I think that if the parents don't want to have a confrontation about the probably-abusive son-in-law and how much he's damaging their grandchildren by trying to cut his wife off from everyone she loves, perhaps instead of blowing everything up, a cheerful, "We're having a party for your father's birthday, but I understand that the people we're having a party with will make you uncomfortable, so maybe a quiet dinner at home with us later will be a better choice for you and the family," is more appropriate.