Sacerdote v. New York University

Background

The plaintiffs—New York University professors and participants in NYU’s retirement plans—claimed that New York University, its Retirement Plan Committee, Margaret Meagher, and Nancy Sanchez breached fiduciary duties under the Employee Retirement Income Security Act (ERISA). The alleged breaches involved excessive administrative fees, an inefficient structure using multiple recordkeepers, expensive retail mutual-fund share classes, and investment options whose performance did not justify their fees.

The case began in 2016. In 2017, Judge Katherine B. Forrest dismissed some claims and allowed others to proceed. She also granted an earlier motion to strike the plaintiffs’ jury demand after the plaintiffs failed to oppose it. Judge Forrest later held an eight-day bench trial and ruled for NYU on the remaining claims. The Second Circuit later affirmed the judgment in part, vacated it in part, and remanded the case. It also upheld the ruling that the plaintiffs had waived their jury right.

After remand, the plaintiffs amended their complaint. The amended complaint added the Retirement Plan Committee, Margaret Meagher, and Nancy Sanchez as defendants; reasserted a claim concerning retail mutual-fund share classes; and included a claim alleging failure to monitor. It also demanded a jury trial. The defendants moved to strike that demand.

Court’s Analysis

Federal Rule of Civil Procedure 38 generally requires a timely written jury demand. A party may waive that right through its conduct, including by failing to object to and participating in nonjury proceedings. A previously waived jury right may be revived by an amended pleading only if the amendment changes the issues to be tried. A new legal theory, additional details, or added parties generally does not create a new issue when the underlying factual dispute remains the same.

The plaintiffs did not argue that the claims seeking removal of Meagher and Sanchez as plan fiduciaries were jury-triable because those claims sought equitable relief. They argued instead that the retail-share-class claim was a new issue because it had been dismissed before they waived their jury right.

The court rejected that argument. It concluded that the retail-share-class claim was part of the same general dispute presented in the earlier complaint: whether the defendants imprudently included expensive investment options whose returns did not justify their fees. Reasserting that claim did not change the character of the case or add new factual issues. The addition of three defendants also did not revive the previously waived jury right.

The court separately declined to use Federal Rule of Civil Procedure 39 to order a jury trial despite the waiver. The plaintiffs identified inadvertence as the reason for the waiver. The court found that the case was not clearly one traditionally tried by a jury because courts disagreed about whether ERISA claims of this type carry a constitutional jury right; the parties had previously proceeded on the understanding that the case would be tried to a judge; and NYU had relied on the waiver for approximately six and a half years, including through a prior bench trial. Ordering a jury trial at that stage would prejudice NYU.

Disposition

Judge Analisa Torres granted the defendants’ motion to strike the plaintiffs’ jury demand and directed the Clerk of Court to terminate the motion at ECF No. 481. The order addressed the method of trial, not the underlying ERISA claims.