In a recent federal district court decision that featured ERISA plan participants suing for breach of fiduciary duty, Moitoso v. FMR LLC, the court concluded that a jury trial is not required.. The argument for a lack of jury trial when the plan participants won the argument was that the participants’ winnings were not legal damages but an equitable surcharge, and thus they did not require a jury trial. The court did grant the request for an advisory jury.
Many courts, in considering whether in cases of fiduciary breach a right to a jury trial exists as required by the Seventh Amendment, have previously concluded that it does not. In this case, the federal district court gives additional analysis in making their decision.
The Seventh Amendment Right to a Jury
The Seventh Amendment guarantees citizens the right to a jury trial for all lawsuits at common law. This means that legal claims can access a jury trial but the amendment does not offer the same protection for equitable claims. In the case of ERISA fiduciary breach claims, ERISA provides for equitable remedies such as surcharge but not legal remedies such as damages.
The court decided that, “ERISA fiduciary duty claims draw directly from trust law and thus fall within ‘the bailiwick of the courts of equity.’” While the plaintiffs argued that the case at hand was subject to an Unconditional Payment Exception and they had an immediate right to relief, the court found that this exception does not apply if there is a readily identifiable sum in question. The plaintiffs argued that the defendant’s (Fidelity’s) breach resulted in the diminishment of plan income, but they did not provide a specific sum. Thus, even though changes in plan payments will directly impact plan participants, the plaintiffs do not have a right to a direct payment from Fidelity.
The court also found that the losses the plan participants incurred due to Fidelity’s fiduciary breach were not damages that would lead to a direct payment but rather a surcharge. Make-whole monetary relief is considered an equitable surcharge, not a damages payment. This decision is confirmed by Supreme Court precedent on the nature of the specific remedy, and because of this type of remedy a jury trial is not required.
The attorneys at Hall Benefits Law follow fiduciary breach litigation closely so we can help our clients navigate these complicated issues and avoid costly litigation. To learn more, call Hall Benefits Law today at 678-439-6236, or visit the Hall Benefits Law website.
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