On February 27, the U.S. Court of Appeals for the Fifth Circuit ruled in favor of Greenberg Traurig (GT) client Sears, Roebuck & Co., affirming the constitutionality of Mississippi’s $1 million statutory cap on noneconomic damages in Learmonth v. Sears, Roebuck and Co., No. 09-60651 (5th Cir. Feb. 27, 2013). The Learmonth appeal, which took four years and multiple rounds of briefing and argument to decide, and passed back and forth between the Fifth Circuit and the Mississippi Supreme Court, has been closely watched by legal observers from the plaintiffs’ bar and tort reform groups. The Court’s lengthy and well-reasoned decision is likely to be an important precedent in cases challenging similar state legislative caps on noneconomic damages around the country. GT attorneys Frank A. Citera, Greg E. Ostfeld, and Tanisha R. Reed from GT’s appellate practice group represented Sears in the appeal.

The plaintiff, Lisa Learmonth, was injured in a collision between her vehicle and a van operated by a Sears employee. At the conclusion of trial, a federal jury found Sears liable for Learmonth’s injuries, and awarded her $4 million in compensatory damages, which the parties stipulated and the district court found included $2.2 million in noneconomic damages. Applying the statutory cap, Miss. Code § 11-1-60, the court reduced the noneconomic damages award to the statutory limit of $1 million. Learmonth challenged the constitutionality of the damages cap under the Mississippi Constitution as violations of her right to a jury trial and Mississippi’s separation of powers. The Fifth Circuit initially certified the constitutionality of the statute to the Mississippi Supreme Court, which ultimately declined the question. Sears, Roebuck & Co. v. Learmonth, 95 So.3d 633, 639 (Miss. 2012) (en banc). The matter then returned to the Fifth Circuit for decision.

The Fifth Circuit concluded that Mississippi’s statutory cap does not violate Mississippi’s jury guarantee that the “right of trial by jury shall remain inviolate,” Miss. Const. art. III, § 31, nor does it violate Mississippi’s separation of powers clause, Miss. Const. art. I, §§ 1, 2.

In finding that the cap does not violate Mississippi’s right to a jury trial, the Court concluded:

• The statutory limit does not disturb the jury’s fact-finding role in deciding the amount of damages, and the jury is not even told of the cap. The judge applies the cap only at the judgment stage, after the jury has completed its function, which comports with the court’s traditional role of applying the law to the jury’s factual findings.
• Mississippi’s right to a jury trial does not include a right to have the jury’s compensatory damages finding translated “dollar for dollar” into a binding judgment, in light of the state legislature’s long-recognized authority to set public policy and to alter or limit personal remedies.
• The reasoning of a minority of courts striking down noneconomic damages caps as violating the right to trial by jury contradicts the traditional understanding of the law’s function in defining the permissible remedy and its measure.
• The framing of Mississippi’s jury trial right as an “inviolate” right does not prevent the legislature from setting substantive limits on remedies, as inviolability simply means that the jury trial right is protected absolutely where it applies; it does not establish the boundaries of what the jury trial right encompasses.

In finding that the cap does not violate Mississippi’s separation of powers, the Court held:

• Application of the statutory limit does not interfere with the judicial procedure of remittitur, because it sets a statutory, non-discretionary limit on the permissible legal remedy separate from and not intruding upon remittitur.
• The statutory limit does not facially violate separation of powers, because it merely defines substantive legal rights and a permissible legal remedy, not the mode of proceeding in court. By its very nature, non-procedural law affects judicial application of the law, but separation of powers does not prohibit the legislature from enacting changes to substantive law.

The Court also rejected the plaintiff’s suggestion that, if the legislature can limit noneconomic damages to $1 million, then nothing stops it from limiting damages to $1.00. The Court recognized that there may be some circumstances under which the Mississippi Constitution’s Due Process Clause or Remedy Clause might impose substantive constraints on the legislature’s authority to cap damages, but noted that the issue had not been raised on appeal and was not a concern under the circumstances of this case.

The Fifth Circuit is the seventh federal appeals court to uphold a statutory limit on damages, but the first to do so following a recent split in authority between state supreme and intermediate appellate courts in California, Georgia, Illinois, Kansas, Maryland, Missouri, and West Virginia regarding the constitutionality of similar tort reform measures. Efforts to limit or cap noneconomic damages will continue to be a high priority for those states seeking to foster a more business friendly environment, and the Learmonth decision is likely to remain helpful precedent in those efforts.

GT and Sears were joined in their defense of the statutory cap by the State of Mississippi and a coalition of amici led by Mississippians for Economic Progress. The State of Mississippi asked GT to present its position at oral argument.