Drayton v. Jiffee Chemical Corporation

Terri Drayton (plaintiff), a Black child, was severely and permanently injured when she was a year old by a chemical made by Jiffee Chemical Corporation (Jiffee) (defendant). During trial on Drayton’s claims against Jiffee, Drayton presented Dr. John Burke’s expert testimony regarding her loss of earning capacity and future medical expenses. Burke testified the present value of Drayton’s lost earnings was $608,215 and the present value of her future medical expenses was $890,000. Following a bench trial, Drayton was awarded $500,000 for her loss of earning capacity and $600,000 for future medical expenses. Jiffee moved for a new trial, amendment of findings of fact, and an amendment of the judgment. The trial court held a hearing for additional economic expert testimony regarding the computation of damages. Burke testified again, providing additional details regarding his methodology, including his underlying assumptions, information sources, and his precise reasoning to support his testimony. For salary projections, Burke assumed 3 percent inflation, 0.5 percent aging (getting better at navigating the labor market), and 2.9 percent productivity (based on technological advances). To calculate present value, Burke used an interest rate for a long-term, very safe investment such as long-term government bonds. To determine Drayton’s future medical expenses, Burke assumed Drayton would need $782,000 and the present value was $890,000 using minimum-wage increases as a guide. Jiffee presented the expert testimony of Dr. Segal, who started with Social Security Administration income data on all Black women in the labor force and then presented three different possibilities to determine present value. First, Segal used 2.4 percent for productivity and a 0.6 percent growth factor in incomes for Black workers to compensate for past employment discrimination. Segal then used a 3 percent discount rate, making the absolute dollar value the same as the present value, or $193,769. Segal then used a 2 percent productivity rate, a 0.5 percent growth factor for Black workers, and a 4 percent interest rate, resulting in $121,470. Finally, Dr. Segal used a 1 percent discount rate, for a total of $141,269. As to future medical expenses, Dr. Segal assumed Drayton would spend $600,000 in actual dollars. Segal concluded the present value was one of three possibilities. First, Segal used a 4.5 percent discount rate based on a 3 percent interest rate and a 1.5 percent increase in medical productivity, reaching $119,213. Segal assumed that medical-cost increases would match inflation. If inflation were 3 percent, Segal opined the present value would be $125,848, and if inflation were 4 percent, then the present value would be $111,515. Segal could not provide a basis for these inflation rates. Segal stated that the true present value was probably somewhere in the middle.