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A civil suit arising out of the “deliberated” killing of a well-respected American war correspondent once again illustrates that damages from lost future income continues to play a critical role in damages litigation.

Marie Colvin was an acclaimed American war journalist who worked for over 25 years for the British paper, The Sunday Times. In February 2012, Colvin, who was a special target of the Syrian government, was killed in a concerted artillery attack in the Syrian city of Homs. Afterwards, members of the Syrian military and intelligence celebrated by reportedly saying “Marie Colvin was a dog and now she’s dead. Let the Americans help her now.

Colvin’s youngest sister, Cathleen, along with Colvin’s niece and nephew sued the Syrian government under the Foreign Sovereign Immunities Act (FSIA), alleging the reporter’s death was an extrajudicial killing.

The damage calculations in this case closely parallel the calculations that would be made in a business lost profits context.  The plaintiffs’ expert estimated the economic loss associated with Marie Colvin’s death on February 22, 2012, based on projections relating to Ms. Colvin’s employment with The Sunday Times, to be $2,370,640.  The expert utilized a reasonable projection methodology with an ex-ante assumption centering on the date of death in estimating future lost income, which was ultimately upheld by the court.

In a business lost profits calculation, the ex-ante or ex-post assumption is one of the most important foundations on which the attorney and expert must agree prior to the determination of any damages projections and lost profits analyses. Ex-ante means the damages projected are made based on the facts known at the time of the damaging event, in this case, the date of Ms. Colvin’s death. In a business dispute it may be the date an income producing property is foreclosed upon or the date a key piece of manufacturing machinery malfunctioned.

The court in the Colvin case found that requests for damages should be reduced by consumption costs. Consumption costs account for the things that the decedent personally would be using, such as food, clothing, health insurance, travel, etc.

In a business setting, consumption costs are similar to “saved expenses”. Saved expenses are generally the variable costs associated with lost revenues in a lost profits damages case. For example, saved expenses could be reduced power bills, the cost inventory sold, a reduced labor force, etc. Lost revenues must be reduced by the saved expenses associated with the lost revenues in a lost profits damages case to determine the actual damages. Another term for saved expenses is “cost behavior” which relates to all costs, both fixed and variable.

For those interested in personal injury cases, consumption costs are relevant only in the context of a wrongful death. Where the claim is for lost income as a result of personal injury, consumption costs do not come in to play because the recovery will go to the injured party, not its heirs.

If you have any questions or comments about this article or of other related topics, please give us a  call or an email and we’ll be happy to discuss them with you.

Chris Edwards

[email protected]

(478) 330-5241

 

John Houser

[email protected]

(478) 330-5320