United States District Court, D. Colorado
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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