Blue Cross Blue Shield of Minnesota et al v. Wells Fargo Bank, N.A.

Filing 475

MEMORANDUM OPINION AND ORDER. Wells Fargo's Motion for Bench Trial of ERISA and Non-ERISA Fiduciary Duty Claims (Doc. No. 297 ) is GRANTED IN PART and DENIED IN PART as follows: 1. To the extent Wells Fargo seeks a bench trial of Plaintiffs 9; ERISA fiduciary duty claim (Count I(b)), the motion is GRANTED. 2. To the extent Wells Fargo seeks a bench trial of Plaintiffs' non-ERISA fiduciary duty claim (Count I(a)), the motion is DENIED. 3. The Court adopts Plaintiffs' proposal for trial of this matter. (Written Opinion). Signed by Judge Donovan W. Frank on 6/4/2013. (BJS)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Blue Cross and Blue Shield of Minnesota, as
Administrator of the Blue Cross and Blue
Shield of Minnesota Pension Equity Plan;
CentraCare Health System, on Behalf of
Itself and the Sisters of the Order of Saint
Benedict Retirement Plan; Supplemental
Benefit Committee of the International Truck
and Engine Corp. Retiree Supplemental
Benefit Trust, as Administrator of the
International Truck and Engine Corp. Retiree
Supplemental Benefit Trust; Jerome
Foundation; Meijer, Inc., as Administrator of
the Meijer OMP Pension Plan and Meijer
Hourly Pension Plan, Participants in the
Meijer Master Pension Trust; Nebraska
Methodist Health System, Inc., on Behalf of
Itself, and as Administrator of the Nebraska
Methodist Hospital Foundation, the Nebraska
Methodist Health System Retirement
Account Plan, and the Jennie Edmundson
Memorial Hospital Employee Retirement
Plan; North Memorial Health Care; The
Order of Saint Benedict, as the St. John’s
University Endowment and the St. John’s
Abbey Endowment; The Twin Cities
Hospitals-Minnesota Nurses Association
Pension Plan Pension Committee, as
Administrator of the Twin Cities HospitalsMinnesota Nurses Association Pension Plan,
Plaintiffs,
v.
Wells Fargo Bank, N.A.,
Defendant.

Civil No. 11-2529 (DWF/JJG)

MEMORANDUM
OPINION AND ORDER

_______________________________________________________________________
Michael V. Ciresi, Esq., Munir R. Meghjee, Esq., Stephen F. Simon, Esq., Vincent J.
Moccio, Esq., and Brock J. Specht, Esq., Robins Kaplan Miller & Ciresi LLP, counsel for
Plaintiffs.
Lawrence T. Hofmann, Esq., Michael R. Cashman, Esq., Daniel J. Millea, Esq., James S.
Reece, Esq., Lindsey A. Davis, Esq., Richard M. Hagstrom, Esq., and Rory D.
Zamansky, Esq., Zelle Hofmann Voelbel & Mason LLP; Brooks F. Poley, Esq. and
William A. McNab, Esq., Winthrop & Weinstine, PA, counsel for Defendant.
_______________________________________________________________________

INTRODUCTION
This matter is before the Court on Defendant Wells Fargo Bank, N.A.’s (“Wells
Fargo”) Motion for Bench Trial of ERISA and Non-ERISA Fiduciary Duty Claims (Doc.
No. 297). For the reasons set forth below, the Court grants the motion in part and denies
it in part.
BACKGROUND
Plaintiffs are a group of institutional investors who participated in Wells Fargo’s
Securities Lending Program (“SLP”) and suffered substantial losses during the course of
their participation in the SLP. (Doc. No. 200, Third Am. Compl. ¶¶ 11-24.) This action
stems from Wells Fargo’s purported improper and imprudent investment of Plaintiffs’
funds. As such, Plaintiffs assert the following claims against Wells Fargo: (1) Breach of
Fiduciary Duty (Non-ERISA and ERISA); (2) Breach of Contract; (3) Intentional and
Reckless Fraud and Fraudulent Nondisclosure/Concealment; (4) Negligent
Misrepresentation; (5) Violation of Minnesota Prevention of Consumer Fraud Act—
Minn. Stat. §§ 325F.69 and 8.31; (6) Unlawful Trade Practices—Minn. Stat. §§ 325D.13
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and 8.31; and (7) Deceptive Trade Practices—Minn. Stat. §§ 325D.44 and 8.31. (Id.
¶¶ 256-328.)
The factual background of this matter is set out in this Court’s previous Orders and
is incorporated by reference herein. Wells Fargo now moves for a bench trial of
Plaintiffs’ fiduciary duty claims.
DISCUSSION
I.

Legal Standard
The Seventh Amendment provides that “[i]n Suits at common law, where the

value in controversy shall exceed twenty dollars, the right of trial by jury shall be
preserved . . . .” U.S. CONST. amend. VII. “Suits at common law” refers to suits in
which legal rights are to be ascertained and determined, in contradistinction to those
where equitable rights alone are recognized, and equitable remedies are administered.
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989).
To determine whether a particular suit falls within the ambit of the Seventh
Amendment, courts must apply a two-step test. Id. at 42. A court must first compare the
action before it “to 18th-century actions brought in the courts of England prior to the
merger of the courts of law and equity”; second, the court must “examine the remedy
sought and determine whether it is legal or equitable in nature.” Chauffeurs, Teamsters
and Helpers, Local No. 391 v. Terry, 494 U.S. 558, 565 (1990). The second inquiry is
the more important in the analysis. Id.; see also Tull v. United States, 481 U.S. 412, 421
(1987) (“We reiterate our previously expressed view that characterizing the relief sought

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is more important than finding a precisely analogous common-law cause of action in
determining whether the Seventh Amendment guarantees a jury trial.”).
Still, the right of a trial by jury at common law is a fundamental, constitutional
right. Jacob v. City of New York, 315 U.S. 752, 752-53 (1942). As such, any seeming
curtailment of the right to a jury trial must be scrutinized with the utmost care. Halladay
v. Verschoor, 381 F.2d 100, 109 (8th Cir. 1967), citing DePinto v. Provident Security Life
Ins., 323 F.2d 826, 837 (9th Cir. 1963).
II.

Motion for Bench Trial
In Count I, Plaintiffs have asserted a breach of fiduciary duty claim on behalf of

both the ERISA and non-ERISA Plaintiffs. Count I(a) states a claim on behalf of the
non-ERISA Plaintiffs,1 while Count I(b) states a claim on behalf of the ERISA
Plaintiffs. 2
There appears to be no dispute that Plaintiffs’ ERISA claim is equitable in nature
and that Plaintiffs are thus not entitled to a jury trial with respect to the ERISA fiduciary
duty claim. See In re Vorpahl, 695 F.2d 318, 322 (8th Cir. 1982) (holding that “a jury

1

According to the Third Amended Complaint, the non-ERISA Plaintiffs include:
CentraCare, Sisters Retirement Plan, Jerome, Nebraska Methodist, North Memorial,
St. John’s, and El Paso Retirement. (Third Am. Compl. at 55.) Nebraska Methodist and
North Memorial participated in the SLP on behalf of, and as administrator of, both
ERISA and non-ERISA entities under their respective Securities Lending Agreements.
(Id. at 55 n.1-2 & 59 n.3-4.)
2

According to the Third Amended Complaint, the ERISA Plaintiffs include:
International Truck Retiree Trust, Meijer Pension Trust, Nurses Pension Plan, Nebraska
Methodist, North Memorial, Tuckpointers Local 52, and LPN Plan. (Third Am. Compl.
(Footnote Continued on Next Page)
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trial is not required under section 502”). As such, the Court grants Wells Fargo’s motion
to the extent it seeks a bench trial of Count I(b).
With respect to the breach of fiduciary duty claim raised in Count I(a), the Court
concludes that the non-ERISA Plaintiffs are entitled to a jury trial. While Plaintiffs
concede that fiduciary duty claims are usually considered equitable in the first step of the
analysis, such a determination does not by itself end the inquiry. (Doc. No. 308 at 7-8.)
For instance, “where a claim of breach of fiduciary duty is predicated upon underlying
conduct, such as negligence, which is actionable in a direct suit at common law, the issue
of whether there has been such a breach is, subject to appropriate instructions, a jury
question.” DePinto, 323 F.2d at 837. Here, the non-ERISA fiduciary duty claim is
inextricably intertwined with the other non-ERISA claims and is premised upon the same
alleged course of conduct and common issues of fact. See Curtis v. Loether, 415 U.S.
189, 196 n.11 (1974) (noting that if a “legal claim is joined with an equitable claim, the
right to a jury trial on the legal claim, including all issues common to both claims,
remains intact”).
Moreover, the damages sought by Plaintiffs in this case are, at their core,
compensatory in nature; and compensatory damages are “the classic form of legal relief.”
Pereira v. Farace, 413 F.3d 330, 339 (2d Cir. 2005) (emphasis in original). Where a case
involves a legal (as opposed to an equitable) cause of action, “the jury rights it creates

(Footnote Continued From Previous Page)

at 55.)

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control.” Halladay, 381 F.2d at 109, quoting Thermo-Stitch, Inc. v. Chemi-Cord
Processing Corp., 294 F.2d 486, 491 (5th Cir. 1961).
Having considered the relevant factors, as well as the interests of efficiency and
justice, and the lack of prejudice to either party, the Court concludes that Plaintiffs’
non-ERISA fiduciary duty claim should be tried to a jury. Therefore, the Court denies
Wells Fargo’s motion with respect to Count I(a).
Wells Fargo indicated at the hearing that, if the Court were to deny its motion,
Wells Fargo would agree to the trial of this matter in the manner proposed by Plaintiffs.
As such, the Court adopts Plaintiffs’ proposal for trial. (See Doc. No. 308 at 20-21.)
ORDER
Based upon the foregoing, and the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Wells Fargo’s Motion for Bench Trial of ERISA and
Non-ERISA Fiduciary Duty Claims (Doc. No. [297]) is GRANTED IN PART and
DENIED IN PART as follows:
1.

To the extent Wells Fargo seeks a bench trial of Plaintiffs’ ERISA fiduciary

duty claim (Count I(b)), the motion is GRANTED.
2.

To the extent Wells Fargo seeks a bench trial of Plaintiffs’ non-ERISA

fiduciary duty claim (Count I(a)), the motion is DENIED.

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3.

The Court adopts Plaintiffs’ proposal for trial of this matter.

Dated: June 4, 2013

s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge

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