Opinion ID: 2033184
Heading Depth: 2
Heading Rank: 3

Heading: Complexity of the Derivative Suit and Its Effect on Due Process

Text: Lastly, this court recognizes that in a shareholder's derivative suit a judge is simply better equipped to hear the complicated corporation and duty claims. See Alsea Veneer, Inc. v. State, 318 Or. 33, 862 P.2d 95, 100 (1993) (An equity court is better able to decide questions relating to the exercise of corporate discretion than is a jury.). The Ross dissent addressed the complexity problem: [W]here the issues in the case are complexas they are likely to be in a derivative suitmuch can be said for allowing court discretion to try the case itself. Ross, 396 U.S. at 545 n. 5, 90 S.Ct. at 741 n. 5, 24 L.Ed.2d at 740 n. 5 (Stewart, J., dissenting). For this reason, Justice Stewart boldly concluded that the majority's opinion had a questionable basis in policy and no basis whatsoever in the Constitution. Id. (Stewart, J., dissenting). To adopt a similar public policy argument today does not offend any constitutional right to a jury because generally this right does not exist in equity. See 27A Am.Jur.2d Equity § 236. Moreover, allowing this type of complex case to be adjudicated by a jury may actually offend Iowa's constitutional mandate of due process under article I, section 9. Not only does our constitution declare that the right to a jury trial is inviolate, it also provides: [N]o person shall be deprived of life, liberty, or property, without due process of law. Iowa Const. art. I, § 9. This is significant because several courts have denied the parties a jury trial, reasoning that because a competent jury cannot be impaneled to decide such cases, the due process right to a fair trial is violated if the jury resolves the dispute. Keith Broyles, Note, Taking the Courtroom into the Classroom: A Proposal for Educating the Lay Juror in Complex Litigation Cases, 64 Geo. Wash. L.Rev. 714, 716 (1996). The Supreme Court in Ross listed juror competence as one of the considerations to be used when determining if a jury is warranted. Ross, 396 U.S. at 538 n. 10, 90 S.Ct. at 738 n. 10, 24 L.Ed.2d at 736 n. 10. It recognized that the practical abilities and limitations of juries could be an important factor in complex derivative suits. Id. Several courts following Ross have concluded that case complexity may indeed trump the right to a jury in order to satisfy due process requirements. See, e.g., In re Japanese Elec. Prods. Antitrust Litig., 631 F.2d 1069, 1084-89 (3d Cir.1980); Bernstein v. Universal Pictures, Inc., 79 F.R.D. 59, 66-70 (S.D.N.Y. 1978). Factors used to consider complexity are the amount of discovery, length of trial, difficulty of case concepts, intricacy of expert testimony, etc. In re Japanese, 631 F.2d at 1088-89. Certainly case complexity is present in almost every shareholder's derivative suit because the jury is asked to pass judgment on the intricate workings of a corporation. Often concepts like the business judgment rule and breach of fiduciary duty are difficult to understand. See Alsea Veneer, Inc., 862 P.2d at 100. Similarly, derivative suits usually involve voluminous amounts of discovery and records to trace the actions of the corporation's officers and directors. With massive discovery comes increased length of trial. Moreover, there may be several plaintiffs and multiple defendants each being represented by different counsel. The present case is no exception. The shareholders are alleging negligence occurred over an extended period of time and was committed by multiple officers, directors, and contractors. Such a make-up is a recipe for complexity. Because juror competence would be challenged in almost every derivative suit, the court is further persuaded not to provide a jury. Much has been written about the necessity of having equitable cases heard by a judge. Disregarding the traditions which underlie the jury as an institution, the use of twelve individuals drawn at random with diverse education, intellectual ability, and occupations, but lacking the specialized knowledge and ability to evaluate testimony, is clearly not an ideal system for determining facts in litigation. No matter how kindly one views the jury there is no question that at times its verdict represents fiction and not fact. 8 James Wm. Moore et al., Moore's Federal Practice § 38.101 app. (3d ed.2000). Our jurisprudence has never provided an absolute right to a jury trial in every case. One modern jurist recognized: Of course, in a very considerable number of cases, no right to trial by jury exists because of historically determined fortuities.... Were jury trial as beneficent as its ardent devotees proclaim, such differences would be indefensibly irrational. Skidmore v. Baltimore & O.R. Co., 167 F.2d 54, 57 n. 6 (2d Cir.1948). This court agrees that equity does not require trial by jury in a derivative suit.