United States District Court, D. North Dakota
The Families Advocate, LLC, an Arizona Limited Liability Corporation, as Conservator of D.M., a minor, and Sarina Bonno and Julian Moreno, individually, Plaintiffs,
Sanford Clinic North d/b/a Sanford Clinic Jamestown, Sarah Schatz, M.D., and Lutheran Charity Association d/b/a Jamestown Regional Medical Center, Defendants.
REPORT AND RECOMMENDATION ON MOTIONS TO EXCLUDE
TESTIMONY OF STAN V. SMITH, PH.D.
R. Senechal, United States Magistrate Judge.
action, plaintiffs allege medical negligence surrounding the
2014 birth of D.M. Plaintiffs are D.M.'s conservator-The
Families Advocate, LLC-and D.M.'s parents-Sarina Bonno
and Julian Moreno. Defendants are (1) Sarah Schatz, M.D., the
attending physician at D.M.'s birth; (2) Sanford Clinic
North d/b/a/ Sanford Clinic Jamestown, Dr. Schatz's
employer; and (3) Lutheran Charity Association d/b/a
Jamestown Regional Medical Center (JRMC), the hospital at
which D.M. was born and which employs various healthcare
providers involved in the care of D.M. and his mother.
Sanford defendants and JRMC move to exclude certain testimony
of Stan V. Smith, Ph.D., an economist whom plaintiffs have
disclosed to express opinions on damages sustained by D.M.
and his family. The opinions defendants seek to exclude
address reduction in value of D.M.'s life (RVL), loss of
consortium, and loss of “household/family
services.” (Doc. 57; Doc. 60). Plaintiffs oppose the
motion. (Doc. 64). Defendants argue plaintiffs cannot meet
their burden of proof as to admissibility of Dr. Smith's
testimony. While they do not challenge Dr. Smith's
qualifications, they contend his testimony is unreliable, not
helpful to the fact-finder, not generally accepted in the
economics community, confusing or misleading to the jury,
unfairly prejudicial, time-wasting, and inconsistent with
North Dakota law on damages. The court heard oral argument on
the motion on December 18, 2018.
dispute centers around hedonic damages, which Black's Law
Dictionary defines as “damages that attempt to
compensate for the loss of the pleasure of being
alive.” Damages, Black's Law Dictionary
(10th ed. 2014). Dr. Smith is a proponent of quantification
of hedonic damages. To quantify hedonic damages, Dr. Smith
uses a “willingness to pay” method, considering
various economic indicators to estimate the “value of
life” and the reduction in the value of a life
resulting from an injury. (See Doc. 58-1, pp. 2-4).
recent case from the Western District of Missouri summarized
Dr. Smith's qualifications:
Dr. Smith [is] a well-qualified expert in the fields of
economics and finance. Dr. Smith has a Ph.D. in economics. He
has been involved in research and education in the field of
forensic economics for over forty years. He is President of
Smith Economics Group, Ltd., former Vice President of the
National Association of Forensic Economics, [and a] ten-year
member of the Board of Editors of the Journal of Forensic
Economics . . . . He has published scholarly articles and
textbooks on the subject of forensic economics and taught the
first course in forensic economics nationwide. Dr. Smith has
specialized knowledge, skill, and training in the field of
economics, and has been recognized as an economics expert in
many courts throughout the country for more than three
Streit v. Halverson, No. 17-4225-CV-WJE, 2018 WL
3763811, at *3 (W.D. Mo. Aug. 8, 2018).
Dr. Smith's Proposed Testimony
disclosed two reports by Dr. Smith. One report addresses Dr.
Smith's opinions on “(1) the reduction in value of
life (‘RVL') [of D.M.], also known as loss of
enjoyment of life; and (2) the loss of the society or
relationship sustained by D.M.'s family.” (Doc.
58-1, p. 1). Dr. Smith's second report addresses
“(1) the loss of wages and employee benefits; (2) the
loss of household/family services, including (a) the loss of
the advice, counsel, guidance, instruction and training
services sustained by D.M.'s family; (b) the loss of
accompaniment services sustained by D.M.'s family; and
(3) the present value of [D.M.'s] future life
care.” (Doc. 58-2, p. 1). In their motions, defendants
do not challenge Dr. Smith's testimony regarding
D.M.'s loss of wages and employee benefits or regarding
the cost of his future life care. (See Doc. 57; Doc.
Smith's opinion on D.M.'s RVL rests on an assumed
value of life, which he derived from a “willingness to
pay” framework. To arrive at a value of life, Dr. Smith
uses economic studies that purport to consider what society
pays to preserve the ability to lead a normal life. (Doc.
58-1, p. 3). The studies he considers are of three general
categories: (1) consumer purchases of safety devices, (2)
wage risk premiums paid to workers in occupations carrying a
higher risk of death on the job, and (3) cost-benefit
analyses conducted in connection with consideration of
various health and safety regulations. Id. at 4.
Based on his meta-analysis of various studies from those
three categories, Dr. Smith estimates the value of a
life to be $4, 700, 000 in 2017 dollars. Id. He
then assumed an “impairment rating benchmark of 95%
reduction in [D.M.'s] ability to lead a normal life,
” and assumed D.M. has a life expectancy of 77.2 years.
Id. at 4. He adjusted for inflation by estimating
real wage growth of 1.00%-based on U.S. Bureau of Labor
Statistics data-and adjusted to present value using an
estimated annual real discount rate of 1.25%-based on U.S.
Treasury investment yields. Under that methodology, Dr. Smith
estimates the RVL of D.M.'s life to be $6, 874, 871.
Id. at 2-5.
Smith defines the “loss of society or
relationship” as the loss to D.M.'s parents of the
value of the love and affection D.M. would have provided to
them but for his injury. Id. at 5. He states,
“The value of the loss of society or relationship by
family members with the injured can be based on a measure of
the value of preserving the ability to live a normal
life.” Id. Though not explaining why, Dr.
Smith chose a “benchmark loss” of 20% for each
parent and estimated the value of Moreno's loss to be $1,
137, 227 and the value of Bonno's loss to be $1, 282,
839. Id. The differences in the estimated losses of
Moreno and Bonno are not explained in Dr. Smith's report
but may be attributable to a difference in their ages and
Smith describes “household/family services” as a
type of economic damages not including “loss of love,
care, or affection, etc., but . . . the tangible services,
valued as if they were provided by a person unknown to the
household.” (Doc. 58-2, p. 4). Within the category of
loss of “household/family services, ” Dr. Smith
identifies two types of losses: (1) loss of the
“advice, counsel, guidance, instruction and training
services” (hereinafter loss of advice and counsel) that
D.M.'s parents cannot expect to receive from him because
of his injury, and (2) loss of the “household/family
[accompaniment] services” (hereinafter loss of
accompaniment services) that D.M. would have provided to his
parents but for his injury. Id. Dr. Smith describes
loss of advice and counsel as a tangible economic loss
“beyond the physical housekeeping chores.”
Id. at 12.
derive his estimate of the value of lost advice and counsel,
Dr. Smith examined mean hourly earnings of
“educational, vocational, and school counselors;
marriage and family therapists; child, family and school
social workers; social and human service assistants; clergy;
directors of religious activities and education; coaches;
elementary school teachers; and personal financial
advisors.” Id. at 5. He calculated mean hourly
earnings in those occupations to be $27.28 in 2016 dollars,
using U.S. Bureau of Labor Statistics data. Id. Dr.
Smith then adjusted the mean hourly earnings to account for
non- wage components and overhead expenses. Id.
Though not explaining why, he chose a benchmark loss to each
parent of one half hour per day of D.M.'s advice and
counsel, beginning when D.M. reaches age 25. Id. at
6. He estimates total loss of the value of D.M.'s advice
and counsel as $208, 427 to Moreno and $279, 284 to Bonno.
Id. Again, the reason for the difference between the
estimated losses for the two parents is not explained, but
may be attributable to a difference in their ages and life
Smith describes accompaniment services as the “normal
social relationships that would be expected” between
D.M. and his parents which were “completely
disrupted” by his injury. Id. He based his
estimate of the value of accompaniment services on mean
hourly earnings of orderlies, attendants, home health aides,
and personal care aides, which averaged $11.85 per hour in
2016 dollars using U.S. Bureau of Labor Statistics data.
Id. at 7. He again adjusted to account for non-wage
components and overhead expenses. Dr. Smith estimated D.M.
would have provided his parents one hour of accompaniment
services per day from ages 13 to 22 and a half hour per day
thereafter, resulting in estimated total losses to Moreno of
$148, 136 and to Bonno of $178, 901. Id. at 8.
Defense Rebuttal Testimony
disclosed an opinion of economic consultant David D. Jones,
Ph.D., in response to Dr. Smith's reports. Dr. Jones has
over forty years of experience in the field and a substantial
number of professional publications. (Doc. 65-1, pp. 19-20).
Dr. Jones' opinion is critical of Dr. Smith's hedonic
damages opinions and of his general theory, which Dr. Jones
asserts Dr. Smith introduced into litigation in Sherrod
v. Berry, 629 F.Supp. 159, 162-64 (N.D. Ill. 1985),
rev'd on other grounds, 856 F.2d 802 (7th Cir.
1988). (Doc. 65-1, p. 1).
Jones points out that Dr. Smith uses the same estimate of
value of life-$4, 700, 000-for all individuals, and so does
not account for any differences among
individuals. Id. at 3. Dr. Jones analyzes the
three categories of studies on which Dr. Smith's value of
life estimation is based and asserts none of those studies
can validly be used in the manner in which Dr. Smith employs
studies on consumer behavior and purchases of safety devices,
Dr. Jones points out a perception issue regarding consumer
decisions to purchase smoke detectors. Dr. Jones asserts
that, for Dr. Smith's methodology to be valid, consumers
would have to be willing to “spend $100 on a device
that lowers the risk of death from 30 to 28 per 10, 000 (by
.00002 from .00030 to .00028).” Id. As Dr.
Jones notes, the study of smoke detector purchases on which
Dr. Smith relies acknowledges this problem:
[T]he individual is required to react to small changes in
small probability and to distinguish between the probability
reductions of 2 x 10-6 and 4 x 10-6. This is a risk
perception/risk response problem which has not been
sufficiently addressed. Yet, it is fundamental to the entire
Id. (quoting Rachel Dardis, The Value of a Life:
New Evidence from the Marketplace, 70 Am. Econ. R. 1077,
1081 (Dec. 1980)).
wage-risk premium studies, Dr. Jones cites research showing
an increased risk of death on the job does not necessarily
lead to higher pay:
The analysis finds that there is no statistically significant
evidence that changes in occupational mortality are
associated with changes in wages and, thus, there is no
empirical basis for using the willingness-to-pay concept as a
reliable method for valuing a life or evaluating regulatory
Id. at 4 (quoting William P. Jennings & Albert
Kinderman, The Value of a Life: New Evidence of
the Relationship Between Changes in Occupational Fatalities
and Wages of Hourly Workers, 1992 to 1999, 70
J. Risk and Ins. 549, 549 (Sept. 2003)) (using Bureau of
Labor Statistics data for the period 1992-1999).
the cost-benefit studies done in connection with
consideration of government regulations, Dr. Jones points out
that many of the researchers who provided data on which Dr.
Smith relies have rejected the idea of using that data for
determining the value of life in litigation. Id. at
5-6. Dr. Jones and the researchers whom he cites assert that
governmental estimates, made in the context of regulatory
policy decisions, are “not in any way connected with
the joie de vivre [joy of living] that an individual
or family members might lose” because of an injury.
Id. at 6.
Jones also criticizes Dr. Smith's use of 95% RVL and 20%
loss of society in estimating losses of D.M. and his parents.
Id. at 7. Dr. Smith's report cites an article,
which he co-authored, stating that determination of those
percentages requires ratings and judgments of a psychologist
or mental health professional evaluating the individual
subject. See Edward P. Berla, Michael L. Brookshire,
and Stan V. Smith, Hedonic Damages and Personal Injury: A
Conceptual Approach, 3 J. Forensic Econ., No. 1, at 3
(Winter 1990). As Dr. Jones notes, “Dr. Smith has not
revealed the name of the medical professional who determined
that D.M. will lose 95% and his family 20% each of their
joie de vivre in the next seven decades.”
(Doc. 65-1, p. 7).
Dr. Smith's estimated loss of the value of D.M.'s
“household/family services, ” Dr. Jones questions
Dr. Smith's assumption that, after age 25, D.M. would
provide advice and counsel for one-half hour per day to each
parent, and accompaniment services for one-half hour per day
to each parent. Dr. Jones cites a recent government survey
showing that men, on average, spend less that five minutes
per day caring for and helping adults who are not part of
their household. Id. at 17 (citing U.S. Department
of Labor, Bureau of Labor Statistics “American Time Use
Survey-2016 Results, ” USDL-11-0880, June 27, 2017).
Jones also cites a series of surveys of members of the
National Association of Forensic Economics regarding
testimony about hedonic damages. Id. at 8-12. From
1990 to 2017, the surveys reflect a decline in the number of
forensic economists providing or willing to provide hedonic
damages testimony, from 83 out of 159 in 1993 to 6 out of 165
in 2012. Id. at 12. Dr. Jones opines that these
surveys “[do] not support [Dr. Smith's] contention
that [hedonic damages] is ‘generally
accepted.'” Id. at 13.
begins with Federal Rule of Evidence 702, which provides:
A witness who is qualified as an e xpe rt by knowledge, sk
ill, experience, training, or education may testify in the