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UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF VIRGINIA 

Richmond Division 

In re Toys “R” Us, Inc., et al.1 Case No. 17-34665-KLP 

 Debtors. Chapter 11 

 Jointly Administered 

TRU Creditor Litigation Trust, 

 Plaintiff, 

v. Adv. Pro. No. 20-03038-KLP 

David A. Brandon, et al., 

 Defendants. 

MEMORANDUM OPINION 

 Plaintiff, TRU Creditor Litigation Trust (the “Trust”), brought this action 

against Defendants, former directors and officers of Toys “R” Us, alleging various 

breaches of fiduciary duty, fraudulent misrepresentation and concealment, 

negligent misrepresentation and concealment, and negligence. The Trust’s lengthy 

complaint (the “Complaint”) includes a demand for a jury trial “on all matters 

subject to jury trial.” (ECF No. 10, Complaint p. 110).2 

The question before the Court is whether the Trust’s right to a jury trial on 

the claims asserted against the Defendants has been waived. The Defendants 

maintain that a settlement approved by the Court and incorporated into the 

Chapter 11 plan confirmed by the Court includes a waiver of a trial by jury that 

binds the Trust. The Trust disagrees, contending that the language at issue applies 

1 The Debtors in these cases, along with the last four digits of each Debtor’s tax identification 

number, are set forth in the Order (I) Directing Joint Administration of Chapter 11 Cases and (II) 

Granting Related Relief (17-34665-KLP, ECF 78). 

2 All references to “ECF No.” refer to docket entries in the lead case unless otherwise noted. 

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only to disputes over the settlement agreement itself and does not apply to the 

claims set forth in the Complaint. For the following reasons, the Court finds that 

there has not been a waiver of the Trust’s right to a jury trial on the claims asserted 

against the Defendants and that the Trust has the right to demand trial by jury. 

Background 

 On September 18 and 19, 2017, Toys “R” Us, Inc. and twenty-four affiliated 

entities (collectively, “TRU” or “Debtors”) filed voluntary Chapter 11 petitions for 

relief in the United States Bankruptcy Court for the Eastern District of Virginia. 

The cases were jointly administered pursuant to Bankruptcy Rule 1015(b) through 

a lead case captioned In re: Toys R Us, Inc., et al., Case No. 17-34665-KLP. (ECF 

No. 78).

 On March 22, 2018, the Court entered an Order authorizing TRU to wind 

down U.S. operations, authorizing U.S. store closings, establishing administrative 

claims procedures, and granting related relief. (ECF No. 2344). In connection with 

its wind-down, on July 17, 2018, TRU filed with the Court a settlement agreement 

(the “Settlement Agreement”) entered into by and among multiple parties that 

resolved numerous issues relating to the liquidation of TRU’s U.S. businesses. (ECF 

No. 3814). The parties to the Settlement Agreement agreed to release all claims 

against each other. The Settlement Agreement provided that a Non-Released 

Claims Trust would be established for the purpose of administering all nonreleased claims, including claims held by TRU and its creditors against TRU’s 

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directors and officers. The Court entered an order approving the Settlement 

Agreement on August 8, 2018. (ECF No. 4083). 

On December 17, 2018, the Bankruptcy Court confirmed the Third Amended 

Chapter 11 Plan of TRU (the “Plan”). (ECF No. 5979). Article XI of the Plan stated 

with respect to jurisdiction that: 

Notwithstanding the entry of the Confirmation Order and the 

occurrence of the Effective Date, on and after the Effective Date, the 

Bankruptcy Court shall retain such jurisdiction over the Chapter 11 

Cases and all matters, arising out of, or related to, the Chapter 11 Cases 

and the Plan, including jurisdiction to . . . 

19. Resolve any cases, controversies, suits, disputes, or Causes of 

Action that may arise in connection with any Non-Released 

Claims, including the D&O Claims . . . . 

On April 30, 2019, the Debtors filed the Non-Released Claims Trust 

Agreement. (ECF No. 6925). Section 2.3(a) of that agreement provides in part that: 

The TRU Creditor Litigation Trust shall be the successor-in-interest to 

the Debtors with respect to any Non-Released Claims that were or could 

have been commenced or asserted by, or on behalf of, any of the Debtors 

or their estates prior to the applicable Effective Date, shall be deemed 

substituted for each such Debtor as the party in any such litigation and 

shall have the right to proceed in the name, right and stead of the 

Debtors with respect to all such Non-Released Claims. 

 In furthering its duty to pursue the non-released claims, the Trust initiated 

this litigation against the Defendants. It originally filed the Complaint in the 

Supreme Court of the State of New York, County of New York. The case was 

removed to the U.S. District Court for the Southern District of New York and then 

transferred, upon Defendants’ motion, to the U.S. District Court for the Eastern 

District of Virginia. The Virginia District Court then referred the case to this 

Court. 

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 On April 10, 2021, the Trust filed a motion (the “Motion”) seeking a ruling 

that the Trust’s right to a jury trial on the claims asserted against Defendants has 

not been waived. (Adv. Pro. No. 20-03038-KLP, ECF No. 134). The Settlement 

Agreement includes a waiver of the right to a jury trial for any “legal proceeding 

arising out of, or relating to, this Settlement Agreement or the transactions 

contemplated hereby.” (ECF No. 4083, Ex. 1, Settlement Agreement, § 4.8(b)). The 

Trust maintains that the waiver is limited to claims challenging or enforcing the 

terms of the Settlement Agreement itself. The Defendants counter that this 

provision constitutes a waiver of the Trust’s right to a jury trial on the claims 

asserted in this adversary proceeding. The parties have submitted memoranda of 

law in support of their respective positions, and the matter was argued before the 

Court on April 29, 2021. 

Jurisdiction and Venue 

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 

1334, the Order of the U.S. District Court for the Eastern District of Virginia 

referring this matter to the Bankruptcy Court (Civil No. 3:20-cv-311 (DJN), ECF 

No. 15), and the Standing Order of Reference from the United States District Court 

for the Eastern District of Virginia, dated August 15, 1984. Venue is proper before 

this Court pursuant to 28 U.S.C. §§ 1408 and 1409. 

Conclusions of Law 

 The right to a jury trial in civil suits is guaranteed by the Seventh 

Amendment to the U.S. Constitution. U.S. Const. amend VII (“In Suits at common 

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law, where the value in controversy shall exceed twenty dollars, the right of trial by 

jury shall be preserved”). This fundamental right may be “knowingly and 

intentionally waived by contract.” Leasing Serv. Corp. v. Crane, 804 F.2d 828, 832 

(4th Cir.1986). The Fourth Circuit places the burden of proving voluntary and 

informed waiver on the party seeking to enforce the waiver. Topline Sols., Inc. v. 

Sandler Sys., Inc., 131 F. Supp. 3d 435, 438–39 (D. Md. 2015) (citing Leasing Serv. 

Corp. v. Crane, 804 F.2d at 832-33). In this case, the Defendants, who are seeking 

to enforce the waiver, bear the burden of proving that the Trust’s right to a jury 

trial on the claims in this adversary proceeding was knowingly and intentionally 

waived. 

When considering a waiver of the right to a jury trial, “courts indulge every 

reasonable presumption against waiver.” Aetna Ins. Co. v. Kennedy ex rel Bogash, 

301 U.S. 389, 393 (1937). For that reason, jury trial waivers are narrowly 

construed. See LaPosta v. Lyle, Civil Action No. 5:1CV177, 2012 WL 1752550, at 

*19 (N.D.W.Va. May 16, 2012). When determining whether a party to an 

agreement has waived its right to a jury trial, courts generally “look to the plain 

language of the contract’s jury waiver to determine whether it unambiguously 

covers the claims asserted.” Med. Air Tech. Corp. v. Marwan Inv., Inc., 303 F.3d 11, 

19 (1st Cir. 2002). Thus, the Defendants not only bear the burden of proving that 

the language in the Settlement Agreement establishes a knowing and intentional 

waiver of the Trust’s right to a jury trial, but also that the language in the waiver 

unambiguously covers the claims asserted. 

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The Defendants have pointed out that the Settlement Agreement provides 

that it is governed by New York law.3 New York law, however, does not differ from 

the authority cited above; it recognizes that jury trial waivers must be narrowly 

construed and that if the language in the waiver is capable of being interpreted in 

two different ways, then it is ambiguous. See Adelphia Recovery Tr. v. Bank of Am., 

N.A., No. 05 Civ. 9050 (LMM), 2009 WL 2031855, at *3 (S.D.N.Y. July 8, 2009) (“the 

UCA Pledge Agreement Waiver does not cover claims in the Amended Complaint 

because the waiver must be narrowly construed under jury waiver analysis”); 

Sherrod v. Time Warner Cable, Inc., No. 14-CV-1471 (JLC), 2014 WL 6603879, at *2 

(S.D.N.Y. Nov. 21, 2014) (“[c]ontract provisions waiving the right are narrowly 

construed”); Stephens Inc. v. Flexiti Fin., Inc., No. 18-CV-8185 (JPO), 2019 WL 

2725627, at *9 (S.D.N.Y. July 1, 2019) (“In defining their scope, contractual 

provisions containing jury trial waivers should be narrowly construed.”) (citation 

omitted). See also Seiden Assocs. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d 

Cir.1992) (applying New York law) (a phrase is ambiguous if capable of more than 

one meaning). 

 In LaPosta, the agreement between the parties contained a provision that 

“waive[d] the right to any jury trial in any action, proceeding, or counterclaim 

brought by any party against any other party.” 2012 WL 1752550, at *9. The court 

found that because the language included the word “any,” it could be broadly 

3 Article 4.8 of the Settlement Agreement provides that “[t]his Settlement Agreement shall be 

construed and enforced in accordance with, and the rights of the Parties shall be governed by, the 

laws of the State of New York.” 

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interpreted to mean all actions between the parties regardless of origin or basis. Id. 

at *10. But the court also determined that the waiver could be reasonably 

construed to refer to “only. . . [claims] brought to enforce or challenge the terms of 

the agreements themselves.” Id. The court concluded that by adopting the 

narrowest construction, as was required by law to do, the waiver only applied to 

“actions regarding the terms of the agreements of which the waivers are a part.” Id. 

at *11. 

 Likewise, in Pittsburg SNF LLC. v. Pharmerica E., Inc., No. 2:10-CV-363-

JRG-RSP, 2012 WL 12903688 (E.D. Tex. Oct. 4, 2012), when considering language 

in an asset purchase agreement stating “each of the parties hereby irrevocably 

waives any and all right to trial by jury in any legal proceeding arising out of or 

relating to this agreement,” the court held that for a legal proceeding to be one 

“arising out of or relating to this agreement,” it must be a “lawsuit to enforce or 

challenge the provisions of the agreement.” Id. at *2. As a result, claims alleging 

fraud on the part of defendants prior to the agreement being executed were 

considered claims arising before the agreement came into existence and could not be 

claims “arising out of or relating to this agreement.” Id. 

LaPosta and Pittsburg SNF LLC provide valuable guidance for resolving the 

matter at issue. Here, as in LaPosta, a broad interpretation of the language in the 

Settlement Agreement could result in a determination that the Trust has waived 

the right to trial by jury for any action associated with the actions addressed in the 

Settlement Agreement, including the claims being asserted in the Complaint. 

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However, the language could also be reasonably construed to refer only to litigation 

involving disputes over the Settlement Agreement itself. The narrower construction 

of the language would confine the waiver to disputes over the Settlement 

Agreement. 

The waiver language in the Settlement Agreement is similar to what was 

considered in Pittsburg SNF LLC. There, as in this case, the language included a 

waiver of the right to trial by jury in any proceeding “arising out of, or relating to” 

the agreement. The court determined that the fraud claims being asserted existed 

before the agreement was executed and, therefore, did not arise out of or relate to 

the agreement. 2012 WL 12903688, at *2. 

The claims being asserted by the Trust also accrued prior to the execution of 

the Settlement Agreement. The Settlement Agreement was not the origin or cause 

of any of the claims being asserted in the Complaint. The waiver language does not 

specifically address or refer to these claims. Again, a narrow construction of the 

jury waiver provision in the Settlement Agreement requires that the waiver be 

limited to claims involving the terms of the agreement itself.4

Having found that the language at issue is, at best, ambiguous and there 

being no persuasive evidence before the Court that the parties to the Settlement 

Agreement intended to include a waiver of the right to trial by jury in the claims 

being asserted in the Complaint, the Court finds that the Defendants have failed to 

4 The additional language in the waiver before the Court, “transactions contemplated hereby,” does 

not alter the Court’s analysis, as the language may objectively refer to transactions contemplated by 

the Settlement Agreement. There is nothing to indicate that the parties intended the word 

“transactions” to refer to claims against the officers and directors of TRU. 

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carry their burden of proving that the Trust waived its right to a jury trial. The 

Trust is entitled to have a jury trial on the Complaint. 

Conclusion 

Controlling law, including New York law, requires that a jury waiver be 

narrowly construed. Applying a narrow construction to the language of the 

Settlement Agreement, “arising out of, or relating to” may be reasonably interpreted 

to mean “coming from or caused by.” The claims being asserted by the Trust in its 

Complaint do not stem from a dispute over the Settlement Agreement; rather, those 

causes of action accrued before the Settlement Agreement was executed. To the 

extent that the waiver language is ambiguous, the Defendants have offered no 

conclusive evidence that the jury waiver was intended to broadly apply to the 

causes of action being brought by the Trust and, thus, have failed to carry their 

burden of proving that the Trust voluntarily and knowingly waived its right to a 

jury trial. Accordingly, the Trust’s Motion for a jury trial will be granted. 

A separate order shall issue. 

Signed: September 3, 2021 /s/ Keith L. Phillips 

United States Bankruptcy Judge 

Copies: 

Robert I. Bodian 

Scott A. Rader 

Amanda B. Asaro 

Kerime S. Akoglu 

MINTZ LEVIN COHN FERRIS 

GLOVSKY and POPEO, P.C. 

Chrysler Center 

666 Third Avenue, 25th Floor 

New York, New York 10017 

Entered on Docket: September 3, 2021

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James C. Cosby 

J. Brandon Sieg 

O’HAGAN MEYER, PLLC 

411 E. Franklin Street, Suite 500 

Richmond, Virginia 23219 

Greg Dovel 

Christin Cho 

DOVEL & LUNER, LLP 

201 Santa Monica Blvd., Suite 600 

Santa Monica, California 90401 

Michael Wilson 

MICHAEL WILSON PLC 

12733 Storrow Rd. 

Henrico, Virginia 23233 

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