When the 107th General Assembly convened this January, the Republican Party controlled the legislature and Governor’s office for the first time in modern Tennessee history. Newly-elected Governor Bill Haslam was determined to make Tennessee more attractive to businesses, and key among his initiatives was tort reform. By session’s end, the General Assembly delivered to Governor Haslam his tort reform measure, which he signed into law on June 16, 2011.

The Tennessee Civil Justice Act of 2011, better known as the Tennessee Tort Reform Bill, goes a long way toward constraining the amount juries may award an injured plaintiff. Foremost, the law caps noneconomic damages at $750,000, and caps punitive damages at twice the amount of compensatory damages or $500,000, whichever is greater. Also, the new law addresses forum shopping by limiting where a plaintiff may file a lawsuit.

Key provisions of the Tennessee Civil Justice Act of 2011

Economic Damages:

  • Places a cap on non-economic damages, which are subjective damages like pain and suffering, at $750,000 per injured plaintiff. The cap does not apply for intentional torts, or when the defendant was under the influence of alcohol or illegal drugs and his or her judgment was substantially impaired, or when a defendant intentionally falsified, destroyed or concealed records to avoid liability.
  • There is no cap, under the measure, on economic damages and any damages that can be objectively quantified may be recovered.
  • Apportions noneconomic damages among multiple defendants found liable under comparative fault based on a percentage of fault so long as the plaintiff’s fault is not equal to or greater than 50%.

Punitive Damages:

  • Caps punitive damages, which must be proved by clear and convincing evidence, at two times compensatory damage or $500,000, whichever is greater unless the defendant intended to injure the plaintiff, was under the influence of drugs or alcohol and his or her judgment was substantially impaired, or intentionally falsified or concealed records to avoid liability.
  • Prevents punitive damages in products liability actions, unless the seller had substantial control over the design or manufacturing of the product or had actual knowledge of the defect in the product at the time it was sold.

Venue and Appeals:

  • Requires civil actions be brought in the county where the events constituting the cause of action occurred, where the business has its principal office, or where its registered agent of record is located.
  • Requires the Court of Appeals to hear appeals from trial court orders granting or denying class action certification if a notice of appeal is filed within 10 days after entry of the order. All proceedings in the trial court are stayed pending the appeal of the class certification ruling.
  • Limits the maximum appeal bond amount from $75 million to $25 million or 125 percent of the judgment amount.

Conclusion

By all accounts, Tennessee’s tort reform measure will be attractive to businesses, as the law should prevent outrageous verdicts and limit frivolous lawsuits.  But many argue that the bill is a solution in search of a problem - that jury verdicts in Tennessee were not out of control. And there is also the specter of unintended consequences. For instance, intent will now be central to many claims, an area the plaintiff’s bar will certainly exploit. Before all is done, the Tennessee Supreme Court will no doubt have its say - which may be an issue for a future eNewsletter update.