You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


     Case: 16-60098      Document: 00513794207         Page: 1    Date Filed: 12/13/2016




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                        United States Court of Appeals
                                                                                 Fifth Circuit
                                      No. 16-60098                             FILED
                                                                       December 13, 2016
                                                                          Lyle W. Cayce
EDDIE J. BRIGGS; REBECCA BRIGGS,                                               Clerk

              Plaintiffs - Appellants

v.

STATE FARM FIRE & CASUALTY COMPANY,

              Defendant - Appellee




                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                              USDC No. 3:14-CV-16


Before CLEMENT, PRADO, and OWEN, Circuit Judges.
PER CURIAM:*
       Eddie J. and Rebecca Briggs (“the Briggses”) appeal following a jury trial
of their insurance-related claims against State Farm Fire & Casualty
Company (“State Farm”). They challenge the district court’s manner of
bifurcation of trial, evidentiary ruling, and grant of judgment as a matter of
law in favor of State Farm. For the reasons set forth below, we AFFIRM.




       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                  No. 16-60098
                                        I
      In 2011, a tornado struck Mississippi and damaged the Briggses’ home.
They filed a claim with State Farm, their homeowners insurance provider,
seeking the policy limit of $256,800. State Farm determined that the home
could be repaired for an amount less than the policy limit, ultimately paying
the Briggses $158,778.58.
      The Briggses sued, alleging that State Farm improperly adjusted and
underpaid their claim. In particular, they alleged that State Farm: failed to
use the applicable costs of materials and labor to repair their home; failed to
provide complete pricing information; failed to use a licensed contractor to
make the repair estimate; improperly relied on a computer software program
without verifying its accuracy; improperly passed the Briggses around through
approximately fifteen claims representatives; and attempted to intimidate the
Briggses.
      Prior to trial, State Farm filed a motion to bifurcate the trial between
the Briggses’ breach of contract claim (“Phase One”) and their remaining
claims for extra-contractual and punitive damages (“Phase Two”). The district
court granted State Farm’s motion.
      At trial, the Briggses sought to introduce the Mississippi Homeowner
Insurance Policyholder Bill of Rights as evidence of State Farm’s duty and
breach of duty to properly adjust the claim. The Mississippi Department of
Insurance promulgated these regulations following Hurricane Katrina. They
set forth rights that policyholders have with respect to their insurance policies.
See Miss. Dep’t of Insurance Regulation 2007-1, as amended. The district court
excluded the Policyholder Bill of Rights from evidence during Phase One,
finding that it was not relevant to the Briggses’ breach of contract claim.
      At the conclusion of Phase One, the jury rendered a verdict for the
Briggses on their breach of contract claim and awarded $72,521.42 in damages.
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                                  No. 16-60098
This amount, in addition to what State Farm had already paid the Briggses,
was still less than the policy limit.
      State Farm moved for judgment as a matter of law on the remaining
claims that were to be tried in Phase Two. The district court held an
evidentiary hearing. It readmitted all evidence that was admitted during
Phase One. The parties also were allowed to proffer any evidence that they
would rely on during Phase Two. The Briggses introduced the Policyholder Bill
of Rights as evidence for purposes of the hearing. After hearing the parties’
arguments, the district court granted State Farm’s motion for judgment as a
matter of law, holding that the Briggses’ evidence was not sufficient for their
remaining claims to be tried during Phase Two.
      The Briggses moved for a new trial, challenging each of the district
court’s rulings described above. The district court denied a new trial, and the
Briggses now appeal.
                                        II
      Motions for bifurcation of trial are governed by Federal Rule of Civil
Procedure 42(b). Rule 42(b) provides: “For 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.” “A
motion to bifurcate is a matter within the sole discretion of the trial court, and
we will not reverse the court’s decision absent an abuse of that discretion.”
First Tex. Savings Ass’n v. Reliance Ins. Co., 950 F.2d 1171, 1174 n.2 (5th Cir.
1992).
      “This court reviews evidentiary rulings for abuse of discretion.” U.S.
Bank Nat’l Ass’n v. Verizon Commc’ns, Inc., 761 F.3d 409, 430 (5th Cir. 2014).
A “trial court has broad discretion in determining the admissibility of evidence
based on relevance and materiality, and that determination will be overturned
only when the abuse of that discretion is clearly shown from the record.” Id.
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                                  No. 16-60098
Even if the district court abused its discretion, this court “reverse[s] judgments
for improper evidentiary rulings only where the challenged ruling affects a
substantial right of a party. The burden of proving substantial prejudice lies
with the party asserting error.” Id.
       We review rulings on motions for judgment as a matter of law de novo.
Broussard v. State Farm Fire & Cas. Co., 523 F.3d 618, 624 (5th Cir. 2008).
Such a motion should be granted only if “the facts and inferences point so
strongly and overwhelmingly in favor of one party that the Court believes that
reasonable men could not arrive at a contrary verdict.” Id. We must “consider
all of the evidence, drawing all reasonable inferences and resolving all
credibility determinations in the light most favorable to the non-moving party.”
Id.
                                       III
                                        A
       The Briggses first argue that the district court abused its discretion in
the manner in which it bifurcated the trial. They contend that the trial should
have been bifurcated between all claims that could result in compensatory
damages and assessment of punitive damages. The Briggses point to Universal
Life Insurance Co. v. Veasley, 610 So. 2d 290 (Miss. 1992), in which the
Mississippi    Supreme    Court   recognized     a     right   to   extra-contractual
compensatory damages when an insurer lacked an arguable basis for denying
a claim but its conduct was not sufficiently egregious to warrant punitive
damages. Id. at 295; see also Essinger v. Liberty Mut. Fire Ins. Co., 534 F.3d
450, 451 (5th Cir. 2008). Relying on Veasley and its progeny, the Briggses
contend that their claims other than for punitive damages all raise the right to
compensatory damages and should have been tried together.
       The Briggses’ claims for extra-contractual and punitive damages require
a showing that State Farm lacked an arguable basis for its claim position,
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                                       No. 16-60098
unlike their breach of contract claim. The district court recognized this
common element when it decided to bifurcate the trial. 1 In addition, the district
court determined that it made the most economical sense to try the claims for
extra-contractual and punitive damages together during Phase Two, as the
commonality of elements made these claims a natural fit. See Fed. R. Civ. P.
42(b) (allowing bifurcation “[f]or convenience” and “to expedite and
economize”). Further, the district court identified Federal Rule of Evidence 403
concerns in trying breach of contract and non-breach of contract claims
together. See id. (allowing bifurcation “to avoid prejudice”). The district court
did not abuse its discretion in its chosen method of bifurcation. See First Tex.
Savings Ass’n, 950 F.2d at 1174 n.2.
                                              B
       Next, the Briggses argue that the district court abused its discretion in
excluding the Policyholder Bill of Rights from evidence during Phase One. This
evidence was not relevant to the Briggses’ breach of contract claim, the only
claim tried during Phase One. Even if it were relevant, the Briggses have not
met their burden of showing that exclusion of the Policyholder Bill of Rights
violated their substantial rights. See U.S. Bank Nat’l Ass’n, 761 F.3d at 430.
                                              C
       Finally, the Briggses argue that the district court erred in granting State
Farm’s motion for judgment as a matter of law. They contend that the evidence
presented during Phase One and during the evidentiary hearing prior to Phase
Two created a fact issue such that reasonable minds could differ as to whether
State Farm had an “arguable basis” for its claim valuation. “Under Mississippi
law, insurers have a duty to perform a prompt and adequate investigation and


       1In their reply brief, the Briggses contend that they pursued a simple negligence claim
below for which they did not seek extra-contractual damages and which should have been
tried during Phase One. The district court properly found that any such claim was waived.
                                              5
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                                   No. 16-60098
make a reasonable, good faith decision based on that investigation and may be
liable for punitive damages for denying a claim in bad faith.” Broussard, 523
F.3d at 627 (internal quotation marks omitted). As discussed above, an insured
may also be liable for an intermediate form of compensatory damages if it acted
without a reasonably arguable basis but its actions did not rise to the level of
an independent tort. Id. at 628.
      “[T]he plaintiff bears a heavy burden in demonstrating to the trial court
that there was no reasonably arguable basis for denying the claim.” Windmon
v. Marshall, 926 So. 2d 867, 872 (Miss. 2006). Here, as the district court noted,
there may have been things that State Farm could have done better in its claim
handling. But State Farm never fully denied coverage. Instead, the dispute has
always been whether the home could be repaired for an amount within the
policy limit. Ultimately, the jury found that State Farm should have paid more
than it did but still an amount less than the policy limit. The evidence reflects
that this case presented a pocketbook dispute between the parties and that
State Farm’s claim position was at least arguable. See Tutor v. Ranger Ins. Co.,
804 F.2d 1395, 1398-99 (5th Cir. 1986). As such, the district court did not err
in granting State Farm’s motion for judgment as a matter of law.
                                       IV
      The judgment of the district court is AFFIRMED.




                                        6