TERA II, LLC v. Rice Drilling D, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

TERA II, LLC, et al.,

: Case No. 2:19-cy-2221

Plaintiffs, :

: Chief Judge Algenon L. Marbley

Vv. : Magistrate Judge Kimberly. A Jolson

RICE DRILLING D, LLC, et al.,

Defendants.

ORDER

This matter is before the Court on Defendants’ Motion to Bifurcate Punitive Damages

Trial. (ECF No. 594). For the reasons explained below, this motion is DENIED.

I. BACKGROUND

This case arises from a dispute between parties to an oil and gas lease. Specifically,

Plaintiffs—TERA II, LLC (“TERA II”), TERA III Honza, LLC (“TERA III”), TERA IV, LLC

(“TERA IV”)—allege that Defendants—Gulfport Energy Corporation, Gulfport Appalachia,

LLC’s, and Rice Drilling D, LLC’s—infringed on Plaintiffs’ mineral rights by drilling on property

that they are not entitled to drill, outside of the terms of the leases. As a result, Plaintiffs sued for

a variety of different issues, including trespass, conversion, unjust enrichment, and fees—a

universe of claims narrowed from their underlying complaint by, among other things, this Court’s

June 28, 2023, Opinion and Order on the parties’ motions for summary judgment as to issues of

liability. (ECF No. 490).

After dismissal of one prior defendant, a myriad of discovery motions, and briefing on

Plaintiffs’ motion to reconsider, Defendants moved for bifurcation of the upcoming trial into two

stages: (1) liability and compensatory damages; and (2) if liable, punitive damages. Earlier this

week, this Court ruled on the parties’ supplemental motions for summary and various expert

discovery-related issues. Op. & Order, ECF No. 645. In light of the upcoming trial, this Court now

turns its attention to the Defendants’ request to bifurcate.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 42(b) provides that “[f]or convenience, to avoid prejudice,

or to expedite and economize, the court may order a separate trial of one or more separate issues,

claims, crossclaims, counterclaims, or third-party claims.” Fed R. Civ. P. 42(b). Defendants, as the

party seeking bifurcation, “ha[ve] the burden of showing that concerns such as judicial economy

and prejudice weigh in favor of granting the motion.” Woods v. State Farm Fire & Cas. Co., No.

2:09-cv-482, 2010 WL 1032018, at *1 (S.D. Ohio Mar. 16, 2010) (citing Wright & Miller, Federal

Practice and Procedure § 2388 (2d ed. 2006)). There is, however, no bright-line rule as to when

bifurcation is appropriate: the propriety of trying issues separately “depend[s] on the facts of each

case, a matter to be determined by the trial judge exercising a sound discretion.” Jn re Benedectin

Litig., 857 F.2d 290, 307 (6th Cir. 1998) (cleaned up) (citation omitted). As this Court has pointed

out previously, “federal courts have long adhered to the rule that bifurcation should be ordered

only in exceptional cases because the piecemeal trial of separate issues in a single lawsuit or the

repetitive trial of the same issue in severed claims is not to be the usual course.” Bennett v. Board

of Educ. of Washington Cnty. Joint Vocational Sch. Dist., No. 08-CV-0663, 2011 WL 4753414, at

*6 (S.D. Ohio Oct. 7, 2011) (citation omitted). Importantly, Ohio’s tort reforms efforts have not

displaced this discretion. See Bonasera v. New River Elec. Corp., 518 F. Supp. 3d 1136, 1150-52

(S.D. Ohio Feb. 10, 2021) (conducting an Erie analysis of the interaction between the Ohio

Revised Code provisions mandating bifurcation and Federal Rule of Civil Procedure 42(b) and

concluding that 42(b) prevails).

Hil. LAW & ANALYSIS

The issue at the core of Defendants’ motion to bifurcate has woven its way through this

litigation from all parties: what is the role of the Defendants’ intent—i.e., willfulness, good faith,

bad faith—in determining their liability and/or damages owed? See, e.g., ECF Nos. 386, 424, 551,

556, 574, 575. On this, the parties split. Plaintiffs assert an evidentiary standard, in that the jury

must decide whether Defendants acted in good faith or bad faith in order to determine if Defendants

are liable of the trespass alleged by Plaintiffs (Resp. to Mot. to Bifurcate at 5), while Defendants

assert a punitive damages standard, in that the extent that Defendants acted in good or bad faith is

relevant only to ascertaining what, if any, damages to award if the jury finds Defendants liable

(Mot. to Bifurcate at 4).

Under this Court’s case law, even if Defendant’s intent is irrelevant to liability and matters

only for punitive damages, such that there would be no overlapping evidence or witnesses, the trial

can—but does not have to—be bifurcated. Compare, with Great West Casualty Co. v. Flandrich,

No. 07-cv-1002, 2010 WL 1433306, at * (S.D. Ohio Apr. 2, 2010) (granting bifurcation under a

preempted Ohio state code provision), with Bennett, 2011 WL 4753414, at *6 (denying bifurcation

of punitive damages from compensatory damages). Regardless, this Court has discretion to

determine which of the suggested avenues is the least prejudicial to both parties or the most

efficient or convenient for all involved—including this Court and the witnesses. See Benedectin,

857 F.2d at 307.

Defendants start by asserting that bifurcation is warranted because “if the jury finds in

Defendants’ favor on this threshold liability question [of contractual interpretation], evidence and

argument related to punitive damages would be needless.” (Mot. to Bifurcate at 4). Defendants

rightfully immediately pivot to emphasize that they do not actually request the contract question

be severed from other aspects of the trial, and that, rather, they ask only for a splitting off of

punitive damages. Jd. This Court, then, need not explain why it opts not to entertain the argument

implying some rationale for bifurcating an even smaller aspect of Defendants’ potential liability

from the rest of the case. See Bonasera, 518 F. Supp. at 1152 (explaining that bifurcation is

appropriate to filter out “evidence only admissible for determining punitive damages” and nothing

more (emphasis added)).

But even as to this more narrow request of a punitives-only stage, Defendants have failed

to flip the default that “the piecemeal trial of separate issues in a single lawsuit or the repetitive

trial of the same issue in severed claims is not to be the usual course.” Bennett, 2011 WL 4753414,

at *6. Plaintiffs assert a claim for willful trespass. Accordingly, on multiple occasions, this Court

has reiterated that “[t]respassing creates a presumption of willful conduct on the part of the

trespasser and requires the defendant to prove by a preponderance of the evidence that he acted in

good faith.” TERA II, LLC v. Rice Drilling D, LLC, --- F. Supp. 3d ----, 2023 WL 4236670, at *18

(S.D. Ohio June 28, 2023); Op. & Order, ECF No. 645 at 34. And in attempting to ascertain

Defendants’ potential liability for trespass and conversion, this Court has also reiterated that “there

[] exists a genuine issue of material fact as to whether Defendants acted in good faith when drilling

into the Point Pleasant” and “as to whether Defendants acted wrongfully.” TERA I, LLC, 2023

WL 4236670, at *19, 22; Op. & Order, ECF No. 645 at 33, 35, 38. Necessarily, then, this Court

has concluded that evidence relating to Defendants’ willfulness—interpreted as bad faith,

inasmuch as it is the opposite of good faith—comes into play at the liability stage, not just a

potential punitive damages calculation. Thus, the more convenient, expeditious, and economical

route is to consider all issues together.

Certainly, as trial progresses and the jury deliberates, issues may no longer be ripe for

consideration. The Defendants correctly point out that “[i]f the Defendants had the right to drill

the Point Pleasant, the tort claims would be moot.” (Mot. to Bifurcate at 4 (citing TERA II, LLC v.

Rice Drilling D, LLC, --- F. Supp. 3d ----, 2023 WL 4236670, at *12 (S.D. Ohio June 28, 2023))).

The same is true regarding the impact of a finding of no liability on the jury’s requirement to

consider compensatory damages. But this alone does not justify bifurcation under Rule 42(b).

And the decision not to bifurcate does not displace Ohio’s requirement that a jury must

first determine that a plaintiff is owed compensatory damages before punitive damages are

available. See Ohio Rev. Code § 2315.21(C)(2). Under either party’s order of operations, punitive

damages are reserved for after a determination of liability—and therefore compensatory damages,

if any. (Compare Mot. for Bifurcation at 12, with Resp. to Mot. for Bifurcation at 3).

Rule 42(b) cannot, and will not, be understood as a categorical grant of bifurcation of

punitive damages in every case; to do so would eliminate the “case-by-case approach” required by

the Sixth Circuit, Nature ’s One, Inc. v. Spring Hill Jersey Cheese, Inc., No. 2:15-cv-02820, 2016

WL 4094959, at *2 (S.D. Ohio Aug. 2, 2016), and this Court’s rejection of the bifurcation mandate,

Bonasera, 518 F. Supp. 3d at 1151. As such, the trial will proceed with all issues considered

together.

IV. CONCLUSION

For the reasons explained above, Defendants’ Motion to Bifurcate Punitive Damages Trial

is DENIED.

IT IS SO ORDERED.

DATED: February 16, 2024 CHIEF UNITED STATES DISTRICT JUDGE