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Tennessee Tort Reform – Exceptions to the punitive damages cap found in T.C.A. § 29-39-104
Posted on Jul 13 2012 10:09AM by Attorney, Jason A. Lee
Brief Summary: The <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Tennessee tort reform bill of 2011 added a punitive damages cap in T.C.A. § 29-39-104. This cap has four exceptions. These four exceptions are: (1) the defendant’s act is intentional; (2) the defendant intentionally concealed or falsified evidence; (3) the defendant was under the influence of drugs or alcohol; (4) the defendant was convicted of a felony (for the act that caused the injury). <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Analysis: I previously discussed the punitive damages cap found in T.C.A. § 29-39-104 that went into effect for all actions that accrue on or after October 1, 2011. See punitive damages blog post. This punitive damages cap also has specific exceptions found in the statute. These exceptions operate to remove the cap put in place in this statute providing that punitive damages awards can not exceed two times the total amount of compensatory damages award or $500,000.00, whichever is greater. Specifically, T.C.A. § 29-39-104(a)(7) provides:
(7) The limitation on the amount of punitive damages imposed by subdivision (a)(5) shall not apply to actions brought for damages or an injury:
(A) If the defendant had a specific intent to inflict serious physical injury, and the defendant's intentional conduct did, in fact, injure the plaintiff;
(B) If the defendant intentionally falsified, destroyed or concealed records containing material evidence with the purpose of wrongfully evading liability in the case at issue; provided, however, that this subsection (a) does not apply to the good faith withholding of records pursuant to privileges and other laws applicable to discovery, nor does it apply to the management of records in the normal course of business or in compliance with the defendant's document retention policy or state or federal regulations; or
(C) If the defendant was under the influence of alcohol, drugs or any other intoxicant or stimulant, resulting in the defendant's judgment being substantially impaired, and causing the injuries or death. For purposes of this subsection (a), a defendant shall not be deemed to be under the influence of drugs or any other intoxicant or stimulant, if the defendant was using lawfully prescribed drugs administered in accordance with a prescription or over-the-counter drugs in accordance with the written instructions of the manufacturer;
(D) If the defendant's act or omission results in the defendant being convicted of a felony under the laws of this state, another state, or under federal law, and that act or omission caused the damages or injuries.
It is important to note that the original statute (passed in 2011) did not have the fourth exception found in (a)(7)(D). This exception was added on June 12, 2012 with the provision that "this act shall take effect upon becoming a law, the public welfare requiring it." The bill can be found here: http://www.tn.gov/sos/acts/107/pub/pc0902.pdf. Since the addition of subsection (a)(7)(D) will most likely be interpreted as a substantive change to the statute it will only apply to causes of action that accrue on or after June 12, 2012.
Subsection (a)(7)(A) could cause a significant increase in litigation over the intent behind damages caused by the defendant. Specifically, if the defendant had a specific "intent to inflict serious physical injury" and the intentional conduct actually did "in fact, injure the plaintiff" then the punitive damages cap will not apply. This is a relatively narrow exception that is designed to prevent a defendant from taking advantage of the cap after they intentionally inflict serious personal injury upon another person.
Subsection (a)(7)(B) provides an exception to the cap if the defendant intentionally "falsified, destroyed, or concealed records" that contain "material evidence" for the specific purpose of trying to evade liability. This provides some real teeth to a spoliation defense. The court could provide an instruction to the jury pertaining to spoliation of documents and also hold that the spoliation causes the lifting of the punitive damages cap found in T.C.A. § 29-39-104. In a significant value case this could substantially penalize the defendant.
Subsection (a)(7)(C) provides an exception to the punitive damages cap in T.C.A. § 29-39-104 if the defendant was under the influence of "alcohol, drugs or any other intoxicant or stimulate, resulting in his or her judgment being substantially impaired, and causing the injuries or death." As a result, this exception has three specific components. First, the defendant must actually be under the influence of alcohol, drugs, or another intoxicant or stimulant. Second, the intoxicant must result in the defendant's judgment being "substantially impaired". Obviously, this will be fruitful ground for disagreement between plaintiff and defense attorneys. Finally, the “substantial impairment” must cause the injuries or death at issue. Interestingly, there is an exception to this exception if the defendant was lawfully using prescribed drugs and complying with the prescription was or using over-the-counter drugs in accordance with the written instructions of the manufacturer.
Subsection (a)(7)(D) provides an exception to the caps if the defendant’s act, that is the basis for the lawsuit, also causes the defendant to be convicted of a felony. The conviction can be in any state or under federal law.
Interestingly, the exceptions are identical to the exceptions for the plaintiff to escape the noneconomic damages cap found in T.C.A. § 29-39-102. As a result, if any of these exceptions applies, then the noneconomic damages cap no longer applies in addition to the removal of the punitive damages cap. Also, it is important to remember that if the punitive damages cap is lifted under any of these exceptions this does not provide an unlimited potential exposure for punitive damages. The State Farm and Flax decisions still provide an outer limit for the appropriate ratio between compensatory damages and punitive damages. Generally, the extreme outer limit ratio between punitive damages and compensatory damages is 9 to 1 and this is discussed in detail here.
TAGS: Tennessee Tort Reform, Damages, Punitive Damages
Jason A. Lee - 7/13/2012 1:21:17 PM
I agree with you. The way I read the statute, the exception to the punitive damages cap requires the actual defendant for whom the cap is lifted to have the "specific intent to inflict serious physical injury". In the situation you addressed, with a vicarious charge only, the actual conduct of the bar or restaurant could reach the level of negligence or recklessness, but I do not see how the bar or restaurant could be found to have the "specific intent" to injure required under this statute. The plain language of this statute requires the specific "intent element" and I do not see how that could be reached unless there is a specific finding that the defendant intentionally harmed the plaintiff.
Steven J. Meisner - 7/13/2012 1:01:07 PM
Can a negligent defendant fall within the “intentional exception” to the cap when his negligence causes a foreseeable intentional tort to occur?
Consider the case of patron on patron violence in a bar. Generally, the bar has a duty to take reasonable measures to protect its customers from foreseeable attacks if the bar knows, or has reason to know, either from what has been or should have been observed or from past experience, that attacks are reasonably foreseeable. See Limbaugh v. Coffee Med. Ctr., 59 S.W.3d 73 (Tenn. 2001) and Turner v. Jordan, 957 S.W.2d 815 (Tenn. 1997). In this context, the bar’s negligence can not be compared with the intentional conduct of its patron where the assault is the foreseeable risk created by the negligent bar. In Limbaugh, the Court conclude that where the intentional actor and the negligent actor are both named defendants and each are found to be responsible for the plaintiff's injuries, then each defendant will be jointly and severally responsible for the plaintiff's total damages. Id. at 87.
So what about punitives?
In the case of Price v. Clapp, 105 S.W. 864 (Tenn. 1907), the Court stated that if the liability of the defendant was shown to be “technical or vicarious only” and he was not a participant in the actual tort committed by his co-defendant, he should be held liable only for compensatory damages, and that it would be proper for him to be exonerated from punitive damages even if punitives were imposed upon his co-defendant. The Price case was cited by the Court in Huckeby v. Spangler, 563 S.W.2d 555, 558 (Tenn. 1978). In Huckeby, the Court permitted the apportionment of punitive damages among defendants who were jointly and severally liable.
In my opinion, this is a summary judgment issue. If the charge is simply vicarious in nature, the “intentional exception” to the cap on punitives should not apply without some separate finding that the bars conduct was intentional. Punishing a bar for the conduct of another seems contrary to the intent of punitive damages, and frankly a violation of Due Process.