A Tennessee law that caps punitive monetary damages in civil lawsuits is unconstitutional. That was the determination of a 6th U.S. Circuit Court of Appeals panel ruling last week. In the 2-1 split decision, the judges cited the Tennessee Constitution, and borrows from North Carolina's, as well as state case law reaching into the 1800's to show awards of punitive damages are "finding of fact" that ultimately rests in the hands of jurors.
The appellate decision in the case, released 12/21/18, is based upon a lawsuit filed by Tamarin Lindenberg in 2013 on behalf of herself and two children against Jackson National Life Insurance Company. Her attorneys claimed the insurer breached contract on a life insurance policy for her ex-husband.
A U.S. District Court jury in Memphis, in late 2014, found in Lindenberg's favor following a trial. The jurors awarded $350,000 in actual damages, $87,500 in bad faith damages and as a punishment for Jackson National's actions, added an additional $3 million in punitive damages. Under current Tennessee law, punitive damages may be awarded in breach of contract cases if a defendant acted fraudulently, recklessly, or intentionally. According to court records, Jackson National's staff told her that she had waived her beneficiary status, as well as additional requirements. Among other provisions, the relevant Tennessee law capped punitive damages at two times the amount of compensatory damages, or $500,000, whichever is greater.
U.S. District Judge Jon McCalla, who was presiding over the trial in Memphis, deferred to the state, reducing the punitive damages award to $700,000 (from $3 million) in September 2016. Following that decision, it was appealed to the 6th U.S. Circuit in Cincinnati. For more about this story, click here. To read the 25 page 6th U.S. Circuit Court of Appeals decision, click here.
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