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The Constitutionality of Caps – The High Court in Tennessee Upholds Statutory Limits on Noneconomic Damages

Author: Harry Harrison

Guest Editor: Ashley Kaye

February 1, 2021 8:30pm

Background

In February 2020, the Tennessee Supreme Court upheld the state’s cap on noneconomic damages found in section 29-39-103 of the Tennessee Code Annotated.

In McClay v. Airport Management Services, LLC, 596 S.W.3d 686 (Tenn. 2020), plaintiff Jodi McClay sued defendant Airport Management Services, LLC (“AMS”) for personal injuries she sustained in a Hudson News store at the Nashville International Airport.  The case proceeded to trial, and a jury returned a verdict that included $444,500 for future medical expenses and $930,000 for noneconomic damages.  AMS then moved the trial court for application of the statutory cap.  In opposition, plaintiff contended the cap was unconstitutional on three grounds.

First, plaintiff contended the cap violates a litigant’s right to a trial by jury.  Second, she contended it violates well-settled separation of powers principles.  Third, McClay argued the cap disproportionately discriminates against women.  The district court certified those three issues for consideration by the Tennessee Supreme Court.

In affirming the constitutionality of the statutory cap, the Tennessee high court considered all three of these arguments.  As to the first, the majority opinion noted the right to a jury trial is satisfied when a jury makes a factual determination as to the amount of noneconomic damages, and that right is not violated by the post-trial application of a cap on those damages.[i]

Regarding the suggested violation of the separation of powers between the judicial and legislative branches, the court’s majority likewise concluded the noneconomic damages cap does not belie separation.  Justice Bivens wrote, “[t]he statutory cap does not interfere with the judicial power of the courts to interpret and apply the law.”[ii]

Finally, asked to consider whether the noneconomic damages limit discriminates against women, the question before the court was not whether there was discriminatory intent on the part of the General Assembly in enacting the statute, but instead whether the cap has a disparate impact on women.  The court, relying on federal treatment of such arguments under the U.S. Constitution, concluded: “The United States Supreme Court has held repeatedly that the Equal Protection Clause of the Federal Constitution does not provide for disparate impact claims.”[iii]

While the Tennessee Supreme Court upheld the legislated cap on noneconomic damages in most injury cases, the full reach of the McClay decision the Volunteer State and beyond is yet to be seen.  The decision certainly provides sound judicial support for what many believe is the most compelling case for tort reform via statutory damages caps.  However, not all courts agree.

In Lindenberg v. Jackson National Life Insurance Company, 912 F.3d 348 (6th Cir. 2018), the Sixth Circuit found Tennessee’s similar cap on punitive damages to be unconstitutional, and did so in consideration of issues practically identical to those considered in McClay.  However, as the court noted in the McClay decision, the Tennessee Supreme Court did not certify the constitutional questions presented in the Lindenberg matter for its consideration.  While the McClay decision only addresses the cap applicable to noneconomic damages, Justice Bivens’ language therein suggests the court’s rationale can readily apply to other statutory caps, including the cap on punitive damages.

Takeaway

Tennesseans can safely expect further judicial guidance on this issue and the issue of tort reform as a whole.  Tort reform comes in many shapes and sizes, and there is no shortage of hearty debate on the topic.  Arguments of the very real dangers and consequences of runaway verdicts on individuals, businesses, and insurers, are countered by arguments of deterrence and appropriate compensation to those who are injured.

While these and other policy arguments abound, decisions like McClay focus on the constitutionality of legislation that impacts judicial decisions.  Challenges and considerations of such legislative involvement will continue so long as legislatures seek to affirmatively address tort reform.

[i] McClay, supra at p. 693.

[ii] Id. at p. 695.

[iii] Id.

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