## F I L E D United States Court of Appeals Tenth Circuit 

### JUL 16 1998 

### PATRICK FISHER Clerk PUBLISH UNITED STATES COURT OF APPEALS

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 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; FREDMOORE; NORMAN NICHOLAS; DEBBY NORLINGLAURITA; 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. No. 97-1105

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 o f 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. Little ton, Colorado, with him on1 At least four circuits have ruled on this precis e 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).

-2- the briefs) of Law Office of Peter B. Carey, Chicag o, Illinois, for PlaintiffAppellees. Charles W. Newcom (William A. Wright with him on th e brief) of Sherman & Howard L.L.C., Denver, Colorado, for Defendant-Appe llants.

Before BRORBY, McKAY and BRISCOE , Circuit Judges.

BRORBY , Circuit Judge.

This is an interlocutory appeal of a district courtorder denying Defendants’ motion to strike Plaintiffs’ jury demand. A single issue is presented on appeal: Does the Seventh Amendment of the United States Con stitution entitle Plaintiffs to a jury trial on claims to recover enhanced sever ance plan benefits under 29 U.S.C. § 1132(a)(1)(B), the Employee Retirement Inc ome Security Act (“ERISA”)? The Tenth Circuit has not previously ru led on this issue. 1 Exercising jurisdiction pursuant to 28 U.S.C. § 1292(b) and Fe d. R. App. P. 5, we hold no jury right attaches to Plaintiffs’ § 1132(a)(1)(B) claims. We therefore reverse.-3- BACKGROUND Plaintiffs-Appellees are thirty-nine former employe es 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 th ey were entitled to benefits under Amax Inc.’s Corporate Separation Policy for C orporate Employees, also referred to by Plaintiffs as the Enhanced Severance Plan.

The Enhanced Severance Plan is an ERISA “employee w elfare 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.” Thu s, the central issue in this dispute is whether Plaintiffs were “corporate headq uarters” personnel entitled to benefits under the Enhanced Severance Plan. If Pla intiffs were eligible to receive benefits under the Enhanced Severance Plan, they wo uld have received larger severance payments and greater medical benefits tha n they received under the plan applied to them when their employment ended.2Section 1132(a)(1)(B) empowers a participant or b eneficiary 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 clari fy his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)( 1)(B).

-4- After failing to receive full benefits under the En hanced Severance Plan, Plaintiffs filed an ERISA suit against Cyprus Amax Minerals Company and plan administrator, Helen M. Feeney. Their complaint al leges 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 administ rator pursuant to 29 U.S.C. §§ 1132(a)(1)(A) and 1132(c).

Defendants answered the complaint by denying Plaint iffs 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 expr essly committed to the “court’s discretion.” See 29 U.S.C. § 1132(c). However, Plaintiffs maintain ed their first five claims are analogous to state law breach of co ntract actions to which the3 The federal district court for the Eastern Distri ct 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 equi table, right. Id . at 746-47. We join a number of our sister circuits in concluding the reasoning in Stamps is -5- right to a jury trial attaches. The district courtagreed, denied Defendants’ motion to strike, and certified the matter for appeal.

DISCUSSION The issue presented – whether Plaintiffs’ are entit led 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 th is 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 Enforce ment Actions under Section 502(a)(1)(B) of ERISA, 96 Harv. L. Re v. 737, 738, 741-43 (1983)). There being no express statutory right to a jury tr ial and no evidence of congressional intent to grant the right to a jury t rial on § 1132(a)(1)(B) claims, 3flawed. 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 Are as Pension Fund, 627 F.2d 820, 828-29 (7th Cir. 1980). Congress g ranted state courts concurrent jurisdiction only over § 1132(a)(1)(B) c laims, see 29 U.S.C. § 1132(e)(1); thus, it was entirely rationale for C ongress to separate § 1132(a)(1)(B) from the other equitable actions en umerated under § 1132(a)(3).

-6- 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 ex ceed twenty dollars.” U.S. Const. amend. VII. The United States Supreme Courthas long interpreted “Suits at common law” to include “‘suits in which legalrights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administere d.’” Feltner , ___ U.S. at ___, 118 S.Ct. at 1284 (quoting Parsons v. Bedford, 3 Pet. 433, 447 (1830)(emphasis in original)). Accordingly, the Se venth 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

.-7-

(quoting Granfinanciera, S. A. v. Nordberg , 492 U.S. 33, 42 (1989)). To determine whether a particular statutory action mor e closely resembles an 18th century case tried in a court of law or one tried i n 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. Te rry , 494 U.S. 558, 565 (1990). The more important factor is whether the r emedy 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 thei r 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 Prattthat the defendants used an improper valuation date when assessing the value of the plaintiff’s ve sted interest in a pension plan, a panel of this court referred to the plaintiff’s § 1 132(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 express ly grant the plan administrator-8-

discretion to interpret the terms of the plan or el igibility under the plan, courts must apply a de novo rather than an arbitrary and c apricious standard when reviewing the administrator’s decision. 489 U.S. at 112-13. In reaching that conclusion, the Court reasoned that where a plan do es not give the administrator exclusive discretion to interpret the plan, it woul d 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 employe r’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 Prattand the Supreme Court’s discussion of the contractual nature of pre-ERISA c laims in Firestone are dispositive of our analysis of the first Terryfactor.

The district court similarly concluded “Firestone invites courts to reexamine whether juries may be required in cases i nvolving 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 o r fiduciary discretionary authority to determine eligibility for benefits or to constru e the terms of the plan, an action to recover benefits under that plan “must be seen a s a traditional contract law action, i.e. one at law.” Id . at 1475.-9-

We believe the Plaintiffs’ and district court’s rel iance on Prattand Firestone to determine Plaintiffs’ right to a jury trial is misplaced. Neither Pratt

nor Firestone addressed the jury trial issue or the broader issu e of whether an ERISA § 1132(a)(1)(B) action is best characterized as legal or equitable. The language Plaintiffs cite from Prattcharacterizing § 1132(a)(1)(B) actions as “breach of contract” actions duplicates the charact erization 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 ca se, which involves an eligibility determination based upon the interpretation of term s left undefined in the plan, the Pratt case involved the application of an unambiguous val uation 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 c laim raised here. Finally, the Firestone reference to analogous, pre-ERISA breach of contra ct actions is relevant only to the extent some of our sister circ uits used the pre-Firestone arbitrary and capricious standard as support for th eir 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 ,4 See 29 U.S.C. §§ 1001, 1001a.

-10-

consideration of the incompatibility of jury trials with the application of the arbitrary and capricious standard of review is no l onger 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 i n a given ERISA case vis-àvis the Firestone analysis is determinative of whether the particula r statutory claims at issue here are legal or equitable in natu re. Just because the Supreme Court acknowledged that plaintiffs filed breach of contract suits in state courts prior to implementation of ERISA’s comprehensive sc heme 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 a ctions. 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 fu ndamentally equitable in
nature.

We begin with the statute itself; with limited exce ptions, the assets of an employee welfare benefit plan authorized under ERIS A must be held in trust to be-11-

managed and controlled under the authority and disc retion of a named fiduciary(ies). 29 U.S.C. §§ 1102, 1103. Not surp risingly then, courts consistently have characterized ERISA actions, incl uding § 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 d etermining 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 l aw.” 489 U.S. at 111. To the extent the Court discussed the appl ication of contract law, it did so to illustrate that pre-ERISA contract principles we re consistent with established principles of trust law applicable in the ERISA context. Id. at 112-15.

Our conclusion Plaintiffs’ ERISA action is analogou s 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 Co urt in Terry , 494 U.S. at 569. The trust law underpinning of Plaintiffs’ breach offiduciary duty claim is selfevident. See id. , 494 U.S. at 567. Plaintiffs’ remaining claims fo r recovery of5 Even were we to consider Plaintiffs’ claim to rec over benefits analogous

to a claim for monetary damages stemming from a bre ach 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 tri al. See Terry , 494 U.S. at 570. -12- benefits, enforcement of plan terms, and violation of procedural requirements all turn on a threshold determination of whether Plaint iffs are beneficiaries under the Enhanced Severance Plan. This threshold determinat ion of whether Plaintiffs are eligible to receive assets held in trust by the Def endants 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 AmaxEnhanced 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 “m oney damages” (measured by the amount of benefits Plaintiffs would have received o n separation had the-13-

Defendants paid them all benefits due under the Enh anced Severance Plan), and cite the general rule that monetary relief constitu tes 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 awa rd of money damages may be considered an equitable rather than legal remedy if (1) the monetary award is “‘incidental to or intertwined with injunctive reli ef.’” 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 improperprofits,’” 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 conc lude 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 Terryholding. See id. , 494 U.S. at 571. What Plaintiffs overlook, however, is the fact they have no entitle ment to the benefits unless and-14-

until a court exercises its equitable powers to dec lare Plaintiffs eligible beneficiaries of the plan and thus order Defendants , as fiduciaries, to pay benefits. We are unwilling to presume Plaintiffs a re 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 eq uitable relief. See Bittinger v. Tecumseh Prods. Co. , 123 F.3d 877, 883 (6th Cir. 1997).

We further believe the recovery of benefits is bett er characterized as equitable/ restitutionary versus legal/compensatoryrelief. By definition, an action for restitution has for its primary purpose the “taking from the defendant and restoring to the plaintiff something to which t he 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 benef its under an ERISA plan is analogous to an action to enforce a trust. It i s pertinent, then, that our characterization of Plaintiffs’ requested remedy is consistent with the delineation-15-

of beneficiaries’ remedies under trust law. The R estatement (Second) of Trusts §§ 197-198 (1959) states a beneficiary’s remedy aga inst a trustee is exclusively equitable unless the trustee has an immediate and u nconditional duty to pay the beneficiaries. We do not see how Plaintiffs can cl aim they are unconditionally and immediately entitled to benefits under the Enha nced Severance Plan when, as we have shown, the resolution of their claims for m onetary 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 an d the remedy sought in this ERISA, § 1132(a)(1)(B) action are equitable innature, we hold the Seventh Amendment provides no right to a jury trial. The d istrict court’s order denying Defendants’ motion to strike Plaintiffs’ jury deman d is REVERSED and the case is remanded for further proceedings consistent withthis opinion.