Ridlon v. N.H. Bureau of Sec. Regulation

• Decision Date: 24 July 2019
• Docket Number: No. 2018-0035,2018-0035
• Citation: 172 N.H. 417,214 A.3d 1196
• Parties: Curtis S. RIDLON v. NEW HAMPSHIRE BUREAU OF SECURITIES REGULATION
• Court: New Hampshire Supreme Court

172 N.H. 417

214 A.3d 1196

Curtis S. RIDLON

v.NEW HAMPSHIRE BUREAU OF SECURITIES REGULATION

No. 2018-0035

Supreme Court of New Hampshire.

Argued: October 24, 2018

Opinion Issued: July 24, 2019

Preti Flaherty, PLLP, of Concord (Brian M. Quirk and Nathan R. Fennessy, Concord, on the brief, and Mr. Quirk orally), for the plaintiff.

Gordon J. MacDonald, attorney general (K. Allen Brooks, senior assistant attorney general, and Scott E. Sakowski, assistant attorney general, on the brief, and Mr. Brooks orally), for the defendant.

LYNN, C.J.

In this appeal we are asked to determine whether Part I, Article 20 of the New Hampshire Constitution guarantees that a party subject to an administrative enforcement action undertaken by the defendant, the New Hampshire Bureau of Securities Regulation (Bureau), be afforded a jury trial. The Superior Court (McNamara, J.) answered the question in the affirmative. We disagree and therefore reverse.

The following relevant facts are derived from the record. The plaintiff, Curtis S. Ridlon, was formerly employed as an investment adviser. In April 2017, the Bureau brought an administrative enforcement action against Ridlon, alleging that he charged clients approximately $2.8 million in improper fees. The relief sought by the Bureau included civil penalties of up to $3,235,000, restitution in the amount of $1,343,427.20, and disgorgement of up to $1,513,711.09. See RSA 421-B:6-604(d) - (e) (2015) (amended 2018).¹ By agreement of the parties, Ridlon filed a declaratory judgment petition in the trial court asserting that he was constitutionally entitled to a jury trial and seeking to enjoin the administrative proceedings from continuing. In response, the Bureau filed a motion to dismiss. The trial court denied the Bureau's motion, ruling that Part I, Article 20 of the State Constitution affords Ridlon the right to a jury trial, and enjoining any further administrative proceedings by the Bureau. This appeal followed.

Ridlon argues that the trial court correctly ruled that he has a constitutional right to a jury trial because the Bureau seeks penalties in excess of $6 million and, in the alternative, because the action against him "amounts to an action for common law fraud." Because we are the final arbiter of the meaning of both statutes, Appeal of Laconia Patrolman Assoc., 164 N.H. 552, 555, 62 A.3d 787 (2013), and the State Constitution, Petition of Below, 151 N.H. 135, 139, 855 A.2d 459 (2004), we review the trial court's decision de novo, Linehan v. Rockingham County Comm'rs, 151 N.H. 276, 278, 855 A.2d 1271 (2004).

Part I, Article 20 of the New Hampshire Constitution governs jury trials in civil cases. It provides:

In all controversies concerning property, and in all suits between two or more persons except those in which another practice is and has been customary and except those in which the value in controversy does not exceed $1,500 and no title to real estate is involved, the parties have a right to a trial by jury. This method of procedure shall be held sacred, unless, in cases arising on the high seas and in cases relating to mariners' wages, the legislature shall think it necessary hereafter to alter it.

N.H. CONST. pt. I, art. 20. Although "[i]t is beyond dispute that the right to a jury trial is a fundamental one under our State Constitution in both the civil and the criminal contexts," State v. Morrill, 123 N.H. 707, 711, 465 A.2d 882 (1983), it is equally irrefutable that in civil cases the right is considerably more limited than it is in criminal cases, State v. Bilc, 158 N.H. 651, 653, 972 A.2d 1029 (2009). Specifically, in civil cases the right "extends only to those cases for which the jury trial right existed when the constitution was adopted in 1784." Morrill, 123 N.H. at 712, 465 A.2d 882. As we have explained, " Part I, Article 20 did not create or establish a right to a jury trial not before existing." Hair Excitement v. L'Oreal U.S.A., 158 N.H. 363, 368, 965 A.2d 1032 (2009) (quotation and brackets omitted). Rather, "[i]t was a recognition of an existing right, guaranteeing it as it then stood and was practiced, guarding it against repeal, infringement, or undue trammel by legislative action, but not extending it so as to include what had not before been within its benefits." Id. (quotation omitted).

"To resolve whether a party has a right to trial by jury in a particular action, we generally look to both the nature of the case and the relief sought, and ascertain whether the customary practice included a trial by jury before 1784." Id. (quotation omitted). "Partly as a result of this test, and at times independently thereof, it has been decided that a guaranty of trial by jury cannot be invoked in special, statutory or summary proceedings unknown to the common law." Hallahan v. Riley, 94 N.H. 338, 339-40, 53 A.2d 431 (1947) ; accord In re Sandra H., 150 N.H. 634, 636, 846 A.2d 513 (2004).

Relying on state and federal case law, the trial court concluded that the Bureau "cannot seek a fine of $2,500 for a violation of RSA 421-B without a jury determination of liability." At the outset of our analysis, we observe that, to the extent the trial court relied on federal precedent interpreting the Seventh Amendment to the United States Constitution, such reliance was misplaced. The jury trial guaranty enshrined in the Seventh Amendment is not among the federal rights that have been held to be encompassed within the Fourteenth Amendment's due process clause and thus binding in state court actions. See Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 432, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) (recognizing that the Seventh Amendment "governs proceedings in federal court, but not in state court"); Opinion of the Justices, 121 N.H. 480, 482-83, 431 A.2d 135 (1981) (noting that "the Seventh Amendment is one of the few remaining provisions in the Bill of Rights which has not been held to be applicable to the states through the Fourteenth Amendment" (quotation omitted)); see also 47 Am. Jur. 2d Jury § 5, at 630 (2006). More importantly, as the Bureau points out, the analysis we use in determining whether the jury trial right conferred by Part I, Article 20 applies in a given case differs from that employed by federal courts in making similar determinations under the Seventh Amendment. Compare, e.g., Tull v. United States, 481 U.S. 412, 420-21, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987) (cautioning that the Seventh Amendment may require "trial by jury in actions unheard of at common law," and noting that "characterizing the relief sought is more important than finding a precisely analogous common-law cause of action in determining whether the Seventh Amendment guarantees a jury trial" (quotation and brackets omitted)), with Franklin Lodge of Elks v. Marcoux, 149 N.H. 581, 592, 825 A.2d 480 (2003) (explaining that focusing solely upon the nature of damages "fails to address whether ... the right remedied in this case ... was recognized at common law in 1784 and customarily resolved by jury trial," and "makes no effort to appraise the seemingly comprehensive nature of the" statutory scheme). In light of this divergence, and because neither party has asked us to eschew our traditional methodology in favor of the federal approach, we decline to give controlling weight to Seventh Amendment jurisprudence when determining whether Part I, Article 20 affords a state court litigant the right to a jury trial.

Moreover, the cases cited by the trial court, and relied upon by Ridlon on appeal for the proposition that claims involving statutory penalties above the constitutional limit obligate a trial by jury, do not address the applicability of the jury trial right under the State Constitution to what we have described as "purely statutory" causes of action. See Pomponio v. State, 106 N.H. 273, 274, 209 A.2d 733 (1965). When assessing the right to a jury trial in such circumstances, we have explained that we must "consider the comprehensive nature of the statutory framework to determine whether the jury trial right extends to the action." Hair Excitement, 158 N.H. at 368, 965 A.2d 1032 (quotation omitted). State securities laws, commonly referred to as "Blue Sky Laws," are designed to prevent fraud and protect the public. 79A C.J.S. Securities Regulation § 482, at 534-36 (2009). They seek to create "a balanced regulatory scheme to cope with the problems of modern securities markets" in a given state. Id. at 534. "The first legislative attempts to regulate securities transactions were effected on the state level, with the first general securities law being said to have been enacted by the State of Kansas in 1911, and with 48 jurisdictions having enacted such statutes by 1933." Brenner v. Oppenheimer & Co. Inc., 273 Kan. 525, 44 P.3d 364, 371 (2002) (quotation omitted). New Hampshire enacted its first blue sky law in 1917. See Laws 1917, ch. 202. In its original form, the statute made violations of its terms "punishable upon conviction ... by a fine of not more than two thousand dollars, or by imprisonment for not more than six months, or by both such fine and imprisonment," and also provided that "such false or misleading statements or information so furnished shall be evidence in court ... in a suit to recover damages on account of loss sustained ...." Laws 1917, ch. 202, at 762-63. The statute was amended in 1981 to include a provision that gave the attorney general the authority to seek "civil penalties for violations of" the statute. See Laws 1981, ch. 214, at 214. The amendments further granted the commissioner of insurance the authority to impose an administrative fine of not more than $2,500 for knowing violations of "any rule or order" issued by the commissioner. Laws 1981, ch. 214, at 216.² In 2015, amendments to the statute as a whole created the current statutory scheme. See Laws 2015, 273:1.

In its current form, the Uniform Securities Act is comprised of 55 sections contained in...