Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Investing

In Yale University ERISA Case, Plaintiffs Lose but 7th Amendment Wins

by July 19, 2023
July 19, 2023

Joshua A. Katz

The Seventh Amendment guarantees the right of trial by jury for “Suits at common law.” But defining when a suit is “at common law” can be surprisingly tricky. More than two hundred years after the Seventh Amendment’s enactment, the matter remains heavily litigated and unresolved.

For the first time in U.S. history, plaintiffs suing an employer for breach of ERISA fiduciary duties resulting in excessive fees have received a jury trial. ERISA, the Employee Retirement Insurance Security Act, requires employers sponsoring retirement plans to behave prudently with plan money. (Full disclosure: This case was litigated by my former firm, and I was at the firm during the trial.) The court held that the 7th Amendment jury trial right for “Suits at common law,” applies to such claims, despite plaintiffs seeking relief under ERISA’s provision for “other appropriate equitable relief.” The scope of the 7th Amendment jury trial right is no simple matter, but the court in Yale University got it right, and in so doing protected a vital constitutional right.

The case involves the distinction between suits at “law” and suits at “equity.” Historically, the British courts of law split and shared jurisdiction with the “Chancellor’s court,” which heard equity cases. In law, claims were advanced seeking, predominantly, monetary damages. In equity, by contrast, courts typically awarded such remedies as injunctions and specific performance (in a nutshell, orders for people to take or refrain from taking certain actions). Although the Federal Rules of Civil Procedure merged law and equity into a single form of action, the distinction lives on in some states, most famously Delaware, where corporate law matters go to the Court of Chancery because they concern trusts.

The right to a jury trial depends on both the nature of the action and the nature of the remedy. In ERISA cases, the statutory action is undoubtedly equitable in nature. This makes sense, as Congress was consciously adopting portions of the common law of trusts. As Justice Antonin Scalia has explained, “appropriate equitable relief” means relief that was “typically available in equity” pre‐​merger. Monetary relief is permitted in such cases because it takes the form of surcharge, an equitable remedy consisting of an injunction requiring a fiduciary (like an employer) to pay for a loss that resulted from his breach. In most cases, plaintiffs sue because, for instance, the employer caused them to pay excessive fees to an investment firm or recordkeeper. But there is no segregated fund from which the funds will be collected; indeed, they are not even in the hands of the defendant. These are historical markers of equitable remedies: recovery from segregated funds unjustly obtained is equitable. Without those markers, the Supreme Court has held that monetary damages are legal rather than equitable, because they were not typically available in equity.

In sum, these cases present an equitable claim for relief, together with a remedy not typically available in equity pre‐​merger. While both the claim and the remedy sought matter for the 7th Amendment analysis, the Supreme Court has made clear that the remedy is the more important. So ERISA cases seeking monetary relief against employers for money paid to third parties should be decided by juries; they seek legal relief, albeit under an equitable statutory right.

Until now, all courts before which the matter reached trial have (wrongly) rejected this conclusion. In general, these courts have read the Supreme Court’s precedent holding monetary damages to be legal damages narrowly, because that case dealt with a suit by a fiduciary against a non‐​fiduciary. These courts have instead applied the “previously available in equity” test strictly, holding that the collection sought in these cases is surcharge, an exclusively equitable remedy. These reeds are too thin, though, for the denial of a constitutional right, as the court in Yale rightly held.

So in Yale, score one for the defendants, who received the jury verdict, but score another for the Constitution, whose 7th Amendment received some much‐​needed recognition.

0
FacebookTwitterGoogle +Pinterest
previous post
The Wisdom of Jesse Livermore, Part 10
next post
Tired of Long Large-Cap Growth Stocks? Dave Shows His Top 2 Alternatives

You may also like

Debating the Trump Prosecutions

November 24, 2023

Taiwan Arms Backlog, November 2024 Update: HIMARS Delivery...

December 13, 2024

Questioning the Housing Crisis: Recap and Wrap-Up 

January 13, 2025

101 Late Fees Charged by the Government

May 17, 2024

The Free Speech Recession Deepens Across the Democratic...

January 8, 2024

Top Tax Rates Are Already on Wrong Side...

April 24, 2024

Friday Feature: St. Ambrose Academy

September 20, 2024

Does Section 3 of the Fourteenth Amendment Disqualify...

August 25, 2023

Are Institutional Investors a Problem in the Housing...

November 13, 2023

Postal Reforms Abroad

April 10, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump wins over lifelong Democrat autoworker with ‘big, beautiful bill’ vehicle loan tax benefit

      June 27, 2025
    • EXCLUSIVE: Trump admin takes action after massive fraud uncovered at agency Dems tried to protect from DOGE

      June 26, 2025
    • FBI investigating Iran strike leaker, Leavitt says: ‘They should be held accountable’

      June 26, 2025
    • SMCI Stock Surges: How to Invest Wisely Now

      June 26, 2025
    • NEW! 5 Significant Additions to Our Professionally-Curated Market Summary Dashboard

      June 26, 2025
    • ‘Presidential incapacity’: Senate Republican seeks paper trail of Biden’s autopen use

      June 26, 2025

    Categories

    • Business (8,316)
    • Investing (2,074)
    • Politics (15,824)
    • Stocks (3,172)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved