A question every attorney must ask themselves when spending their client’s money is, “do I really need to do this?” When it comes to discounting to present value, the answer is “it depends.” The law generally separates damages into two categories – noneconomic and economic damages. The answer is different for each type.
Noneconomic damages compensate a plaintiff for nonpecuniary injuries, including pain, suffering, and various forms of mental anguish and emotional distress. For noneconomic damages, there is no fixed standard to determine the amount, the determination is left solely to the discretion of the trier of fact. Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308, 1332.
CACL 3905A
Since there is no fixed standard, the jury instructions state that future noneconomic damages should not be reduced to present value. Rather, they instruct jurors to “determine the amount in current dollars paid at the time of judgment that will compensate the plaintiff for future noneconomic damages.” CACI No. 3905A Physical Pain, Mental Suffering, and Emotional Distress (Noneconomic Damage). Economic damages are another story.
Economic damages compensate a plaintiff for pecuniary injuries. The most common forms of economic damages are medical expenses, lost household services, and lost wages, benefits, and earning capacity. The logic being a person who undergoes medical treatment for injuries suffers an economic loss by taking on liability for the costs of treatment. Williams v. The Pep Boys Manny Moe & Jack of California (2018) 27 Cal.App.5th 225, 237. A person who is unable to perform household services should be compensated for the value of the services they would have performed but will now have to be performed by someone else. Overly v. IngallsShipbuilding, Inc. (1999) 74 Cal.App.4th 164, 171. And where there are lost wages, benefits, and earning capacity, that the injured person should be restored as nearly as possible to their former position or given some pecuniary equivalent. Hilliard v. A. H. Robins Co. (1983) 148 Cal.App.3d 374.
CACL 3904A
Where there is a future economic loss, the jury instructions require a reduction to present value. Specifically, they state that if you decide plaintiff’s harm includes future economic damages you must reduce the amount of those future damages to their present cash value. CACI No. 3904A Present Cash Value. Toward that end, “the present value of a gross award of future damages is that sum of money prudently invested at the time of judgment which will return, over the period the future damages are incurred, the gross amount of the award… This is the case in part because money received today can be used to generate additional value in the interim.” Holt v. Regents of the University of California (1999) 73 Cal.App.4th 871, 878.
Summary
To summarize, if you have a case that is comprised solely of noneconomic damages there is no need to discount. However, if there are future economic damages, a jury will be required to discount those amounts to present value. Juris Economics is proud to provide real time valuations for parties seeking to know the present value of a case. If you need assistance generating an economic report, please contact us at (858) 477-9537 or sales@juriseconomics.com.
