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California’s New S.B. 41 Law Prohibits Tort Damages Based on Race, Gender, or Ethnicity

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California S.B. 41 law

California Governor, Gavin Newsom, recently signed State Bill 41 (S.B. 41) into law, marking landmark legislation that will take effect on January 1, 2020. The law, which is the first of its kind in the U.S., prohibits reductions of damages for lost future earnings based on race, gender, or ethnicity in personal injury and wrongful death cases.

Such legislation may seem unremarkable at first glance. Not basing the amount of a lawsuit settlement on race, gender, or ethnicity may seem like a straightforward concept, and one could easily assume laws addressing it already exist. However, the issue at hand is actually complex and extensive, and by tackling it directly, S.B. 41 will undoubtedly disrupt and potentially redefine the $429 billion tort law system. 

In legal terminology, a tort is a wrongful act (other than a breach of contract) that causes injury or harm. Under the law, a victim of tort is entitled to relief in the form of damages or an injunction. In the U.S., ‘tort reform’ is a term that frequently grabs headlines and generates debate (often oversimplified into a singular question of whether or not we live in a litigious society). California bill S.B. 41 is an example of tort reform.

In tort law, lost wages will often represent a significant portion of a final settlement awarded to an injured plaintiff. When a victim is injured so seriously that it affects his or her ability to work, a jury must consider future lost wages when determining a settlement amount. The process of accurately calculating someone’s future lost wages is an issue that, like the bill, may seem straightforward at first glance. However, if you take a moment to consider the issue from the perspective of both a victim and a juror, the question of future lost wages becomes a proverbial Pandora’s box.

Today, if someone asked you how much money you would make in the remainder of your lifetime, how would you respond? It’s a difficult question on a strictly personal level. Nevertheless, how a jury answers the question for a plaintiff is, at least in the state of California, no longer able to be influenced by one’s race, gender, or ethnicity due to A.B. 41. Throughout the rest of the nation, however, the process of determining the issue of future lost wages remains an inexact science.

In the U.S., where opportunity for advancement and upward mobility is supposed to be limitless, how should a nebulous figure like future lost wages be calculated under the law? And what factors should be considered? 

Currently, lawyers, judges, and juries rely on data compiled by forensic economists in the form of life or age ‘expectancy tables.’ But in a tort law proceeding, multiple expectancy tables featuring varying metrics, such as race or gender, can be referenced or used to reinforce arguments. Such inconsistencies, one could argue, needlessly complicate the jury’s arduous task of calculating future lost wages. 

Remember, in personal injury cases, jurors are responsible for calculating what a plaintiff would have earned if he or she hadn’t been injured. The expectancy tables serve as the best guide for juries in effectively looking into the future and quantifying an injured victim’s foregone future earnings. But when forensic economists are gathering data for an expectancy table, they frequently use factors like race or gender.

A 2009 survey conducted by the National Association of Forensic Economics found that when compiling data for future lost wages, 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 how that data can be wielded in the courtroom, as a 2016 article from The Washington Post examined, can be quite surprising. 

The article cited an example of a 4-year-old mentally disabled boy who, following an investigation, was found to have been living in an apartment illegally coated with lead paint. In determining damages to be paid by the landlord, the jury would have to account for future lost wages. Attorneys representing the child, “said $3.4 million was the right number, arguing that the boy would have had a bright career ahead of him; both of his parents had graduated from college and his mother received a master’s degree.” The landlord’s attorneys presented the jury with a figure of $1.5 million, contending that, “because the boy was Hispanic…[he] was unlikely to attain the advanced education that would garner such a large income.” An attorney for the landlord told the court, “The [proportion] of Hispanics attaining master’s degrees was in the neighborhood of 7.37 percent.” 

The article concluded that the ultimate result of using these race and gender-based expectancy tables in court is somewhat predictable: women and people of color are most affected and receive lower awards in personal injury and tort settlements. The article cited one example where, “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.” Such a scenario is entirely permissible under the laws throughout the nation at the moment. But, when A.B. 41 goes into effect in 2020, it could have a significant impact on future legislation throughout the country. 

Defenders of such tables typically rely on a causal argument, claiming disparities in projected future earnings are merely a symptom of persistent societal problems — not the cause. They also maintain that, the goal being to determine as accurate a settlement figure as possible, calculations for future lost earnings should comprise a variety of demographics including race and gender.

Critics of the tables insist that they further solidify racial and gender hierarchies. Additionally, they charge that such tables fail to acknowledge any potential for progress throughout a plaintiff’s lifetime. The report by the Washington Post summarized the issue by noting, “use of demographic averages pits two tenets of the American justice system – fairness and accuracy – against each other.” 

S.B. 41 takes effect on January 1, 2020, making California the first state to address the future earnings issue through specific legislative action. Though California is considered a liberal bastion, the bill’s passage received a unanimous 78-0 vote. Given the overwhelming bi-partisan support, S.B. 41 may a harbinger of future tort reform throughout the nation.