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Brief Summary: Under the Tennessee tort reform bill of 2011, the legislature provided specific requirements for the assessment of punitive damages in Tennessee. Many of these requirements were present in pre-existing case law but some of them are new. The main impact of this statute, T.C.A. § 29-39-104, is it codified case law requirements for punitive damage awards.
Analysis: The Tennessee tort reform bill of 2011 provided a new statute that provided specific rules for when punitive damages can be assessed in civil actions in Tennessee. T.C.A. § 29-39-104 outlines the requirements for a punitive damages award under Tennessee law. This statute is only in effect for causes of actions that accrue on or after October 1, 2011. T.C.A. § 29-39-104(a)(1) provides as follows:
(a) In a civil action in which punitive damages are sought:
(1) Punitive damages may only be awarded if the claimant proves by clear and convincing evidence that the defendant against whom punitive damages are sought acted maliciously, intentionally, fraudulently or recklessly;
This statute is broad because it is intended to apply to all civil actions where punitive damages are assessed. This opening section of the statute sets out the first threshold identifying when punitive damages can be assessed. The jury or judge must find that the defendant acted "maliciously, intentionally, fraudulently, or recklessly." Further, this must be proved by “clear and convincing evidence”. The Tennessee Supreme Court held in Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901 (Tenn. 1992) in footnote #3 that "clear and convincing evidence means evidence in which there is no serious or substantial doubt about the correctness of the conclusions drawn from the evidence."
T.C.A. § 29-39-104(a)(2) provides more requirements for a punitive damages award. This section requires that the punitive damages phase of the trial should be bifurcated (held separately) and the trier of fact must first determine whether compensatory damages are to be awarded and how much those damages are before proceeding to the punitive damages phase of the trial. Then, the jury must determine whether each defendant's conduct was "malicious, intentional, fraudulent or reckless." Next the jury must determine whether any T.C.A. § 29-39-104(a)(7) exception to the cap on punitive damages applies. The exceptions to the new cap on punitive damages were discussed in a prior blog post here.
After a jury finds that the defendant engaged in malicious, intentional, fraudulent or reckless conduct, under T.C.A. § 29-39-104 the Court then “promptly commences” an evidentiary hearing where the trier of fact will determine the amount of punitive damages. Under T.C.A. § 29-39-104(a)(4), the trier of fact should determine the amount of a punitive damage award by considering the following elements:
1. the defendant's financial condition and net worth;
2. the nature and reprehensibility of the defendant's wrongdoing;
3. the impact of the defendant's conduct on the plaintiff;
4. the relationship of the defendant to the plaintiff;
5. the defendant's awareness of the amount of harm being caused and the defendant's motivation in causing such harm;
6. the duration of the defendant's misconduct and whether the defendant attempted to conceal such misconduct;
7. the expense plaintiff has borne in attempts to recover the losses;
8. whether the defendant profited from the activity, and if defendant did profit, whether the punitive award should be in excess of the profit in order to deter similar future behavior;
9. whether, and the extent to which, defendant has been subjected to previous punitive damage awards based upon the same wrongful act;
10. whether, once the misconduct became known to defendant, defendant took remedial action or attempted to make amends by offering a prompt and fair settlement for actual harm caused; and
11. any other circumstances shown by the evidence that bear on determining a proper amount of punitive damages.
Under this statute, the jury must be instructed that the "primary purpose of punitive damages is to punish the wrongdoer and deter similar misconduct in the future by the defendant and others while the purpose of compensatory damages is to make the plaintiff whole." The remaining parts of T.C.A. § 29-39-104 provide additional details on the assessment of punitive damages including caps that apply to the damages on those damages that I discussed in a prior blog post.
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