Tennessee Tort Reform Bill Passes, Caps Punitive Damages

(July 29, 2011)

On May 20th, Tennessee Governor Bill Haslam’s House Bill 2008, known as “The Civil Justice Reform Act of 2011”, was approved by the state Senate, as well as the House.

This tort reform bill will protect Tennessee Businesses from large jury verdicts by capping the amount of damages. On May 9th, the Tennessee House of Representatives passed the legislation with a vote of 74-24. On May 12th, the Senate adopted the House Bill 21-12, after adding two amendments.

This bill caps non-economic damages (pain and suffering, loss of enjoyment, humiliation, loss of enjoyment of life, etc.) at $750,000, and $1 million in the extreme case where catastrophic circumstances come into play.

Also, “The Civil Justice Reform Act of 2011” requires a plaintiff to prove by a preponderance of evidence that the defendant was malicious with intent in order to receive any punitive damages. Punitive damages will be capped at two times the amount of compensatory damages or $500,000, whichever is greater.

This bill will take effect on October 1, 2011, and applies to all liability actions for injuries after this date. When asked about the bill, Governor Haslam responded, “Tennessee has many great attributes going for it as we recruit companies interested in relocating to our state or expanding here, but the global competition for jobs continues to grow. This legislation removes one of the few advantages surrounding states had and makes our state even more desirable to business as we go out and see Tennessee as the best place int eh Southeast to do business.”

Economic experts agree that this is a great bill that will propel Tennessee in terms of places businesses look to expand. Since there will now be a cap, everything is much more predictable, and we could eventually see Tennessee’s business economy start to blossom at an exponential rate.

However not everybody sees this as a good thing. Sure, it’s great for the businesses looking to get started. But what about the plaintiff’s who are injured? By injury, of course, I am referring to pain and suffering, as only these non-economic damages are capped. Yet these limitations in essence nullify the whole purpose of punitive damages. If the results of a company’s actions leads to the harm of another, they should be penalized, regardless of limitations. For one individual, a $750,000 verdict might be a lot to pay, but to a multi-billion dollar company, it’s essentially pocket change. If their actions lead to making more money – even if they have to affect the lives of others along the way – what’s a small “fee”, so long as it is capped?

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