*1 judgment originally entitled was (Empha- . .”

the District Court. COMPANY, FREEPORT SULPHUR added). It is to 198 F.2d at 196. sis Plaintiff-Appellee, the Court that in that case fixed noted running for the of interest at a the date judgment disputed when time HERMOSA, engines, her S/S entered, have been amount tackle, furniture, etc., apparel, Here we deal with date was not. rem, al., Defendants, et judgment for the full amount when Compania Navigacion Pansuiza de S. which, above, as noted has entered A., personam, questioned. since been never Defendant-Appellant. therefore, We, orig hold that since the $33,656.12 with interest at No. 74-1581. inal award annum was not dealt with per this 4% Appeals, United States Court of part judgment as Court Fifth Circuit. reversed, entry of the subse 23,1976. Jan. judgment August on 1974 did quent itself, not, of have the effect of termi Rehearing En Banc Granted nating running of interest from the 30,1976. April judgment. Cf., date first Masculli (E.D.Pa. States, v. United 1974).

Because of the appellant to failure of explicitly

undertake more to establish redelivery of

when MADS SKOU would made as been between June 9 pinpoint

10 and because the failure to days involved,

the hours different here with nine days whole only,

we deal is the plaintiff most the

because clearly proved; thus, judgment must $15,- adding the

be modified sum of amount August entered on must also be modified

changing the date from which interest is $33,656.12 August

to run to June judgment of the trial court

modified so that it will read as follows: adjudged

“It ordered and that the

plaintiff OVE SKOU recover of the United

defendant States of America interest, the sum per $33,- rate of 4% annum on $15,-

656.12 from June 1972 and on from the date of

750.00 the entry judgment.” *3 Carroll, Jr., Orleans, La.,

Walter New defendant-appellant. Kemp, Jr., Eustis, James B. Richmond Sims, W. John Orleans, La., New plaintiff-appellee. WISDOM, Before and RO- SIMPSON

NEY, Judges. Circuit WISDOM, Judge: Circuit During early morning hours 21, 1971, March Hermosa, the S. S. attempting while to moor at a dock Sulphur owned Compa ny (Freeport), upstream struck the end dock, causing severe damage the structure. The district court held shipowner, Compañía Pansuiza de (Pansuiza), Navigacion, A. S. liable. Freeport Sulphur Hermosa, Co. v. S/S E.D.La.1973, F.Supp. 368 952. Pansuiza does se;1 not contest liability its per dispute in this case relates to the district court’s damages.2 calculation of ship subject 1. The and its owner are 2. Because of action the cause arises under the law, presumption against moving are fault vessel issues decided maritime stationary object, strikes a rather such as a federal than state law. See Rob under 1895, 186, 197, Pocahontas, Inc., 1973, Oregon, dock. The U.S. 1 477 158 15 inson Cir. F.2d 804, 809, 949; 1048, 1052-53; 943, L.Ed. 39 Skidmore v. Petition of United States Steel S.Ct. 1970, 1278, 1975, 716, 721; 1256, Grueninger, Corp., 6 5 506 F.2d Cir. 436 F.2d cert. Cir. Co., denied, 1971, 987, Barge Griffith, 1649, Canal Inc. v. 29 Cir. U.S. S.Ct. supports 17. The record the find L.Ed.2d Canova v. Travelers Insurance suitably ing “the dock built” and that cert. de explanation nied, “no offered Pansuiza for the im 396 U.S. 90 S.Ct. Liability pact. . dam resultant L.Ed.2d age therefore clear.” at 953. tap this outside necessary is al- dur- First, of the engineering period reconstruction work paid for the leged to have $16,000 dock, that, were dock, about as Pansuiza contends it claims on the performed work, engi- engineering Freeport’s work not for tlie dock idle or argues engaged Pansuiza would have been employees. neers by its work. Pansuiza nonproductive essentially argues, inflated in-house figure this is an therefore, engineering included as an cannot properly services performed without addi- work of damages. element reject expense or overhead. We tional Second, the district court found that argument being wholly as based on was enhanced of the dock the value plausible It is at least as speculation. reconstruction, repairs because Freeport projects there were the useful life of the dock. In extended would have been worked deducting improvement the cost of this engineers, internal but were Freeport’s compensation for its re- *4 an emergency of such nature that expenses, rejected the district court pair required the immediate they employment straight-line depreciation formula the commonly outside firm.3 in calculating used the costs the extension of useful attributable support argument of its In that relied on a instead formula life and expenses Freeport’s engineering were “percentage of useful life on based $10,000 excessive, Pansuiza cites a esti contests Pansuiza extension”. engineering by costs made Free- mate “novel”, adoption “unsup- of this court’s engineering department after re port’s theory unsupportable” and and ported, reconstruction work. ceiving bids improp- court asserts, moreover, that the by which this underestimated The $6000 erly applied its own formula. engineering expenses Freeport’s actual is compen- to the objects Third, Pansuiza however, by the fact that explainable, be- Freeport awarded that was sation before was made the actual the estimate collision, Free- cause, as a result completed reconstruction the useful life extension port paid Pansuiza also draws calculated.4 costs expenditure earlier than such an much testimony of its ex our attention necessary. would otherwise have been that engineering expenses pert witness projects average per 10 to 15 similar costs, of the total construction cent I engineering expenses claimed that objections to the inclusion Pansuiza’s Freeport were about by Free- the labor and overhead costs of discrepancy may This be ex costs. such in the department engineering port’s Freeport’s engi the fact that plained First, damages award are twofold. it provided alignment grading and neers use of its own Freeport’s asserts usually provided by the contractor. If engineers draftsmen did not salaried engineering at portion of costs expense. cost or involve additional alignment grading tributable Second, argues engi- that the claim for $3500) were deducted from (roughly neering expenses figure. was an inflated costs, these costs would be engineering range down to the that Pansui brought an in arranged has Freeport expert witness indicated was the fur za’s concern to be engineering dependent court The district found that its norm. when supplemental personnel nished “hourly properly records were Freeport’s is over staff engineering own salaried its records were “accurate kept”; it un- found Freeport worked. Because Freeport engineer Freeport project engineer 4. The who made the esti- 3. A senior testified Freeport engineers mate contended this was the reason for if the had not been inaccuracy. dock, “they working its on the would have been doing department”. work in the reasonable”; charges and that plaintiff’s and its value of the pretort hance case, such the increase in property. saving, resulted in a net the ben- had “it plaintiff’s from the re- value covery have inured to the efit would defend- deducted major for the cost of A repairs.5 findings clearly were not er- ant”. The issue case is method of roneous. computing the increase in value of repairs performed in cost of The dock that caused its injured party, including ternally following the collision. reconstruction overhead, are in a negligence recoverable & action. Baltimore Ohio Railroad See only betterment to Free- Transport, Inc., 7 Co. Cir. v. Commercial dock port’s proved that was is the exten 448-49; Broth Crain its remaining useful life. ers, Duquesne Slag Inc. v. Products found, fact, district court as a matter of 948, 953; 1959, 273 3 Cir. Ford Mo remaining useful precollision Transportation Co., Bradley tor Co. v. years, life dock was 25 but that 1949, 174 F.2d The district repairs had extended its useful life properly court concluded that years. This to 35 extension engi to recover its was entitled in-house remaining its a benefit neering costs. deducted award.6 II argues “correct, Pansuiza long that the purpose compensatory established, and fair” method of account *5 in damages place tort cases is to the for compensate betterment ing is to the person nearly possibly as injured only as in plaintiff repairs for those that re occupied he have if portion the condition would the place property of its wrong undepreciated the had not occurred. Re See was the time of the 903, collision, the statement of Torts a at At time of comment tort. the the old § 19, years 16 (Tent. 1973); was 60 Draft No. C. McCor dock old and had a remain mick, Damages (1935). years. useful life 25 560 When there was thus injury property is a tortious to 16/4ior 39 Pansuiza percent depreciated. contends, therefore, property market value of that is un that 39 known, repair amount costs the must be repairs determined deducted its recovery. the cost the Dobbs, support See D. property. argument Law In of its of Reme the (cid:127) (1973); straight-line Harper James, 392 depreciation dies F. & F. method of cal (1956). culating Law Torts The 1311 - 12 These “long betterment is the estab principles apparent are two applied conflict lished” method by the courts in repairs necessary that are when where damaged or destroyed cases damage by negligence correct en- caused had property span a definite life structure, (Tent. 5. See Restatement of Torts 928 Draft it was § uncertain whether 1973); Dobbs, 19, D. Law of Remedies No. 392 new structure was more than valuable the old. Baltimore, 1869, (1973). (8 1967, Ebinger, In The U.S. in United 75 And States v. 2 Cir. 377, 465, Wall.) 385-86, 463, 557, 561, property damaged L.Ed. dicta- F.2d 19 386 was that, cases, negligence should; integral part unit, larger indicate there aof whose realiza- probably fur-' not be deduction' for new materials value was ble not enhanced place replacement. of the not. nished old. This dicta has followed, generally been as the cases cited types 6. When other of betterment have been throughout opinion Part II indicate. proven, against their value has been offset for Two cases that denied deductions See, plaintiff’s g., award. e. United States v. replacements equally new and contain broad (credit Ebinger, maintenance 386 F.2d 561 for distinguishable from the dicta are structure); saved-by expenses Patterson new case. In Paxson Free- Co. v. Board of Chosen Frans, Terminals, E.D.Pa. S. S. Johannes Inc. v. 1912, County, of Cumberland 3 holders Cir. enlarge- (credit F.Supp. for 711 209 replacement 201 F. structure was caisson). ment made of materials inferior to that of the old

305 had a useful replaced property or paired of- the at the time elapsed partially had property old when with the identical cases life accident, cites numerous Pansuiza See, plaintiff. purchased See, e.g., formula. applied have Contractors, Inc. v. Brothers g., Rawls v. e. Co. Railroad Nashville & Louisville M.D.Fla.1966, S.D.Ala.1971, States, F.Supp. 251 330 Turbo, United de Ciudad M/V Terminals, 57; v. Inc. v. S. 769; Corp. Patterson S. Allied Chemical F.Supp. E.D.La.1970, 710; Frans, Co., F.Supp. 209 Towing Johannes Edmundson Terminals, 448; Corp. Transportation American Patterson F.Supp. General Frans, Chotin, F.Supp. at Johannes Patricia S. v. The S. E.D.Pa. v. Inc. however, 705; cases, many v. The courts F.Supp. Jemison 1962, 209 947; plaintiff’s S.D.Ala.1958, improperly F.Supp. reduced Duplex, deprecia- percentage of Corp. recovery by v. Transport American General E.D.La.1954, giving any indication Chotin, without tion Patricia repaired prop- useful life expected F.Supp. & Nashville See, Louisville e.g., erty. Co., v. Barge Inc. stated in Canal We Turbo; Ciudad de v. M/V Co. Railroad 11, 27, that F.2d Griffith, 5 Cir. Compress & Warehouse Co. v. Oakdene handy tool “a is often depreciation Norfolk, E.D.S.C.1965, Cities Service S/S recovery repair costs for reduce Duplex. v. The Jemison injured necessary to return level position in economic party are increasingly Courts recognizing issues, underlying found”. he was “handy straight-line tool” of de- repairs ex- however, are whether preciation should not be used for all oc- property life of the useful tended casions. In Oregon Tug Go-Getter, repair so, portion of the what and, if example, useful life attributable costs barge defendant’s collided with Corp. v. In Allied Chemical extension. damage caused severe pier to the south deprecia- prior Towing Edmundson plaintiff’s bridge. Although the measuring “handy tool” tion pier and, was twelve old according repair portion nonrecoverable court, precollision the district had a neg- tugboat had defendant’s costs. expectancy eighteen years, *6 piling cluster the collided ligently Appeals the Court of awarded plain- the the clus- dock, causing plaintiff’s the full cost of repairs. tiff the The court cost of The destruction. complete ter’s repairs the reasoned did not add to new, When was replacement $3500. its expectancy life pier the of the because it clus- replaced the old both integral part and, was bridge, of the years; of 20 expectancies life had ters regardless condition, of its would have to at the years was 3V2 old cluster the old replaced be when the bridge required re- awarded The court the collision. of time placement. Other circuits have also rec- damages in the amount plaintiff the that, ognized circumstances, in certain Be- replacement cost. of the 16V2/20 application depreciation of the formula damaged piling cluster the cause See, be inappropriate. g., would e. Canal that had by a cluster replaced completely Barge Griffith, Inc. v. 480 F.2d at 27 the that of identical with life a useful (useful life of property not extended by new, the when it cluster destroyed repairs); United v. Ebinger, States 2 Cir. destroyed property of the portion (realizable accu- depreciated the collision before had property not enhanced by repairs). the which measured the extent rately its extended property the replacement expected Thus, the where life. useful repairs property after life of the useful time of its at the same as it was is the which cases the many of In straight- by plaintiff, acquisition formula depreciation straight-line ap be depreciation formula should line as- either the court applied, been has repairs do not ex- But where plied. re- found explicitly or sumed $84,141.20, repairs, life of the as it was the cost of ob- property the useful tend collision, just taining a dock with useful life of 35 before there existed years depreciation. no the numerator of 10 should years, deduction for cases, to the to- remaining applied of which denominator the in- be In pur- example, number of useful life repairs is an ex- tal stant case $84,141.20 by the to derive that property, the useful life of the chased tend repair costs portion total degree expected a different from the year cost of the 10 life useful exten- property life of the useful the time of plaintiff. acquisition by sion. repairs is allocable to judge’s The district solution cost to these per- requires the useful life extension is thus 28.6 we cases—in concur— $24,064.38. Deduct- percentage $84,141.20, or of the re- calculation cent of costs leaves expenses representing the pair repair cost of the total ing this from repair life extension. as the the useful This he costs recoverable “percentage by Freeport. termed the of useful ex- life F.Supp. per- at 955. tension”. This

centage portion is the of the total useful III.* repaired property

life life extension constitutes. The al- useful The district court held: cost the useful life locable extension To the extent depreciation is al- may then derived multiplying this against lowed damages, amount of percentage repair expenses. the total expend owner must funds for re- this allocable is then If deducted placement repair long dock repairs, the total cost of the result- before it required would have been precisely award will com- do in the so normal course business. plaintiff pensate for the cost of re- To reimburse it capital before it storing his property precollision to its normally be required to divert condition.7 operation, funds from it should be al- lowed interest on the amounts so ex- precolli case pended for the remainder of the useful years. useful life of the dock was the original life of dock. repairs a result of expected As life was years. useful increased 368 F.Supp. at 955. The district court percentage life extension that, reasoned were it not for the colli- 10/a5, percent. thus or 28.6 district sion, Freeport would not have had to in applying court erred the fraction 10/25, spend the amount allocable to the useful percent, repairs. or cost of extension until the date at represents at 955. This fraction which the useful life of the old dock *7 life a percentage the useful extension as have expired. would The court there- remaining useful life precollision Freeport, fore awarded in addition to above, property. recoveries, of the As indicated the difference between however, the proper ratio is that which amount of repairs allocable to the useful life extension bears life to extension and the remaining useful life of the property aft worth of that money paid sum of repairs. er Because total cost of the years hence.8 Freeport’s subject exception repair in expenses 7. This is discussed from for the useful Part III. life extension of determining the dock. After paid $1 value of * Roney Judge III written and con- Part $.18, percent hence is the court added 82 Simpson, Judge author of the curred in $33,656.48, $27,598.31, or back original panel incorporated in en decision net award. The percent effect was a deduction of 18 Co., Drilling opinion in v. Penrod banc Johnson $33,656.48, $6,058.17, or for the im- 1975,510 5 Cir. F.2d 234. provement of the dock. In accordance with holding II, As opinion, indicated in Part II of our Part this amount must be ($33,656.48). recomputed accurately district court deducted 40 state the result of opposed as construction now the district To the extent cost; the extent to possible which attempts new measure of dam a court sinking fund may commitments be re law, principle reversal is as a ages by the extended life of duced the dock general principle required because possible reduction of mainte universally applied has been rather structure, nance costs on the new both of well as in this jurisdictions, as in other would tend to lessen the diversion Circuit, plaintiff recovery for denies the operation; of funds from the the effect that enhance the value of expenditures possible loss to the Baltimore, dockowner of the (8 75 U.S. property. his Wall.) many other considerations that (1869); might be Canal L.Ed. Griffith, relevant whether the dockowner will 5 Cir. Barge Co. damage real 11; Bordagain early suffer from the Tug Ship June v.S. F.2d expenditure may funds. Co., T. H. well 5 Cir. be ping full evaluation Browning Steamship Peavey damage ques F. H. Co. v. would Co., Cir. tion demonstrate no actual dam See & some of Dobbs, age or that Law of Remedies D. considerations generally, speculative be so (1973) incapa would as to be and authorities cited 312-318 reasonable ble ascertainment re therein. to sustain a quired damage Cf. award. matter, district As a factual Drilling v. Penrod Johnson 5 Cir. en finding on a based its decision court 1975, 510 any event, F.2d 234. In banc damage by dockowner has suffered proof the dockowner offered no on this capi- being required expend funds for damage item of support there is no improvements the time that tal before in the record for the conclusion that loss expended would funds have been such premature as a occurred result exten business, course of normal costs. In view of the absence of Findings of fact will not the accident. support, a court apply factual clearly unless found to overturned rule general plaintiff that a is denied 52(a). F.R.Civ.P. Where erroneous. expenditure consideration repair supported by substantial findings are beyond necessary costs to restore its clearly taken to be they are evidence to the property condition was in be Western Cottonoil Co. v. erroneous. accident. fore the 1954, 218 F.2d reh. Hodges, 5 Cir. curiam, per 5 Cir. and modified den. The extended useful life of the dock 1955, 218 F.2d 163. may well increase the dock’s val- however, case, amount of the we have ue in the In this attributable re- cost, so that to any pair to find in the record follow the unable district been damage, any, may judge’s analysis permit plaintiff as to what if a evidence ready profit repair to turn accrued because of the costs the accident by selling damaged property enhancement immedi- attributable ately after payment reconstruction nothing useful life. There is dock’s of the award. See General to show: whether the dock Outdoor Ad- the record vertising Realty Co. v. LaSalle long Corp., be rebuilt before it crumbles might Ind.App.1966, 218 141; compare water at the end of its estimat N.E.2d into life; Restatement of extent to which a Torts § Comment b ed useful (1939) (suggesting may return be obtained on a distinction in dam- reasonable age computation depending enhanced value as on on whether the cost *8 capital expenditures; possible damaged property put personal is to a or use). savings in the cost useful commercial of extended repair percent costs holding. that allocable to the useful district court’s Part II a Given interest, present $24,064.38. present paid $1 were The value of extension rate of life paid years years Selby, $.18. is sum hence S. that hence is thus Standard Math- value of $24,064.38, $4,331.58. (1970). Tables 646 We concluded in or ematics yal- concerning present objection primary Pansuiza’s to The award computation portion of the extended useful of the damages ue award is that repairs component prospective of the cost of interest should not be taken be should eliminated. into account unless other criteria that speculative are no more and at least as special Wisdom’s concurrence Judge important are considered.1 Pansuiza ar- III, reaching the re- although same Part example, gues, that Freeport has re- Court, majority sult as follows because, a windfall although ceived reasoning which would seem to a line prospective was awarded interest until by Johnson v. Penrod Drill- be foreclosed ing permitted it was to replace the (en 510 F.2d 234 at the much dock lower 1971 prices. It First, bane). the Court in Penrod express- concludes, therefore, if inflation is ly provided account, taken into prospective not inter- gross earnings calculated future [t]he should not be est awarded. present by be reduced to value must This issue is closely analogous to appropriate of an rate the use prevailing interest personal issue in injury cases whether it place at the time and to proper reduce the award for loss of trial. earnings future to present if value Id. validity discounting at The earnings estimate of those adjust- is not present of future damages for inflation. According ed to the dis- interest rates would not appear current formulation, court’s trict Freeport should by open Second, left Penrod. required spend (i. e. to have de- spec- we held that inflation is Penrod too expenditures from its ducted damages purposes) total to be taken into ulative account in the only in 1971 computation earnings. of lost future ($4,331.58) present value hypothet- seem, therefore, inflation is payment ical for the useful life exten- speculative to also too take into account ($24,064.38) the dock reasoning concerning in damages, conclusion theory hence.2 is that if the colli- e., that i. interest sion had not occurred if money would have been earned had invested in- prematurely invested in dock enhanced $24,- vestment would increase to the wholly value is offset the degree to 064.38 cost useful life extension which inflation would increase the cost the date on which such ex- of the useful life extension penditure would have to have been made part, Affirmed in in part, reversed no if there had been collision. Similarly, proceedings remanded for further con- personal case, injury in the the estimate opinion. with this sistent earnings future lost reduced to its that, theory value on the if the WISDOM, Judge (specially Circuit con- award is invested at prevailing curring): rates, it will interest accumulate to the I concur in result reached in Part equivalent lost earnings is, majority opinion, III times they would have been received. Sulphur eliminate award to through prema- of the interest it lost majority rule as to calculation of expenditure of ture funds for the useful for loss of future benefits re- life extension of dock. With defer- quires the reduction the projected brothers, my ence to I reach that result present, value, benefits to but prohibits reasoning. by different the consideration of See, inflation. g., e. 1. Pansuiza also contends district court money, subsequent worth of and its applied “sophisticated accept offer to further evidence or briefs on accounting methods” without the issue basis in of an award for lost interest went expert or unanswered. record of factual evidence. court, however, did receive evidence as 2. See footnote 8 majority opinion.

309 Railway windfall would result & Ohio Chesapeake v. Sleeman our failure to consider the extent 1969, 305, 307. This from 414 F.2d Co., 6 Cir. increase the however, severely inflation 1996 has been .which approach, re- improvements. dock The proposed The solution criticized.3 reduction, value to make a fusal adopted the critics is most of however, fully offset the would almost in Beaulieu v. El- Supreme Court Alaska Freeport.4 windfall Beaulieu, 1967, 665. liott, 434 P.2d damages injury action for sus- personal inflation-produced in The increase in- accident, held in an auto “mitigate”, tained will rather than “off- terest should not be dis- earnings of future loss set”, inflation-caused increase in the because “infla- improvements, counted the dock because cost of . offsets the interest . . rate used tion interest to discount market in- on ‘safe’ includes, earned apart could be court district by the This solu- component, 434 P.2d 671. interest” an vestments”. element “real argu- logical successor to our compensate is the for the effect of inflation. tion Co., Drilling (the Penrod example, price capital in Johnson v. if the ment For banc), that, 1975, (en interest”) 510 F.2d 234 percent per 5 Cir. rate of is 3 “real expect investors the value of year and higher does cause inflation if future depreciate at the rate of 6 the dollar experience predictably demon- wages, per year, the market rate of in- higher interest rates on strates percent.5 up- will be 9 terest about always accom- investments that, although the cost of the shot also inflation will occur and panied improvements will increase to the dock mitigate failure to will factor this 1996, through extent inflation full inflationary surcharge in include Freeport’s prospective in- interest on its rate calculations. wage will only increase to the extent vestment in increase the investors’ forecast case, the 510 at 236. In the F.2d of inflation. in- in future inflation-produced increase Because a complete more offset rate used will the discount rates above terest operate resulting in a more accurate mitigate the court would the district — 1970, Henderson, Corp., 1256, 6 Cir. Steel 436 F.2d of Increased States Consideration denied, 1971, 1280, 987, Productivity Discounting and the of Future cert. 402 U.S. 91 S.Ct. 1649, 153; Value, Chesapeake 306, 29 L.Ed.2d Sleeman Earnings 20 v. to Present N.D.L.Rev. Co., Henderson, Railway 1969, (1975); 305,. 6 Some Recent Deci- Cir. 414 & Ohio F.2d 308-10 Damages; Special 307-08, accepted by With Reference to sions on it has been several courts Taxes, applying Income 40 of Inflation and state law. See Frankel v. United Questions States, E.D.Pa.1970, 1331, 1346, 423, Comment, F.Supp. (1973); 428-32 Ins.Coun.J. Fu- Damages Haym, 1972, as an Element of ture Inflation nom. Frankel v. aff'd sub 3 Cir. (1974); 1226; Alabama, 72-74 5 Cumb.Sam.L.Rev. Pierce v. New York Central Comment; Accounting Damages W.D.Mich.1969, 44, Income: F.Supp. of Future for Loss Railroad Inflation, 311, 45-46; Gowdy States, 6 U.S.F.L.Rev. v. United W.D.Mich. (1972). approving 733, 752, F.Supp. Alaska 314-21 rev’d on other opinion, applied grounds, in this one critic has writ- rule Cir. cert. de majority nied, not uncom- ten of the rule: “It is a 396 U.S. 90 S.Ct. concededly impeccable phenomenon mon legal reasoning L.Ed.2d Resner Northern Pacific Rail (1973). . way, to lead to a result which is Mont. 505 P.2d 86 develop- practicalities of a irreconcilable to the ing Posner, Analysis Law 5. SeeR. Economic difficulty . . Substantial situation. Meiselman, (1972); Bond Yields 81-82 product arises when the soning process of the deductive rea- Regained, in Paradox Level: The Gibson Price becomes enshrined the com- Monetáry (D. Carson Banking Studies 112 and practical to such an extent mon law that the 1963); Fisher, Theory I. of Interest ed. Stein, ignored.” Injury are J. Personal results (1930); discussion and the excellent 41-44 (1972). Death Actions 331 impact principle calcu Airlines, Inc., Allegheny in Feldman v. lations rejected Although this offset one circuit has 1271, 1288-93, D.Conn.1974, affd injury personal argument in the context of part, 2 524 F.2d 384. relevant actions, wrongful Petition of United death *10 310 Freeport is damages is life extension that the difference be- of

measure —if prema- the two for its tween factors. Even when in- compensation no awarded funds, agree foreseen, is entirely I with flation expenditure impreci- of the ture Freeport’s compensation should be sion in holding that there will be Court’s the small, present particularly compared to value in the com- when with reduction no inaccuracy the deduction of cost of of the the would result if Free- putation port prospective interest, from recov- were awarded improvements the expenses. required pay If the rate of to not the repair but price inflated 1996 ery for interest equals improvements.8 the rate of the of inflation earn invest- able to on its is Freeport approach taken in Feldman v. Al 1996, through the offset will be ments Airlines, D.Conn.1974, legheny 382 compensation the to total F.Supp. aff’d in relevant 1288 - complete. bewill part, 2 the probably prevent compensation. Two will more provide factors exact Feld First, complete. being wrongful a death offset man was action in major the market component issues addition which one was the compensates for present of interest that rate ascertainment value of inflation, there a prospective “real” impact earnings. the decedent’s payment than component represents impact forecast the Rather infla Second, capital.6 many earnings, have on the use tion would these will Judge believe that there often Blumenfeld discounted economists future dollars, gap compo- estimated in earnings, between inflation be through and the actual rate of inflation value use present nent be- of the in depreciation flation-adjusted (“real”) in the value of cause rate of interest money rarely entirely Although foreseen.7 on “risk-free” investments. I prices rising, are “When rate of in- precision admire theoretical of this high tends be high Posner, terest not so approach, see R. Economic Anal compensate as it should ysis, (1972), rise Law 81-82 I am also con Fisher, Theory I. . .” of In- complexities cerned specu (1930). terest 43 Because two these fac- inherent lation in factoring the inflation push rate tors the market of interest in component out of the market rate of directions, compensation different These interest.9 difficulties in estimat Freeport will be imprecise my ap- under rate of ing the inflation were one proach only to the extent of that com- compelling concerns our decision in John pound interest on cost Drilling son v. Penrod Co. that inflation For relationship if, 6. a discussion of the of this minished as the authorities in footnote 7 component calculations, argued, see investors underestimate the ex- Allegheny Airlines, Inc., v. Feldman prospective tent of future inflation. If F. interest Supp. at 1292-93. were awarded market rate and account, were not inflation taken into the “in- Meiselman, See, g., supra e. 7. note at accuracy percentage” would be the difference Fisher, supra note I. at 38 n. 2 average between annual rate of inflation (1930); Fisher, I. The Rate of Interest 278-79 average annual increase in interest (1907); Schwartz, M. cf. Friedman & J. A years. past rates over next 25 In the Monetary History States, of the United 1867- years, the annual increase in interest rates (1963). at 91-92 n. 5 year government 10-15 U.S. bonds has aver- Allegheny Airlines, Inc., Feldman aged 0.2 and annual inflation has aver- 1293-95, F.Supp. it was found that aged percent. Report 3.0 See 1975 Economic average inflation-adjusted rate inter- of the President 317-18. (i. yield”) est e. “real on risk-free in- determining inflation-adjusted After rate vestments percent. since 1940 was 1.5 If interest, Judge Blumenfeld observed that wholly compensated future inflation is for in “[n]othing conclusively is more established rates interest available to over the instant memorandum of decision than the years, next award will difficulty ascertaining the amount of dam- per therefore be inaccurate about 1.5 cent ages in this due case . .” . (compounded annually) of the the use- at 1295. inaccuracy ful life extension. This will be di- not read- should now We value. taken into account in about instructions remand general *11 those earnings. lost future computation of In- forcing us into a sub- as value present deed, Judge that, indicated Blumenfeld if position. indefensible stantively required Connecticut law he were not earnings present future to discount value, adoption of the Moreover, my proposed that, might he have decided be- way long toward go a would rule Alaska in speculation cause of the inherent his in Pen- enunciated policies fulfilling the calculations, best approach would opinion to attempted in that We rod. adopt have been to Alaska rule that I while compensation, accurate achieve applied in this case.10 have of courts use district preventing future infla- as factors such speculative tion, Nevertheless, recognize that rule I attaining and at with some is inconsistent propose I procedures. efficient trial simplified and case, That language in Penrod. specula- By prohibiting at 237. Act, that, holds 510 the Jones brought under rates,11 by re- interest future damages about award for the tion calculating a in responsibili- judges of lieving earnings, trier of district fact future loss calculations, value present into account future to make ty take not (1) must compen- complete more by providing (2) esti- must reduce and and inflation consider-present-value-ig- earnings to its than the future of lost sation mate rule, approach the offset through appro- use nore-inflation present promote these Penrod effectively prevailing at rate interest would priate in the trial. The focus place of policies. and time inflation, present not val- was on Penrod addition, and, I we ue, to the extent that considered believe that the literal holding only the of Penrod inapplicable determined is value, we to the present present ease. for the district court rate Penrod is a interest Jones Act proper disposition in of case. The incorporates Jones Act account take into provisions not did con- remand. We F.E.L.A. case on Sixth that, Circuit has noted prohibition of the in cases, of our impact F.E.L.A. sider Chesapeake and proprie- inflation on the Railway Ohio consideration Kelly, v. 241 U.S. discounting future benefits S.Ct. 60 L.Ed. ty $6,058.17 25-year given requires in a 10. the dis- a Connecticut law to note-at [S]ince interest counting ignore, rate. however, is a fact of value of It life that we cannot capacity, earning rarely destruction of future . . that investors elect to have open up to this to decide their funds such not Court tied in [i]t safe investments for long periods See, g., the ascertainment of a rate discount has be- time. e. F. Har- fair, speculative James, per come too that the of Torts & F. The Law 1303-04 statutory awarding ‘just (1956). mandate of dam- ages’ wrongful for death . . would be prospective The award of interest is thus by dispensing better served dis- speculation prevailing based on est rates ties inter- altogether. counting process Freeport’s capabili- investment permitted premise at 1293 n. have would of 7 percent Note, interest to be fulfilled. Prospective interest seems me to Undercompen- be as Future Inflation and the speculative premise as Plaintiff, Loyola (Chi.) inflation. sated U.L.J. 366- application (1973). the district court’s compensation Freeport’s Freeport formula is that “premature” expenditure value been able to terest would have is also based on the premise Freeport invest in- would have desired in years. for 25 The investment replace- 1996 to invest in the restoration or then wholly accumulate speculative, allocable ment however, the dock. It is extension, $33,656.48. useful the today See note 8 of to forecast whether majority opinion. may argued require business will whether dock in 1996 or the consideration of future inflation is more will even be in existence speculative prospective than that of interest that time. could, because in have invested light Court would be able to 1117, requires the narrow discounting of lost fu- superior in substantive result earnings to achieve value. Sleeman ture squarely by them. controlled Railway Ohio Chesapeake and cases This narrow hold- F.2d at 307. The majority attempts to reach the though perhaps justi- Kelly, I same result that showing that now lost all sup- has fied is no factual there basis for Judge Ru- part courts not take because do port, prospective bin’s award of interest. Its calculating into account dam- inflation ages persuasive argument point most on this disapprove awards.12 I would Freeport Sulphur may not have *12 Kelly confine that case the rationale and any through loss premature suffered its the F.E.L.A. context in which it to of payment simply because it Penrod also arose that con- arose.13 a invested this type capi- different of (because incorporates the Jones Act text tal, the useful extension of dock. the F.E.L.A.) we and were therefore the It there contends that is no reason to Supreme compelled by the prece- Court believe Freeport Sulphur that could not discounting require present a to dent obtain a rate of return on the new in- of recognition point Our this is value. vestment comparable would be in our evident introduction to the discus- the interest it could have obtained Kelly in of the Penrod case: investing money in an alternative The United Supreme States Court ad- type capital of from 1971 to I 1996. am problem dressed itself to the of reduc- persuaded not that this argument eco- is ing present value lost future earn- nomically sound. dock integral is an ings Employers under the Federal Lia- part Freeport Sulphur’s of business, and Act, bility is incorporated by it therefore is doubtful Freeport Act, reference into the Jones in Sulphur could “turn a ready profit from [Kelly l by selling accident damaged 510 F.2d at 239. other case relied property immediately after reconstruc- for the upon value remand order payment tion and of the award”. The case, in Penrod also an F.E.L.A. Blue only possible way to obtain a rea- Alabama, of Railway Western v. 1972, 5 Cir. sonable return on the enhanced value of argue 469 F.2d 487. I not that this the dock be through would the rates Kelly view narrow of Freeport Penrod Sulphur charges. is my mandated on the face of those opinions, however, understanding, by viewing those but cases in Sulphur does not obtain rents for use argued that, Kelly also been supra. It has than See text and note note 3 re- rather 12. at setting up experience an inflexible of the last half of formula flects for determin- Kelly century, price damages, “represents nineteenth when the the rec- level fell consistently aspect prevailing ognition problem of one and the view of future was that money gave earning power advantage damages ruling as a and stands in favor of receiving payment. compensation injured person party”. immediate At to a accurate that, Comment, Damages- given rising one economist believes for In- least Loss of Future incomes, “earning Accounting Inflation, 3, prices power supra come: for note 319; accord, Comment, money” “myth” purchas- at is now a and that the Future Inflation as an money actually Damages Alabama, ing power supra decreases over Element of note therefore, concludes, 3, Kelly Note, time. He at Future Inflation and the Under- narrowly require supra compensated plaintiff, read both to should not note at 367. prohibit value and to reduction Supreme only Kelly 13. The has Court cited for Henderson, consideration of inflation. The Con- proposition in two other old Productivity of Increased sideration cases: F.E.L.A. Louisville & Nashville Railroad Discounting Earnings to of Future Present Val- Holloway, 525, 528, Co. v. 246 U.S. 308-10, Henderson, ue, supra note Some 869; Chesapeake 62 L.Ed. S.Ct. & Damages; Special Decisions on With Recent Railway Gainey, 1916, Ohio Co. 241 U.S. of Inflation and In- Reference to Questions 494, 496, S.Ct. L.Ed. Taxes, supra note come plaintiff recovery denies the only rates it rule dock, expenditures that enhance the value sulphur. for for the sale of charges are property. I do not believe that his price sulphur may because Both reversal. Free- and, rule alone dictates regulated government in this by the Sulphur seeking recovery is not for event, may plaintiff port because prop- of the enhancement of its price cost profitably to increase the be able life extension. The profit-maximizing erty, above sulphur i.e., collision, wholly separate, are charged before the Free- it seeks rate probably the interest it has Sulphur compensation will not be able to port foregone being compelled by the de- investment in the useful life recoup its $24,- property of its period 1996 to 2006. to invest until the struction extension twenty-five in dock construction 064.38 dispute between Perhaps point of neces- been years before as to what is and me is majority it not been for the collision. sary had proof on burden of carry the needed point is that Sul- The crucial prospective damages for question compensation not seek does phur dictate to me practicalities interest. that, enhancing proper- the value of its spend about being compelled *13 Judge According to Rubin’s calcula- ty. improvement that $24,000 capital on a tions, Freeport Sulphur would in effect generate revenues not probably charged for the full cost of the ten- Sulphur twenty-five years, for life extension. year useful (assuming we loss a financial suffered conclude, my it is view that To inflation on the impact of ignore two foundations of Part III of the ma- have obtained Freeport could earnings opinion support will jority reversal Adding twenty-five years). during those prospec- district court’s award of practical approach facts to Judge agree major- interest. I do with the tive at trial that he Rubin declared however, Freeport Sulphur ity, considering awarding damages for compensated prema- not be for its request interest and that his prospective expenditure. suggest I ture bearing on that issue went evidence for plaintiff compen- deserves no reason (the plain- by the defendant unanswered prospective is that interest it sation responded value calcu- tiff on earned will could lations), think that this Court is I do not wholly by degree offset to which overturning his award on the justified will increase the cost of the inflation support in the is no “there ground by life extension loss oc- the conclusion for record exten- premature as a result curred BROWN, Judge, Chief WIS- Before Indeed, require we do not costs”. GEWIN, THORNBERRY, DOM, COLE- for the award greater factual basis GOLDBERG, AINSWORTH, MAN, or, in F.E.L.A. interest prejudgment DYER, MORGAN, CLARK, GODBOLD, cases, the reduction of the plaintiff’s RONEY, TJOFLAT, GEE and Circuit damages by the earnings lost Judges. he could obtain interest amount BY THE COURT: judgment during lump sum investing his wages. of lost period majority Judges in active A service, motion, on the Court’s own hav- majority Part III of the opinion seems determined to have this cause re- One, on two foundations. to rest banc, en heard above, I have discussed is the asserted of a factual basis for that this shall Judge lack Rubin’s IT IS ORDERED cause the Court en Freeport Sulphur in- banc with conclusion be reheard premature argument on a date hereafter to be jured expenditure oral Second, specify briefing The Clerk will majority argues fixed. funds. Judge filing supplemental

Rubin’s award must be reversed schedule universally applied the basis of the briefs.