Reply Brief — Norfolk & Western R. Co. v. Liepelt

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In THE MICHAEL ROBAK, JR..CLERK

. Supreme Court of the United States

Octoser TERM, 1978

No. 78-1323

Norfolk and Western Railway Company,

a Corporation,

Petitioner,

vs.

Kandythe J. Liepelt, Administratrix

of the Estate of Delroy Liepelt, Deceased,

Respondent.

On Petition for a Writ of Certiorari to the

Appellate Court of Illinois,

First District, First Division

REPLY BRIEF

Howarpb J. TRIENENS

SipLEY & AUSTIN

Suite 4860

One First National Plaza

Chicago, Illinois 60603

(312) 329-5400

Rosert L. LANDEss

Tosin M. RICHTER

Ross, Harpies, O’KEEFE,

Bascock & Parsons

One IBM Plaza, Suite 3100

Chicago, Illinois 60611

(312) 467-9300

Attorneys for the Petitioner

March, 1979

TABLE OF CONTENTS

Pee eC TURIN oc ek cb pk ald eae a vincwa

STI PED eh BY UE Eee ol Oe ee

I. Petitioner Has Properly Preserved Its Objection

to the Gross Earnings Rule and This Case Square-

ly Presents that Question and All Its Variations. .

Il. The Questions are Substantial .................

TABLE OF CITATIONS

Cases

Austin Liquor Mart, Inc. v. Dept. of Revenue, 18 Ill.

App. 3d 894, 310 N.E. 2d 719 (1974) .............

Burlington Northern, Inc. v. Boxberger, 529 F.2d 284

COR Se DOES) Na PUN a Haw RE Cer ane eee

Chesapeake & Ohio R. Co. v. Kelly, 241 U.S. 485 (1916) .

Hession v. Liberty Asphalt Products, Inc., 93 Ill. App. 2d

es ee I OT AMOR 156% ws ccsgle's diab atahe aa

Huddell v. Levin, 395 F. Supp. 64 (D.C.N_ J. 1975) ....

Jenkins v. Georgia, 418 U.S. 153 (1974) ..............

{

Norfolk & Western Ry., Co. v. Holbrook, 235 U.S. 625

RRA marae een x aaa ike tN ei etre ake Bua ise ele

Raley v. Ohio, 360 U.S. 423 (1959)... eee,

Rediker v. Chicago, Rock Island & Pacific R. Co., 1 Kan.

App. 2d 581, 571 P. 2d 70 (1977) cert granted 435

U.S. 922 (1978) (dismissed under Rule 60) ........

MISCELLANEOUS

R. Stern & E. Gressman, Supreme Court Practice (5th

CREPES 3G CPR EVEN A aa aW as 6a ERM EES BRIO

Page

on

In THE

Supreme Court of the United States

Ocroper TERM, 1978

No. 78-1323

Norfolk and Western Railway Company,

a Corporation,

Petitioner,

US.

Kandythe J. Liepelt, Administratrix

of the Estate of Delroy Liepelt, Deceased,

Respondent.

On Fetition for a Writ of Certiorari to the

Appellate Court of Illinois,

First District, First Division

REPLY BRIEF

Introduction

The most noteworthy aspect of respondent’s Brief in Op-

position (Opposition) is that it does not seriously challenge

any of the grounds petitioner has advanced in support of its

application for certiorari.

First, and most significantly, the Opposition does not deny

that there is, in cases brought under the FELA, a conflict

among the state courts and among the federal courts both on

the question whether income taxes should be deducted in com-

puting a decedent’s lost earnings and also on the question

whether « court may refuse to advise a jury that a claimant’s

award will not be taxed. And apart from making the wholly

2

‘

unrealistic claim that these federal questions are “insubstan-

tial’, respondent does not present any reasons why this

Court should not resolve these conflicts. Indeed, by failing to

deny either that the questions presented have enormous

practical importance in large numbers of lawsuits filed each

year or that most major suits will, until this Court acts, be

filed and tried in those jurisdictions which follow the Illinois

rules, see Petition for Certiorari at 17-18, the Opposition un-

derscores that an authoritative national decision is urgently

needed.

Second, the Opposition. does not dispute that the Illinois

courts’ rulings required the jury to award respondent money

that decedent would have paid out in taxes and encouraged

it to inflate the verdict to compensate for an imagined tax

and that, therefore, the decision below is not in accord with

the well established rule that damages in a FELA action is

to be the amount the claimant could reasonably have expect-

ed to have been applied to his benefit if the accident had not

occurred. See Chesapeake & Ohio R. Co. v. Kelly, 241 U.S. 485

(1916); Norfolk & Western Ry. Co. v. Holbrook, 235 U.S. 625, 629

(1915). Although the Opposition apparently is arguing that

the damages rulings of the Illinois courts are correct, none of

its specific arguments even address the standard for FELA

damages prescribed in Kelly and Holbrook.’ ) |

For example, respondent’s primary defense of the gross

earnings test is that a deduction for the taxes the decedent

would have paid somehow bestows a benefit on the wrongdo-

ing defendant that Congress intended to confer upon the

plaintiff. Opposition at 7-8. This argument simply ignores

that the measure of damages under the FELA is the amount

required to place a plaintiff in the same position he would

‘Curiously, the case respondent relies upon, Huddell v. Levin, 395

F. Supp. 64 (D.C.N.J. 1975), involved state tort law, not the

FELA.

3

have occupied had the accident never occurred. The cost to

the defendant of providing the compensation necessarily is

irrelevant, and the suggestion that a net earnings test could

confer a benefit on a defendant is simply untenable.

Respondent’s other arguments jn defense of the rulings

below were addressed in the Petition for Certiorari.

Although respondent’s Opposition does not challenge the

reasons petitioner advanced in support of granting certiorari,

the Opposition makes two arguments which, if tenable,

would affect this Court’s decision. Neither, however, is re-

motely tenable.

I. Petitioner Has Properly Preserved Its Objec-

tion to the Gross Earnings Rule and This Case

Squarely Presents that Question and All Its Var-

iations.

Petitioner makes two interrelated arguments to the effect

that petitioner’s claim that the gross earnings test violates

. the FELA is somehow not before the Court.

First, it is contended that petitioner did not preserve its

right to appellate review of this claim because it failed to

show at trial, by way of a proper offer of proof, that the ap-

plication of a net earnings rule would have resulted in a sig-

nificant reduction in the size of the verdict. Although this

contention is based on a misrepresentation of the trial

record, the short answer to respondent is that the Illinois Ap-

pellate Court disposed of this federal question on the merits.

See A22-23. This Court has repeatedly held that “there can

be no question of the proper presentation of a federal claim

when the highest state court [has] passe[d] on it.” Raley v.

Ohio, 360 U.S. 423, 436 (1959); accord Jenkins v. Georgia, 418

U.S. 153, 157 (1974); see generally R. Stern & E. Gressman,

Supreme Court Practice 43.28, at 222-24 (5th Ed. 1978).

4

But even if the Court were to deviate from established

principles and inquire into whether the point was preserved,

respondent’s argument would have to be rejected. The claim

proceeds from the premise that there is no evidence in the

record concerning the effect taxation would have had on peti-

tioner’s future earnings because the trial judge, in respon-

dent’s view, “rejected the offer of proof” concerning the tes-

timony of Robert Barnes on the ground the offer lacked

specificity. Opposition at 6-7 (emphasis supplied). This

premise is simply false. The record unequivocably shows

that, while the trial court kept from the jury Dr. Barnes’ tes-

timony on the authority of his earlier rulings concerning the

treatment of income taxation, the trial judge accepted the

offer of proof, see A35-36, regarding it as entirely adequate to

preserve petitioner's claim.’ In any case, respondent having

made the same argument in the lower court, see Brief for

Plaintiff—Appellee at 60, and the Illinois Appellate Court

having nevertheless reached the merits, it is clear that it too

regarded the offer of proof as fully adequate, and that re-

spondent’s assertion that the decision below rests on an in-

dependent adequate state procedural ground is frivolous.

Second, in a related vein, respondent maintains that peti-

tioner may not rely upon those cases that require a deduc-

tion for income taxes only when taxation would have signif-

icantly reduced the amount of the wage earner’s disposable

income, see Burlington Northern, Inc. v. Boxberger, 529 F. 2d

284, 290 (9th Cir. 1975) (discussing cases), because her de-

cedent would not have paid: out a substantial amount of

his income in taxes. Opposition at 4. This argument both

*The cases respondent cites—Austin Liquor Mart, Inc. v. Dept. of

Revenue, 18 Ill. App. 3d 894, 906, 310 N.E. 2d 719 (1974); Hession v.

Liberty Asphalt Products, Inc., 93 Ill. App. 2d 65, 71, 235 N.E. 2d 17

(1968)—are both cases in which the moving party had failed to at-

tempt to make an offer of proof, so both are clearly inapposite.

5

ignores the record—which showed that respondent’s decedent

would have paid out $57,000 in taxes and that consideration

of the effect of taxation would have reduced respondent’s es-

timated pecuniary loss from $302,000 to some $115,000, see

A35—and further misstates the law of those jurisdictions

that follow this variation on a net earnings approach. These

courts hold that inquiry into the effect of taxation is required

whenever the projected annual earnings exceed $15,000 (and

possibly whenever they exceed $11,500). See Burlington

Northern, Inc. v. Boxberger, supra, at 290 (summarizing cases).

Because Liepelt’s projected (i.e. post-trial) earnings ranged

from $16,800 to $36,000, the ruling below plainly would have

been held erroneous by these net earnings jurisdictions.’

II. The Questions are Substantial ¥

Although respondent repeatedly refers to petitioner’s

federal claims as being “insubstantial”, such a characteriza-

tion is preposterous. The federal questions petitioner has pre-

sented are neither devoid of merit nor plainly foreclosed by

prior decisions of this Court. See R. Stern & E. Gressman,

supra, 93.25, at 208. On the contrary, as numerous federal

courts and several state courts have concluded, established

federal principles of damages compel the adoption of peti-

tioner’s claims.

To the extent respondent is contending that there is no

federal interest in the correct resolution of these questions,

that argument is conclusively refuted by this Court’s own ac-

tions. The single overriding issue in this case is whether the

Illinois courts’ ruling either requiyed—by excluding all

‘The Illinois Appellate Court, moreover, plainly recognized as

much. If it had agreed with respondent’s argument—which was

made below, See Brief of Plaintiff—Appellee at 59-60—surely it

would have decided the case on a narrow ground rather than align-

ing itself with the gross earnings jurisdictions.

6 7

evidence of the taxes decedent would have paid—or imper- CONCLUSION

missibly encouraged—by refusing to instruct the jury that ad!

awards are tax free—a verdict which overcompensated re- For the foregoing reasons and for the reasons stated in the

spondent in violation of the established principle that FELA Petition, certiorari should be granted.

damages shoula be the amount the claimant lost as a result

of the accident—and no more. See Norfolk & Western Ry. Co. Respectfully submitted,

v. Holbrook, supra. This Court has, in the past, required

states to follow practices that will ensure that no such over- Howarpb J. TRIENENS

compensation occurs, see Chesapeake & Ohio R. Co. v. Kelly, su- Siptey & Austin

pra, and these cases dispose of respondent’s assertion that Suite 4800

the “content” of FELA jury instructions are “matters of One First National Plaza

procedure” which may be governed by the Forum’s law with- / Chicago, Illinois 60603

out threatening any federal interest. Opposition at 2, 7. (312) 329-5400

The grant of certiorari in Rediker v. Chicago, Rock Island & Rosert L. LANDEss

Pacifie R. Co., 1 Kan. App. 2d 581, 571 P. 2d 70 (1977), cert Tosin M. Ricuter

granted, 435 U.S. 922 (No. 77-1000), is a recent illustration of Ross, Harpies, O'KEEFE,

the point. Respondent’s implication to the contrary notwith- Bascock & Parsons

standing, Rediker involved the identical statutory issues peti- One IBM Plaza

tioner has submitted, this Court haying there not limited its Chicago, Illinois 60611

grant to a related constitutional issue which was referred to (312) 457-9300

in that petition.‘

rs eet March, 1979

‘Contrary to respondent’s assertion, petitioner is not claiming

that Rediker “controls the Court’s consideration of the instant peti-

tion.”’ Opposition at 3. Rediker does show, however, the questions

presented here were regarded by this Court as worthy of plenary

consideration last term, and for the reasons set forth in the Peti-

tion in this case, these same questions are as much or more worthy

of certiorari today.