In 2011, Tennessee enacted a new statute capping awards of punitive damages at $500,000 or double the compensatory damages, whichever is greater. To date, no appellate decisions in any state courts have addressed whether the cap is valid under the Tennessee Constitution. That did not stop a federal court from weighing in. The Sixth Circuit ruled last month in Lindenberg v. Jackson National Life Insurance Company, that the cap violates the constitutional right to trial by jury under Article I, Section 6 of the Tennessee Constitution.

The Sixth Circuit rested its decision primarily on two findings: (1) that there was a common-law right to have the jury determine punitive damages when the Tennessee Constitution was adopted in 1796; and (2) that Tennessee decisions have treated punitive damages as a finding of fact within the province of the jury.

The decision was not unanimous.

Judge Joan Larsen wrote a sharp dissent and questioned the majority’s decision to forgo certifying the unsettled question of state law to the Tennessee Supreme Court. She also questioned whether state-law right to a jury trial—as a procedural question—would even apply in federal court with a federal jury. Regarding the constitutional question, Judge Larsen disagreed with the majority’s finding that the cap interfered with the jury’s fact-finding function.  She also disagreed with the scope of the majority’s inquiry into the existence of punitive damages awards when the Tennessee constitution was adopted.

According to Judge Larsen, the scope should not have been whether there were any punitive damages awards in any kind of case, but whether there had been any awards of punitive damages before the adoption of the constitution in the specific kind of case presently before the court. Judge Larsen ended by stating that “striking down a new state law on novel state-constitutional law grounds” would risk causing friction with state courts and that the majority’s decision was reached “at the expense of comity and our cooperative federalism.”

The constitutionality of the cap on punitive damages remains an open question.

The Tennessee Supreme Court is the final authority on the state constitution. So the Sixth Circuit’s opinion about the constitutionality of the damages cap is controlling law only in Federal district courts and only until the Tennessee Supreme Court decides the issue.