United States District Court, S.D. New York
MEMORANDUM AND ORDER
C. FRANCIS IV UNITED STATES MAGISTRATE JUDGE.
United States of America (the "Government") brings
this action on behalf of the Administrator of the
Environmental Protection Agency (the "EPA") against
Accolade Construction Group, Inc. ("Accolade"),
alleging violations of the Toxic Substances Control Act (the
"TSCA"), 15 U.S.C. § 2601 et sea.,
and EPA regulations codified at 40 C.F.R. pt. 745, subpart E
(the "Renovation, Repair, and Painting Rule" or the
"RRP Rule"). Specifically, the Government asserts
that Accolade engaged in renovation of residential buildings
and did not comply with requirements to hire renovators
trained and certified in lead-safe renovation practices, seal
off work areas to prevent lead contamination, warn building
owners and occupants of the risks of lead exposure from the
renovations, or provide the EPA with required records to
enable the agency to monitor Accolade's compliance.
(Complaint ("Compl."), ¶ 1). As relief, the
Government seeks (1) an order restraining Accolade from
performing any renovation work until it can demonstrate
compliance with the TSCA and the RRP Rule, (2) an injunction
compelling Accolade to comply with the TSCA and the RRP Rule,
and (3) an order requiring Accolade to disgorge all proceeds
from its illegal conduct, together with interest. (Compl. at
Government now moves to strike Accolade's demand that
this case be tried before a jury. The motion is granted.
a case of first impression, as the parties have identified no
case addressing the right to a jury trial in a TSCA case, and
I am aware of none. The statute itself is silent on the right
to a jury, so if such a right exists, it must be derived from
the Seventh Amendment to the United States Constitution. The
Seventh Amendment provides: “In Suits at common law,
where the value in controversy shall exceed twenty dollars,
the right of trial by jury shall be preserved . . . .”
This Amendment protects the fundamental right to a jury trial
for actions at law, not actions in equity.
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41
(1989); Soley v. Wasserman, No. 08 Civ. 9262, 2013
WL 1655989, at *1 (S.D.N.Y. April 17, 2013); Maersk, Inc.
v. Neewra, Inc., 687 F.Supp.2d 300, 338 (S.D.N.Y. 2009).
Therefore, a two-step analysis is necessary to determine
whether the jury right attaches. First, “the court must
consider whether the action would have been deemed legal or
equitable in 18th-century England before the merger of courts
of law and equity.” Maersk, 687 F.Supp.2d at
338. Then, it must “examine the remedy sought and
determine whether it is legal or equitable in nature.”
Granfinanciera, 492 U.S. at 42 (quoting Tull v.
United States, 481 U.S. 412, 417-18 (1987)). The second,
functional prong of the test weighs more heavily than the
first, historical inquiry. Id.; Tull, 481
U.S. at 421.
under modern statutes often have no precise parallel in
18th-century English law. See Pernell v. Southall
Realty, 416 U.S. 363, 375 (1974) (finding that Seventh
Amendment may require “trial by jury in actions unheard
of at common law”). Nevertheless, the closest
historical antecedent to an action under the TSCA appears to
be a suit to abate a public nuisance. In particular, in the
18th century, the sovereign could bring an action in the
English courts of equity “to enjoin ‘offensive
trades and manufactures' that polluted the
environment.” Tull, 481 U.S. at 420 (quoting 4
William Blackstone, Commentaries *167). An action by
the Government under the TSCA to enjoin renovation work that
threatens the release of hazardous lead is a relatively close
importantly, the monetary remedy sought by the Government --
disgorgement -- is equitable in nature. The TSCA provides
district courts with jurisdiction over civil actions
“to . . . restrain any violation of” relevant
provisions of the TSCA and related regulations. 15 U.S.C.
§ 2616(a)(1). When Congress thus invokes the federal
courts' equity jurisdiction in a statute, “all the
inherent equitable powers of the [courts] are available for
the proper and complete exercise of that jurisdiction”
except where the statute restricts the forms of equitable
relief by “clear and valid legislative command”
or “necessary and inescapable inference.”
Porter v. Warner Holding Co., 328 U.S. 395, 398
(1946). “When Congress entrusts to an equity court the
enforcement of prohibitions contained in a regulatory
enactment, it must be taken to have acted cognizant of the
historic power of equity to provide complete relief in the
light of statutory purposes.” Mitchell v. Robert
DeMario Jewelry, Inc., 361 U.S. 288, 291-92 (1960).
Relief ancillary to the equitable power to enjoin statutory
and regulatory violations includes the remedy of
disgorgement. See FTC v. Bronson Partners, LLC, 654
F.3d 359, 365-66 (2d Cir. 2011) (finding disgorgement
available as ancillary relief under Federal Trade Commission
Act); United States v. Rx Depot, Inc., 438 F.3d
1052, 1058 (10th Cir. 2006) (same as to Food, Drug, and
Cosmetic Act); SEC v. Materia, 745 F.2d 197, 200-01
(2d Cir. 1984) (same as to Securities Exchange Act of 1934).
although disgorgement of profits under the TSCA involves the
payment of money, it is nevertheless equitable in nature.
See SEC v. Cavanagh, 445 F.3d 105, 117 (2d Cir.
2006) (“The emphasis [of disgorgement] on public
protection, as opposed to simple compensatory relief,
illustrates the equitable nature of the remedy.”).
Accordingly, the Seventh Amendment does not provide for the
right to a jury trial. See Bronson Partners, 654
F.3d at 374 (finding disgorgement remedy “permissible
without a jury trial”); SEC v. Tome, 833 F.2d
1086, 1096 n.7 (2d Cir. 1987) (“[T]he Seventh Amendment
right to a jury trial does not apply to  equitable actions
for disgorgement.”); SEC v. Amerindo Investment
Advisors Inc., No. 05 Civ. 5231, 2014 WL 2112032, at *8
(S.D.N.Y. May 6, 2014) (“Disgorgement is an equitable
remedy and the findings underlying a disgorgement order are
made by a court, not a jury.”); Chevron Corp. v.
Donziger, No. 11 Civ. 691, 2013 WL 5526287, at *3
(S.D.N.Y. Oct. 7, 2013) (“Cases seeking only
injunctions, imposition of constructive trusts, and
disgorgement . . . are purely equitable and carry no right to
trial by jury.”).
course, if the Government were seeking legal as well as
equitable relief in this case, the calculus might be
different. The TSCA does provide for the award of civil
penalties in an administrative proceeding. 15 U.S.C. §
2615. However, whether the jury right attaches turns on the
claims asserted in this litigation, where the Government
seeks only equitable and injunctive remedies. Indeed, even a
party that has once asserted legal claims in a lawsuit can
avoid a jury trial by abandoning those claims and seeking
only equitable relief. See Chevron, 2013 WL 5526287,
does not seriously dispute any of these principles. Rather,
it argues that, as a practical matter, the Government is
seeking extensive monetary relief that can only be
characterized as damages or as a civil penalty, thus
triggering the right to a jury trial. (Memorandum in
Opposition to Plaintiff's Motion to Strike
Defendant's Jury Demand (“Def. Memo.”) at
2-3, 10). In particular, Accolade contends that the
Government seeks disgorgement not only of those profits
attributable to work that might have been done in violation
of the TSCA and the RRP Rule but also profits from work
unrelated to lead hazards, such as installing new cabinets,
mirrors, and wood flooring. (Def. Memo. at 8-9 & n.l).
Furthermore, according to Accolade, the Government's
proposed remedy is punitive because it improperly understates
Accolade's overhead, thereby inflating the profit to be
disgorged. (Def. Memo, at 9-10).
argument is premature. The Government's request for
equitable relief only is binding. That means that Accolade is
not entitled to trial by jury. It also means that Accolade
will have the opportunity to challenge the Government's
proof as to what constitutes the appropriate disgorgement
amount, but that will take place at trial.
reasons discussed, the Government's motion to strike the