Guest Post: Jonathan Cardi--Should Nonpecuniary Damages Be Adjusted According to Plaintiffs’ Cost of Living?

In March 2019, an Ethiopian Airlines flight on a Boeing 737 Max 8 airplane crashed in a field six minutes after take-off from Ethiopia’s capital Addis Ababa, killing all 157 passengers and crew. Many on the flight were en route to a United Nations meeting, so the flight carried people of many nationalities.

In the consolidated litigation stemming from the crash, defendants admitted liability, leaving damages the only issue to be tried. In the flurry of pre-trial motions, defendants argued that the jury ought to be allowed to adjust the noneconomic damages awarded to each plaintiff according to the cost of living in that plaintiff’s country and region. Although defendants sometimes make such arguments, they are rarely credited—but Judge Jorge Alonso of the Federal District Court for the Northern District of Illinois accepted the argument, ruling:

I agree with Boeing that cost of living is an important or likely to be an important consideration in understanding what amount is appropriate or reasonable as compensation. . . . Boeing can make arguments about cost of living and whether an amount is, quote-unquote, generational wealth in a particular country, to the extent that these arguments are limited, to helping the jury understand what amount is appropriate to compensate the beneficiaries for their loss.[1]

I have found no case in which a court ruled as Judge Alonso did. With defendants’ success on this issue in such a high-profile case, one wonders whether defendants will be incentivized to make the argument more often and whether judges will be emboldened by Judge Alonso to similarly hold.

The argument supporting Judge Alonso's ruling goes something like this: One purpose of emotional distress damages is to allow the plaintiff to offset their suffering with purchasable pleasures. Courts and academics sometimes voice this reasoning, as does the Restatement of Torts: Remedies §§ 20-21 on emotional damages.[2] In order to award equal damages to plaintiffs who suffered equally, the jury should take account of each plaintiff's purchasing power, which includes cost of living. (Incidentally, if this is the reasoning, the jury should also consider each plaintiff’s personal wealth, because a dollar means more to a poor plaintiff than a rich one. The defendants in this case did not request such an instruction—likely because what is good for the goose is good for the gander: if plaintiff’s wealth is relevant to compensatory damages, then perhaps defendant’s wealth should be as well.)

Although such reasoning is not without merit, the arguments against such a ruling are, in my view, considerably stronger. I summarize them as follows:

(1) As mentioned above, adjusting noneconomic damages according to the plaintiff’s cost of living would be a change in the law;

(2) The primary purpose of pain and suffering damages is not to replace suffering with pleasure[3]—a dubious goal, both practically and jurisprudentially—but merely to estimate in dollars the harm the victim suffered. Differentiating damages between victims who suffered the same harm either deviates from this purpose or presumes that one’s pain differs depending one’s cost of living, which surely cannot be the case.

(3) A secondary goal of pain and suffering damages is to deter the defendant’s wrongful conduct. Adjusting noneconomic damages for cost of living is not consistent with this goal either. We want airlines to be equally deterred from killing passengers from developing regions as those from wealthy nations (and, for that matter, equally deterred regardless of passengers’ level of personal wealth).  

(4) Courts do not see pain and suffering damages as susceptible to market valuation,[4] so courts do not, for example, reduce ED damages to present value.[5] A cost of living adjustment would seem highly analogous and should be treated similarly.

(5) There are strong policy reasons not to account for cost of living or wealth. Primary among these is that doing so sends a message that courts value poorer plaintiffs or plaintiffs in poorer communities/nations less than others. Such differential treatment might even rise to the level of an Equal Protection Violation based on race or national origin. It is analogous (although presenting an even stronger case) to allowing race or gender-based data on life expectancy for pain and suffering damages, which the Restatement and an increasing number of jurisdictions do not allow.[6]

This argument is bolstered by yet another commonly-cited justification for noneconomic damages awards. As the Restatement Third, § 20, cmt. b explains:

Compensation for pain and suffering is especially important to plaintiffs with limited earning capacity, including women and minority groups who may be underpaid because of past and present discrimination. And without compensation for pain and suffering, plaintiffs would not recover even the amount of their lost earnings and medical expenses after paying their attorneys’ fees.

Were courts to reduce a pain and suffering award due to a plaintiff’s relatively low cost of living (or allow a jury to do so), courts would not only counteract the ameliorative effect described above, but they would be expanding the discriminatory effect of damages into the noneconomic damages realm.

(6) Even accepting as a legitimate and primary goal of nonpecuniary damages to replace physical and emotional pain with purchasable pleasures, courts arguably should distinguish between survival and wrongful death claims. Although a surviving relative might use pain and suffering damages to purchase pain-supplanting pleasures, a decedent does not enjoy that possibility.

(7) Cost of living is not generally admissible evidence in tort cases in which plaintiffs are from different neighborhoods or cities. Why should Judge Alonso have allowed evidence of cost-of-living differences between countries? This ruling not only enhances the national-origin discriminatory effect, but it raises a difficult line-drawing issue. Should courts allow evidence of cost-of-living differences according to zip code? Neighborhood within a zip code? And if so, what about the historical and present effects of discrimination that have led to such disparities—ought the law reify them?

(8) Finally, a court’s ruling to allow cost-of-living adjustments to nonpecuniary damages awards presents a significant practicality problem. Cost of living is a relative metric. What is to serve as the baseline? Would the jury issue a baseline award, to be adjusted by the court upward or downward according to some hypothetical (and highly contestable) median cost of living? Is the median that of the US, Belgium, Ethiopia, or a worldwide median? Or does the court simply leave it to the jury to assign pain-and-suffering damages "taking into consideration" each plaintiff’s cost of living? Either approach (and others) adds ample danger of arbitrary—or worse, discriminatory—adjustments to an already rather arbitrary element of damages. There are considerable grounds for worry that either judges or juries might allow a plaintiff’s race or national origin to affect such an adjustment.[7]

In sum, Judge Alonso’s ruling on this issue is rather worrying. One hopes that it is an anomaly.

 

[1] Transcript of Final Pretrial Conference at 30, In re: Ethiopian Airlines Flight ET 302 Crash (2023) (No. 19 CV 2170).

[2] Restatement of the Law Third Torts: Remedies §§ 20-21 (Tentative Draft No. 2 April 2023); see also James M. Fischer, Understanding Remedies § 73.1 at 258 (4^th ed. 2021) (stating, as one aim of pain and suffering damages, to provide the injured party “with sufficient funds to purchase at least an imperfect substitute, e.g., the purchase of happiness equal to the pain and suffering the plaintiff has endured as a result of the tortious conduct.”).

[3] Id. Every single source citing the purpose of pain and suffering damages lists this as the award’s primary purpose.

[4] See Restatement Third § 20, cmts. d & e.

[5] Id. cmt. h.

[6] Id. cmt. k.

[7] See the seminal body of work created by Martha Chamallas and Jennifer Wriggins. See also W. Jonathan Cardi, Valerie Hans & Gregory Parks, Do Black Injuries Matter?: Implicit Racial Bias and Juror Decision Making in Tort Cases, 93 S. Cal. L. Rev. 3 (2020).