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Woodward, Inc. v. ZHRO Solutions, LLC

United States District Court, D. Colorado

March 31, 2019

WOODWARD, INC., a Delaware corporation, Plaintiff,
v.
ZHRO SOLUTIONS, LLC, a Nevada limited liability company, ADVANCED GREEN INNOVATIONS, LLC, a Nevada limited liability company, and KENNETH LOSCH, Defendants.

          ORDER

          PHILIP A. BRIMMER CHIEF UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff Woodward, Inc.'s Motion to Strike Defendants ZHRO Solutions, LLC and Advanced Green Innovations, LLC's Jury Demand [Docket No. 30].[1] This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332.

         I. BACKGROUND

         This is a breach of contract action based on a Joint Development Agreement (“JDA”) entered into by plaintiff Woodward, Inc. (“plaintiff”) and defendant ZHRO Solutions, LLC (“ZHRO”) in December 2015. See Docket No. 60 at 7-8, 14-15, ¶¶ 33, 73-78; Docket No. 67 at 4, ¶ 33; Docket No. 30-1 (JDA).[2] The operative complaint asserts claims for breach of contract and declaratory relief against ZHRO, AGI, and Kenneth Losch. Docket No. 60 at 14-16.[3]

         On August 3, 2018, ZHRO and AGI (hereinafter “defendants”) filed their answer to plaintiff's second amended complaint, along with counterclaims for breach of contract, breach of the duty of good faith and fair dealing, and declaratory judgment. Docket No. 28 at 8-10, ¶¶ 14-32. ZHRO and AGI requested “that all issues triable to a jury be so tried.” Id. at 10. On August 24, 2018, plaintiff moved to strike defendants' jury demand. Docket No. 30.[4]

         II. ANALYSIS

         The Seventh Amendment to the U.S. Constitution guarantees the right to a trial by jury. U.S. Const. amend. VII. In cases litigated in federal courts, both the right to a jury trial and the question of whether a party has waived that right are governed by federal law. See Telum, Inc. v. E.F. Hutton Credit Corp., 859 F.2d 835, 837 (10th Cir. 1988); Merrill v. Pathway Leasing LLC, No. 16-cv-02242-KLM, 2018 WL 2183985, at *1 (D. Colo. May 10, 2018) (citing Tracinda Corp. v. Daimler Chrysler AG, 502 F.3d 212, 222 (3d Cir. 2007)). Federal Rule of Civil Procedure 39(a) provides:

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.

Fed. R. Civ. P. 39(a). “Agreements waiving the right to trial by jury are neither illegal nor contrary to public policy.” Telum, Inc., 859 F.2d at 837. However, a jury trial waiver is valid only if it is knowing and intentional. See Merrill, 2018 WL 2183985, at *1; see also Bevill Co., Inc. v. Sprint/United Mgmt. Co., 304 Fed.Appx. 674, 682 (10th Cir. 2008) (unpublished).

         Plaintiff argues that defendants waived their right to a jury trial by entering into the JDA. Docket No. 30 at 1-3. Section 15.7 of the JDA, entitled “Governing Law and Forum; Waiver of Jury, ” provides that “[e]ach Party irrevocably waives, to the fullest extent allowed by applicable law, the defense of an inconvenient forum in any such action or proceeding and any right it may have to a trial by jury.” Docket No. 30-1 at 22. In support of their jury demand, defendants argue that (1) they did not knowingly and voluntarily waive their right to a jury trial; (2) the jury waiver cannot be enforced against AGI, a non-signatory to the JDA; and (3) plaintiff's alter ego claim is triable to a jury. Docket No. 45.

         A. Whether the Jury Waiver Was Knowing and Voluntary

         In determining whether a jury trial waiver was knowing and voluntary, courts consider several factors, including:

(1) the conspicuousness of the provision in the contract; (2) the level of sophistication and experience of the parties entering into the contract; (3) the opportunity to negotiate terms of the contract; (4) the relative bargaining power of each party; and (5) whether the waiving party was represented by counsel.

PostNet Int'l Franchise Corp. v. Amercis Int'l, Inc., No. 06-cv-00125-PSF-BNB, 2006 WL 1775599, at *1 (D. Colo. June 26, 2006) (quoting Allyn v. W. United Assurance Co., 347 F.Supp.2d 1246, 1252 (M.D. Fla. 2004)). The ultimate question is “not whether any particular number of factors have been satisfied, but whether, in light of all the circumstances, the Court finds the waiver to be unconscionable, contrary to public policy, or simply unfair.” Allyn, 347 F.Supp.2d at 1252. The burden is on the party seeking to enforce the waiver to show that it was knowing and voluntary. Merrill, 2018 WL 2183985, at *1.

         1. Conspicuousness of the Jury Waiver

         The Court finds that the first PostNet factor, conspicuousness, supports a finding that the waiver was knowing and voluntary. Although the jury waiver provision is located on page 21 of the 37-page JDA, Mr. Losch initialed that page, the jury waiver provision is written in the same typeface as the rest of the agreement, and the provision is offset by the bolded heading “Governing Law and Forum; Waiver of Jury.” See Docket No. 30-1 at 22. Additionally, a nearly identical jury waiver provision was included in the parties' Collaboration Agreement, which was executed more than a year before the JDA. Docket No. 30-3 at 20, 22.[5] Courts have found jury waiver provisions to be enforceable based on similar facts. See, e.g., Hines v. 1025 Fifth Ave., Inc., 2015 WL 765943, at *3 (S.D.N.Y. Feb. 23, 2015) (finding jury waiver enforceable where it “was printed in the same font and typeface as every other provision in the Lease, and included the boldface heading ‘Waiver by Trial of Jury'”); Moreno v. Qwest Corp., No. 13-cv-00103-RM-MEH, 2013 WL 2444720, at *3 (D. Colo. June 5, 2013) (holding that a jury waiver located four paragraphs above the signature line with a heading set forth in bold, capital letters was “sufficiently conspicuous”); Lehman Bros. Holdings Inc. v. Bethany Holdings Grp., LLC, 801 F.Supp.2d 224, 232 (S.D.N.Y. 2011) (finding jury waivers “sufficiently conspicuous” where they appeared “in the same font and size as all the other provisions in the contract” and the parties had used identical jury waiver provisions in previous business dealings); Too Tall Inc. v. Sara Lee Bakery Grp., Inc., 2009 WL 10665806, at *2-3 (D.N.M. Sept. 9, 2009) (finding that jury waiver located on the twenty-second page of a twenty-six-page agreement in capital letters “easily satisf[ied] the conspicuousness requirement”); PostNet, 2006 WL 1775599, at *2 (holding that jury waiver clause contained on the next to last page of a 34-page franchise agreement and in the same typeface as the rest of the agreement was enforceable); cf. Tara Woods Ltd. P'ship v. Fannie Mae, No. 09-cv-00832-MSK-MEH, 2010 WL 1529459, at *2 (D. Colo. Apr. 1, 2010) (noting that placement of jury waiver provision on the pages immediately preceding the signature page “demonstrat[ed] that [the plaintiff] likely saw and read the provision before [signing] the documents”).

         2. ...


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