McCrann v. United States Lines, Inc.

Dennis McCrann (plaintiff) worked as a merchant seaman when he was injured by falling on an oil-soaked deck of a ship owned by United States Lines (defendant). McCrann filed suit under the Jones Act and was awarded $275,544 of past and future lost earnings at trial. The court later awarded him an additional $20,000 in pain and suffering. The issues of this case arose in the context of adjusting McCrann’s lost wages claims for both prejudgment interest, which would cover McCrann’s loss before trial, and the discount factor, which would reduce his future lost wages by a factor to account for the future effects of inflation. This discount factor, which operates as a discount to present value, was particularly contested. McCrann presented an economist as an expert witness who testified that the discount rate should be zero, as McCrann would have presumably received wage increases in the future due to noninflationary forces like productivity and seniority. The trial judge was confused by the economist witness, and, rather than adopting the economist’s approach, the judge endorsed a 2 percent discount rate. The discount rate ideally should function as a statement of the prevailing current interest rate less than the inflation rate. Meanwhile, United States Lines argued against applying a prejudgment interest rate of 10.397 percent (the currently applicable market rate of interest), arguing that the same 2 percent discount rate should also control the prejudgment interest rate. United States Lines appealed, but McCrann also separately argued for a finding of error in applying the 2 percent discount rate.