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Reflections on McClay Part II: Lindenberg Undone – Tennessee Supreme Court Restores Statutory Limits on Damages Awards in Tennessee

For a little over a year, a federal court’s opinion eliminating a Tennessee statutory damages limit as inconsistent with the Tennessee Constitution has stood as the law of the land. On December 21, 2018, a divided panel of the Sixth Circuit struck down Tennessee’s statutory limit on punitive damages in Lindenberg v. Jackson National Life Insurance Company.[1]  The decision was extraordinary for several reasons. First and foremost, it seems that never before had a federal court of appeals held a state statute invalid under a state constitution without a single decision from the state’s supreme court to that effect.[2] Second, the Sixth Circuit had to—and did—overrule its own precedent, which held that punitive damages were not available in such cases, to reach the constitutional questions.[3] Third, the Tennessee Attorney General, who had intervened in the case, specifically asked the Sixth Circuit panel to certify the constitutional questions to the Tennessee Supreme Court[4]—and the panel refused. Requests for review by the en banc (full) Sixth Circuit and appeals to the U.S. Supreme Court also were unavailing.[5] 

Then, just this week, came McClay v. Airport Management Services, LLC.[6] Pending before the Tennessee Supreme Court while Lindenberg worked its way through the federal appeals system, McClay posed identical questions about a different, but similar, statute—Tennessee’s statutory limit on non-economic damages.[7] Like Lindenberg, McClay ultimately will be decided in federal court. But the federal district court where McClay is pending (the M.D. Tenn.) decided, unlike the 6th Circuit in Lindenberg, to certify the constitutional questions to the Tennessee Supreme Court.[8]

The Tennessee Supreme Court answered plainly: (1) “[T]he statutory cap on noneconomic damages . . . does not violate the right to trial by jury under the Tennessee Constitution”; and (2) “[T]he statutory cap on noneconomic damages . . . does not violate the separation of powers doctrine under the Tennessee Constitution.”[9] And while acknowledging that the statutes at issue in McClay and Lindenberg were different,[10] the court also took the opportunity to express its opinion about the Sixth Circuit’s decision: “[W]e note that decisions by federal circuit courts of appeals are not binding on this Court. We also find the reasoning of the majority in Lindenberg unpersuasive in this case.”[11] Further, the court made a recommendation to the Sixth Circuit about how it might handle similar cases in future: “We simply point out that the procedure for certifying questions of state law to this Court is designed to promote judicial efficiency and comity, and to protect this State’s sovereignty.”[12]

Yet McClay was not unanimous. Justices Clark and Lee vigorously dissented from the majority opinion, taking the view that the statutory limit on noneconomic damages “usurps and replaces the jury’s constitutionally protected function of determining damages with an arbitrary ceiling”[13] and “improperly ‘amends’ . . . the Tennessee Constitution to diminish the right to trial by jury.”[14] Even Justice Kirby, who joined the majority, wrote separately to note that “[a] much closer question is presented on whether the statutory cap [on non-economic damages] violates the clause in the Tennessee Constitution guaranteeing a right to trial by jury.”[15] She ultimately concluded, however, that “the plaintiffs in [McClay] ha[d] not shown that the constitutional right to a jury trial was intended to protect plaintiffs from substantive legislative enactments limiting noneconomic damages.”[16]

Thus, although Tennessee law now has been settled by the Tennessee Supreme Court, questions about the future of statutory limits on damages awards persist. Also undecided is whether statutory limits on punitive damages raise questions distinct from those implicated by statutory limits on non-economic damages, such that the McClay holding is more limited—and Lindenberg’s more enduring—than it appears.  Only time will tell. For now, though, Lindenberg is largely undone, and statutory limits on damages awards in Tennessee are restored.

[1] 912 F.3d 348.

[2] See Brief of Amici Curiae U.S. Chamber of Commerce, et al., Dkt. No. 44, Case No. 17-6034, at 8 (“The panel’s decision appears to be inconsistent with every federal circuit that has considered whether a statutory limit on damages violates the Seventh Amendment or a state right to jury trial, including this Court’s own jurisprudence.”)

[3] See Lindenberg, 912 F.3d at 360 (“If Heil remains good law—which Plaintiff disputes—then the district court should have dismissed Plaintiff’s claim for punitive damages in its entirety.”); see also id. at 370 (Larsen, J., concurring in part and dissenting in part) (“That a prior decision of this court has held [that Plaintiff may not recover punitive damages] is no obstacle—the majority overrules this court’s published decision in Heil Co. v. Evanston Insurance Co., 690 F.3d 722 (6th Cir. 2012)[.]”).

[4] See Brief of State of Tennessee, 2018 WL 459376, at *9 n. 2 (stating that if the court determines that Plaintiff is entitled to an award of punitive damages beyond the statutory limit, then it “should certify the constitutional questions to the Tennessee Supreme Court”).

[5] See 919 F.3d 992 (denial of petitions for rehearing en banc) and (denial of Jackson National (Case No. 19-4) and State of Tennessee (Case No.19-13) petitions for a writ of certiorari).

[6] Case No. M2019-00511-SC-R23-CV (Tenn., Feb. 26, 2020).

[7] In addition to asking whether the non-economic damages limit violated the right to trial by jury or the separation of powers under the Tennessee Constitution, both of which questions were at issue in Lindenberg, McClay asked a third question: Whether the non-economic damages limit “violate[d] the Tennessee Constitution by discriminating disproportionately against women.”

[8] Ironically, the federal district court that originally decided Lindenberg (the W.D. Tenn.) did certify the constitutional questions to the Tennessee Supreme Court. The state high court denied certification “because antecedent questions regarding the availability of [punitive] damages had not also been certified.” McClay, Case No. M2019-00511-SC-R23-CV, at 10 n. 6.  Included in the denial, however, was an invitation to the Sixth Circuit to re-certify “both . . . the availability of the remedy of common law punitive damages . . . and the question of the constitutionality of the statutory caps on punitive damages.” Lindenberg, Case No. M2015-02349-SC-R23-CV (Tenn. June 23, 2016) (per curiam). The Sixth Circuit declined the invitation. See Lindenberg, 912 F.3d at 372 (Larsen, J., dissenting) (“I would accept this invitation; but the majority has declined.”)

[9] McClay, Case No. M2019-00511-SC-R23-CV (Maj. Op.), at 10-11. The court also held that the statutory limit on non-economic damages “does not violate the Tennessee Constitution by discriminating disproportionately against women.” Id. at 13.

[10] Id. at 10 n. 6 (“[W]e note that the statutory cap on punitive damages . . . is not at issue in this case, and we express no opinion on this issue.”).

[11] Ibid. (internal citations omitted).

[12] Ibid. (citations omitted).

[13] McClay, Case No. M2019-00511-SC-R23-CV (Clark, J., dissenting), at 3.

[14] McClay, Case No. M2019-00511-SC-R23-CV (Lee, J., dissenting), at 1.

[15] McClay, Case No. M2019-00511-SC-R23-CV (Kirby, J., concurring), at 1.

[16] Ibid.