A little over a year ago, on June 16, 2011, Tennessee Governor Bill Haslam signed into law the Tennessee Civil Justice Act of 2011 (“TCJA” or “Act”). The Act, among other things, places limits on noneconomic and punitive damages that can be recovered in civil lawsuits. Governor Haslam applauded the General Assembly’s passage of the Act, a part of his first-term strategic legislative package, stating, “This legislation removes one of the few advantages surrounding states had and makes our state even more desirable to businesses as we go out and sell Tennessee as the best place in the Southeast to do business.”
The TCJA has been effect in effect for less than a year, so any economic benefit anticipated by the Governor has yet to be documented. A question more interesting to lawyers, however, is will the Act survive a constitutional challenge to mature and fulfill the Governor’s purpose, or will it die in its infancy? The Missouri Supreme Court recently struck down a similar tort reform law that imposed caps on noneconomic damages as being an unconstitutional limitation on the state’s constitutional right to trial by jury. Although the Tennessee appellate courts have not yet addressed the constitutionality of the TCJA, cases raising similar constitutional challenges will be worth watching as they make their way through the court system.
In order to better understand the nature of constitutional challenges to caps on noneconomic damages, it helps to understand what noneconomic damages are, what they are not, and the arguments for and against the position that legislative limitations on noneconomic damages violate a constitutional right to trial by jury.
In Tennessee civil actions, plaintiffs typically seek two types of monetary awards for actual losses: economic damages and noneconomic damages. Economic damages generally include out-of-pocket expenses or “objectively verifiable monetary losses” such as medical expenses, loss of income, burial costs, and loss of business or employment opportunities. Noneconomic damages, on the other hand, are more subjective in nature. This category of damages includes, by definition, the following:
- physical and emotional pain;
- physical impairment;
- mental anguish;
- emotional distress;
- loss of society, companionship, and consortium;
- injury to reputation;
- noneconomic effects of disability, including loss of enjoyment of normal activities, benefits and pleasures of life and loss of mental or physical health, well-being or bodily functions; and
- all other nonpecuniary losses of any kind or nature.
With the enactment of the TCJA, a plaintiff’s recovery of non-economic damages is limited to $750,000, unless the loss is catastrophic in nature or an intentional act. In the case of catastrophic injury, such as spinal injuries resulting in paraplegia/quadriplegia, significant burns, amputation, or the wrongful death of the parent of a minor child, the cap on non-economic damages is increased to $1,000,000. The caps on noneconomic damages do not apply if a defendant’s actions are intentional, although the TCJA does place caps on punitive damages, when imposed in cases where the defendant acted intentionally.
In practice, the TCJA prohibits disclosure of the noneconomic damages cap to the jury. Instead, a jury proceeds as it would have prior to the enactment of the TCJA by awarding the amount of noneconomic damages it finds appropriate based upon the facts of the case. After the jury announces its findings and award, the judge then applies the cap to any award of noneconomic damages in excess of $750,000.
II. Constitutional Challenges to Legislative Limitations on Noneconomic Damages
Opponents of legislation limiting noneconomic damages argue, in part, that such limitations violate the constitutional right to trial by jury. In Tennessee, the Constitution states that “the right to trial by jury shall remain inviolate . . . .” The Tennessee Supreme Court has interpreted this provision to mean that the right to a jury trial as it existed at common law before adoption of the first Tennessee Constitution in 1796 was preserved following its adoption. As a result, opponents of the TCJA argue that because juries were freely allowed to determine the amount of damages to be awarded to a plaintiff before adoption of the Tennessee Constitution, legislative attempts to cap a jury’s damages award would violate the Constitution’s requirement that the right to trial by jury remain inviolate.
The Missouri Supreme Court recently held that a similar legislative cap on noneconomic damages violates the Missouri Constitution's inviolate right to trial by jury. On July 31, 2012, the Missouri Supreme Court considered the case of a Plaintiff who had been awarded $3.371 million in economic damages and $1.45 million in noneconomic damages by a jury. As required by Missouri statute, the trial judge reduced the Plaintiff’s award for noneconomic damages to $350,000. The Plaintiff appealed, arguing that the statutory cap on noneconomic damages violated the section of the Missouri Constitution which provided that “the right of trial by jury as heretofore enjoyed shall remain inviolate . . . .” After a detailed analysis of Missouri history, the Missouri Supreme Court concluded that because an individual’s right to have a jury determine the amount of damages without limitation or cap existed prior to the adoption of the Missouri Constitution, any attempt to impose restrictions on the jury’s award is a violation of that state’s inviolate right to trial by jury. To support its position, the Court referred to the decisions by high courts of other states determining that such caps were unconstitutional. Specifically, the court noted that Washington, Oregon, Alabama, and Florida had all determined that similar restrictions on a jury’s award of noneconomic damages were unconstitutional.
The Missouri Supreme Court’s decision was not, however, unanimous. The dissenting Justice argued that because the caps on noneconomic damages were to be applied after the jury makes its unfettered determination of the amount of damages to be awarded (as in Tennessee), the legislature was not invading the fact-finding province of the jury by imposing caps. The jury remains free to make any damages determination it finds to be supported by the facts. The legislature, however, may by statute cap the amount after that determination is made. The Justice also pointed out that other states, such as Nebraska, Idaho, Ohio, Maryland, and Virginia, had reached similar conclusions and upheld statutory caps on noneconomic damages.
It is only a matter of time before the Tennessee Supreme Court will have to address the constitutionality of the TCJA. In fact, in a federal district court action currently pending in Nashville styled Gummo v. Ward, the plaintiff is challenging the constitutional validity of the TCJA and requesting that the judge resolve the constitutional issue or certify the question to the Tennessee Supreme Court. Relying in part on the Missouri case, the plaintiff argues that the TCJA violates the Tennessee Constitution's right to trial by jury. The Tennessee Attorney General has entered an appearance in the case, but the judge has not yet ruled on the plaintiff’s request. The case will certainly be one to follow in the coming months as this issue comes to a head in Tennessee.
We do not know how the Tennessee Supreme Court will rule when faced with a constitutional challenge to the noneconomic damages cap imposed by the TCJA, nor is it known how the Tennessee business community will react to any decision handed down. Prior to enactment of the TCJA, Tennessee successfully attracted businesses like Volkswagen, Nissan, GM, Wacker Chemical, and others. Should the legislation survive challenge it may very well fulfill Governor Haslam’s economic plan by lowering civil litigation exposure to those who chose to relocate to or transact business in Tennessee. Yet, if the Act is deemed unconstitutional in its infancy only time will tell whether any negative economic affect can be measured given Tennessee’s pre-TCJA success at attracting new business to the state. Stay tuned.
Source: Tennessee Business Litigation Newsletter