Pfizer and the other defendants in the Mirapex litigation are seeking a bifurcated trial plan. In motions filed with the U.S. District Court for the District of Minnesota, where MDL-1310 is based, the defendants asked for separate liability and punitive damages phases. Defendants raised the legitimate concern that the jury may be swayed by financial considerations when determining liability.

In this litigation, plaintiffs allege that the drug causes a compulsive urge to gamble. The plaintiffs claim that Mirapex triggered compulsive behaviors, and that the defendants knew the risks but failed to properly study the effects or warn patients. As is so often the case, a label change (in February 2006) seems to have prompted litigation.

Defendants assert that bifurcation is warranted because evidence of defendants’ finances is irrelevant to the issues of liability; introduction of such evidence during the liability phase would be unduly prejudicial. Bifurcation is thus necessary to prevent unfair prejudice to defendants during the liability determination. The motions note that the 8th Circuit has recognized bifurcated trial plans in a number of settings. Indeed, bifurcation is a common feature of pharmaceutical mass torts.

Plaintiffs oppose the proposal, arguing that the issue of liability and punitive damages are somehow “intertwined.” Meaning, of course, that they would like for the jury to consider the company’s financials when judging its conduct. Plaintiffs insist on a single trial where the fact finder considers “all the evidence at once.” To the extent some of that evidence should not be considered on the issues of liability, plaintiffs propose that the jury could be instructed to consider the financial information only in the proper context.

MassTortDefense has posted on the importance of proper trial plans here. The Mirapex motions present perhaps the most basic form of bifurcation or trial plan issue.  The timing of the punitive damages issues in class actions or other complex aggregated litigation can become highly complex and controversial. The questions as to punitive damages may include: a) whether they can be awarded; b) if so, whether as a lump sum, as a multiplier of individual compensatory damages, or on a per class member basis, c) whether they can be tried before individual liability as to specific class members, or as to absent class members, or non-bellwether plaintiffs has been decided; d) whether they can be awarded before the actual amount of compensatory damages has been determined; and e) how punitive damages are allocated among class members or the aggregated plaintiffs if not determined on a per plaintiff basis. State Farm Mutual Auto Insurance Co. v. Campbell, 538 U.S. 408 (2003). See In re Simon II, 407 F.3d 125 (2d Cir. 2005); Beck v. Boeing Co., 60 Fed. Appx. 38 (9th Cir. 2003); Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998); Johnson v. Ford Motor Co., 35 Cal.4th 1191,113 P.3d 82 (Cal. 2005) (rejecting aggregate disgorgement); Engle v. Liggett Group, Inc., 945 So.2d 1246, 1265 (Fla. 2006); In re Chevron Fire Cases, 2005 WL 1077516, at *14-15 (Cal. App. May 6, 2005); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006).

Punitive damages are designed to punish a defendant for egregious conduct and deter future reprehensible conduct on the part of the defendant or others. Particularly in the context of juries unchecked by proper legal instructions and unorthodox trial plans that prematurely address the punitive damages issue, they constitute a serious litigation threat to product sellers today. In aggregated litigation, such damages have the potential to lead to crippling verdicts, and thus the threat of punitive damages may coerce “blackmail” settlements.

In recent years, the United States Supreme Court has identified a variety of constitutional limits on punitive damage awards. Specifically, such awards cannot be arbitrary punishments and cannot be grossly excessive. In Philip Morris USA v. Williams, 127 S.Ct. 1057 (2007), the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards in part upon the desire to punish a defendant for harm to persons that are not before the court. Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims. The Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.” That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk.

One implication of the Court’s emphasis on avoiding misuse of evidence of harm to “strangers” clearly relates to the employment of reverse-bifurcated trial plans in aggregated cases, in particular trial plans in which the entitlement and amount of punitive damages (by ratio or dollar amount) is set in an early phase of the trial, well before the jury has considered whether the vast bulk of the plaintiffs have actually been injured by the alleged conduct of the defendant. E.g., In re Tobacco Litigation, 624 S.E.2d at 740 (W. Va. 2005)(holding that an aggregated, reverse-bifurcated punitive damage multiplier trial before adjudication of any affirmative defense would not be per se invalid). Some state courts favor this approach because it puts pressure on defendants to settle by creating the risk of a huge punitive damages burden before it has even been established whether many or most of the plaintiffs have any compensatory damages. Such a trial plan clearly creates an unnecessary and unreasonable risk of a due process violation under Williams, one that a simple jury instruction about the distinction between entitlement and reprehensibility cannot hope to address adequately. See, e.g., In re Simon II Litig., 407 F.3d at 138 (“In certifying a class that seeks an assessment of punitive damages prior to an actual determination and award of compensatory damages, the district court’s Certification Order would fail to ensure that a jury will be able to assess an award that, in the first instance, will bear a sufficient nexus to the actual and potential harm to the plaintiff class, and that will be reasonable and proportionate to those harms.”); Allison v. Citgo Petroleum Corp., 151 F.3d at 417–418 (stating that “because punitive damages must be reasonably related to the reprehensibility of the defendant’s conduct and to the compensatory damages awarded to the plaintiffs, . . . recovery of punitive damages must necessarily turn on the recovery of compensatory damages”); Southwestern Ref. Co. v. Bernal, 22 S.W.3d at 433 (“Under the [trial plan], the jury would decide punitive damages for the entire class without knowing the severity of the offense or the extent of compensatory damages, if any, for each of the 885 plaintiffs…. the modified trial plan is … prejudicial because it fails to ensure that punitive damages have some understandable relationship to compensatory damages and are not grossly out of proportion to the severity of the offense for each of the 885 plaintiffs.”).