Projection of Economic Loss: Inflation v. Present Value
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Authors
Sherman, Jerome F.
Issue Date
1981
Type
Journal Article
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Abstract
INTRODUCTION|Many attorneys have been fearful of considering the impact of inflation on future earnings in wrongful death or personal injury cases because of the Eighth Circuit ruling in Riha v. JasperBlackburn Corp. The Appeals court ruled that the evidence of future inflation projected over the plaintiff's lifetime to the year 2005 was speculative and inadmissable. But the court in the Riha case did not hold that the jury could never consider inflation and future wage increases in determining damages. Therefore, the purpose of this paper is to review what the court actually said in the Riha case concerning inflation and future wage increases. The next step will be to explain how the Nebraska Supreme Court clarified the question of wage increases in Ott v. Frank and how The United States Court of Appeals for The Eighth Circuit clarified the same question in Taenzler v. Burlington Northern. The last portion of the paper will explain how an economist implements the decisions from these cases. The first step is to review the Eighth Circuit Court's Riha decision in which the court cited its interpretation of the Nebraska rule on damages: The measure of damages in Nebraska for personal injury resulting in permanent disability is that amount which will compensate the plaintiff for the diminution of his earning capacity reduced to its present value. [citations omitted]. The Nebraska Supreme Court has considered the place of inflationary considerations in this measure of damages. In Johnson v. Schrepf, 154 Neb. 317, 47 N.W. 2d 853 (1951) it observed: "Economic condition, including the low purchasing power of money for necessities of life, is a factor in determining the amount of a verdict .... The period of inflation now existing is a factor which the jury could consider...
Description
Citation
14 Creighton L. Rev. 723 (1980-1981)
Publisher
Creighton University School of Law