The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge
Presently before the Court for consideration are the following pretrial motions:
JOINT MOTION OF PLAINTIFFS ANGELA WEAVER AND DOMENICK SALVATORE AND ADDITIONAL DEFENDANT ANGELA WEAVER TO BIFURCATE THE TRIAL OF THE THIRD PARTY CLAIMS AND COUNTERCLAIMS (Document No. 269);
DEFENDANTS' MOTION IN LIMINE TO ADMIT DEFENSE OF BUSINESS JUDGMENT RULE (Document No. 272);
ADDITIONAL DEFENDANT, ANGELA B. WEAVER, EXECUTRIX OF THE ESTATE OF GERALD W. WEAVER, DECEASED, MOTION IN LIMINE TO PRECLUDE DEFENDANTS/THIRD PARTY PLAINTIFFS FROM TESTIFYING OR OFFERING TESTIMONY AS TO ANY MATTERS OCCURRING BEFORE THE DEATH OF GERALD W. WEAVER (Document No. 274);
PLAINTIFFS' OMNIBUS MOTION IN LIMINE (Document No. 275);
DEFENDANTS' MOTION TO EXCLUDE EXPERT TESTIMONY (Document No. 276); PLAINTIFFS' MOTION FOR SANCTIONS PRECLUDING DEFENDANTS' EXPERT TESTIMONY (Document No. 288);
PLAINTIFFS' MOTION IN LIMINE TO PRECLUDE EVIDENCE NEWLY IDENTIFIED IN DEFENDANTS' SUPPLEMENTAL PRETRIAL STATEMENT (Document No. 289); and
DEFENDANTS' MOTION TO STRIKE PLAINTIFFS' MOTION IN LIMINE TO PRECLUDE EVIDENCE IDENTIFIED IN DEFENDANTS' SUPPLEMENTAL PRETRIAL STATEMENT, AND STRIKE PLAINITFFS' MOTION FOR SANCTIONS (Document No. 301).
The motions have been thoroughly briefed and are ripe for disposition.
1. Motion to Bifurcate Trial
Plaintiffs seek to bifurcate the trial of the claims and counterclaims between Defendants and Angela Weaver in her role as Executrix of the Estate of Gerald W. Weaver (the "Estate") (collectively, the "Third Party Claims") from the trial of Plaintiffs' derivative claims against Defendants on behalf of AMD Southfield Limited Partnership ("AMD"). Plaintiffs cite the follwing reasons: (1) the Third Party Claims will be moot if the Allegheny County Orphan's Court determines that the Estate should remain closed; (2) the Dead Man's Act will preclude certain evidence as to the Third Party Claims but will not preclude such evidence as to the derivative claims such that it will be "impossible" for the same jury to hear both sets of claims; (3) the general complexity of the matters at issue; (4) the existence of additional defenses that will be raised by the Executrix if the Estate is reopened; and (5) the lack of prejudice to Defendants, as they will be able to "put on relevant evidence relating to their affirmative defenses."
Defendants do not directly address the pros and cons of bifurcation. Instead, Defendants primarily disagree with Plaintiffs' recitation of the procedural history of the case (both retrospective and prospective) and contend that the state court's ruling regarding the Dead Man's Act is not "law of the case" or entitled to preclusive effect. Defendants do argue that bifurcation is not warranted solely due to complexity or jury confusion and suggest that the court has an "array of methods" to deal with such complexity, such as a limiting instruction to the jury regarding evidentiary issues.
The applicable law concerning bifurcation was recently summarized in Grosek v. Panther Transp., Inc., 2009 WL 905035 (M.D. Pa. April 1, 2009) (citations omitted):
The decision to bifurcate . . . is left to the trial court's discretion and must be decided on a case by case basis. In exercising our discretion, we "must weigh the various considerations of convenience, prejudice to the parties, expedition, and economy of resources." The moving party bears the burden of establishing that bifurcation is appropriate.
The Court is convinced that bifurcation is appropriate in this case. The Court is aware that separate trials (if necessary) would be more expensive and time-consuming than a single proceeding. On the other hand, judicial economy would not be furthered by trying claims and counterclaims regarding an Estate that the Orphan's Court may decline to reopen. The Executrix intends to raise further defenses in that court if the Estate is reopened, while the derivative claims are ready for trial immediately - nearly seven years after Plaintiffs filed this case. Moreover, the Court does not share Defendants' confidence that a jury could readily separate the derivative claims from the Third Party Claims if they were tried together, particularly if certain evidence is admitted for only limited purpose(s). One of the "array of methods" available to the Court to deal with such evidentiary and legal complexity is bifurcation. See Fed. R. Civ. P. 42(b).
Accordingly, the JOINT MOTION OF PLAINTIFFS ANGELA WEAVER AND DOMENICK SALVATORE AND ADDITIONAL DEFENDANT ANGELA WEAVER TO BIFURCATE THE TRIAL OF THE THIRD PARTY CLAIMS AND COUNTERCLAIMS (Document No. 269) is GRANTED. The trial of the derivative claims shall proceed as scheduled. The trial of the Third Party Claims shall be continued pending further order of Court.
2. Business Judgment Rule Defense
Defendants have filed a motion in limine seeking an affirmative declaration that they should be entitled to present arguments and jury instructions regarding their defense of the "business judgment rule" ("BJR"). Plaintiffs oppose this motion and, as part of Plaintiffs' Omnibus Motion in Limine, seek to preclude the BJR as a defense.
The BJR, in essence, insulates certain corporate business decisions from second-guessing in hindsight in a lawsuit. In Cuker v. Mikalauskas, 692 A.2d 1042, 1046 (Pa. 1997), the Pennsylvania Supreme Court explained (citations omitted) (emphasis added):
Courts recognize that managers have both better information and better incentives than they. The press of market forces ... will more effectively serve the interests of all participants than will an error-prone judicial process." The business judgment rule "expresses a sensible policy of judicial noninterference with business decisions made in circumstances free from serious conflicts of interest between management, which makes the decisions, and the corporation's shareholders.
Not only do businessmen know more about business than judges do, but competition in the product and labor markets and in the market for corporate control provides sufficient punishment for businessmen who commit more than their share of business mistakes." "The fact is that liability is rarely imposed upon corporate directors or officers simply for bad judgment and this reluctance to impose liability for unsuccessful business decisions has been doctrinally labeled the business judgment rule." Shareholders challenging the wisdom of a business decision taken by management must overcome the business judgment rule. "For efficiency reasons, corporate decisionmakers should be permitted to act decisively and with relative freedom from a judge's or jury's subsequent second-guessing. It is desirable to encourage directors and officers to enter new markets, develop new products, innovate, and take other business risks.
The BJR doctrine is not all-encompassing. For example, it does not protect corporate decisionmakers against allegations of fraud or self-dealing, or decisions beyond the scope of authority, and the decisionmakers must have exercised reasonable diligence and honestly and rationally believed ...