KHVPF Insight
No Jury For You! Court Holds That Dodd-Frank Whistleblower Claims Are Not Subject to Seventh Amendment
Most employment plaintiffs prefer a jury. Many employers do not. Jury trials are often perceived as more favorable to employees, and more expensive and time-consuming for companies. But under the Seventh Amendment, not every claim is entitled to a jury trial. Only cases that would have been heard by a jury historically are subject to a jury trial right today. Claims that would have been heard in a court of equity are for a judge to decide. A recent district court decision, Edwards v. First Trust Portfolios L.P., has held that a Dodd-Frank whistleblower claim falls on the “equitable” side of the line, meaning no jury.
The Seventh Amendment: Legal vs. Equitable Divide. The Seventh Amendment is short and succinct: “In Suits at common law… the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.” Historically, suits “at common law” were heard by a jury, whereas a court of equity would decide other claims. Whether the Seventh Amendment applies, then, hinges on whether the claim is “legal” or “equitable” in nature.
“Legal” cases seek to punish or deter misconduct, typically through monetary damages. “Equitable” cases seek to restore the status quo, through remedies like reinstatement, injunctions, or back pay. The remedy is thus critical. Under Title VII, for instance, courts consistently hold that claims for job reinstatement and back pay simply restore the status quo and do not entitle plaintiffs to a jury trial. But Title VII claims for compensatory and punitive damages seek to deter and punish employers’ behavior, entitling a plaintiff to a trial by jury.
The Case: Edwards v. First Trust Portfolios L.P. The Edwards case involved a relatively new cause of action: whistleblower claims under the Dodd-Frank Act. Aaron Edwards, a former employee of First Trust, alleged that he was fired for complaining that an employee gift program violated securities laws. He brought a Dodd-Frank claim, which authorizes remedies like reinstatement, double back pay with interest, and attorneys’ fees.
At issue was whether Edwards was entitled to a jury trial. Edwards claimed that since the statute provided for double back pay, it sought to do more than restore the status quo but instead was designed to punish and deter misconduct—and was thus a “legal” case entitling him to a jury trial. First Trust argued that a mere automatic doubling of back pay is a mathematical calculation and does not reflect the discretion generally associated with a jury’s award of monetary damages, and thus remained equitable. The district court agreed with First Trust, and ordered that the case would be heard without a jury.
Of course, Edwards is only a single district-court case and is not binding anywhere else, let alone in Michigan. Still, it is instructive. Employers should carefully assess the nature of the claims being brought in an employment suit and—if appropriate—argue that the claims are “equitable” and not legal, thus requiring a bench trial.