United States District Court, D. Idaho
EDMARK AUTO, INC., an Idaho corporation; CHALFANT CORP., an Idaho corporation, Plaintiffs,
ZURICH AMERICAN INSURANCE CO., a New York corporation; and UNIVERSAL UNDERWRITERS SERVICE CORP., a Delaware corporation, Defendants.
MEMORANDUM DECISION AND ORDER
Court has before it four motions in limine
including: Zurich American Insurance Company's and
Universal Underwriters Services Corporation's (together,
“Insurers”) First Motion in Limine
Regarding Bifurcation of Trial and Related Evidentiary
Matters (Dkt. 215); Insurers' Second Motion in
Limine Regarding Equitable Unjust Enrichment and
Disgorgement Issues (Dkt. 216); Insurers' Third Motion
in Limine Regarding Testimony of Robert Anderson
fourth motion in limine was filed by Edmark Auto,
Incorporated and Chalfant Corporation (together,
“Dealers”). Dealers' motion contains three
distinct subparts, which Dealers have labeled motions one
through three. Dkt. 222-1. Dealers' first motion seeks to
exclude the report and testimony of Kathi Ingham.
Id. at 2-7. Dealers' second motion seeks to
exclude specific pieces of evidence pursuant to Federal Rule
of Civil Procedure 37. Id. at 7-10. Dealers'
last motion seeks to exclude any evidence related to the sale
of Edmark to Kendall Auto in 2016 and any “Financial
Condition Evidence” related to the Dealers and their
namesakes. Id. at 10-16.
factual background of this case has been described in
extensive detail by Judge Candy W. Dale (Dkt. 134 and 169)
and Judge Edward J. Lodge (Dkt. 145). The Court will assume
the reader's familiarity with those decisions.
is no express authority for motions in limine in
either the Federal Rules of Civil Procedure or the Federal
Rules of Evidence. Nevertheless, these motions are well
recognized in practice and by case law. See, e.g.,
Ohler v. United States, 529 U.S. 753, 758 (2000).
The key function of a motion in limine is to
“exclude prejudicial evidence before the evidence is
actually offered.” Luce v. United States, 469
U.S. 38, 40 (1984).
Insurers' First Motion in Limine Regarding
Bifurcation of Trial and Related Evidentiary Matters (Dkt.
Arguments Raised in Motion
make four requests, the first two of which are interrelated.
First, Insurers ask the Court to bifurcate the trial to
separate the jury's consideration of liability and
compensatory damages from their consideration of punitive
damages. Dkt. 215-1 at 3-7. Second, Insurers ask the Court to
issue an order precluding Dealers from
“referenc[ing]… or [producing] evidence …
[related to] Defendants' company-wide financial condition
and net worth until” the punitive damages phase of the
trial. Id. at 6. Defendants specifically identify
“(1) Universal's and Zurich's company-wide
consolidated audited financial statements for 2010-2017; and,
(2) Universal's and Zurich's company-wide balance
sheets and annual reports” as the evidence they want
excluded from the liability phase. Id. at 5. Third,
Insurers ask the Court to restrict the financial information
presented to the jury during the punitive phase of the
proceedings to their 2017 audited financial information.
Id. Finally, Insurers seek to exclude parent company
Zurich Financial Group's financial information from
trial. Id. at 8-10.
Legal Standards Applicable to the Arguments Raised in
Insurers' First Motion in Limine
normal course of litigation, all claims and issues in a civil
action are presented for resolution in one trial. Federal
Rule of Civil Procedure 42(b), however, empowers courts to
bifurcate a trial for any one of the following reasons: (1)
“convenience”; (2) “to avoid
prejudice”; or (3) “to expedite and
economize.” A district court is given “broad
discretion” to determine whether bifurcation is
appropriate. Zivkovic v. S. Cal. Edison Co., 302
F.3d 1080, 1088 (9th Cir. 2002). Absent some experience
demonstrating the worth of bifurcation, “separation of
issues for trial is not to be routinely ordered.”
Fed.R.Civ.P. 42(b) (advisory committee notes to the 1966
amendment). The party moving for bifurcation bears the burden
of demonstrating that bifurcation is warranted. See
Spectra-Physics Lasers, Inc. v. Uniphase Corp., 144
F.R.D. 99, 101 (N.D. Cal. 1992).
bifurcation should not be “routinely ordered, ”
this Court routinely bifurcates trials involving claims for
punitive damages “to avoid placing evidence of a
defendant's net worth before the jury in the main trial
as liability is being considered.” PMG, Inc. v.
Lockheed Martin Idaho Techs. Co., No. CV-02-539-E-BLW,
2006 WL 1207609, at *2 (D. Idaho Apr. 27, 2006) (Winmill,
J.). Nevertheless, denial of a motion to bifurcate is
appropriate where there is substantial overlap in the
evidence that will be used to prove both liability and
punitive damages. See, e.g., Hangarter
v. Provident Life & Acc. Ins. Co., 373 F.3d
998, 1021 (9th Cir. 2004).
Insurers' Request to Bifurcate Trial and Exclude
Evidence Related to Punitive Damages Claims Is Conditionally
who bear the burden under Federal Rule of Civil Procedure
42(b) to show that bifurcation is appropriate, argue that
“evidence relating to … the …
[Insurers'] company-wide financials and net worth should
be excluded during the liability and compensatory damage
phase of the trial.” Dkt. 215-1 at 6. More
specifically, Insurers seek an order precluding Dealers from
presenting the following information prior to the punitive
phase of the trial: “(1) Universal's and
Zurich's company-wide consolidated audited financial
statements for 2010-2017; and, (2) Universal's and
Zurich's company-wide balance sheets and annual
reports.” Id. at 5.
response, Dealers argue that they intend to use Insurers'
company-wide consolidated audited financial statements,
balance sheets, and annual reports to prove Insurers'
liability. Specifically, Dealers assert that the financial
information is relevant to the intent and knowledge elements
of their fraud claim. Dkt. 234 at 3-6. Dealers also argue
that “the return on investment of the funds in the No.
Charge Back Program demonstrates Insurers' breaches of
contractual, fiduciary, and statutory duties, as well as
damages related thereto.” Id. at 6. Finally,
Dealers argue that the Insurers produced the “No Charge
Back Program” materials in such a way that the
company-wide financial data appears in the same financial
reports as those containing “information about the
Insurers' management of revenue, the flow of funds that
went into the No. Charge Back Program, and the data from
which reasonable rates of return were calculated for the
purpose of showing liability (whether the funds were properly
managed).” Id. at 7.
evaluating the Parties' arguments, the Court is
immediately confronted by the problem that Insurers have
described the evidence they are seeking to exclude from the
liability phase of the trial in the broadest of terms, while
the Dealers have described with great generality how they
will use this evidence to prove liability. At this point, the
prudent course is to grant the Insurers' motion
conditionally: During their case-in-chief, Dealers will be
allowed to offer the evidence in support of their liability
claims but not as part of their claim for punitive damages.
If they are successful in persuading the Court that the
evidence is admissible as part of their liability claims, the
issues will be submitted to the jury without bifurcation. If
the Dealers cannot convince the Court that the evidence they
are seeking to admit satisfies Rules 401, 402, and 403 with
respect to Dealers' liability claims, then the Court will
exclude them until the punitive damages phase of the trial.
Insurers Request to Exclude All Financial Records Except
Their Audited 2017 Financial Statements Is
Insurers argue that Dealers should be limited to presenting
only 2017 company-wide financial information to the jury.
Dkt. 215-1 at 7-8. This request is expanded in Insurers'
Reply brief, in which they argue that the presentation of any
financial records other than Insurers' audited financial
statements (e.g., balance sheets, profit and loss
statements, income statements, etc.) would be prejudicial and
misleading to the jury. Dkt. 242 at 7-8.
argument is not well taken. First, it is the Court's
experience that jurors are sufficiently savvy that they can
distinguish between financial information from different
years, especially when capable counsel is present on both
sides. Second, in considering whether to grant punitive
damages, the jury is entitled to more than a mere snapshot of
Insurers' net-worth. See White v. Ford Motor
Co., 500 F.3d 963, 977 (9th Cir. 2007). To provide the
jury with a full portrait of the Insurers' net-worth,
Dealers are entitled to show how that net-worth has evolved
temporally and may, in that effort, rely on documents outside
of the Insurers' audited financial statements. Such
evidence falls comfortably within the bounds of Federal Rules
of Evidence 401, 402, and 403.
The Court Will Reserve Ruling on Whether Non-Party Zurich
Insurance Group's Consolidated Financial Reports Are
Insurers ask the Court to exclude evidence relating to Zurich
Insurance Group's consolidated financial reports. Dkt.
215-1 at 8-10. Zurich Insurance Group is the parent
corporation of both Insurers. Id. Dealers respond
that they “do not intend to use the net worth of
non-party Zurich Insurance Group to prove the amount of
punitive damages that should be awarded against Insurers,
” but do intend to use the information to establish
liability and compensatory damages. Dkt. 215 at 10.
on this record, the Court cannot determine what, if anything,
should be excluded from the jury. In general, the Court
agrees that presentation of a parent company's financial
information is inappropriate because the evidence is
irrelevant and unfairly prejudicial when just the
subsidiaries' conduct is at issue. Fresno Rock
Taco, LLC v. Nat'l Sur. Corp., No.
1:11-CV-00845-SKO, 2013 WL 2182864, at *7 (E.D. Cal. May 20,
2013). But the Court cannot say, on this record, that Zurich
Insurance Group's financial information is per
se irrelevant to Dealers' claims. As such, the Court
will reserve ruling on this evidence until trial.
Insurers' Second Motion in Limine Regarding
Equitable Unjust Enrichment and Disgorgement Issues (Dkt.
Arguments Raised in Motion
second motion in limine contains three distinct
arguments. First, Insurers ask the Court to find that Dealers
are not entitled to a jury trial on their unjust enrichment
claim and on the disgorgement remedy. Dkt. 216-1 at 3-4.
Second, Insurers ask that any evidence related to
“conscious wrongdoing, ” which is an element of
the disgorgement remedy, be reserved for the punitive phase
of the trial. Id. at 4-6. Third, Insurers ask
the Court to preemptively limit the profits subject to
disgorgement. Id. at 6-10.
oppose Insurers at every turn. First, Dealers contend that
disgorgement is not purely an equitable remedy, and therefore
should go to the jury. Dkt. 235 at 6-9. Second, Dealers
strenuously argue against the imposition of a preemptive
limit on the profits subject to disgorgement. Id. at
9-13. According to Dealers, they are entitled to prove the
exact amount of profits that should be disgorged at trial
subject to the sole restriction that Dealers “are not
seeking disgorgement of all ‘company wide' profits
in general, … [but instead] specifically seek the
profits from the sale of F&I products.” Dkt. 235 at
Legal Standards Applicable to the Arguments Raised in
Insurers' Second Motion in Limine
The Jury Trial Right
Seventh Amendment states “[i]n Suits at common law,
where the value in controversy shall exceed twenty dollars,
the right of trial by jury shall be preserved.”
“The right to a jury trial includes more than the
common-law forms of action recognized in 1791; the phrase
‘Suits at common law' refers to ‘suits in
which legal rights [are] to be ascertained and determined, in
contradistinction to those where equitable rights alone [are]
recognized, and equitable remedies [are]
administered.'” Chauffeurs, Teamsters &
Helpers, Local No. 391 v. Terry, 494 U.S. 558, 564
Supreme Court has developed a two-part test to determine if
the jury trial right is triggered. “First, …
[the court must] compare the … action to
18th-century actions brought in the courts of England prior
to the merger of the courts of law and equity. Second,
… [the court] examine the remedy sought and determine
whether it is legal or equitable in nature.” Tull
v. United States, 481 U.S. 412, 417-418 (emphasis
added). The second inquiry is the more important factor.
See Granfinanciera, S.A. v. Nordberg, 492 U.S. 33,
42 (1989). The Supreme Court has “characterized damages
as equitable where they are restitutionary, such as in
‘action[s] for disgorgement of improper
profits.'” Tull, 481 U.S. at 424.
legal and equitable claims are joined in the same action, the
trial judge has only limited discretion in determining the
sequence of trial. This means that the court's discretion
must be exercised to preserve the right to a jury trial,
whenever possible. Dollar Systems, Inc. v. Avcar Leasing
Systems, Inc., 890 F.2d 165, 170 (9th Cir. 1989).
“[O]nly under the most imperative circumstances ... can
the right to a jury trial of legal issues be lost through
prior determination of equitable claims.” Dollar
Systems, 359 U.S. at 509. When legal and equitable
claims involve the same set of facts, the right to a jury
trial should predominate. If, however, the legal and
equitable claims do not involve any common questions of law
or fact, a court does not abuse its discretion by deciding
the equitable claims prior to the legal claims. Id.
The Causation ...