Sixth Circuit Strikes Down Punitive Damages Cap
The beneficiary of a life insurance policy sued Jackson National Life Insurance Company for breach of contract and bad faith based on its refusal to pay benefits on a life insurance policy. A jury awarded the plaintiff $350,000 in actual damages, $87,500 in bad faith damages and $3,000,000 in punitive damages. During the course of the appeal, the plaintiff challenged a statutory cap that the district court applied to reduce the award of punitive damages to $700,000 and the State of Tennessee intervened to defend the statute. The Sixth Circuit determined the state’s cap on punitive damages is unconstitutional because it infringes on an individual’s right to a jury trial long-guaranteed by the Tennessee Constitution.