By Cary Silverman; Cary Silverman is a Partner in Shook, Hardy & Bacon L.L.P.’s Washington, D.C.-based Public Policy Group. He filed amicus briefs supporting the constitutionality of Tennessee’s limits on noneconomic and punitive damages on behalf of organizations representing businesses, physicians, and insurers in McClay and Lindenberg.
A recent Tennessee Supreme Court ruling reaffirms the ability of state legislatures to place reasonable bounds on tort liability and reminds federal courts to tread lightly when “guessing” the answer to an unsettled question of state law.
Tennessee’s Civil Justice Act of 2011
The Tennessee Civil Justice Act of 20111 created a more business-friendly environment for the state. The package of reforms reduced no-injury consumer class actions, protected innocent retailers from product liability lawsuits, and precluded the use of lawsuits to punish companies for actions that complied with state or federal law. The law also reduced unpredictable, excessive damage awards. It limited noneconomic damage awards in all personal injury cases to $750,000, which rises to $1 million in cases involving a catastrophic loss or injury.2 In addition, the Act facilitated proportionality between misconduct and penalties by limiting punitive damage to the greater of two times compensatory damages or $500,000.3 Neither damage limit applies if a jury finds a defendant acted with an intent to harm, falsified records, or acted under the influence of drugs or alcohol.
The business and healthcare communities strongly supported these reforms, which are in the mainstream. About half of states have responded to the significant rise in subjective pain and suffering awards over the last half century by limiting noneconomic damages in medical liability cases or all civil actions. Many of these states have adopted significantly lower limits than Tennessee’s. Likewise, about two-thirds of states have addressed punitive damages “run wild” and curbed outlier awards with caps. Most courts have upheld such laws,4 though some state supreme courts have invalidated them. In recent years, the supreme courts of Florida, Kansas, Missouri, and Oklahoma have struck down noneconomic damage limits.5 Since the Tennessee law’s enactment, plaintiffs’ lawyers have repeatedly challenged the constitutionality of the noneconomic and punitive damage limits. The varied outcomes in the lower courts limited the effectiveness of these reforms since the limits’ application remained uncertain.
McClay v. Airport Management Services
Jodi McClay allegedly suffered soft tissue damage and bruising when a part from a beverage cooler at a Hudson News store in Nashville International Airport fell on her foot. She sued Airport Management Services (AMS) for negligence and a jury awarded her $444,500 for future medical expenses and $930,000 for pain and suffering and lost enjoyment of life. AMS asked the federal court to apply Tennessee’s $750,000 cap on noneconomic damages, leading the plaintiff to challenge the constitutionality of the statute. She alleged that the cap violated her right to trial by jury, separation of powers, and equal protection under the Tennessee Constitution. The district court certified these questions to the Tennessee Supreme Court.
In a 3-2 decision, the Tennessee Supreme Court rejected each of these challenges.6 The court recognized that the legislature regularly alters common-law causes of action and available remedies. It can “weigh and balance competing public and private interests in order to place reasonable limitations on rights of action in tort” and can create a cause of action as well as abolish one.7 The right to jury trial ensures an unbiased jury decides contested factual issues. That right “does not entitle a plaintiff to any particular cause of action or any particular remedy.”8 In reaching this decision, the Tennessee Supreme Court drew from rulings in Alaska, Maryland, Michigan, Nebraska, Nevada, Ohio, Oregon, South Carolina, Utah, and Virginia.9 For similar reasons, the court found the limit on noneconomic damages consistent with separation of powers. A statutory limit on damages, the court found, is a substantive law that does not interfere in the procedural operations of the judiciary.10 Finally, the court found that the statutory limit did not violate equal protection by having a disparate impact on women, as the plaintiff claimed. Facially neutral laws can only fail on equal protection grounds if there is evidence the legislature had a discriminatory intent or purpose in enacting the law, which there was not.11
Implications of McClay Beyond the Noneconomic Damage Limit
Sometimes courts bury important material, especially dicta (non-binding statements on matters not specifically before the court) in footnotes. In footnote 6 in the McClay ruling, the Tennessee Supreme Court pointed some sharp dicta at the U.S. Court of Appeals for the Sixth Circuit on its decision in Lindenberg v. Jackson Nat’l Life Insurance Co.12 In that case, a divided three-judge panel of the Sixth Circuit found Tennessee’s statutory limit on punitive damages violates the state constitution’s right to jury trial. While the Tennessee Supreme Court issued the usual disclaimer that it was not deciding an issue not before it, the court stated that it found the reasoning of Lindenberg “unpersuasive.”13 In short, the Sixth Circuit guessed wrong. McClay should eliminate uncertainty on the viability of the punitive damages limit. The decision serves as another example of state courts respecting the legislature’s constitutional authority to set rational bounds on liability as an exercise of its public policy judgment. Just as importantly, McClay reminds federal courts to respect state sovereignty in interpreting state law, particularly when the cases before them involve core questions of the constitutionality of civil justice reform.14
- Pub. Law ch. 510 (Tenn. 2011) (H.B. 2008).
- Tenn. Code Ann. § 29-39-102.
- Tenn. Code Ann. § 29-39-104.
- Recent examples of state high courts upholding noneconomic damage limits include Condon v. St. Alexius Med. Ctr., 926 N.W.2d 136 (N.D. 2019); Tam v. Eighth Jud. Dist. Ct., 358 P.2d 234 (Nev. 2015); Simpkins v. Grace Brethren Church of Del., 75 N.E.3d 122 (Ohio 2016); Mayo v. Wisconsin Injured Patients & Families Comp. Fund, 914 N.W.2d 678 (Wis. 2018).
- See N. Broward Hosp. Dist. v. Kalitan, 219 So. 3d 49 (Fla. 2017); Hilburn v. Enerpipe Ltd., 442 P.3d 1127 (Kan. 2019); Watts v. Lester E. Cox. Ctrs., 376 S.W.3d 633 (Mo. 2012); Beason v I.E. Miller Servs., Inc., 441 P.3d 1107 (Okla. 2019).
- See McClay v. Airport Mgmt. Servs., LLC, No. M2019-00511-SC-R23-CV, 2020 WL 915980, — S.W.3d – (Tenn. Feb. 26, 2020).
- Id. at *3 (quoting Mills v. Wong, 155 S.W.3d 916, 923 (Tenn. 2005)).
- See id. at *4.
- See id. at *5.
- See id. at *6.
- Lindenberg v. Jackson Nat’l Life Ins. Co., 912 F.3d 348 (6th Cir. 2018), rehearing en banc denied, 919 F.3d 992 (6th Cir. 2019), cert. denied, 140 S. Ct. 624 (2019).
- McClay, 2020 WL 915980, at *4 n.6.
- See id. (observing that certifying questions to the state supreme court when there is no controlling precedent “is designed to promote judicial efficiency and comity, and to protect this State’s sovereignty”).