Day on Torts
Erin Andrews won a jury verdict yesterday in Nashville for $55,000,000 in her case against the company that owned and managed a local hotel. What happens next?
- Andrews’ lawyers will prepare a judgment reflecting the jury’s verdict. Look for a fight over whether joint and several liability or several liability applies that will be brought to head during this part of the proceedings. The hotel lawyers will ask the Court to enter judgment declaring that several liability controls the case and thus the hotel is “only” responsible for the hotel’s fault percentage multiplied by the total damages (about $27,000,000). Andrews’ lawyers will ask for joint and several liability, arguing that the logic of Turner v. Jordan and its progeny should apply and result in the imposition of joint and several liability, making the hotel liable for the entire $55,000,000. With $28,000,000 at play, look for a real fight over this issue.
- The hotel will attempt to do jury interviews in an effort to find some way to impeach the verdict.
- The hotel has thirty days from the entry of the judgment to file a motion for new trial and a motion for a judgment notwithstanding the verdict. The motions will include an argument that, as a matter of law, Andrews’ claimed injuries do not meet the legal threshold for recovery of damages for purely emotional injuries. (This argument will fail, in my opinion, if the evidence at trial was consistent with what I saw and read in news reports about the testimony.)
- The hotel will also ask for a remittutur.
- Andrews’ team will file a motion for an award of discretionary costs under T.R.C.P. 54.02.
- A hearing will be held on the above-mentioned motions. That hearing will likely take place in May or June.
- There will be settlement negotiations. I do not know anything about the history of settlement negotiations in this matter. But odds are there were discussions and odds are they will continue, with Andrews having much more leverage than she did before trial.
- The individual defendant will not participate in the post-trial proceedings. He did not participate at trial and there is no reason to expect he will jump into this matter at this date. He is almost certainly judgment proof.
- Post-judgment interest will start to accrue from the date of the verdict. The current interest rate is 5.50%. The daily interest on a $55,000,000 judgment is $8287.67; the total per year is $3.025,000.
- Odds are the motion for new trial, judgment notwithstanding the verdict, and a remittutur will be denied. What will actually happen? Only a knowledgeable lawyer who has participated in or watched the entire trial can truly handicap this one. I say “odds are” that the motions will be denied because these motions are routinely made and routinely denied. My experience with Judge Gayden leads me to conclude he is likely to deny any motion to remit the verdict, but that is based solely on experience and is not based on the facts of this case.
- Assuming the motions are denied, a thirty-day clock starts to run on the deadline to file a notice of appeal.
- Assuming the motions are denied and a notice of appeal is filed, Andrews can start to execute on the judgment unless a surety bond is posted. The post-tort reform surety bond law will apply. T.C.A. Section 27-1-124 et seq.
- An appeal to the Court of Appeals will take twelve to fifteen months from the date of the notice of appeal. A discretionary appeal to the Tennessee Supreme Court, if accepted by that court, will add another fifteen to twenty months to the clock.
- As the parties discuss settlement, there will be a discussion of some interesting tax issues. Is any recovery by Andrews taxable for federal income tax purposes? An argument can be made that it is taxable because Section 104 of the Internal Revenue Code (excluding from taxable income monies received for personal physical injuries and physical sickness” may not have been triggered by the evidence. I do not know enough about the evidence to know whether there was any claim of personal physical injury and or sickness or not.
- If the recovery is taxable, how much Andrews will pay in taxes depends on three things. First, what is her federal tax marginal rate? I assume, but do not know, that she is in the highest federal income tax bracket (applied to incomes over $415,051 in 2016) and that she will be when any judgment or settlement is collected. If so and if the amount is taxable under federal law the tax rate will be 39.6% plus another .9% for Medicare tax. Thus, if the award is taxable under federal law 40.5 % will be taken in federal income taxes. Second, there is an issue whether the amount Andrews pays in attorneys’ fees and expenses can be used to reduce any amount declared taxable under federal tax law. Once again, I defer to those who have expertise in federal tax law to answer this question – I only know it is an issue that will be addressed. We are talking real money here – a determination that fees and expenses cannot be used to reduce taxable income will increase taxes by millions. Third, there is the question of state income taxes. Andrews reportedly lives in Los Angeles and thus my guess is that California law will control whether any portion of a recovery will be taxable under California law and whether a deduction for attorneys’ fees and expenses will be permitted. The answer to this question is important because in California incomes over $526,433 for a single person are taxed at the marginal rate of 12.30%. I continue to disavow any knowledge of tax law – I just know this is a question for consideration.
The highly-viewed trial will not end the litigation in this case. The lawyers for the plaintiff are to be commended for achieving an excellent result for their client.