Court Opinion

ID: 70667
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:06:09+00
Date Added: 2024-06-11T17:21:08.970364
License: Public Domain

United States Court of Appeals,

                           Eleventh Circuit.

                             No. 94-8547.

    Ronald STEWART, David Kirchoff, Darrell L. Howard, Louis
Kubitschek, John Tuckness, Ronald Keltner, on behalf of themselves
and other persons similarly situated, Plaintiffs-Appellants,

                                     v.

        KHD DEUTZ OF AMERICA CORPORATION, Defendant-Appellee.

                            Feb. 28, 1996.

Appeal from the United States District Court for the Northern
District of Georgia. (No. 1:91-CV-1534), Marvin H. Shoob, Judge.

Before HATCHETT, DUBINA and BLACK, Circuit Judges.

     HATCHETT, Circuit Judge:

     As a matter of first impression in this circuit, the court

holds that a jury trial is available to plaintiffs in a breach of

contract lawsuit brought under section 301 of the Labor Management

Relations Act (LMRA), 29 U.S.C. § 185(a), and when a hybrid LMRA

and Employee Retirement Income Security Act (ERISA) (29 U.S.C. §

1104(a), 1132(a)(1)(B), and § 1132(a)(3)), lawsuit is brought.

                                 FACTS

     In May 1985, appellee, KHD Deutz of America Corporation (KHD

Deutz), purchased a combine manufacturing plant in Independence,

Missouri,    from   Allis-Chalmers        Manufacturing    Company   (Allis-

Chalmers).    KHD Deutz, through its wholly-owned subsidiary Deutz-

Allis   Corporation   (Deutz-Allis),       assumed   the   1984   collective

bargaining agreement (CBA) between Allis-Chalmers and Local 1958 of

the United Steelworkers of America (Local 1958).              In 1986, KHD

Deutz and Local 1958 negotiated a new CBA almost identical to the

1984 CBA. Both CBAs provided health benefits to employees retiring
on or after May 25, 1985.

     In June 1990, KHD Deutz sold Deutz-Allis and its Independence

plant.     Pursuant to the terms of the sales agreement, KHD Deutz

retained    responsibility      for    all    health    benefit      programs    for

employees who retired between May 25, 1985, and December 31, 1989.

On June 1, 1991, KHD Deutz unilaterally modified its retirees'

health benefit program to provide for monthly premiums, increased

deductibles, and reduced maximum lifetime benefits.

                              PROCEDURAL HISTORY

     On July 3, 1991, retired employees Ronald Stewart, David

Kirchoff, Darrell L. Howard, Lewis Kubitschek, John Tuckness, and

Ronald Keltner (the retirees) brought a class action lawsuit in the

Northern District of Georgia alleging that KHD Deutz breached the

1984 and 1986 CBAs in failing to provide the health benefit

coverage     specified   in    the     CBAs   for    the   duration     of   their

retirement.     In their complaint, the retirees presented a legal

claim for breach of contract and sought legal and equitable relief

under section 301 of the Labor Management Relations Act (LMRA), 29

U.S.C. § 185(a), and sections 404(a), 502(a)(1)(B), and 502(a)(3)

of the Employee Retirement Income Security Act (ERISA), 29 U.S.C.

§§ 1104(a), 1132(a)(1)(B), and 1132(a)(3). In the alternative, the

retirees alleged that KHD Deutz should be equitably estopped from

reducing their benefits because the company intentionally induced,

directed,    and   caused    the    fiduciary   to     engage   in    breaches   of

fiduciary duty.

     On July 5, 1991, the retirees filed a motion for a preliminary

injunction    to   prevent    KHD     Deutz   from     modifying     their   health
benefits.    On December 16, 1991, the district court denied the

preliminary injunction finding that the language of the CBAs

unambiguously established KHD Deutz's right to modify the health

benefits, and thus precluded the court from considering extrinsic

evidence on the issue.     The retirees appealed the denial of their

preliminary injunction motion to this court.        On January 5, 1993,

this court reversed the district court and directed it to consider

the extrinsic evidence the parties offered.         Stewart v. KHD Deutz

of America Corp., 980 F.2d 698, 704 (11th Cir.1993).          On remand,

the retirees renewed their motion for preliminary injunction, and

KHD Deutz filed a motion to strike the jury demand.

     On January 13, 1994, the district court denied the retirees'

renewed motion for preliminary injunction and granted KHD Deutz's

motion to strike the jury demand.       In striking the jury demand, the

district    court   held   that   the    retirees   could   not   recover

extracontractual damages under section 301.          On March 7, 1994,

after the retirees filed a motion to certify the jury trial issue

for appeal, the court granted the retirees' motion and certified

the jury issue for interlocutory review.            The district court

certified the issue pursuant to 28 U.S.C. § 1292(b) as follows:

     whether plaintiffs are entitled to a jury trial of their
     breach of contract claims under section 301 of the Labor
     Management Relations Act where those claims are joined with
     claims under the Employment Retirement Income Security Act of
     1974 which are not triable to a jury in an action to restore
     retiree health benefits and recover damages for breach of
     contract.1

     1
      Initially, this appeal was consolidated with the appeal
from the district court's denial of the retirees' renewed motion
for a preliminary injunction. The retirees, however, voluntarily
dismissed their appeal on the denial of the renewed motion for
preliminary injunction; therefore, that issue is not presently
                                  CONTENTIONS

      The retirees contend that the district court erred in striking

their demand for a jury trial on their breach of contract claim

under section 301 of the LMRA because that claim and the remedy

sought are both legal in nature;             thus, the Seventh Amendment

entitles them to a jury trial.             The retirees also contend that

their right to a jury trial on the section 301 claim remains intact

even though it is joined with ERISA claims that do not ordinarily

afford the right to a jury trial.

      In response, KHD Deutz contends that the district court

properly granted its motion to strike the retirees' demand for a

jury trial because the remedies sought under section 301 of the

LMRA and section 502 of ERISA are equitable in nature;            therefore,

no Seventh Amendment right to a jury trial exists on the retirees'

section 301 claim.      In the alternative, KHD Deutz contends that

even if the monetary relief sought under section 301 is construed

as   legal   in   nature,   the   remedy    is   properly   characterized    as

incidental to, or intertwined with, ERISA, and therefore does not

entitle the retirees to a jury trial.2
                                    ISSUES

      This interlocutory appeal presents the following issues:              (1)

whether the retirees are entitled to a jury trial on their breach

of collective bargaining claim under section 301 of the LMRA;               and

before this court.
      2
      KHD Deutz also argues that this court should dismiss this
appeal because it was initially granted in connection with the
retirees' appeal of the denial of their renewed motion for
preliminary injunction. We reject this contention.
(2) if so, whether the retirees retain their Seventh Amendment

right to a jury trial in a hybrid LMRA/ERISA action where the

amount of monetary relief sought under LMRA and ERISA is identical.

                             DISCUSSION

A. Right to jury trial under section 301 of LMRA

      This court reviews a district court's grant of a motion to

strike a jury demand in plenary fashion.      Waldrop v. Southern Co.

Services, Inc., 24 F.3d 152, 155 (11th Cir.1994).       Because this

court has not specifically addressed whether the Seventh Amendment

provides a right to a jury trial in a section 301 LMRA action, we

first address this issue.

     In determining whether the retirees are entitled to a jury

trial on the section 301 claim, we first interpret the statute.

Waldrop, 24 F.3d at 155.     Section 301 of the LMRA provides for

lawsuits by and against labor unions, stating in pertinent part:

     Suits for violation of contracts between an employer and a
     labor organization representing employees in an industry
     affecting commerce ... or between any such labor organization,
     may be brought in any district court of the United States
     having jurisdiction of the parties, without respect to the
     amount in controversy or without regard to the citizenship of
     the parties.

29 U.S.C.A. § 185(a) (West 1978).     Because section 301 does not

provide a statutory right to a jury trial, we must now determine

whether a jury trial is required under the Seventh Amendment.

Waldrop, 24 F.3d at 155.

     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."   Waldrop, 24 F.3d at 156.   Although at the time of

its adoption the Seventh Amendment only preserved the right of jury
trial    for    common   law   actions   existing        in    1791,    courts   have

interpreted the amendment to extend to "all suits where legal

rights are involved whether at common law or arising under federal

legislation."       Waldrop, 24 F.3d at 156;                  see also Curtis v.

Loether, 415 U.S. 189, 193, 94 S.Ct. 1005, 1007, 39 L.Ed.2d 260

(1974). We employ a two-part inquiry to determine the availability

of a jury trial under the Seventh Amendment when a federal statute

does    not    explicitly     provide for a jury trial.                  Chauffeurs,

Teamsters & Helpers Local No. 391 v. Terry, 494 U.S. 558, 565, 110

S.Ct. 1339, 1344, 108 L.Ed.2d 519 (1990).                 First, we compare the

nature of the issues to be resolved to "[eighteenth century]

actions brought in the courts of England prior to the merger of the

courts of law and equity."          Tull v. United States, 481 U.S. 412,

417-18, 107 S.Ct. 1831, 1835-36, 95 L.Ed.2d 365 (1987). Second, we

assess whether the remedy sought is legal or equitable in nature.

Tull, 481 U.S. at 418, 107 S.Ct. at 1836.               The nature of the remedy

sought is the more important inquiry in our analysis.                     Terry, 494

U.S. at 565, 110 S.Ct. at 1344.

       An action for breach of a CBA did not exist under common law.

Terry, 494 U.S. at 565-66, 110 S.Ct. at 1344-45.                       Therefore, to

satisfy the first inquiry we look for an analogous cause of action

that existed in eighteenth century England.                   The retirees contend

that their action for breach of the CBAs most resembles a breach of

contract      action.    In    support   of     their    characterization,        the

retirees note that section 301 explicitly provides for "suits for

violation of contracts."          29 U.S.C. § 185(a).            KHD Deutz argues

that    this    cause    of    action    more    closely        mirrors    a     trust
beneficiary's equitable action because ERISA, like a trust, places

fiduciary     duties     on   employers    in   the     implementation    of

ERISA-regulated plans.

         We agree with the retirees' characterization of this action.

The dispositive issue is whether KHD Deutz breached the CBAs.             KHD

Duetz urges this court to analyze the issues to be resolved under

the retirees' 301 claim in light of retirees' ERISA claims.              The

retirees' section 301 claim, however, is actionable independent of

ERISA.    See Ross v. Bernhard, 396 U.S. 531, 537, 90 S.Ct. 733, 738,

24 L.Ed.2d 729 (1970) (the Seventh Amendment question depends on

the nature of the issue to be tried rather than the character of

the overall action).          Thus, for purposes of Seventh Amendment

analysis, ERISA is irrelevant.         KHD Deutz also argues that the

retirees' characterization of the issues in this LMRA/ERISA action

constitutes conclusory labeling.          Although the Supreme Court has

stated that for Seventh Amendment analysis the nature of the remedy

is more dispositive than the nature of the issues to be tried, the

first     inquiry   is   nonetheless   essential      because   the   Seventh

Amendment only extends to cases in which legal rights are at

stake.3    See Grandfinancier v. Nordberg, 492 U.S. 33, 44, 109 S.Ct.

2782, 2791, 106 L.Ed.2d 26 (1989); Blake v. Unionmutual Stock Life

Ins. Co., 906 F.2d 1525, 1526 (11th Cir.1990).            We hold that the

     3
      The Seventh Amendment right to a jury, however, may also
attach to a cause of action that encompasses both legal and
equitable issues. See Terry, 494 U.S. 558, 110 S.Ct. 1339, 108
L.Ed.2d 519 (holding that an action for breach of fair
representation under section 301 of LMRA was legal in nature
despite the fact that the issue when viewed in isolation, was
analogous to a claim against the trustee for breach of fiduciary
duty—an equitable action).
retirees' breach of CBA claim is most analogous to a claim of

breach of contract—a legal cause of action.     See Terry, 494 U.S. at

570, 110 S.Ct. at 1347 (holding that a breach of a collective

bargaining agreement is most analogous to a "breach of contract

claim").     Thus, we conclude that the issues to be resolved under

the section 301 claim, when viewed in isolation of the ERISA

claims, are legal in nature.

         The second inquiry requires this court to examine whether the

remedy sought is legal or equitable in nature.    The only remedy the

retirees seek under section 301 of LMRA is compensatory damages

representing out-of-pocket expenditures incurred as a result of the

decreased health benefits. 4    An action for money damages was "the

traditional form of relief offered in courts of law."       Curtis v.

Loether, 415 U.S. 189, 196, 94 S.Ct. 1005, 1009, 39 L.Ed.2d 260

(1994);     Terry, 494 U.S. at 570, 110 S.Ct. at 1347.       Monetary

relief, however, is only presumed to be a legal remedy.    A monetary

award may be characterized as an equitable remedy if it is found to

be "incidental to or intertwined with injunctive relief."      Terry,

494 U.S. at 571, 110 S.Ct. at 1348.

     KHD Deutz argues that the monetary relief the retirees seek

under section 301 is equitable in nature because the 301 action

involves an ERISA-regulated plan.5     In support of its proposition,

     4
      Retirees concede that the same remedy is sought under both
ERISA and LMRA; however, they argue that for purposes of Seventh
Amendment analysis, the remedy is characterized differently under
LMRA.
     5
      The argument KHD Deutz makes here is similar to an argument
the Supreme Court rejected in Terry. In Terry, the defendant
argued that the monetary damages plaintiffs sought were equitable
because the court characterized back pay awarded under Title VII
KHD Deutz cites Blake v. Unionmutual Stock Life Ins. Co., 906 F.2d

1525 (11th Cir.1990).        In    Blake this court held that monetary

relief sought under section 502 of ERISA was equitable in nature;

therefore, no Seventh Amendment right to a jury trial existed. The

plaintiffs in Blake sought monetary damages under ERISA for medical

expenses incurred and claimed that they were entitled to a jury

trial.    The plaintiffs in Blake argued that the monetary damages

under ERISA was more analogous to a monetary award in a breach of

contract    action    than   injunctive   relief.   The court in         Blake

rejected plaintiffs' argument and held that the monetary relief

sought was equitable.        In reaching its holding the court stated:

      Although the plaintiffs assert that they are claiming money
      damages, in effect they are claiming the benefits they are
      allegedly entitled to under the plan.      Although here the
      medical treatment has been completed so that a money judgment
      would satisfy their demands, if the claimants were still under
      treatment, only an order for continuing benefits would be
      sufficient.

Blake, 906 F.2d at 1526.         Accordingly, the court in Blake affirmed

the district court's decision striking plaintiffs' jury demand.

         In this case, KHD Deutz's reliance on Blake is misplaced.

For   purposes   of    Seventh    Amendment   analysis,   ERISA    has   been

interpreted as an equitable statute. See Chilton v. Savannah Foods

& Industries, Inc., 814 F.2d 620, 623 (11th Cir.1987);            Blake, 906

of the Civil Rights Act of 1964 as equitable. Terry, 494 U.S. at
571, 110 S.Ct. at 1348. After noting that Congress specifically
characterized back pay under Title VII as a form of equitable
relief and finding no such congressional declaration under the
National Labor Relations Act (NLRA), the Court refused to find a
parallel between Title VII back pay—an equitable remedy—and back
pay sought in a section 301 LMRA action. Terry, 494 U.S. at 573,
110 S.Ct. at 1349. Similarly, this court declines to find a
parallel connection between money damages sought under ERISA, an
equitable statute, and monetary damages sought in a cause of
action under section 301 of LMRA that is legal in nature.
F.2d at 1526.    Accordingly, no Seventh Amendment right to a jury

trial exists in actions brought pursuant to ERISA.      Chilton, 814

F.2d at 623.    Unlike ERISA, this court has not interpreted section

301 to be equitable in nature.     United Steelworkers of America v.

Connors Steel Co., 855 F.2d 1499 (11th Cir.1988).     Therefore, the

classification     of   monetary   damages   under   ERISA   is   not

determinative.     Because we find no reason to depart from the

general rule that monetary relief sought pursuant to section 301 of

the LMRA is legal in nature, we conclude that the retirees have a

Seventh Amendment right to a jury trial on their section 301 claim.

B. Right to jury trial under hybrid LMRA/ERISA action

      The central issue in this case is whether the joinder of a

section 301 LMRA claim with ERISA claims deprives the retirees of

their constitutional right to a jury trial.    The Supreme Court has

repeatedly stressed that the Seventh Amendment right to a jury

trial is not abridged when equitable and legal claims are joined in

the same action.    See Ross, 396 U.S. at 537-38, 90 S.Ct. at 737-38

("where equitable and legal claims are joined in the same action,

there is a right to a jury trial on legal claims which must not be

infringed either by trying the legal issues as incidental to the

equitable ones or by a court trial of a common issue existing

between the claims");     Tull, 481 U.S. at 425, 107 S.Ct. at 1839

(same);   Loether, 415 U.S. at 196 n. 11, 94 S.Ct. at 1009 n. 11

(same).

     Although the issue of whether plaintiffs retain their Seventh

Amendment right to a jury trial in a hybrid LMRA/ERISA action is a

matter of first impression in this circuit, other courts have
considered the question and held the right to a jury trial exists

in such cases.   Senn v. United Dominion Industries, Inc., 951 F.2d

806, 813-14 (7th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct.

2992, 125 L.Ed.2d 687 (1993); Local 836, United Automobile Workers

v. Echlin, Inc., 670 F.Supp. 697 (E.D.Mich.1987);       International

Union, United Automobile Workers v. Park-Ohio Industries,         661

F.Supp. 1281 (N.D.Ohio 1987), aff'd in part, rev'd in part on other

grounds, 876 F.2d 894 (6th Cir.1989);     Smith v. ABS Industries,

Inc., 653 F.Supp. 94 (N.D.Ohio 1986).     For example, the Seventh

Circuit in Senn held that plaintiffs were entitled to a jury trial

in a hybrid LMRA/ERISA action.    Senn, 951 F.2d 806.    In Senn the

plaintiffs asserted a claim for breach of contract and sought

compensatory and injunctive relief pursuant to section 301 of the

LMRA and sections 404(a)(1), 502(a)(1)(B), and 502(a)(3) of ERISA.

In that case, the plaintiffs requested a jury trial on their

section 301 claim;   the trial court granted plaintiffs' request,

and the defendant appealed.    The court in     Senn held that the

Seventh Amendment provided plaintiffs with the right to a jury

trial because plaintiffs instituted a legal claim for breach of

contract and sought legal relief in the form of compensatory

damages pursuant to section 301 in addition to their ERISA claims.

Senn, 951 F.2d at 813-14.   Accordingly, the Senn court affirmed the

district court's decision denying defendant's motion to strike jury

demand.

      In an attempt to distinguish Senn from this case, KHD Deutz

argues that the retirees seek extracontractual damages.         This

argument is without merit.      As previously noted, the monetary
relief the retirees seek under section 301 and ERISA is identical.

Moreover, if the retirees sought extracontractual damages under

section 301 of the LMRA in a LMRA/ERISA action, their 301 claim

would    be   barred.   See   Connors,   855   F.2d   1499   (holding   that

extracontractual damages under section 301 of the LMRA is not

recoverable in a hybrid LMRA/ERISA action). 6         In the alternative,

KHD Deutz argues that the comprehensive scheme of ERISA warrants

the denial of the retirees' right to a jury trial on their section

301 claim in this action.      We also reject this argument.        First,

section 514(d) of ERISA explicitly saves federal causes of action

including section 301 of the LMRA.7       29 U.S.C. § 1144(d).     Second,

permitting the retirees to exercise their constitutional right to

a jury trial is "consistent with the spirit of the Federal Rules of

Civil Procedure, which allow liberal joinder of legal and equitable

actions, and the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202

(1982 ed.), which preserves the right to jury trial to both

parties."     Terry, 494 U.S. at 589, 110 S.Ct. at 1357 (Kennedy, J.,

dissenting).     Finally, and more importantly, the Seventh Amendment

     6
      In Connors, plaintiff sought extracontractual compensatory
damages under both section 502 of ERISA and section 301 of LMRA.
After concluding that extracontractual damages were not available
under ERISA, the court in Connors held that extracontractual
damages were also not available under LMRA. Connors, 855 F.2d at
1509. The court reasoned that to allow extracontractual damages
under section 301 would frustrate ERISA. Connors, 855 F.2d at
1509. Because retirees do not seek damages above and beyond
damages provided for under ERISA, Connors does not control the
issue of whether a jury trial is permissible on a section 301
claim in a hybrid LMRA/ERISA action.
     7
      Section 514(d) of ERISA provides: "[n]othing in this
[statute] shall be construed to alter, amend, modify, invalidate,
impair, or supersede any law of the United States ... or any rule
or regulation issued under any such law." 29 U.S.C.A. § 1144(d)
(West 1985).
right to a jury trial should be abridged, if at all, "only under

the most imperative circumstances";        circumstances of which do not

exist in this case.     See Dairy Queen Inc. v. Wood, 369 U.S. 469,

472-73, 82 S.Ct. 894, 897-98, 8 L.Ed.2d 44 (1962) (" "only under

the most imperative circumstances, circumstances which in view of

the   flexible    procedures   of   the   Federal   Rules   we   cannot   now

anticipate, can the right to a jury trial of legal issues be lost

through ... determination of equitable claims.' ") (quoting Beacon

Theatres v. Westover, 359 U.S. 500, 510-11, 79 S.Ct. 948, 956-57,

3 L.Ed.2d 988 (1959)).

      For the reasons set forth above, we join the Seventh Circuit

in holding that plaintiffs are entitled to a jury trial in hybrid

LMRA/ERISA actions.     Accordingly, the district court is reversed,

and the case is remanded to the district court with directions that

it proceed consistent with this opinion.

      REVERSED.