Concept_Split Coin_14927417MediumThere are substantial tactical questions whether or when it is in the defendant’s interest to seek bifurcation of the amount of punitive damages from other trial issues and whether the defendant should in some circumstances seek bifurcation of all punitive damages issues from compensatory damages issues or trifurcation so that punitive liability and punitive amount are each tried in separate second and third phases, respectively (if necessary).

Those are subjects for another post.  This post concerns the defendant’s right to have a separate proceeding to determine punitive amount, which is the most common form of bifurcation.

As part of tort-reform statutes, a number of states have required courts to bifurcate punitive damages trials upon a defendant’s request, and both the Federal Rules of Civil Procedure and state analogues afford courts discretion to bifurcate.  But what is a defendant to do when it is in a forum that does not require bifurcation and before a judge who is indisposed to grant it as a matter of discretion?

In our view, defendants in such a situation have a compelling argument that they have a due process right to bifurcation.  The argument rests on a straightforward application of the three-part test established by the Supreme Court in Mathews v. Eldridge and refined for private litigation in Connecticut v. Doehr.

Under that test, courts must consider (i) “the private interest that will be affected by” providing the defendant with the procedural safeguard of bifurcation; (ii) “the risk of erroneous deprivation through the procedures under attack”—i.e., a unitary trial—“and the probable value of additional or alternative safeguards”—i.e., bifurcation; and (iii) “the interest of the party seeking [bifurcation], with, nonetheless, due regard for any ancillary interest the government may have in providing [bifurcation] or forgoing the added burden of providing [bifurcation].”

The first factor is readily satisfied:  Punitive damages cases involve a substantial property interest—the defendants’ money.  As the Supreme Court said in Honda Motor Co. v. Oberg—its first case holding that the Due Process Clause requires particular safeguards for punitive-damages defendants—“[p]unitive damages pose an acute danger of arbitrary deprivation of property.”

In most cases, defendants should be able to make a convincing argument that the second factor is likewise satisfied.  In forums that deem evidence of a defendant’s financial condition relevant to the amount of punitive damages, refusing to bifurcate the proceedings so that the introduction of such evidence is deferred until after the other issues in the case have been decided substantially increases the risk that the jury’s determination of those other issues will be infected by financial evidence that has no probative value with respect to those issues.

As the Supreme Court recognized in Honda, “the presentation of evidence of a defendant’s financial worth creates the potential that juries will use their verdicts to express biases against big businesses.”  The same is true for mitigating evidence that the defendant may wish to introduce, most particularly evidence of subsequent remedial efforts, policy changes, expanded warnings, design modifications, and the like.

Finally, the third factor is easily satisfied by a bifurcation procedure that allows only a short break between the first and second phases and employs the same jury.  Such a procedure imposes no cognizable burden on the plaintiff or the court, as it ought not lengthen the trial by much in cases in which the jury finds the standard for imposing punitive damages to be satisfied, and will shorten the trial in all cases in which the jury finds for the defendant on either the underlying cause of action or liability for punitive damages.

Moreover, bifurcation would advance the governmental interests in procedural fairness and judicial economy by reducing the risks of jury error in making liability and compensatory damages determinations.  To illustrate, a jury exposed to evidence of a defendant’s multi-billion-dollar net worth in a unitary trial might well award a materially higher amount of non-economic compensatory damages than would a jury in a bifurcated trial.  The defendant therefore would be more apt to challenge the non-economic damages as excessive, and the court then would have to resolve one more argument on post-trial motions than would be the case had the trial been bifurcated.

The problem is by no means confined to the impact of financial evidence.  As noted above, there are other kinds of evidence that might be proffered in mitigation that could be in tension with a full-throated defense on liability.  The civil defendant, like a criminal defendant, should not be placed in the position of having to plead for leniency while simultaneously seeking to establish innocence.  Bifurcation removes the defendant from impalement on the horn of that dilemma.

Because there are no countervailing reasons to deny bifurcation, the three-part test establishes pretty clearly that defendants are generally entitled to this procedure as a matter of due process.