United States District Court, S.D. New York
March 19, 2004.
WILLIAM WEBB, Plaintiff, -against- RLR ASSOCIATES, LTD. and ROBERT ROSEN, Defendants
The opinion of the court was delivered by: HAROLD BAER, JR., District Judge[fn1] [fn1] Lisa Dudzinski, a spring 2004 intern in ray Chambers and a second-year law student at New York Law School, provided substantial assistance in the research and drafting of this Opinion.
OPINION & ORDER
Defendant Robert Lewis Rosen Associates, Ltd. ("RLR") moves to strike
plaintiff William Webb's (" Webb") jury demand, pursuant to Federal Rules
of Civil Procedure (Ted. R. Civ. P.") 38(a) and 39(a), For the following
reasons, defendant's motion to strike plaintiff's jury demand is granted.
A. Factual Background
As this court has already issued two Opinions relating to this case,
one confirming the arbitration award (Robert Lewis Rosen Assocs.,
Ltd. v. Webb, 03 Civ. 6338, 2003 U.S. Dist LEXIS 21317 (S.D.N.Y.
Nov. 24, 2003)), and the other granting summary judgment on several of
Webb's claims in this action (Webb v. Robert Lewis Rosen Assocs.,
Ltd., 03 Civ. 4275, 2003 U.S. Dist. LEXIS 23160 (S.D.N.Y. Dec. 23,
2003)), familiarity with the facts is presumed, Therefore, only a brief
summary is warranted.
In 1986, Webb, a director of televised sporting events, hired RLR, a
sports management company, to negotiate contracts on his behalf. The
contract between RLR and Webb stipulated that "RLR's services are not
exclusive to you [Webb] and we [RLR] shall have the right to perform the
same or similar services for others." The contract also required Webb to
pay RLR ten percent of his earnings in this industry. The contract
between RLR and Webb expired in 1986 and was not renewed until 1997. The
1997 renewal contract covered the period June 8,
1997 through October 12, 2001.
Before the renewal contract took effect, Webb maintains that he had a
"loose working relationship under which RLR was compensated for services
rendered on a contract-by-contract basis." Compl. ¶ 15. During this
time, in the summer of 1995, Webb spoke with John Filippelli
("Filippelli"), who later became the coordinating producer of FOX
Baseball, about working as the director of FOX's major league "A"
baseball games. Webb contacted Rosen in order to negotiate this FOX
contract on his behalf. One month later, Webb learned through Filippelli
that RLR had sought to promote another person instead of Webb, At one
point, Rosen communicated to Webb that "he would be lucky to do the "B",
"C", or "D" game." Compl. ¶ 20. Despite Rosen's alleged disloyal
comments and actions, Filippelli still hired Webb to direct FOX's "A"
baseball games, and Webb still allowed RLR to negotiate the contract with
FOX, Additionally, at the end of February 1997, Webb retained RLR to
negotiate his renewal contract with MSG. However, Webb claims that he
later discovered that RLR again attempted to promote another client over
Webb by telling the coordinating producer of MSG Baseball that "another
of RLR's clients was a better baseball director than Mr. Webb." Compl.
¶ 26. Webb now seeks recompense for RLR's alleged disloyalty.
B. Procedural History
On or about April 18, 2001, RLR initiated an arbitration against Webb,
pursuant to an arbitration clause in the 1986 agreement, which had been
incorporated into the renewal contract. RLR initiated the arbitration to
compel Webb to pay fees allegedly owed to RLR for contracts with FOX and
MSG that became effective on March 1, 2001. During the pendency of the
arbitration, Webb commenced an action in this Court, which this Court
stayed pending the outcome of the arbitration and later dismissed without
prejudice because of Webb's failure to timely notify the Court of the
status of the arbitration. In a March 11, 2003 Interim Opinion and Award,
the arbitrator denied Webb's claim for fraudulent inducement, and
sustained RLR's claim for breach of the extension agreement. On August
21, 2003, RLR filed an action to confirm the arbitration award and on
November 24, 2003, this Court confirmed the award. Following the issuance
of the March 11 Award, Webb commenced the instant action. On December 23,
2003, relying on the arbitrator's findings that Webb suffered no injury,
this Court dismissed Webb's claims for (1) fraud in the inducement, (2)
breach of oral contract, (3)
breach of fiduciary duty (other than under the faithless servant
doctrine), and (4) violations of Article 11 of the New York General
Business Law and § 1700.44(a) of the California Labor Code, but allowed
Webb's claims of (1) unjust enrichment and (2) breach of fiduciary duty
under the faithless servant doctrine to go forward as neither of these
claims required a showing of injury. RLR now moves to strike Webb's jury
demand in lieu of the fact that the claims that once entitled Webb to a
jury have been dismissed,
A. Motion to Strike Jury Demand
The Seventh Amendment, which determines whether the parties are
entitled to a jury trial, provides that "in suits at common law, where
the value in controversy shall exceed twenty dollars, the right of trial
by jury shall be preserved." Consequently, a plaintiff is entitled to a
jury if his claims "involve rights and remedies of the sort traditionally
enforced in an action at law, rather than in an action in equity."
S.E.C v. Commonwealth Chem. Sec., Inc., 574 F.2d 90, 95 (2d Cir.
1978). However, if the relief he seeks is equitable in nature, a jury
trial is not wanted. See Chauffeurs, Teamsters and Helpers. Local
No, 391 v. Terry, 494 U.S. 558, 565 (1990),
1. Breach of Fiduciary Duty (Faithless Servant Doctrine)
Because Webb's claim under the faithless servant doctrine is a claim in
equity, Webb is not entitled to a jury trial on this claim. The faithless
servant doctrine provides relief when an agent is disloyal or unfaithful
to his principal, even if the principal suffers no provable damage.
Feiger v, Iral Jewelry, Ltd, 41 N.Y.2d 928, 929 (1977). This doctrine
ensures that the unfaithful agent is not compensated for his disloyal
actions. See Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184,
200 (2d Cir. 2003). Notably, this court dismissed all of Webb's claims
requiring a showing of injury expressly because, as a result of the
arbitrator's findings, Webb was collaterally estopped from proving
injury. The faithless servant doctrine is an alternative to a claim for
breach of fiduciary duty, which compensates the principle for the
faithless actions of his agent, even when the principal has suffered no
injury. See Phansalkar, 344 F.3d at 200.
Generally, even strict fiduciary duty claims are "actions in equity
carrying with them no right to a trial by jury." Pereira v. Cogan, 00
Civ. 619, 2002 U.S. Dist. LEXIS 8513, at *7 (S.D.N.Y. May 10, 2002)
(internal quotations and citations omitted). However, some allegations
of breach of fiduciary duty have been construed as legal when they
constitute claims of breach of contract, fraud, fraudulent transfer,
negligence, and gross negligence. Id. at *8 (internal quotations and
citations omitted). In this case, the strict breach of fiduciary duty
claim, which may have relied on one of the theories discussed in
Pereira, has already been dismissed, Webb, 2003 U.S. Dist. LEXIS 23160,
at *31. Only the equitable version remains.
The fact that Webb seeks monetary damages under the faithless servant
doctrine, does not alter his lack of entitlement to a jury. While
monetary damages are generally regarded as legal, "an award of monetary
relief is not necessarily legal relief." Swan Brewery Co. v. U.S. Trust
Co., 143 F.R.D. 36, 41 (S.D.N.Y. 1992) (internal quotations omitted).
Instead, monetary damages may be considered equitable when "the damages
sought are in the nature of restitution, as in actions for disgorgement
of improper profits or money wrongfully withheld." Id. at 41, citing Tull
v. United Slates, 481 U.S. 412, 424 (1987). Since Webb similar to the
plaintiff in Swan seeks the disgorgement of profits, the monetary damage
claimed is equitable in nature, and therefore does not entitle Webb to a
jury trial. 2.
2. Unjust Enrichment
Similarly, plaintiff is not entitled to a jury trial based on his claim
for unjust enrichment, stemming from RLR's alleged disloyalty, because
this claim as well is grounded in equity.*fn2
Unjust enrichment is an equitable doctrine that provides for recovery
when (1) there is a benefit conferred upon the defendant by the
plaintiff; (2) the defendant is aware of the benefit; and (3) the defendant
accepts the benefit under such circumstances as to make it inequitable
for him to retain the benefit without payment of its value. Van Gemert
v. Boeing Co., 590 F.2d 433, 444 (2d Cir. 1987). "Restitution is the
traditional remedy employed for unjust enrichment claims." Golden Pacific
Bancorp. v. Fed. Deposit Ins. Corp., 95 Civ. 9281, 2002 U.S. Dist. LEXIS
24961, at *49 (S.D.N.Y. Dec. 24, 2002), citing Brown v. Sandimo
Materials, 250 F.3d 120, 126 (2d Cir. 2001). Therefore, Webb's claim for
unjust enrichment does not entitle him to a jury trial.*fn3 S.E.C., 574
F.2d at 95-96.*fn4
B. Discretionary/Advisory Jury
This Court also declines to appoint either a discretionary jury or an
advisory jury. A discretionary jury is only appropriate in actions,
unlike this one, when "a [jury] demand might have been made of right."
Fed.R.Civ.P. 39(b). And, while the Court's power to empanel an advisory
jury, pursuant to Fed.R.Civ.P. 39(c), "is entirely discretionary" (NAACP
v. Acusport Corp., 226 F. Supp.2d 391, 398 (E.D.N.Y. 2002), citing
Glanzman v. Schaffer, 252 F.2d 333, 334 (2d Cir. 1958)), because the
legal issues involved are not of a complicated nature, "the interests of
judicial economy would not be served in this case by empanelling an
advisory jury." Pan Am Corp., v. Delta Air Lines, Inc., 93 Civ. 7125,
1994 U.S. Dist. LEXIS 5704, at *11 (S.D.N.Y. May 2, 1994). Therefore,
this case will proceed as a bench trial.
For the foregoing reasons, defendant's motion to strike plaintiff s
jury demand is granted. The non-jury trial will commence on April 5,
IT IS SO ORDERED.
*fn2 The "unjust enrichment claim is similar to the faithless servant
claim . . . both allege that due to disloyalty, the benefit conferred was
undeserved., these claims address the inequity of the benefit derived by
the allegedly disloyal actor, rather than remedy the injury or damage
suffered by Webb." Webb, 2003 U.S. Dist. LEXIS 23160, at *28.
*fn3 The fact that Webb seeks punitive damages "does not change the
nature of [his] claim to a legal one." Hodges v. Virgin Atlantic
Airways, Ltd., 714 F. Supp. 75, 77 (S.D.N.Y. 1988) (striking plaintiff's
jury demand based in part on the fact that the mere assertion of punitive
damages does not "alter the genre of the proceeding."). Id. at 78. As
discussed, the underlying nature of Webb's claims are in equity.
Therefore, the fact that he requested punitive damages which are of
questionable appropriateness here anyway does not entitle Webb to a
*fn4 Webb's reliance on Ideal World Marketing, Inc. v. Duracell, Inc.,
997 F. Supp. 334, 336 (E.D.N.Y. 1998) for the proposition that a jury
trial may be awarded for claims in equity is unfounded. Ideal, a case
from a neighboring district, discusses a plaintiff's request for damages
in the context of a Lanham Act suit. The Court's discussion and
conclusion are particular to the area of trademark law, and are therefore
© 1992-2004 VersusLaw Inc.