Branta, LLC et al v. Newfield Production Company

Filing 321

ORDER granting 266 Motion to Strike Jury Demand and Memorandum Brief in Support Thereof, by Magistrate Judge Kristen L. Mix on 4/24/2017. (jgonz, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 15-cv-00416-WYD-KLM
BRANTA, LLC, a Delaware limited liability company,
BRANTA EXPLORATION & PRODUCTION COMPANY, LLC, a Delaware limited liability
company,
HARVEST (US) HOLDINGS, INC., a Delaware corporation, and
HARVEST NATURAL RESOURCES, INC., a Delaware corporation,
Plaintiffs,
v.
NEWFIELD PRODUCTION COMPANY, a Texas corporation,
Defendant.
______________________________________________________________________
ORDER
_______________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Defendant’s Motion to Strike Jury Demand and
Memorandum Brief in Support Thereof [#266]1 (the “Motion”). Plaintiffs filed a Response
[#279] in opposition to the Motion, and Defendant filed a Reply [#293]. The Court has
reviewed the pleadings, the entire case file, and the applicable law, and is sufficiently
advised in the premises. For the reasons set forth below, the Motion [#266] is GRANTED.2

1

“[#266]” is an example of the convention the Court uses to identify the docket number
assigned to a specific paper by the Court’s case management and electronic case filing system
(CM/ECF). This convention is used throughout this Order.
2

The issue of whether to strike a jury demand is a non-dispositive issue. Cellport Sys., Inc.
v. Peiker Acustic GMBH & Co. KG, 847 F. Supp. 2d 1293, 1303 (D. Colo. 2012) (affirming
magistrate judge’s order striking a jury demand).

-1-

I. Background
This action arises from Plaintiffs Branta, LLC (“Branta”) and Branta Exploration and
Production Company (“Branta E&P”) (collectively, the “Branta Plaintiffs”) and Plaintiffs
Harvest (US) Holdings, Inc. (“Harvest US”) and Harvest Natural Resources, Inc.’s
(collectively “Harvest Plaintiffs”) January 2011 sale of certain oil and natural gas assets
located in Utah’s Uinta Basin. See generally Second Am. Compl. [#258]. These assets
were sold by the Branta Plaintiffs to Defendant at an auction on March 21, 2011, for
approximately $310 million. Id. ¶ 50. Defendant was the Branta Plaintiffs’ competitor in the
Uinta Basin and previously expressed interest in purchasing the assets; as such, the two
parties entered into a Confidentiality Agreement, which granted Defendant confidential and
proprietary information about the assets. Id. ¶¶ 18-29. The Confidentiality Agreement
prohibited Defendant from contacting other entities that may also have been interested in
purchasing Plaintiffs’ assets. Id.
Plaintiffs allege that in September 2013, the Branta Plaintiffs first became aware of
a letter dated May of 2011 between Defendant and Ute Energy in which Defendant offered
to compensate Ute Energy if it agreed to not bid competitively at the auction. See generally
Second Am. Compl. [#258]. Plaintiffs argue that Ute Energy would have submitted a highly
competitive bid for the assets, but instead chose not to participate based on discussions
with and promises made by Defendant. Id. Plaintiffs argue that this “bid-rigging” was done
in violation of the Confidentiality Agreement, and that Defendant conspired with Ute Energy
to conceal its bid-rigging activities from Plaintiffs. Id.

-2-

The Harvest and Branta Plaintiffs filed this civil action against Defendant Newfield
Production Company (“Defendant”) asserting the following claims for relief: (1) breach of
contract under Tex. Prac. & Rem. Code Ann. § 38.001(8) for Defendant’s breach of the
Branta Confidentiality Agreement and Amendment Letter between Branta Plaintiffs and
Defendant; (2) breach of contract under Tex. Prac. & Rem. Code Ann. § 38.001(8) for
Defendant’s breach of the Harvest Confidentiality Agreement between Harvest Plaintiffs
and Defendant; (3) violation of the Colorado Antitrust Act, Colo. Rev. Stat. § 6–4–101 et
seq. by all Plaintiffs against Defendant; (4) violation of the Sherman Antitrust Act, 15 U.S.C.
§ 1 et seq., by all Plaintiffs against Defendant; (5) tortious interference with prospective
business advantage under Colo. Rev. Stat. § 13–21–102 by Branta Plaintiffs against
Defendant; (6) tortious interference with prospective business advantage under Colo. Rev.
Stat. § 13–21–102 by Harvest Plaintiffs against Defendant, and; (7) civil conspiracy under
Colo. Rev. Stat. § 13–21–102. See Second Am. Compl. [#258] ¶¶ 53-98.
The facts underlying the Motion [#266] currently before the court are as follows: the
Harvest and Branta Plaintiffs each executed independent Confidentiality Agreements with
Defendant on February 22, 2010. Second Am. Compl. [#258]; see also Response [#279]
at 2.

On March 21, 2011, the parties executed two separate Purchase and Sale

Agreements (“PSAs”) containing materially identical language. Second Am. Compl. [#258];
see also [#267-1] at 1; [#267-2] at 1. The PSAs contain language waiving the parties’ right
to a jury trial. Id. Plaintiffs argue that the PSAs’ contractual jury trial waivers do not apply
to Harvest Natural Resources, Inc. or Branta, LLC, the parent companies of Branta E&P
and Harvest US, because the parent companies were not parties to the PSAs. Response
[#279] at 15. Defendant argues that Plaintiffs waived their right to a jury trial by knowingly
-3-

and intentionally signing contracts which contain a jury waiver clause applying to all
lawsuits “arising out of” or “relating to” the PSAs or the “contemplated transactions.” Motion
[#266] at 2; see also PSA [#267-3] at 68; PSA [#267-2].
Plaintiffs respond that their claims of “bid-rigging, and the attendant breaches of the
Confidentiality Agreements, are separate from the execution of the PSAs because these
causes of action commenced long before the existence of the PSAs.” Response [#279] at
2 (emphasis in original). Plaintiffs argue that the jury trial waiver does not extend to their
causes of action because the causes of action arose prior to the signing of the PSAs, and
therefore do not “arise out of” or “relate to” the PSAs. Response [#279] at 3; see also PSA
[#267-3] at 68. Plaintiffs further aver that Defendant’s jury demand made on May 18, 2015,
supersedes the jury waiver clause and cannot be withdrawn without Plaintiffs’ consent.
Response [#279] at 3; Answer [#13].
The Court first addresses whether the contractual PSA waivers apply to the parent
companies, Harvest Natural Resources, Inc. and Branta, LLC. Next, the Court addresses
whether the scope of the jury waiver clause applies to all Plaintiffs’ causes of action.
Finally, the Court addresses whether Defendant’s jury demand may be withdrawn under
Rule 38(d) without Plaintiffs’ consent.
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.
-4-

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.
Fed. R. Civ. P. 39(a).
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. In re Bank of Am., N.A., 278 S.W.3d 342, 343
(Tex. 2009); see also Telum, 859 F.2d at 837 (citing Leasing Serv. Corp. v. Crane, 804
F.2d 828, 832 (4th Cir. 1986)). The PSAs’ language indicates that they “shall be governed
by and construed in accordance with the internal laws of the State of Texas.” PSA [#267-3]
at 70; Response [#279] at 6 n.4 (conceding that any interpretation of the PSAs’ language
is determined under Texas State law). Thus, the Court applies Texas state law to interpret
the agreements. See Id.
III. Analysis
A.

The Contractual PSA Waivers Apply to the Parent Companies, Harvest
Natural Resources, Inc. and Branta, LLC.
The parties dispute whether the two identical contractual jury trial waivers contained

in the two individual PSAs apply to Harvest Natural Resources, Inc. and Branta, LLC, the
parent companies of Harvest US and Branta E&P, respectively. Response [#279] at 15.
The waiver provision states:

-5-

Each party hereby unconditionally and irrevocably waives its right to a jury
trial in any lawsuit, action, or proceeding between or among the parties
arising out of or relating to this agreement or the contemplated transactions.
See PSA [#267-3] at 68; see also [#267-2] at 61. As discussed below, the Court finds that
the jury waiver clause in the PSAs applies to the Plaintiff parent companies.
First, in determining whether contractual language binds non-signatories, courts
have answered “yes” in certain circumstances. For example, courts have required a nonsignatory who is closely related to a signatory to abide by an arbitration clause when the
issues that the non-signatory seeks to resolve are connected to the agreement. See e.g.,
Sunkist Soft Drinks, Inc. v. Sunkist Growers Inc., 10 F.3d 753, 756-58 (11th Cir. 1993);
McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., Inc., 741 F.2d 342 (11th Cir.
1984). Courts have applied this same reasoning to jury waiver provisions. See, e.g., In re:
DaimlerChrysler AG Sec. Litig., No. Civ. A. 00-993-JJF, 2003 WL 22769051, at *2 (D. Del.
Nov. 19, 2003) (holding that a jury waiver clause applied to any action arising out of or in
connection with the contemplated transactions regarding both corporate and individual
defendants, including non-signatories).
Harvest Natural Resources, Inc. and Branta, LLC, are the “parents” of Harvest (US)
Holdings and Branta E&P, respectively. Response [#279]. The parent companies were
not signatories to the PSAs. Id. They were, however, affiliates as defined in the PSAs.
“Affiliate” is defined in Appendix A of the PSAs as:
an Entity . . . that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person. As
used in this definition, the word “control” . . . [m]eans the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of an Entity, whether through ownership of voting securities, by
contract, or otherwise.

-6-

[#267-3] at 75; [#267-2] at 68. Harvest (US) Holdings “is 100% owned by [Harvest Natural
Resources].” Second Am. Compl. [#258] at 2. Branta E&P is a wholly owned subsidiary
and an affiliate of Branta, LLC. Id. Thus, the Court finds that because Harvest US and
Branta E&P are wholly owned by and closely related to the parent companies Harvest
Natural Resources, Inc. and Branta, LLC, and because the PSAs’ jury waiver provision runs
to every party in the contract, including the parent companies as affiliates, [#267-3] at 75,
the jury waiver clause in the PSAs applies to Harvest Natural Resources, Inc. and Branta,
LLC.
B.

The Scope of the PSAs’ Jury Waiver Clause Applies to Plaintiffs’ Claims for
Relief
Plaintiffs do not dispute knowingly and voluntarily acceding to the “Waiver of Jury

Trial” provision contained in the PSAs. Response [#279]; see also PSA [#267-3] at 68.
Having conceded that the waiver provisions were entered knowingly and voluntarily,
Plaintiffs oppose enforcement on the ground that the scope of the waiver does not
encompass their claims for relief. Response [#279] at 4-5.
The parties fundamentally disagree about the scope of the PSAs. Defendant argues
that the PSAs “contain a broad jury waiver extending to any lawsuit relating to or arising out
of the PSAs”. [#266] at 3. Plaintiffs argue that this case “arises from Defendant’s wrongful
conduct before, and unrelated to, the signing of the [PSAs]. . .,” specifically, “from
[Defendant’s] breach of two independent Confidentiality Agreements . . . [a]nd a bid-rigging
conspiracy with an entity that is not even a party to the PSAs.” Response [#279] at 2
(referring to UTE Energy); Second Am. Compl. [#258] ¶¶ 53-98.

-7-

To determine the scope of a waiver, the Court must look to the factual underpinnings
of the lawsuit, not the legal labels applied. Chelsea Family Pharm., PLLC v. Medco Health
Sol., Inc., 567 F.3d 1191, 1198 (10th Cir. 2009) (referencing contractual interpretation of
an arbitration clause); Telum, 859 F.2d at 837-38 (applying the logic from arbitration
clauses to jury waiver because “submission of a case to arbitration involves a greater
compromise of procedural protections than does the waiver of the right to trial by jury”). As
Plaintiffs point out, the United States Supreme Court has held that in construing waivers,
“courts indulge every reasonable presumption against waiver.” Response [#279] at 5
(quoting Aetna Ins. Co. v. Kennedy to Use of Bogash, 301 U.S. 389, 393 (1937)).
Although the parties do not explicitly state that the PSAs are ambiguous, the parties
have two opposite interpretations of the scope of the PSAs’ jury waiver clause.
Interpretation of a contract is a matter of state law. DIRECTV, Inc. v. Imburgia, 136 U.S.
463 (2015). The primary goal of contract interpretation is to give effect to the written
expression of the parties’ intent. Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738,
741 (Tex. 1998). Where the words of a contract in writing are clear and unambiguous, its
meaning is to be ascertained in accordance with its plainly expressed intent. M & G
Polymers USA, LLC v. Tackett, 135 U.S. 926 (2015). Interpretation of a contract is a
question of law where the contract’s construction does not depend on extrinsic evidence
and where the language is susceptible of only one reasonable interpretation. Zink v. Merrill
Lynch Pierce Fenner & Smith, Inc., 13 F.3d 330, 332 (10th Cir. 1993); see also Stegall v.
Little Johnson Assoc., Ltd., 996 F.2d 1043, 1048 (10th Cir. 1993); Evensen v. Pubco
Petroleum Corp., 274 F.2d 866, 872 (10th Cir. 1960). While parol evidence of the parties’
intent is not admissible to create an ambiguity, the contract may be read in light of the
-8-

surrounding circumstances to determine whether ambiguity exists. Balandran, 972 S.W.
2d at 741; see Columbia Gas Transmission Corp. v. New Ulm Gas. Ltd., 940 S.W. 2d 587,
589 (Tex. 1996); see also Nat’l Union Fire Ins. Co. of Pittsburgh v. U.S. Liquids Inc., 271
F. Supp. 2d at 932 (S.D. Tex. 2003). If, after applying these rules, a contract is subject to
two or more reasonable interpretations, it is ambiguous. Balandran, 972 S.W.2d at 741
(Tex. 1998).
The issue here is that Plaintiffs’ narrow interpretation of the meaning of “relating to”
in the PSAs is not reasonable, because Plaintiffs’ causes of action are inexorably linked to
the PSAs at issue, as explained more fully below.3 Plaintiffs contend that the PSA jury
waiver provisions are inapplicable to their claims for relief due to temporal and substantive
reasons. Response [#279] at 8-11. The Court considers each argument in turn.
1. Temporal Relationship Between PSAs and Plaintiffs’ Claims for Relief
First, the Court addresses Plaintiffs’ argument that the PSA jury waiver provisions
are inapplicable to Plaintiffs’ causes of action for temporal reasons. Plaintiffs’ assert that
the Confidentiality Agreements and the PSAs were separate and distinct transactions.
[#279] at 5; see JB Hanna, L.L.C., 766 F.3d at 849. The Branta Confidentiality Agreement
was executed to permit Defendant to gather information to prepare a potential offer to
acquire the Branta Plaintiffs’ assets. Second Am. Compl. [#258] ¶ 18. The Harvest
Confidentiality Agreement was executed to permit Defendant to gather information to
prepare a potential bid for the Branta Plaintiffs’ assets. Id. ¶ 27. In 2011, when Harvest
and Branta decided to auction their Uinta Basin assets, Plaintiffs and Defendant amended
3

For example, Plaintiffs seek to collect the difference between the allegedly depressed
price Defendant paid and the amount Plaintiffs claim they would have received had UTE Energy
submitted a bid. Reply [#293] at 5.

-9-

the Branta Confidentiality Agreement via an “Amendment Letter.” Second Am. Compl.
[#258] ¶ 24. The Amendment Letter allowed Defendant to communicate with Harvest US
because Defendant wanted to participate in the auction that Branta E&P and Harvest US
were conducting to sell their Uinta Basin assets. Id. In March 2011, Defendant entered
into two separate PSAs, one with Harvest US and one with Branta E&P. Second Am.
Compl. [#258] ¶ 50. In the PSAs, Defendant agreed to pay Harvest US and Branta E&P
approximately $310 million for the Uinta Basin assets. Id.
As mentioned above, Plaintiffs’ assert that the broad jury trial waiver is inapplicable
to Plaintiffs’ causes of action because the Confidentiality Agreements and the PSAs were
separate and distinct transactions. Response [#279] at 5. But the Court must consider the
totality of the facts underlying the claims in determining whether or not the jury waiver
provisions are applicable. See Chelsea Family Pharm., 567 F.3d at 1197. Plaintiffs’
attempt to divide up the transaction into separate events is not convincing. Although the
parties’ transaction for the sale of the Uinta Basin assets evolved over time, it is clear that
the course of the parties’ conduct was always in pursuit of buying and selling the Uinta
Basin assets. See generally Second Am. Compl. [#258]. Under the totality of the
circumstances, the Court will not strain to find separate transactions when the entirety of
the parties’ business relationship was directed to achieving the same goals, namely, the
purchase and sale of the Uinta Basin assets.

2. Substantive Relationship Between PSAs and Plaintiffs’ Claims for Relief

-10-

Second, the Court addresses Plaintiffs’ argument that the PSA jury waiver provisions
are inapplicable for substantive reasons. Plaintiffs assert that their claims “do not have a
significant relationship with, or touch on matters covered by the PSAs.” Response [#279]
at 7. Plaintiffs also state that, “[t]he PSAs are only mentioned in passing in the Second
Amended Complaint.” Id. They argue that the references to the sale of the Uinta Basin
assets are “not even necessarily a reference to the PSAs[,]” and that the PSAs are relevant
evidence only because they contain the allegedly depressed price at which the Uinta Basin
assets were sold. Id. at 7-8. Defendant argues that the waiver is not limited to the PSAs,
“but rather extends to the purchase and sale of the [a]cquired [a]ssets.” Reply [#293] at 5.
Defendant further asserts that in determining the scope of the waiver the Court must look
to the facts alleged, which demonstrate that the Second Amended Complaint arises out of
and relates to the contemplated transactions. Reply [#293] at 6.
The PSAs at issue each contain a jury waiver provision that states, “[e]ach party
hereby unconditionally and irrevocably waives its right to a jury trial in any lawsuit, action,
or proceeding between or among the parties arising out of or relating to this agreement or
the contemplated transactions.”

PSA [#267-3] at 68; PSA [#267-2].

The phrase

“contemplated transactions” is defined in the PSAs as, “the purchase and sale of [a]cquired
[a]ssets, that assumption of the [a]ssumed [l]iabilities, and the other transactions provided
by this agreement or any other Transaction Documents.” [#267-3] at 77; [#267-2] at 69.
According to the language of the PSAs, any interpretation of the contract or its construction
is governed by Texas law. Response [#279] at 6 n.4. To interpret the language of the
PSAs, Plaintiffs rely on Kirby Highland Lakes Surgery Ctr., L.L.P., v. Kirby, to define the
term “relating to” as broad, but not unlimited in scope. 183 S.W.3d 891, 898-99 (Tex. Ct.
-11-

App. 2006).

Furthermore, Plaintiffs concede that “it is generally consistent across

jurisdictions to apply the standard that a claim is related to a contract if it has a significant
relationship with, or touches matters covered by, the contract.” Response [#297] at 7 n.4
(Internal quotations omitted) (citing Jones v. Halliburton Co., 583 F.3d 228, 235 (5th Cir.
2009). Texas law (which governs here) does not require a “but for” analysis or stringent
causal connection for a claim to “arise out of” certain actions. Nat’l Union Fire Ins. Co. of
Pittsburgh, 271 F. Supp. 2d at 934. It does, however, require more than an incidental
relationship. Id. at 935. The Court therefore evaluates whether the scope of the PSAs’ jury
waiver provision “relates to” each of Plaintiffs’ causes of action.
Plaintiffs’ first cause of action is for breach of contract under Tex. Prac. & Rem.
Code Ann. § 38.001(8) based on Defendant’s alleged breach of the Branta Confidentiality
Agreement and Amendment Letter between Branta Plaintiffs and Defendant. Second Am.
Compl. [#258] ¶¶ 54-58. The Branta Confidentiality Agreement was executed to permit
Defendant to gather information to prepare a potential offer to acquire the Branta Plaintiffs’
assets. Second Am. Compl. [#258] ¶ 18. The Confidentiality Agreement relates to the sale
of the Uinta Basin assets, and the PSAs’ jury waiver provision therefore applies.
Plaintiffs’ second cause of action is for breach of contract under Tex. Prac. & Rem.
Code Ann. § 38.001(8) based on Defendant’s alleged breach of the Harvest Confidentiality
Agreement between Harvest Plaintiffs and Defendant. Second Am. Compl. [#258] ¶¶ 5966. The Harvest Confidentiality Agreement was executed to permit Defendant to gather
information to prepare a potential bid for the Branta Plaintiffs’ assets. Id. ¶ 27. The
Confidentiality Agreement relates to the sale of the Uinta Basin assets, and the PSAs’ jury
waiver provision therefore applies.
-12-

Plaintiffs’ third cause of action is based on Defendant’s alleged violation of the
Colorado Antitrust Act, Colo. Rev. Stat § 6–4–101 et seq. Second Am. Compl. [#258] ¶¶
67-74. Plaintiffs allege that Defendant engaged in a bid-rigging scheme that artificially
depressed the sale price of the Uinta Basin assets. Id. As this cause of action relates to
the sale of the Uinta Basin assets, the PSAs’ jury waiver provision applies.
Plaintiffs’ fourth cause of action is based on Defendant’s alleged violation of the
Sherman Antitrust Act, 15 U.S.C. § 1 et seq. Second Am. Compl. [#258] ¶¶ 75-80.
Plaintiffs allege that Defendant’s actions in “conspiring with Ute Energy to rig bidding for
Branta E&P’s and Harvest’s Uinta Basin assets restrained trade and commerce in violation
of the Sherman Act.” Second Am. Compl. [#258] ¶ 77. As this cause of action relates to
the sale of the Uinta Basin assets, the PSAs’ jury waiver provision applies.
Plaintiffs’ fifth cause of action is based on Defendant’s alleged tortious interference
with prospective business advantage claim under Colo. Rev. Stat. § 13–21–102. Second
Am. Compl. [#258] ¶¶ 81-85. Plaintiffs allege that Defendant, “by discouraging and
preventing Ute Energy from bidding on Branta E&P’s Uinta Basin assets, intentionally and
improperly interfered with the prospective economic relationship between Ute Energy . . .
and the Branta entities.” Id. at ¶ 83. As this cause of action relates to the sale of the Uinta
Basin assets, the PSAs’ jury waiver provision applies.
Plaintiff’s sixth cause of action is based on Defendant’s alleged tortious interference
with prospective business advantage under Colo. Rev. Stat. § 13–21–102. Second Am.
Compl. [#258] ¶¶ 86-90. Plaintiffs allege that Defendant, “by discouraging and preventing
Ute Energy from bidding on Harvest’s Uinta Basin assets, intentionally and improperly
interfered with the prospective economic relationship between Ute Energy and the Harvest
-13-

[Plaintiffs].” Id. ¶ 88. As this cause of action relates to the sale of the Uinta Basin assets,
the PSAs’ jury waiver provision applies.
Plaintiffs’ seventh cause of action is a civil conspiracy claim under Colo. Rev. Stat.
§ 13–21–102 against Defendant. Second Am. Compl. [#258] ¶¶ 91-98. Plaintiffs allege,
“the object to be accomplished by [Defendant] and Ute Energy in their conspiracy was to
rig the auction process so that Plaintiffs sold their assets to [Defendant] for less money.”
Second Am. Compl. [#258] ¶ 94. As this cause of action relates to the sale price of the
Uinta Basin assets, the PSAs’ jury waiver provision applies.
The Court finds that each of Plaintiffs’ causes of action either arises from or relates
to the sale of the Uinta Basin assets. As a result, the plain language of the PSAs compels
the conclusion that a jury trial has been waived.
C.

Defendant’s Jury Demand May be Withdrawn Under Rule 38(d) Without
Plaintiffs’ Consent.
Finally, the Court addresses whether or not Defendant’s jury demand may be

withdrawn without Plaintiffs’ consent. The Seventh Amendment to the United States
Constitution guarantees the right to a jury trial in “[s]uits at common law.” U.S. Const.
amend. XII. Rule 38(a) preserves the right to a jury trial as declared by the Seventh
Amendment or provided by federal statute. Fed. R. Civ. P. 38(a). On any issue “triable of
right by a jury,” a party may demand a jury trial either in a pleading, or by filing and serving
a written demand for jury trial on the other parties. Fed. R. Civ. P. 38(b). If a party does
not specify the issues he wishes to have tried by a jury, he is considered to have
demanded a jury trial “on all the issues so triable.” Fed. R. Civ. P. 38(c).

-14-

A party waives his right to a jury trial unless his demand is properly served and filed.
Fed. R. Civ. P. 38(d). Once a jury trial has been demanded pursuant to Rule 38, the trial
must be by jury on all issues subject to the demand, unless: (1) the parties stipulate to a
non-jury trial; or (2) the court finds that on some or all of those issues there is no federal
right to a jury trial. Fed. R. Civ. P. 39(a).
Defendant argues that Plaintiffs knowingly and intelligently waived their right to a jury
trial by executing the PSAs. Motion [#266] at 3. However, Defendant also made a jury
demand in its Answer and Jury Demand. Answer [#13]; Response [#279] at 13. Defendant
argues that it neither waived its own contractual rights to a bench trial, nor did its demand
nullify Plaintiffs’ contractual jury waiver. Response [#279] at 10-12. Defendant contends
that it does not need Plaintiffs’ consent to withdraw its demand pursuant to Fed. R. Civ. P.
38(d) because Plaintiffs never had a right to a jury trial. Plaintiffs argue that once
Defendant demanded a jury on “all issues triable to a jury,” Plaintiffs were entitled to rely
on the demand pursuant to Trujillo v. Bd. of Educ. of Albuquerque Public Sch., and that the
demand could not be withdrawn without their consent. 295 F. App’x 885, 891 (10th Cir.
2008); see generally Cellport, F. Supp. 2d at 1293-1303.
Plaintiffs are correct that a party may legitimately rely on another party’s jury
demand. 295 F. App’x at 891. However, Plaintiffs interpret Trujillo to mean that once a jury
demand is filed, all parties have a right to rely on that demand, and trial to a jury must occur
unless all parties consent to its withdrawal. Response [#279] at 13. The Court does not
agree with this broad reading of Trujillo. See 295 F. App’x at 885. Rather, Trujillo involved
circumstances where the relying party had a right to a jury trial in the first place. Id.

-15-

Notably, none of the parties in Trujillo had explicitly contractually waived their right to a jury
trial, as did Plaintiffs in the present case. Id.
Moreover, the Court’s reading of Trujillo is consistent with the Federal Rules of Civil
Procedure. Plaintiffs rely on Rule 38(d) for the proposition that “a proper demand may be
withdrawn only if the parties consent.” Fed. R. Civ. P. 38(d). First, the court notes that the
phrase “proper demand” in Rule 38 implies that the party who makes the demand is legally
entitled to do so. 9 Charles Alan Wright, Arthur R. Miller, Federal Practice and Procedure
§ 2320 (3d ed. 2008) (discussing how demanding a jury does not create a right to a jury
where one does not independently exist). Second, Rule 39 clarifies that Rule 38 is not a
source of independent rights, and reflects the possibility that a party may have no preexisting right to a jury trial. Fed. R. Civ. P. 39. Specifically, Rule 39 instructs that following
a demand under Rule 38, trial on all issues so demanded must be by jury unless the parties
consent otherwise, or 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). Here, the Court has
determined that all parties waived their right to a jury trial on the claims asserted.
Accordingly, Defendant’s subsequent jury demand was improper.
The Court’s conclusion is further supported by decisions from other circuits. In
Kramer v. Banc of America Securities, LLC, the Court of Appeals for the Seventh Circuit
rejected the plaintiff’s argument that once the defendant demanded a jury trial, it could not
withdraw that demand without the plaintiff’s consent, where no such right existed. 355 F.3d
962, 968 (7th Cir. 2004). The Court interpreted the text of Rules 38 and 39 concluded:
[Plaintiff’s] reliance on Rule 38(d) for the proposition that [defendant] could
not withdraw a demand for a jury trial without her consent, is misplaced.
Rule 38, as is made clear by its caption, is concerned with jury trials of right
-16-

. . . But [Plaintiff] had no right to a jury trial and there is no restraint in the text
of Rule 39 on the ability of a party to withdraw its consent to a jury trial that
is not of right.
Id. at 968; see also Rachal v. Ingram Corp., 795 F.2d 1210, 1217 (5th Cir. 1986)
(concluding that plaintiffs could withdraw a jury demand without defendant’s consent
because Rule 39(a) does not create the right to a jury, but rather preserves a right
established by some other source).
Moreover, the District of Colorado confronted this issue in Cellport. 847 F. Supp.
2d at 1302. In that case, the plaintiff filed a lawsuit and demanded a jury trial. At a
scheduling conference with a Magistrate Judge, the parties indicated that they anticipated
the length of the jury trial to be “eight to ten days.” Id. The plaintiffs pointed to several
places in the record where the defendant seemed to concede that there would be a jury
trial. Later, in the case, the defendant filed a motion to strike the plaintiff’s jury demand,
based on a contractual waiver clause. Id. The Magistrate Judge then entered an order
granting the motion to strike the jury demand, concluding that a motion to strike may be
made at any time. Id. The District Judge affirmed the Magistrate Judge’s order, stating
that the defendant, “apparently changed its mind and elected to enforce a contractual right
to which both parties agreed.” Id.
The Court finds that Plaintiffs’ arguments against the application of the jury waiver
provision in the PSAs parallel the facts of Cellport. Id. Plaintiffs cite no authority for their
proposition that Defendant’s jury demand in its original Answer either nullified or
superceded the jury waiver provision. See generally Response [#279]. Instead, Plaintiffs
cite Rule 38(d) claiming Defendant cannot withdraw its jury demand without Plaintiffs’
consent. Fed. R. Civ. P. 38(d); Response [#279]. Rule 38(d) precludes withdrawing a jury
-17-

demand only where there is the right to a jury trial. Herstal SA v. Clyde Armory Inc., 838
F.3d 1071, 1089 (11th Cir. 2016), cert. denied, No. 16-936, 2017 WL 388092 (U.S. Apr. 3,
2017). Nothing in Rule 39 restrains a party from withdrawing a request for a jury trial that
is not based on such a right. Id.; see also Fed. R. Civ. P. 39. The Court recognizes the
presumption for jury trials; however, if a party changes its mind and elects to enforce the
contractual right to which both parties agreed, then the Court must adhere to the language
of the contract. See generally Cellport, 847 F. Supp. 2d at 1302. Because Plaintiffs
contractually waived their right to a jury on all claims, they have no remaining right to a jury.
III. Conclusion
Based on the foregoing,
IT IS HEREBY ORDERED that the Motion [#266] is GRANTED.

Dated: April 24, 2017

-18-