Iowa Supreme Court Reverses Exclusion of RRB Stats on Average Retirement Age

In personal injury or wrongful death cases involving railroad employees, one key parameter of loss is the age at which the injured or deceased railroad employee would have retired from the railroad but for the claimed harm. Unlike the workforce in general, railroad employees may collect full retirement benefits, including Social Security benefits, as early as age 60, as much as seven years prior to the full retirement age available to non-railroad employees. For this reason, retirement ages observed in the workforce, generally, are not relevant to railroad employees. To assess the likely retirement age of railroad employees given such incentives to retire earlier than the general workforce, one must look to data compiled by the Railroad Retirement Board on the average retirement ages of railroad employees, specifically.

In Giza v. BNSF Railway Company, Spectrum Principal Mark W. Erwin opined that Mr. Giza, a railroad employee with over 40 years of creditable railroad service, would have retired from the railroad at age 60 but for his injury, based on Railroad Retirement Board data on railroad employee retirement from 2003 through 2010. Specifically, according to these data, railroad employees with 30 or more years of service retire, on average, at age 60.7 with 36.5 years of railroad service, five years less service than Mr. Giza would have had by age 60 but for his injury. In addition, from 2004 through 2006, 62% of railroad employees with 30 or more years of service retired at age 60.

In contrast, the opposing damages expert, John O. Ward, opined that Mr. Giza would have retired at age 66, the full retirement age for Social Security for persons Mr. Giza’s age who, unlike Mr. Giza, are not railroad employees.

Incredibly, the trial court excluded testimony on Railroad Retirement Board statistics on railroad employee retirement patterns but allowed testimony that erroneously applied full-retirement ages available to non-railroad employees to Mr. Giza’s railroad employment but for his injury. The trial court based its ruling on a line of cases that, from the perspective of economic damages experts tasked with properly calculating economic loss, are not well-reasoned. In these cases, courts have misapplied the U.S. Supreme Court’s ruling in Eichel v. New York Central (1963), which barred the introduction into evidence of an injured railroad employee’s post-injury disability benefits for purposes of impeaching the employee’s testimony as to motive for not returning to work. In Eichel, the Supreme Court explained their ruling as follows:

We have recently had occasion to be reminded that evidence of collateral benefits is readily subject to misuse by the jury. It has long been recognized that evidence showing that the defendant is insured creates a substantial likelihood of abuse. Similarly, we must recognize that evidence showing that the petitioner’s receipt of collateral social insurance benefits involves a substantial likelihood of prejudicial impact. We hold therefore that the District Court properly excluded the evidence of disability payments.

In other words, the U.S. Supreme Court affirmed the exclusion of evidence of post-injury receipt of disability payments because 1) such payments are excluded from consideration under the collateral source rule and 2) their substantial likelihood of prejudicial impact outweighs their probative value. Note that, in accordance with the collateral source rule and Eichel, lost railroad earnings are not offset by post-injury disability benefits in economic damages calculations.

In recent rulings, some courts, however, have misconstrued Eichel and deemed evidence of railroad retirement benefits, which are not excluded under the collateral source rule, as prejudicial. In Norfolk Southern Railway v. Tiller (2008), for example, the Maryland Supreme Court refused to let a railroad show that an injured employee would have been eligible to retire at age 60 but for his injury, finding this “closely analogous” to the use of disability benefits in Eichel. It was upon such rulings that the trial court in Giza relied.

In fact, when calculating economic damages, post-injury disability benefits and pre- and post-injury retirement benefits are not analogous at all. While the former are excluded under the collateral source rule, the latter are elements of the injured or deceased railroader’s economic loss claim. Furthermore, the decision to retire but for an injury fundamentally differs from the decision to return to work (or not) following an injury. Persons who opt to retire are not deemed to be malingerers. There is no prejudice associated with opting to retire. An uninjured employee’s decision to retire is purely economic, and can be understood by analyzing the economic trade-offs that underlie such a decision. On the one hand, railroad employees may continue to forego leisure, work and earn, with all earnings subject to taxes that fund railroad retirement benefit plans, as well as FICA and income taxation. On the other hand, they may instead retire, enjoy the leisure time that they otherwise would have foregone and receive railroad retirement benefits, which are subject to lower rates of taxation than railroad earnings. Given these trade-offs, once railroad employees reaches retirement age, their economic return from continuing to work decreases significantly. This is why railroad employees typically opt to retire once full retirement benefits become available. They do so, not because they are malingerers, but because they are rational economic actors, unwilling to continue working once their after-tax return from continuing to work becomes much reduced by the availability of full retirement benefits.

Moreover, loss of railroad retirement benefits is an element of the total economic loss properly claimed by injured or deceased railroad employees. If their value but for the harm (or post-harm) cannot be referenced without prejudice, then their lost value also cannot be referenced and included in the calculation of a railroad employee’s total economic loss. Ironically, if the reasoning of rulings misconstruing Eichel, such as Tiller, were fully followed, no evidence of a railroad employee’s loss related to railroad retirement benefits could be presented, as the value of such benefits, both but for the injury and post-injury, which are the bases for such loss, would be excluded as prejudicial. As a result, injured or deceased railroad employees would be unjustly denied this key component of their total economic loss resulting from their claimed harm.

In Giza, the Iowa Supreme Court reversed the trial court’s exclusion of Railroad Retirement Board statistics on railroad employee retirement, correctly observing that “retirement benefits are not collateral source payments.” However, the Court’s ruling allows for the introduction of such statistical evidence only “so long as the evidence does not directly or indirectly refer to retirement benefits.” The Court added:

While our ruling concerns the statistical evidence, a plaintiff may open the door to further exploration of the subject of retirement by the position he or she takes at trial. For example, if a plaintiff testifies on direct examination or the plaintiff’s counsel argues that the plaintiff would have kept working until a particular age because of the money she is making, then it may be appropriate for the defendant to show that the plaintiff could make money by not working.

Hence, while the Iowa Supreme Court is to be commended for its walk-back from the flawed economic and legal reasoning of recent cases like Tiller that found railroad retirement benefits to be analogous to post-injury disability benefits and similarly prejudicial, its walk-back is only partial. One hopes that the Iowa Supreme Court’s ruling in Giza is the beginning of a reconsideration of past rulings like Tiller, so that employee retirement decisions can again be viewed as purely economic in nature and non-prejudicial. Only when the value of retirement benefits, both but for the claimed harm and post-harm, can be adduced and introduced into evidence will juries have the information they need to award to injured or deceased railroad employees the entirety of their economic loss resulting from their claimed harm.

Click Here to read the Iowa Supreme Court’s opinion in Giza v. BNSF