Louisiana generally does not permit punitive damages. But if an accident happens on navigable waters, and the plaintiff brings a claim under federal maritime law, a Louisiana jury can award punitive damages, and Louisiana courts then must decide the full panoply of issues that arise in punitive damages cases. That’s what happened in Warren v. Shelter Mutual Insurance Co.
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Why Shady Grove Should Be No Impediment To Obtaining Bifurcation In Federal Court
As we have noted in prior posts, many states require courts to bifurcate punitive damages trials upon the defendant’s request. The question therefore arises whether a federal court sitting in diversity must or, at least should, require bifurcation when the applicable state law requires bifurcation.
Most federal courts that have confronted the issue have concluded that bifurcation is procedural and that, under Erie, they therefore need not adhere to the bifurcation requirements of the state whose substantive law governs the case. While at first blush, the Supreme Court’s 2010 decision in Shady Grove Orthopedic Associates v. Allstate Insurance Co. may appear to reinforce that conclusion, on closer inspection it does not affect the analysis one way or the other.
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West Virginia Enacts Punitive Damages Statute
West Virginia long has been at or near the top of the Chamber of Commerce’s and American Tort Reform Association’s lists of judicial hellholes. Last month, the State took a big step toward changing its image, enacting a series of laws that aim to eliminate “jackpot justice.”
Most pertinent to readers of this blog, the Legislature passed and the Governor signed a punitive damages statute that comprehensively reshapes the manner in which this remedy is administered in West Virginia.
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Missouri Court Of Appeals Reverses Punitive Award Because Of Erroneous Instructions
In a prior post, Andy Frey and I discussed the concern expressed by some defense lawyers that jurors in a bifurcated trial might bake punitive damages into their compensatory award because they are unaware that they will be able to impose punitive damages in a second phase. We expressed the view that this concern can be readily addressed by instructing the jury before it deliberates in the first phase that, if it finds that the defendant acted with the requisite mental state, a second phase will commence to address the amount of punitive damages (if any).
The Missouri Court of Appeals’ decision last week in Advantage Buildings & Exteriors, Inc. v. Mid-Continent Casualty Co. confirms both that the concern about inflation of the compensatory damages is a real one and that the solution is proper instruction of the jury.
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Alternatives To Traditional Bifurcation
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.
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To Bifurcate Or Not To Bifurcate, That Is The Question
As we noted in a prior post, many state legislatures and supreme courts have mandated that the amount of punitive damages be tried separately from other issues in the case if the defendant so requests. The principal impetus for mandating this procedure was concern that evidence of the defendant’s financial condition, though assumed to be relevant to the amount of punitive damages, is undeniably irrelevant to and presents a grave risk of prejudicing the resolution of the other issues in the case—i.e., liability for the underlying tort, comparative fault, compensatory damages, and liability for punitive damages.
We will address in a future post why the assumption that an organization’s financial condition is relevant to the setting of punitive damages is false. But the purpose of this post is to take sides in the debate over whether this safeguard—colloquially known as bifurcation—is worth invoking.
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Why Defendants In Punitive Damages Cases Have A Due Process Right To Bifurcation
There 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.
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Parties In Pennsylvania Punitive Damages Case Perform Role Reversal On Bifurcation Issue
My colleagues and I generally recommend that clients confronted with claims for punitive damages seek bifurcation—so long as they can adduce evidence in the second phase to support a low award (such as evidence of post-injury remedial efforts) and not effectively cede that phase to the plaintiff, who generally is happy to harp on the defendants’ net worth and contend that a high award is necessary to get the attention of management. Occasionally, trial counsel resist this advice out of concern that giving the jury a second chance to award damages will result in a higher total award than if the jury were required to award both compensatory and punitive damages at the same time.
The parties in Kuchwara v. Williams, a personal-injury case decided by the Pennsylvania Superior Court on May 12, took this tactical debate to a new level.