Visual Creations, Inc. v. IDL Worldwide, Inc.
Filing
19
MEMORANDUM AND ORDER denying 14 Motion to Strike. So Ordered by Chief Judge William E. Smith on 1/9/2018. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
VISUAL CREATIONS, INC.,
)
)
Plaintiff,
)
)
v.
)
C.A. No. 17-405 WES
)
)
IDL WORLDWIDE, INC.,
)
)
Defendant.
)
___________________________________)
MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
This case is before the Court on Defendant IDL Worldwide,
Inc.’s, (“IDL”) Motion to Strike (ECF No. 14), which asks the Court
to deny Plaintiff Visual Creation, Inc.’s, (“VCI”) request for a
jury, as opposed to a bench, trial on the issue whether there
exists a binding agreement to arbitrate. For the following reasons,
IDL’s motion is DENIED.
I.
Discussion
Both parties are agreed that there exists a triable issue of
whether an arbitration agreement exists. Their dispute is over
whether this issue should be tried to the Court or a jury. IDL
argues that VCI waived its right to a jury trial when it failed to
request one in its response to IDL’s Motion to Dismiss and Compel
Arbitration (ECF No. 9). (Def.’s Mot. to Strike 1.) VCI, however,
claims
that
it
preserved
its
right
to
a
jury
trial
in
its
complaint. (Pl.’s Opp’n to Def.’s Mot. to Strike 8, ECF No. 15.)
The
Federal
Arbitration
Act
(“FAA”)
reflects
“a
liberal
federal policy favoring arbitration agreements,” Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), and
requires
that
the
Court
“rigorously
enforce
agreements
to
arbitrate,” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221
(1985). On the other hand, the right to “[t]rial by jury is a vital
and cherished right, integral in our judicial system,” City of
Morgantown v. Royal Ins. Co., 337 U.S. 254, 258 (1949), and
therefore the Court must “indulge every reasonable presumption
against waiver,” Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393
(1937).
Indeed Section 4 of the FAA explicitly provides for a jury
trial on the issue of an arbitration agreement’s existence, when
“the party alleged to be in default . . . demand[s] a jury trial
of such issue” and does so “on or before the return day of the
notice of application.” 1 9 U.S.C. § 4. And here VCI complied with
1
VCI concedes that it lacks a constitutional right to a jury
trial, (Pl.’s Opp’n to Def.’s Mot. to Strike 10), so the Court
rests its conclusion herein on the statutory right found in Section
4 of the FAA. See Burch v. P.J. Cheese, Inc., 861 F.3d 1338, 1347
(11th Cir. 2017) (“In a civil case, a right to trial by jury may
arise either by the Seventh Amendment to the U.S. Constitution or
via a federal statute.”). The Court notes, however, that VCI’s
concession may have been ill-considered: The question of fact
determinative of whether an arbitration agreement exists in this
case – i.e., when the parties’ formed their contract – is also
2
Section 4 by raising the issue whether an arbitration agreement
exists in its complaint, and then, by including a general jury
demand therein, requesting a trial by jury as to that issue. (See
Compl. 9, ECF No. 1 (“VCI has never agreed to arbitrate with IDL
regarding the Samsung Project”); id. at 12 (“Plaintiff demands a
trial
by
jury
on
all
issues
so
triable.”).)
VCI’s
complaint
therefore complied with Section 4’s procedure, by demanding a jury
trial as to this issue “before the return day of the notice of
application.” 9 U.S.C. § 4.
Contrary to IDL’s position, nothing in Section 4 precludes –
or
is
inconsistent
with
–
a
plaintiff
complying
with
its
requirements by demanding a jury trial on this issue in the
complaint. See Booth v. Hume Publ’g, Inc., 902 F.2d 925, 931 (11th
Cir. 1990) (noting that the Federal Rules of Civil Procedure apply
to a motion brought under the FAA “to the extent the Rule[s] [are]
consistent with the language and purpose of the Arbitration Act.”).
relevant to VCI’s breach of contract claim, which is likely an
action at law. Wyler Summit P’ship v. Turner Broad. Sys., Inc.,
235 F.3d 1184, 1194 (9th Cir. 2000) (“In most instances, a claim
seeking money damages for breach of contract is an action at
law.”). And the Seventh Amendment requires that where a party
demands a jury “[i]n cases which combine legal and equitable
claims, a jury must decide the former, including issues of fact
common to both sets of claims.” Gallagher v. Wilton Enters., Inc.,
962 F.2d 120, 122 n.3 (1st Cir. 1992). Therefore, it is quite
possible VCI had a constitutional right to try to a jury the
question of fact related to the existence of an arbitration
agreement, even before IDL triggered Section 4 of the FAA by moving
to compel arbitration.
3
That is to say, if a plaintiff raises the issue in its complaint
and makes a general jury demand therein, nothing in Section 4
prevents the normal operation of Federal Rule of Civil Procedure
38, which states that a party “is considered to have demanded a
jury trial on all the issues so triable,” unless it specifies “the
[particular] issues that it wishes to have tried by a jury.” Fed.
R. Civ. P. 38(c). Section 4 simply provides another opportunity –
arising if and when a party moves to compel, potentially after
Rule 38’s 14-day window has closed – for the alleged party in
default to demand a jury trial. See Fed R. Civ. P. 38(b)(1);
Guidotti v. Legal Helpers Debt Resolution, L.L.C., Civil Action
No. 11-1219 (JBS/KMW), 2016 WL 4163547, at *2 (D.N.J. Aug. 4, 2016)
(“[T]he demand provisions of Section 4 of the FAA simply provide
another procedure to demand a jury trial, parallel to that provided
by Rule 38.” (quotations and alterations omitted)).
Burch is of no help to IDL on this point when it states that,
consistent with Federal Rule of Civil Procedure 81(a)(6)(B), it is
“only where the Arbitration Act is silent that the Federal Rules
of Civil Procedure become applicable.” 861 F.3d at 1348-50 (quoting
Booth, 902 F.2d at 931) (holding that right to jury trial on the
existence of an arbitration agreement was waived where plaintiff
failed to raise the issue in his complaint and in his response to
motion to compel). Section 4 of the FAA is, in fact, silent on the
procedures required to raise the issue of whether an arbitration
4
agreement exists in a pleading, except to the extent it allows the
party resisting arbitration to demand a jury trial on this issue
before it must respond to a motion to compel. Cf. Application of
Deiulemar Compagnia Di Navigazione S.p.A v. M/V Allegra, 198 F.3d
473, 483 (4th Cir. 1999) (“[A] district court could invoke Rule
81(a)[(6)(B)] to use federal discovery rules to determine whether
a dispute is arbitrable.”). Therefore Rule 38 applies here to
preserve VCI’s right to a jury trial.
II.
Conclusion
For the foregoing reasons, IDL’s Motion to Strike (ECF No.
14) is DENIED.
IT IS SO ORDERED.
William E. Smith
Chief Judge
Date: January 9, 2018
5
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?