Evidence of Actual Monetary Loss is Required

When Calculating the Exemplary Damages Cap

In a recent Texas Court of Appeals case, the jury awarded plaintiff $15,000,000 in exemplary damages; the Court reduced this amount citing section 41.008(b)(1) of the Texas Civil Practice & Remedies Code, which caps exemplary damages at two times the amount of “economic damages,” plus up to $750,000 in non-economic damages.  The question on appeal was whether the jury’s finding of “pecuniary loss” was the same as “economic damages” for purposes of Chapter 41.  The Court emphasized the word “actual” in the statutory definition of “economic damages”.  The decision features a dissent from Justice Brown who opined that pecuniary losses are not always subject to precise mathematical calculation.  A jury, she said, is entitled to look beyond the evidence of calculable financial contributions and use their own knowledge and experience to estimate the lost value of things like household services.

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A divided Dallas Court of Appeals has ruled that a jury’s finding on “pecuniary loss” must be supported by evidence of actual monetary or financial losses for that finding to be used as “economic damages” for purposes of calculating the exemplary damages cap in Texas Civil Practice and Remedies Code § 41.008(b)(1).

Carl Rogers’s wife and two daughters sued Mr. Rogers’s former employer, Goodyear, contending the asbestos fibers in Goodyear’s facility were the proximate cause of his mesothelioma and death.  Plaintiffs argued Goodyear was grossly negligent, and therefore, they were entitled to exemplary damages.  The jury found in Plaintiffs’ favor and awarded Carl’s wife $600,000 and each daughter $150,000 in past and future “pecuniary loss.”  The jury also awarded $15,000,000 in exemplary damages.  Based on the jury’s verdict, the trial court reduced the exemplary damages award to $2,890,000 pursuant to the exemplary damages cap in Texas Civil Practice and Remedies Code § 41.008(b)(1).

Goodyear first challenged the jury’s finding of gross negligence, arguing there was legally insufficient evidence to support both the objective and subjective elements of Plaintiffs’ gross negligence claim.  On the objective element, Goodyear argued there was not sufficient evidence of an “extreme degree of risk” because, based on the testimony of Plaintiffs’ own expert, Mr. Rogers’s exposure to asbestos fibers at the Goodyear facility only increased his chance of developing mesothelioma from 1 in 1,000,000 to 1 in 45,000.  The Court rejected this argument, holding the degree of risk or likelihood of injury is “not to be viewed in a vacuum” based on statistical evidence alone.  Rather, a court should look at whether the jury could have concluded Goodyear’s acts and omissions created an extreme degree of risk, considering the probability and magnitude of the harm.  Based on this standard, there was legally sufficient evidence to support the objective prong for gross negligence.  On the subjective component, Goodyear argued Plaintiffs were required to prove Goodyear had actual knowledge of the dose (amount) of asbestos to which Mr. Rogers was exposed which would likely cause his mesothelioma.  The Court again disagreed, stating awareness of an extreme risk “does not require proof that the defendant anticipated the precise way the injury would occur or be able to identify whom the injury would befall.”  The evidence of Goodyear’s acts and omissions, together with the evidence of Goodyear’s knowledge regarding the risks of asbestos, was enough to support the jury’s finding of gross negligence.

Having found there was legally sufficient evidence to support gross negligence, the Court then looked to Section 41.008(b)(1) of the Texas Civil Practice & Remedies Code, which caps exemplary damages at two times the amount of “economic damages,” plus up to $750,000 in non-economic damages.  The question was whether the jury’s finding of “pecuniary loss” was the same as “economic damages” for purposes of Chapter 41.  The Court emphasized the word “actual” in the statutory definition of “economic damages”: “compensatory damages intended to compensate a claimant for actual economic or pecuniary loss.”  For purposes of the exemplary damages cap, the Court held, the use of the word “actual” requires there to be evidence of real monetary losses or expenditures such as lost wages, lost profits, or increased expenditures to replace the services that were provided by Mr. Rogers prior to his death.  Having determined Chapter 41 requires proof of actual financial expenditures or losses, the Court held the exemplary damages in this case should have been capped at $1,150,000 because there was legally sufficient evidence to support actual monetary losses of only $200,000 ($170,000 in medical expenses and $30,000 for yard work).  The Court further held there was no evidence of any actual economic loss for either daughter; there was only evidence they lost their father’s advice and counsel, which did not result in any actual pecuniary loss to either daughter.  The Court therefore suggested a remittitur of exemplary damages to $1,150,000.

Justice Brown agreed with the majority’s opinion regarding gross negligence, but dissented on damages.  She argued that pecuniary losses are not always subject to precise mathematical calculation.  A jury, she said, is entitled to look beyond the evidence of calculable financial contributions and use their own knowledge and experience to estimate the lost value of things like household services, advice, and counsel to determine “actual economic or pecuniary loss.”

This article was previously published in Lexology, September 11, 2017, and is republished here with permission from the author and Carrington, Coleman, Sloman & Blumenthal, LLP.

Debrán O’Neil is with Carrington Coleman’s Healthcare practice group. Ms. O’Neil represents healthcare facilities in medical negligence and commercial litigation cases. She also advises healthcare facilities and healthcare providers on issues related to peer review, physician credentialing, Stark, Anti-kickback, HIPAA, HITECH Act, and the Patient Protection and Affordable Care Act. Ms. O’Neil assists clients in litigation by deposing plaintiffs and fact witnesses, working with expert witnesses, drafting and arguing motions, and preparing discovery requests and responses.

Ms. O’Neil can be reached at (214) 855-3057 or by e-mail to doneil@ccsb.com.