Wilcox v. Lloyds TSB Bank, PLC et al
ORDER FINDING PLAINTIFFS ARE ENTITLED TO A JURY TRIAL - Signed by JUDGE ALAN C KAY on 9/16/2016. (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
BRADLEY WILLCOX, FRANK DOMINICK,
and MICHELE SHERIE DOMINICK,
) Civ. No. 13-00508 ACK-RLP
LLOYDS TSB BANK, PLC and DOES
ORDER FINDING PLAINTIFFS ARE ENTITLED TO A JURY TRIAL
For the reasons discussed below, the Court finds that
Plaintiffs made a proper jury demand in the instant case;
accordingly, Plaintiffs are entitled to a jury trial.
This case involves the issuance by Defendant Lloyds
TSB Bank plc’s (now known as Lloyds Bank plc) (“Lloyds” or
“Defendant”) of certain dual currency loans, also referred to as
International Mortgage System (“IMS”) loans.
The Court and the
parties are familiar with the extensive factual and procedural
history of this case, and the Court will not repeat it here
except as necessary.
On September 13, 2013, Plaintiff Bradley Willcox filed
a Complaint on behalf of himself and a similarly situated class
against Lloyds, in the Circuit Court of the First Circuit, State
Compl., ECF No. 1-2.
Id. at 17.
The Complaint attached a jury
The Complaint brought a claim under the
Hawaii Unfair and Deceptive Trade Practices Act (“UDAP”), H.R.S.
§§ 480-2 and 481A-3(a)(12), and requested declaratory relief
pursuant to H.R.S. §§ 632-1 et seq. and 28 U.S.C. §§ 2201 and
See Compl. ¶¶ 46-62.
On October 7, 2013, Lloyds removed
the case to federal court pursuant to the Class Action Fairness
Act, 28 U.S.C. § 1332.
Notice of Removal, ECF No. 1.
removal filing included the jury demand from the state action.
Id. Ex. A, at 17, ECF No. 1-2.
On December 3, 2013, Willcox filed a First Amended
Complaint (“FAC”), adding Frank Dominick as a named plaintiff.
ECF No. 25.
On June 10, 2014, the Court granted Lloyds’ Motion
to Dismiss the FAC.
Order Granting Def.’s Mot. to Dismiss, ECF
The Court concluded that the Hong Kong choice-of-law
provision in the parties’ contractual agreements precluded the
assertion of Hawaii and U.S. statutory claims; accordingly, it
dismissed the FAC in its entirety.
Id. at 46.
Court granted Willcox and Dominick leave to file a further
On August 14, 2014, Willcox and Dominick filed a
Second Amended Complaint (“SAC”), bringing claims under Hong
Kong law for Breach of Contract (Count I), Breach of an Implied
Term Limiting Lloyds’ Discretion to Change the Interest Rate
(Count II), and declaratory relief (Count III).
See SAC ¶¶ 54-
78, ECF No. 61.
On September 19, 2014, Lloyds moved to dismiss the SAC
on grounds of forum non conveniens and failure to state a claim.
Def. Lloyds’ Mot. to Dismiss the Claims Asserted in the SAC, ECF
On December 23, 2014, the Court issued an Order
Granting in Part and Denying in Part Defendant’s Motion to
ECF No. 73.
The Court denied Lloyds’ motion to
dismiss for forum non conveniens and for failure to state a
claim as to Counts I and II of the SAC.
However, it granted
Lloyds’ motion as to Willcox and Dominick’s claim for
declaratory relief (Count III).
Id. at 35-36.
On January 9, 2015, Lloyds moved to join Michele
Sherie Dominick, wife of named Plaintiff Frank Dominick, as a
ECF No. 76.
Magistrate Judge Puglisi issued an Order
Granting Defendant Lloyds’ Motion to Join Michele Sherie
Dominick as a Party on March 16, 2015.
ECF No. 94.
directed that an amended complaint naming Ms. Dominick as a
party to this action be filed by March 27, 2015.
Id. at 10.
Plaintiffs filed the operative Third Amended Complaint
(“TAC”) on March 27, 2015.
ECF No. 100.
The TAC names Frank
Dominick, Michele Sherie Dominick, and Bradley Willcox
(collectively, “Plaintiffs”) as class representatives and brings
claims for Breach of Contract (Count I) and Breach of an Implied
Term Limiting Lloyds’ Discretion to Change the Interest Rate
Id. ¶¶ 6-8, 55-72. 1
The FAC, SAC, and TAC did not contain jury demands.
On February 11, 2016, the Court issued an Order
Denying Plaintiffs’ Motion for Partial Summary Judgment on Their
and the Putative Class’s Claim for Breach of Contract on Count
I, Denying Plaintiffs’ Request for Declaratory Relief, Granting
in Part and Denying in Part Defendant’s Motion for Summary
Judgment, and Sua Sponte Granting Partial Summary Judgment to
Plaintiffs on Count II (“Summary Judgment Order”).
ECF No. 419.
On August 15, 2016, the Court held a hearing on
Lloyds’ Motion to Compel Plaintiffs to Present a Trial Plan.
During the hearing, Lloyds for the first time questioned the
basis for a jury trial in this action.
The same day of the
hearing, the Court ordered the parties to file briefs addressing
whether Plaintiffs were entitled to a jury trial.
ECF No. 472.
The parties filed their respective briefs on August 22, 2016.
ECF Nos. 474, 475.
On August 30, 2016 the Court issued a minute
order allowing the parties to file responses to the opposing
September 6, 2016.
The parties filed their responsive briefs on
ECF No. 490, 492.
The Court notes that the TAC includes requests for courtordered relief (a permanent injunction and a judicial
declaration) as well as a request for compensatory damages. TAC
Only two months prior to the start of trial, Lloyds
for the first time claims that Plaintiffs are not entitled to a
jury trial in this matter.
Lloyds argues that because the
character of the lawsuit has changed since Plaintiffs filed the
original Complaint, the jury demand included in the original
Complaint does not satisfy Federal Rule of Civil Procedure
Lloyd’s Br. Regarding Pls.’ Failure to Demand a
Jury Trial (“Lloyd’s Br.”), at 10-14, ECF No. 475. 2
Rule 38(b) governs jury demands.
Pursuant to Rule
38(b), a party seeking to have an issue tried before a jury must
serve “the other parties with a written demand—which may be
included in a pleading—no later than 14 days after the last
pleading directed to the issue is served.”
“[A] party may
specify the issues that it wishes to have tried by a jury;
otherwise, it is considered to have demanded a jury trial on all
issues so triable.”
Fed. R. Civ. P. 38(c).
“A party waives a
jury trial unless its demand is properly served and filed.”
Fed. R. Civ. P. 38(d).
Lloyds does not dispute that Plaintiffs’ state court jury
demand remained effective upon removal. Lloyds’ Supp. Br.
Regarding Pls.’ Failure to Demand a Jury Trial (“Lloyds’ Supp.
Brief”), at 3, ECF No. 492; see Fed R. Civ. P. 81(c) (“A party
who, before removal, expressly demanded a jury trial in
accordance with state law need not renew the demand after
“[T]he purpose of a jury demand is to inform the court
and opposing counsel that certain issues will be tried to a
Lutz v. Glendale Union High Sch., 403 F.3d 1061, 1065
(9th Cir. 2005).
Importantly, the Ninth Circuit has repeatedly
held that it will “‘indulge every reasonable presumption against
waiver’ of the jury trial right.”
California Scents v. Surco
Prod., Inc., 406 F.3d 1102, 1108 (9th Cir. 2005) (quoting Aetna
Ins. Co. v. Kennedy ex rel. Bogash, 301 U.S. 389, 393 (1937));
see also Lutz, 403 F.3d at 1064.
With respect to amended complaints, the Ninth Circuit
has determined that what is relevant in terms of a jury demand
is “whether the amended complaint raises an ‘issue’ for the
purpose of Rule 38(b) not previously raised in the original
California Scents, 406 F.3d at 1106.
is concerned with issues of fact” as opposed to legal issues.
Id. (quoting Lutz, 403 F.3d at 1066); see also Las Vegas Sun,
Inc. v. Summa Corp, 610 F. 2d 614, 620 n.5 (9th Cir. 1979);
Trixler Brokerage Co. v. Ralston Purina Co., 505 F.2d 1045, 1050
(9th Cir. 1974) (“Manifestly, the issue contemplated by the Rule
is one of fact”).
Specifically, for purposes of Rule 38, the
Court must determine whether issues in the original complaint
and the amended complaint “turn on the same matrix of facts.”
Lutz, 403 F.3d at 1066 (quoting Las Vegas Sun, 610 F.2d at 620).
In Lutz, for example, the court considered whether a
plaintiff who had waived her right to a jury trial with respect
to the original complaint by failing to make a timely jury
demand could nevertheless request a jury trial in an amended
403 F.3d 1061.
The plaintiff’s original complaint
raised claims under the Americans with Disabilities Act (“ADA”),
while the amended complaint raised new claims under the
Rehabilitation Act and the Arizona Civil Rights Act.
Although the legal issues had clearly changed between the
two complaints, the Court determined that the amended complaint
did not renew the right to request a jury trial “[b]ecause it is
clear that ‘the issues in the original complaint and the amended
complaint turn on the same matrix of facts.’”
Id. (quoting Las
Vegas Sun, 610 F.2d at 620).
The Ninth Circuit extended the reasoning in Lutz and
related cases to resolve the question of whether, under Rule 38,
a plaintiff could rely on the defendant’s jury trial demand as
to its counterclaims to “preserve [its] right to a jury trial on
the claims pled in its complaint.”
California Scents, 406 F.3d
The Court sought to determine whether the “issues” in
the complaint, as defined under Rule 38, “were embraced by [the
defendant’s] jury demand.”
Id. at 1106.
The relevant claims in
the complaint were for trade dress infringement and unfair
competition related to the manufacturing, packaging, and
labeling of air fresheners.
Id. at 1104.
claimed that defendant Pestco manufactured “nearly identical”
air freshener products.
Pestco raised counterclaims for
business disparagement, business defamation, conspiracy to
disparage and defame, and false advertising.
three counterclaims were based on allegations that California
Scents “injured Pestco’s reputation and sales by falsely
representing to sales representatives and competitors in the air
freshener industry that Pestco ‘copied and/or infringed upon’
California Scents’s air freshener trade dress.”
The court acknowledged that the legal issues raised by
the parties were distinct and noted that some of the facts
needing to be proven did not overlap.
The Court stated, “To
prevail in its business defamation and business disparagement
counterclaims, Pestco would have to prove facts that were
unnecessary to California Scents’s trade dress infringement
claims, and vice-versa.”
Id. at 1108-09.
In this respect, the
court compared the elements required to prove common law
disparagement with the elements required to prove trade dress
Although there were clear differences
between the elements and facts required to prove the claims, the
court concluded that the claims “turn[ed] on the same matrix of
facts, and concern[ed] the same general area of dispute,” i.e.,
“whether Pestco infringed on California Scents’s trade dress.”
Id. at 1109 (citations omitted).
The Court held, “The
substantial factual overlap underpinning the parties’ respective
claims compels our conclusion that Pestco’s jury demand on its
counterclaims was directed, at least in part, to the same
‘issues’ as California Scent’s complaint.”
the court determined that California Scents reasonably relied on
Pestco’s jury demand to preserve its right to a jury trial on
Applying this precedent to the instant case, the
dispositive issue becomes whether the original complaint and the
amended complaints revolve around the “same matrix of facts” so
that Plaintiffs were not required to restate their jury demand.
See Williams v. Agilent Techs., No. 04-1810 MMC, 2004 WL
2848005, at *1 (N.D. Cal. Dec. 10, 2004) (“While the FAC
included additional legal claims against defendant, the new
claims are based on the ‘same matrix of facts’ alleged in the
original complaint, and, consequently, plaintiffs were not
required to restate their jury demand after defendant answered
The Court finds that the standard is met here.
Indeed, although the claims raised by Plaintiffs have changed
since the original Complaint, throughout the litigation
Plaintiffs have consistently maintained—and alleged facts
demonstrating—that Lloyds breached its loan agreements by
arbitrarily increasing interests rates and that Lloyds acted
dishonestly by “concealing the wrongful nature of its acts.”
See Compl. ¶ 1; SAC ¶ 1; TAC ¶ 1.
According to Lloyds, the litigation significantly
changed between the filing of the original Complaint and the SAC
and as a result, Plaintiffs are not entitled to a jury trial.
However, a comparison of the original complaint and the SAC
demonstrates that although the legal issues have changed, the
matrix of relevant facts underpinning the claims remains the
To start, in the “Introduction” section of both the
Complaint and the SAC, Plaintiffs note that their “claims arise
from LLOYDS’ marketing and sale of complex variable rate, and
often variable currency, loans (the “Loans”).”
¶ 1; see also TAC ¶ 1.
Compl. ¶ 1; SAC
The complaints then allege that “[w]ith
respect to the Loans, LLOYDS breached its agreements with
consumers by” “arbitrarily increasing applicable interest rates”
and “actively concealing the wrongful nature of its acts.”
Compl. ¶ 1; SAC ¶ 1; see also TAC ¶ 1. 3
The Introduction sections proceed to explain the IMS
loan program at issue, including the “Cost of Funds” 4 provision
The Complaint also alleges that Lloyds “engag[ed] in
unfair and deceptive” practices while the SAC maintains that
LLoys “breach[ed] an implied duty to act honestly and in good
The “Cost of Funds” is defined (with immaterial
differences) in the loan documents as:
(continued . . . )
and allege that “Lloyds arbitrarily increased the variable
interest rate described in the Loan Documents to the detriment
Compl. ¶¶ 3-5; SAC ¶¶ 2-4; see also TAC ¶¶ 2-4.
The complaints further allege that after 2008 (or 2009), Lloyds
changed its method for calculating the “Cost of Funds” causing
injury to many in the class.
Compl. ¶ 6; SAC ¶ 5; see also TAC
With respect to the latter, both complaints note that
Lloyds added several new basis points to its Cost of Funds
calculation in order to reflect the imposition by its parent
company of a “liquidity transfer pricing” (“LTP”) charge.
According to both complaints, the LTP charge added to the Cost
of Funds an amount “based not on the actual cost of funds for
the Loans, but for Lloyds’ parent’s significantly longer-term
set of obligations.”
The complaints further allege that
this represented Lloyds’ attempt to pass on to borrowers “the
cost of funding” Lloyds’ “parent’s overhead and operations as a
whole, not just the cost of funding their own IMS Loans.”
( . . . continued)
[T]he cost (calculated to include the costs of
complying with liquidity and reserve asset
requirements) in respect of any currency
expressed as a percentage rate of funding for
maintaining the Advance or Advances in that
currency as conclusively nominated by the Bank
from time to time.
Compl. ¶ 3; SAC ¶ 2; TAC ¶ 2.
Compl. ¶ 6 (emphasis omitted); SAC ¶ 5 (emphasis omitted); see
also TAC ¶ 5 (emphasis omitted).
The “General Allegations” section of the complaints
are also markedly similar.
Both complaints explain the relevant
interest rate provision in the Loan Documents and proceed to
allege that Lloyds arbitrarily increased the interest rates and
its “Cost of Funds” to the harm of Plaintiffs.
SAC ¶¶ 12-19; see also TAC ¶¶ 13-20.
Compl. ¶¶ 13-20;
The definition of the
“Class” in the complaints is also identical (although the SAC no
longer contained the “Injunction Sub-class”).
¶ 39; see also TAC ¶ 40.
Compl. ¶ 31, SAC
Turning to the claims for relief,
although the legal issues have changed, both complaints maintain
that Lloyds concealed information relevant to the interest rates
and misled Plaintiffs.
Compl. ¶ 49, SAC ¶¶ 60-61, 70; see also
TAC ¶¶ 61-62, 71.
Despite the similarities between the factual
allegations in the complaints, Lloyds maintains that the SAC
provides a “different theory of liability, claims and issues”
and thus, Plaintiffs were required to renew their jury demand.
Lloyds’ Supp. Brief, at 4.
In support for its claim, Lloyds
compares the elements required to prove a UDAP claim under
Hawaii law with the elements required to prove Plaintiffs’
breach of contract claim.
Id. at 5-6.
Lloyds’ argument misses
As the Ninth Circuit determined in California Scents,
although the elements required to prove the claims at issue may
be distinct, what matters for purposes of Rule 38(b) is that the
claims “‘turn on the same matrix of facts’ and ‘concern the
same general area of dispute.’”
406 F.3d at 1109 (alteration in
original) (citations omitted).
The court also acknowledged that
even if some of the facts necessary to prove the claims differ,
the “same matrix of facts” standard can still be satisfied.
Lloyds also argues that the “matrix of facts” changed
at the time of the filing of the SAC, claiming that the
Complaint was “fraud-based” and involved deception of consumers,
while the SAC (and the TAC) do not contain such factual
Lloyds’ Br., at 12-13.
However, Lloyds overstates
the differences between the factual issues that make up the socalled “fraud-based” claims and the claims currently alleged.
For example, Lloyds cites to ¶ 50 of the Complaint as an example
of a “fraud-based” factual allegation that is no longer part of
Id. at 12.
Lloyds is correct that the legal claim
contained in ¶ 50, i.e., that Lloyds’ conduct was unfair and
deceptive pursuant to H.R.S. Chapter 480, is no longer at issue.
See Compl. ¶ 50.
However, as Plaintiffs argue, when read
together with ¶ 49, the allegations provide that Lloyds acted
deceptively toward borrowers by manipulating interest rates and
sending an inadequate “Frequently Asked Questions” document
(“FAQ”) regarding the “Cost of Funds” calculations.
As noted above, the SAC and TAC contain similar
allegations, and also cite to the FAQ, noting that Lloyds
concealed facts relevant to the interest rate issue in the FAQ.
SAC ¶ 61; TAC ¶ 62.
Indeed, contrary to Lloyds’ assertions, the SAC and
TAC still allege facts regarding Lloyds’ concealment and
Plaintiffs continue to allege that Lloyds
manipulated the Cost of Funds, arbitrarily increased interest
rates, improperly passed the LTP charge from its parents to its
borrowers, concealed the Cost of Funds calculation from the
borrowers, and acted deceptively with respect to the basis of
the increased interest charges.
As Plaintiff argues, the SAC
and TAC allege facts regarding Lloyds’ allegedly wrongful
behavior in support of their claim that Lloyds violated the Nash
standard, 5 under Hong Kong Law. 6
Accordingly, and for the
In Nash, et al. v. Paragon Fin. PLC,  EWCA Civ. 1466
(15 Oct. 2001), the court determined as follows with respect to
the exercise of a lender’s discretion to set interest rates:
The [lender] is not a charitable institution.
Its aim is to make a profit by lending money. It
follows that if it encounters financial
difficulties, it may feel obliged to raise the
interest rates paid by its borrowers. In
deciding whether to raise interest rates, it will
have to make fine commercial judgments. But if
it decides to take that course in order to
overcome financial difficulties, it is not acting
(continued . . . )
additional reasons discussed above, the Court determines that
the original Complaint and the successive complaints turn on the
same matrix of facts.
The Court is also cognizant of the purpose of a jury
demand as put forth by the Ninth Circuit, i.e., to give notice
to the “court and opposing counsel that certain issues will be
tried by a jury.”
Lutz, 403 F.3d at 1065.
Here, after the SAC
was filed, Magistrate Judge Puglisi issued four scheduling
orders, each stating the date that “JURY trial” would begin.
See ECF Nos. 92, 178, 436, 441.
The Court also issued a Minute
Order on June 14, 2016, noting the date that jury selection
would be held.
ECF No. 438.
Under these circumstances, Lloyds’
contention that it was unaware that Plaintiffs intended that
their claims be tried by a jury until August 15, 2016 is
See Lloyds’ Br., at 16.
Indeed, the Court is troubled
by Lloyds’ failure to raise the jury trial issue until two
( . . . continued)
dishonestly, capriciously or in an arbitrary
manner. It is not taking into account an
irrelevant consideration. Nor is it acting in a
way which is so unreasonable that it can be said
of it that no reasonable lender would take that
course if placed in that situation.
Id. ¶ 47.
The Court also agrees with Plaintiffs that Lloyds has
overstated the importance of the wrongful foreclosure
allegations in the original Complaint.
months prior to trial, particularly given that the Court
intended to proceed with a jury trial regarding Plaintiffs’
remaining claims, as noted in the above-cited documents.
In sum, the Court concludes that because there is
“substantial factual overlap underpinning” the claims in the
original Complaint and the successive complaints (particularly
the SAC and the operative TAC), Plaintiffs were not required to
renew their jury demand.
See California Scents, 406 F.3d at
In reaching this conclusion, the Court is guided by Ninth
Circuit precedent explaining the purpose of a jury demand and
the guidance that courts should “‘indulge every reasonable
presumption against waiver’ of the jury trial right.”
1108 (citation omitted).
Because the Court concludes that Rule
38(b) was satisfied, the Court need not consider Plaintiffs’
request to exercise its discretion to order a jury trial under
For the foregoing reasons, the Court finds that
Plaintiffs are entitled to a jury trial in this case.
IT IS SO ORDERED.
Honolulu, Hawaii, September 16, 2016.
Alan C. Kay
Sr. United States District Judge
Willcox v. Lloyds TSB Bank, plc, et al., Civ. No. 13-00508 ACK-RLP, Order
Finding Plaintiffs are Entitled to a Jury Trial.
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