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POLLOCK v. CASTROVINCI

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


June 28, 1979;

ANN POLLOCK, Plaintiff, against BASIL CASTROVINCI, individually and and Trustee of the BASIL CASTROVINCI ASSOCIATES, PENSION TRUST, and BASIL CASTROVINCT ASSOCIATES, INC., Defendants.

The opinion of the court was delivered by: GOETTEL

MEMORANDUM OPINION

GOETTEL, D.J.:

 Defendants have moved to strike plaintiff's demand for a jury trial claiming that all the plaintiff's claims relate to the defendants' breach of their fiduciary responsibility under either the common law or under ERISA, and that all such claims have always been treated as equitable. Plaintiff submitted a demand for a jury trial as to all Counts. However, in open court on June 15, 1979, she has limited her demand to Counts I through V. Counts I through V allege that the defendants violated sections 403(c)(1), 403(d)(1); 404(a)(1); 406(a)(1)(d); 406(b) of ERISA and that they violated their fiduciary responsibility and engaged in prohibited transactions by attempting to divert assets of the plan to their own use, primarily through terminating the plan and attempting to recover the surplus assets remaining in it after payment of all accrued benefits to participants.

 Plaintiff's right to a jury trial must derive from the Seventh Amendment to the Constitution as applied in light of the substantive and procedural provisions of ERISA, or directly from some provisions of ERISA. The Seventh Amendment to the Constitution provides that "[in] suits at common law, where the value in controversy shall exceed twenty dollars, the right to trial by jury shall be preserved." Although the thrust of the Amendment was to preserve the right to jury trial as it existed in 1791, it has long been settled that the right extends beyond the common law forms of action recognized at that time, Parsons v. Bedford, 3 Pet. 433, 7 L. Ed. 732 (1830), and that the Seventh Amendment applies to actions enforcing statutory rights and requires a jury trial upon demand if the statute creates legal rights and remedies, enforceable in an action for damages in the ordinary courts of law. Curtis v. Loether, 415 U.S. 189 (1974). The Litmus test for determining the right to a jury trial is whether the nature of the legal issues to be tried is "legal" or "equitable." A jury trial may be demanded if the nature of the issues is legal regardless of whether or not the legal issues are intertwined with other equitable issues.

 This case was brought under section 502 of ERISA which in relevant part provides that:

 "(a) A civil action may be brought --

 (1) by a participant or beneficiary --

 . ..

 (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;

 . . .

 (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provision of this subchapter or the terms of the plan;..."

 It has been held that the section sets forth, in the alternative, two remedies which are available to the beneficiary: subsection (a)(3) creates a civil action for equitable relief and subsection (a)(1)(B) creates a different civil action for legal relief. Stamps v. Michigan Teamsters Joint Council No. 43, 431 F. Supp. 745 (E.D. Mich. 1977); Bouton v. Central States, Southeast and Southwest Areas Pension Fund, BNA Pension Rptr. No. 226 at Dl (E.D. Tenn. 1978) (CIV 2-78-189). InStamps and Botuton, the court held that an action for past due benefits under section 502 (a)(1)(B) of ERISA was a legal claim for which a party was entitled to a jury trial.

 The defendants claim the Stamps and Bouton cases are not precedent in regard to the plaintiff's claims since the instant action is not one for past due benefits, but rather one for an "equitable" pro-rata share of the pension plan's surplus. In addition, the defendants assert that Stamps incorrectly interpreted the legislative history of ERISA in finding that Congress intended to allow a legal cause of action under section 502.

 The legislative history of ERISA indicates that section 502 actions should be guided by the caselaw developed under section 301 of the Labor-Management Relations Act of 1947, 29 U.S.C. section 185. The Joint Explanatory Statement of the Committee of Cxonference reads, in relevant part, as follows:

 "All such actions in Federal or State courts are to be regarded as arising under the laws of the United States in similar fashion to those brought under section 301 of the Labor-Managment Relations Act of 1947." H.R. Conf. Rp. No. 93-1280, 93d Cong. It is clear that, under section 301 of the LMRA, an employee who sues for money damages under a collective bargaining agreement is entitled to a jury trial upon request, Allen v. United Mine Workers of America, 319 F.2d 594 (6th Cir. 1963), and defendants admit that decisions construing section 301 of the LMRA as creating an action in contract for past due benefits under a pension plan are correct. However, defendants claim that Congress' reason in providing remedies in sections 502(a)(1)(B) and 502(a)(3) was merely to provide concurrent jurisdiction for federal and state court claims. Defenants point to section 502(e)(1), as the basis for their argument which states that the federal courts have exclusive jurisdiction for all actions except those under section 502(a)(1)(B), for which state courts have concurrent jurisdiction. Defendants' reasoning on this point is illogical since section 502(e)(1) states nothing as to actions under section 502(a)(3).

 In the final analysis, whether the instant action is at law, or one seeking equitable relief, depends upon the terms and provisions of the pension plan. A provision was added to the plan that the participants are only entitled to benefits as specifically provided for by the terms of the plan and after liabilities to participants have been met that the employer can recover the remaining funds. If this section of the plan was illegally added, the relief to be granted, reformation of the plan, is clearly equitable. The issues to be determined thereafter, benefits due under the reformed plan, would be legal.

 It is apparent that the Court must first decide the equitable issue concerning reformation of the plan. If defendants prevail, the action goes no further. If the plaintiff prevails, issues will be presented for jury determination.

 The only remaining matter to be decided is whether a jury should be impaneled at the start of the trial and hear evidence going to the reformation issue. Whether this is desirable depends in part upon whether evidence on the subsequent issues would require similar testimony. In order to determine this, the plaintiff is directed to submit immediately a list of special interrogatories that would be submitted to the jury at the conclusion of the trial so that the Court may assess their similarity to the equitable issue.

 SO ORDERED:

19790628

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