The opinion of the court was delivered by: WILLIAM M. SKRETNY
Presently before this Court is defendant's motion to strike plaintiffs' jury demand, pursuant to Fed. R. Civ. P. 12(f). Defendants argue that § 502(a)(1)(B) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), does not expressly or impliedly provide for a jury trial to enforce the terms of an ERISA plan. Furthermore, defendants argue that plaintiffs' lawsuit seeks to enforce equitable rights and recover equitable remedies. Therefore, defendants argue, the Seventh Amendment to the United States Constitution does not provide plaintiffs the right to a jury trial.
In support of their motion, defendants have submitted a Notice of Motion, a Memorandum of Law, a Reply Memorandum of Law, and a Notice of Renewal of Adjourned Motion to Strike Plaintiffs' Demand for a Jury Trial. In opposition to defendants' motion, plaintiffs have submitted a Memorandum of Law Opposing Defendants' Motion to Strike Plaintiffs' Jury Request, and a Memorandum of Law in Opposition to Defendants' Motion to Strike Jury Demand.
For the reasons that will be discussed below, defendants' motion to strike plaintiffs' jury demand will be Denied.
In this lawsuit, plaintiffs allege that they are entitled to unpaid severance benefits under their employer's ERISA severance pay plan, pursuant to § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B). Defendants' severance pay plan is part of a Key Employee Retention Plan ("KERP") that was instituted by LTV for the benefit of certain LTV employees. Additionally, plaintiffs seek attorney fees under § 502(g) of ERISA, 29 U.S.C. § 1132(g). Plaintiffs allege that defendants' decision to deny them severance benefits under KERP was arbitrary and capricious because defendants unreasonably construed certain terms contained in KERP governing plaintiffs' eligibility for benefits. Furthermore, plaintiff George Davidson seeks additional severance benefits from defendants, alleging that defendants unreasonably decided to award him thirteen fewer weeks of benefits upon his termination than were awarded to the other plaintiffs. Other than attorney fees, the only remedy sought in this case is damages in the form of unpaid severance benefits.
On September 30, 1993 this Court entered a Decision and Order [the "Decision"] denying defendants' motion for summary judgment. This Court determined that plaintiffs had indicated facts in the record sufficient to create a genuine issue of whether the decision of the plan administrator [the "Committee"] to deny plaintiffs KERP benefits was improperly motivated by a conflict of interest. Furthermore, this Court found that the language of KERP is ambiguous as to the terms governing plaintiffs' entitlement to benefits. Although this Court recognized that it could not substitute its own interpretation of ambiguous language for an administrator's reasonable, good faith interpretation, the ambiguous language, as well as other facts in the record, were considered in light of the existing evidence of a conflict of interest. After undertaking such a consideration, keeping in mind LTV's poor financial situation, the ongoing nature of workforce reductions, and the purposes of KERP and ERISA severance plans in general, this Court held that it could not say as a matter of law that the Committee's decision was not arbitrary and capricious. Therefore, this Court explained, "A trier of fact must consider the Committee's interpretation of the ambiguous language in light of the facts and circumstances addressed [in the Decision]." (Decision, p. 27).
Now, this Court must determine who the trier of fact will be. For the following reasons, the trier of fact will be a jury.
Defendants have moved to strike plaintiffs' demand for a jury trial. Federal Rule of Civil Procedure 12(f) provides:
Upon motion made by a party before responding to a pleading, or, if no responsive pleading is permitted by these rules, upon motion made by a party within 20 days after the service of the pleading upon the party or upon the court's own initiative at any time, the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.
In this case, plaintiffs' demand for a jury trial can be stricken as "immaterial" or "impertinent" only if this Court determines that neither ERISA nor the Seventh Amendment invests plaintiffs with the right to a jury trial.
The first case to examine this issue thoroughly was Stamps v. Michigan Teamsters Joint Council 43, 431 F. Supp. 745 (E.D.Mich. 1977). In Stamps, the court held that, although ERISA does not explicitly address the issue of a plaintiff's right to a jury trial, ERISA's statutory scheme and legislative history indicate that Congress intended that a plaintiff be entitled to a jury trial where he is suing under § 502(a)(1)(B) to recover benefits owed to him under the terms of his plan. The court interpreted § 502 as distinguishing between legal and equitable claims. Section 502 of ERISA provides, in relevant part:
(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 relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan. . . .
In Stamps, the court read § 502 as setting forth two alternative remedies available to a plaintiff beneficiary. The court wrote, "Subsection (a)(3) clearly and specifically creates a civil action for equitable relief. Subsection (a)(1)(B) creates a different civil action for legal relief." Id. at 747. The court referred to the general rule of statutory construction that statutes should be construed in such a way as to render none of the statutory sections superfluous. The court believed that if it "construed subsection (a)(1)(B) to also create a cause of action for equitable relief, it would be superfluous to subsection (a)(3)." Id.
The Stamps court found further support for its position in portions of ERISA's legislative history indicating that actions under § 502 should be guided by case law developed under section 301 of the Labor-Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185. The court cited the following portion of the Joint Explanatory Statement of the Committee of Conference:
Id. at 747 (quoting H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N. 5038, 5107). Section 301 of the LMRA provides that a labor union may sue or be sued for breach of a collective bargaining agreement. Furthermore, an individual employee who is a union member may sue the union pension fund where the pension fund agreement is part of a contract between the union and the employer. Id. at 746 (citing Abruscateo v. Local 199, 69 LRRM 2537 (S.D.N.Y. 1968); Smith v. DCA Food Indus., Inc., 269 F. Supp. 863 (D.Md. 1967)). Under § 301 of the LMRA, an employee who sues for money damages resulting from an alleged breach of a collective bargaining agreement is entitled to a jury trial on request. Id. (citing Lucas v. Philco-Ford Corp., 380 F. Supp. 139 (E.D.Pa. 1974)). Therefore, the Stamps court concluded, by reference to the LMRA, that a plaintiff suing for pension benefits due under § 502(a)(1)(B) of ERISA is stating a legal claim for breach of contract, and is entitled to a jury trial. 431 F. Supp. at 747.
Stamps has not received approval from the circuit courts. For instance, in Wardle v. Central States, Southeast & Southwest Areas Pension Fund, 627 F.2d 820 (7th Cir. 1980), cert. denied, 449 U.S. 1112, 101 S. Ct. 922, 66 L. Ed. 2d 841 (1981), the Seventh Circuit concluded that Congress' silence on the jury trial issue "reflects an intention that suits for pension benefits by disappointed applicants are equitable. Such suits under the law of trusts have existed for quite a while in state courts and have existed for quite a while in federal courts under their diversity jurisdiction." Id. at 829. Therefore, the Wardle court determined that jury trials are not required. But see George Lee Flint, Jr., ERISA: Jury Trial Mandated for Benefit Claims Actions, 25 LOY. L. REV. 361, 386-87 (1992) ("Investigation of pre-ERISA state cases reveals that most courts viewed benefits-due lawsuits as contractual"); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111, 109 S. Ct. 948, 954, 103 L. Ed. 2d 80 (1989) ("Actions challenging an employer's denial of benefits before enactment of ERISA were governed by principles of contract law.").
The Wardle court rejected Stamps' conclusion that if § 502(a)(1)(B) were read as providing equitable relief, then that subsection would be superfluous in light of § 502(a)(3). The court wrote, "The specific types of claims enumerated in § 502(a)(1)(B) would still have to be separated in some manner from general equitable actions under § 502(a)(3) because Congress granted state courts concurrent jurisdiction only over § 502(a)(1)(B) claims. 29 U.S.C. § 1132(e)(1). Thus the statutory scheme does not imply that § 502(a)(1)(B) claims are legal." Wardle, 627 F. Supp. at 829. Furthermore, the court stated that Stamps incorrectly interpreted the legislative history of ERISA. Wardle suggests that the quoted portion of the Committee Statement
merely indicates Congress' intent that federal courts should create federal common law in civil actions under § 502(a)(1)(B) of ERISA, just as the Supreme Court in Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456, 77 S. Ct. 912, 917, 1 L. Ed. 2d 972 (1957), ruled that the courts could establish federal common law for claims "arising under" § 301 of the [LMRA]. See Reiherzer v. Shannon, 581 F.2d 1266, 1271 (7th Cir. 1978). The Committee states that § 502(a)(1)(B) claims are to be regarded "in similar fashion" to § 301 actions, not that the identical rules of federal common law are necessarily to apply in both statutory claims.
Wardle has been relied upon by other circuit courts holding that a plaintiff suing under § 502(a)(1)(B) is not entitled to a jury trial. See, e.g., Calamia v. Spivey, 632 F.2d 1235 (5th Cir. 1980). To date, each of the circuit courts that have resolved this issue has held that no jury trial is warranted. See Wardle, 627 F.2d 820; Calamia, 632 F.2d 1235; In re Vorpahl, 695 F.2d 318 (8th Cir. 1982); Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir. 1984), cert. denied, 474 U.S. 865, 106 S. Ct. 183, 88 L. Ed. 2d 152 (1985);
Berry v. Ciba-Geigy Corp., 761 F.2d 1003 (4th Cir. 1985); Turner v. CF & I Steel Corp., 770 F.2d 43 (3d Cir. 1985), cert. denied, 474 U.S. 1058, 106 S. Ct. 800, 88 L. Ed. 2d 776 (1986); Daniel v. Eaton Corp., 839 F.2d 263 (6th Cir.), cert. denied, 488 U.S. 826, 109 S. Ct. 76, 102 L. Ed. 2d 52 (1988); Blake v. Unionmutual Stock Life Ins. Co., 906 F.2d 1525 (11th Cir. 1990).
Within the Second Circuit, the district courts have split on the issue. Some courts have held that, at least in some circumstances, § 502(a)(1)(B) impliedly secures the right to a jury trial, and/or that such a right is guaranteed by the Seventh Amendment. See Pollock v. Castrovinci, 476 F. Supp. 606 (S.D.N.Y. 1979), aff'd without opinion, 622 F.2d 575 (2d Cir. 1980); Paladino v. Taxicab Indus. Pension Fund, 588 F. Supp. 37 (S.D.N.Y. 1984); Abbarno v. Carborundum Co., 682 F. Supp. 179 (W.D.N.Y. 1988); Vicinanzo v. Brunschweig et Fils, Inc., 739 F. Supp. 882 (S.D.N.Y. 1990); Weber v. Jacobs Mfg. Co., 751 F. Supp. 21 (D.Conn. 1990); Resnick v. Resnick, 763 F. Supp. 760 (S.D.N.Y. 1991); Smith v. Union Mut. Ins. Co., 1990 WL 209456 (S.D.N.Y. 1990); Dawes v. First Unum Life Ins. Co., 1992 WL 350778 (S.D.N.Y. 1992). Other sister courts have held that there exists no such right. See Nobile v. Pension Comm. of the Pension Plan for Employees of New Rochelle Hosp., 611 F. Supp. 725 (S.D.N.Y. 1985); Gardella v. Mutual Life Ins. Co. of New York, 707 F. Supp. 627 (D.Conn. 1988); In re Emhart Corp., 706 F. Supp. 153 (D.Conn. 1988); Brock v. Group Legal Adm'rs, Inc., 702 F. Supp. 475 (S.D.N.Y. 1989); Clay v. ILC Data Device Corp., 771 F. Supp. 40 (E.D.N.Y. 1991).
The Second Circuit has not spoken definitively regarding this issue; however, there is authority indicating that the Second Circuit is not prepared to join the various circuits that have recognized no right to a jury trial. In Haeberle v. Board of Trustees of Buffalo Carpenters Health-Care, Dental, Pension and Supplemental Funds, 624 F.2d 1132, 1136 (2d Cir. 1980), the Second Circuit expressed "reservation about the practice of taking [an ERISA claim for unpaid benefits] away from a jury, rather than setting aside an incorrect verdict. . . ." As the court noted in Paladino, 588 F. Supp. 37:
This statement may well be regarded as dictum, but it is rare for the Court of Appeals in this Circuit to criticize a trial judge, especially when the judgment appealed from is being affirmed. This Court believes that, although dictum, the statement in Haeberle is well-considered dictum, and reflects a view, which this Court shares, that private civil litigation seeking to enforce rights under ERISA should be tried to a jury, where as in this case, disputed ...