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Tracey v. Massachusetts Institute of Technology

United States District Court, D. Massachusetts

August 8, 2019

DAVID TRACEY, et al., Plaintiffs,


          Nathaniel M. Gorton, United States District Judge.

         Plaintiffs David B. Tracey, Daniel Guenther, Maria T. Nicholson and Corrinne R. Fogg, individually and as representatives of a class of participants and beneficiaries ("plaintiffs") on behalf of the Massachusetts Institute of Technology Supplemental 401 (k) Plan ("the Plan"), filed a complaint alleging breach of fiduciary duty by Massachusetts Institute of Technology ("MIT") and related parties (collectively "defendants") with respect to the supervision of MIT's employee-sponsored defined contribution plan under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1101-1461.

         Defendants filed a motion to strike plaintiffs' demand for a jury trial and in February, 2019, Magistrate Judge Marianne Bowler allowed defendants' motion to strike (Docket No. 187).

         Pending before this Court is plaintiffs' objections to the Magistrate Judge's order to strike plaintiffs' demand for a jury trial. For the reasons set forth below, the decision of the Magistrate Judge to strike plaintiffs' jury demand is affirmed.

         I. Legal Analysis

         A. Standard of Review

         Under Fed.R.Civ.P. 72, a district judge may, given a timely appeal, set aside the order of a magistrate judge on a nondispostive motion if it is "clearly erroneous or is contrary to law". Fed.R.Civ.P. 72(a)). Under the "contrary to law" prong, the district court reviews pure questions of law de novo. PowerShare, Inc. v. Syntel, Inc., 597 F.3d 10, 15 (1st Cir. 2010).

         B. Discussion

         The Seventh Amendment to the United States Constitution guarantees a right to a jury trial in suits at common law. U.S. Const, amend. VII; Fed.R.Civ.P. 38(a). Suits at common law refer to suits in which legal rights are ascertained, as opposed to suits in which equitable rights and remedies are at issue. Chauffers, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 564 (1990). To determine whether a claim is legal or equitable in nature, courts engage in a two-prong inquiry based on the nature of the issue and the remedy sought, wherein the latter carries more weight. Id. at 565.

         Plaintiffs aver that their claim is legal in nature because they are not seeking recovery of a specifically identifiable fund but instead seek recovery from defendants' general assets. Defendants respond that courts typically construe an ERISA claim as primarily based on the law of trusts which is equitable in nature. This Court agrees with defendants that in a suit such as this one, in which a beneficiary brings a claim against a plan fiduciary, ERISA typically treats the fiduciary as a trustee and the plan as a trust. CIGNA Corp. v. Amara, 563 U.S. 421, 439 (2011). That means the appropriate jurisdiction is a court of equity, not a court of law. Id.

         Turning to the second prong of the inquiry (remedy sought), plaintiffs claim they seek damages (in addition to other equitable forms of relief) in an amount that would restore the Plan to a position it would have occupied but for the breaches of fiduciary duty. Plaintiffs argue that because they are seeking to impose personal liability on the defendants who do not possess the particular funds sought, they are seeking monetary recovery from defendants' general assets, thus rendering their relief legal, not equitable.

         Plaintiffs further assert that the Magistrate Judge erred because she reviewed case law pertaining to 29 U.S.C. § 1132 (a) (1) (B) (ERISA § 502 (a) (1) (B)), not subsection (a) (2) of that statute which is actually at issue. They further argue that the Magistrate Judge's reliance on dicta in Amara was incorrect because the Supreme Court in Mertens v. Hewitt Assocs., 508 U.S. 248 (1993) did not rely on a distinction between fiduciaries and non-fiduciaries in determining that the subject monetary relief was, in fact, legal in nature. Finally, plaintiffs submit that because the monetary award they seek is not incidental or intertwined with the requested injunctive relief, it would be appropriate for the Court to bifurcate the issues, reserving the equitable claims for itself.

         Defendants respond that the decision in Amara makes clear that an award of "make-whole relief" is equitable when sought against an ERISA fiduciary. They offer three more persuasive arguments, to wit: 1) that courts have relied on Amara to conclude that fiduciary duty claims for monetary, make-whole relief under ERISA § 502 (a) (2) do not implicate the Seventh Amendment's jury guarantee, 2) that plaintiffs' attempt to distinguish Amara by emphasizing Mertens, Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) and Montanile v. Bd. of Trustees of Nat. Elevator Indus. Health Benefit Plan, 136 S.Ct. 651 (2016) is misplaced because those cases involved non-fiduciaries and 3) that the decision in Cunningham v. Cornell Univ., No. 16-CV-6525 (PKC), 2018 WL 4279466 (S.D.N.Y. Sept. 6, 2018) is not controlling because this Court is not bound by Second Circuit law and other courts with factually similar cases have struck analogous jury demands.

         Plaintiffs contend, in essence, that by seeking monetary relief for funds that are not in defendants' possession, their remedy must be legal in nature. That argument has been rejected by several courts nationwide. See, e.g., Geneva Henderson, et al., v. Emory University, et al., No. 1:16-02920-CAP, Doc. No. 127 (N.D.Ga. Feb. 28, 2018) (allowing defendants' motion to strike plaintiffs' jury demand under Amara); Pledger v. Reliance Trust Co., No. 1:15-CV-4444-MHC, Doc. No. 100 (N.D.Ga. Nov. 7, 2017) (rejecting plaintiffs' reliance on Great-West and Montanile and allowing defendants' motion to strike a jury demand in an ERISA § 502 (a) (2) action); Gernandt v. SandRidge Energy Inc., No. CIV-15-1001-D, 2017 WL 3219490, at *12 (W.D. Okla. July 28, 2017) (distinguishing Montanile and finding no right to a jury trial in a § 502(a)(2) action); Carver v. Bank of New York Mellon, No. 15-CV-10180 (JPO), 2017 WL 1208598, at *11-12 (S.D.N.Y. Mar. 31, 2017) (distinguishing Great-West and striking jury demand because the plaintiffs' monetary remedy for their ERISA § 502 (a) (2) claim was "equitable in nature"); Bell v. Pension Comm. of Ath Holding Co., LLC, No. 1:15-CV-02062-TWP- MPB, 2016 WL 4088737, at *2 (S.D. Ind. Aug. 1, 2016) (distinguishing Mertens, Great-West and Montanile with respect to ...

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