Abbarno v. Carborundum Co.

• Decision Date: 22 March 1988
• Docket Number: No. Civ-86-666E.,Civ-86-666E.
• Citation: 682 F. Supp. 179
• Parties: Paul ABBARNO, et al., Plaintiffs, v. The CARBORUNDUM COMPANY, Kennecott Corporation, The Standard Oil Company (an Ohio Corporation) a/k/a Sohio, Sohio Industrial Products Company, a/k/a Sipco, and Sohio Chemicals and Industrial Products Company, a/k/a Scipco, Defendants.
• Court: U.S. District Court — Western District of New York

682 F. Supp. 179

Paul ABBARNO, et al., Plaintiffs, v. The CARBORUNDUM COMPANY, Kennecott Corporation, The Standard Oil Company (an Ohio Corporation) a/k/a Sohio, Sohio Industrial Products Company, a/k/a Sipco, and Sohio Chemicals and Industrial Products Company, a/k/a Scipco, Defendants.

No. Civ-86-666E.

United States District Court, W.D. New York.

March 22, 1988.

Richard T. Sullivan, Buffalo, N.Y., for plaintiffs.

David K. Floyd, Buffalo, N.Y., for defendants.

MEMORANDUM AND ORDER

ELFVIN, District Judge.

The plaintiffs seek to recover severance pay allegedly due them under a written "Severance Plan" maintained by the defendants and have demanded a jury trial. The defendants contend that this demand should be stricken pursuant to Fed.R.Civ.P. rule 12(f) as "immaterial or impertinent" because the plaintiffs' claims are equitable in nature and therefore not appropriate for trial by jury.

The plaintiffs' claims arise under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., which neither explicitly grants nor explicitly denies the right to a jury trial. The parties generally agree that, absent specific statutory entitlement, the propriety of the plaintiffs' request depends upon the nature of the claims in dispute. The plaintiffs' request for a jury trial would be inappropriate if the claims are equitable, but appropriate if their nature is legal.

Two decisions within the Second Circuit show that jury trials have been permitted in ERISA actions. The first, Haeberle v. Board of Trustees of Buffalo Carpenters, 624 F.2d 1132, 1136 (2d Cir.1980), implicitly approved the use of juries in such actions when it expressed "reservation about the practice of taking a case away from a jury, rather than setting aside an incorrect verdict." In Paladino v. Taxicab Industry Pension Fund, 588 F.Supp. 37 (S.D.N.Y. 1984), it was concluded that the plaintiff was entitled to a jury trial as a matter of right.

The most recent decision by the United States Court of Appeals for the Second Circuit on this issue, Katsaros v. Cody ("Katsaros"), 744 F.2d 270, cert. denied sub nom., Cody v. Donovan, 469 U.S. 1072, 105 S.Ct. 565, 83 L.Ed.2d 506 (1984), has been relied upon by both parties. The defendants contend that it establishes a per se rule that jury trials are always inappropriate in ERISA actions because all such actions are equitable in nature. The plaintiffs, while they recognize that the case weakens the precedential value of Haeberle v. Board of Trustees of Buffalo Carpenters and of Paladino v. Taxicab Industry Pension Fund, both supra, contend that, rather than establishing a per se rule, it stands for the proposition that the appropriateness of a request for a jury trial in an ERISA action depends upon the nature of the particular claims involved.

The plaintiffs in Katsaros were denied their request for a jury trial. The Court declined to follow the district court's decision in Pollock v. Castrovinci, 476 F.Supp. 606 (S.D.N.Y.1979), aff'd, 622 F.2d 575 (2d Cir.1980), in which it had been found that, once a court had decided the equitable question whether a provision in the pension plan should be excised, the question of entitlement to additional monies was a legal question that should be decided by a jury. While noting that no jury trial had ultimately been held (because the controversy had been mooted by the trial court's resolution of the threshold equitable issue), the appellate court stated that it viewed all of the claims in Pollock v. Castrovinci to have been essentially equitable in nature and implied that, accordingly, a jury trial would not have been required in that case. Katsaros at 278-279. The instant defendants read this to mean that all ERISA actions are essentially equitable and that the United States Court of Appeals for the Second Circuit has expressly disapproved of jury trials for such actions. Katsaros, however, did not state that the claims therein involved and the claims in Pollock v. Castrovinci, supra, were equitable simply because they were ERISA claims. In light of the language which prefaced such decision—viz.,

"nor were appellants entitled to a jury trial of the claims against them since the plaintiffs seek equitable relief in the form of removal and restitution as distinguished from damages for wrongdoing or non-payment of benefits. There is no right to a jury trial of ERISA actions against pension fund trustees seeking the equitable remedy of restitution," (emphasis added)—,

it seems more appropriate to read Katsaros as establishing a rule that ERISA actions can be tried to a jury provided the particular ERISA claim at hand is legal in nature—e.g., a claim for non-payment of benefits.

The defendants bolster their claimed proper reading of Katsaros by referring to decisions of other United States Courts of Appeal which contain language that more certainly establishes a per se rule. Wardle v. Central States, Etc., 627 F.2d 820 (7th Cir.1980), cert. denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981), precluded the use of jury trials in all ERISA actions. Such conclusion was bottomed on the consideration that ERISA actions are controlled primarily by the law of trusts which is predominantly equitable in nature and by the reasoning that, because the federal courts have interpreted the standard for their review of decisions by plan administrators as whether such were "arbitrary and capricious", this "bespeaks a legislative scheme granting initial discretionary decisionmaking to bodies other than the federal courts, with which federal jury trials have proved incompatible." Id. at 830.

The United States Court of Appeals for the Third Circuit, in Turner v. CF & I Steel Corp., 770 F.2d 43 (1985), expressly adopted the defendants' reading of Katsaros and the reasoning of Wardle v. Central States, Etc. in its decision not to allow a jury trial in an ERISA action. The statement in Turner v. CF & I Steel Corp. that the Court of Appeals for the Second Circuit has held that jury trials are not available under subsection 502(a)(1)(B) cannot be supported. Nowhere in Ka...