## Facts

- A railroad fireman employed by Norfolk & Western Railway Company was killed in a collision caused by the railroad’s negligence.
- The decedent’s estate representative brought a wrongful death action under the Federal Employers’ Liability Act (FELA) in Illinois state court.
- The plaintiff presented expert testimony estimating the decedent’s future gross earnings and household services, discounted to present value, at $302,000.
- The jury returned a $775,000 verdict for the estate.
- The railroad sought to introduce evidence of the federal income taxes the decedent would have paid on future earnings and requested a jury instruction that any damages award would not be subject to federal income tax.
- The trial court excluded the tax-effect evidence and refused the requested no-taxability instruction; the intermediate appellate court affirmed.

## Issues

1. In a FELA wrongful death action, must the court admit evidence of federal income taxes that would have reduced the decedent’s estimated future earnings when determining pecuniary loss?
2. Is it error to refuse a requested jury instruction that the damages award is not subject to federal income tax and should not be adjusted for taxes?

## Decision

- The Supreme Court reversed and remanded.
- The Court held it was error to exclude evidence offered to show the effect of federal income taxes on the decedent’s estimated future earnings.
- The Court held it was error to refuse a properly requested instruction that the award is not subject to income taxes and jurors should not consider taxes in fixing damages.

## Legal Principles

- In FELA wrongful death actions, damages are limited to the beneficiaries’ pecuniary loss.
- Pecuniary loss from earnings is measured by the decedent’s after-tax earning capacity; gross earnings are a starting point, not the measure of loss.
- Evidence of the likely federal income taxes on projected future earnings is relevant to calculating after-tax loss and is admissible when competently presented.
- A properly requested, accurate, and simple instruction that a damages award is not subject to federal income tax must be given to reduce the risk that jurors will inflate damages based on an incorrect tax assumption.

## Conclusion

The Court required after-tax measurement of FELA wrongful death earnings loss by admitting tax-impact evidence and mandated, upon request, a jury instruction that the damages award is not taxable, reversing the judgment and remanding for further proceedings.


Norfolk & W. Ry. Co. v. Liepelt, 444 U.S. 490 (1980)