Should there be jury trials in Employee Retirement Income Security Act benefit denial cases? A recent ruling from the U.S. District Court for the Southern District of Ohio, Phillips v. Sun Life Assurance Co. of Canada,[1] has reopened the debate.
The Phillips case was originally filed in Ohio state court and alleged a variety of claims against Sun Life. Sun Life removed the matter to federal court, maintaining the case was governed by ERISA regardless of what was alleged. Sun Life also moved to dismiss claims that were preempted by ERISA.
The plaintiff responded by filing an amended complaint alleging an ERISA cause of action seeking disability benefits claimed to be due and requesting a jury trial. The defendant then moved to strike the jury demand.
The court found the motion to dismiss was mooted by the filing of an amended complaint. The court also decided it did not have to resolve the jury issue at this juncture but did not foreclose the possibility.
The plaintiff argued the ERISA statute impliedly recognized the right to a jury trial pursuant to the Seventh Amendment because, “he is seeking solely money damages, which is a form of legal relief, meaning this is a ‘suit at common law’ for Seventh Amendment purposes.” Sun Life countered by arguing that ERISA claims were equitable in nature and thus not subject to jury trials.
The court examined the most recent U.S. Court of Appeals for the Sixth Circuit case on the issue, In re: Caudill.[2] That case came before the court in an unusual procedural manner. There, a district court had stricken a jury demand and the plaintiff sought a writ of mandamus to reinstate the jury demand.
The court declined to grant the writ, finding “[t]here is no clear and indisputable right to a jury trial in actions for recovery of benefits under § 502.”[3] However, the court added that it was not “definitively resolv[ing] Caudill’s claim that he is entitled to a jury trial under ERISA § 502(a)(1)(B) or the Seventh Amendment.”[4]
Instead, the court held that mandamus was not appropriate since the absence of a “clear and indisputable” right to relief precluded a grant of a writ of mandamus.
In the Caudill decision referenced in Phillips, the Sixth Circuit cited Daniel v. Eaton Corp.,[5] which squarely held that “in actions for recovery of benefits under section 502, there is no right to a jury trial.”[6] However, the judge in Phillips questioned that ruling since claims that seek monetary recoveries are subject to trial by jury.
The most common reason given by courts for denying jury trials is a blanket assertion by defendants that ERISA cases are equitable in nature. However, many courts have also described ERISA claims seeking payment of benefits as contractual. For example, in 2013 in Larson v. United Healthcare Insurance Co.,[7] the U.S. Court of Appeals for the Seventh Circuit pronounced:
An ERISA § 502(a)(1)(B) claim is “essentially a contract remedy under the terms of the plan.” The Supreme Court has explained that the remedy provided in § 1132(a)(1)(B) is designed “to protect contractually defined benefits,” and in keeping with its contract-law foundations, the cause of action offers typical contract forms of relief, including recovery of benefits accrued or otherwise due, declaratory judgments to clarify plan benefits, and injunctions against future denial of benefits. The claim is governed by a federal common law of contract keyed to the policies codified in ERISA.
The U.S. Supreme Court established more than 30 years ago that all breach of contract actions are triable by jury under the Seventh Amendment.[8] In its 1990 ruling in Teamsters v. Terry, the Supreme Court examined the rights of parties to a jury trial in 18th century England prior to when courts of law and equity were merged in that country and found that breach of contract cases could be tried to juries so long as the remedy sought was contractual in nature.
ERISA cases seeking benefits due under the terms of a benefit plan are no different from common law actions for breach of contract according to a federal court in Michigan which ruled on the issue not long after the ERISA law went into effect.
In the 1977 U.S. District Court for the Eastern District of Michigan case Stamps v. Michigan Teamsters Joint Council No. 43,[9] the court found that a claim for pension benefits was subject to a jury trial based on the court’s recognition that the action was essentially a contract action seeking damages.[10]
The court went on to distinguish fiduciary breach claims from actions seeking benefits claimed to be due, explaining that a fiduciary breach claim would be equitable in nature, but “[i]f the court construed subsection [ERISA § 502](a)(1)(B) to also create a cause of action for equitable relief, it would be superfluous to subsection [502](a)(3).”[11]
Stamps further pointed out that ERISA’s legislative history supported its conclusion since ERISA civil actions were described as being guided by the case law developed under Section 301 of the Labor-Management Relations Act of 1947,[12] a law that allows jury trials as a matter of right. To be sure, there is no explicit provision in the ERISA law providing for jury trials, but there is also nothing in the ERISA law or its legislative history excluding jury trials either. This is yet another issue in which courts have made up rules about ERISA litigation that lack any statutory support. In 2020 in Wallace v. Oakwood Healthcare Inc.,[13] U.S. Circuit Judge Amul Thapar of the Sixth Circuit wrote a special concurring opinion questioning one of those doctrines — the requirement of exhaustion of administrative remedies as a precondition to filing a lawsuit following an ERISA-governed benefit denial. Thapar openly questioned the right of the judiciary to create rules that distinguished ERISA litigation from other civil actions. Denial of jury trials of ERISA benefit claims is another judicially created ERISA doctrine that, when closely examined, has no support other than judges’ say-so. In Terry, the Supreme Court ruled the right to a jury trial is based on the remedy sought.
ERISA cases that mostly involve insurance coverage and exclusively seek payment of monetary benefits are quintessentially legal in nature as the above quote from the Larson ruling makes evident.
Judge Thapar was on the Caudill panel cited by the court in Phillips. Perhaps the ruling in Caudill was seen by the court in Phillips as a signal that the time has come for a thoughtful reexamination of jury trials in ERISA cases.
Mark DeBofsky is a shareholder at DeBofsky Law.
This article was published first by Law360 on September 24, 2021.
[1] Phillips v. Sun Life Assur. Co. of Canada , 2021 U.S. Dist. LEXIS 168649, 2021 WL 4066807 (S.D. Ohio September 7, 2021).
[2] In re Caudill , No. 20-3834, 2020 U.S. App. LEXIS 34464, 2020 WL 6748203 (6th Cir. Oct. 30, 2020) (unsigned order).
[3] Id. at *2.
[4] Id. at *3.
[5] Daniel v. Eaton Corp. , 839 F.3d 263, 268 (6th Cir. 1988).
[6] Internal quotations omitted.
[7] Larson v. United Healthcare Ins. Co. , 723 F.3d 905, 911 (7th Cir. 2013).
[8] Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry , 494 U.S. 558, 564-65 (1990).
[9] Stamps v. Michigan Teamsters Joint Council No. 43 , 431 F. Supp. 745 (E.D. Mich. 1977).
[10] Id. at 746.
[11] Id. at 457.
[12] Id. (citing 29 U.S.C. § 185 (1988) and H.R. Rep. No. 93-1280, at 5107 (1974) (Conf. Rep.) (“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-Management Relations Act of 1947.”)).
[13] Wallace v. Oakwood Healthcare, Inc. , 954 F.3d 879 (6th Cir. 2020).
