Archived Webinars

All archived webinars are merely for educational and viewing purposes ONLY. NO CLE CREDIT will be given for watching the archived webinar.

Valuing Damages in Labor and Employment Cases: Discrimination | Fair Pay Act | Wrongful Termination | Class Action

TASA ID: 10362

On May 6, 2021, at 3:00 p.m. (ET), The TASA Group, in conjunction with forensic economist Nora Ostrofe, presented a one-hour, interactive webinar presentation, Valuing Damages in Labor and Employment Cases: Discrimination | Fair Pay Act | Wrongful Termination | Class Action, for all legal professionals.

During this presentation, Nora Ostrofe discussed:

• The fundamentals of how economists calculate damage claims in discrimination, Fair Pay Act, wrongful termination, and class action (including wage and hour) cases.

• State and Federal Equal Pay Act, and Title VII discrimination cases often require detailed calculations of compensation with, and without, discrimination.

• Wrongful termination wage loss claims, or calculations of back pay and front pay, can be quite challenging.

• Class action cases frequently require management and analysis of voluminous and frequently disorderly data sets.

• Perspectives that experts can take that influence value.

• Useful practice pointers, such as: minimizing economic expert fees; obtaining economic data through discovery from recalcitrant opposing counsel; and how to depose and cross examine economic experts.


About the presenter:

Nora Ostrofe has served as a forensic economist for the past 22 years. She has a Bachelor’s Degree in Economics from UCLA, an MBA from St. Mary’s College, and a Certificate in Accounting with Distinction from U.C. Berkeley.

Note: This webinar is approved for CLE credit in NJ, IL, PA , and CA.

Disclaimer: Please remember that if you are applying for CLE credit you must attend for the full 60 minutes of the LIVE presentation, not the ONDemand version. If a participant is seeking credit in states we are not approved to issue credit and the participating party seeking credit incurs a fee to receive said credit, it is not the obligation of TASA to remit payment for such credit. It is the participant's obligation to remit payment to the state in which they would like to receive credit


Najah: Good afternoon, and welcome to today's presentation, "Valuing Damages in Labor and Employment Cases: Discrimination, Fair Pay Act, Wrongful Termination, Class Action." The information presented by the expert is not to be used as legal advice and does not indicate a working relationship with the expert. All materials obtained from this presentation are merely for educational purposes and should not be used in a court of law, sans the expert's consent, i.e., a business relationship where she or he is hired for your particular case.

In today's webinar, Nora Ostrofe will discuss the fundamentals of how economists calculate damage claims and discrimination, Fair Pay Act, wrongful termination, and class action cases, State and Federal Equal Pay Act, wrongful termination, waives loss claims, class action cases frequently require management and analysis of voluminous and frequently disorderly data sets, perspectives that experts can take that influence value and useful practice pointers.

To give you a little background about our presenter, Nora Ostrofe has served as a forensic economist for the past 22 years. She has a bachelor's degree in economics from UCLA, an MBA from St. Mary's College, and a certificate in accounting with distinction from UC Berkeley. Attendees who require passcode, the passcode for today is LABOR. During the Q&A session, we ask that you enter this passcode into the Q&A widget for CLE reporting purposes. The Q&A is located to the left of your screen. Please, remember that if you are applying for CLE credit, you must log onto your computer, as yourself, and stay for the full 60 minutes. You are also required to complete the survey at the end of the program. Please note that CLE credit cannot be given to those watching together on a single computer. Tomorrow morning, I will send out an email with a link to the archive recording of the webinar. The slides can be downloaded from the resource list at the widget at the bottom of your screen. Thank you all for attending today. And Nora, the presentation is now turned over to you.

Nora: Okay, thank you. Okay, Najah, are you looking at a slide that says, "Valuing Damages in Labor and Employment Litigation"?

Najah: I am not. Now, I am.

Nora: Okay. Okay, great. I need to go... Okay. All right. So, today I'm gonna talk about valuing damages in labor and employment litigation in the previous slide. Okay. I was thrilled when President Trump didn't win the 2020 election, not because of political reasons, but because back in the day before he became president, he was always my poster child for my webinars on labor and employment. And now I have him back. So, there he is. And today, we're gonna talk about damages in discrimination, Fair Pay Act, wrongful termination, and class action cases.

So, I'm sorry, I'm just trying to get to my slides. All right. Generally, when we're doing damages in discrimination or Fair Pay or Equal Pay Act, we're dealing with a plaintiff who has somehow lost... I'm sorry, Najah, I'm having difficulty with the slides. The slides seem when I do push the audience and I'm not getting back to... I should be on a slide that's called, "Using Comparators" right now. But when I push the audience, I get the next slide.

Najah: That's what's on my slide now, using comparators.

Nora: Okay. So, the slide that says, live. Okay, so it should be on slide 12.

Najah: Yeah.

Nora: But I'm on slide 13. Okay. All right. So, I'm on slide 12 or 13?

Najah: You're on 12, the one that says [inaudible 00:05:03]

Nora: I'm not seeing 12 in my preview.

Najah: You're not seeing 12, like, in your live view, you mean you're not seeing that?

Nora: Right.

Najah: You're seeing 13?

Nora: Correct. Now, I'm seeing 13, but I have live on 12.

Najah: Twelve is live. I think you're just selecting 13, but, you know, like, covered over it type of situation. But what's pushed to the audience is 12. So, we're all seeing 12. We all should be seeing 12. I see 12, yeah.

Nora: All right. So, it says, "Choosing Comparators"?

Najah: Yes.

Nora: And then it says, "Comparators may be selected"?

Najah: No.

Nora: Okay. That's the problem. I'm not getting to the preview that I need. Okay. So, it says [crosstalk 00:06:01]

Najah: Now, it's back to using comparators. Now it's back to using comparators.

Nora: Okay.

Najah: It just jumped.

Nora: Okay. All right. Okay.

Najah: Which one do you wanna be on? Do you wanna be on 12, or do you...

Nora: I wanna be on 12.

Najah: Using comparators?

Nora: It says using comparators, yes.

Najah: Yes. So, we see 12 as well. I got a confirmation.

Nora: Okay. And the first line says, "Generally damages"?

Najah: Yes.

Nora: Okay. All right. Sorry about that. Okay. But we need to literally be on the same page. Okay. So, generally, what I'm going to be asked to do is reconstruct the plaintiff's career, absent discrimination, okay? And this may entail going back even to the date of hire of the plaintiff and looking at their offer letter and asking absent discrimination, what would the plaintiff have been paid at higher? And then reconstructing their entire career, you know, sometimes for some plaintiffs, we've got 10 years of back pay to look at, what raises, bonuses, cash, equity, compensation, would they have received? What positions would they have been promoted to? How long would they have remained at the company? And so ask to ask those questions, usually what we will do is we will find somebody who's a comparator at the company, somebody who was an employee in the same position that was presumed not to have suffered discrimination. Now, something to remember about your economist is that comparators may be selected by the attorney. They can't be selected by the economist, okay? I don't have the expertise to do that, okay? I'm still having the same problem. Are we on slide 13?

Najah: Yes, we're on 13.

Nora: Okay. Okay. All right. Okay. So, I cannot myself pick the comparator, but it's something that the attorney can do if they wanna pick the comparator or another expert who may be an HR expert or somebody who would have been an employee comparable to the plaintiff but for discrimination. Sometimes what I'll be asked to do is we'll take a group of comparators, and I may take the average of what those comparators earned. Or the attorney may pick a specific employee, they may pick the highest compensated similarly situated employee, the lowest compensated similarly situated employee. What you need to remember is that who the comparator is, is not going to be part of the expert opinion of the economist. We are going to calculate the damages only, but we're not going to opine on who is an appropriate comparative for the plaintiff.

Another thing is, in discovery, it may be very difficult to obtain data on the comparators because they are other employees, and very often employers will [inaudible 00:09:31] you know, because of privacy considerations and so forth. This often happens in the early stages of the case. So, very often, if you want to say, produce a report for a mediation or settlement conference, and you don't have data on the competitors at that stage, you may wanna ask your economist to go out and do some research and try to find out what comparable compensation was and do a preliminary estimate of what that compensation would be. Okay.

One thing to remember about Equal Pay Act cases is that they do require quite a bit of precision on the part of the economist in that, the only thing that we're looking at is, you know, the wage differential, what they could have been paid. And it can be meticulous, time-consuming, and expensive.

The other thing is that the damages in these cases aren't typically particularly high, the way they could be in a wrongful termination case, because we're only looking at the difference in pay between two people in about the same jobs. You know, there may be a salary differential and there may be some kinds of benefit differential. But unless we're looking at a long period of back pay or front pay, and probably not front pay because the problem would be presumed to have been fixed, we're not looking at really high damages. So, certainly, getting the payroll records for the plaintiff is essential and understanding them. And at some point in the case, the payroll records for the comparators. If the type of compensation is complicated, for instance, you know, if these people were commissioned or it was based on performance or something like that, you may also want to ensure that you've got the opportunity to go back and request additional data if you need it, or possibly depose a person most knowledgeable in HR or in compensation to answer questions that your expert may have about the kind of pay that they received.

Okay. This is an example of a case where I used one comparator, and this was a case where if you look at the plaintiff's and predecessor's pay, there wasn't a big salary differential. This was a case of, the plaintiff, in this case, was a female comptroller who had been hired at a startup, and her predecessor was male and had been paid more than her. But the big element of damages was not salary. She was hired in at $215,000. Her predecessor was hired in at $240, and she received a bonus that was about $5,000 less than him. But he had received a significant stock grant at higher, and then he had also received equity that would vest far faster. You know, if the company was gonna be sold, he had the opportunity to invest in all his stock immediately and realize the gains from the equity. So that was a big portion of the case, and that's what made the case particularly valuable. But then we had to look closely at the equity, and so forth. So, again, you know, getting the records and understanding the differences in equity was important in that case.

Okay. Sometimes... Okay. As I said before, you may not be able to get data on a comparator and so your economist is gonna have to do some research. I had a case involving someone who was going to be working as a private banker for a fairly large bank in Manhattan. And the defendant simply wouldn't produce any comparator records. And they were going into a settlement conference. Fortunately, because it was New York and there were sort of a lot of these jobs around, I was able to go onto Glassdoor, and LinkedIn, and PayScale and get comparator pay that. And fortunately, all these sources were sort of hovering around the 80k mark, and so I was able to go ahead and use that. But, of course, should the case progress, at some point, we're gonna have to get the actual data on what people were earning in a particular branch, where he worked, and what he might have been expected to be paid.

Okay. Okay. I had another case, which was kind of interesting, where the attorney asked me to assume that... We had multiple comparators. This was a case involving an African-American female who was hired in at a lower salary than anyone else who was similarly situated. And the other comparators in the case were a white male, a black male, actually half African-American, half Caucasian, who was described as presenting as white, and then an Indian woman from India, not a Native American woman. And the Indian woman was the highest-paid comparator. And the plaintiff attorney asked me to assume that the plaintiff would've been paid as much as the highest comparator. I don't know how that strategy ultimately would've been played out, but she did successfully settle the case and the damages were significantly more than if we had taken an average of all the comparators or the lowest comparator. So, it's something and another approach you may want to think about.

When you are calculating damages, generally, in a fair pay case, people are generally focused on the salary differentials. But one thing that you wanna remember is that there are other benefits, or there may be other elements of compensation that also tied a salary that are gonna amplify the damages when you include them. So, in one case that I had certainly... There was a 401k, that was 4.5% of salary. So, I put that in there as well. And then there's always the employer contribution to Social Security, which is a percentage of salary, which is 6.2% up to a maximum of $140,000. So, you want to look at any other benefits that the employee would've received that would've tagged a salary, and make sure you include that. Prejudgment interest is also something that you want to include. And also if you have liquidated damages because liquidated damages can include prejudgment interest as well. And so with all those enhancements, you can sometimes, you know, turn what is a small delta into a larger delta if you really do your homework on all the elements of compensation and make sure that you include everything.

Okay. And then, as I said before, economic damages in a Fair Pay Act or discrimination tend to be low. They're not like a termination case where somebody may have been unemployed for a while and you have full salary as damages, you're looking at the difference in compensation between two people who essentially held the same job. So again, that's something to consider. If you have a wrongful termination claim, the damage following the charge of discrimination, and then they terminate the employee, then you may have more substantial back pay and front pay. In this particular case, I was asked to... The plaintiff was terminated, so I was asked to, not only value her back pay at her own salary level but also at what she would've received at the comparator's level, which also enhanced damages as well. And then she had front pay.

I'm gonna move on to damages in wrongful termination cases. Wrongful termination cases are usually the kind of employment case that I am most frequently asked to calculate damages on. And in wrongful termination cases, usually, the things that are going to determine damages are a couple of factors. The most prevalent one is determining the period of loss, okay? And so the possibilities for the period of loss, by length of duration in a wrongful termination case is, can you take the plaintiff all the way out to the date of expected retirement? And this is usually, if you have employees who are sort of career workers, maybe in their mid-40s or 50s, and they've been with the company in a long time, that's usually a credible thing to do, especially if they've progressed to a higher position in a company. And it's going to be difficult for them to acquire another position of similar importance or compensation, you can usually credibly take them out to retirement. If you have an employee who's maybe in their 30s or 20s, that's a far harder argument to make. And then I'm looking at other statistics in terms of how long they would've been there.

To work life expectancy, which is another measure. That's not the number of years to retirement, but the number of years they statistically have to remain in the labor force. And that's usually a shorter measurement. One thing I like to look at is tenure statistics, which are available from the Bureau of Labor Statistics, which gives some support to how long the employee would've remained with the terminating employer. Some attorneys like to just use hypotheticals, you know, we'll take out the laws for 5, 10, 15 years. We can do that. But that's usually an assumption. It's not based on any actual worker experience. So, usually, if the attorney wants to give some hypotheticals, I try to find some basis for why the plaintiff would've remained, you know, the estimated number of years. And then it could be to the date of expected mitigation in alternate comparable employment. And generally, you will see this defense economist, you know, will take them out, at least six months before they're expected to fully mitigate. So, that's another very common figure.

Okay. Okay. Date of expected retirement is a common benchmark to be used. And you can use several different figures. One of the figures that I use is full Social Security retirement age, which is 67, and that's usually going to be longer than work-life expectancy. Most people who collect Social Security, however, and you should remember this, don't collect it at age 67, they collected it at age 62. But then I'll look at work-life expectancy. And if the work-life expectancy says that the worker was expected, at least to work beyond age 62, then the next most probable age at which they would retire would be full Social Security retirement age when they have another source of income.

If the employee has a pension plan, very often you can look at actuarial data for the pension plan and determine what the most probable date of retirement would be. If you have workers who are, for instance, firefighters, or corrections officers, or police or highway patrol, you're usually not gonna be taking them out to 67 because those jobs have incentives. For instance, in California, we have state safety workers. They have a pension plan that's 2% at 50, so they want people to retire in their early 50s. And the demographic data, you know, so actuarial data suggests that most of them do. That's not always true. That's usually for someone who went into the job in their 20s and has been there for, you know, a full 20 or 25 years. If you had somebody who got into a job like that, maybe at age 35 or 40, they may not have attained full pension benefits and may be expected to stay longer. Some jobs have mandatory retirement ages, but very few, you know, pilots, air traffic controllers, may have to retire at a certain point. FBI officers have to retire at an age 55. And so if that's the case, you're gonna have a hard time arguing that they could go past a mandatory retirement age.

Every now and then I get a call on a worker who's sort of past the typical age of retirement. They may be, you know, 68 or 70, and somebody wants to know, you know, is it worth making a claim because the other side says, they just would've retired anyway. But if somebody is working and terminated, they usually, no matter how old they are, statistically have, at least a couple of years left. And some workers, who were past the age of retirement and still going strong, I may take them out to how long they were physically able to work if they had expressed an intent to work as long as they were able. And then other than Supreme Court justices, I can think of very few jobs like this, but some people do remain in the job until they die.

Okay. Work-life expectancy is a statistical measure. And it's harder to argue with than saying somebody was gonna retire at a particular age. It's a measure of how many more years the person has to be active in the labor force. And for people with, and it's generally based on gender and education, so that the less education that you have, usually because people with less education have less of an adherence to the labor force, or they may be in physical jobs where they're not expected to work into their 60s or 70s. So, I'll always do a measurement in work-life expectancy. And usually, as I said, the longer the worker works, the longer his or her work life expectancy. But if you have somebody, say, maybe with a high school education and they're in their 50s, a work-life expectancy may take them out to 62 or 63. And if they have a college education or an advanced degree, we may be looking at 65, 66, 67, 68, and so forth. But it's a statistical average. So, for instance, if you have a plaintiff and, you know, maybe they have kids in college and they're already in their early 60s, but still expected to work beyond their work-life expectancy, if the individual considerations that would suggest that they're not the average worker, then certainly you can make those arguments.

Okay. Tenure with an employer is also something that I look at. And certain generalities of tenure is that tenure will increase with age. So, approximately 55% of workers with age 55 or more have 10 or more years of tenure with their employer, whereas only about 12% of those in their 30s have 10 more years of tenure, simply because they're younger. But also younger workers tend to job hop and move around and so forth. So, usually, if you're looking at a younger worker, it's going to be a very tough argument to take them out to retirement with one employer. Although you can, in some positions, it can be credible. But with older workers, that's usually a relatively easier argument. Something to remember. During COVID, during times of uncertainty and high unemployment statistics about tenure generally increase, not decrease because people are more reluctant to move from a job when there aren't a lot of jobs around. So, the 2020 tenure statistics. And the BLS does these measurements of tenure every two years. I would expect that tenure would increase during that period because not a lot of people if they had a job, would have moved from it.

Okay. It's lower for service sector jobs, for instance, restaurant workers, and so forth, tend to have tenure within two or three years. But again, remember that age is the greatest predictor of tenure. So, I once had an employment case with a number of waiters, but they were all in their 50s, and they had been with the same restaurant for 25 years. So, even though the tenure data was showing that they would only be expected to remain a short time, in their situation, you know, the age tenure marker was more important than tenure for workers and occupations. And it's higher for government and public sector workers. And tenure data is organized by gender, by age, by occupation, by industry, and by levels of education. So, I'll show all of those statistics, and sometimes there's quite a range. But I'll generally go with age, the tenure that corresponds with the employee's age and gender before I pick a different statistic just because of the strength of the relationship between age and tenure.

Okay. And then, as I said, measures of tenure tend to be according to age, occupation, industry. Tenure data can be available by the employer. Some people in tech that issue stock options have data on attrition. So, that's something that can be looked at, or unions with pensions will have data on how long the average worker stays. Okay. And that's gonna be, again, the expected tenure for the plaintiff, you can ask the plaintiff, you know, how long did you expect to stay here? And some plaintiffs will say, you know," I only expected to stay four years or more." So, it's always a question that you wanna ask, how long did the plaintiff intend to remain with the worker if they had been allowed to stay?

Okay. Another topic that I don't think is looked at as hard as maybe it could be, is that there's a legal requirement to look at, whether or not if the plaintiff has not yet secured post-termination employment, or if they have, whether or not the position is comparable to the job that they help. And usually, what I see is that if the employee has secured almost any position, whether it's comparable or not, I'm asked to go ahead and offset those earnings. But plaintiffs are not required to accept just any job, it's supposed to be a comparable job. So, sometimes I will do two sets of damages analysis. One, I will offset the job that they have, whether it's comparable or not, but I will also just do the straight loss without offsetting post-termination earnings if the job doesn't look like it's comparable and then, you know, the finder of fact can make that determination.

Okay. I'm gonna go on to valuing damages and class action cases. And we have before us, the women's U.S. soccer team, who were not as successful as they had had to be in their class action case against the U.S. soccer team. And that was a case that, from a damages standpoint, was really interesting to me, because although they got a lot of press, when I looked at the complaint and looked at some of the details of their pay, I thought it was going to be a difficult argument for them to make, largely because they were comparing themselves to the men's soccer team. But both the men's and the women's soccer teams had negotiated their contracts. And the contracts that the women had negotiated was sort of interesting, it had much less risk in it. Everybody was sort of paid a salary and got benefits, whether they played or not. Whereas in the men's contract, they got sort of, it was, you were paid to play. But if you didn't play, you know, it was a far less egalitarian contract. So, they were making the argument that they should have been paid comparably to the men, but they had also negotiated pay that was different for the men. And for these reasons, a number of their claims were thrown out, which I actually wasn't sort of surprised by.

So, that's another thing that kind of leads me into this topic, is that when you are looking to certify a class and you're looking at your claims, you have to think very carefully about how you're going to approach the damages because it's really important to get it right at the outset. Okay? And so economists are often asked to write a declaration in support of, or against trying to defeat class certification. And if the economist is retained by the plaintiff and is trying to make an argument to achieve class certification, there's certain things that they wanna do. And the first thing that you wanna do is establish that class action is the best way to value these damages. And in order to establish that, you have to make the case that the damages are uniform across the class and that the plaintiffs are not so wildly different that we would have to do a separate calculation of damage for each plaintiff, but that we can treat them all in a fairly cookie-cutter fashion. And it's going to be simple, and it's going to be reliable that we can measure it. Okay? Also, in a subtle way, you know, on the plaintiff's side, we're gonna wanna say that damages are pervasive that every class member experienced the damage, and that the damages are going to be substantial.

By contrast, okay, if the economist is retained by the defendant and is making an attempt to defeat class certification, the economist is gonna wanna do the opposite. The economist, first of all, is going to want to say that the damages cannot be measured in a cookie-cutter fashion, that they are unique to each plaintiff, and they're dissimilar, and we can't treat all the plaintiffs the same by quantifying the damages, because some people, you know, can be overcompensated or under-compensated. The other thing that you may wanna establish is that the damages are essentially unquantifiable. They really cannot be measured. And that's another way that you may wanna approach it. Right now, these aren't in the employment sphere, but I'm seeing a lot of class action cases against insurance companies to try to reimburse them for income losses during the pandemic. But the classes are so large, they may include businesses that are, you know, attorneys firms, and restaurants, and hotels, and barbershops, and so forth, all within one class. And you can't treat those businesses the same because, you know, barbershops might have been shut down completely, whereas restaurants could pivot and do Uber Eats, or takeout, or something like that. And so to try to measure damages the same way for very different businesses isn't something that's going to be able to be done as part of a class action.

Another large case, employment case was that there was a case, a number of years ago, where plaintiffs were trying to assert that female employees of Walmart had been discriminated against across the board. And that was kind of thrown out on liability, whereas the judge who was presiding over the case found it hard to believe that every single Walmart manager was discriminating against women. But it also would've been a very tough thing to do in terms of a damages standpoint, just because you have so many different types of workers who work for Walmart. You know, you'd have people in the pharmacy, and you'd have stockers, and you'd have cashiers, and you might have truck drivers or whatever, that you'd have so many subclasses, and then they'd be in different regions of the country. You know, you would wanna point out all these things about how impossible a task it would be, and there would be so many subclasses and so forth.

Okay. The other way to do it is to point out that the proposed methodology for calculating damages is going to come to an incorrect result, and it's unreliable in producing an accurate amount for damages. And then you wanna also suggest that the damages occur only sporadically across the class. And it might be every other plaintiff who has experienced the damage, but not everyone. And it will produce an insignificant total and so forth. Or you may wanna point out that you simply don't have the data to measure damages and are unlikely to have it, even if a full discovery is performed. And so if it's best you tried as individual cases, okay?

One thing that I try very hard when I'm contacted on a class action case, particularly if there's not a lot of time remaining before I'm to produce a declaration, is that it really isn't necessary to calculate total damages or prove them at the certification stage, okay? All this really is sort of a theoretical blueprint for how once you're provided with all the data and the class is certified, you are going to calculate damages. But you do not have to prove damages, nor do you have to calculate them at this state. And if you're a plaintiff attorney and representing the plaintiffs, and you wanna hire an economist, you may not want to pay for the calculation of damages until you're assured that you're going to get past certification. Or if you do want to show that the damages are pervasive and substantial, you may just wanna do a preliminary calculation or hypothetical calculation without actually putting in all the resources to do the actual numbers.

Okay. Okay. So, certification is basically only asking the expert to provide an opinion that damages can be reliably calculated. And the point of certification is to obtain approval for the litigation to proceed as a class action. Okay. And very often, you know, you may not have time by the time you contact the expert to calculate damages across the class, even if this would really be desirable. Okay.

Okay. So, the economist's declaration is basically, just to explain why it is or is not desirable to treat the plaintiffs as a class and to demonstrate a reliable methodology for calculating damages. And that's really all it's designed to do, and that may be all you want to do at that stage.

Okay. One of the things that's a big challenge in class action cases is dealing with data and discovery. And I have never had a class action case where the data was not, in some respect, messy and expensive to deal with. So, when you are planning to launch a big class action with voluminous data with respect to damages, you wanna plan way ahead and expect it to be messy and also expensive. I've seen class action cases damages on those ranging from the tens to the hundreds of thousands of dollars. So, don't assume that you can do it on the sheet. And also don't assume that you're gonna be able to turn it around quickly, you wanna think in terms of months rather than weeks. Understand that to get an opinion on damages across the class or reliable opinion, you really only have two routes open to you. You either have to analyze all of the data, or you have to hire a statistician and take a statistical sample. And you take a sample of the data and then you extrapolate to the rest of the class.

The biggest mistake that I see attorneys get into is waiting until the penultimate moment to calculate damages for the class. And then not having either the time or the budget to do all of the analysis, and then trying to take a small portion of the class and use the damages for a sample to represent damages for the entire class. You cannot do that without a statistician. If you have a class that's 200 members and you analyze 20 people, you cannot make any assumptions that the 20 people are representative of the 200-member class unless you have a statistician that can do that. So, be prepared for that. And that's probably the most common mistake that I see attorneys make. Okay?

If you're working on a class action case with your expert and dealing with data and discovery, one of the things that you want to do is communicate frequently with your expert. And when you drop a claim, let them know. Sometimes I've been in the middle of evaluating claims only to find out later that the claim has been dropped. Expect the data to be messy, expect that you may have to make multiple requests for data. Because if you don't and you get stuck with data, which frequently happens, then your economist is gonna have to do some fancy footwork to try to make estimates which they're gonna have to explain and say, you know, "I made assumptions," which again, is not as good as having all the data that you need. Remember that it's gonna be expensive. Okay.

Okay. Now, I'd like to talk about perspectives in any case that are going to influence value. And these can be the assumptions that the expert makes, prejudgment interest, which we talked about a little bit before, tax neutralization or gross calculations, growth in discount rates, post-termination earning capacity. First thing is anything that an economist does that's an assumption, okay, is going to be open to question. And common assumptions, for instance, in wrongful termination cases are going to be about the duration of loss, the tenure with an employer, the date of retirement, post-termination earning capacity, the probability of future damages, and growth and discount rates.

Common assumptions that are made in class action cases, for instance, wage and hour will often be the frequency of rest period violations, because people never punch out for rest periods. So, usually, the economists will just assume that every shift that was four hours or greater qualified to be a rest period and then rely on anecdotal evidence, but that almost at least makes rest periods a big, grey area. Common assumptions and discrimination cases are going to be your fair payout cases that you've selected as a comparator is an appropriate proxy for the plaintiff's earnings, but for discrimination. And so to make that assumption, you have to assume that the plaintiff and the comparator, the comparators were identical, in every respect, but for discrimination, which can be a difficult assumption to make, you know, they may have had different experiences coming into the job, different levels of education and so forth.

Okay. Prejudgment interest. In state cases, particularly if you have back pay can be significant. For instance, prejudgment interest rate in California is 7% or 10%. In New York, it's 9%. By contrast, if you have a federal case, it's almost not worth it to claim prejudgment interest at all. Because given the Federal Reserve lowering interest rates during the pandemic, the prejudgment interest rate is essentially zero, and it may be going up. So, if you have a case going to trial, maybe in a year or so, it might be up to 1%. But right now, it is basically nothing. And be aware, too, that if you have a federal case, your prejudgment interest is the federal rate, not the state rate. I once had a case recently where somebody was claiming the state rate in a federal case, which wasn't appropriate.

Same thing, too, growth and discount rates. Right now, wage growth sort of for the average worker is about 2% to 3% a year. And if we're looking at discount rates over the near term, let's say the next 5 years or the near 10, they're going to be very low. So, you can't expect, if you're representing the defendant that, for front pay, that discount rates are going to help you much. There are economists out there who still use a 3% or 4% discount rate, but I think in this interest rate environment, that's a very difficult argument to make for the near term and not say if you have a 20 or 30-year front pay loss.

Okay. And post-termination earning capacity is something to think about as well. But again, if the plaintiff hasn't secured post-termination employment, it's going to be an assumption that has to be estimated by a vocational expert, or it has to be an attorney assumption given to the economist. The economists themselves unless they have a vocational credential, doesn't have the expertise to determine post-termination earning capacity. Although, you know, you can certainly tell the economist the kind of job you'd expect them to get, and the economist can take that assumption and look at wage rates for it. Some economists, this is generally economists retained by the defendant, make an assumption that the labor market will recognize the intrinsic value of the plaintiff's labor. And once they're out in the labor market, they will, within three or five years, automatically regain whatever compensation that they lost. This is not born out by empirical data, and I think it's kind of a dangerous assumption to make because there's data out there that will show that this isn't on average the case.

Labor markets tend to be sticky. They're notoriously sticky. You know, people who are in jobs, if they aren't laid off, you know, don't just get their earnings reduced. If their productivity falls off, they generally maintain their same wage. And if you're hired in at a significantly lower wage than you had, it's not like you're going to get raises to bring you up to your lost pay within the next 3 to 5 years. Okay. Think about in terms of post-termination incapacity, has the plaintiff genuinely attempted to mitigate damages? Generally, quite often they haven't. Some people do. Evidence of a few research comparable jobs is available to the plaintiff, is better, I think, for the defendant, than producing a huge file of research available positions. We're in a data position now where people can go to companies, and for a couple of thousand dollars, they can go into huge databases that will scour Indeed and all the job online job listings and come up with a considerable number of jobs that were available to the plaintiff within their geographic area. But, you know, these are just job listings. They don't usually give the salary of the job or the fringe benefit of a job, or whether or not the job is comparable to one of the plaintiff's jobs. So, they're just gonna tell you how many positions that respond to a particular job title were available. Often I think defendants try to scare plaintiff's counsel with all this data.

I was once in a case where we had it eliminated because it was just job listings or job offers. It really wasn't evidence that there were comparable jobs available to the plaintiff. So, I think defendants are better served by providing fewer jobs, but well-researched comparable jobs that the plaintiff would've qualified for and was available to them. Okay. Dealing with opposing experts. Then we have Karl Marx and Adam Smith, who has been in opposition for a long time. So, if you have two an economist in the case, you know, hopefully, they agree. If they don't, there's gonna be differences, and how do you deal with them?

Okay. I'm gonna go quickly because I've only got about 10 more minutes. But things to look for in the opposing expert's opinion. One of the first things you wanna find out is, has there been an opposing expert declared in the case at all. Sorry, I'm getting ads. Okay. If there is, is the opposing expert's opinion truly independent, or have they just been fed a number of opinions by opposing counsel and they really don't have any support other than that they were asked to calculate some numbers and are functioning as a human calculator? That can often be a fairly effective, you know, pointing out that there really isn't any expertise here. They've just been asked to do something because opposing counsel asked them to do it.

Another thing to look at is, are there opinions in accordance with employment law. There are a lot of accountants with not a lot of forensic experience getting into this, who think it's just the numbers, and they don't really understand what they can legally can or cannot do, or the opinions they can and cannot have. They may make themselves, you know, position themselves as a vocational expert when they don't have that kind of expertise. Or they may use offsets that aren't legally permitted, or they may use a legally improper methodology for calculating the loss. I was in a case with millions of dollars in equity where the defense expert was not familiar with how you calculate or how you apply mitigation offsets. And I think that case settled, I think largely because he had calculated damages that were low, but were improperly calculated and at risk of being tossed out.

Okay. And if they have made a legal error, is it worth filing a motion in limine or a Daubert challenge? Has the expert expressed similar opinions in the past? Does the expert ever testify on the other side? You know, very often people will sort of say, "I testify 50% for the plaintiff and 50% for the defendant," but there's almost nobody who does that. So, you know, somebody may testify 95% of the time for the plaintiff for 95% for the defendant and, you know, you can point that out. I think if it's closer to 50% or 60%, it's not such a compelling argument.

Is the opposing expert's opinion too complicated to explain? You know, if they can't explain it to you in deposition, they probably can't explain it to a jury, and that would be something to exploit in a trial. Does the opposing expert's opinion involve too many scenarios? I was once in a case where the opposing expert came up with 30 different calculations of loss. And by the time, you know, we had gone through 10 of these, the arbitrator was so exasperated, you know, they just basically said, you know, "Pick one and we're gonna run with that." Does the opposing expert's opinion rely on a personal theory? You know, they might say, "Well, everybody mitigates their losses in 5 years," or, "Social Security is a tax so, I didn't give them employer contributions that Social Security," or I just, you know, said they were gonna retire at age 65 because that's when most people retire. Well, there's no foundation for that.

Okay. If you changed one assumption that the expert may...would it significantly alter the damages figure, you know, and asked them to calculate that one assumption? Is there anything, and this is important, is there anything that you can embrace in the opposing economist's opinion? If you can find areas of agreement, point them out. You know, both my expert and the defendant's expert agree that this is how much the plaintiff would've made had they continued to be employed. We only disagree on what they're gonna earn now, or how long they're gonna be expected to be unemployed and embrace the portions of their opinion that you can. What is the opposing expert's damages figure? How much different is it than yours? You want to quantify, you wanna find out where the experts, the areas of disagree, where they disagree that account for the most magnitude and damages. Usually, it's, you know, maybe how long they're gonna be looking for a comparable job or what they're gonna earn or so forth. But don't spend time on small disagreements between experts that really aren't worth anything, you wanna go towards the differences in opinions that have the most dollar value.

Okay. If you're deposing opposing experts... I'm gonna move quickly because I only have a couple more minutes. But I really wouldn't spend any time... You know, most depositions should take an hour in a complicated case, too. You don't really need to spend a lot of time researching every testimony they made in the past four years, spending hours going through their CV, or anything like that. The deposition is best used to develop a sense of the expert, what his or her opinions are, what assumptions and data we're using at the analysis, and how they intend to communicate their opinion at trial. That's it. You don't want to cross-examine the expert and prepare them for trial. Every time I'm deposed by opposing counsel, I get out of the deposition. I write down all the questions that were asked. Or I get a copy of my depo, I write out my responses to them, and then I am prepared for trial. Very seldom, am I asked a question at trial that I wasn't asked at a deposition. So, you don't need to ask those kinds of questions or be argumentative, or anything like that. Even if you vehemently disagree with the opposing expert, all you wanna find out is what kind of witness are they going to be and what their opinions are if you can't understand them from their report, that's about it.

If you don't understand an aspect of the opposing economist's opinion, don't be afraid to say, "I don't understand it, or explain it to me." You're gonna learn two things. One, can they explain the thing that you don't understand? And can they explain it to a jury? Depositions are a great opportunity to have the opposing expert calculate the number that you want and get it on record and say, you know, "If you did X and Y, wouldn't your figure be X?" And then they have to say, "Yes." Okay. And depositions are also a great opportunity for you to find out what the opposing expert has to say about your expert's opinion. And if it's a legitimate attack, you have the opportunity to change that calculation prior to trial. Your expert may have to go through a second deposition, but you can bulletproof whatever your damages figure is before it's too late.

Okay. Okay. When cross-examining opposing experts that's the time when you sort of wanna get real. Okay. So, one thing that you can do is experts really don't like to be surprised at trial. They generally have prepared carefully for their trial testimony, and are expecting it to be predictable. So, if there's anything that you know that the opposing expert hasn't considered, you wanna surprise them and make them sort of think on their feet, they're not gonna be prepared for that. You don't wanna ask a question that you do not know the expert's answer to. I know that that is trial 101, but I can't tell you the number of times I've been asked a question that I know the attorney doesn't know what my answer is gonna be. I know what my answer is gonna be and it doesn't work out well for the attorney. Questions that address the expert personally or kind of demeaning [inaudible 00:59:05] kind of desperate or mean-spirited. Questions of a general sort, like you don't know what's gonna happen in the future, I think are less effective than, you know, a question that really strikes at the heart of the expert opinion. And don't focus so much on liability that you forget to address damages. I've seen attorneys make that mistake, particularly on the defense. And then if you haven't spent some time considering damages, the only figure on damages you're gonna have is the opposing counsel's.

Okay. Getting the most from your expert. I'm sort of down to the wire here. But generally, in my experience, I spent a great deal of time talking with the attorney before retention, a great deal of time of getting the data for my report, and almost no time preparing for deposition or more importantly preparing for trial. I myself prepare a lot for trial. I prepare visuals, trial slides. I have memorized my direct examination responses, but it's very seldom that I have an attorney want to practice for trial or practice for deposition. And if you've spent thousands of dollars putting together a report and having your expert put an opinion together, it's really worth spending an hour. I know things though, it's usually a big scramble before trial. But if you know you're going to trial in two weeks and you've got a free hour, it's really worth it to call up your expert and say, you know, "Okay, what questions should I ask on direct? What are the most likely questions you're gonna be crossed about? If you've crossed about this, how do we recover on redirect?" That almost never happens, and that's really when the rubber meets the road. So, I would encourage people to do that and plan ahead. Okay. I'm going to take questions now, and I think we have a minute or two, Najah?

Najah: Yes. Okay. So, we have one question we can add. And [crosstalk 01:01:11] the passcode... What'd you say?

Nora: Yeah, also, I think you should... Najah, are you looking at the slide that has my phone number and email address?

Najah: Yes.

Nora: Okay, great. So, if I don't get to your question, just ping me and I will. It may take me a couple of days to get back to you, but I definitely will within two weeks. Okay.

Najah: Yes. Okay. So, the question is, in equal pay cases, when you calculate Social Security contributions by the employer, do you also calculate the difference in Social Security the plaintiff would receive after retirement if plaintiff had been paid at the higher rate? Do you wanna put...

Nora: That's a really good question. In equal pay after cases, generally, because we're looking at sort of a differential back pay, I calculate the contributions as a percentage of their earnings. So, when you get a W-2 and you look at the amount that your employer contributed to Social Security that year, that's the differential I'm looking at. I'm not taking... Unless we're looking at a very long time horizon where it would be worth calculating it sort of on the back end instead of what's contributed every year, what somebody's gonna receive in retirement. So, it's gonna be a differential. Let's say somebody was paid $50,000 and they should have been paid $100,000, then I'm calculating 6% of a $100,000 versus 6%, you know, or $6,000 versus the 3%. And so there would be a 3% loss in the contribution for a year. I can take another question.

Najah: Okay. This question was just, please indicate the context, for example, federal or state litigation and/or before the U.S. EEOC.

Nora: Please specify the context. I have not ever done a case before the EEOC. And the reason for that is, generally, my understanding is that the EEOC will go ahead and calculate their own damages and tend not to use experts. So, I've only calculated these damages in a federal context or a state context. And usually, and quite frequently people are making both federal and state claims. So, I'm calculating damages according to federal law, and then I'm also calculating damages according to state law. I can take another question.

Najah: There was an add-on to that question. He also said plaintiff and/or employer defense.

Nora: Plaintiff and/or employer defense. Yeah, I worked on both sides of cases. So, I work more for plaintiffs than I do for defendants, but I do a lot of defense work, so...okay.

Najah: Those are the only questions that came through. I don't see any, I was waiting. I didn't see any other ones that came through at the time. But as Nora mentioned, if there are questions that you're thinking of and that you're typing away at right now, I will send them over to Nora or you can, you know, contact her directly and she will respond to you with those answers. Yeah, we're definitely past time, so I just wanted to take this opportunity to thank Nora for her time for creating this presentation. And again, I'll send the presentation over to you in the morning. And your CLE certificates will be emailed to you within a week. So, this concludes our presentation today, and thank you for attending.

Nora: Okay, thank you, Najah. Bye-bye.

Najah: You're welcome. Bye-bye.



Previous Article Police and Crisis Intervention – A Crisis in Itself
Next Article Driving Under the Influence of Marijuana:
Tasa ID10362

Documents to download

Theme picker

  • Let Us Find Your Expert

  • Note: This form is to be completed by legal and insurance professionals ONLY. If you are a party in a case that requires an expert witness, please have your attorney contact TASA at 800-523-2319.

Search Experts

TASA provides a variety of quality, independent experts who meet your case criteria. Search our extensive list of experts now.

Search Experts