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.

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...