Martin v. City of San Jose

Background

The court reviewed the parties’ briefs concerning plaintiff’s expert, Robert Johnson, and his testimony about a negative discount rate. A discount rate is used to calculate the present value of future expenses. Johnson applied a negative rate in calculating projected medical expenses and gave testimony containing specific inflation and interest-rate figures.

Defendants moved to strike, or exclude, Johnson’s testimony. They argued that they did not know there would be an issue until Johnson testified at trial because he first provided concrete inflation and interest-rate numbers then.

Court’s reasoning

The court held that the motion was untimely. Johnson’s initial report had already presented a negative discount rate, and his methodology remained the same even though the interest-rate input was revised upward at trial. Defendants did not claim that Johnson had failed to disclose his methodology. The court also found that defendants had not been prejudiced because they had cross-examined Johnson about his assumptions and still had an opportunity to respond during their own case.

The court rejected the argument that Trevino v. United States made a negative discount rate automatically unreasonable. It stated that Trevino was based on factual assumptions that were flawed, rather than on a rejection of negative discount rates as a concept. The court also ruled that Jones v. Laughlin Steel Corp. v. Pfeifer did not bar use of a negative discount rate. The court stated that defendants’ disagreements with the rate were matters for cross-examination and rebuttal, not grounds for excluding the testimony.

Disposition

The court denied defendants’ motion to strike Robert Johnson’s testimony.