Aponte-Davila v. Municipality of Caguas et al

Filing 321

Certification of Issue to the Puerto Rico Supreme Court. The Clerk of Court shall transmit this Certification to the Clerk of the Puerto Rico Supreme Court pursuant to P.R.Laws Ann. tit. 4 Ap. XXI-B, R. 25. Signed by Ju dge Pedro A. Delgado-Hernandez on 7/17/2017. (Attachments: # 1 Appendix, # 2 Docket Sheet, # 3 Opinion and Order, # 4 Attachment A O&O, # 5 Attachment B O&O, # 6 Complaint, # 7 Opinion and Order, # 8 First Circuit Opinion, # 9 Expert Report)(LMR)

Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 1 of 17

Expert Economic Evaluation
of the
“Report of the Income Losses
of
Mr. José A. Aponte”
submitted by
Mr. Francisco E. Martínez Aponte

José A. Aponte Dávila
v.
Municipality of Caguas, et al.
USDC PR Civil
Submitted March 24, 2014

Apartado Postal 1918, Trujillo Alto, Puerto Rico 00977-1918

G O(787) 760-6757

[phone]

[e-mail]

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 2 of 17

I.

Introduction
We have been retained by Mr. Pablo Montero, Esq. to evaluate the alleged loss of

earnings suffered by Mr. José A. Aponte Dávila as a result of the alleged injuries suffered
on July 13, 2009 while “walking on the sidewalk in Dr. Rufo street inside the Caguas public
transportation terminal” (Complaint, p.3, Section IV. The Facts, Allegation #9). Plaintiff
alleges that as he “went by the dumpster he suddenly slipped and fell. His slip and fall was
so fast and unexpected that plaintiff could not use his hands to break his fall and [his] body
received the full impact of the fall” (Ibid. Allegation #10). It is also alleged that as a result
of this pedestrian accident, Mr. Aponte Dávila suffered a list of traumas (Complaint, Section
VI, Allegation 15, (a)-(v)). It is further alleged that “[a]s a result of the accident plaintiff Jose
Aponte is partially permanently disabled.” (Complaint, p.6, Allegation #16. Emphasis
added). Section VII of the Complaint (Third Cause of Action for Plaintiff's Loss of Earnings)
alleges that:
18)
19)

At the time of the accident plaintiff was a truck driver and permanently
employed. As a result of the injuries suffered in the accident, plaintiff
is permanently unable to work.
Plaintiff's loss of earnings as a result of his disability are estimated in
a sum not less than two million dollars.

This report offers an independent and objective economic evaluation of the estimate
of Mr. Aponte Dávila’ losses. No opinion is issued about negligence, responsibility,
disability or plaintiff’s right to compensation nor as to causality of the events that gave rise
to the complaint. Our estimate will be based on the baseline assumption of Plaintiff’s total
and permanent disability.

If evidence is submitted regarding Plaintiff’s actual

functional/occupational disability that differs from this assumption, these estimates can be
adjusted accordingly.

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 3 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 2 of 16
March 24, 2014

Our evaluation will follow the commonly accepted and established methodology in
forensic economics known as the Life-Participation and Employment methodology (LPE)
and the established and applicable local Jurisprudence for the computation of loss of
earnings due to personal injuries.
II.

A critical assessment of Mr. Francisco Martínez’s Report
Mr. Martínez begins his analysis by correctly asserting that at the time of the

unfortunate accident Mr. Aponte Dávila was “an independent trucker” (Report of the Income
Losses..., p. 3). For this statement Mr. Martínez quotes Mr. Aponte Dávila’s Tax Returns.1
Mr. Martínez calculates Mr. Aponte Dávila’s alleged loss of earnings in an amount
between $1,668,393 if a discount rate of 2.46% is used, or $1,355,750 if 6% is used. In
both cases Mr. Martínez incorporated an interest amount for the past losses of years 2012
and 2013, and an annual average rate of increase of his earnings of 2.71%. He calculated
a 0.09% interest for the May to December 2012 (58%) period he claims Mr. Aponte Dávila
did not work, and 0.06% for the 2013 earnings.2 As is well known, the addition of interest
to past losses, although mathematically correct, is contrary to local jurisprudence (Suro
vda. de García v ELA, 111 DPR 456 (1981)) and it is usually applied only in cases where
the case has been litigated with “rashness”, “boldness” or what in Spanish is called
“temeridad” (2009 Rules of Civil Procedures, Rule 44.3 (b)).

Otherwise interest is

1.
Actually, the one-(long)-parragraph Section on “Baseline Wage Income”, is the only section in which
actual, historic (but partial) information on Mr. Aponte Dávila is used.
2.
Unfortunately, Mr. Martínez does not state which T-Bill series he uses, nor does he state the source.
We have briefly researched both the FED’s website (http://www.federalreserve.gov/econresdata/ ) and the
US Treasury Department’s (http://www.treasury.gov/resource-center/Pages/default.aspx ) but have been
unable to locate Mr. Martínez’s series.

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 4 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 3 of 16
March 24, 2014

computed over total compensation from the date of the judicial sentence (2009 Rules of
Civil Procedures, Rule 44.3 (a))3. Therefore past losses should be computed at its nominal
value, without including interest payment.
Furthermore, in Table 1 of his Report (p. 7) Mr. Martínez presents Mr. Aponte
Dávila’s “wages” and states he is quoting Mr. Aponte Dávila’s tax returns.

For

Mr. Martínez, baseline income is $94,788. This amount is the result of the 2008-2012
gross earnings average. In Table 1 overleaf we present Mr, Aponte Dávila’s full Schedule
C earnings form his Tax Returns.
First of all, we must mention that Mr. Martínez incorrectly refers to “wages” whe he
should have clearly referred to “earnings”. This, because as Mr. Martínez mentioned on
page 3, Mr. Aponte Dávila was an independent trucker; he was not a salaried employee.
Moreover, Mr. Martínez should have known that the information he gathered from
Mr. Aponte Dávila is presented in Schedule C of the Tax Returns and that schedule refers
to “Profit or Loss From Business (Sole Proprietorship)”.
This fact should have alerted Mr. Martínez to the applicable local jurisprudence and
also to basic economic theory, whereby the benefit of a business activity or profession is
net income, not gross income. In Rodríguez v Nationwide Insurance (156 DPR 614

3.
See also Martínez Cuevas, Ronald Assessing Economic Damages in Personal Injury and Wrongful
Death Litigation: The Commonwealth of Puerto Rico, Journal of Forensic Economics 16(3), 2003,
pp. 329-344

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 5 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 4 of 16
March 24, 2014

(2002)) the Supreme Court of Puerto Rico clearly stated that, in the case of a self employed
professional:4
“Precisa que en la determinación de la pérdida económica de un
agente de seguros no asalariado por concepto de lucro cesante, distingamos
entre el ingreso bruto del negocio o industria y aquella partida que redunda
en un beneficio real para el reclamante, en este caso el ingreso neto
producto de la venta de seguros. Todo ingreso generado por un individuo en
el curso de un negocio propio no constituye por sí mismo una ganancia
atribuible a un perjudicado dentro del contexto de una determinación de lucro
cesante.” (P. 628)
From Table 1 below we can clearly see that Mr. Martínez considered gross earnings
and not net earnings as he should have. In our re-estimates, we will use net profits
derived from his business, as the appropriate measure of earnings.

4.
See also Álvarez González, José Julián, Responsabilidad Civil Extracontractual, Sumario Análisis
del Término 2001-02 del Tribunal Supremo de Puerto Rico, 72 Revista Jurídica U.P.R. 615 (2003)

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 6 of 17
JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 5 of 16
March 24, 2014

Table 1: José A. Aponte Dávila’s Gross and Net Earings
José A. Aponte's Tax Returns: Schedule C: Profit
or Loss From Business (Sole Proprietorship)

2007

2008

2009

2010

2011

2012

$1,650
$0
$1,650
$0
$1,650
$0
$1,650

$87,501
$0
$87,501
$0
$87,501
$0
$87,501

$81,804
$0
$81,804
$0
$81,804
$0
$81,804

$74,549
$0
$74,549
$0
$74,549
$0
$74,549

$113,781
$0
$113,781
$0
$113,781
$0
$113,781

$48,460
$0
$48,460
$0
$48,460
$0
$48,460

$0
0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
0
0
$1,650
$0

$0
$57,296
$0
$0
$0
$0
$0
$0
$0
$500
$0
$0
$0
$0
$0
$0
$10,640
$0
$0
$0
$68,436
$19,065
$0

$0
$51,535
$0
$0
$0
$0
$0
$0
$0
$500
$0
$0
$0
$0
$0
$0
$11,780
$975
$0
$0
$64,790
$17,014
$0

$0
$41,411
$0
$0
$0
$0
$0
$488
$0
$510
$64
$0
$0
$0
$256
$3,397
$10,631
$0
$0
$2,380
$59,137
$15,412
$0

$0
$63,818
$0
$0
$1,250
$0
$0
$2,397
$0
$500
$0
$0
$0
$2,896
$2,807
$2,240
$1,902
$0
$0
$19,610
$97,420
$16,361
$0

$0
$16,540
$0
$0
$5,187
$0
$0
$0
$0
$500
$0
$0
$0
$0
$219
$550
$1,027
$0
$0
$8,983
$33,006
$15,454
$0

I.  Income
Gross receipts or sales
Returns an allowances
Net  receipts or sales
Costs of goods sold
Gross  Profits
Other Income
Gross Income
II. Expenses
Advertising
Car and Truckk Expenses
Commissions and Fees
Contract Labor
Depletion
Depreciation and Section 179 expense deduction
Employee benefit programs
Insurance
Interest
Legal and Professional Services
Office Expense
Pension and profit‐sharing plans
Rent or lease
Repairs and Maintenance
Supplies
Taxes and Licences
Travel, meals and entertainment
Utilities
Wages
Oter Expenses
Total Expenses before expenses for business use of home
Tentative Profits
Expenses for business use of your home
Net Profit (loss)

$1,650

$19,065

$17,014

$15,412

$16,361

$15,454

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 7 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 6 of 16
March 24, 2014

Another interesting fact not mentioned by Mr. Martínez is that, contrary to the
allegations, Mr. Aponte Dávila did continue working from the date of the accident (July 13,
2009)5 until (at least)6 May 2012. That is, Mr. Aponte Dávila continued working during the
following 34 months period. Moreover, Mr. Aponte Dávila’s 2009 gross earnings is only
$5,697 (6.51%) less than that of the previous year, while in 2010 gross earnings
decreased by $7,255 (-8.87%) but in 2011 it increased by $39,232 (52.63%).7 Actually, in
terms of average monthly gross earning, if we consider as correcto Mr. Martínez claim that
Mr. Aponte Dávila worked only 5 months in 2012, then his tax returns show an increase in
his earnings from $9,482 per month in 2011 to $9,692 in 2012.
Another interesting fact that derives from the analysis of Mr. Aponte Dávila’s tax
returns is the fact that in 2007 he only declared $1,750 in total wage income and $1,650
in total gross and net earnings from his business activity. We have been furnished with
no explanation for this low income for this year.8
This confusion between wages and earnings from business, makes Mr. Martínez
incur in an additional methodological and data error, by using BLS’ data on “Trucker Mean

5.
Mr. Martínez states that the date of the accident was June 13. We will take the date in the Complaint
as the correct date.
6.
We say “at least” because we have no evidence, and Mr. Martínez presents none, to support his
assumption that Mr. Aponte Dávila’s 2012 earnings covers only the January-May period.
7.
This data is inconsistent with an allegation of a causal relationship between the accident and an
alleged decrease in the working potential of Mr. Aponte Dávila.
8.
We have requested Mr. Aponte Dávila’s tax returns for the years 2004 to 2006, so as to have a full
five (5) years period prior to the accident. We have also inquired into 2013 tax returns. As an additional
source of verification of Mr. Aponte Dávilas earning history, we have requested the Social Security
Administration’s
earning and payment information, available immediately online at
http://www.ssa.gov/myaccount/ . As of the time of writing this report, we have received no answer to our
requests.

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 8 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 7 of 16
March 24, 2014

Salary” (sic) to project Mr. Aponte Dávila’s future earnings. Since, as we have discussed
above, Mr. Aponte Dávila’s earnings come from his own business and not from a salaried
employment. In order to project Mr. Aponte Dávila’s earnings Mr. Martínez should have
referred either to comparable industry-based data (i.e. net earnings from business) or,
preferably, to Plaintiff’s own earnings history. Table 2 below show this later information.
Table 2
Mr. José A. Aponte Dávila’s Historic net earnings from his business activity
Year

Wages

Income

2007
2008
2009
2010
2011
2012

$1,750
$1,650
$0
$19,065
$0
$17,014
$0
$15,412
$0
$16,361
$0
$15,454
Total 2008-2012 Income
Average 2008-2012 Income

Total Income
$3,400
$19,065
$17,014
$15,412
$16,361
$15,454
$83,306
$16,661

Source: US Income Tax Returns, Schedule C, various years

It is clear to see that Mr. Aponte Dávila’s net earnings have been fluctuating around
its mean, even during the years that his total gross earnings increased (2011 and
annualized 2012). This data invalidates Mr. Martínez’s assumption regarding the 2.71%
annual average increase in earnings, and on the contrary suggest that a constant net
earnings is the most appropriate assumption.9

9.
Bear in mind that assuming a constant average only means that in some years one could be
underestimating earnings, but on others, one will be overestimating them. At the end, the sum of these
deviations should tend to zero (0).

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 9 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 8 of 16
March 24, 2014

Finally, we should analyze Mr. Martínez’s use of a 2.46% discount rate in his
calculation of the present value of future earnings.10 Mr. Martínez begins by quoting the
well established jurisprudence that in Puerto Rico the discount factor is 6%, and then goes
on and mentions the Office of the Commissioner of Financial Institutions’ (OCIF in Spanish)
judicial interest rate on private debts11 as the “legal rate in the settlement of claims”. As we
have already discussed before, this is the rate that applies between the date of the judicial
sentence and the final payment of the claim (or for the case of temeridad), not the rate
used to calculate present values. Then, by simply stating that “[i]f we follow the market,
interest rates are markedly different from 6%” (p. 5) he quotes the average T-Bills for the
preceding 17 years (1997-2013: 2.46%) and uses this rate in one of his present value
calculations. It is well know that mathematically, the use of a lower interest rate has the
effect of overestimating the present value calculation.
Mr. Martínez does not argue or demonstrate, first why one should disregard the
statutory 6% discount rate and secondly, why does he understand that the T-Bill (the one
he chose) would be the relevant (even familiar) investment tool for Mr. Aponte Dávila. The
only basis for his disregard to the statutary 6% discount rate is his reliance on Jones &
Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523 (1983). Nevertheless on closer analysis of
that case is solved within the parameters of the Longshoremen’s and Harbor Workers’
Compensation Act (33 U.S. Code Chapter 18), because it relates to a “longshoreman who
10.
Although Mr. Martínez states that he is using 2.46% as discount rate his calculations show that he
is actually using 3.16%. This has the effect os underestimating his own results. Had he correctly used 2.46%
he would have arrived at a total loss of earnings, past and future of $1,922,077.
11.
Tasas de Interés Aplicable
http://www.ocif.gobierno.pr/tiposinteres.html

a

Sentencias

Judiciales:

Obligaciones

Privadas.

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 10 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 9 of 16
March 24, 2014

was injured in course of his employment” (p. 523). The Supreme Court is very clear about
this when, at theend of its analysis it states:
“These conclusions all counsel hesitation. Having surveyed the multitude of
options available, we will do no more than is necessary to resolve the case
before us. We limit our attention to suits under § 5(b) of the Act, noting
that Congress has provided generally for an award of damages but has not
given specific guidance regarding how they are to be calculated. Within that
narrow context, we shall define the general boundaries within which a
particular award will be considered legally acceptable.
The Court of Appeals correctly noted that respondent's cause of action
“is rooted in federal maritime law.” The fact that Pennsylvania has adopted
the total offset rule for all negligence cases in that forum is therefore not of
controlling importance in this case. Moreover, the reasons which may
support the adoption of the rule for a State's entire judicial system for
a broad class of cases encompassing a variety of claims affecting a
number of different industries and occupations-are not necessarily
applicable to the special class of workers covered by this Act.” (Page
547, Citations ommitted. Emphases added.)
It is clear that the cited case is not applicable to Mr. Aponte Dávilas economic
circumstances, nor it provides a justification (all the opposite) to the disregard for local
jurisprudence. Thus, it is our opinion that the 2.46% (3.16% used) should be discarded and
the 6% discount rate should be used.
III.

Re-evaluation of the alleged losses
Apart from the data and methodological errors that we have already pointed out, In

forensic terms, what Mr. Martínez has calculated are projected earnings. It is well
established theory that economic agents operate under uncertainty.

To consider

uncertainty in a forensic analysis, one should consider the probability of occurrence of

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 11 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 10 of 16
March 24, 2014

certain events that might alter any future12 economic outcomes. More specifically, any
projection of future earnings must be adjusted for the probability of specific, relevant
economic variables that might change the expected value of such projection. In this sense,
we must transform projected values into probable values.
The computation of probable earnings forces the economist to consider the concepts
of worklife and life-employment and participation probabilities. In forensic economics:13
“‘Worklife expectancy’ can be defined as the statistically average remaining
years of participation in the labor force for a person of a given age and
demographics characteristics. Participation includes those who are
working plus those who are unemployed but either expecting to be called
back to work or actively seeking employment, i.e., those who are described
by the BLS as being “in the labor force”.
In ‘real life’, many people take breaks from periods of employment to
further their education, raise families recuperate from severe illness, or
temporarily drop out for other voluntary and involuntary reasons.
Worklife expectancies, however combine all expected period of future
participation into a single number.” (Emphasis added)
(Richards, Hugh (1999) Life and Worklife Expectancies Lawyers and
Judges Publishing Co., Inc, Tucson AZ; Chapter 8, p. 51)
On the other hand the Life-Participation and Employment (LPE) methodology
considers:
“The LPE approach sums probable earnings across all remaining years of a
person’s life expectancy.
In the LPE methodology, estimated earnings at each age are dependent on
three conditions: whether the person would have been alive, whether he or
she would have been willing and able to work, and whether he or she would
have actually been employed. These are described as the following
probabilities:

12.
Actually, uncertainty also affects present behavior, but for the purpose of our endeavor, only future
actions are affected.
13.
In pure economic theory, when referring to certain events, one has to consider the risks (uncertainties)
associated to such events. Mathematically one would refer to the “expected value” of an event.
Overlooking these uncertainties would imply that one would be assuming perfect foresight or, what
is the same, absolute certainty of the events.

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 12 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 11 of 16
March 24, 2014

Probability of life (L): probability that a person will survive through a
subsequent age from the initial age.
Probability of labor force participation (P): percentage of living persons
who are either employed or actively seeking work (i.e., the labor force
participation rate for the appropriate sex, age, race, education, etc.)
Probability of employment (E): the percentage of persons in the labor
force who are actually working (equivalent to one minus the
unemployment rate)
These three probabilities when multiplied together provide a joint LifeParticipation-Employment (LPE) probability. Expected earnings at
each age are estimated as this joint probability multiplied by an
earnings amount (which, for instance, can be based on projections of
past earnings, statistical data, etc.) The present value of expected
lifetime earnings is the summation of the present value for all ages.”
(Richards, Hugh (1999) Life and Worklife Expectancies Lawyers and
Judges Publishing Co., Inc, Tucson AZ; p. 101)

Notice that LPE methodology considers not only the probability of surviving from one
age to the next, which is a non-economic event, but also the economic event that a person
actively participates in the labor market and that he or she finds an employment. In this
way, this methodology accounts for periods of unemployment (understood as ‘involuntary
leisure’).

These probabilities transform projected earnings into probable earnings.

Moreover, although LPE methodology estimates probable income over the entire natural
life of a person (or ‘expected lifetime’), it is common practice in Puerto Rico and the US to
use approximate retirement age as the terminal age of any economic earnings projection.
Forensic

economic

methodology

also

recommends

considering specific

demographic and or health conditions that might affect the previously mentioned
probabilities of events. For example, it is strongly recommended to consider previous
health conditions (family related health conditions -high blood pressure, diabetes, cancer,
etc.) or risky behavior (like smoking, drug addiction and others). In that respect, it is stated
that:

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 13 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 12 of 16
March 24, 2014

"Practitioners may find it appropriate to make adjustments to the life tables
for the general population for two reasons. First, as a result of an injury, an
otherwise healthy individual may have a shortened life expectancy. Second,
an individual who has been injured may have had a medical condition prior
to the injury. For example the person may have suffered from heart disease,
diabetes or have been a heavy smoker" (Slesnick & Thornton. Life
Expectancies for Persons with Medical Risks, Chapter 5, §5.3, p.29, in
Richards, Op. Cit.)
Moreover:
"In light of the above, it is probably good advice that the assistance of a
qualified medical expert be sought when questions of life expectancy are
raised or assumptions challenged in cases of persons with particular health
or other medical problems.
[...] The life expectancy of a particular individual may be different than that
indicated in the general life tables either because of the tort itself or due to
a medical condition present prior to the tort. [...] If necessary, a range of
economic losses can be estimated based upon various mortality rate
assumptions" (Ibid, p. 33)
Considering the above arguments we will present our estimate of the present value
of the probable earnings one might reasonably expect Mr. Aponte Dávila to have earned,
had the accident that is claimed forced him to retire from active labor market participation
not occurred. We can apply the LPE methodology to calculate Mr. Aponte Dávila’s probable
earnings throughout his remaining working life. Our date of valuation -our present- will be
December 31, 2014. With the posited base constant-average earnings of $16,661 we
calculate the projected probable annual earnings, following the above analyzed LPE
methodology.

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Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 14 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 13 of 16
March 24, 2014

Table 3
Estimate of probable loss of earnings of Mr. José A. Aponte Dávila
Age
at
end of
year
46.95
47.95
48.95
49.95
50.95
51.95
52.95
53.95
54.95
55.95
56.95
57.95
58.95
59.95
60.95
61.95
62.95
63.95
64.95
65.95
66.95
67.95

Projected
annual
earnings

Employment
rate

$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661
$16,661

2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Intertemporal
survival probability
by age
and sex (males)
1.000000
1.000000
1.000000
1.000000
1.000000
1.000000
0.965454
0.965454
0.965454
0.965454
0.952703
0.952703
0.952703
0.952703
0.952703
0.935427
0.935427
0.935427
0.935427
0.935427
0.907348
0.907348

100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%

$366,546

Participation
rate

Joint Life,
Participation and
Employment (LPE)
probability

Present value
of projected
probable
earnings

100.00%
100.00%
100.00%
100.00%
87.36%
87.36%
87.36%
87.36%
85.70%
85.70%
85.70%
85.70%
85.70%
85.70%
85.70%
85.70%
85.70%
85.70%
77.27%
77.27%
77.27%
77.27%

1.000000
1.000000
1.000000
1.000000
0.873600
0.873600
0.843421
0.843421
0.827394
0.827394
0.816467
0.816467
0.816467
0.816467
0.816467
0.801661
0.801661
0.801661
0.722804
0.722804
0.701108
0.701108

$0
$0
$0
$0
$14,555
$13,731
$12,507
$11,799
$10,919
$10,301
$9,590
$9,047
$8,535
$8,052
$7,596
$7,036
$6,638
$6,262
$5,327
$5,025
$4,598
$4,338

Annual
cummulative
earnings
$0
$0
$0
$0
$14,555
$28,287
$40,793
$52,592
$63,511
$73,812
$83,402
$92,449
$100,984
$109,036
$116,632
$123,668
$130,306
$136,568
$141,894
$146,919
$151,518
$155,856

$155,856

Column 1 of Table 3 shows Mr. Aponte Dávila’ age at the end of the (calendar) year,
which is shown in column 2, beginning in 2009. As Mr. Martínez does, we have projected
Mr. Aponte Dávila’s earnings until year 2030, when he would turn 67 and is assumed to
retire. Column 3 begins with Mr. Martínez’s assumed -base year- (2009) earnings of
$16,661, and according to his earning history, is assumed to fluctuate around this average.
Columns 4 and 5 show the intertemporal probability of survival for men in Puerto
Rico, form one group age to another ( a , 2008-2010 Cohort), and the probability of being
s

employed ( a ) and the probability of participating in the labor force ( a ) for males of a
e

p

specific age group in Puerto Rico. These data are public data published by the Health
Department and the Labor and Human Resources Department, respectively.

App. to Cert. - 0144

Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 15 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 14 of 16
March 24, 2014

Notice that we have adjusted the intertemporal survival probability for the years 2009
to 2014 to 1.00 (absolute certainty) to reflect the fact that Mr. Aponte Dávila is alive today,
and is expected to remain so until December 31, 2014. Likewise, the employment and
participation rates probabilities have also been adjusted to 1.00 to reflect the fact that
Mr. Aponte Dávila was self-employed, so he is not assumed to risk being “unemployed”.
Nevertheless, the intertemporal probability of participating in the labor force is adjusted
annually at the appropriate rate for males in Puerto Rico.
s
e
p
j
Column 6 shows the joint probability of these events ( a  a  a  t ), while

j
column 7 shows the probable earnings for each year ( $Et  t , where $Et is projected

earnings for year t ). Probable earnings then is the projected earning of one year times the
joint probability of a person being alive, employed and participating in the labor market.
Finally, column 8 shows the cumulative losses, in case the Honorable Court finds that the
interruption to Mr. Aponte Dávila' work life is neither total nor permanent. Therefore, if we
consider all these data and follow, as we have done, the LPE methodology, we can
reasonable calculate Mr. Aponte Dávila’ total probable earnings throughout his remaining
(2009-2030) working life, assuming 100% permanent interruption of his productive
capacity be an amount not in excess of $155,856.14
The partiality of the interruption can be ‘adjusted’ by multiplying the compensable
loss by the percentage of the interruption, or mitigation. For example, if Mr. Aponte Dávila
cannot work full time, but is found to be able to work part time (say half his usual time) in

14.
If we use the two year 2008-2009 net income average (which by the way is the highest average that
can be calculated from the whole series) of $18,040, and use Mr. Martínez’s 2.71% annual average rate of
increase of income, this total would be $226,606.

App. to Cert. - 0145

Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 16 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 15 of 16
March 24, 2014

a comparable job, then we can multiply the loss by 50%, and total compensation would be
$77,928 ($155,856 × 0.50 = $77,928).
On the other hand the duration of the interruption can be adjusted by truncating the
compensation at the year it is found reasonable that Mr. Aponte Dávila can return to the
labor market. That is, if, for example, it is considered reasonable that Mr. Aponte Dávila
could be able to return to work in 10 years time from the date of his accident, while
assuming complete disability throughout the period, cumulative compensation could end
at year 2018 (2009 to 2018 inclusive) and total compensable loss would be $73,812.
Obviously many other contingent scenarios for degree of occupational disability and
of its duration can be constructed, and the calculation of the according compensation can
be made. This is a matter of expert testimony from other professionals, and a legal
determination of relevant evidence submitted throughout the proceedings.

IV.

Certification
I hereby certify that I do not, or have not had any previous personal or professional

relationship with the parties and that my fees are not contingent on the outcome of the
case. I also certify that I do not have any interest or claim whatsoever on the estimate of
the losses or final compensation if any, and that such estimates are the result of an
objective and independent evaluation.

V.

Statement of Qualification
The author of this report is a BA in Economics graduate from the University of

Puerto Rico, M.Phil. in Economics and Politics of Development graduate from the

App. to Cert. - 0146

Case 3:13-cv-01367-PAD Document 267-2 Filed 11/09/16 Page 17 of 17

JLDV Estudios Económicos, inc.
Jaime L. del Valle Caballero, Ph.D.
Expert Economic Evaluation of the “Report of the Income Losses of Mr. José A. Aponte”
USDC PR Civil

Page 16 of 16
March 24, 2014

University of Cambridge in England and a Ph.D. in Economics graduate from the Victoria
University of Manchester, also in England.

He is currently a full professor at the

Department of Economics, Río Piedras Campus, where he has been teaching since 1989.
He is a current member of the American Economics Association and of the National
Association of Forensic Economics. Doctor del Valle has been involved in over 175
cases as an expert witness ranging from loss of earnings, life care plan evaluations,
distribution and representative laws (75, 21), and other general economic losses. He has
been deposed and has testified in Court on several occasions.

App. to Cert. - 0147