In the balance: The right to jury trial on Chapter 93A claims in federal court

Issue November/December 2017 By Matthew J. Ginsburg
Complex Commercial Litigation Section Review

The American jury trial — a cornerstone of our system of civil and criminal justice — and an essential part of the bedrock of our democracy. Our high courts routinely extol its virtues as “the ‘sacred’ method for resolving factual disputes,” the “most important means by which laypersons can participate in and understand the legal system,” and as bringing “the rules of law to the touchstone of contemporary common sense.” Dalis v. Buyer Advertising, Inc., 418 Mass. 220, 222, 636 N.E.2d 212, 214 (1994).          

On a more concrete or “micro” level, however, a jury trial can be a blessing or curse. Depending on the nature of the claims, who or what your client is, and what sort of witnesses you are stuck with, trying to a jury can be a treat you anticipate with relish, or a looming nightmare you attempt to avoid at all costs.

Chapter 93A claims emphasize this stark duality, as the prospect of double to treble damages, automatic attorneys’ fee award, and amorphous legal elements, ratchet up the boom or bust of a jury trial.

Where Chapter 93A Massachusetts juries come from

Since the Supreme Judicial Court decided Nei v. Burley, 388 Mass. 307, 315, 446 N.E.2d 674 (1983), there has been no right to a jury trial in Chapter 93A cases in Massachusetts state courts. In Nei, decided in 1983, the SJC emphasized Chapter 93A’s sui generis character, finding that it “created new substantive rights in which conduct heretofore unlawful under common and statutory law is now unlawful.” Id. These “new substantive rights” failed to trigger the jury trial right because they swept 93A liability within the narrow exception drawn in Massachusetts’ jury trial grant in Article XV of the Massachusetts Constitution’s Declaration of Rights.

Article XV provides that “[i]n all controversies concerning property, and in all suits between two or more persons . . . the parties have a right to a trial by jury . . . except in cases in which it has heretofore been otherways used and practiced.” See id.; art. XV, Massachusetts Declaration of Rights. The exception is interpreted to apply to those cases in which a court of equity in either England or Massachusetts would have exercised jurisdiction in 1780. See Dalis, 418 Mass. at 222, 636 N.E.2d at 214.

The rule set down by Nei has largely remained intact in the intervening 34 years — with respect to the Constitutional right to a jury trial. But, as Judge William G. Young of the U.S. District Court has pointed out, Nei’s practical effect is more debatable because the SJC recognized the presiding judge’s right — under Mass. R. Civ. P. 39(c) — to refer 93A claims to a jury as a “matter of discretion, although not of constitutional right . . .” See In re Acushnet River & New Bedford Harbor Proceedings re Alleged PCB Pollution, 712 F. Supp. 994, 1010 (D. Mass. 1989) (Young, D.J.), citing Travis v. McDonald, 397 Mass. 230, 233-34, 490 N.E.2d 1169 (1986), et al.

The federal courts look to U.S. Constitution

In the federal courts, the Seventh Amendment of the U.S. Constitution decides the right to a jury, even where the claim at issue arises under a state’s substantive law.

Still, since Nei, the courts of the First Circuit have largely followed Nei in confining Chapter 93A jury trials to “advisory” status. The Wallace case is the standard-bearer here. See Wallace Motor Sales, Inc. v. American Motors Sales Corp., 780 F.2d 1049, 1063-1067 (1st Cir. 1985), In Wallace, the First Circuit held that “the reasoning employed by the [SJC] in Nei is determinative of the seventh amendment issue,” and that Chapter 93A claims are not “‘suits at common law,’ entitled to a jury trial under the seventh amendment.” As in the state courts, federal court judges could refer a 93A claim to a jury, but could then choose whether to accept its verdict, make contradictory findings, and/or render an ultimate decision without any regard to the jury’s role.

There were two problems with the First Circuit’s reliance on Nei and denial of a 93A jury right:

First — it ran counter to the Circuit’s pre-Nei view of the issue. When Chapter 93A was first enacted, it referred to claims brought “in equity,” but this language was struck in 1978. This led to the pre-Nei view in the First Circuit (as well as in the Massachusetts Superior Courts) that chapter 93A statutorily required a trial by jury. See Mass. Eye & Ear Infirm. v. QLT, Inc., 495 F. Supp. 2d 188, 193-194 (2007) (Young, J.), citing Capp Homes v. Duarte, 617 F.2d 900, 902 n. 2 (1st Cir. 1980).

Second — in Wallace, the parties had stipulated that there was no right to a jury trial on the 93A claims, and thus, as of 2007, “the First Circuit ha[d] never squarely decided the question.” See Mass. Eye and Ear, 495 F.Supp.2d at 194.

Cut to 2014, a year in which two different panels of the First Circuit went opposite directions on the issue. In Frappier v. Countrywide Home Loans, Inc., 750 F.3d 91, 97-98 (1st Cir. 2014), the court reasoned that “chapter 93A allows a litigant to seek both legal and equitable relief . . . [and] [i]n light of the importance of the nature of the remedy under federal law, a litigant seeking legal relief in federal court under chapter 93A may be entitled to a jury.” “Regardless of any contrary language in Wallace,” the court concluded, “the question remains an open one in this circuit.” Almost simultaneously, across the hall, a second panel found the question to be decidedly shut: In Baker v. Goldman Sachs & Co., 771 F.3d 37, 59 n.5 (1st Cir. 2014), the court proclaimed that “[t]here is no right to a trial by jury for claims brought under ch. 93A.”

So confusion reigned, until June of 2017, when the First Circuit provided at least partial clarity in deciding an appeal of Full Spectrum Software, Inc. v. Forte Automation Systems, Inc., Case No. 1:12-CV-40098-TSH, a case in which the jury trial issue appeared to be squarely teed up. The District Court had referred a chapter 93A claim to the jury for a full and binding determination over the defendant’s objection, and the defendant directly challenged this on appeal.

In a limited ruling, the First Circuit held that a 93A plaintiff has the right to a jury trial in Federal Court, where (i) its claim includes some aspect of “deception” that renders it analogous to a common law fraud or deceit action, (ii) a legal, as opposed to equitable remedy is sought, and (iii) the claim is not of a type that Congress has decided should be decided by non-Article III courts (such as within a bankruptcy matter). Full Spectrum Software, Inc. v. Forte Automation Sys., Inc., 858 F.3d 666, 675-677 (1st Cir. 2017). Significant to the decision was that the defendant failed to fully argue that “an undifferentiated chapter 93A claim is analogous to a claim that would have been tried in a court of equity in late 18th–century England and not to one that would have been tried in a court of law. . .” Id. at 858 F.3d at 677.

Less than a full resolution of the issue, but clearly a boost for those in favor of a jury trial right for Chapter 93A claims in Federal Court — and a bit of instruction for those who are not.  

This article previously appeared in the Summer 2017 edition of the ComCom Quarterly, the newsletter of the Complex Commercial Litigation Section.

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