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Merrill v. Pathway Leasing LLC

United States District Court, D. Colorado

May 10, 2018

FRANKLIN MERRILL, et al., Plaintiffs,
v.
PATHWAY LEASING LLC, a Colorado limited liability company, MATTHEW HARRIS, an individual, Defendants.

          ORDER

          Kristen L. Mix United States Magistrate Judge

         This matter is before the Court on Defendants' Motion to Strike Jury Demand [#226][1] (the “Motion”).[2] Plaintiffs filed a Response [#233] in opposition to the Motion, and Defendants filed a Reply [#239]. The Court has reviewed the Motion, Response, Reply, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#226] is GRANTED.

         I. Background

         Plaintiffs have asserted five claims in this case: (1) failure to pay minimum wage in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., (2) recision or voiding of lease agreements, warranties and promissory notes, and restitution, (3) unjust enrichment and restitution, (4) quantum meruit, and (5) unlawful retaliation in violation of the FLSA. Second Am. Compl. [#54] ¶¶ 59-86. Here, Defendants seek to strike Plaintiffs' Jury Demand [#82]. They assert that Plaintiffs are not entitled to a jury trial on any of their claims because (1) Plaintiffs knowingly and voluntarily waived their right to a jury trial, and (2) Plaintiffs' claims for rescission, unjust enrichment, and quantum meruit are purely equitable claims to which no right to a jury attaches. Motion [#226] at 2.

         II. Legal Standard

         The Seventh Amendment guarantees the right to a trial by jury. United States Const. amend. XII. In cases litigated in federal courts, this guarantee is governed by federal law. Telum, Inc. v. E.F. Hutton Credit Corp., 859 F.2d 835, 837 (10th Cir. 1988) (citing Simler v. Conner, 372 U.S. 221, 222 (1963)). As such, the question of whether a party has waived its right to a jury trial is a question of federal law. Tracinda Corp. v. Daimler Chrysler AG, 502 F.3d 212, 222 (3d Cir. 2007); see also Allyn v. W. United Life Assurance Co., 347 F.Supp.2d 1246, 1251 (M.D. Fla. 2004). Jury trial waivers are governed by Fed.R.Civ.P. 38 and 39. Specifically, Rule 39(a) provides, in pertinent part:

When a jury trial has been demanded under Rule 38, the action must be designated on the docket as a jury action. The trial on all issues so demanded must be by jury unless . . . the court, on motion or on its own, finds that on some or all of those issues there is no federal right to a jury trial.

         The Tenth Circuit has found that “[a]greements waiving the right to trial by jury are neither illegal nor contrary to public policy.” Telum, 859 F.2d at 837. To be valid, the waiver must be knowing and intentional. See Id. (citing Leasing Serv. Corp. v. Crane, 804 F.2d 828, 832 (4th Cir. 1986)).

         III. Analysis

         Although the Tenth Circuit Court of Appeals has not enunciated a complete list of factors to be considered in determining whether a contractual jury waiver is knowing and voluntary, courts in this District generally consider the following, non-exclusive factors: (1) the conspicuousness of the waiver; (2) the level of sophistication and experience of the contracting parties; (3) the negotiation of the contract's terms; (4) the relative bargaining power of the parties; and (5) whether counsel represented the waiving party. See Tatonka Capital Corp. v. Connelly, No. 16-cv-01141-MSK-NYW, 2016 WL 9344257, at *12 (D. Colo. Dec. 29, 2016). These factors merely help guide the Court's inquiry, though, because ultimately the question is “whether, in light of all the circumstances, the Court finds the waiver to be unconscionable, contrary to public policy, or simply unfair.” Id. (quoting Tara Woods Ltd. P'ship v. Fannie Mae, No. 09-cv-00832-MSK-MEH, 2010 WL 1529459, at *2 (D. Colo. Apr. 1, 2010). Courts in this District place the burden of proving that a waiver was knowing and voluntary on the party seeking to enforce the waiver. Tatonka Capital Corp., 2016 WL 9344257, at *12.

         Regarding the first factor, i.e., the conspicuousness of the waiver, the relevant Equipment Lease Agreement contains the following provision:

29. WAIVER OF JURY TRIAL. THE LESSOR AND THE LESSEE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST EACH OTHER ON, OR IN RESPECT OF, ANY MATTER ARISING OUT OF, RELATING TO OR PERTAINING TO THIS EQUIPMENT LEASE, THE INTERPRETATION, BREACH, ENFORCEMENT OR SUBJECT MATTER THEREOF, THE RELATIONSHIP BETWEEN THE LESSEE AND THE LESSOR AND/OR ANY CLAIM OF INJURY OR DAMAGE FROM ANY OTHER RELATIONSHIP BETWEEN THE PARTIES HERETO.

[#195-16] at 8 (emphasis in original). The provision is the last numbered paragraph in the agreement and is located on the same page and only shortly above where each Plaintiff signed the agreement. Id. The provision is also one of only two numbered paragraphs in the agreement which is emphasized in all capital letters. Id. The heading of the paragraph is printed in all capital letters and is emphasized in bold. Id. The Court finds this factor weighs heavily in favor of a knowing and voluntary waiver. See, e.g., Moreno v. Qwest Corp., No. 13-cv-00103-RM-MEH, 2013 WL 2444720, at *3-4 (D. Colo. June 5, 2013) (holding that this factor weighed in favor of waiver where the heading of the provision was set forth in bold, capital letters located four paragraphs above the signature line).

         Regarding the second factor, i.e., the level of sophistication and experience of the contracting parties, ths issue is whether the waiving party was “sufficiently sophisticated to understand the meaning” of the jury waiver provision. Post Net Int'l Franchise Corp. v. Amercis Int'l, Inc., No. 06-cv-00125-PSF-BNB, 2006 WL 1775599, at *3 (D. Colo. June 26, 2010). The issue is not whether the waiving party was sufficiently sophisticated to understand the meaning of the entire contract and all of its provisions, but merely whether the waiving party was sufficiently sophisticated to understand the jury waiver provision itself. See Telum, 859 F.2d at 837-38 (holding that allegations relating to invalidation of a contract as a whole are insufficient to invalidate a jury waiver without providing allegations specific to the jury waiver). Further, “[i]t is a fundamental principle of law that, absent fraud or concealment, a person who signs a document is presumed to have knowledge of the document's contents, independent of whether that person has read the document.” Breaux v. Am. Family Mut. Ins. Co., 387 F.Supp.2d 1154, 1162 (D. Colo. 2005). Given this bedrock principle and in the absence of any evidence that Plaintiffs were not “sufficiently ...


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