6th Circuit Federal Court Rules Cap on Punitive Damages is Unconstitutional

A Tennessee statute capping punitive damages is unconstitutional, a panel for the U.S. Court of Appeals Sixth Circuit has ruled.

The Sixth Circuit panel ruled 2-1 on Dec. 21 that state case law shows an award of punitive damages is a “finding of fact” that is allowed by jurors.

The case involved a dispute between Tamarin Lindenberg, individually and as guardian for her minor children, and Jackson National Life Insurance Co., which had a $350,000 life insurance policy on Lindenberg’s ex-husband.

The panel cited the Tennessee Constitution of 1796 and its relation to the constitution and common laws of North Carolina when Tennessee adopted the document. The panel found that a right to jury trials and punitive damages existed at the time.

The panel’s ruling states:

Defendant Jackson National Life Insurance Company (“Defendant”) appeals from the district court’s judgment enforcing a jury trial verdict of $350,000 in actual damages, $87,500 in bad faith damages, and $3,000,000 in punitive damages in favor of Plaintiff Tamarin Lindenberg (“Plaintiff”), individually and in her capacity as natural guardian of her minor children, ZTL and SML. Plaintiff cross-appeals, challenging a statutory cap that the district court applied to reduce the award of punitive damages to $700,000. The State of Tennessee (“the State”) intervened to defend the statute. For the reasons that follow, we AFFIRM the district court’s judgment on all issues raised in Defendant’s appeal, REVERSE on the issue raised in Plaintiff’s cross-appeal, VACATE the judgment as to punitive damages, and REMAND with instructions for the district court to recalculate the award of punitive damages in accordance with the jury verdict and with this Court’s holding that the statutory cap on punitive damages,T.C.A. § 29-39-104, is unconstitutional.

Courthouse News Service said:

A federal jury in Memphis found in December 2014 that Jackson National Life Insurance Company had breached its contract to pay out a life insurance policy to Tamarin Lindenberg for the death of her ex-husband.

After a six-day trial, the jury awarded Lindenberg $350,000 in actual damages, $87,500 in bad faith damages and as a punishment for Jackson National’s fraud, $3 million in punitive damages.

Under Tennessee law, punitive damages can be awarded in breach of contract cases if the defendant acted intentionally, fraudulently or recklessly.

The Tennessee Star