F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUL 16 1998
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
GLEN ADAMS; GREGORY ADAMS; KURT ANAST;
JAN BAIAMONTE; BERNIE BAKER; EUGENE BECK;
LEO BECKSTEAD; MARK BERGGREN; ANTONIO
BLANDON; JOE BRISTER; GENE CARLIN; EDDIE
CHOU; JAMES COMPTON; BRYCE DANES; TERRY No. 97-1105
DUGHMAN; CHARLES DUY; RONALD GEHAUF;
MARILYN GERMANN; ROBERT HOGSETT; WENDY
KENNEDY; BARBARA LAMOREE; BETH LOW;
WILLIAM MAY; ROBERT McCORMICK; RUSSELL
MEADERS; DAVID MEYER; WILLIAM MIDDLETON;
STEPHEN MIDSON; AARON MONTOYA; FRED
MOORE; NORMAN NICHOLAS; DEBBY NORLING-
LAURITA; RODNEY NUSSE; MICHAEL O’SULLIVAN;
JAMES ROSS; FRANCIS SMIT; RICHARD VIGIL; NGA
THI VO; MAHESH C. JHA; and ROBERT ROWE,
Plaintiffs-Appellees,
v.
CYPRUS AMAX MINERALS COMPANY, a Delaware
corporation; and HELEN M. FEENEY,
Defendants-Appellants.
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 96-K-71)
Peter B. Carey (Michael G. Connelly of Law Office of Peter B. Carey, Chicago,
Illinois; James C. Mallon of Mallon & Associates, P.C., Evergreen Colorado; and
John H. Lonnquist of John H. Lonnquist, P.C. Littleton, Colorado, with him on
the briefs) of Law Office of Peter B. Carey, Chicago, Illinois, for Plaintiff-
Appellees.
Charles W. Newcom (William A. Wright with him on the brief) of Sherman &
Howard L.L.C., Denver, Colorado, for Defendant-Appellants.
Before BRORBY, McKAY and BRISCOE, Circuit Judges.
BRORBY, Circuit Judge.
This is an interlocutory appeal of a district court order denying Defendants’
motion to strike Plaintiffs’ jury demand. A single issue is presented on appeal:
Does the Seventh Amendment of the United States Constitution entitle Plaintiffs
to a jury trial on claims to recover enhanced severance plan benefits under 29
U.S.C. § 1132(a)(1)(B), the Employee Retirement Income Security Act
(“ERISA”)? The Tenth Circuit has not previously ruled on this issue. 1 Exercising
jurisdiction pursuant to 28 U.S.C. § 1292(b) and Fed. R. App. P. 5, we hold no
jury right attaches to Plaintiffs’ § 1132(a)(1)(B) claims. We therefore reverse.
1
At least four circuits have ruled on this precise issue. All have denied
the right to a jury trial on § 1132(a)(1)(B) claims. See DeFelice v. American Int’l
Life Assurance Co., 112 F.3d 61, 64-65 (2d Cir. 1997); Blake v. Unionmutual
Stock Life Ins. Co., 906 F.2d 1525, 1526-27 (11th Cir. 1990); Cox v. Keystone
Carbon Co., 894 F.2d 647, 649-50 (3d Cir.), cert. denied, 498 U.S. 811 (1990); In
re Vorpahl, 695 F.2d 318, 320-22 (8th Cir. 1982).
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BACKGROUND
Plaintiffs-Appellees are thirty-nine former employees of Amax Research
and Development, Inc., a wholly owned subsidiary of Amax, Inc. Their
employment with Amax Research and Development, Inc. was terminated in
December 1993, as a result of Amax Inc.’s merger into Cyprus Minerals
Company. Plaintiffs claim that upon termination they were entitled to benefits
under Amax Inc.’s Corporate Separation Policy for Corporate Employees, also
referred to by Plaintiffs as the Enhanced Severance Plan.
The Enhanced Severance Plan is an ERISA “employee welfare benefit
plan,” 29 U.S.C. § 1002(1), which applies only to “corporate employees.” The
Plan defines “corporate employees” as “personnel of the Company at the
Company’s corporate headquarters other than Corporate Officers.” The Plan does
not, however, define “corporate headquarters.” Thus, the central issue in this
dispute is whether Plaintiffs were “corporate headquarters” personnel entitled to
benefits under the Enhanced Severance Plan. If Plaintiffs were eligible to receive
benefits under the Enhanced Severance Plan, they would have received larger
severance payments and greater medical benefits than they received under the
plan applied to them when their employment ended.
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After failing to receive full benefits under the Enhanced Severance Plan,
Plaintiffs filed an ERISA suit against Cyprus Amax Minerals Company and plan
administrator, Helen M. Feeney. Their complaint alleges six claims for relief and
demands a jury trial. The first five claims allege breach of fiduciary duty,
violation of ERISA procedures, and violation of the plan itself. Pursuant to 29
U.S.C. § 1132(a)(1)(B), 2 Plaintiffs seek monetary benefits and enforcement of
their rights under the terms of the Enhanced Severance Plan. The sixth claim
prays for civil penalties against the plan administrator pursuant to 29 U.S.C.
§§ 1132(a)(1)(A) and 1132(c).
Defendants answered the complaint by denying Plaintiffs are entitled to any
severance benefits under the Enhanced Severance Plan and by asserting a number
of affirmative defenses. They also filed a motion to strike Plaintiffs’ jury
demand. In response, Plaintiffs withdrew their jury demand on their sixth claim,
which sought redress for a statutory violation expressly committed to the “court’s
discretion.” See 29 U.S.C. § 1132(c). However, Plaintiffs maintained their first
five claims are analogous to state law breach of contract actions to which the
2
Section 1132(a)(1)(B) empowers a participant or beneficiary to file a
civil action “to recover benefits due to him under the terms of his plan, to enforce
his rights under the terms of the plan, or to clarify his rights to future benefits
under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B).
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right to a jury trial attaches. The district court agreed, denied Defendants’ motion
to strike, and certified the matter for appeal.
DISCUSSION
The issue presented – whether Plaintiffs’ are entitled to a jury trial on their
29 U.S.C. § 1132(a)(1)(B) claims – is a question of law we review de novo.
Zimmerman v. Sloss Equip., Inc., 72 F.3d 822, 829 (10th Cir. 1995).
As we noted in Zimmerman, ERISA does not specify whether a jury should
decide claims brought under 29 U.S.C. § 1132(a)(1)(B). 72 F.3d at 829. The
legislative history also provides no guidance on this issue. Id. n.3. “‘Congress
expressed no opinion on the mode of trial intended for plan-enforcement
actions.’” Id. (quoting Note, The Right to Jury Trial in Enforcement Actions
under Section 502(a)(1)(B) of ERISA, 96 Harv. L. Rev. 737, 738, 741-43 (1983)).
There being no express statutory right to a jury trial and no evidence of
congressional intent to grant the right to a jury trial on § 1132(a)(1)(B) claims, 3
3
The federal district court for the Eastern District of Michigan, in an early
ERISA case, concluded there is an implied right to a jury trial in § 1132(a)(1)(B)
itself. Stamps v. Michigan Teamsters Joint Council No. 43, 431 F. Supp. 745
(E.D. Mich. 1977). The district court in Stamps reasoned that § 1132(a)(1)(B)
would be surplusage in light of § 1132(a)(3) unless § 1132(a)(1)(B) was
considered to create a legal, as opposed to an equitable, right. Id. at 746-47. We
join a number of our sister circuits in concluding the reasoning in Stamps is
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we must consider whether Plaintiffs can claim such right under the Seventh
Amendment of the United States Constitution. See Feltner v. Columbia Pictures
Television, Inc., ___ U.S. ___, ___, 118 S. Ct. 1279, 1283-84 (1998).
The Seventh Amendment preserves the right of trial by jury “[i]n Suits at
common law, where the value in controversy shall exceed twenty dollars.” U.S.
Const. amend. VII. The United States Supreme Court has long interpreted “Suits
at common law” to include “‘suits in which legal rights were to be ascertained
and determined, in contradistinction to those where equitable rights alone were
recognized, and equitable remedies were administered.’” Feltner , ___ U.S. at
___, 118 S.Ct. at 1284 (quoting Parsons v. Bedford, 3 Pet. 433, 447
(1830)(emphasis in original)). Accordingly, the Seventh Amendment applies to
“‘actions brought to enforce statutory rights that are analogous to common-law
causes of action ordinarily decided in English law courts in the late 18th century,
as opposed to those customarily heard by courts of equity or admiralty.’” Id.
flawed. See Sullivan v. LTV Aerospace & Defense Co., 82 F.3d 1251, 1258 (2d
Cir. 1996); Vorpahl, 695 F.2d at 321; Calamia v. Spivey, 632 F.2d 1235, 1236-37
(5th Cir. 1980); Wardle v. Central States, Southeast & Southwest Areas Pension
Fund, 627 F.2d 820, 828-29 (7th Cir. 1980). Congress granted state courts
concurrent jurisdiction only over § 1132(a)(1)(B) claims, see 29 U.S.C.
§ 1132(e)(1); thus, it was entirely rationale for Congress to separate
§ 1132(a)(1)(B) from the other equitable actions enumerated under § 1132(a)(3).
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(quoting Granfinanciera, S. A. v. Nordberg, 492 U.S. 33, 42 (1989)). To
determine whether a particular statutory action more closely resembles an 18th
century case tried in a court of law or one tried in a court of equity, we must
examine both the nature of the statutory action and the remedy sought. Id;
Chauffeurs, Teamsters & Helpers Local No. 391 v. Terry, 494 U.S. 558, 565
(1990). The more important factor is whether the remedy sought is legal or
equitable in nature. Terry, 494 U.S. at 565 (citing Granfinanciera, 492 U.S. at
42).
The Nature of Plaintiffs’ ERISA Claims
Plaintiffs rely on language from Pratt v. Petroleum Prod. Management, Inc.
Employee Sav. Plan & Trust, 920 F.2d 651, 658 (10th Cir. 1990) and Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112-13 (1989) to characterize their
claims as “straightforward contract claim[s], legal in nature,” even though they
arise “in the context of a statute with an overall trust law theme.” When
considering allegations in Pratt that the defendants used an improper valuation
date when assessing the value of the plaintiff’s vested interest in a pension plan, a
panel of this court referred to the plaintiff’s § 1132(a)(1)(B) claim as a “breach of
contract” action. Pratt, 920 F.2d at 652, 658-59. In Firestone, the Supreme
Court held that if a benefit plan does not expressly grant the plan administrator
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discretion to interpret the terms of the plan or eligibility under the plan, courts
must apply a de novo rather than an arbitrary and capricious standard when
reviewing the administrator’s decision. 489 U.S. at 112-13. In reaching that
conclusion, the Court reasoned that where a plan does not give the administrator
exclusive discretion to interpret the plan, it would make little sense to impose a
standard of review that would afford employees less protection than they enjoyed
prior to ERISA, when actions challenging an employer’s denial of benefits were
governed by state contract law. Id. at 112-14. Plaintiffs suggest this court’s
reference to breach of contract actions in Pratt and the Supreme Court’s
discussion of the contractual nature of pre-ERISA claims in Firestone are
dispositive of our analysis of the first Terry factor.
The district court similarly concluded “Firestone invites courts to
reexamine whether juries may be required in cases involving certain ERISA
claims.” Adams v. Cyprus Amax Mineral Co., 954 F. Supp. 1470, 1473 (D. Colo.
1997). Accepting the invitation, the district court extended Firestone to hold that
if a benefit plan fails to give the administrator or fiduciary discretionary authority
to determine eligibility for benefits or to construe the terms of the plan, an action
to recover benefits under that plan “must be seen as a traditional contract law
action, i.e. one at law.” Id. at 1475.
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We believe the Plaintiffs’ and district court’s reliance on Pratt and
Firestone to determine Plaintiffs’ right to a jury trial is misplaced. Neither Pratt
nor Firestone addressed the jury trial issue or the broader issue of whether an
ERISA § 1132(a)(1)(B) action is best characterized as legal or equitable. The
language Plaintiffs cite from Pratt characterizing § 1132(a)(1)(B) actions as
“breach of contract” actions duplicates the characterization of the claims in the
Pratt plaintiffs’ complaint itself. Pratt, 920 F.2d at 652. We note that Plaintiffs
in this case did not couch their complaint in terms of a “breach of contract.”
More important, unlike the central issue in this case, which involves an eligibility
determination based upon the interpretation of terms left undefined in the plan,
the Pratt case involved the application of an unambiguous valuation procedure
provided in the plan. Id. at 662. An action by recognized beneficiaries to enforce
the unambiguous terms of a plan is more readily characterized as a breach of
contract action than the more general eligibility claim raised here. Finally, the
Firestone reference to analogous, pre-ERISA breach of contract actions is
relevant only to the extent some of our sister circuits used the pre-Firestone
arbitrary and capricious standard as support for their holdings there is no right to
a jury trial of § 1132(a)(1)(B) claims. See, e.g., Sullivan, 82 F.3d at 1258-59;
Berry v. Ciba-Geigy Corp., 761 F.2d 1003, 1006-07 (4th Cir. 1985); Vorpahl, 695
F.2d at 321; Wardle, 627 F.2d at 829-30. As we noted in Zimmerman,
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consideration of the incompatibility of jury trials with the application of the
arbitrary and capricious standard of review is no longer appropriate given the
Firestone holding. Zimmerman, 72 F.3d at 829. Beyond that, however, we fail to
see how the standard of review deemed appropriate in a given ERISA case vis-à-
vis the Firestone analysis is determinative of whether the particular statutory
claims at issue here are legal or equitable in nature. Just because the Supreme
Court acknowledged that plaintiffs filed breach of contract suits in state courts
prior to implementation of ERISA’s comprehensive scheme to protect employee
benefit rights, 4 Firestone, 489 U.S. at 112-13, it does not follow that ERISA
actions are best analogized to breach of contract actions. See DeFelice v.
American Int’l Life Assurance Co., 112 F.3d 61, 64 (2d Cir. 1997); Blake v.
Unionmutual Stock Life Ins. Co., 906 F.2d 1525, 1526 (11th Cir. 1990). To the
contrary, ample support exists in Firestone and elsewhere for our decision that
Plaintiffs’ 29 U.S.C. § 1132(a)(1)(B) claims are fundamentally equitable in
nature.
We begin with the statute itself; with limited exceptions, the assets of an
employee welfare benefit plan authorized under ERISA must be held in trust to be
4
See 29 U.S.C. §§ 1001, 1001a.
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managed and controlled under the authority and discretion of a named
fiduciary(ies). 29 U.S.C. §§ 1102, 1103. Not surprisingly then, courts
consistently have characterized ERISA actions, including § 1132(a)(1)(B) actions,
akin to common law trust actions and thus governed by common law trust
principles. See, e.g., DeFelice, 112 F.3d at 64; Borst v. Chevron Corp., 36 F.3d
1308, 1324 (5th Cir. 1994), cert. denied, 514 U.S. 1066 (1995); Cox v. Keystone
Carbon Co., 894 F.2d 647, 649-50 (3d Cir.) (citing Turner v. CF&I Steel Corp.,
770 F.2d 43 (3d Cir. 1985)), cert. denied, 498 U.S. 811 (1990); Vorpahl, 695 F.2d
at 321; Wardle, 627 F.2d at 829 (7th Cir. 1980). Indeed, “[i]n determining the
appropriate standard of review for actions under § 1132(a)(1)(B),” the Supreme
Court in Firestone made clear it was “guided by principles of trust law.” 489 U.S.
at 111. To the extent the Court discussed the application of contract law, it did so
to illustrate that pre-ERISA contract principles were consistent with established
principles of trust law applicable in the ERISA context. Id. at 112-15.
Our conclusion Plaintiffs’ ERISA action is analogous to a trust action and
therefore equitable in nature does not change when we examine the individual
issues to be tried, as instructed by the Supreme Court in Terry, 494 U.S. at 569.
The trust law underpinning of Plaintiffs’ breach of fiduciary duty claim is self-
evident. See id., 494 U.S. at 567. Plaintiffs’ remaining claims for recovery of
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benefits, enforcement of plan terms, and violation of procedural requirements all
turn on a threshold determination of whether Plaintiffs are beneficiaries under the
Enhanced Severance Plan. This threshold determination of whether Plaintiffs are
eligible to receive assets held in trust by the Defendants likewise must be guided
by principles of trust law. See Vorpahl, 695 F.2d at 322. The present action thus
embodies equitable as opposed to legal issues, and the first part of our Seventh
Amendment inquiry weighs against attaching a jury trial right to Plaintiffs’
§ 1132(a)(1)(B) claims. 5
The Nature of the Remedy Sought
On each of their first five claims, Plaintiffs pray:
(A) For all benefits due each of them under the Amax Enhanced
Severance Package;
(B) For prejudgment interest;
(C) For attorneys fees and costs pursuant to the Amax [Enhanced
Severance Package] and 29 U.S.C. Section 1132(g); and
(D) Such other and further relief as the Court deems just and
equitable.
Plaintiffs characterize this requested relief as “money damages” (measured by the
amount of benefits Plaintiffs would have received on separation had the
5
Even were we to consider Plaintiffs’ claim to recover benefits analogous
to a claim for monetary damages stemming from a breach of contract, Plaintiffs’
action nevertheless would encompass both equitable and legal issues. At best,
therefore, the first part of our Seventh Amendment inquiry would be inconclusive
as to whether Plaintiffs are entitled to a jury trial. See Terry, 494 U.S. at 570.
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Defendants paid them all benefits due under the Enhanced Severance Plan), and
cite the general rule that monetary relief constitutes a legal remedy. Plaintiffs
further assert the relief they seek has none of the attributes necessary to trigger an
exception to the general rule. Consequently, they contend their right to a jury
trial on their § 1132(a)(1)(B) claims is “obvious.” Guided by Supreme Court
precedent and principles of trust law, we disagree.
The Supreme Court has recognized two exceptions to the general rule that
monetary relief constitutes a legal remedy. An award of money damages may be
considered an equitable rather than legal remedy if (1) the monetary award is
“‘incidental to or intertwined with injunctive relief.’” Id. at 571 (quoting Tull v.
United States, 481 U.S. 412, 424 (1987)); or (2) the damages are restitutionary,
“such as in ‘action[s] for disgorgement of improper profits,’” Terry, 494 U.S. at
570-71 (quoting Tull, 481 U.S. at 424). We would be among the first to admit
neither exception is well-defined; however, we conclude both exceptions apply to
the facts of this case.
Plaintiffs would like us to believe they seek only money damages and thus
fit squarely within the Terry holding. See id., 494 U.S. at 571. What Plaintiffs
overlook, however, is the fact they have no entitlement to the benefits unless and
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until a court exercises its equitable powers to declare Plaintiffs eligible
beneficiaries of the plan and thus order Defendants, as fiduciaries, to pay
benefits. We are unwilling to presume Plaintiffs are eligible beneficiaries when
examining the nature of the remedy they seek. The eligibility determination is the
root issue in this case. Absent a favorable ruling (i.e., equitable relief) on that
issue, Plaintiffs have no claim for money damages. Consequently, their claim for
monetary relief is inextricably intertwined with equitable relief. See Bittinger v.
Tecumseh Prods. Co., 123 F.3d 877, 883 (6th Cir. 1997).
We further believe the recovery of benefits is better characterized as
equitable/ restitutionary versus legal/compensatory relief. By definition, an
action for restitution has for its primary purpose the “taking from the defendant
and restoring to the plaintiff something to which the plaintiff is entitled.”
Restatement (First) of Restitution Pt. I, Ch. 8, To. 2, Intro. Note (1936 Main
Vol.). The payment of monetary benefits allegedly wrongly held by the
Defendants fits this definition.
As stated above, Plaintiffs’ claim to recover benefits under an ERISA plan
is analogous to an action to enforce a trust. It is pertinent, then, that our
characterization of Plaintiffs’ requested remedy is consistent with the delineation
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of beneficiaries’ remedies under trust law. The Restatement (Second) of Trusts
§§ 197-198 (1959) states a beneficiary’s remedy against a trustee is exclusively
equitable unless the trustee has an immediate and unconditional duty to pay the
beneficiaries. We do not see how Plaintiffs can claim they are unconditionally
and immediately entitled to benefits under the Enhanced Severance Plan when, as
we have shown, the resolution of their claims for monetary relief turns on a
determination of their eligibility under the plan. The remedy Plaintiffs’ seek
pursuant to 29 U.S.C. § 1132(a)(1)(B) is therefore equitable
CONCLUSION
As we conclude the nature of the issues involved and the remedy sought in
this ERISA, § 1132(a)(1)(B) action are equitable in nature, we hold the Seventh
Amendment provides no right to a jury trial. The district court’s order denying
Defendants’ motion to strike Plaintiffs’ jury demand is REVERSED and the case
is remanded for further proceedings consistent with this opinion.
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