California Bars the Calculation of Tort Damages Based on Race, Gender and Ethnicity

(This article was first published in The Recorder on November 12, 2019.)

The law, which is the first of its kind, expressly prohibits reductions of damages for lost future earnings in personal injury and wrongful death cases when those reductions are based on race, gender or ethnicity.

Professor Nora Freeman Engstrom and Professor Robert Rabin

California has long been a tort law leader. In the 1963 case of Greenman v. Yuba Power Products, the state broke new ground in imposing strict liability on manufacturers for defective products, an approach that was quickly adopted by the Second Restatement of Torts. Five years later, the state again led the way. In Dillon v. Legg, the California Supreme Court established bystander liability for emotional distress, and, the same year, in Rowland v. Christian, the court abolished the traditional landowner premises liability categories. Indeed, the list of California tort law “firsts” is long and varied, including such heavyweights as Summers v. Tice (1948), which established alternative liability, Tarasoff v. Regents of California (1976), which imposed a “duty to warn” on therapists, and Sindell v. Abbott Laboratories (1980), which established market share liability for the inter-generational harm traceable to DES, a drug marketed to pregnant women, ostensibly to prevent miscarriage.

Notably, while the cases above mostly expand tort liability, the Golden State has been at the vanguard of the opposite, too. It was California that broke new ground in enacting the Medical Injury Compensation Reform Act of 1975. Applicable to medical malpractice cases, that act, which restricted contingency fees and imposed a $250,000 hard cap on noneconomic damages, started the United States down the path of legislative tort reform—a reform movement that has dramatically altered the tort system’s operation, generosity and capacity—and that is still going strong well into its fourth decade.

Now, California is once again leading the way, as Gov. Gavin Newsom recently signed another tort reform measure—S.B. 41—into law. The law, which is the first of its kind, expressly prohibits reductions of damages for lost future earnings in personal injury and wrongful death cases when those reductions are based on race, gender or ethnicity.

To understand S.B. 41—and why it’s so consequential—a bit of background is necessary. In the tort system, lost wages are a big-ticket item. When the victim is so seriously hurt that her ability to work is impaired, future lost wages must be calculated. To make these all-important calculations, lawyers, judges and juries estimate the plaintiff’s foregone future earnings; basically, what the plaintiff would have earned, if she hadn’t been hurt. To aid in these assessments, experts often rely on life and wage expectancy tables—and these tables often include different figures, based on the plaintiff’s race and gender.

Race- and gender-based tables are common: A 2009 survey conducted by the National Association of Forensic Economics found that 44% of respondents said they would account for race, and 92% said they would account for gender when projecting the future wages of an injured child. And, these race- and gender-based tables are impactful: The use of such tables can result in significantly lower awards for women and persons of color. A 2016 analysis by the Washington Post found, for example, that the use of these tables would mean that, assuming identical claims involving identical injuries, a 20-year-old African American female plaintiff would recover only $1.24 million in future lost wages, while her white male counterpart would recover $2.28 million—almost twice as much—even holding constant the two plaintiffs’ educational attainment.

These race- and gender-based tables are increasingly controversial. The tables’ defenders argue that any disparities in projected future earnings are a symptom of persistent societal problems—not the cause. They also maintain that future lost earnings should be estimated as accurately as possible. Accurate calculations, in their view, require accounting for a range of characteristics, including race and gender.

Critics of the tables respond that such disparities are discriminatory, arbitrary and may violate the Fifth and Fourteenth Amendments. They further charge that the tables reify racial and gender hierarchies and also fail to account for future progress that could be made during the plaintiff’s lifetime. As Judge Jack Weinstein—a prominent critic of such tables—put it in a 2015 opinion: “Using these statistics to calculate future economic loss reinforces the rigid racial and ethnic barriers that our society strives to abolish.” Critics also note that using such tables to deflate women’s and minorities’ damage awards at the back-end of litigation may impair these plaintiffs’ access to counsel at the front-end of litigation. The reason is that personal injury lawyers tend to take cases on a contingency fee basis. Given this form of financing, lawyers will only take cases if the likely damage award is big enough to make the litigation worthwhile; the larger a prospective client’s likely damages, the more “worthwhile” her case.

Though the propriety of such tables has long been debated, advocacy groups have approached the question with renewed vigor in the past year or two. Last year, the Lawyers’ Committee for Civil Rights published a report urging legislative reforms to prevent the use of such tables. And earlier this year, sixteen of the nation’s most prominent civil rights organizations—including the ACLU and the NAACP—published a letter calling upon the National Association of Forensic Economists to stop using race- and gender-based tables. Such tables, the civil rights groups argued, are based on the “egregiously flawed premise that the lives of people of color and women are worth less than those of white men.”

To this debate, enter California—the first state to tackle the issue by specific legislative action.  S.B. 41 is still new; indeed, it doesn’t even go into effect until Jan. 1, 2020. Given the bill’s infancy, it is too early to tell what kind of impact it will have in California, much less outside of the state. But the ultimate vote for the bill on the assembly floor was 78-0. Perhaps this overwhelming support is a sign that California will, once again, lead the way.

Nora Freeman Engstrom is a Professor of Law and Deane F. Johnson Faculty Scholar at Stanford Law School. Robert L. Rabin is the A. Calder Mackay Professor of Law at Stanford Law School.

Reprinted with permission from the November 12 issue of The Recorder. © 2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.