue .2 7
Near the end of her direct examination CSX did object when she began to refer to a
chart that compared Moody with other individuals. Moody promptly removed the
chart and it was not mentioned again.
23 See, e.g., 3A Kevin F. O'Malley et al., FEDERAL JURY PRACTICE AND INSTRUCTIONS, ch.
155 (5th ed. 2001) .
24 See Lumpkins v. City ofLouisville, 157 S.W.3d 601 (Ky. 2005) ; Young v. J. B. Hunt
Transportation, Inc., 781 S .W .2d 503, 506 (Ky. 1989) .
25 Olfice, Inc. v. Wilkey, 173 S.W.3d 226, 229 (Ky. 2005) .
26 Drury v. Spalding, 812 S.W.2d 713 (Ky. 1991) .
27 Murphy v. Harmon, 291 Ky. 504, 165 S.W.2d 11 (1942).
22
14
A. Foreseeability
The parties disputed. whether the risks of Moody's exposure to solvents
were foreseeable at the time of the exposure . Moody presented evidence that
CSX knew or should have known of the risks to which it exposed him .zs CSX
asserts that the trial court erred by refusing to give tendered instructions on
foreseeability, particularly because it presented evidence that the scientific
community had not linked the use of 1, 1, 1 trichloroethane or other solvents
to toxic encephalopathy at the time of Moody's exposure . CSX tendered two
proposed instructions .
Instruction 10 stated :
In order to find that CSX is guilty of negligence which
in whole or in part resulted in the injuries of which
plaintiff complains, you must find that the acts of the
railroad were such that a reasonably prudent man
would have known that they were calculated to produce
injury, or, in other words, it must appear that the
inquiry [sic] was the natural and probable
consequence of the negligence or wrongful act, and
that it ought to have been foreseen in the light of the
attendant circumstances . (emphasis added) .
Instruction 13 stated:
CSX in this case was not required to guard its
employees against that which reasonably prudent
persons acting at the same time and under like
circumstances would not anticipate as likely to
28
Moody introduced a 1978 Material Data Safety Sheet (MSDS) for DowClene, which
stated that prolonged skin contact could cause burning and that its vapors should
not be inhaled, particularly in confined spaces. Moody testified that he worked in
"pits," which were confined spaces, and introduced evidence that solvent vapors
were heavier than air and collected in such areas. A 1980 MSDS warned that
overexposure to DowClene could cause organic injury, central nervous system
depression, and death . Other evidence indicated that CSX's legal predecessors
knew of the dangers posed by solvent use as early as the 1950s and 1960s.
15
happen . If, for example, someone has no reasonable
ground to anticipate that a particular condition would
or might result in injury, then he is not required to do
anything to change such a condition.
Because the same substance may be dangerous in
some circumstances and completely harmless in other
[sic], the plaintiff, in this instance, must provide [sic]
that it was reasonably foreseeable, during the period
between 1978 and present, when he was working for
CSX, that solvents posed a danger ofsolvent-induced
encephalopathy to employees employed as plaintiff was
employed . Likewise, it is not enough to show that
solvents may have been foreseeable as a danger to
railroad workers with duties or working conditions
different from that of plaintiff. For CSX to have acted
negligently as to the plaintiff, a danger to him arising
from his work practices must have been reasonably
foreseeable to CSX. (emphasis added) .
CSX states correctly that common-law negligence requires proof that the
defendant knew or should have known that its conduct created a reasonable
likelihood of injury. Moreover, the foreseeability of harm is an essential
element of negligence under the FELA. 29 We conclude, however, that the trial
court did not err because the requested instructions might have misled or
confused the jury and because the trial court's instructions addressed
foreseeability adequately.
Gallick v. The Baltimore and Ohio Railroad Co.30 indicates that a
defendant "need not foresee the particular consequences of [its] negligent acts"
but only that its conduct would reasonably be anticipated to result in harm . 31
29 Inman v. Baltimore & O.R. Co., 361 U .S. 138, 140 (1959) .
30 372 U.S. 108 (1963) .
31 Id. at 120.
16
Thus, a defendant is liable for even the improbable or unexpectedly severe
results of its negligence .32 A separate foreseeability instruction is not required
in FELA cases if the jury is instructed that the defendant's duty is "measured
by what a reasonably prudent person would anticipate" under the same or
similar circumstances . 33
Mindful that a FELA defendant need not intend to harm the plaintiff or
foresee the particular type of injury that occurred, we conclude that the
tendered instructions might have misled the jury. The phrase "calculated to
produce injury" might have led the jury to think erroneously that it could find
for Moody only if it determined that CSX intended to injure him. Likewise, the
reference to "a danger of solvent-induced encephalopathy" might have misled
the jury to think erroneously that it could find for Moody only if it determined
that CSX should have foreseen a reasonable likelihood that solvent exposure
would cause him to develop toxic encephalopathy specifically. The trial court
did not err in refusing the proposed instructions under the circumstances.
The jury received instructions that complied with the foreseeability
requirement as construed in Gallick. Instruction 3 informed the jury that
negligence was "the failure to use the same degree of care which a person of
ordinary prudence would use in the circumstances of a given situation ." It also
stated that negligence could be "the doing of something which a reasonably
32
33
Id.
Id. at 118 .
17
prudent person would not have done, or failing to do something a reasonably
prudent person would have done under the circumstances."
The jury found under Instruction 4 that CSX "was negligent as defined in
Instruction No . 3, and that such negligence was a cause in whole, or in part, of
the claimed injury. . . . . The jury made clear by doing so and answering
affirmatively on Verdict Form No . 1 that it thought CSX should have realized
when requiring Moody to use solvents as it did that such use could reasonably
be anticipated to result in injury. Gallick indicates that the FELA requires no
more. 34
B. Damages for Future Lost Wages
The proper measure of damages in a FELA claim is a federal question. 3 s
Damages for future lost wages in FELA claims are exempt from taxation. 36
They are measured in after-tax dollars37 and reduced (i.e., discounted) to
present value.38
1 . Non-taxability instruction
CSX asserts that the trial court committed reversible error by refusing to
instruct the jury as follows :
372 U.S. at 118-19 .
3s Chesapeake & O. Ry. Co. v. Kelly, 241 U.S. 485, 491 (1916) .
36 26 U.S.C. § 104(a)(2) (gross income excludes damages received on account of
personal injuries); KRS 141.010(9) (adopts Internal Revenue Code definition of
gross income) .
37 Norfolk & Western Ry. Co. v. Liepelt, 444 U.S. 490 (1980).
38 Kelly, 241 U.S. at 490 (future benefits must be discounted unless an expectancy is
so short that a reasonable person could not be expected to invest or purchase an
annuity with the proceeds of the judgment) .
34
18
In the event that you determine to award the plaintiff a
sum of money, you are instructed that the award is
not subject to any deductions for federal or state
income taxes .
CSX relies on Norfolk 8a Western Ry. Co. v. Liepelt39 for the principle that
refusing to instruct the jury concerning the exemption from state and federal
income tax4 O constitutes reversible error. Although we agree that the trial
court erred by failing to give the requested instruction, we do not agree that the
error compels us to reverse in this case .
As we determined today in CSX Transportation, Inc. v. Begley, 2008-SC000643-DG, Liepelt does not require a conclusion that a refusal to give a tax
instruction always constitutes reversible error.41 Begley acknowledges that CR
61 .01 presumes erroneous jury instructions to be prejudicial and places the
burden on the appellee to show a lack of prejudice. It notes, however, that the
error may be viewed as being harmless if the result probably would have been
the same absent the error and if the error was not so prejudicial as to merit a
new trial . In Begley we viewed a verdict that was not excessive under the
evidence as showing a probable lack of prejudice . 42
A verdict is excessive under the evidence if it "cause[s] the mind at first
blush to conclude that it was returned under the influence of passion or
39 444 U.S. 490.
40 See 26 U.S.C. § 104(a)(2) (gross income excludes damages received on account of
personal injuries); KRS 141 .010(9) (adopts internal revenue code definition of
gross income) .
41 Slip op . at 25.
42 Id. at 27.
19
prejudice on the part of the jury. "43 Even if liberal, an award that does not
shock the conscience or is not clearly excessive may not be set aside .44 The
award in the present case was not clearly excessive under the evidence.
The jury awarded a total of $2,540,000 in damages for future wage loss
and past and future pain and suffering, which was slightly more than half of
the $5,000,000 that Moody requested. Moody was 51 years old when the trial
was held in 2003 . Although he testified that he had intended to retire when he
reached age 60, experience teaches us that circumstances change and that
individuals often work to a later age than they had hoped to work at age 51 .
Moody testified that he had experienced memory loss and depression since the
early 1980s and began to experience anxiety attacks sometime later.45 Medical
evidence indicated that he suffered from chronic toxic encephalopathy, a
condition that could be treated but not cured ; that the condition produced
neuropsychological impairment, particularly affecting his memory, the ability
to concentrate, and problem-solving skills; that it also produced depression,
anxiety, and irritability, which were often disabling and apt to worsen over
time ; and that the difficulty he would have following instructions and finding
jobsites rendered him incapable of employment .
43
Louisville & Nashville Railroad Co, Inc. v. Mattingly, 339 S .W.2d 155, 160-61 (Ky.
1960) .
44
Id.
4s
Medical records indicated that a CSX nurse questioned in 1993 whether Dr. Vaughn
found short-term memory loss as noted by Healthsouth and proposed a
neuropsychological evaluation if he did.
20
We affirm because we are convinced that the verdict was reasonable and
was not returned under the influence of passion or prejudice. The record
indicates that the jury probably determined what amount would compensate
Moody reasonably and did not inflate that amount in the mistaken belief that it
would be taxed .
2 . After-tax instruction
CSX asserts that the trial court committed reversible error by refusing to
instruct the jury to calculate Moody's lost after-tax earnings. An alternative
argument relies on Reusch v. Seaboard System R. R.46 for the proposition that
Moody had the burden to prove his after-tax earnings in order to permit his
future wage loss to be calculated and failed to meet that burden . We disagree .
Filed on June 27, 2003, Moody's itemized damage list stated that he
earned approximately $67,000 per year plus approximately $14,000 in travel
pay; thus, he would lose approximately $6,700 per month due to his inability
to work. He testified at trial that he made $4,500 per month and intended to
retire from CSX at age 60 . He did not specify whether the $4,500 figure
represented his gross or after-tax earnings. CSX failed to cross-examine him
and, unlike the defendant in Liepelt,47 offered no evidence of its own concerning
taxes . When denying the tendered instruction the trial court noted and CSX
566 So .2d 489 (Ala. 1990) (FELA plaintiff has burden to offer evidence concerning
effect of taxation on future stream of income, interest rate on best and safest
investments, and application of discount rate to alleged stream of income) .
47 444 U.S. 490 .
46
21
conceded the impossibility of determining that $4,500 was not Moody's aftertax earnings . Moody questioned what tax rates the jury would apply if the
$4,500 per month was reduced for taxes . 48
The trial court did not err by refusing the requested after-tax instruction
because, even if we were to assume for the purposes of discussion that Moody's
gross monthly earnings were $4,500, the jury had no evidence from which to
calculate his after-tax earnings . An instruction to reduce future lost earnings
by the applicable taxes requires evidence of what the taxes would be or
evidence to permit the jury to calculate taxes. Liepelt did not address which
party is responsible for showing the applicable tax rates. Federal appellate
courts that have addressed the matter since the Liepelt decision have
concluded that the defendant is responsible.49 We agree .
3 . Present value instruction
CSX tendered the following instruction on present value :
If you should find that the plaintiff is entitled to a
verdict, and further find that the evidence in this case
establishes either : (1) a reasonable likelihood of future
medical expense, or (2) a reasonable likelihood of loss
of future earnings, then it becomes the duty of the jury
to ascertain the present worth in dollars of such future
48
49
When denying the instruction, the trial court and the parties agreed that they would
brief the matter after trial and that the jury's verdict could be adjusted to account
for taxes before judgment was entered if necessary. The court indicated earlier
when denying CSX's directed verdict motion that additional proof could be taken
concerning taxation, if necessary. Although the trial court refused ultimately to
adjust the verdict to account for taxes, by denying the oral motion for JNOV on
November 21, 2003, CSX does not take issue with the ruling .
See Bergen v. F/ V St. Patrick, 816 F.2d 1345, 1351 (9th Cir. 1987) ; Deakle v. John E.
Graham & Sons, 756 F.2d 821, 830-31 (11th Cir. 1985) ; Fanetti v. Hellenic Lines
Ltd., 678 F.2d 424, 432 (2nd Cir. 1982), cert denied 463 U.S. 1206 (1983) . See
also CSX Transp., Inc.v. Williams, 497 S.E.2d 66 (Ga. App. 1998) .
22
damages, since the award of future damages
necessarily requires that payment be made now for a
loss that will not actually be sustained until some
future date.
Under these circumstances, the result is that the
plaintiff will in effect be reimbursed in advance for the
loss, and so will have the use of money, which he
would not have received until some future date, but for
the verdict .
In order to make a reasonable adjustment for the
present use, interest free, of money representing a
lump-sum payment of anticipated future loss, the law
requires that the jury discount or reduce to its present
worth, the amount of the anticipated future loss, by
taking (1) the interest rate or return which the plaintiff
could reasonably be expected to receive on an
investment of the lump-sum payment, together with
(2) the period of time over which the future loss is
reasonably certain to be sustained; and then reduce,
or in effect deduct from, the total amount of
anticipated future loss whatever that amount would be
reasonably certain to earn or return, if invested at
such rate of interest over such future period of time;
and include in the verdict an award for only the
present-worth - the reduced amount - of anticipated
loss.
CSX asserts that the plaintiff in a FELA action has the burden to prove
the present value of future lost wages. 50 Relying on Jones 8a Laughlin Steel
Corporation v. Pfeifer5 l CSX also asserts that the trial court committed
reversible error in this case by refusing to instruct the jury that damages for
future wage loss must be reduced to present value . We disagree.
so 566 So .2d at 492 ; Gorniak v. Nat'l. R.R. Passenger Corp., 889 F.2d 481 (3=d Cir.
1989) ; Myrlak v. Port Authority ofN. Y. and N.J., 694 A.2d 575 (N.J. Sup. 1997) .
51
462 U.S . 523 (1983) .
23
The Sixth Circuit has rejected arguments by railroads that damages for
future wage loss are prohibited absent proof of a discount rate . In other words,
the plaintiff is not required to produce evidence concerning the present value of
future lost wages 52 in order to be entitled to damages for future wage loss. We
adhere to the Sixth Circuit's view.
The U. S. Supreme Court determined in Kelly53 that federal law requires
future damages to be reduced to present value but considered the evidence
admitted to assist the jury in making the computation to be "a matter of
procedure and evidence . . . to be determined according to the law of the
forum ."
In Pfeifer, 5 4 a Jones Act case, the court acknowledged that "because the
lost stream [of earnings] can never be predicted with complete confidence, any
lump sum represents only a 'rough and ready' effort to put the plaintiff in the
position he would have been in had he not been injured ." 55 The court
explained that the calculation of damages resulting from an injury begins with
the assumption that the plaintiff would have continued to work until
retirement. The calculation then attempts to compensate for the stream of
income lost due to the injury, which depending on the proof may include not
only present wages but fringe benefits as well as anticipated future wage
Baker v. Baltimore & Ohio Railroad Co., 502 F.2d 638 (1974); Baynum v.
Chesapeake and Ohio Railway Company, 456 F.2d 658 (1972) ; Pennsylvania
Railroad Company v. McKinley, 288 F.2d 262 (1961) .
53 241 U.S. at 490-91 .
s4 462 U.S. 523 .
55 Id. at 546-47 .
52
24
increases due to inflation or cost-of-living adjustments, likely promotions,
seniority, and merit raises. 56
In order to compensate only for the plaintiffs actual pecuniary loss, the
calculation must account for the fact that most or all of the items in the
earnings stream would be subject to income tax .-57 Likewise, the calculation
must account for the fact that the plaintiff will receive the award in a lump
sum rather than in periodic payments . That is accomplished by discounting
the lump sum at a rate that is based not only on the return from investing the
sum in "the best and safest investments" but also on the extent to which that
return is likely to be offset by taxes and inflation . 5s The Pfeifer court refused to
specify a mandatory formula for choosing the discount rate but rejected the
application of a state's total offset rule as a matter of law, stating that the trier
of fact must make
"a
deliberate choice . "59 The court noted, however, that
nothing would prevent parties interested in controlling litigation costs from
stipulating to the total offset method before trial. 60
The trial court did not err in refusing CSX's present value instruction. It
mentioned only some relevant factors and was not supported by any evidence .
Pfeifer makes it clear that an appropriate discount rate considers three factors :
the interest likely to be earned on the best and safest investments ; the
56 Id. at 535-36.
57 Id. at 537 .
58 Id. at 537-40.
59 Id. at 553 .
60 Id. at 550.
25
applicable tax rate on the interest ; and the extent to which inflation would be
likely to reduce the return further . Neither Pfeifer nor St. Louis Southwestern
Railway Co. v. Dickerson6 l or Monessen Southwestern Railway Company v.
Morgan, 62 both of which applied Pfeifer to FELA claims, addressed the
evidentiary foundation necessary to require an instruction directing the jury to
discount future wage loss damages .
Neither party introduced evidence concerning any of the factors
comprising a discount rate in the present case or indicating that the interest
likely to be earned would exceed taxes and inflation. Thus, no evidentiary
basis existed to support an instruction that referred specifically to any of the
factors. The trial court's Instruction No. 7 and Verdict Form No. 4 directed the
jury "to determine from the evidence a sum of money that will fairly and
reasonably compensate Troy Moody" for future lost wages . As the Sixth Circuit
has observed :
Jurors are presumed to be intelligent people, generally
aware, from today's economy and their own experience
with it, of the earning value of money when placed in
safe investments .63
Jurors are also aware from their own experience that interest is taxed and that
inflation reduces the value of money. The trial court could have said more on
the subject than it did, but the instructions were adequate under the
circumstances .
61
62
63
470 U .S. 409 (1985) .
486 U.S. 330, 340-42 (1988) .
Baynum v. Chesapeake and Ohio Railway Company, 456 F.2d 658, 661 (1972) .
26
4. Future Medical Expenses
We affirm with respect to future medical expenses . Although Moody's
cross-motion sought discretionary review of the Court of Appeals' decision to
vacate his award of future medical expenses, he failed to address the matter in
his brief to this court. We conclude for that reason that he has abandoned the
issue .
The decision of the Court of Appeals is affirmed.
All sitting. All concur.
COUNSEL FOR APPELLANT/ CROSS-APPELLEE,
CSX TRANSPORTATION, INC . :
Raymond G. Smith
Edward H. Stopher
David T. Klapheke
Boehl, Stopher &, Graves, LLP
Aegon Center
400 West Market Street
Suite 2300
Louisville, KY 40202-3354
Dan Himmelfarb
Mayer Brown, LLP
1999 K Street N.W.
Washington, DC 20006
COUNSEL FOR APPELLEE/CROSS-APPELLANT,
TROY MOODY:
Kenneth L. Sales
Joseph Donald Satterley
Paul Jason Kelley
Sales, Tillman, Wallbaum, Catlett 8s Satterley
1900 Waterfront Plaza.
325 West Main Street
Louisville, KY 40202-4251
27
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