Discrimination in the Calculation of Lost Earnings: What Can California Teach Us?

In 2011, a young couple expecting their first child moved into an apartment in Brooklyn. Their son was born healthy, but a year later, a routine medical exam detected lead in his blood. It turned out that dust from lead-based paint in the apartment was silently poisoning their baby. In the years that followed, he suffered significant cognitive delays, as well as severe social and emotional impairments. The child’s mother filed a lawsuit seeking damages against the landlord, who was found to be negligent. In calculating the damages, a critical issue for the jury was how much this child would have earned over the course of his life had he not been exposed to lead. As usual, the experts took into account the fact that the baby was Hispanic. As a result, their estimates of damages were significantly lower than they would have been if the baby had been white. The only unusual detail in this case was that Federal Judge Jack B. Weinstein of the Eastern District of New York refused to allow such an injustice, defying a century of established case law.¹

In 2020, California banned the calculation of lost earnings based on race, gender, and ethnicity. The law, which is the first of its kind—and to date has not been replicated at the federal level by the Biden administration—expressly prohibits reductions in damages for loss of future earnings in cases of personal injury and wrongful death when such reductions are based on race, gender, or ethnicity. The practice of reducing civil damages for African Americans and other racial and ethnic minorities dates back to the early 20th century, when judges did so with explicit reference to offensive stereotypes. For example, in Blackburn v. Louisiana Ry. & Nav. Co., the Louisiana Supreme Court in 1911 reduced damages awarded to an African American by nearly 70 percent, citing “the well-known imprudence of the black race and the irregular life that these colored men lead.”² Established case law also requires women to justify their career aspirations in order to be awarded higher damages. A court dismissed evidence of a young accident victim’s aspiration to become a veterinarian as “purely speculative” and “lacking evidentiary basis” due to the difficulty of gaining admission to the region’s only veterinary school.³ The same skepticism was not shown in cases where men aspired to similar professional careers. Despite this widespread discrimination in damage awards, state legislatures have failed to take any meaningful action to correct this error.

California has long been a leader in the field of civil liability. In the 1963 case of Greenman v. Yuba Power Products, the state broke new ground by imposing strict liability on manufacturers for defective products, an approach that was quickly adopted in the Second Restatement of Torts. In 1968, the state once again led the way. In Dillon v. Legg, the California Supreme Court extended the availability of damages to bystanders for emotional distress. This list of precedents does not end here: it also includes Summers v. Tice (1948)⁴, which established alternative liability, allowing the victim to shift the burden of proof regarding the cause of their injury to multiple defendants, even if only one of them may have been responsible. Also worth noting is Tarasoff v. Regents of California (1976), which imposed a “duty to warn” on therapists to inform third parties or authorities if a client poses a threat to themselves or to another identifiable individual. Finally, Sindell v. Abbott Laboratories (1980) established market share liability⁵ —a doctrine that allows a victim to bring a claim against a group of manufacturers for harm caused by a product, even when the plaintiff does not know which defendant caused the harm—due to transgenerational harm⁶ traceable to DES, a drug marketed to pregnant women, ostensibly to prevent miscarriage.⁷

Currently, California is once again leading the way in reforms for civil liability with the enactment of Senate Bill No. 41 into law,⁸ which expressly prohibits reductions in damages for loss of future earnings in cases of personal injury and wrongful death when such reductions are based on race, gender, or ethnicity. In the system of civil liability of any jurisdiction, lost earnings carry significant weight in the assessment of economic damages. When a victim is seriously injured to the point of impairing their ability to work, the probable lost income must be calculated. Naturally, lawyers, judges, and juries (in the U.S.) estimate the plaintiff’s lost future earnings based on what they would reasonably have earned had they not suffered the injury. To assist in these assessments, experts often rely on life expectancy and wage tables—and in the U.S., these tables generally include different figures based on the plaintiff’s race and gender. Typically, experts use the Bureau of Labor Statistics’ Current Population Survey, which is updated quarterly, to determine projected lost earnings. Loss of earning potential is a significant component of damages and can “make the difference between a modest and a substantial award.”

Tables based on race and gender are common: a 2009 survey conducted by the National Association of Forensic Economics found that 44% of respondents stated that they account for race and 92% that they account for gender when projecting the future earnings of a child injured in a tort. Evidently, the use of such tables can result in significantly lower awards for women and people of color. A 2016 analysis by the Washington Post⁹ found, for example, that the use of these tables would mean that, in identical lawsuits involving identical injuries, a 20-year-old African-American female plaintiff would receive only $1.24 million in lost future earnings, while her white male counterpart would receive $2.28 million—nearly double—even if the educational levels of both plaintiffs were held constant.

These race- and gender-based tables are increasingly controversial. Their proponents argue that any disparities in projected future earnings are a symptom of persistent social problems—not the cause. They also assert that lost future earnings should be estimated as accurately as possible. Accurate calculations, in their view, require consideration of a range of characteristics, including race and gender. Nevertheless, this practice is particularly problematic when calculating compensation for child victims who have not yet worked or reached a certain level of education, since experts are more likely to take gender and race into account, to the detriment of individualized factors such as academic ability, work ethic, career aspirations, or educational attainment.

Critics of the tables argue that such disparities are discriminatory, arbitrary, and may violate the Fifth and Fourteenth Amendments¹⁰. The use of race-based statistics to calculate compensation violates due process and property rights because it is not scientifically acceptable in a heterogeneous population to categorize people based on race, a fictitious and fluid social construct. Instead, disparities between “races” are associated with socioeconomic differences and tend to decrease significantly when socioeconomic factors are controlled for. Consequently, race-based statistics are inherently unreliable, and their use in a court to deprive someone of their right to compensation constitutes arbitrary and irrational state action and, therefore, a denial of due process.

In this regard, an analysis developed by Professor Martha Chamallas—one of the most prolific scholars on the subject—demonstrates that the persistence of judicial reliance on tables based on race, ethnicity, and gender requires state action for the purpose of equal protection, because “it is impossible to separate the use of statistics from the underlying legal standard in the case, insofar as no principle of constitutional law is more firmly entrenched than the antidiscrimination principle as applied to explicit racial classifications. The use of race-based data fails to meet the strict standard of scrutiny required to pass constitutional review.”¹¹

Furthermore, the tables reinforce rigid racial and ethnic barriers, as they do not take into account future progress that could be made during the plaintiff’s lifetime, perpetuating negative stereotypes that diminish the individual’s worth and fail to account for human potential. The elimination of these tables would mean putting an end to the perpetuation of past discrimination and loosening its grip on the victims’ future. Consider, for example, a 3-year-old Black girl who was seriously injured in a car accident. Even if this child has not experienced discrimination in the workplace, and even if discrimination diminishes over the course of her life, projections of her future earnings will incorporate the levels of racial and gender discrimination suffered by Black women from previous generations. The result is that the girl’s compensation will be tainted not only by discrimination but also by a level of racial and gender discrimination that she herself would likely never face.

Critics also note that by reducing the awards for damages against women and minorities, the tables hinder these plaintiffs’ access to legal representation at the outset of litigation. After all, lawyers take on cases on a contingency fee basis. Given this form of financing, lawyers will only accept cases if the likely damages award is large enough to make the litigation worthwhile; the greater the likely damages for a potential client, the more “worthwhile” their case is.

Add to all this the perverse cost-benefit calculation. This practice provides an economic justification for the devaluation of these communities, which results in more reckless behavior on the part of offenders, since the perceived “costs” of such conduct are lower. In practical terms, the use of race and ethnicity data in compensation calculations encourages companies to locate their factories and operations in low-income or people-of-color communities, where any compensation for property damage and wrongful death lawsuits will be less costly than if the damage occurred in locations where the community were predominantly white.¹² Although this financial incentive is rarely explicit, statistics show a disproportionate concentration of hazardous waste landfills in minority communities.

Although the constitutionality of such tables has long been debated, the controversy has gained prominence in recent years. In 2018, the Lawyers’ Committee for Civil Rights published a report calling for legislative reforms to prevent the use of such tables.¹³ In 2019, sixteen of the nation’s most prominent civil rights organizations—including the ACLU and the NAACP —published a letter¹⁴ urging the National Association of Forensic Economists to halt the use of race- and gender-based tables, which are founded on the “glaringly flawed premise that the lives of people of color and women are worth less than those of white men.”

Interestingly, one of the rare instances of successful federal reform efforts to ban the use of race or gender in damage calculations occurred precisely in the notorious case of the September 11 Victims’ Compensation Fund, which was designed to provide a no-fault compensation alternative for civil liability claims on behalf of the families of the deceased and injured. Special Master Kenneth R. Feinberg adopted race- and gender-neutral tables “to avoid any bias regarding assumed future earning potential and to ensure consistency.”¹⁵

It is expected that the Supreme Court will eventually rule on the matter, or that, gradually, state laws will draw inspiration from California’s initiative. This clearly exemplifies the promotional function of civil liability.

__________

---

1. G.M.M. v. Kimpson, United States District Court, E.D. New York. July 29, 2015, 116 F. Supp. 3d 126 (E.D.N.Y. 2015). Judge Weinstein emphasizes the importance of the “myriad factors that affect an individual’s ability to realize his or her potential.” He further describes the harm caused to young children by lead and the disproportionate exposure of low-income families and minorities.
2. 30 54 So. 865, 869 (La. 1911).
3. Gilborges v. Wallace, 379 A.2d 269, 276–278 (N.J. Super. Ct. App. Div. 1977), holding that, although the decedent, a sixteen-year-old girl, had expressed a lifelong interest in becoming a veterinarian, there was no evidence that she would likely have become a veterinary student or graduate, because there were no veterinary schools in the state of New Jersey and only one in the state of Pennsylvania, with the consequent serious difficulty for a student from New Jersey to gain admission to such a school.
4. Two defendants negligently fired shots in the direction of the plaintiff, and only one of the bullets caused harm to the victim. In the interests of justice, the innocent plaintiff’s case is not defeated because she cannot prove which of the parties was the actual “but-for” cause of her injury.
5. This doctrine is unique to the United States and allocates liability among manufacturers according to their market share for the product that caused the claimant’s injury.
6. A phenomenon in which harm is transmitted from ancestors to descendants, with traumatic consequences for the latter.
7. Diethylstilbestrol (DES) is a synthetic form of the female hormone estrogen. It was prescribed to pregnant women between 1940 and 1971 to prevent miscarriage, premature birth, and pregnancy-related complications. In 1971, researchers linked prenatal (in utero) exposure to DES to a type of cervical and vaginal cancer called clear cell adenocarcinoma in a small group of women. Shortly thereafter, the Food and Drug Administration (FDA) notified doctors nationwide that DES should not be prescribed to pregnant women. The drug continued to be prescribed to pregnant women in Europe until 1978. DES is now known to be an endocrine disruptor, one of several substances that interfere with the endocrine system and cause cancer, birth defects, and other developmental abnormalities.
8. Available here. The law took effect on January 1, 2020. The final vote on the bill in the full assembly was 78-0, demonstrating the strength of the argument.
9. Available here.
10. 5. Amendment: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” 14. Amendment: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
11. Martha Chamallas, Questioning the Use of Race-Specific and Gender-Specific Economic Data in Tort Litigation: A Constitutional Argument, 63 Fordham l. rev. 73, 105 (1994); see also id. "When the court allows an expert to testify as to the plaintiff's future earning capacity, it makes a determination of relevancy and an implicit judgment about the substance of the common law of damages."
12. Although a company’s presence in a racially minority community may increase employment opportunities and foster better economic development, these benefits are negated if the company fails to comply with environmental safety regulations and the community suffers from costly and burdensome health problems. Martha Chamallas, Civil Rights in Ordinary Tort Cases: Race, Gender, and the Calculation of Economic Loss, 38 Loy. L.A. L. Rev. 1435, 1441 (2005).
13. Available here.
14. Available here.
15. The Final Report does not mention “race.” However, the Special Master used the combined “All Working Men” tables to calculate the future earnings of all claimants. Available here.