United States District Court, D. Massachusetts
DAVID B. TRACEY, DANIEL GUENTHER, MARIA T. NICHOLSON, and CORRINNE R. FOGG, Individually and as Representatives of a Class of Participants and Beneficiaries on behalf of the MIT Supplemental 401k Plan, Plaintiffs,
MASSACHUSETTS INSTITUTE OF TECHNOLOGY, THE MIT SUPPLEMENTAL 401K PLAN OVERSIGHT COMMITTEE, THE ADMINISTRATIVE COMMITTEE, ISRAEL RUIZ, ALISON ALDEN, MARC BERSTEIN, LAWRENCE CANDELL, GLENN DAVID ELLISON, MICHAEL HOWARD, MARTIN KELLY, S.P. KOTHARI, ROBERT C. MERTON, GUNTHER ROLAND, LORRRAINE A. GOFFE-RUSH, GLEN SHOR, PAMELA WELDON, THOMAS M. WIEAND, and BARTON ZWIEBACH, Defendants.
MEMORANDUM AND ORDER RE: DEFENDANTS' MOTION TO
STRIKE PLAINTIFFS' DEMAND FOR A JURY TRIAL (DOCKET ENTRY
MARIANNE B. BOWLER, UNITED STATES MAGISTRATE JUDGE.
before this court is a motion to strike a demand for a jury
trial filed by defendants Massachusetts Institute of
Technology (“MIT”), the MIT Supplemental 401(k)
Plan Oversight Committee, the Administrative Committee,
Israel Ruiz, Alison Alden, Marc Berstein, Lawrence Candell,
Glenn David Ellison, Michael Howard, Martin Kelly, S.P.
Kothari, Robert C. Merton, Gunther Roland, Lorraine A.
Goffe-Rush, Glen Shor, Pamela Weldon, Thomas M. Wieand, and
Barton Zwiebach (collectively “defendants”) under
Fed.R.Civ.P. 39(a)(2) (“Rule 39(a)(2)”). (Docket
Entry # 138). Plaintiffs David B. Tracey, Daniel Guenther,
Maria T. Nicolson, and Corrianne R. Fogg, individually and as
representatives of a class of participants and beneficiaries
(“plaintiffs”) on behalf of the MIT Supplemental
401(k) Plan (“the Plan”), oppose the motion.
(Docket Entry # 142).
filed this action on behalf of the Plan alleging
“breach of fiduciary duties and prohibited
transactions” under the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C.
§§ 1101-1461. (Docket Entry # 98, pp. 1-2, ¶
1). Plaintiffs seek “to enforce [d]efendants'
personal liability under 29 U.S.C. § 1109(a) to make
good to the Plan all losses resulting from each breach of
fiduciary duty and to restore to the Plan any profits made
through [d]efendants' use of [the] Plan assets.”
(Docket Entry # 98, p. 3, ¶ 4). Plaintiffs allege that
“[i]nstead of leveraging the Plan's bargaining
power to benefit participants, [d]efendants allowed a
conflicted third party to dictate Plan decisions . .
..” (Docket Entry # 98, p. 2, ¶ 3). Thus,
defendants purportedly permitted MIT donor Fidelity
Investments, “the Plan's recordkeeper and primary
investment provider, ” “to put hundreds of its
proprietary investment funds in the Plan” and “to
collect unreasonable and excessive fees, all at the expense
of participants' retirement savings.” (Docket Entry
# 98, p. 2, ¶ 3). The second amended complaint sets out
causes of action for breach of fiduciary duties: (1) under 29
U.S.C. § 1104(a)(1)(B) for unreasonable investment
management fees and performance losses (Count I); (2) under
29 U.S.C. § 1104(a)(1)(B) for unreasonable
administrative fees (Count II); (3) under 29 U.S.C. §
1106 for prohibited transactions between the Plan and a party
in interest (Count III); and (4) for failure to monitor
adequately those to whom it delegated fiduciary
responsibilities (Count IV). (Docket Entry # 98, pp. 113-123,
¶¶ 164-200). The second amended complaint also
demands a trial by jury pursuant to Fed.R.Civ.P. 38. (Docket
Entry # 98, p. 123, ¶ 201).
move to strike the jury demand on the basis that claims
against fiduciaries for alleged breaches of fiduciary duties
imposed by ERISA do not confer the right to a jury trial.
(Docket Entry ## 138, 139). Plaintiffs oppose the motion.
(Docket Entry # 142). On October 25, 2018, this court held a
hearing and took the motion to strike the jury demand (Docket
Entry # 138) under advisement.
submit that the ERISA claims and the remedies sought are
equitable and not legal in nature and thus carry no right to
a jury trial. (Docket Entry # 139). Plaintiffs respond that
when an ERISA plaintiff seeks to recover compensatory
damages, the plaintiff is seeking a legal remedy, not an
equitable remedy. (Docket Entry # 142).
502(a)(2), 29 U.S.C. § 1132(a)(2), the second of
ERISA's “six carefully integrated civil enforcement
provisions, ” Mass. Mut. Life Ins. Co. v.
Russell, 473 U.S. 134, 146 (1985), allows the Secretary
of Labor or any plan beneficiary, participant, or fiduciary
to bring a civil action “‘for appropriate relief
under section .'” Mertens v. Hewitt
Assocs., 508 U.S. 248, 252-53 (1993). The Seventh
Amendment establishes the right to a jury trial
“‘[i]n [s]uits at common law, '”
U.S.Const.amend.VII, or those “‘suits in which
legal rights [are] to be ascertained and determined,
in contradistinction to those where equitable rights alone
[are] recognized, and equitable remedies [are]
administered.'” Chauffeurs, Teamsters and
Helpers, Local No. 391 v. Terry, 494 U.S. 558, 564-565
(1990) (internal citation omitted). ERISA does not expressly
permit or deny that claims brought for breach of fiduciary
duty outlined in section 404(a), 29 U.S.C. § 1104(a), be
tried by a jury. Gammell v. Prudential Ins. Co. of
Am., 502 F.Supp.2d 167, 172 (D. Mass. 2007) (stating
ERISA does not expressly provide for a jury trial). When a
statute is silent on a matter, as ERISA is on the right to a
trial by jury, the court initially looks to the statute and
its legislative history to determine legislative intent.
See Tull v. United States, 481 U.S. 412, 417 n.3
great weight of authority holds that no right to trial by
jury applies to actions for breach of fiduciary duty under
ERISA. See, e.g., O'Hara v.
Nat'l Union Fire Ins. Co. of Pittsburgh, 642 F.3d
110, 116 (2nd Cir. 2011) (finding “no right to a jury
trial in a suit brought to recover ERISA benefits”);
Graham v. Hartford Life & Accident Ins. Co., 589
F.3d 1345, 1356-57 (10th Cir. 2009) (rejecting argument that
actions by beneficiaries for money obligations are legal in
nature and denying jury demand); Reese v. CNH America
LLC, 574 F.3d 315, 327 (6th Cir. 2009) (finding no
Seventh Amendment right to jury trial under ERISA);
Rolland v. Textron, Inc., 300 Fed.Appx. 635, 636
(11th Cir. 2008) (finding district court did not err in
denying jury trial because “ERISA claims are not
entitled to jury trials under ERISA because such claims are
equitable in nature”) (unpublished); Hampers v.
W.R. Grace & Co., Inc., 202 F.3d 44, 53-54 (1st Cir.
2000) (holding district court did not err in denying jury
trial where state contract law preempted by ERISA);
Thomas v. Oregon Fruit Products Co., 228 F.3d 991,
996 (9th Cir. 2000) (holding “plan participants and
beneficiaries are not entitled to jury trials for claims
brought under, or preempted by, section 502 of ERISA”);
Borst v. Chevron Corp., 36 F.3d 1308, 1324 (5th Cir.
1994) (no right to jury under ERISA even where plaintiff only
seeks monetary relief); Biggers v. Wittek Indus.,
Inc., 4 F.3d 291, 298 (4th Cir. 1993) (affirming no
right to jury under ERISA). Likewise, a majority of the
district courts within this circuit have held no jury trial
right exists for claims alleging breach of fiduciary duties
under ERISA. See, e.g., Gammell v.
Prudential Ins. Co. of Am., 502 F.Supp.2d at 172 (D.
Mass. 2007) (rejecting claim for jury trial and citing
cases); Turner v. Fallon Cmty. Health Plan Inc., 953
F.Supp. 419, 422-23 (D. Mass. 1997) (jury trial not available
in ERISA action to recover benefits); Stanford v.
AT&T Corp., 927 F.Supp. 524, 527 (D. Mass. 1996) (no
right to jury under ERISA because relief sought was
equitable); Vartanian v. Monsanto Co., 880 F.Supp.
63, 72 (D. Mass. 1995) (no right to jury in action to recover
pension benefits under ERISA); Charlton Mem'l Hosp.
v. Foxboro Co., 818 F.Supp. 456, 459-60 (D. Mass. 1993)
(no right to jury under ERISA).
determine whether a statutory action is more similar to cases
that were tried in courts of law than to suits tried in
courts of equity or admiralty, the Court must examine both
the nature of the action and of the remedy sought.”
Tull v. United States, 481 U.S. at 417;
Chauffeurs, Teamsters and Helpers, Local No. 391
v. Terry, 494 U.S. at 565 (establishing the right to a
jury trial involves a bifurcated analysis). The second
inquiry regarding the nature of the relief sought weighs more
heavily than the first in the calculus. Id. at 565.
Where the nature of the rights and remedies sought is legal
rather than equitable in nature, the Seventh Amendment grants
the right to a jury trial. Id. at 564 (citation
contend that because they seek to hold defendants personally
liable “to make good to the Plan all losses resulting
from each breach of fiduciary duty” as allowed by
section 409(a), the nature of their claim is legal rather
than equitable. (Docket Entry # 98, p. 3, ¶ 4). Merely
because a plaintiff seeks a monetary remedy, however, does
not require that the action be viewed as legal rather than
equitable in nature. Curtis v. Loether, 415 U.S.
189, 196-97 (1974). Based on ERISA's trust law roots,
plan fiduciaries under ERISA have been treated as trustees
and the plans as trusts. CIGNA Corp. v. Amara, 563
U.S. 421, 439 (2011). “[I]t is only by virtue
of [MIT]'s status as an ERISA employer with direct
control over the administration and operation of the [Plan]
that [MIT] could have breached the [Plan] in the way
[plaintiffs] insists that it did.” Hampers v. W.R.
Grace & Co., Inc., 202 F.3d at 53 (emphasis in
original). Thus, a case involving a suit by a plan
beneficiary against a plan fiduciary is a case involving a
suit against a trustee typically only heard in a court of
equity. CIGNA Corp. v. Amara, 563 U.S. at 439-440;
see also Mertens v. Hewitt Assocs., 508 U.S. at 256
(stating at common law courts of equity had exclusive
jurisdiction over actions for breach of trust brought by
beneficiaries). The cases on which plaintiffs rely are
distinguishable because they are analogous to an action for
breach of contract not breach of fiduciary duty. See
Callery v. United States Life Ins. Co. in the City of New
York, 392 F.3d 401, 404 (10th Cir. 2004) (noting in both
Mertens and Great-West the Supreme Court
rejected claims for equitable relief under section 502(a)(3)
where relief sought by plaintiffs to impose personal
liability for a contractual obligation to pay money was legal
rather than equitable). In Mertens, plan
participants sought to hold the plan's actuary liable as
a nonfiduciary for knowingly participating in the plan's
fiduciaries' breach of their fiduciary duties.
Mertens v. Hewitt Assocs., 508 U.S. at 251. Both
Great-West and Montanile, involved claims
brought against plan beneficiaries for reimbursement for the
plans' payment of medical expenses when participants
later recovered money from a third party for the same. The
claims against which plaintiffs sought to hold defendants
liable in the above cited cases are legal claims based on
contractual rights of subrogation not as fiduciaries
entrusted to act for the interest of participants. See
Great-West, 534 U.S. at 211-216 (holding claim against
plan beneficiary for specific performance of reimbursement
provision of ERISA to repay funds recovered from third-party
tortfeasor was for contractual obligation to pay money);
Montanile, 136 S.Ct. at 657-61 (same).
rely on a recent district court decision in the Second
Circuit, Cunningham v. Cornell Univ., 2018 WL
4279466 (S.D.N.Y. Sept. 6, 2018), for the proposition that a
make-whole remedy is not equitable when the action seeks to
hold defendants personally liable and the funds are not
particular funds or property belonging to plaintiffs in good
conscious and in defendants' possession. See also
Great-West, 534 U.S. at 214. Yet, when a trustee commits
an intentional breach or falls below the required standard of
care, it is equity that seeks to place the beneficiary at
least in the position that it would have been in had there
not been a breach of trust. See CIGNA Corp. v.
Amara, 563 U.S. at 442 (distinguishing that claims
brought against fiduciaries “insofar as an award of
make-whole relief is concerned, the fact that the defendant
in this case, unlike the defendant in Mertens, is
analogous to a trustee makes a critical difference”).
In the trust context what is being made whole is the
beneficiary's equitable property interest in the trust
estate. See LaRue v. DeWolff, Boberg & Assocs.,
Inc., 552 U.S. 248, 253 n.4, 254 (2008) (holding claims
for lost profits to the entire plan are cognizable under
section 502(a)(2) based on the law of trust); Donovan v.
Bierwirth, 754 F.2d 1049, 1056 (2d Cir. 1985)
(“[o]ne appropriate remedy in cases of breach of
fiduciary duty is the restoration of the trust beneficiaries
to the position they would have occupied but for the breach
of trust”) (citation omitted).
following with the line of cases of courts in this district,
claims under ERISA for recovery of benefits allegedly due and
for breach of fiduciary duties are analogous not to legal
actions for breach of contract but to actions by a
beneficiary against a trustee under the law of trusts.
See Gammell v. Prudential Ins. Co. of Am., 502
F.Supp.2d at 172; Turner v. Fallon Cmty. Health Plan
Inc., 953 F.Supp. at 422-23; Stanford v. AT&T
Corp., 927 F.Supp. at 527; Vartanian v. Monsanto
Co., 880 F.Supp. at 72; Charlton Memorial Hosp. v.
Foxboro Co., 818 F.Supp. at 459-60. In accord with the
great weight of authority in the federal courts holding