Tamarin Lindenberg v. Jackson Nat'l Life Ins. Co.
912 F.3d 348 (2018)
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Rule of Law:
A legislative cap on punitive damages violates the Tennessee Constitution's right to a trial by jury because, under the common law at the time of the constitution's adoption, the determination of the amount of punitive damages was a finding of fact within the exclusive province of the jury.
Facts:
- Thomas A. Lindenberg held a $350,000 life insurance policy with Jackson National Life Insurance Company ('Jackson National'), naming his wife, Tamarin Lindenberg, as the 100% primary beneficiary.
- The policy designated the couple's adopted minor children as contingent beneficiaries.
- The Lindenbergs divorced in 2006, executing a Marital Dissolution Agreement (MDA).
- The MDA required Thomas to maintain separate life insurance for the benefit of the children, while also requiring Tamarin to continue paying the premiums on the specific Jackson National policy.
- Thomas Lindenberg died on January 22, 2013.
- On February 6, 2013, Tamarin Lindenberg filed a claim for the death benefit under the policy.
- Jackson National refused to pay the claim, citing ambiguity from the MDA and demanding that Tamarin Lindenberg obtain waivers from other potential claimants, including the minor children.
Procedural Posture:
- Tamarin Lindenberg sued Jackson National in the U.S. District Court for the Middle District of Tennessee for breach of contract and bad faith.
- Jackson National filed a counterclaim for interpleader, asking the court to determine the rightful beneficiary of the insurance proceeds.
- The district court dismissed Jackson National's interpleader action and ordered it to pay the $350,000 policy benefit to Lindenberg.
- Lindenberg's claims for bad faith and punitive damages proceeded to a weeklong jury trial.
- The jury returned a verdict for Lindenberg, awarding $350,000 in actual damages, $87,500 in statutory bad faith damages, and $3,000,000 in punitive damages.
- Upon Jackson National's motion, the district court applied a Tennessee statute (T.C.A. § 29-39-104) to cap the punitive damages award, reducing it to $700,000.
- Jackson National, the defendant, appealed the judgment to the U.S. Court of Appeals for the Sixth Circuit.
- Lindenberg, the plaintiff, filed a cross-appeal challenging the district court's application of the punitive damages cap.
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Issue:
Does Tennessee's statutory cap on punitive damages, T.C.A. § 29-39-104, violate the right to a trial by jury under Article I, section 6 of the Tennessee Constitution?
Opinions:
Majority - Clay, Circuit Judge.
Yes, Tennessee's statutory cap on punitive damages violates the right to a trial by jury under the Tennessee Constitution. The right to a jury trial as guaranteed by the Tennessee Constitution is inviolate and preserves the right as it existed at common law in 1796. Historical evidence from Tennessee and North Carolina common law demonstrates that juries were empowered to award punitive damages at that time. Furthermore, Tennessee Supreme Court precedent has historically treated the amount of a punitive damages award as a 'question...purely of fact' within the exclusive province of the jury. By imposing a statutory cap, the legislature unconstitutionally invades this core fact-finding function of the jury, substituting its judgment for the jury's determination.
Concurring-in-part-and-dissenting-in-part - Larsen, Circuit Judge.
No, the statutory cap on punitive damages should be upheld. The majority errs by not certifying this novel and unsettled question of state constitutional law to the Tennessee Supreme Court. It is also not clear that the Tennessee Constitution's jury trial right even applies in a federal diversity case governed by federal procedural rules. Even if it does apply, the statute should be upheld under the strong presumption of constitutionality. A damages cap does not interfere with the jury's fact-finding role; it merely applies a legal consequence to that finding. Moreover, the majority's historical analysis is flawed, as punitive damages were not available for breach of contract actions under the common law in 1796, meaning no such right was 'inviolate' for this type of case.
Analysis:
This decision represents a significant, though not binding on state courts, invalidation of a major Tennessee tort reform statute by a federal appellate court. It establishes that, within the Sixth Circuit, Tennessee's punitive damages cap will not be enforced, creating a split between how the law is applied in federal versus state courts until the Tennessee Supreme Court resolves the issue. The ruling reinforces the jury's role in determining punitive damages as a fundamental, constitutionally protected fact-finding function, which could influence future challenges to similar legislative reforms in Tennessee and other states with analogous constitutional provisions.
