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Chao v. Meixner Brief, petition on appeal from the United States District Court for the Northern District of Georgia

No. ___
________________________

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_________________________

ELAINE L. CHAO, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,

PLAINTIFF-PETITIONER,

v.

MARC MEIXNER, et. al.,

DEFENDANTS-RESPONDENTS.

_________________________

 On APPEAL from the UNITED STATES DISTRICT COURT
for the Northern District of Georgia
_________________________

PETITION FROM THE SECRETARY OF LABOR
_________________________

GREGORY F. JACOB
Solicitor of Labor

ELIZABETH HOPKINS
Counsel for Appellate and Special Litigation

TIMOTHY D. HAUSER
Associate Solicitor

NICKOLE C. WINNETT
Attorney

U.S. Department of Labor
Office of the Solicitor
Room N-4611
200 Constitution Avenue, N.W.
Washington, DC  20210
(202) 693-5600

TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF AUTHORITIES

QUESTION PRESENTED

RELIEF REQUESTED

STATEMENT OF THE FACTS

ARGUMENT

THIS DISTRICT COURT'S ORDER GRANTING THE DEFENDANTS A JURY TRIAL MEETS ALL THE REQUIREMENTS FOR INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b)

  1. The Jury Trial Question Involves a Controlling Issue of Law

  2. Substantial Ground for Differences of Opinion Exist as to the Nature of Monetary Relief under Sections 502(a)(2) and 409(a) of ERISA

  3. Immediate Appeal of the Jury Trial Issue Will Materially Advance the Ultimate Termination of the Litigation

CONCLUSION

CERTIFICATE OF SERVICE

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOUSRE STATEMENT

TABLE OF AUTHORITIES

Cases:

Adams v. Cyprus Amax Minerals Co., 149 F.3d 1156 (10th Cir. 1998)

Ahrenholz v. Bd. of Trs. of the Univ. of Ill ., 219 F.3d 674 (7th Cir. 2000)

Baker v. Universal Die Casting, Inc., 725 F. Supp. 416 (W.D. Ark. 1989)

Berlo v. McCoy, 710 F. Supp. 873 (D.N.H. 1989)

Bigger v. Am. Commercial Lines, Inc., 625 F. Supp. 123 (W.D. 1989)

Blake v. Unionmutual Stock Life Ins. Co., 906 F.2d 1525 (11th Cir. 1990)

Bona v. Barasch, 30 Empl. Benefits Cas. 1874, 2003 WL 1395932 (S.D.N.Y. 2003)

Borst v. Chevron Corp., 36 F.3d 1308 (5th Cir. 1994)

Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574 (7th Cir. 2000)

Broadnax Mills v. Blue Cross & Blue Shield, 876 F. Supp. 809 (E.D. Va. 1995)

Brock v. Group Legal Adm'rs, Inc., 702 F. Supp. 475 (S.D.N.Y. 1989)

Browning v. Grote Meat Co., 703 F. Supp. 790 (E.D. Mo. 1988)

Burud v. Acme Elec. Co., 591 F. Supp. 238 (D. Alaska 1984)

Camp v. Pac. Fin. Group, 956 F. Supp. 1541 (C.D. Cal. 1997)

Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp. Inc., 472 U.S. 559 (1985)

Chauffeurs, Teamsters & Helpers Local No. 391 v. Terry, 494 U.S. 558 (1990)

Chilton v. Savannah Foods & Indus., Inc., 814 F.2d 620 814 F.2d 620 (11th Cir. 1987)

Coan v. Kaufman, 457 F.3d 262 (2d Cir. 2006)

Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978)

Dasler v. E.F. Hutton & Co., 694 F. Supp. 624 (D. Minn. 1988)

Devine v. Combustion Eng'g, Inc., 760 F. Supp. 989 (D. Conn. 1991)

Flanagan v. General Motors Corp., 2006 WL 2792678 (N.D. Ga. 2006)

Goodman v. S & A Rest. Corp., 756 F. Supp. 966 (S.D. Miss. 1990)

Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989)

In re Evangelist, 760 F.2d 27 (1st Cir. 1985)

In re Oakwood Homes Corp., 2007 WL 4031606 (D. Del. 2007)

Lamberty v. Premier Millwork Lumber Co., 329 F. Supp. 737 (E.D. Va. 2004)

LeBlanc v. Salem (In re Mailman Steam Carpet Cleaning Corp.), 196 F.3d 1 (1st Cir. 1999)

Lehman v. Nakshian, 453 U.S. 156 (1981)

Lorillard v. Pons, 434 U.S. 575 (1978)

McFarlin v. Conseco Servs., LLC, 381 F.3d 1251 (11th Cir. 2004)

Mertens v. Hewitt Assocs., 508 U.S. 248 (1993)

Motor Carriers Labor Advisory Council v. Trucking Mgmt., Inc., 731 F. Supp. 701 (E.D. Pa. 1990)

Olympia Express, Inc. v. Linee Aeree Italiane, S.P.A., 509 F.3d 347 (7th Cir. 2007)

Pereira v. Farace, 413 F.3d 330 (2d Cir.), cert. denied, 126 S. Ct. 2286 (2006)

Smith v. ABS Indus., Inc., 653 F. Supp. 94 (N.D. Ohio 1986)

Stewart v. KHD Deutz of Am. Corp., 75 F.3d 1522 (11th Cir. 1996)

Swofford v. B.W., Inc., 336 F.2d 406 (5th Cir. 1964)

Trs. of Cent. States, Se. & Se. Areas Pension Fund v. Golden Nugget, Inc., 697 F. Supp. 1538 (C.D. Cal. 1988)

Tull v.United States, 481 U.S. 412 (1987)

Unitis v. JFC Acquisition Co., 643 F. Supp. 454 (N.D. Ill. 1986)

Waldrop v. S. Co. Servs., Inc., 24 F.3d 152 (11th Cir. 1994)

White v. Martin, 27 Empl. Benefits Cas. 2583, 2002 U.S. Dist LEXIS 6899 (D. Minn. 2002)

Statutes and Regulations:

28 U.S.C. § 1291

28 U.S.C. § 1292(b)

Employee Retirement Income Security Act of 1974 (“ERISA”) 29 U.S.C. § 1001 et seq.,

Section 409, 29 U.S.C. § 1109(a)
Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B)
Section 502(a)(2), 29 U.S.C. § 1132(a)(2)
Section 502(a)(3), 29 U.S.C. § 1132(a)(3)
Section 502(a)(5), 29 U.S.C. § 1132(a)(5)

Federal Rules of Appellate Procedure

Rule 5
Rule 5(b)(1)(E)

Miscellaneous:

Austin W. Scott & William F. Fratcher, The Law of Trusts (4th ed. 1987)

Black's Law Dictionary 1441 (6th ed. 1990)

George G. Bogert & George T. Bogert, The Law of Trusts and Trustees (rev. 2d ed. 1995)

Restatement (Second) of Trusts (1959)

U.S. Const., amend. VII

No. __
__________________________

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

_________________________

ELAINE L. CHAO, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,

PLAINTIFF-APPELLANT,

v.

MARC MEIXNER, GPTA BENEFITS GROUP, INC.,
LESLIE E. SMITH, EMPLOYERS ONESOURCE, INC.,
DAVID SHERMAN, AND GEORGIA PLUMBERS
TRADE ASSOCIATION HEALTH PLAN, et al.,

DEFENDANTS-APPELLEES.

_________________________

PETITION UNDER 28 U.S.C. § 1292(b) TO REVIEW
CERTIFIED ORDER FROM THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
GRANTING DEMAND FOR JURY TRIAL

_________________________

    Elaine L. Chao, Secretary of Labor for the United States Department of Labor ("Secretary"), through counsel, hereby petitions this Court pursuant to Fed. R. App. P. 5 and 28 U.S.C. § 1292(b) for permission to appeal from the interlocutory order of the U.S. District Court for the Northern District of Georgia in Chao v. Meixner, et al., 1:07-cv-0595-WSD and 3:08-cv-0013-JTC, entered on November 27, 2007, concluding that Defendants OneSource ("EOS") and Leslie E. Smith (collectively, "Defendants") are entitled to a jury trial on the Secretary's breach of fiduciary duty claim, which the district court certified for interlocutory appeal on July 3, 2008.

    In accordance with Rule 5(b)(1)(E) of the Federal Rules of Appellate Procedure, the Secretary has attached as Exhibits "A" and "B" copies of the district court's Opinion and Orders issued on November 27, 2007 and July 3, 2008 from which this petition seeks to appeal.

QUESTION PRESENTED

    The controlling question of law as certified by the district court is whether the fiduciaries of the Georgia Plumber's Trade Association Health Benefit Plan (The "Plan") are entitled to a jury trial in the Secretary's lawsuit under section 502(a)(2) of ERISA in which she seeks to recover the Plan's monetary losses caused by the Defendants' alleged fiduciary misconduct.

RELIEF REQUESTED

    The Secretary requests that this Court grant this petition for interlocutory appeal and reverse the order of the district court issued on November 27, 2007, which denied the Secretary's Motions to Strike Jury Trial Demand.

STATEMENT OF THE FACTS

    This case concerns the application of the Seventh Amendment's right to a jury trial to a civil enforcement provisions in Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.  The Secretary has primary authority for enforcing and administering Title 1 of ERISA, which establishes standards governing the operation of employee benefit plans. ERISA section 502(a)(2), 29 U.S.C. § 1132(a)(2), provides that the Secretary may bring suit for "appropriate relief under [section] 409" against plan fiduciaries. Section 409(a), in turn, authorizes the court to order defendants to repay any "losses to the plan," "to restore" "any profits" resulting from the use of plan assets, and to grant "such other equitable or remedial relief as the court may deem appropriate." 29 U.S.C. § 1109(a). Additionally, ERISA section 502(a)(5), 29 U.S.C. § 1132(a)(5), authorizes the Secretary to obtain injunctive and other "equitable" relief to redress any violations of ERISA or to enforce any provision of the statute.

    Pursuant to this enforcement authority, the Secretary filed a complaint against the administrators and fiduciaries of the Georgia Plumber's Trade Association Health Benefit Plan (the "Plan") on March 14, 2007. Compl. [1].[1] The Secretary filed a second complaint against additional plan administrators and fiduciaries on February 8, 2008, asserting fiduciary breach claims against Defendants Georgia Plumbers Trade Association for Continuing Education, Inc., Ron Anderson, Windell Peters, and the Georgia Plumbers Trade Association Health Plan. Compl. [89].[2]

    The Secretary asserts, among other things, that Defendants Smith and EOS, along with the other named Defendants, breached their fiduciary duties to the Plan by allowing or receiving improper payments, which "caused the Plan to suffer financial losses for which they are personally and otherwise liable pursuant to ERISA section 409(a), 29 U.S.C. § 1109(a)." Compl. [1] ¶¶ 47, 49, 50, 54; Compl. [89] ¶¶ 41, 45. More specifically, the Secretary alleges that the Defendants caused the Plan to suffer a loss of $275,598.67 due to improper payments made to Smith and others, Compl. [1] ¶¶ 42, 43, 44, and she seeks to hold the Defendants personally liable for the losses to the Plan pursuant to sections 409(a) and 502(a)(2) of ERISA. Compl. [1] ¶¶ 47, 54, 58, 61; Compl. [89] ¶¶ 41, 45, 48. The Secretary also alleges that Defendants, while serving in their fiduciary roles, dealt with the assets of the Plan in their own account, transferred Plan assets to themselves, and acted on behalf of other parties in transactions with the Plan. Compl. [1] ¶¶ 51, 52. The Secretary further alleges that the Defendants "knowingly aided and abetted in, participated in, or otherwise assisted in … fiduciary breaches," Compl. [1] ¶ 63, and likewise claims that the Defendants named in the second complaint breached their duties through their failure to evaluate, review, monitor or attempt to rectify the acts and omissions of Meixner, GPTA Benefits Group, Smith, EOS, and one another with respect to the management and administration of the Plan. Compl. [89] ¶¶ 37, 40, 41, 45. Essentially, this case is about two plan fiduciaries that set their own commission rates, which they paid from Plan assets, without the consent or knowledge of the responsible Plan fiduciaries, and without assuring that their payments to themselves were reasonable.

    Pursuant to section 502(a)(5) of ERISA, the Secretary also seeks "to enjoin any acts and practices" which violate ERISA, "to obtain appropriate equitable relief" for the breaches of fiduciary duty, and to obtain any further relief as may be appropriate to redress violations and enforce the provisions of ERISA. Compl. [1] ¶ 1; Compl. [89] ¶ 1. For instance, the Secretary seeks the appointment of an independent fiduciary to manage and administer the Plan, and seeks an order permanently enjoining all the Defendants from acting directly or indirectly in any fiduciary capacity. Compl. [1], at 22-23; Compl. [89], at 18-19. She also requests, as other appropriate equitable relief under section 502(a)(2) of ERISA, that Defendants Smith and EOS, along with the other named Defendants disgorge the improper payments they received from the Plan. Compl. [1] ¶ 64.

    Defendants Smith and EOS filed an Answer on May 21, 2007 in which they demanded a jury trial. Answer [12]. The Secretary moved to strike the Defendants' jury trial demand on June 4, 2007. Motion [17]. Defendants Smith and EOS filed a response to the Secretary's Motion to Strike on June 14, 2007. Resp. [22].

    On November 27, 2007, the district court denied the Secretary's motion to strike the jury demand. The court reasoned that while the Secretary's claims under section 502(a)(5) are clearly equitable, and thus not subject to trial by jury under the Seventh Amendment, section 409 of ERISA does not limit the available remedies to merely equitable remedies. Exhibit A, at 11-12. Because, however, the court further reasoned that the Secretary was seeking remedies under section 409 that were compensatory in nature, the court concluded that the Secretary's claim brought pursuant to section 502(a)(2) of ERISA is a "suit at common law" within the meaning of the Seventh Amendment, and that the Defendants were accordingly entitled to a jury trial on these claims. Exhibit A, at 13-14.

    On January 3, 2008, the Secretary filed a motion under 28 U.S.C. § 1292(b) to certify for immediate appeal to this Court the district court's interlocutory ruling on the jury trial issue. Defendants Smith and EOS filed an opposition to this motion on January 8, 2008. The district court granted the Secretary's motion on July 3, 2008. Exhibit B.

ARGUMENT

THE DISTRICT COURT'S ORDER GRANTING THE DEFENDANTS A JURY TRIAL MEETS ALL OF THE REQUIREMENTS FOR INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b)

    Although a district court ruling is generally not reviewable by a federal court of appeals until after entry of a final judgment, 28 U.S.C. § 1292(b) gives district courts discretion to certify their orders for immediate appeal if the court concludes "that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation." See 28 U.S.C. § 1291; Coopers & Lybrand v. Livesay, 437 U.S. 463, 474 (1978). If the district court certifies an order in this manner, the statute provides that "[t]he Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order." 28 U.S.C. § 1291. The party seeking certification of an interlocutory appeal has the burden to show that the specified exceptional circumstances exist to justify departing from the normal procedure of only appealing a district judge's ruling after final judgment. Coopers & Lybrand, 437 U.S. at 474-75.

    The district court's order granting the Defendants' request for a jury trial meets all three criteria for certification under 28 U.S.C. § 1292(b) because, as discussed more fully below, the jury trial issue involves: (1) a "controlling question of law," (2) "as to which there is substantial ground for difference of opinion," and (3) "an immediate appeal from the order may materially advance the ultimate termination of the litigation."  See McFarlin v. Conseco Servs, LLC, 381 F.3d 1251, 1257 (11th Cir. 2004). [3]

  1. The Jury Trial Question Involves a Controlling Issue of Law

    On the first factor, the Eleventh Circuit has noted that it must deny certification where resolution of the issue would be too fact-intensive, and may grant it where the petition raises "pure" questions of law that the court of appeals can decide without having to study the record. Id. at 1258 (citing Ahrenholz v. Bd. of Trs. of the Univ. of Ill., 219 F.3d 674, 677 (7th Cir. 2000)). The jury trial issue certified by the district court presents just such a "pure" question of law.

    The Seventh Amendment secures the right to a jury trial "[i]n Suits at common law, where the value in controversy shall exceed twenty dollars." U.S. Const., amend. VII; see generally Waldrop v. S. Co. Servs., Inc., 24 F.3d 152, 155 (11th Cir. 1994). To determine whether the Seventh Amendment gives the right to trial by jury in a particular action, the court must consider whether, given the nature of the action, and the nature of the remedy sought, the action would have been brought in a court of law, rather than a court of equity, prior to the amendment's adoption in 1791. See, e.g., Tull v.United States, 481 U.S. 412, 417-18 (1987); Stewart v. KHD Deutz of Am. Corp., 75 F.3d 1522, 1525 (11th Cir. 1996). In making this determination, the court gives more weight to the nature of the remedy.  Chauffeurs, Teamsters & Helpers Local No. 391 v. Terry, 494 U.S. 558, 565 (1990). If the action and the remedy were historically legal, rather than equitable, the constitutional provision guarantees the right to a trial by jury.  See Tull, 481 U.S. at 417. See also In re Evangelist, 760 F.2d 27 (1st Cir. 1985); Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42 (1989).

    Thus, as the district court correctly recognized, Exhibit A, at 8-9, the jury trial issue it certified for appeal is a purely legal issue that requires resolution of two related legal issues: whether the nature of the claim and whether the nature of the remedy would have been characterized as legal or equitable in the 18th century. Both of these issues require the court to look at the statute and the common law, but do not require resolution of any of the factual allegations in the case.

    Both the nature of the claim and the nature of the remedy sought here are equitable. In seeking to impose personal liability on Defendants Smith and EOS to make good on losses they caused to the Plan when they breached their fiduciary duties, the Secretary's claim is precisely analogous to a traditional action by a beneficiary of a trust to compel the trustee to redress a breach of trust. See Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp. Inc., 472 U.S. 559, 570 (1985) (citing S. Rep. No. 93-127, at 29 (1973), reprinted in 1974 U.S.C.C.A.N. 4639, 4865) ("'The fiduciary responsibility section, in essence, codifies and makes applicable to these fiduciaries certain principles developed in the evolution of the law of trusts.'"). Under the common law of trusts, such claims were "exclusively equitable."  Restatement (Second) of Trusts, § 197, at 433 (1959); see Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993) ("at common law, the courts of equity had exclusive jurisdiction over virtually all actions by beneficiaries for breach of trust"); Borst v. Chevron Corp., 36 F.3d 1308, 1323-24 (5th Cir. 1994) ("ERISA law is closely analogous to the law of trusts, an area within the exclusive jurisdiction of the courts of equity."); G. Bogert, The Law of Trusts and Trustees, § 870, at 123 (rev. 2d ed. 1995); III. A. Scott, The Law of Trusts, § 197, at 188 (4th ed. 1988).

    Moreover, the remedy sought here – "[t]he imposition of personal liability on a fiduciary" for breach of fiduciary duty, as provided for in sections 409(a) and 502(a)(2) – is the venerable and exclusively equitable remedy of "surcharge." See LeBlanc v. Salem (In re Mailman Steam Carpet Cleaning Corp.), 196 F.3d 1, 7 (1st Cir. 1999) (citing Black's Law Dictionary 1441 (6th ed. 1990) and discussing the remedy in a non-ERISA case). This remedy, historically available only in courts of equity against fiduciaries, seeks to restore the beneficiary to the "position in which he would have been if the trustee had not committed the breach of trust." Restatement, supra, § 205 cmt. a, at 458; see also id. § 205, at 458; Scott, supra, § 199.3, at 206 ("If the trustee has committed a breach of trust the beneficiaries can maintain a suit in equity to compel him to redress the breach of trust, either by making specific reparation or by the payment of money or otherwise."); id. § 199, at 203-04 & 206 (listing money payment designed to redress fiduciary breach as one of the "equitable remedies" available to a beneficiary). Although surcharge was a form of monetary redress, it was an equitable remedy distinct from legal damages that was available only in equity for a claim over which the court of equity had exclusive jurisdiction. Thus, a suit against an ERISA fiduciary to recover monetary losses caused by a breach of duty is an action that would have been brought solely in a court of equity and which sought a wholly equitable remedy.

    Whether or not one agrees with this analysis, however, the resolution of the Seventh Amendment issue does not depend on factual inquiries or disputes, but instead requires the interpretation and application of constitutional and statutory provisions. The jury trial issue thus presents exactly the sort of pure legal issue for which interlocutory appeals are intended.  For this reason, this Court and others have routinely certified for review questions involving the availability of jury trial rights, and appellate courts routinely exercise their discretion to hear such appeals, under ERISA and other statutes. See, e.g., Stewart, 75 F.3d at 1524-25 (interlocutory review to determine jury trial right in case brought under ERISA and the LMRA); Lehman v. Nakshian, 453 U.S. 156 (1981) (interlocutory appeal granted to consider denial of government's motion to strike employee's jury trial demand in age discrimination case); Lorillard v. Pons, 434 U.S. 575 (1978) (same); Swofford v. B.W., Inc., 336 F.2d 406 (5th Cir. 1964) (interlocutory appeal granted to consider jury trial rights in patent infringement case); Adams v. Cyprus Amax Minerals Co., 149 F.3d 1156 (10th Cir. 1998) (granting interlocutory appeal and finding that the no right to jury trial exists under ERISA section 502(a)(1)(B) because such claims and related remedies are equitable in nature for purposes of Seventh Amendment).

  1. Substantial Ground for Differences of Opinion Exists as to the Nature of Monetary Relief under Sections 502(a)(2) and 409(a) of ERISA

    To meet the second factor, there must be a "substantial dispute about the correctness" of the district court's original ruling on the issue. McFarlin, 381 F.3d at 1259. As the district court found, there is such a dispute concerning the right to a jury trial in a case seeking to recover plan losses under ERISA section 502(a)(2). Exhibit A, at 9-10.

    The overwhelming majority of courts applying the Seventh Amendment analysis conclude that section 502(a)(2) claims are always equitable in nature because pre-merger courts of equity had exclusive jurisdiction over analogous 18th century actions, which involved claims for equitable remedies against fiduciaries for breach of trust, and have long denied requests for jury trials in such cases.[4] In its Opinion and Order, the district court joins a small number of courts that have held that jury trials are available under the Seventh Amendment in breach of fiduciary duty cases such as this one to the extent that they seek monetary losses. See In re Oakwood Homes Corp., 2007 WL 4031606 (D. Del. 2007); Lamberty v. Premier Millwork Lumber Co., 329 F. Supp. 2d 737 (E.D. Va. 2004); Bona v. Barasch, 30 Empl. Benefits Cas. (BNA) 1874, 2003 WL 1395932, *33-*35 (S.D.N.Y. 2003); Pereira v. Farace, 413 F.3d 330 (2d Cir. 2005) (applying this reasoning to a jury trial request in a case for breach of fiduciary duty brought under state corporate law); but see White v. Martin, 2002 WL 598432, 27 Empl. Benefits Cas. (BNA) 2583 (D. Minn. 2002) (rejecting argument that recent Supreme Court decisions required abandonment of precedent holding that suits under § 502(a)(2) of ERISA are equitable). These courts have relied on the Supreme Court's decisions in a line of cases beginning with Mertens v. Hewitt Assocs., 508 U.S. 248 (1993), which a number of courts have read to mandate the conclusion that monetary relief to remedy fiduciary breaches does not constitute "equitable relief" under another, closely related statutory provision, ERISA section 502(a)(3), 29 U.S.C. § 1132(a)(3). Compare Coan v. Kaufman, 457 F.3d 250, 262-64 (2d Cir. 2066) (section 502(a)(3) does not authorize suit to recover losses caused by fiduciary breach because the recovery of such losses do not constitute equitable relief), with Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 592 (7th Cir. 2000) (monetary relief is equitable "when sought as a remedy for breach of fiduciary duty").

    Although the Eleventh Circuit has not addressed the jury trial issue in a case seeking to recover plan losses stemming from alleged fiduciary breaches under section 502(a)(2) of ERISA, this Court has held that no jury trial is available in benefit cases brought under section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). Blake v. Unionmutual Stock Life Ins. Co., 906 F.2d 1525, 1526 (11th Cir. 1990) (holding that ERISA has been interpreted as an equitable statute where no Seventh Amendment right to a jury trial exists); Chilton v. Savannah Foods & Indus., Inc., 814 F.2d 620 (11th Cir. 1987) (same). Indeed, in a case decided on interlocutory review of a district court order denying a jury trial, this Court held broadly that "because ERISA has been interpreted as an equitable statute," "no Seventh Amendment right to a jury trial exists in actions brought pursuant to ERISA." Stewart, 75 F.3d at 1527.[5]  Although the Stewart case, like Blake and Chilton, involved an ERISA section 502(a)(1)(B) claim for benefits, and not a claim for plan losses, id. at 1527-28, it strongly underscores the substantial ground for difference of opinion on this controlling issue of law and warrants granting the petition for interlocutory review 28 U.S.C. § 1292(b).

  1. Immediate Appeal of the Jury Trial Issue Will Materially Advance the Ultimate Termination of the Litigation

    The third requirement is met if resolution of the "controlling legal question would serve to avoid a trial or otherwise substantially shorten the litigation."  McFarlin, 381 F.3d at 1259. As the district court found, resolution of the jury trial issue is likely to do so. Exhibit A, at 10. A jury trial requires considerably more time and expense to the parties and the court than a bench trial, and is unprecedented for the Secretary of Labor in ERISA cases. A bench trial, the primary form of trial for ERISA cases, would provide a quicker, less burdensome resolution to the parties and the Court.

    Moreover, an immediate appeal of the district court's order granting of Defendants' demand for a jury trial would advance the ultimate termination of the litigation by providing for a less cumbersome process should this Court agree with the Secretary that a jury trial is not required. The appeal process would not unreasonably delay the litigation because the case has not yet been set for trial, and the Secretary has no plans to move the court to stay the proceedings unless trial appears imminent. However, should the case proceed to trial by jury, the Secretary may well appeal any adverse decision on the grounds that the jury trial was not appropriate under the statute. Such appeal would further prolong resolution of the matter - perhaps even resulting in a remand to the district court for another trial, as the district court recognized. Exhibit A, at 10 (citing Olympia Express, Inc. v. Linee Aeree Italiane, S.P.A., 509 F.3d 347, 352 (7th Cir. 2007)). The third requirement is therefore met and this Court should grant the petition for immediate appeal pursuant to 28 U.S.C. § 1292(b).

CONCLUSION

    For the foregoing reasons, the Secretary requests that this Court grant the petition for permission to appeal the interlocutory order of the U.S. District Court for the Northern District of Georgia in Chao v. Meixner, et al., 1:07-cv-0595-WSD and 3:08-cv-0013-JTC, entered on November 27, 2007 and certified on July 3, 2008, which concluded that the Defendants are entitled to a jury trial on the Secretary's breach of fiduciary duty claim under section 502(a)(2) of ERISA.

ADDRESS:

GREGORY F. JACOB
Solicitor of Labor

Office of the Solicitor
U.S. Department of Labor
200 Constitution Ave, N.W.
Room N4611
Washington, DC 20210
Telephone:

(202) 693-5805
(202) 693-5610 (FAX)

TIMOTHY D. HAUSER
Associate Solicitor

ELIZABETH HOPKINS
Counsel for Appellate and Special Litigation

___signed_____________
NICKOLE C. WINNETT
Attorney

CERTIFICATE OF SERVICE

    I hereby certify that on this 11th day of July 2008, copies of the foregoing petition were served by Federal Express, postage prepaid, on the following:

GPTA Benefits Group, Inc.
9925 Haynes Bridge Road
Suite 200
Alpharetta, Georgia  30022

Georgia Plumbers Trade Assoc. Health Plan
c/o Michael S. Evans
Baker & Donnelson
3414 Peachtree Road, N.E.
Suite 1600
Alpharetta, Georgia  30326

Lynda Womack Kenney
Hall, Booth, Smith & Slover, P.C.
Atlantic Center Plaza, Suite 900
1180 West Peachtree Street
Atlanta, Georgia  30309

___________________________
NICKOLE C. WINNETT
Attorney

    Chao v. Meixner, et al., Nos. 1:07-cv-0595-WSD and 3:08-cv-0013-JTC

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOUSRE STATEMENT

    Counsel for the Secretary of Labor for the U.S. Department of Labor certifies that the following persons and entities have or may have an interest in the outcome of this case:

  1. Ron Anderson, Defendant

  2. Bradford P. Campbell, Assistant Secretary for Employee Benefits Security Administration

  3. Elaine L. Chao, Secretary of Labor, United States Department of Labor

  4. Employers Onesource, Inc., Defendant

  5. Michael Scott Evans, Counsel for GPTA Health Plan, GPTA for Continuing Education, Inc., Ron Anderson, and Windell Peters

  6. Dana L. Ferguson, Esq., Counsel for DOL

  7. Georgia Plumbers Trade Association, Defendant

  8. Georgia Plumbers Trade Association for Continuing Education, Inc., Defendant

  9. Georgia Plumbers Trade Association Health Plan, Defendant

  10. Timothy D. Hauser, Esq., Counsel for DOL

  11. Elizabeth Hopkins, Esq., Counsel for DOL

  12. Stanley E. Keen, Esq., Counsel for DOL

  13. Lynda Womack Kenney, Esq., Counsel for Leslie E. Smith and Employers Onesource, Inc.

  14. Robert M. Lewis, Jr., Esq., Counsel for DOL

  15. Marc Meixner, Defendant

  16. Windell Peters, Defendant

  17. David Sherman, Defendant

  18. Leslie E. Smith, Defendant

  19. Rush S. Smith, Jr., Esq., Counsel for Leslie E. Smith and Employers Onesource, Inc.

  20. Nickole C. Winnett, Esq., Counsel for DOL


Footnotes

[1]    References to the documents in the district court docket are indicated by brackets and the number designated to that document.

[2]    The district court consolidated Chao v. Mexiner, et al., No. 1:07-cv-0595-WSD with Chao v. Georgia Plumbers Trade Association for Continuing Education, Inc., et. al., No. 3:08-cv-0013-JTC on June 20, 2008. Consol. [88]. On June 27, 2008, the Secretary moved to strike the jury trial request of Defendants Georgia Plumbers Trade Association for Continuing Education, Inc., Ron Anderson, Windell Peters, and the Georgia Plumbers Trade Association Health Plan. Motion [92]. On July 3, 2008, in the same order in which the court certified for interlocutory appeal its earlier ruling on the jury trial issue in Meixner, the district court also denied the Secretary’s motion to strike the jury trial request in Georgia Plumbers. Opinion [93]. The district court recognized in the June 3, 2008 order that any decision ultimately rendered by this Court on the jury trial issue will bind all parties to the consolidated civil action. Id. at 15-16

[3]    The court properly rejected the Defendants' argument that they are entitled to a jury trial on the Secretary's claims under section 502(a)(5) because that section of ERISA provides only for equitable relief.

[4]    See, e.g., Borst v. Chevron Corp., 36 F.3d 1308, 1323-24 (5th Cir. 1994); Flanagan v. General Motors Corp., 2006 WL 2792678, *13 (N.D. Ga. 2006) (noting simply that "[a]n ERISA case receives a bench trial"); Broadnax Mills, Inc. v. Blue Cross & Blue Shield, 876 F. Supp. 809, 816 (E.D. Va. 1995); Camp v. Pac. Fin. Group, 956 F. Supp. 1541, 1552 (C.D. Cal. 1997); Devine v. Combustion Eng'g, Inc., 760 F. Supp. 989, 994 (D. Conn. 1991); Goodman v. S & A Rest. Corp., 756 F. Supp. 966, 970-71 (S.D. Miss. 1990); Motor Carriers Labor Advisory Council v. Trucking Mgmt., Inc., 731 F. Supp. 701, 702-03 (E.D. Pa. 1990); Baker v. Universal Die Casting, Inc., 725 F. Supp. 416, 418-19 (W.D. Ark. 1989); Berlo v. McCoy, 710 F. Supp. 873, 874 (D.N.H. 1989); Brock v. Group Legal Adm'rs, Inc., 702 F. Supp. 475, 476 (S.D.N.Y. 1989); Browning v. Grote Meat Co., 703 F. Supp. 790, 794-95 (E.D. Mo. 1988); Trs. of Cent. States, Se. & Sw. Areas Pension Fund v. Golden Nugget, Inc., 697 F. Supp. 1538, 1549 (C.D. Cal. 1988); Dasler v. E.F. Hutton & Co., 694 F. Supp. 624, 627 n.4 (D. Minn. 1988); Unitis v. JFC Acquisition Co., 643 F. Supp. 454, 461-62 (N.D. Ill. 1986); Bigger v. Am. Commercial Lines, Inc., 652 F. Supp. 123, 127-28 (W.D. Mo. 1986); Smith v. ABS Indus., Inc., 653 F. Supp. 94, 97-99 (N.D. Ohio 1986); Burud v. Acme Elec. Co., 591 F. Supp. 238, 248 n.9 (D. Alaska 1984). Cf. In re Evangelist, 760 F.2d at 29 (Breyer, J.) (denying a request for jury trial in a corporate fiduciary breach case because "[a]ctions for breach of fiduciary duty, historically speaking, are almost uniformly actions 'in equity' - carrying with them no right to trial by jury").

[5]    The Stewart case was brought under both ERISA and the Labor Management Relations Act (LMRA). As set forth above, although this Court held that the defendants in that case did not have the right to a jury trial on their ERISA claim, but that they did have a right to a jury trial under section 301 of the LMRA, and that joinder of the ERISA section 502(a)(1)(B) claim for benefits did not defeat that right. 75 F.3d at 1527-28.