Stewart v. KHD Deutz of America Corp.

• Decision Date: 28 February 1996
• Docket Number: No. 94-8547,94-8547
• Citation: 75 F.3d 1522
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: 151 L.R.R.M. (BNA) 2609, 64 USLW 2574, 131 Lab.Cas. P 11,515, 19 Employee Benefits Cas. 2697, Pens. Plan Guide P 23918P 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.

Page 1522

75 F.3d 1522

151 L.R.R.M. (BNA) 2609, 64 USLW 2574,

131 Lab.Cas. P 11,515,

19 Employee Benefits Cas. 2697,

Pens. Plan Guide P 23918P

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.

No. 94-8547.

United States Court of Appeals Eleventh Circuit.

Feb. 28, 1996.

Janae L. Schaeefer, Jolley, Walsh & Hager, Kansas City, MO, Norman J. Slawsky, Jacobs & Slawsky, Atlanta, GA, Jeremiah A. Collins, Roger L. Pollak, Andrew D. Roth, Bredhoff & Kaiser, Washington, DC, for appellants.

Howard Shapiro, Steven R. Cupp, McCalla, Thompson, Pyburn & Ridley, New Orleans, LA, for appellee.

Appeal from the United States District Court for the Northern District of Georgia.

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 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.

                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
                

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 LMRA, 29 U.S.C. § 185(a), and sections 404(a), 502(a)(1)(B), and 502(a)(3) of 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

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 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

joined with ERISA claims that do not ordinarily afford the right to a jury trial.

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 (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...