Reply Brief — Norfolk & Western Railway Co. v. Chittum

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

NORFOLK AND WESTERN RAILWAY COMPANY,

Petitioner,

Vv.

JAMES L. CHITTUM,

Respondent.

On Petition for a Writ of Certiorari to the

Supreme Court of the Commonwealth of Virginia

REPLY BRIEF OF PETITIONER

CARTER G. PHILLIPS *

NATHAN C. SHEERS

SIDLEY & AUSTIN

1722 Eye Street, N.W.

Washington, D.C. 20006

(202) 736-8000

Counsel for Petitioner

November 19, 1996 * Counsel of Record

WILSON - Eres PRINTING Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF AUTHORITIES

CASES Page

American Dredging Co. Vv. Miller, 114 S. Ct. 981

Sista hantiatsdaaienetelistemtidalic nauandiincbisciipatanaeitinnendein 5

Begier v. IRS, 496 U.S. 53 (1990) ............2..0......... 6

CSX Transp., Inc. v. Levant, 410 S.E.2d 299 (Ga.

App. 1991), rev’d, 417 S.E.2d 320 (Ga. 1992)... 4

Culver v. Slater Boat Co. (“Culver II’), 722 F.2d

I I” cis 5

Hernandez v. M/V Rajaan, 841 F.2d 582 (5th

Cir.), other section of opinion corrected, 848

F.2d 498 (5th Cir.), cert. denied sub nom. Dia-

nella Shipping Corp. V. sqrnandes, 488 U.S.

EEE RESREE SR. SLES renee 5

Hisquierdo Vv. Hisquierdo, 489 U.S. 572 (1979)... 3,4

Hoge V. Anderson, 106 S.E.2d 121 (Va. 1958) ......... 2

Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S.

RRR AIRS TGR He Ree nae DN aD ee 2,3

Madore Vv. Ingram Tank Ships, Inc., 732 F.2d 475

RRR RES omens Neale nO 4,5

Marynik v. Burlington N., Inc., 317 N.W.2d 347

RN a 4

Molzof v. United States, 502 U.S. 301 (1992) ........ ; 6

Norfolk & W. Ry. v. Liepelt, 444 U.S. 490 (1980). 1, 2,6

Oltersdorf v. Chesapeake & Ohio R.R., 404 N.E.2d

320 (Ill. App. Ct.), appeal denied, (Ill. Sept. 29,

1980), cert. denied, 450 U.S. 920 (1981) ............. 4

Rachal v. Ingram Corp., 795 F.2d 1210 (5th Cir.

SIT daisies scidiuslibilasaiaibiddeicaniibiig’ncuteipidis Waa Saw 4

Rayonier Inc. V. United States, 352 U.S. 315

| EEE SO Ae aN ee aS al OD SA Ne era 6

STATUTES

RRR eae Re RN ie Mane Me AED 3

Federal Tort Claims Act, 28 U.S.C. § 2674

OA IIIT oun es lelihens i ccs een oeachlniac enteesinciatioetind ities 6

Fe peas GOIN, Te ON ik ncesitesnsieicisncescddteincnonamnnsnnitonwannis 5

In THE

Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-358

NORFOLK AND WESTERN RAILWAY COMPANY,

¥ Petitioner,

JAMES L. CHITTUM,

Respondent.

On Petition for a Writ of Certiorari to the

Supreme Court of the Commonweaith of Virginia

REPLY BRIEF OF PETITIONER

1. Contrary to its obvious intent, the opposition filed

by respondent, James Chittum, concretely demonstrates

why it is of such vital importance for the Court to grant

review in this case and end the state court practice of

applying state law to the recovery of damages under the

Federal Employers’ Liability Act (“FELA”). Respondent

does not contest that FELA was intended to “ ‘create uni-

formity’ . . . with respect to railroads’ financial responsi-

bility for injuries to their employees.” Norfolk & W.

Ry. v. Liepelt, 444 U.S. 490, 493 n.5 (1980) (quoting

H.R. Rep. No. 1386, 60th Cong., Ist Sess. 3 (1908)).

Moreover, respondent readily concedes that “the measure

of damages in cases brought pursuant to [FELA] are fed-

eral in character and, therefore, are governed by federal

law.” Opp. 10 (citations omitted); see Pet. 7 (“the need

for uniform national policy renders the calculation of dam-

ages pursuant to FELA a substantive issue of federal

law”) (citation omitted). Respondent, nevertheless, con-

cludes his opposition by taking the astonishing position

that it was proper for the Supreme Court of Virginia to

rely on state law to compute damages based on “gross

earnings” rather than “net or ‘take home pay.’” Opp. 26

(citing Hoge v. Anderson, 106 S.E.2d 121 (Va. 1958));

see also R. 460 (THE COURT: “The Supreme Court

of Virginia has held as a matter of Virginia law that so-

called take-home pay or net pay is no proper matter for

consideration by the jury”).

In its petition, however, petitioner demonstrated that

under federal law FELA awards are to be based on “ ‘real-

istic measures’ ” of future income calculated from “ ‘after-

tax income, rather than [from]. . . gross income.’” Pet. 8

(quoting Liepelt, 444 U.S. at 493). Respondent provides

no reason—other than demonstrably inapplicable Virginia

law—as to why the admitted 12.55% reduction in Chit-

tum’s net income for mandatory federal railroad retire-

ment taxes should not be considered at all by the jury in

calculating his future income stream. Instead, respondent

attempts to minimize the significance of the damages mis-

calculation engaged in by the court below by pointing

out—presumably without humorous intent—that this issue

“involves only Chittum and the rest of the 213,000

employees currently engaged in the freight railroad indus-

try.” Opp. 2. Thus, by respondent’s own characterization,

the issue is of national importance and warrants this

Court’s review. See also Brief of Association of American

Railroads as Amicus Curiae.

2. Petitioner has not “misinterpreted” this Court’s deci-

sion in Liepelt as respondent asserts. Opp. 11. Respond-

ent suggests that petitioner’s alleged misinterpretation is

based on the distinction between damages recoverable in a

wrongful death action and in a personal injury case. Opp.

13. However, that distinction has no bearing whatsoever

on the holdings in Liepelt (a wrongfui death case) and

Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523

(1983) (a personal injury case) with respect to how

future income streams are to be calculated. While dam-

ages in the two types of cases are “similar but not identi-

cal,” this Court has recognized that the problems in deter-

mining awards for diminution of future income streams

are “the same in both types of actions.” Jd. at 533 n.8.

Respondent’s invented distinction from Liepelt cannot

negate the fact that the jury in this case was permitted to

hear no record evidence of the significant and readily

identifiable impact of railroad retirement taxes on Chit-

tum’s future income.’

Furthermore, while respondent asserts that only “income

taxes” were at issue in Lierelt, respondent does not dis-

pute that railroad retit:meuat taxes are clearly federal taxes

on income. Pet. 9 (citing Hisquierdo v. Hisquierdo, 439

U.S. 572, 582 (1979); 26 U.S.C. § 3201). There is no

reasoned distinction between the two types of income

taxes for purposes of calculating future income streams.

More importantly, however, it is clear from Liepelt and

Pfeifer that the applicability of this Court’s decisions is

not limited to whatever may be labeled “income taxes.”

Rather, any avoided costs should be deducted from the

claimant’s future income stream. Pfeifer, 462 U.S. at 534

(“unreimbursed costs, such as transportation to work and

uniforms . . . should also be deducted in estimating the

lost stream”’).

Respondent simply provides no explanation as to how

such costs can be excluded consistent with his suggested

limitation of deductions from gross income to “income

taxes” or why Chittum is not overcompensated by recov-

1Qn the other hand—contrary to the impression created by re-

spondent, Opp. 15—the jury was presented with evidence of Chit-

tum’s likely future pay increases, R. 292A-292E, as well as his

inability to increase the retirement pension annuity he would re-

ceive after his disability annuity expired, R. 399-401. Thus, the

record insured that the jury’s estimate of Chittum’s future income

stream would be significantly inflated.

ering the 12.55% of his income that he concededly never

would have received had he been able to work. The peti-

tion does not ask the Court to expand Liepelt; it requests

the Court to stop state courts from narrowing it.’

3. Respondent does not contest the similarities between

Social Security taxes and railroad retirement taxes. See

Pet. 11-12. Instead, respondent argues that the statutory

schemes under which Social Security taxes have been ex-

cluded from future income stream calculations are “not

really analogous in the context of this or any other FELA

case involving a disabling, career-ending” injury. Opp.

21. This distinction between personal injury and wrong-

ful death cases is irrelevant in this context as demonstrated

above. Moreover, several of the cases cited by petitioner

requiring the exclusion of Social Security taxes from future

income streams involved disabled claimants. See Rachal

v. Ingram Corp., 795 F.2d 1210, 1218 (Sth Cir. 1986)

(Jones Act); Madore v. Ingram Tank Ships, Inc., 732

2CSX Transportation, Inc. v. Levant, 410 S.E.2d 299 (Ga. App.

1991), rev’d, 417 S.E.2d 320 (Ga. 1992), quoted at length by re-

spondent, Opp. 18, does not support respondent’s argument that

another state has adopted the position of the Supreme Court of

Virginia. Instead, the decision demonstrates that another state

court has ignored this Court’s direction in yet another FELA

matter. Compare CSX, 410 S.E.2d at 303 (refusing to admit evi-

dence on basis that “taxes paid by plaintiff into the railroad re-

tirement fund are to fund his future retirement and are paid

directly to him upon his retirement”) with Hisquierdo, 489 U.S.

at 575 (railroad retirement benefits “are not contractual” and

“Congress may alter, and even eliminate, them at any time’’); see

also Pet. 14 (discussing Marynik v. Burlington N., Inc., 317 N.W.2d

347 (Minn. 1982)).

Oltersdorf v. Chesapeake & Ohio R.R., 404 N.E.2d 320 (Ill. App.

Ct.), appeal denied, (Ill. Sept. 29, 1980), cert. denied, 450 U.S. 920

(1981), on the other hand, properly reversed a trial court that re-

fused to allow proof of the effect of railroad retirement taxes. Re-

spondent’s attempt to distinguish the case is disingenuous. The

evidence on “the impact of taxation” the trial court refused to

allow, id. at 464, clearly refers to the railroad’s proffer on the

effect of “Federal income taxes, state income taxes and railroad

retirement taxes,” id. at 463, on the claimant’s income.

F.2d 475, 478-79 (Sth Cir. 1984) (same); Hernandez v.

M/V Rajaan, 841 F.2d 582, 587-88 & nn.2-3 (Sth Cir.)

(LHWCA), other section of opinion corrected, 848 F.2d

498 (5th Cir.), cert. denied sub nom. Dianella Shipping

Corp. v. Hernandez, 488 U.S. 981 (1988).

The Jones Act, as demonstrated in the petition, is

clearly analogous to FELA. Pet. 12. The Jones Act ex-

plicitly states that “all statutes . . . modifying or extending

the common-law right or remedy in cases of personal in-

jury to railway employees shall apply.” 46 U.S.C. App.

§ 688(a); see also American Dredging Co. v. Miller, 114

S. Ct. 981, 989-90 (1994). Perhaps this is why respondent

ignores it completely. Nevertheless, on the basis of the

Jones Act analogy alone, it is clear that Social Security

and similar taxes should be excluded from calculations of

future income streams under federal remedial schemes,

such as FELA.

Respondent’s tortured history of the Culver case, Opp.

23-24, does nothing to reduce the relevance of this issue

under the LHWCA. Respondent’s claim that no other

court of appeals decision applies Madore beyond the date

of Culver v. Slater Boat Co. (“Culver II”), 722 F.2d 114

(Sth Cir. 1983), Opp. 24, is belied by Hernandez, 841

F.2d at 587-88 & nn.2-3, a decision cited by petitioner

and expressly based on Culver II, which respondent wholly

ignores.*

Without question, this case provides an effective vehicle

by which the Court can ensure uniformity in the treatment

of retirement taxes in measuring damages under several

related federal remedial schemes that follow the FELA

model. Accordingly, review by this Court of the dam-

3 While respondent asserts that the LHWCA is not analogous to

FELA, Opp. 21-22, respondent concedes the point of petitioner’s ar-

gument with respect to the statute, i.e., that “the treatment of reduc-

ing future economic loss to present value [in LHWCA cases] has

been generally applied to FELA cases.” Opp. 17 n.2 (citation

omitted).

ages issue presented by petitioner, which arises in virtually

every case involving federally mandated compensation

under these myriad schemes, is particularly appropriate

here. See Begier v. IRS, 496 U.S. 53, 57 n.2 (1990).

In fact, beyond these cases ultimately resolved in various

state courts, this damage calculation will affect virtually

every settlement negotiation under these statutes and, if

the issue of the effect of retirement taxation is left unclear,

could discourage many parties from reaching settlement.

4. Finally, respondent chides petitioner for not refer-

ring the Court to the Federal Tort Claims Act, 28 U.S.C.

§ 2674 (“FTCA”), the one statutory scheme respondent

asserts is analogous to FELA. Opp. 25. The FTCA, how-

ever, was not cited simply because it is not analogous.

The FTCA is simply the waiver of sovereign immunity by

the United States for certain existing causes of action. See,

e.g., Rayonier Inc. v. United States, 352 U.S. 315, 319

(1957) (“the test established by the Tort Claims Act for

determining the United States’ liability is whether a pri-

vate person would be responsible for similar negligence

under the laws of the State where the acts occurred”). It

does not create a separate statutory cause of action. As a |

consequence, unlike FELA actions where—as respondent |

concedes, Opp. 10—federal law governs the issue of dam- |

ages, state law controls that issue in FTCA cases. See, e.g.,

Molzof v. United States, 502 U.S. 301, 305 (1992) (“the

extent of the United States’ liability under the FTCA is

generally determined by reference to state law”).

Respondent’s reliance on the FTCA is telling. Respond-

ent seeks to evade the application of uniform national law

on the issue of damages under FELA and to overrecover

for his injuries under Virginia law. This is precisely the

type of variable financial responsibility and burden-shifting

that FELA is supposed to curtail by establishing federal

liability standards for railroads that are applicable in

whichever state a claimant chooses to bring his or her ac-

tion. Liepelt, 444 U.S. at 493 n.5 (quoting H.R. Rep.

m |

No. 1386, 60th Cong., Ist Sess. 3 (1908)). The decision

of the Virginia Supreme Court mandating the exclusion

of evidence demonstrating that respondent’s future income

stream would have been reduced by the payment of com-

pulsory railroad retirement taxes on income detrimentally

biases the remedial effect of FELA and, by respondent’s

own reckoning, has the potential to affect hundreds of

thousands of other claims involving FELA, as well as other

analogous federal statutory schemes that respondent fails

to distinguish. As a result, this case presents a significant

and recurring question of federal law warranting this

Court’s review.

CONCLUSION

For the foregoing reasons, and for the reasons set forth

in the petition, the petition for a writ of certiorari should

be granted.

Respectfully submitted,

CARTER G. PHILLIPs *