Those even rudimentarily familiar with ERISA understand that jury trials generally are not allowed. Why? Because ERISA is a statutory creature that makes no provision for jury determinations and by which the relief sought is most commonly equitable in nature. But a recent decision might reveal a crack in what appeared to be a formidable wall.
The jury-preventing wall in the Eleventh Circuit was addressed about 30 years ago in Useden v. Acker, 947 F.2d 1563 (11th Cir. 1991).
In that case, a trustee responsible for a profit-sharing plan sought to hold responsible those whom he believed caused the plan's financial distress. The question presented was whether they were considered fiduciaries under ERISA. If they were not, then the second question was whether “ERISA provides a right of action for monetary damages against non-fiduciaries who knowingly participate in a breach by a fiduciary.” Id. at 1565. The court found that their conduct did not make them fiduciaries and that ERISA does not impose liability on non-fiduciaries for acting with fiduciaries who breach fiduciary duties. Id. at 1566. In reaching these conclusions, the court dropped a footnote which said, “The ERISA claims in the present case do not entitle plaintiff to a jury trial.”
The crack appeared in a recent case decided in the Southern District of Florida, Romano v. John Hancock Life Ins. Co., No. 19-21147-CIV-GOODMAN (S.D. Fla. Mar. 12, 2021).
In that case, the plan trustees were not happy with the services rendered by John Hancock and in particular, its handling of tax credits for the plan's investments. Some of their decisions had resulted in losses to the plan. There was also evidence some may have resulted in prohibited transactions under ERISA. Prohibited transactions are generally transactions that do not meet the fiduciary standards prescribed by ERISA. The trustees sought damages from John Hancock to reimburse the plan for its losses. The trustees requested a jury trial.
John Hancock moved to strike the jury demand, citing the footnote in Useden. The District Court denied the motion, finding that the 30-year-old footnote was dicta. “Nothing in the opinion [Useden], however, suggests that the plaintiff's right to a jury trial was ever litigated, challenged, or appealed, so the Court's explanatory footnote cannot be fairly read as resolving the issue. To the contrary, it appears to be an unnecessary comment, made without the benefit of legal briefing.” Romano at *8-9.
Romano also cited Supreme Court precedent finding that ERISA allows for legal and equitable claims. And claims of a legal nature generally allow a jury.
Other courts wrestling with this dichotomy have reasoned that all ERISA claims are essentially those which provide equitable relief, in other words, those claims which might appear to be legal claims are actually equitable relief. Those decisions were clearly authored by legal contortionists.
So, will ERISA claims for legal relief be permitted jury trials? We will see if this matter is addressed by the Eleventh Circuit.
I recall a discussion with former U.S. District Court Judge William Acker, now deceased, at an ERISA seminar I was hosting and at which he was speaking. We served on a panel together where we discussed several Eleventh Circuit opinions which held that there was no right to a jury trial for ERISA claims. I suggested that these opinions should be challenged in future cases.
His kind, genteel but firm response was simply, “Good luck with that!”
Despite understanding the problem, he realized it was practically impossible to sway the court. He had used this same sort of reasoning later presented in the Romano case. Judge Acker's opinion in Whitt v. Goodyear Tire Rubber Co., 676 F. Supp. 1119, (N.D. Ala. 1987), which was decided several years before Useden, he noted, “The former Fifth Circuit squarely held that such actions are not entitled to trial by jury,” but also found the holding not to be central to the case. Whitt at 1122 (discussing Calamia v. Spivey, 632 F.2d 1235, 1236-37 (5th Cir. 1980)). “In Calamia, the plaintiff was seeking classical equitable relief in the form of a declaration as to his future entitlements. Calamia's case is therefore clearly distinguishable from the cases of Whitt, Amos, and Eitel, each of whom seeks to recover a sum of money allegedly presently due and owing.” Id.
But Acker was forced to issue a supplementary memorandum changing his ruling in Whitt. “It is embarrassing for this court to have to do a 180-degree turn, but this court will not presume to ignore the Eleventh Circuit's flat holding in Chilton, suddenly discovered and upon which the ink is hardly dry.” Whitt at 1132 (citing Chilton v. Savannah Foods Industries, Inc., 814 F.2d 620 (11th Cir. 1987)). In Chilton, the Eleventh Circuit read a lot more into the Calamia footnote than Judge Acker had. “Because Calamia is binding precedent, the law of this circuit is settled: Chilton was not entitled to a jury trial.” Chilton at 623.
I admired Judge Acker's honesty and fortitude in his attempted defense of the right to a jury trial. I also believe he was correct in his original holding. ERISA claims for legal relief should have the same opportunities as any other claim for legal relief. However, to date, the Eleventh Circuit has not agreed. We'll see.