Bifurcating Trials: A Strategic Approach to Complex Litigation

Introduction

Bifurcation is a rarely utilized but effective procedural tool commonly used to sever a trial into two separate phases: liability and damages. It has increasingly become an effective tool in complex litigation on jury and non-jury trials, but its nuances present important considerations before bifurcation is pursued. This process can streamline proceedings, reduce costs, and facilitate settlements. However, it also raises strategic considerations for both plaintiffs and defendants. This article explores the nuances of bifurcated trials, their benefits and drawbacks, and the strategic implications for litigants.

Bifurcation and Procedural Requirements

Bifurcation of trials is a process that segregates two discrete issues, such as liability and damages, into separate trials held at different times. This approach offers the unique advantage of allowing each issue to be determined independently, thereby potentially reducing costs where addressing one issue fully resolves the action. Notably, under the Rules, the Court has the power to sever any divisible issue at trial, but this paper will focus on severing liability and damages. 

Prior to the modification of the Rules of Civil Procedure on January 10, 2010, Courts did not have a statutory basis to bifurcate trials.[1] Instead, this power was derived from the Court’s inherent jurisdiction,[2] which was “narrowly circumscribed”[3] and limited to non-jury trials unless there was consent.[4] This limitation was based on the principle that “once a trier of fact is seized of an action, it remains seized of it until judgment is pronounced.”[5] Since a bifurcated jury trial would necessarily result in two juries, any bifurcation in a jury trial would impermissibly diverge from this principle. The only time such a divergence was permitted would be with the parties' consent.

On January 1, 2010, the Rules were amended to include Rule 6.1.01, which states:

6.1.01 With the consent of the parties, the court may order a separate hearing on one or more issues in a proceeding, including separate hearings on the issues of liability and damages.

This made two changes. First, the Court’s inherent power to bifurcate trials was enshrined in the Rules, providing a statutory basis for these determinations. Second, it solidified the requirement of consent for the parties prior to bifurcation. As recently confirmed by the Ontario Court of Appeal, absent consent of the parties, Courts do not have an inherent jurisdiction to bifurcate an action.[6] As a result, there is no way for one party to move to bifurcate an action when another party opposes this, no matter how compelling that party’s reasons are.

Rule 6.1.01 was established following Honourable Coulter A. Osborne's report entitled Civil Justice Reform Project: Summary of Findings & Recommendations. This report suggested that some or all of the 14 principles discussed in Bourne v. Saunby should also be introduced to guide when bifurcation should be made.[7] While the amendment to the Rules did not include these principles, the Ontario Court of Appeal reaffirmed the importance of these 14 principles in Duggan v Durham Region Non-Profit Housing Corporation.[8] The 14 principles are:

1. are the issues to be tried simple;
2. are the issues of liability clearly separate from the issues of damages;
3. is the factual structure upon which the action is based so extraordinary and exceptional that there is good reason to depart from normal practice requiring that liability and damages be tried together;
4. does the issue of causation touch equally upon the issues of liability and damages;
5. will the trial judge be better able to deal with the issues of the injuries of the plaintiff and his financial losses by reason of having first assessed the credibility of the plaintiff during the trial of the issue of damages.
6. can a better appreciation of the nature and extent of injuries and consequential damage to the plaintiff be more easily reached by trying the issues together;
7. are the issues of liability and damages so inextricably bound together that they ought not to be severed;
8. if the issues of liability and damages are severed, are facilities in place which will permit these two separate issues to be tried expeditiously before one court or before two separate courts, as the case may be;
9. is there a clear advantage to all parties to have liability tried first;
10. will there be a substantial saving of costs;
11. is it certain that the splitting of the case will save time, or will it lead to unnecessary delay;
12. has there been an agreement by the parties to the action on the quantum of damages;
13. if a split be ordered, will the result of the trial on liability cause other plaintiffs in companion actions, based on the same facts, to withdraw or settle;
14. is it likely that the trial on liability will put an end to the action.[9]

While the parties did not consent, and thus the motion for a bifurcated jury trial was not granted, in Robichaud et al. v. Constantinidis et al., the Court noted that the motion for a bifurcated jury trial would have been granted if it was on consent.[10] This provides one of the few cases where a bifurcated jury trial was discussed, and the Court weighed in on whether it would have been appropriate.

Overall, the decision to bifurcate a trial is decided first by the parties' consent and second by the Court's determination that bifurcation would promote judicial economy.

Advantages of Bifurcating Trials

Bifurcating a trial can have several benefits. These benefits are often clearest in cases where liability is highly contested. Where two parties disagree on liability, the opposing views of the claim often stifle settlement, and it can be challenging to reach a mutually agreeable settlement without factoring in a sizeable litigation risk discount.

We can demonstrate these benefits in the context of an example, Trial X. Trial X, in true Canadian fashion, is a slip-and-fall case concerning a fall on ice. In this case, there is one Plaintiff (the injured party) and three Defendants (the owner of the property, the tenant who leased the property, and the snow removal contractor). In this case, the Plaintiff alleges that they are entitled to $500,000.00 in damages, while the Defendants believe that the Plaintiff will more likely be entitled to $300,000.00. However, each of the three Defendants believes they are not liable for the Plaintiff’s fall, and, to the extent someone is liable, one of the other Defendants will bear the brunt of liability. As a result, the Defendants are only willing to collectively offer $100,000.00 to settle (factoring in a liability risk of 60%).

A bifurcated trial first resolves the issue of liability. Suppose the trier of fact finds no liability. In that case, the litigation concludes without the added expense of a trial on damages (which is often vastly more expensive than the liability portion of a trial, such as in an action for personal injuries where the medical evidence is voluminous). Conversely, if the trier of fact finds that one or several parties are liable, each liable party can approach negotiations knowing what percentage of the plaintiff’s damages each will be responsible for. Once the remaining parties can approach the claim without arguing over liability, it can be far easier to settle.

In Trial X, the parties collectively have an incentive to proceed to a bifurcated trial. This will determine which of the three Defendants will be liable and put them in a position to try to settle before they incur the increased costs of the damages portion of a trial. For example, let's say the tenant and the contractor were found to be 50% liable, respectively, and the owner was not liable. The owner clearly benefits because they are no longer concerned with the litigation and do not need to contribute to the settlement. The tenant and contractor benefit in a sense, notwithstanding that each was found partially liable, because they have an opportunity to negotiate a settlement without having to wait for a full trial for a clear view of their liability. To these Defendants, it is now more reasonable to provide more attractive settlement offers, as they know they will be paying some amount to the Plaintiff, and they can save the added expense of a damages trial.

The Plaintiff also benefits because they can settle the claim without the added expense of a full trial, and if the Plaintiff believes that the Defendants are not offering reasonable settlement offers, they still have the option to continue to trial on damages.

Bifurcation can also speed up the disposition of a claim in the current environment of trial backlogs. The question of liability alone will normally require a shorter trial than that of liability and damages. This means the parties are likely able to schedule their trial sooner than they would otherwise be able to. After all, it is much easier to get a trial date for a 3-week trial than a 7-week trial. As a result, bifurcation can promote a prompt resolution of the claim.

Bifurcating trials may promote the prompt resolution of a claim more effectively than other similar methods, such as summary judgement. Despite the Court’s apparent willingness to embrace summary judgement following Hryniak v Mauldin,[11] there remains a great deal of judicial hesitation around summarily dismissing a claim. This is especially true when there is the potential that more evidence will materialize in the future. By bifurcating a trial, the Court is forced to make a final determination on liability during a liability-only trial, rather than postponing the issue for later.

Bifurcating trial is particularly advantageous in multiparty litigation where a party is on the periphery of those likely to be found liable, but the other parties are unwilling to let them out. A bifurcated trial would either free this party from liability or provide them the opportunity to understand their true risk at a damages trial.

We can return to Trial X for this. If the owner strongly believed that they met the required standard, but there was evidence that the contractor or tenant had not, the owner would know that it is likely the trier of fact would find at least one party was liable. A bifurcated trial could free the owner, who appears to be a peripheral party, from the litigation. In the alternative, if the owner was found to be 10% liable, the other parties can expect the owner to contribute 10% to any joint settlement offer, as that is their liability risk.

Disadvantages of Bifurcation

Conversely, there are both inherent and strategic reasons why bifurcating a trial may not prove the most effective strategy in every case. This is especially true because bifurcation does not guarantee settlement; it only encourages it. Removing litigation risk might encourage Defendants to offer higher amounts, but it also might encourage a Plaintiff to only accept higher amounts. If the parties cannot negotiate a settlement following the liability portion of a trial, there is the potential to incur more costs than would result from a non-bifurcated trial. Preparing for a separate trial on damages would likely result in a duplication of efforts and, therefore, a duplication of costs. Similarly, if there is an appeal following the liability trial, the appeal will need to be heard before a damages trial, which can result in substantial delays and significant additional costs.

Strategic considerations should also be made about the evidence that can be presented for each issue and whether they overlap. One such area is the evidence relating to the credibility of one party. Credibility is an underlying aspect of the trial; it can impact the trier of fact’s determination of both liability and damages. But, if the evidence that proves the Plaintiff is not credible is only relevant to the issue of liability, the Defendants would not be able to introduce it in the damages section of a trial. Conversely, if the Plaintiff is extremely credible in their liability evidence, but their damages evidence does not have objective support, the Plaintiff may not want to bifurcate. In either case, the party may be prohibited from entering evidence that supports their case on the basis that it is not legally relevant to the issue before the Court.

For example, in Trial X, the Plaintiff provided numerous confusing and contradictory statements as to what they were doing before the fall and how the fall occurred. The resulting perception of the Plaintiff is that they are not credible. These statements could be beneficial to the Defendants when determining damages as well as liability; if the trier of fact is less likely to believe the Plaintiff is credible, they may choose to discount the Plaintiff’s subjective reports of their injuries. But, if the trial is bifurcated, the Defendants may not be able to present this evidence on the credibility of the Plaintiff to the trier of fact. At a damages trial, the Plaintiff then appears more credible, which could result in a higher damages award.

In multiparty litigation where one party is the obvious “target” and likely to be held liable, bifurcation is unlikely to be advantageous to the target. This party will know they will be liable for some damages, and the best-case scenario from bifurcation is that they are held less liable than they estimate; in the worst case, this party may be found solely liable. As a result, this Defendant’s ability to rely on other parties for contribution and to discount settlement offers on the basis of litigation risk is removed in a single move. But, if the target refuses to consent to a bifurcated trial, other defendants will be incentivized to contribute to a settlement offer in order to avoid a large and costly trial.

Once more, in Trial X, we can assume that the Plaintiff has strong evidence that the contractor was negligent but weak evidence that the owner or tenant was negligent. To the contractor, a bifurcated trial presents the risk that they will be the only party found liable for the Plaintiff’s injuries. If that occurs, they will have to enter settlement negotiations alone without the benefit of a liability risk deduction. Conversely, even if all the parties are found liable to a smaller degree (let's say the contractor is 50% liable, the owner is 20% liable, and the tenant is 30% liable), the contractor will now be liable for a larger portion of the settlement offer than they could potentially negotiate prior to a liability determination. In either case, the contractor would be expected to pay more than the other parties to settle. But, if the contractor refuses to bifurcate, it will proceed to a single trial. Ahead of this trial, all three parties have an incentive to contribute a larger amount of money to settle the claim, and the Plaintiff has a better incentive to accept a smaller amount, all to avoid a more expensive trial involving damages.

Conclusion

Bifurcation can be a strong strategy to promote efficient litigation. In certain contexts, it is an effective tool not only to promote the determination of an important issue (i.e. liability) but also to promote effective settlement negotiations. However, benefits to one party can also present risks to another, and since all parties need to consent to bifurcation, it is not always a practical option. Therefore, the determination to bifurcate should be grounded in a clear understanding of the case dynamics, legal strategies, and the impact on the litigation process. While it remains true that it is difficult to appeal administrative decisions this case mandates that when the principles of natural justice and fairness are breached the courts can and need to intervene.

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