444 U.S. 490 (1980)
In 1973, a fireman employed by Norfolk & Western Railway Co. suffered fatal injuries in a collision caused by the railway's negligence.1 Respondent, as administratrix of the fireman's estate, brought suit under the FELA in the Circuit Court of Cook County to recover the damages that his survivors suffered as a result of his death.2 In 1976, after a full trial, the jury awarded respondent $775,000.3
The decedent was a 37-year-old man living with his second wife and two young children and contributing to the support of two older children by his first marriage.4 His gross earnings in the 11 months prior to his death on November 22, 1973, amounted to $11,988.5 Assuming continued employment, those earnings would have amounted to $16,828.26 in 1977.6 An expert estimated that the decedent’s earnings would have increased at a rate of approximately five percent per year, amounting to $51,600 in the year 2000.7
Respondent's expert calculated the present value of the pecuniary loss at $302,000 based on gross earnings.8 Petitioner offered to prove through an actuary that the decedent’s federal income taxes from 1973 through 2000 would have amounted to about $57,000, and under its assumptions computed the net pecuniary loss at $138,327.9 Petitioner requested that the jury be instructed that the award would not be subject to income taxes.10
The Appellate Court of Illinois affirmed the exclusion of the tax evidence and the refusal of the instruction. The Illinois Supreme Court denied leave to appeal.11
Whether it was error to exclude evidence of the income taxes payable on the decedent’s past and estimated future earnings?12
Yes. The Court held that income taxes are a relevant factor in calculating monetary loss and that estimates of after-tax earnings are not too speculative for jury consideration.15 Respondent’s expert calculated the present value of pecuniary loss at $302,000 using gross earnings that would have reached $51,600 by 2000.16 Petitioner offered actuarial evidence that taxes from 1973 through 2000 would total about $57,000 and produced a net loss of $138,327.17
The same variables that affect tax liability also affect future earnings growth at five percent per year and personal expenditures, yet courts routinely admit evidence on those matters.18
Exclusion of the tax evidence was error.19
Related opinions on this issue
Justice Blackmun dissented from the holding that estimated income taxes must be subtracted from the award.20 He argued that Congress's decision not to tax wrongful-death awards conferred a benefit intended for victims or their survivors, not for the tortfeasor.21 Subtracting the taxes would give the defendant a windfall contrary to congressional purpose.22
Either the exclusion avoided administrative complexity for the fisc or provided humanitarian relief to the injured, neither of which supports transferring the benefit to FELA defendants.23
Whether it was error for the trial judge to refuse to instruct the jury that the award of damages would not be subject to income taxation?24
Yes. The Court held that refusal of the brief, neutral instruction was error because it left the jury free to speculate about tax consequences and overcompensate.27 The jury returned $775,000 after hearing an expert’s gross-earnings figure of $302,000, a disparity that could reflect an assumption that a large portion of the award would be paid in taxes.28 The instruction eliminates that risk without complicating the trial or prejudicing either party.29
Refusal to give the nontaxability instruction was error.30
Related opinions on this issue
Justice Blackmun dissented from the requirement that the nontaxability instruction be given on request.31 He viewed the instruction as a purely cautionary admonition whose giving is governed by state procedural law when an FELA action is tried in state court.32 Illinois permits refusal of the instruction.33
The majority’s rule would invite a flood of similar cautionary instructions on other extraneous matters such as insurance or attorney’s fees.34 No evidence in this record indicates that the jury is any more likely to act upon an erroneous assumption about an award’s being subject to federal income tax than about any other collateral matter.35