In a recent post, we set forth our views on why, with some forethought, traditional bifurcation—i.e., trying liability for the underlying tort, compensatory damages, and liability for punitive damages in the first phase and, if necessary, the amount of punitive damages in a second phase—can be a beneficial procedural safeguard for defendants. Sometimes, however, circumstances may dictate other forms of bifurcation, or even trifurcation.
In some states—Mississippi and New Jersey, for example—a statute requires that the first phase of trials in which plaintiffs are seeking punitive damages be limited to compensatory liability and damages, and that punitive liability be tried in a second phase. This can have substantial advantages in terms of affording the defendant a fairer trial on underlying liability by excluding bad-conduct evidence that may be irrelevant to determining liability for compensatory damages and relevant only to liability for punitive damages, but highly prejudicial to a fair determination of compensatory liability.
Consider, for example, a design-defect case that focuses on whether the design of the product was unreasonably dangerous, or a case in which defect or negligence is conceded for one reason or another and the only issue is causation. In such cases, evidence of the defendant’s alleged wantonness or recklessness is totally irrelevant to the determination of liability for the underlying tort, yet under the traditional structure the plaintiff will be free to parade evidence of the defendant’s misconduct before the jury because of its bearing on punitive liability. The likely impact of such evidence on the jury’s attitude towards the defect or causation issue is not difficult to imagine.
A similar—albeit not identical—scenario arises in insurance bad-faith cases. In such cases, testimony by so-called claim-handling experts that the insurer’s handling of the claim fell short of proper claim-handling standards is irrelevant to the logically antecedent question whether the plaintiff is entitled to benefits under the contract, yet can be highly prejudicial to the jury’s resolution of that question. The same is true of evidence of any “institutional” misconduct, which the plaintiff may want to introduce to bolster the case for punitive liability.
In such circumstances, a powerful case can be made for bifurcating the liability trial, reserving the issue of punitive liability (or, in the insurance context, liability for the tort of bad faith and punitive damages) for a second phase in the event that the first phase results in a plaintiff’s verdict. The argument for doing so can be supported not only on the basis of fairness to the defendant but also by invoking the interest in judicial economy, since trial of
punitive damages issues can be avoided altogether in those cases in which a defense verdict is returned in the first phase.
And the defendant that wishes to have the amount of punitive damages tried separately can reasonably request trifurcation, reserving that issue for a third phase. Because most jurisdictions already permit bifurcation of punitive liability and punitive amount, there is no reason why that same right should not extend to the circumstance where liability has been tried in two phases. Moreover, we have already explained in a prior post why the defendant should have a good argument that due process requires trying the amount of punitive damages in a separate phase upon the defendant’s request. That argument applies even more powerfully in the context of a request to try the issue of liability for punitive damages only after the jury has determined liability for and the amount of compensatory damages when, as in many cases, evidence relating to punitive damages has no bearing on, yet risks infecting the jury’s determination of, those other issues.
Of course, trying liability for the underlying cause of action separately from liability for punitive damages will not always make sense. In a fraud case, for instance, the evidence of fraud and the evidence bearing on punitive liability will likely overlap to such a degree that no credible showing of prejudice can be made. The key is for counsel to identify whether there is significant prejudicial evidence that is admissible only with respect to liability for punitive damages. If there is, the case may be a candidate for this kind of bifurcation or for trifurcation.