Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

SFF-TIR, LLC v. Stephenson

United States District Court, N.D. Oklahoma

July 5, 2017

SFF-TIR, LLC; STUART FAMILY FOUNDATION, INC.; ALAN STUART 2012 GST FAMILY TRUST; STUART 2005 GST FAMILY TRUST; CELEBRATION, LLC; ANURAG AGARWAL; PETER BUCKLEY; VINCENT SIGNORELLO and RODNEY M. REYNOLDS, Plaintiffs,
v.
CHARLES C. STEPHENSON, JR.; CYNTHIA A. FIELD; PETER BOYLAN, III; LAWERENCE FIELD; CYPRESS ENGERGY PARTNERS-TR, LLC; CEP CAPITAL PARTNERS, LLC; CYPRESS ENERGY HOLDINGS, LLC and TULSA INSPECTION RESOURCES, LLC, Defendants.

          Jamison A. Diehl Akin Gump Strauss Hauer & Feld LLP (NY) and R. Stratton Taylor Mark H. Ramsey Clinton Derek Russell Taylor Burrage Foster Mallett Downs Ramsey & Russell Claremore, Oklahoma and Stuart Kagen Daniel A. Cohen Joshua C. Gillette Kyla Janine Grant Kagen & Caspersen New York, New York Attorneys for the Plaintiffs

          Toney Daniel Foster Taylor Burrage Foster Mallett Downs Ramsey & Russell Claremore, Oklahoma Attorneys for Plaintiff Stuart 2005 GST Family Trust

          Frederic Dorwart Paul DeMuro Sarah Wishard Poston Nora Rose O'Neill Fredric Dorwart Lawyers Tulsa, Oklahoma Attorneys for the Defendants

          MEMORANDUM OPINION AND ORDER

         THIS MATTER comes before the Court on Plaintiffs' Motion for Bench Trial on Plaintiffs' First Through Fourth Claims for Relief, and Brief in Support, filed February 17, 2017 (Doc. 253)(“Motion for Bench Trial”). The Court held a hearing on April 26-27, 2017. The primary issues are whether: (i) the Plaintiffs' breach-of-fiduciary-duty claims against the Defendants are equitable or legal claims; (ii) the Plaintiffs' breach-of-fiduciary-duty claims fall within the scope of the Seventh Amendment's civil jury trial right; and (iii) the Defendants consequently enjoy a constitutional right to a jury trial rather than a bench trial with regard to the Plaintiffs' breach-of-fiduciary-duty claims. To resolve these issues, the Court applies a two-prong test that the Supreme Court of the United States devised in Granfinanciera v. Nordberg, 492 U.S. 33 (1989). The first prong consists of an historical evaluation of whether breach-of-fiduciary-duty claims were within the jurisdiction of English law or equity courts in 1791, the year of the Seventh Amendment's ratification. See Granfinanciera v. Nordberg, 492 U.S. at 42. The second prong consists of an assessment of the nature of the remedies that the Plaintiffs seek with their breach-of-fiduciary-duty claims. See Granfinanciera v. Nordberg, 492 U.S. at 42. After a lengthy historical analysis, which includes review of 346 English law and equity cases between 1789 and 1791, the Court concludes with regard to the first prong that breach-of-fiduciary-duty claims were equitable in England in 1791. Analyzing the nature of the Plaintiff's remedies under the second prong, the Court determines those remedies to be legal in nature. Both because of the Granfinanciera v. Nordberg Court's instructions to weigh the second prong more heavily than the first prong and because of a strong judicial tradition of wariness to wrest issues from the jury in borderline cases, the Court concludes that: (i) the Plaintiffs' claims fall within the Seventh Amendment's scope; and (ii) the Defendants enjoy a right to a jury trial in this case with regard to the breach-of-fiduciary-duty claims. Accordingly, the Court denies the Plaintiffs' Motion for Bench Trial.

         FACTUAL BACKGROUND

         The Court adopts the factual background it previously stated in its Memorandum Opinion and Order, filed April 25, 2017 (Doc. 274). Defendant “Charles Stephenson is the owner of Regent Private Capital.” Defendants' Motion for Summary Judgment on Acquiescence Defense and Brief in Support ¶ 1, at 7, filed April 3, 2015 (Doc. 83)(“Defendants' Acquiescence MSJ”)(stating this fact).[1] See Plaintiffs' Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment on Acquiescence Defense ¶ 1, at 8, filed April 20, 2015 (Doc. 84)(“Response to Defendants' Acquiescence MSJ”)(not disputing this fact). “Defendant Cynthia Field is the daughter of Defendant Charles Stephenson.” Plaintiffs' Memorandum of Law in Support of Motion for Partial Summary Judgment on Breach of Fiduciary Claims ¶ 1, at 3, filed September 14, 2015 (Doc. 157)(“Plaintiffs' MSJ”)(stating this fact). See Defendants' Response in Opposition to Plaintiffs' Motion for Partial Summary Judgment on Breach of Fiduciary Duty Claims (Doc. 157), at 2, filed October 5, 2015 (Doc. 170)(“Response to Plaintiffs' MSJ”)(not disputing this fact). “Defendant Lawrence Field is the husband of Defendant Cynthia Field and the son-in-law of Defendant Charles Stephenson.” Plaintiffs' MSJ ¶ 2, at 3 (stating this fact). See Response to Plaintiff's MSJ at 2 (not disputing this fact). “Defendant CEP-TIR, LLC['s] . . . principals are Defendants Stephenson, Cynthia Field and Peter Boylan, [sic] III.” Plaintiffs' MSJ ¶ 3, at 3 (stating this fact).[2] “In 2009, Regent and Mr. Stephenson individually became together TIR Inc.'s largest shareholder owning approximately 40% of the TIR Inc. shares.” Defendants' Acquiescence MSJ ¶ 1, at 7 (stating this fact).[3] “At the same time a number of the Plaintiffs associated with Alan Stuart acquired a minority interest in TIR Inc.” Defendants' Acquiescence MSJ ¶ 3, at 7 (stating this fact).[4] “Alan Stuart is a ‘seasoned, successful, long-term investor with more than 40 years' experience in business development, investment management, and corporate governance.'” Defendants' Acquiescence MSJ ¶ 4, at 7 (stating this fact).[5] “The Defendant Lawrence Field, the son-in-law of Mr. Stephenson and an officer of Regent, became the chairman, and Alan Stuart became a member of the board of directors of TIR Inc.” Defendants' Acquiescence MSJ ¶ 5, at 7 (stating this fact). See Response to Defendants' Acquiescence MSJ ¶ 1, at 8 (not disputing this fact). “In February 2013, Alan Stuart prepared a proposal for Mr. Field, which he named ‘Project Poirot' to acquire control of TIR, Inc. at $369, 507 per share which he later increased to $385, 175.” Defendants' Acquiescence MSJ ¶ 6, at 7 (stating this fact).[6] “On February 11, 2013, Stuart purchased individual shareholder J.W. Lorett's TIR Inc. shares for $275, 000 per share.” Defendants' Acquiescence MSJ ¶ 7, at 7 (stating this fact).[7] “On March 21, 2013, Stuart presented an offer to the TIR board for TIR Inc. shares of $380, 382 per share.” Defendants' Acquiescence MSJ ¶ 8, at 7 (stating this fact).[8] “On May 16, 2013, Alan Stuart revised his offer to the board, increasing the repurchase price to $413, 143 per share.” Defendants' Acquiescence MSJ ¶ 9, at 8 (stating this fact).[9] “The Defendants [Charles C.] Stephenson, [Peter] Boylan, and [Cynthia A.] Field were principals in Cypress Energy Partners-TIR, LLC (“Cypress Energy Partners”). Defendants' Acquiescence MSJ ¶ 10, at 8 (stating this fact)(brackets added). See Response to Defendants' Acquiescence MSJ ¶ 1, at 8 (not disputing this fact). “In 2013, two TIR Inc. directors (Alan Stuart on the one hand and Lawrence Field on the other hand) [sought] to acquire control of TIR Inc.” Defendants' Acquiescence MSJ ¶ 11, at 8 (stating this fact)(relying on Videotape Deposition of Rodney Reynolds Taken on Behalf of the Defendants (taken November 17, 2014), filed April 3, 2015 (Doc. 83-11)(“Reynolds Depo.”).[10]“In June 2013, the Defendants [completed] the bidding process to acquire control of TIR Inc.” Defendants' Acquiescence MSJ ¶ 13, at 8 (stating this fact)(relying on Affidavit of Randall Lorett, filed April 3, 2015 (Doc. 83-2)(“Lorett Aff.”).[11]

         “On June 26, 2013, Defendant CEP-TIR, LLC acquired 26.45 shares of TIR from certain other shareholders, known as the Pooled Shareholders, in voluntary sales transactions.” Plaintiffs' MSJ ¶ 4, at 3 (emphasis in the original)(stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). “Defendants subsequently referred to this share acquisition as the ‘Control Acquisition.'” Plaintiffs' MSJ ¶ 5, at 3 (stating this fact). See Response to Plaintiff's MSJ at 2 (not disputing this fact). “Between June 2013 and October 2013, CEP-TIR LLC also [acquired] certain other outstanding shares of TIR.” Plaintiffs' MSJ ¶ 6, at 3 (stating this fact).[12] “As a result of these transactions, Defendants CEP-TIR, LLC, Stephenson, and Cynthia Field . . . became, collectively, the majority shareholders of TIR, owning at least 69.4% of the outstanding shares.” Plaintiffs' MSJ ¶ 7, at 3 (stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). CEP-TIR, LLC, Stephenson, and Field “thereby collectively gained control of TIR.” Plaintiffs' MSJ ¶ 8, at 4 (stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact).

         “From June 2013 through December 23, 2013, the Plaintiff SFF-TIR, LLC was represented by legal counsel.” Defendants' Acquiescence MSJ ¶ 14, at 8 (stating this fact).[13]“From June 2013 through December 23, 2013, the Plaintiffs Stuart Family Foundation, Inc.; Alan Stuart 2012 GST Family Trust; Stuart 2005 GST Family Trust; and Celebration, LLC were represented by legal counsel.” Defendants' Acquiescence MSJ ¶ 15, at 8 (stating this fact).[14]“Each of the individual Plaintiffs executed and delivered a proxy to SFF-TIR, LLC to act on his or her behalf with respect to his or its TIR Inc. shares which proxies were in effect on November 2, 2013.” Defendants' Acquiescence MSJ ¶ 16, at 8 (stating this fact).[15] “[T]he Plaintiffs, led by Alan Stuart, attempted to negotiate a sale of their minority block of shares to Cypress for a substantially higher share price.” Defendants' Acquiescence MSJ ¶ 19, at 9 (stating this fact).[16]

         “Following the June 26, 2013 Control Acquisition, and after certain resignations, TIR's Board of Directors had three members as of October 31, 2013: Defendant Lawrence Field, Defendant Peter Boylan, and Randall Lorett, the President and CEO of TIR.” Plaintiffs' MSJ ¶ 10, at 4 (stating this fact).[17] “On September 20, 2013, Cypress Energy Partners Limited Partnership filed a Registration Statement (including the prospectus) for the public offering of partnership units of TIR shares, pursuant to the confidentiality provisions of the Jumpstart Our Business Startups Act.” Defendants' Acquiescence MSJ ¶ 20, at 9 (stating this fact). See Response to Defendants' Acquiescence MSJ ¶ 1, at 8 (not disputing this fact). “As of November 2, 2013, all plaintiffs had granted proxies to Plaintiff SFF-TIR to vote their TIR Inc. shares and agreed among themselves not to sell their TIR Inc. shares for less than $654, 632.” Defendants' Acquiescence MSJ ¶ 21, at 9 (stating this fact).[18] “On October 31, 2013, Cypress and TIR Inc. made a Tender Offer [Letter from Cypress Energy Partners to Shareholders of Tulsa Inspection Resources, Inc. (dated October 31, 2013), filed September 15, 2015 (Doc. 158-3)(Tender Offer)] to TIR Inc.'s remaining shareholders, including the Plaintiffs, for $451, 000.” Defendants' Acquiescence MSJ ¶ 22, at 9 (stating this fact). See Response to Defendants' Acquiescence MSJ ¶ 1, at 8 (not disputing this fact).

The Tender Offer disclosed (i) that the Registration Statement had been filed, (ii) that Cypress Energy intended to enter into an underwriting agreement for the public offering of master limited partnership units and that the equity of TIR Inc. might be dropped into the new publicly traded entity, and (iii) the purchase of shares (and share prices) by which the Defendants acquired TIR Inc. shares.

         Defendants' Acquiescence MSJ ¶ 23, at 9 (stating this fact)(relying on Videotaped Deposition of Anurag Agarwal (taken September 29, 2014), filed April 3, 2015(Doc. 83-20)(“Agarwal Depo. Ex. 1”).[19] In a section called “Certain Conflicts of Interest, ” the Tender Offer states:

“As a result of the June Acquisition, Mr. Boylan, and Mr. Field (who is affiliated with Mr. Stephenson and Ms. Field) may each be deemed to have a conflict of interest related to this Offer.” Id. [Tender Offer] at 2.
“As a result of the foregoing potential conflicts of interest, the TIR Board has not been asked to and is not making any recommendation to you regarding this Offer.” Id. [Tender Offer at 2]
“None of the Purchasers, nor any of their respective affiliates has performed or commissioned any appraisal, or engaged any independent financial advisor or other third party to perform any valuation analysis or provide any opinion respecting the value of the Shares in connection with this Offer.” Id. [Tender Offer at 2]

         Plaintiffs' MSJ ¶ 12, at 4 (stating this fact)(internal citation omitted). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). The merger between TIR, Inc. and TIR, LLC “enabled the Controlling Shareholder Defendants to exchange their own TIR shares for equity in the new entity, Defendant TIR LLC, in proportion to their prior shareholders in TIR.” Plaintiffs' MSJ ¶ 15, at 4 (stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). “The Merger was approved and carried out by the following Defendants: [(i)] The Controlling Shareholder Defendants, i.e., Defendants CEP-TIR, LLC, Stephenson, and Cynthia Field; and [(ii)] TIR Directors Lawrence Field and Peter Boylan III . . . .” Plaintiffs' MSJ ¶ 16, at 4-5 (bullets and internal citations omitted)(stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). “TIR's Rule 30(b)(6) witness, Dan O'Keefe, admitted that because the Board composition had not changed, the same conflicts of interest that existed at the time of the Tender Offer also existed at the time of the Merger.” Plaintiffs' MSJ ¶ 18, at 5 (stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact).

         “On November 13, 2013, Cypress Energy's SEC Registration Statement containing the prospectus for the sale of partnership units in the master limited partnership became public.” Defendants' Acquiescence MSJ ¶ 24, at 9 (stating this fact). See Response to Defendants' Acquiescence MSJ ¶ 1, 8 (not disputing this fact). “Shortly after November 13, 2013, the Plaintiffs analyzed or had analyzed by one or more of their representatives the Registration Statement.” Defendants' Acquiescence MSJ ¶ 25, at 9 (stating this fact).[20] “By November 26, 2013, the Plaintiffs had received and either personally reviewed the October 31 Tender Offer or had had the October 31 Tender Offer reviewed by legal counsel or SFF-TIR, LLC on their behalf.” Defendants' Acquiescence MSJ ¶ 26, at 9 (stating this fact).[21] “The Plaintiffs did not accept the October 31 Tender Offer.” Defendants' Acquiescence MSJ ¶ 27, at 9 (stating this fact). See Response to Defendants' Acquiescence MSJ ¶ 1, at 8 (not disputing this fact). “The Plaintiffs could not have tendered their shares in response to the Tender Offer no matter what the Offer said or did not say; the Plaintiffs had contractually agreed prior to the Tender Offer not to sell their TIR Inc. shares for less than $654, 632.” Defendants' Acquiescence MSJ ¶ 28, at 9 (stating this fact).[22] “By November 26, 2013, the Plaintiffs had received and either (i) personally reviewed or (ii) had had reviewed by legal counsel or SFF-TIR, LLC on their behalf the Cypress Energy Partners Limited Partnership registration Statement.” Defendants' Acquiescence MSJ ¶ 29, at 10 (stating this fact).[23]

The SEC Registration Statement included the following information respecting Cypress Energy Partners Limited Partnership and the Initial Public Offering: (a) Prospectus; (b) List of risks to its business; (c) Capitalization; (d) Cash distribution policy, projections and partnership agreement provisions relating to cash distributions; (e) Historical and projected financial data: (f) Management discussion and analysis of financial condition; (g) detailed descriptions of the industries in which Cypress Energy Partners was engaged, Cypress' business and Cypress' management; (h) Cypress Energy Partners' partnership agreement; (i) Underwriting information; (j) complete audited financial statements (as of September 30, 2013).

         Defendants' Acquiescence MSJ ¶ 30, at 10 (stating this fact)(relying on Austin Aff.) .[24] “As of November 2013, TIR had (a) revenues of $346.6 million, which was and [sic] 28 percent higher than TIR's budgeted figure; (b) pretax profits of $1.6 million; and (c) $9 million year to date, which were all were [sic] the ‘highest numbers [TIR] had had historically” as of that time. Plaintiffs MSJ ¶ 26, at 6 (last set of bracketed material in the original)(stating this fact)(citing O'Keefe Depo. at 297:16-299:13). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). “TIR did not do a valuation [to inform] its merger consideration offer.” Plaintiffs' MSJ ¶ 27, at 6 (internal quotation marks omitted)(stating this fact).[25] “Defendants did not disclose to Plaintiffs TIR's internal October and November 2013 financial statements . . . showing record-breaking revenues or TIR's November 16, 2013 management projections . . . of even higher revenues through 2018.” Plaintiffs' MSJ ¶ 28, at 6 (internal citations omitted)(stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). “On November 26, 2013, the plaintiffs claimed each share of TIR Inc. was worth $650, 000.” Defendants' Acquiescence MSJ ¶ 32, at 10 (stating this fact).[26] “On November 29, 2013, Defendants advised that the Defendants could not negotiate any purchase during the tender offer period.” Defendants' Acquiescence MSJ ¶ 33, at 10 (stating this fact).[27]

         “The TIR Board unanimously approved the Merger in a consent dated December 9, 2013 signed by all three Directors.” Plaintiffs' MSJ ¶ 19, at 5 (stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). “CEP-TIR, LLC, Stephenson, and Cynthia Field, the majority shareholders in TIR, approved the Merger in a similar consent dated December 9, 2013 signed by all three of the majority shareholders.” Plaintiffs' MSJ ¶ 20, at 5 (stating this fact). See Response to Plaintiffs' MSJ at 2 (not disputing this fact). “Plaintiffs were all minority shareholders of TIR at the time of the Merger, owning the 32.882 outstanding shares that were canceled by the Merger.” Plaintiffs' MSJ ¶ 21, at 5 (stating this fact). See Response to Plaintiff's MSJ at 2 (not disputing this fact). “The Merger Agreement stated in its ‘Governing Law' provision . . . that ‘the provisions of this Agreement relating to mechanics or the effects of the Merger under Delaware law shall be governed by and construed and enforced in accordance with the laws of the State of Delaware.'” Plaintiffs' MSJ ¶ 22, at 5 (stating this fact)(quoting Merger Agreement at § 8.04).[28]

         “On December 9, 2013, Cypress and TIR exercised their statutory right to cash-out the Plaintiffs . . . .” Defendants' Acquiescence MSJ ¶ 34, at 10 (stating this fact)(relying on Notice to Former Shareholders of Tulsa Inspection Resources, Inc. of Shareholder Action and Appraisal Rights (dated December 11, 2013), filed April 3, 2015 (Doc. 83-27).[29] “On December 11, 2013, the Plaintiffs received timely after-the-fact notice of the Merger and their appraisal rights in accordance with the Oklahoma statutes.” Defendants' Acquiescence MSJ ¶ 37, at 11 (stating this fact). See Response to Defendants' Acquiescence MSJ ¶ 1, at 8 (not disputing this fact). “The Merger Agreement (dated December 9, 2013), filed April 3, 2015 (Doc. 83-27), provides that:

For the avoidance of doubt, any former shareholder who surrenders his, her or its share certificate (or acceptable evidence of share ownership for payment of Merger Consideration pursuant to Section 2.02 [payment provisions], shall be deemed to have (a) accepted the Merger Consideration and (b) forever waived any appraisal rights pursuant to this Section 2.03 [provisions respecting dissenting share], Section 1091 of the [Oklahoma General corporation Act], or otherwise.

         Defendants' Acquiescence MSJ ¶ 38, at 11 (citing Agarwal Depo. Ex. 7)(stating this fact). See Response to Defendants' Acquiescence MSJ ¶ 1, at 8 (not disputing this fact). “On December 18-20, 2013, each Plaintiff delivered his or its TIR Inc. share certificates to the Defendant CEP-TIR, along with stock powers, pursuant to the provisions of the Merger Agreement.” Defendants' Acquiescence MSJ ¶ 39, at 11 (stating this fact).[30] “On December 23, 2013, the Defendant TIR LLC paid . . . Plaintiffs . . . the $451, 000 per share Merger Consideration.” Defendants' Acquiescence MSJ ¶ 40, at 11 (stating this fact).[31] “As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs knew the Defendants had acquired control of TIR Inc.” Defendants' Acquiescence MSJ ¶41, at 11 (stating this fact).[32]“As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs knew the transactions by which the Defendants acquired controlling shares of TIR, Inc. and the prices paid for those shares.” Defendants' Acquiescence MSJ ¶ 42, at 11 (stating this fact).[33]

         “Defendants admit that they did not: [(i)] Form a special committee of disinterested directors or other disinterested persons to consider the proposed merger; [(ii)] Engage any independent financial advisor or other third party valuation analysis; or [(iii)] Require a majority-of-the-minority vote for the Merger to be approved.” Plaintiffs' MSJ ¶ 23, at 5-6 (bullets and internal citations omitted)(stating this fact). See Response to Plaintiffs' MSJ at 3 (not disputing this fact). “There is no other evidence that Defendants employed any of the above devices at the time of, and in connection with, the Merger.” Plaintiffs' MSJ ¶ 24, at 6 (stating this fact). See Response to Plaintiffs' MSJ at 3 (not disputing this fact).

As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs knew the Defendants' conflicts of interest between their positions as officers, directors and shareholders of TIR Inc. and their positions as officers, directors, and equity owners of Cypress Energy and its Affiliates.

         Defendants' Acquiescence MSJ ¶ 43, at 11 (stating this fact)(relying on Allen Depo. at 108:3-112:3).[34]

As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs knew the intentions of the Defendants respecting the organization of a master limited partnership, the exchange of shares of TIR Inc. for units of ownership in the master limited partnership, and an initial public offering of units of ownership in the master limited partnership.

         Defendants' Acquiescence MSJ ¶ 44, at 12 (stating this fact)(relying on Allen Depo. at 191:8-193:4).[35]

As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs knew the Defendants had not performed or commissioned any appraisal, or engaged any independent financial advisor or other third party to perform any valuation analysis or provide any opinion respecting the value of the TIR, Inc. shares.

         Defendants' Acquiescence MSJ ¶ 45, at 12 (stating this fact)(relying on Allen Depo. at 99:5-104:24, Agarwal Depo. at 42:1-44:17, and Agarwal Depo. Ex. 1).[36]

As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs knew the Defendants had not obtained the approval of a majority of the minority in effecting the Merger: the Plaintiffs were the remaining TIR Inc. minority shareholders. As a group, the Plaintiffs had demanded in September to sell their shares for a price in excess of $600, 000 per share, and in November had agreed amongst themselves not to accept the Tender Offer.

         Defendants' Acquiescence MSJ ¶ 46, at 12 (stating this fact).[37] “As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs knew the Defendants had not formed a special committee to consider the proposed Merger.” Defendants' Acquiescence MSJ ¶ 47, at 12 (stating this fact)(relying on Allen Depo. at 272:3-273:17).[38]

As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs had been provided the financial statements of TIR Inc. for 2011 and 2012, and for the nine month period ending September 30, 2013.

         Defendants' Acquiescence MSJ ¶ 48, at 12 (stating this fact)(relying on Allen Depo. at 83:18-84:1, 223:21-224:3).[39] “As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares to obtain the Merger consideration), the Plaintiffs had received the Registration Statement.” Defendants' Acquiescence MSJ ¶ 49, at 12 (stating this fact)(relying on Allen Depo. at 194:2-11).[40]

As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares . . .), the Plaintiffs believed that the Defendants did not believe (and had no reasonable basis to believe) that $451, 100 per TIR Inc. share represented a premium over the fair value of such shares.

         Defendants' Acquiescence MSJ ¶ 50, at 13 (stating this fact)(relying on Allen Depo. at 206:11-208:25).[41]

As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the dates on which the Plaintiffs surrendered their TIR Inc. shares . . .), Plaintiffs believed both Plaintiffs' financial presentations and Defendants' financial presentations showed the TIR Inc. shares were worth several multiples of $451, 000.

         Defendants' Acquiescence MSJ ¶ 51, at 13 (stating this fact)(relying on Complaint, filed July 3, 2014 (Doc. 1)).[42]

On February 4, 2014, Plaintiff SFF-TIR, LLC by its Managing Member, Alan Stuart, sent a letter to the investors in Plaintiff SFF-TIR in the form and content of [Letter from Alan Stuart to SFF-TIR, LLC investors (dated February 12, 2014), filed April 3, 2015 (Doc. 83-31)(“Letter to SFF-TIR, LLC Investors”)], which stated, in part, as follows
“We are pleased to inform our investors in SFF-TIR, LLC (‘SFF[-]TIR') we were able to liquidate our equity position in Tulsa Inspection Resources, Inc. (‘TIR'). On December 23, 2013 we received cash consideration of $451, 000 per share for a total cash consideration of $5, 763, 780. The investment in TIR has generated 2.47x our original investment with a net annualized IRR of 40.42%.”

         Defendants' Acquiescence MSJ ¶ 53, at 13 (stating this fact)(quoting Letter to SFF-TIR, LLC Investors 1, filed April 3, 2015 (Doc. 83-32)).[43]

After . . . December 18-20, 2013, Defendants CEP-TIR, Charles Stephenson, and Cynthia Field, believing the Plaintiffs to have waived all claims to additional consideration for their shares, contributed 50.1% of the member interest in TIR LLC to Cypress Energy Partners Limited Partnership, and Cypress Energy Partners Limited Partnership effected a sale of partnership units to the public pursuant to the Registration Statement.

         Defendants' Acquiescence MSJ ¶ 54, at 13 (stating this fact)(relying on Austin Aff. ¶ 5, at 2-3).[44] “On July 3, 2014, the Plaintiffs filed this action.” Defendants' Acquiescence MSJ ¶ 55, at 13 (stating this fact)(relying on Complaint). See Response to Defendants' Acquiescence MSJ ¶ 1, at 8 (not disputing this fact).

         PROCEDURAL BACKGROUND

         With this Memorandum and Opinion, the Court resolves and decides the Plaintiff's Motion for a Bench Trial. In this section, the Court will summarize the Motion for a Bench Trial, the Defendants' response, Plaintiffs' reply, and the Defendants' surreply. The Court also recapitulates the parties' arguments during the motion hearing, during which the parties, with only two main exceptions, adhered to the points and arguments they raised in their briefings.

         1. Plaintiffs' Motion for a Bench Trial.

         On February 17, 2017, the Plaintiffs filed Plaintiffs' Motion for a Bench Trial. The Plaintiffs first assert that the Court's dismissal of the Plaintiffs' securities claims leaves no claims that are triable by a jury. See Motion for a Bench Trial at 5. According to the Plaintiffs, the Seventh Amendment to the Constitution of the United States of America provides that “[in] Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” Motion for a Bench Trial at 5 (quoting U.S. Const., amend. VII). The Plaintiffs report that the Supreme Court has interpreted “Suits at common law” to encompass cases involving “suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered.” Motion for a Bench Trial at 5 (quoting Granfinanciera v. Nordberg, 492 U.S. at 41). As the Plaintiffs read the law, whether a claim is entitled to a jury trial in diversity cases is, therefore, a decision that a court must make according to federal law. See Motion for a Bench Trial at 5 (citing Mile High Industries v. Cohen, 222 F.3d 845, 856 (10th Cir. 2000)).

         The Plaintiffs contend that Granfinanciera v. Nordberg creates a two-part test to determine whether a claim should go before a jury. See Motion for a Bench Trial at 5. The first part, the Plaintiffs say, is historical: a court must compare the statutory action to Eighteenth Century actions brought more than a century before the merger of the courts of law and equity. See Motion for a Bench Trial at 5. The second part, the Plaintiffs maintain, is taxonomic: a court must examine whether the remedy that a plaintiff seeks is legal or equitable in nature. See Motion for a Bench Trial at 5. According to the Plaintiffs, the second part of the test is more important than the first part. See Motion for a Bench Trial at 6 (citing Granfinanciera v. Nordberg, 492 U.S. at 42).

         Under the Granfinanciera v. Nordberg test's first part, the Plaintiffs assert, the Plaintiffs' fiduciary duty and unjust enrichment claims -- the only claims remaining after the Court dismissed the Plaintiffs' securities claims -- are not triable by a jury, because they are equitable claims.[45] See Motion for a Bench Trial at 6. The Plaintiffs maintain that Delaware law defines claims against a corporation's controlling shareholders, officers, and directors for breaches of fiduciary duty of loyalty and entire fairness as “equitable, ” even those claims seen as a damages remedy Motion for a Bench Trial at 6 (quoting In re JCC Holding Co., 843 A.2d 713, 724 (Del. Ch. 2003)). Accordingly, the Plaintiffs assert, these breach-of-fiduciary-duty claims carry with them no right to a jury trial. See Motion for a Bench Trial at 6 (citing Miller v. Sun Capital Partners, Inc., 2016 WL 4941989, at *6-7 (D. Del. September 15, 2016)(Andrews, J.)). Invoking Cantor v. Perelman, 2006 WL 318666 (D. Del. February 10, 2006)(Jordan, J.), to explain why they conclude that it is inarguable that a breach-of-fiduciary-duty claim under Delaware corporate law is historically equitable, the Plaintiffs maintain that TIR's corporate officers, directors, and controlling shareholders

“Are not permitted to use their position of trust and confidence to further their private interests. While technically not trustees, they stand in a fiduciary relation to the corporation and its stockholders. Thus, a violation of those duties is treated as a breach of fiduciary duty analogous to that owed by a trustee to a beneficiary[, ] [which is a] type of claim historically within the exclusive jurisdiction of courts of equity. . . . [S]uch claims historically carry with them no right to a trial by jury.”

Motion for a Bench Trial at 7 (quoting Cantor v. Perelman, 2006 WL 318666, at *6-7)(alterations in the Motion for a Bench Trial). Pointing the Court to three federal district court cases, the Plaintiffs contend that their unjust-enrichment claims likewise is equitable and, therefore, not triable by a jury. See Motion for a Bench Trial at 7-8 (citing United States v. DeFelice, 2016 WL 538464, at *3 (E.D. Okla. February 9, 2016); Bustillos v. Bd. Of Cty. Commissioners of Hidalgo Cty., 2015 WL 8014565, at *23-24 (D.N.M. October 20, 2015)(Browning, J.); U.S. Bank Nat. Ass'n v. Verizon Communications Inc., 2012 WL 987539, at *1 n.1 (N.D. Tex. Mar. 21, 2012)(Fish, S.J.)).

         Under the Granfinanciera v. Nordberg test's second part, the Plaintiffs assert, the Plaintiffs' fiduciary-duty and unjust-enrichment claims are not triable by a jury, because those claims sought equitable remedies. See Motion for a Bench Trial at 8. The Plaintiffs refer to their Amended Complaint, filed September 30, 2015 (Doc. 167)(“Amended Complaint”), in which they maintain they seek disgorgement from the Defendants of the benefits of a “grossly unfair transaction.” Motion for a Bench Trial at 8 (quoting Amended Complaint ¶ 160, at 30). The Plaintiffs state that, in the alternative, they also seek the equitable remedies of (i) rescissionary damages; (ii) a judgment requiring the Defendants to “‘pay forthwith the judgment amount awarded in favor of Plaintiffs'”; and (iii) “‘such other and further relief as the Court deems just and proper.'” Motion for a Bench Trial at 8 (quoting Amended Complaint ¶¶ G & H, at 34). The Plaintiffs assert that, as claims that are entirely equitable in nature, these claims are not triable by a jury under Granfinanciera v. Nordberg, even though the Plaintiffs also seek monetary relief in the form of “‘compensatory'” damages, “‘punitive damages, '” and costs and expenses, in addition to, or in the alternative to, equitable remedies. Motion for a Bench Trial at 9-10 (quoting Amended Complaint ¶¶ A-F, at 34)

         Proceeding to their Granfinanciera v. Nordberg's next part, the Plaintiffs then contend that the Defendants have no right to a jury trial on the fiduciary-duty and unjust-enrichment claims under rules 38 and 39 of the Federal Rules of Civil Procedure. See Motion for a Bench Trial at 10. The Plaintiffs parse the language in their Amended Complaint, noting that they demand “a trial by jury in this action for all issues so triable.” Motion for a Bench Trial at 10 (quoting Amended Complaint at 35). According to the Plaintiffs, their demand did not encompass their fiduciary-duty and unjust-enrichment claims, because those claims are equitable and therefore not “so triable.” Motion for a Bench Trial at 10. Furthermore, the Plaintiffs say, the Defendants waived their right to a jury trial when they failed to make their own jury demand. See Motion for a Bench Trial at 10-11 (citing Fed.R.Civ.P. 38(b) & (d)).

         2. Defendants' Response.

         On March 3, 2017, the Defendants filed Defendants' Brief in Opposition to Plaintiffs' Motion for a Bench Trial [Doc. No. 253]. See Defendants' Brief in Opposition to Plaintiffs' Motion for a Bench Trial [Doc. No. 253], filed March 3, 2017 (Doc. 256)(“Response”). After a short encomium to the civil jury, the Defendants remark that the Plaintiffs affirm their original jury demand not only in the Amended Complaint that they filed last autumn, but also during discussions about the breach-of-fiduciary-duty claims and fair price during the December 27, 2016, hearing. See Response at 1-2. The Defendants then accuse the Plaintiffs of attempting to reverse course and thereby not only deny the Defendants their right to a jury trial but also subvert the Supreme Court's Seventh Amendment jurisprudence. See Response at 2.

         According to the Defendants, they first have a right to a jury trial on the fiduciary-duty claims under the very two-part Granfinanciera test that the Plaintiffs invoke. See Response at 3. The Defendants assert that the United States Court of Appeals for the Tenth Circuit's prevailing view is that fiduciary duty claims' nature is legal and not equitable. See Response at 4. The Defendants dismiss the Plaintiffs' citations to Delaware state case law as non-binding authority, on the grounds that the Supreme Court has held that the characterization of a state-created right as legal or equitable for the purposes of a jury right under the Seventh Amendment must be made by recourse to federal law. See Response at 4 (citing Simler v. Conner, 372 U.S. 221, 222 (1963)). Relying on an opinion out of the United States District Court for the Southern District of Ohio, the Defendants argue that Delaware practice is irrelevant:

“Delaware has maintained the separation of law and equity courts, so that if this case were being tried in Delaware, it would be tried in Chancery Court without a jury. However, practice in the state courts in 2008 is not determinative, particularly since the state courts are not bound by the Seventh Amendment. The Seventh Amendment is not binding on the States through the Fourteenth Amendment. . . . Instead, it applies only to courts sitting under authority of the United States. . . . The question is not whether this case would be tried in an equity court in Delaware today, but whether it could have been heard in a law court in England in 1791.

         Response at 4-5 (quoting Official Committee v. Hendricks, 2008 WL 5428012, at *2 (S.D. Ohio October 2, 2008)(Merz, J.))(emphasis applied in the Response). The Defendants contend that applying federal law to make the determination whether this action would have been heard in a law court in England in 1791 yields the certain result that the Plaintiffs' claims would have been tried in a law court. See Response at 5. Consequently, the Defendants maintain, they have a right to demand a jury trial. See Response at 5-6.

         Furthermore, the Defendants argue, the remedy available to the Plaintiffs on their breach-of-fiduciary-duty claims is a quintessentially legal remedy: compensatory damages. See Response at 6. In contrast, the Defendants continue, the rescissionary damages that the Plaintiffs seek are equitable damages that are unavailable to the Plaintiffs, because -- they allege -- the Plaintiffs' delay in bringing suit made rescission impossible. See Response at 6-7. As the Defendants recount these facts, the Plaintiffs received merger notice on December 11, 2013, and then exchanged their shares for the merger consideration later in December, 2013. See Response at 7. Moving forward in the merger timeline, the Defendants say that they initiated the Initial Public Offer on January 14, 2014, and that the Plaintiffs did not file this action until nearly six months later on July 3, 2014. See Response at 7. From these facts, the Defendants conclude that rescission and rescissionary damages both are unavailable to the Plaintiffs, because (i) the merger was effected so long ago that it cannot be unwound; and (ii) the Plaintiffs' unwarranted delay challenging the merger barred them from seeking rescissionary damages. See Response at 7-9.

         The Defendants concede that the Plaintiffs' unjust-enrichment claim appears to have been an equitable claim in 1791. See Response at 10. Nevertheless, the Defendants insist that the two-stage Granfinanciera v. Nordberg analysis gives greater weight to the category of remedy that a plaintiff seeks. See Response at 10. According to the Defendants, this fact combines with a strong bias in federal law toward jury trials to override the historical analysis in the first stage and to make the unjust enrichment claim triable by a jury. See Response at 10. The Defendants assert that the cases which the Plaintiffs present to suggest otherwise are unconvincing and easily distinguishable from this case's facts. See Response at 11 & n. 9.

         Briefly turning to their second argument, the Defendants then maintain that rule 38(d) of the Federal Rules of Civil Procedure prevents the Plaintiffs from withdrawing their jury demand without the Defendants' consent. See Response at 12. Moreover, the Defendants continue, they relied on the Plaintiffs' jury demand, and the Court has “more than ample authority” to grant a jury trial under rule 39(b). Response at 12. Consequently, the Defendants request that the Court deny the Plaintiffs' motion for a bench trial. See Response at 12-14.

         3. Reply.

         On March 17, 2017, the Plaintiffs filed Plaintiffs' Reply Brief in Further Support of Motion for a Bench Trial on Plaintiffs' First Through Fourth Claims for Relief. See Plaintiffs' Reply Brief in Further Support of Motion for a Bench Trial on Plaintiffs' First Through Fourth Claims for Relief, filed March 17, 2017 (Doc. 257)(“Reply”). The Plaintiffs first repeat the argument from their Motion for a Bench Trial that their fiduciary-duty and unjust-enrichment claims are equitable in nature. See Reply at 1. The Plaintiffs dismiss the Defendants' assertion that Delaware state court practice is irrelevant to this inquiry, because their breach of fiduciary duty claims are Delaware breach-of-fiduciary-duty claims, which the Delaware Chancery Court on one occasion called “‘the quintessential equitable claim.'” Reply at 1-2 (emphasis in original)(quoting QC Commens Inc. v. Quartarone, 2013 WL 1970069, at *1 (Del. Ch. May 14, 2013)(Glasscock, V.C.)). Furthermore, the Plaintiffs assert, only equity courts could hear fiduciary-duty claims in 1791, and the Defendants do not cite any case that establishes that the Plaintiffs' Delaware fiduciary-duty and unjust-enrichment claims are legal rather than equitable. See Reply at 2-3.

         Moving to their argument's second part, the Plaintiffs then characterize their fiduciary-duty and unjust-enrichment claims as seeking equitable relief. See Reply at 3. The Plaintiffs note that the Defendants concede that the Plaintiffs allege both legal and equitable remedies even as the Defendants contend that they are constitutionally entitled to a jury trial, because the Plaintiffs predominantly seek the remedy of compensatory damages. See Reply at 3. The Plaintiffs see the Defendants' argument as a unpersuasive, insisting that the Supreme Court never has gone so far as to say that any award of monetary relief must be legal relief, instead holding that the relief may be an equitable remedy if the award is restitutionary in nature, such as in actions for disgorgement of improper profits. See Reply at 3 (citing In re Allied Systems Holdings, Inc., 524 B.R. 598, 611, 609 & n.45 (Bankr. D. Del. 2015)(Sontchi, J.)). The Plaintiffs maintain that they seek just such an equitable remedy in the form of a monetary award for the fair value that they allege rightfully belongs to them. See Reply at 4-5. According to the Plaintiffs, Delaware law expressly provides that an equitable entire-fairness challenge to a merger entitles a plaintiff to this equitable remedy. See Reply at 3 (citing In re Cornerstone Therapeutics Inc. Stockholder Litigation, 2014 WL 4418169, at *6 & nn.42-43 (Del. Ch. September 10, 2014), rev'd on other grounds, 115 A.3d 1173 (Del. 2015)).

         The Plaintiffs then tackle the Defendants' assertion that the Plaintiffs are not entitled to rescission or rescissionary damages on account of the delay between the merger and the time that they filed suit challenging the cash out of their TIR shares. See Reply at 6. According to the Plaintiffs, the Defendants argument is unconvincing from the beginning, because rescissionary damages are not the only equitable remedy that the Plaintiffs seek. See Reply at 7. Moreover, the Plaintiffs insist, the Defendants can cite as proof of their position that a delay waives a plaintiff's right to rescissionary damages only a handful of cases where the delay was measured in years rather in months as in this case. See Reply at 7. The Plaintiffs contend that, ultimately, none of the cases to which the Defendants refer the Court preclude the Plaintiffs from obtaining rescission or rescissionary damages. See Reply at 7-9.

         Closing their argument, the Plaintiffs insist that the Defendants have no right to a jury trial on the Plaintiffs' fiduciary-duty and unjust-enrichment claims. See Reply at 9. The Plaintiffs repeat the contention from their Motion for a Bench Trial that their Amendment Complaint demands a jury trial only for “all issues so triable, ” which they maintain does not encompass the allegedly legal fiduciary-duty and unjust-enrichment claims. Reply at 9. According to the Plaintiffs, the Defendants did not make their own jury demand, so the Court does not have discretion under rule 39(b) to order a jury trial on these claims. See Reply at 10. The Plaintiffs accordingly request that the Court grant their Motion for a Bench Trial. See Reply at 10.

         4. Surreply.

         On May 1, 2017, the Defendants filed Defendants' Surreply in Further Opposition to Plaintiffs' Motion for Bench Trial [Doc. No. 253]. See Defendants' Surreply in Further Opposition to Plaintiffs' Motion for Bench Trial [Doc. No. 253], filed May 1, 2017 (Doc. 277)(“Surreply”). The Defendants first insist that the right to trial by jury is fundamental and sacred to United States citizens, and that the Court must jealously guard this right. See Surreply at 1 (citing Jacob v. New York, 315 U.S. 752, 752-53 (1942)). The Defendants assert that the jury's role as finder of fact under the Seventh Amendment is so important that even an advisory jury fails to satisfy the constitutional requirements under the Seventh Amendment. See Surreply at 1 (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 337 n. 24 (1979)). Consequently, the Defendants conclude, the Seventh Amendment entitles the Defendants to a jury to determine the amount of damages, if any, that the Defendants must pay the Plaintiffs. See Surreply at 2 (citing Mile High Industries v. Cohen, 222 F.3d 845, 856 (10th Cir. 2000)). According to the Defendants, the Plaintiffs agree that the controlling factor in determining the Defendants' right to a jury trial is the characterization of the remedies that the Plaintiffs seek as either legal or equitable. See Surreply at 2 (citing Motion for a Bench Trial at 7). Under this test, the Defendants contend, four propositions demonstrate that the Defendants' right to a jury trial is indisputable. See Surreply at 2.

         First, the Defendants assert, the Plaintiffs' delay in challenging the merger allowed innocent third-party investors to invest in TIR through the anticipated IPO, which makes rescission an impossible remedy. See Surreply at 2. The Defendants report that the Plaintiffs concede rescission is impracticable, and they maintain that the Plaintiffs advised the Court that they do not seek rescission. See Surreply at 2. The Defendants explain that rescission is impracticable, because the Plaintiffs delayed challenging the merger until nearly six months after the IPO. See Surreply at 2.

         Second, the Defendants contend, the alternate remedy of rescissory damages also is unavailable, because rescission is not sought and is unavailable. See Surreply at 3. According to the Defendants, case law uniformly holds that, where rescission is made unavailable on account of a plaintiff's post-transaction conduct, rescissionary damages are unavailable. See Surreply at 4. The Defendants insist that the three cases which the Plaintiffs assert come to the opposite conclusion are easy to distinguish from this case. See Surreply at 4. As the Defendants report the first case, In re MAXXAM, Inc., 659 A.2d 760 (Del. Ch. 1995)(Jacobs, V.C.), the Delaware Chancery Court specifically concluded that the record evidence was insufficient to determine the possibility of a rescission remedy. See Surreply at 4. As the Defendants report the second case, In re Cornerstone Technologies, 2014 WL 4418169 (Del. Ch. June 5, 2014)(Glasscock, V.C.), the Delaware Chancery Court did not address the issue of rescission. See Surreply at 4. As the Defendants report the third case, In re Orchard Enterprises, Inc. Stockholder Litigation, 88 A.3d 1 (Del. Ch. 2014)(Laster, V.C.), the Delaware Chancery Court, although declining to conclude that rescissionary damages could never be obtained, concluded that the evidentiary record before the Court was insufficient to determine the issue. See Surreply at 5. The Defendants dismiss the Plaintiffs' related “Hail Mary attempt to pass off their claim as disgorgement” to circumvent the ponderous weight of case law against them as “logically fallacious, because Plaintiffs simultaneously say they can't have back what Defendants took but want, instead[, ] the value of what they allege Defendants' took -- that is precisely compensatory damages as the law universally holds.” Surreply at 5.

         Third, the Defendants maintain, the Plaintiffs seek compensatory damages, which necessitate a jury. See Surreply at 6. According to the Defendants, rule 26(a)(I)(A)(iii) of the Federal Rules of Civil Procedure requires the Plaintiffs to provide a computation of the alleged damages that the Plaintiffs seek. See Surreply at 6. The Defendants report that Plaintiffs responded to rule 26(a)(I)(A)(iii)'s requirement by dividing the damages they seek into two categories: (i) the damages that arise from their breach-of-fiduciary-duty and unjust-enrichment claims (counts I-IV); and (ii) the damages that arise from their securities law claims (counts V-VIII). See Surreply at 6. The Defendants assert that the Plaintiffs calculate these damages on the basis of TIR shares' alleged value on the merger date less the $451, 000.00 per share merger consideration -- a methodology that the Defendants characterize as a classic compensatory damages calculation. See Surreply at 7 (citing Owen v. Cannon, 2015 WL 3819204, at *32 (Del. Ch. March 17, 2015)(Bouchard, C.)). The Defendants assert that the Plaintiffs' expert expressly calculated compensatory damages to determine TIR shares' fair value on the merger date. See Surreply at 8. In contrast, the Defendants contend, rescissionary damages are not calculated as of the merger date, but rather “‘generally reflects the value of the wrongfully taken property at the time of judgment.'”). Surreply at 8-9 (quoting Reis v. Hazelett Strip-Casting Corp., 28 A.3d 442, 467-68 (Del. Ch. 2011)(Laster, V.C.)). In summary on this third proposition, the Defendants assert: (i) the Plaintiffs seek money in lieu of what the Defendants allegedly took from them, which the Defendants say is not disgorgement; and (ii) the Plaintiffs, throughout the litigation, have calculated and seek classic compensatory damages. See Surreply at 9. Accordingly, the Defendants maintain, the Court should deem: (i) the compensatory damages to be a legal remedy; and (ii) the Defendants, under the Granfinanciera test, to therefore have a right to a jury trial under the Seventh Amendment. See Surreply at 9.

         Fourth, the Defendants aver, in partial overlap with their third proposition, the Tenth Circuit has held that the remedy the Plaintiffs seek is legal and therefore falls with the scope of the Seventh Amendment's jury trial guarantee. See Surreply at 10. The Defendants read Elm Ridge Exploration Co. LLC v. Engle 721 F.2d 1199 (10th Cir. 2013), to hold that a compensatory damages claim arising from a breach of fiduciary duty is a legal claim entitling the defendant to a jury trial. See Surreply at 10-11 (citing Elm Ridge Exploration Co. LLC v. Engle, 721 F.3d at 1222-23).[46] According to the Defendants, Elm Ridge Exploration Co. LLC v. Engle stands for the proposition that, even if a claim is equitable in origin, if the relief sought is compensatory damages, the remedy is “‘peculiarly with[in] the province of the law courts. . . .'” Surreply at 11 (quoting, without pincite and with are incorrect word, Elm Ridge Exploration Co. LLC v. Engle, 721 F.3d at 1223)(alteration added). The Defendants assert that it necessarily follows that a defendant is entitled to a jury trial when the plaintiff is faced with a claim for compensatory damages. See Surreply at 11-13.

         The Defendants append a fifth proposition with four parts asserting that they did not waive their alleged constitutional right to a jury trial. See Surreply at 13. First, the Defendants argue, the Plaintiffs demanded a jury trial on their breach-of-fiduciary-duty claims in both the Complaint and the Amended Complaint. See Surreply at 13. The Defendants accuse the Plaintiffs of disingenuousness when they “attempt to run from their prior legal position by claiming their prior position related only to their securities law claims.” Surreply at 13. Second, the Defendants maintain, the Defendants were entitled to rely on the Plaintiffs' clear demand for a jury trial. See Surreply at 14. Third, the Defendants protest, the Plaintiffs are misguided when they contend that there is a “magic requirement” for a motion to trigger a jury demand. Surreply at 14 (citing Reply to Motion for a Bench Trial at 10; FDIC v. Palermo, 815 F.2d 1329, 1333-34 (10th Cir. 1987)).[47] Fourth, the Defendants insist, district courts should exercise their discretion to grant motions for jury trials under rule 39(b) of the Federal Rules of Civil Procedure absent strong and compelling reasons to deny a particular motion for jury trial. See Surreply at 14 (citing AMF Tuboscope, Inc. v. Cunningham, 352 F.2d 150, 155 (10th Cir. 1965)). According to the Defendants, the Plaintiffs do not offer any reason -- let alone a compelling reason -- to deny the Defendants their purported constitutional right to a jury trial in this case. See Surreply at 14- 15. Consequently, the Defendants conclude, the Defendants have not waived their right to a jury trial under the Seventh Amendment. See Surreply at 14.

         5. April 26 and 27 Hearing.

         The Court held a hearing on April 26 and 27, 2017. See Transcript of Motion Hearing Before the Honorable James O. Browning United States District Judge, April 26, 2017, filed June 5, 2017 (Doc. 282); Transcript of Motion Hearing Before the Honorable James O. Browning United States District Judge, April 27, 2017, filed June 5, 2017 (Doc. 283)(collectively “Tr.”).[48] The Plaintiffs broached the topic of its motion for a bench trial by asserting that virtually all cases that are entire-fairness cases -- whether they are heard in Delaware or elsewhere -- go before a “distinguished, experienced judge who has often a decade or more of expertise in determining fair value.” Tr. at 241:21-242:15 (Kagen). The Plaintiffs pegged the reason for this purported pattern to the complexity inherent to the entire-fairness test. See Tr. at 242:15-19 (Kagen). According to the Plaintiffs, the Court -- if it wishes for a jury to be the trier of fact -- will have to explain to the jurors what fair-market value is and distinguish fair value from the value at which TIR's minority shareholders were cashed out of their shares. See Tr. at 242:20-22 (Kagen). Furthermore, the Plaintiffs asserted, the Court will need to bring the jurors up to speed on abstruse concepts such as minority discounts and liquidity discounts. See Tr. at 242:22-24 (Kagen). Seemingly implying that such concepts are beyond jurors' comprehension, the Plaintiffs argued that the need to educate jurors in these concepts will prejudice the Plaintiffs under rule 403 of the Federal Rules of Evidence in a way that does not normally arise in a Delaware Chancery Court case. See Tr. at 243:1-3 (Kagen). When the Court asked the Plaintiffs whether they also feared the possibility of such prejudice in a bench trial, the Plaintiffs responded that the fear was much less than their fear of jury prejudice. See Tr. at 281:24-282:8 (Kagen, Court).

         The Court then shared its preliminary thoughts on the need for a bench trial on account of the case's complexity:

I just finished up at the end of last year a very big accounting trial with the [Securities Exchange Commission]. Of course, some of the accounting terms were difficult and had to be explained with multiple experts, but that's just the way it goes. You just -- you know, you just have to get your experts ready to talk and be teachers and explain.

Tr. at 282:12-18 (Court). The Plaintiffs pushed back, indicating that they appreciated the Court's position and prefer limiting jury instructions if the Court decides to have a jury, but reemphasized that they believe themselves at risk of pronounced prejudice if the case were before a jury. See Tr. at 283:10-16 (Kagen). The Plaintiffs explained that the core concepts in the case are “very complex” and “esoteric at best to the uninitiated, ” so much so that the Plaintiffs' own expert on pipelines -- who has a doctorate -- made a basic error when computing a fair value discount for the TIR shares' lack of marketability. Tr. at 283:17-285:16 (Kagen).

         The Plaintiffs rhetorically asked how jurors could be expected to understand topics so recondite, suggesting that any attempt to educate the jurors in these topics would prove futile. See Tr. at 285:17-21 (Kagen). The result of a jury trial, in the Plaintiffs estimation, therefore would be extraordinary prejudice under rule 403 of the Federal Rules of Evidence that jury instructions could not cure. See Tr. at 285:22-290:23 (Kagen). If the financial jargon confuses even one juror out of ten, the Plaintiffs said, then the Plaintiffs would not receive the damages that they are due. See Tr. at 289:1-5 (Kagen). In contrast, the Plaintiffs speculated, the Court has been sufficiently immersed in the parties' discussion of these abstruse topics during hours of hearings that -- combined with its ability to read and comprehend the underlying case law -- the Court is not nearly as likely as a jury is to be confused or prejudiced. See Tr. at 289:13-24 (Kagen). The Court then called the hearing to close for the day. See Tr. at 292:2-4 (Court).

         On the next day, the parties did not immediately return to discussion of the Motion for a Bench Trial. See Tr. at 295:1-369:4 (Court, DeMuro, Kagen). Feinting toward the topic at one point, the Court noted its hesitancy to believe that jurors cannot understand complex evidence, indicating:

I think they're a lot more capable of understanding issues than sometimes our appellate judges, who maybe haven't tried a lot of cases, think. I mean, they're good people. . . . And sometimes they bring a heavy dose of common sense to --sometimes you got a complex case and we all overthink it and everything in the world and sometimes they -- I believe in the wisdom of groups and they do a good job.

Tr. at 369:19-370:2 (Court). At the same time, the Court did not minimize the difficulties that would attend explaining some finer financial and legal points to the jurors. See Tr. at 380:16-17 (Court). The Defendants agreed with the Court's sentiment, attesting: “[t]hat's been my experience too. I've tried cases that are equally and more complex than this and have found that if the lawyers do their job and the jury gets the information they need, they're able to make -- and follow the instructions -- make the necessary rulings.” Tr. at 370:2-7 (DeMuro).

         The parties detoured to discussing other outstanding motions before returning to the jury issue after the lunch break. See Tr. at 370:8-409:14 (Court, DeMuro, Kagen). The Court shared that it had not yet come to a tentative inclination on how to decide the Motion for a Bench Trial, in part on the grounds that the Court had not explored the issue before in any other case. See Tr. at 409:24-410:8 (Court). The Plaintiffs thanked the Court for the status check and then sought to convince the Court that it is fairly clear that there is no jury trial for the remaining claims. See Tr. at 410:9-18 (Kagen). The Plaintiffs referred the Court to the Granfinanciera v. Nordberg two-part test to determine whether a jury trial is required. See Tr. at 410:24-411:7 (Kagen). Turning to the Granfinanciera v. Nordberg test's first part -- an historical analysis -- the Plaintiffs contended that the Court must determine whether breach-of-fiduciary-duty and unjust-enrichment were claims that form a suit at common law or a suit at equity when the Seventh Amendment was ratified in 1791. See Tr. at 411:8-412:12 (Kagen). The Plaintiffs acknowledged that this historical evaluation will be deceptively difficult, insofar as the Court would have to grapple with claims under federal statutes that did not exist before the merger of common law and equity. See Tr. at 412:12-20 (Kagen). Nevertheless, in the final analysis, the Plaintiffs insisted, the Court will discover that both breach-of-fiduciary-duty and unjust-enrichment were considered to be equitable claims in 1791. See Tr. at 412:22-413:1 (Kagen).

         Turning to the Granfinanciera v. Nordberg test's first part, the Plaintiffs insisted that it is incontrovertible that these claims would have been properly heard in an equity court in 1791, reasoning by analogy that fiduciary duty “is akin to a claim under a trust, a party is a fiduciary of another, as a trustee is a fiduciary to the trust.” Tr. at 414:2-5 (Kagen). According to the Plaintiffs, Delaware case law confirms the validity of this analogy, replete with holdings that fiduciary-duty claims are equitable in nature. See Tr. at 414:19-415:13 (Kagen). The Plaintiffs contend that other federal district courts likewise have designated fiduciary-duty claims are claims that would have arisen in equity in 1791. See Tr. at 414:23-415:4 (Kagen). Regarding their unjust enrichment claims, the Plaintiffs first referred the Court to its previous decision in Bustillos v. Board of County Commissioners of Hidalgo County, 2015 WL 8014565 (D.N.M. October 20, 2015)(Browning, J.), in which the Plaintiffs contended that the Court held an unjust-enrichment claim to be equitable. See Tr. at 415:14-20 (Kagen). The Plaintiffs dismissed the cases that the Defendants cite to support their contention that fiduciary duty and unjust enrichment are legal claims as little more than Russian nesting dolls -- cases citing other cases without conducting an independent historical analysis. See Tr. at 415:21-417:19 (Kagen).

         Turning then to the Granfinanciera v. Nordberg test's second part, the Plaintiffs maintained that the rescissionary damages they seek can be equitable rather than legal. See Tr. at 418:14-24 (Kagen). In this case, the Plaintiffs contended, they timely pleaded for a rescission of the merger. See Tr. at 419:1-8 (Kagen). According to the Plaintiffs, such rescission is clearly equitable. See Tr. at 419:9 (Kagen). The Plaintiffs further argued that the disgorgement that they seek also is equitable, because the law penalizes a faithless fiduciary regardless whether a plaintiff suffered any monetary damages. See Tr. at 419:21-430:8 (Kagen). The Plaintiffs rejected the Defendants' argument in the Response that fiduciary-duty claims against corporate officers and directors are legal in nature, thereby invoking a jury right, asserting that the case law that the Defendants cite to support their argument is irrelevant. See Tr. at 431:1-434:9 (Kagen). The Plaintiffs also rejected the Defendants' assertion that rescissionary damages are unavailable to the Plaintiffs on account of their six-month delay filing this action, stating that multiple Delaware Chancery Court cases say that regulatory relief for rescissionary damages is available in a merger freeze-out context. See Tr. at 434:10-435:23 (Kagen). Next, the Plaintiffs discounted the Defendants' contention that the relevant case law evinces a strong bias in favor of a jury trial. See Tr. at 436:1-442:1 (Kagen). After repeating and summarizing its argument on the Granfinanciera v. Nordberg test's second part, the Plaintiffs concluded their argument. See Tr. at 442:2-447:7 (Kagen).

         The Defendants then responded to the Plaintiffs' Motion for a Bench Trial, starting with a musing that it seemed as though the Plaintiffs sprang the unjust-enrichment claim suddenly and recently as a deus ex machina after seemingly having abandoned them earlier in the case. See Tr. at 447:16-451:4 (Dorwart). The Plaintiffs interjected that they would not proceed with their unjust enrichment claims, but that they had incorporated them into their Motion for a Bench Trial, because the Court had not dismissed the claims and the Plaintiffs wished to be both comprehensive and forthright. See Tr. at 452:13-453:16 (Kagen). The Court asked the Plaintiffs to confirm that the “ballgame is breach of fiduciary duty, ” given that the Plaintiffs might not proceed with the unjust enrichment claims, to which the Plaintiffs assured the Court that that assessment was correct. Tr. at 453:17-457:22 (Court, Kagen).

         With the unjust enrichment claims therewith withdrawn from the case, the Defendants turned their attention to the Plaintiffs' fiduciary duty claims. See Tr. at 459:3 (Dorwart). According to the Defendants, fiduciary duty claims are for the jury under settled Tenth Circuit law. See Tr. at 459:19-463:3 (Dorwart). Before the Defendants proceeded to the rest of their argument on this point, the Court recessed for fifteen-minute afternoon break. See Tr. at 463:20-21 (Court). After the break, the Court gave its inclination at that point regarding the Motion for a Bench Trial, indicating:

It would seem to me that probably this claim is probably equitable under historical rules. But whether we use the word ‘trump' or we use something else, I do think that the important focus is on the remedies that are sought. It would seem to me that the big request here is for more money. That's something that has never changed hands. That's something that is going to go from, if the Plaintiffs are successful, from this side to that side and it seems to me that is a legal claim or a legal remedy.
So while I do think that there are a number of things that the Plaintiff[s] asked for in their complaint, that may end up like I was talking about in the Comar Pumice case that I tried, where I had to have the trial on the legal issues and then had to come back and do some things on the equitable side[.] [I[t seems to me that we're not going to avoid a trial on the big issues.
And so my thinking is that on the -- that on the claim of the money that should have been paid or needs to be paid to reflect fair value, that sounds to me like a legal claim so I obviously need to look at this more. But those are my inclinations, that it's not -- we're not going to escape on probably the big issue here a jury trial. And do I say that -- that's my thinking right at the moment.

Tr. at 464:1-23 (Court). The Defendants indicated that they read the law in the same way that the Court had just reported it and that they would expand upon their remainder of their argument in a forthcoming Surreply that the Court had approved earlier during the hearing. See Tr. at 466:23-468:25 (Dorwart). The Defendants added, however, that they were certain that the Plaintiffs' delay in filing this action made rescission and the calculation of rescissionary damages impossible. See Tr. at 469:23-470:22 (Dorwart). The Defendants thereafter insisted that they never had waived their right to a jury trial, and that they were entitled to rely on the Plaintiffs' demand for a jury trial that they made at the December 27, 2016, hearing. See Tr. at 471:5-23 (Dorwart). According to the Defendants, their reliance was reasonable insofar as the Plaintiffs allegedly previously had encompassed the fiduciary duty claims within the scope of their jury demand. See Tr. at 471:23-472:8 (Dorwart). With that observation, the Defendants closed their argument on the Plaintiffs' Motion for a Bench Trial. See Tr. at 472:23 (Dorwart).

         At the start of their reply to the Motion for a Bench Trial, the Plaintiffs encouraged the Court to read the cases that they had cited earlier in the hearing, convinced that the Court's inclination had revealed two fundamental errors. See Tr. at 473:1-24 (Kagen). First, the Plaintiffs maintained, disgorgement is return of monies wrongfully taken, and the Delaware Chancery Court, in In re Cornerstone, held that such disgorgement is an equitable claim even if the pleadings call it by another name such as compensatory damages. See Tr. at 473:24-475:15 (Kagen). The Court questioned whether the Plaintiffs' claims for rescission are not just formalistic, to which the Plaintiffs insisted that “we want our shares back.” Tr. at 475:20-478:20 (Court, Kagen). The Court was not convinced that the Plaintiffs actually wanted their share back, but the Plaintiffs insisted that they did want them back and were seeking rescissionary damages, because rescission no longer was possible. See Tr. at 478:21-480:14 (Court, Kagen). The Plaintiffs insisted that the Delaware Chancery Court is clear that the rescissionary damages are equitable in nature and that no case that they had encountered came to the opposite conclusion. See Tr. at 484:8-493:4 (Kagen).

         Beginning to wrap up their argument, the Plaintiffs again flagged what they understood to be the Court's mistaken conclusion that any exchange of money is necessarily legal in nature. See Tr. at 493:11-15 (Kagen). According to the Plaintiffs, the damages they seek are considered to be equitable relief, because they are restitutionary, regardless of the terms that one uses to describe the damages. See Tr. at 493:24-496:1 (Kagen). The Plaintiffs strongly reemphasized their assertion that the case law is firmly and univocally on their side in deeming these damages to be equitable. See Tr. at 496:2-500:10 (Kagen). The Plaintiffs concluded their argument, and the Court recessed after completing assorted housekeeping matters. See Tr. at 500:11-502:23 (Kagen, Court).

         TEXT OF THE SEVENTH AMENDMENT

         Article the ninth[49]... In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.[50] U.S. Const., amend VII (ellipses in original).

         LAW REGARDING CIVIL JURY TRIALS UNDER THE SEVENTH AMENDMENT

         “We have consistently interpreted the phrase ‘Suits at common law' to refer to ‘suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered.'” Granfinanciera v. Nordberg, 492 U.S. at 41(emphasis in original)(quoting Parsons v. Bedford et al., 28 U.S. (3 Pet.) 433 (1830)).

Although “the thrust of the [Seventh] Amendment was to preserve the right to jury trial as it existed in 1791, ” the Seventh Amendment also applies to actions brought to enforce statutory rights that are analogous to common-law causes of action ordinarily decided in English law courts in the late 18th century, as opposed to those customarily heard by courts of equity or admiralty.

Granfinanciera v. Nordberg, 492 U.S. at 41-42 (quoting Curtis v. Loether, 415 U.S. 189, 193 (1974)). To determine whether an English court of law or an English court of equity would have heard a particular cause of action in 1791, a court must engage in a two-part analysis. See Granfinanciera v. Nordberg, 492 U.S. at 42. “‘First . . . compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity.'” Granfinanciera v. Nordberg, 492 U.S. at 42 (quoting Tull v. United States, 481 U.S. 412, 417-18 (1987)). “‘Second . . . examine the remedy sought and determine whether it is legal or equitable in nature.'” Granfinanciera v. Nordberg, 492 U.S. at 42 (quoting Tull v. United States, 481 U.S. at 418. “The second stage is more important than the first.” Granfinanciera v. Nordberg, 492 U.S. at 42 (citing Tull v. United States, 481 U.S. at 420). “If, on balance, these two factors indicate that a party is entitled to a jury trial under the Seventh Amendment, we must decide whether Congress may assign and has assigned resolution of the relevant claim to a non-Article III adjudicative body that does not use a jury as a factfinder.” Granfinanciera v. Nordberg, 492 U.S. at 42. “[W]e do not declare that the Seventh Amendment provides a right to a jury trial on all legal rather than equitable claims.” Granfinanciera v. Nordberg, 492 U.S. at 42 n. 4. “If a claim that is legal in nature asserts a ‘public right, ' as we define that term . . ., then the Seventh Amendment does not entitle the parties to a jury trial if Congress assigns its adjudication to an administrative agency or specialized court of equity.” Granfinanciera v. Nordberg, 492 U.S. at 42 n. 4. “The Seventh Amendment protects a litigant's right to a jury trial only if a cause of action is legal in nature and it involves a matter of ‘private right.'” Granfinanciera v. Nordberg, 492 U.S. at 42 n.4.

         “Whether the trustee's suit should be at law or in equity is to be judged by the same standards that are applied to any other owner of property which is wrongfully withheld.” 1 G. Glenn, Fraudulent Conveyances and Preferences § 98, at 183-84 (rev. ed. 1940). “If the subject matter is a chattel, and is still in the grantee's possession, an action in trover or replevin would be the trustee's remedy; and if the fraudulent transfer was of cash, the trustee's action would be for money had and received.” 1 G. Glenn, Fraudulent Conveyances and Preferences § 98, at 183-84 (1940). “Such actions at law are as available to the trustee to-day as they were in the English courts of long ago.” 1 G. Glenn, Fraudulent Conveyances and Preferences § 98, at 183-84 (1940). “If, on the other hand, the subject matter is land or an intangible, or the trustee needs equitable aid for an accounting or the like, he may invoke the equitable process, and that also is beyond dispute.” 1 G. Glenn, Fraudulent Conveyances and Preferences § 98, at 183-84 (1940).

Characterization of an issue as legal or equitable can be a difficult federal law issue. It is often said that whether an issue involves a legal right depends on the nature of the issue, not the character of the overall action, the form of the complaint or the choice of words used in the pleadings.

         Ronald D. Rotunda & John E. Nowak, 3 Treatise on Const. L. § 17.8(f).

Congress can create statutory rights that are enforced by administrative or judicial tribunals. However, rights created by statutes often are enforced by actions in federal courts. Suits brought under the statute must be tried by a jury, if the statute creates rights and remedies of a type that are closely analogous to those rights and remedies that would have been enforced in actions at “law” (rather than “equity”) and would have required trial by jury in common law courts prior to 1791. However, it may be difficult in any given case to determine whether the newly created cause of action is one that involves fact issues that should be subjected to jury resolution at the demand of the parties.

         Ronald D. Rotunda & John E. Nowak, 3 Treatise on Const. L. § 17.8(f). “On their face, the Federal Rules of Civil Procedure did not, and could not, make any change in the class of cases for which there is right to trial by jury.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2301 (3d ed. 2017). “The Rules Enabling Act, under which the rules were promulgated, specifically requires that they ‘preserve the right of trial by jury as at common law and as declared by the Seventh Amendment to the Constitution.'” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2301 (3d ed. 2017)(citing Jones v. United Parcel Service, Inc., 674 F.3d 1187, 1202 (10th Cir. 2012), cert. denied, 133 S.Ct. 413 (2012); Golden v. Kelsey-Hayes Co., 73 F.3d 648, 659 (6th Cir. 1996)).

Rule 38(a) wisely does not undertake to define the set of cases for which there is a right to a jury trial; instead, the rule, after its restyling in 2007, merely says that the right “as declared by the Seventh Amendment to the Constitution -- or as provided by a federal statute -- is preserved to the parties inviolate.”

         Charles Alan Wright et al., 9 Federal Rules and Procedure § 2301 (3d ed. 2017). “The provision of the Federal Rules that protects the right to a trial by jury does not grant the defendant any new or independent right to a jury trial, but simply protects the right that the defendant may have been granted elsewhere.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2301 n.20 (3d ed. 2017)(citing Rachal v. Ingram Corp., 795 F.2d 1210 (5th Cir. 1986)).

It is true that, at a fundamental level, the Federal Rules merely preserve the ancient distinction between those actions that would have been heard at common law, and are now triable to a jury, and those that would have been heard in equity, and are now triable without a jury. When civil and admiralty procedure were merged in 1966, subdivision (e) was added to Rule 38 so that historical distinctions would continue to govern the right to jury trial in the maritime context.
Despite the neutral stance of Rule 38, the Federal Rules have had the effect of broadening the class of cases triable to a jury of right. Since in the federal courts equity has always acted only when legal remedies were inadequate, the expansion of adequate legal remedies provided by the Declaratory Judgment Act and the Federal Rules necessarily affects the scope of equity. Jury trial in fact is now available under many circumstances in which the matter would have been heard by the court in pre-1938 litigation. In actual practice, however, there has been a significant decline in the number of cases actually tried by a jury in the federal courts in recent years.”

         Charles Alan Wright et al., 9 Federal Rules and Procedure § 2301 (3d ed. 2017)(internal quotation marks and citations omitted).

         “Determining which actions belong to law and which to equity for the purposes of delimiting the jury trial right continues to be one of the most perplexing questions of trial administration.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302 (3d ed. 2017). “One major problem is that a great deal of overlap existed between the two English judicial systems in 1791. Because the dividing line between law and equity was vague in 1791, no clear standards existed for interpreting the constitutional jury trial mandate.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302 (3d ed. 2017).

Furthermore, the assertion of both legal and equitable claims in a single action produced confusion as to how the historical test should be applied following the fusion of law and equity. The use of an historical test in the federal courts after the two systems were merged meant that claims formerly triable “at law” were entitled to a jury and those formerly triable “in equity” did not merit a jury as a matter of right. Courts utilized tests under which they attempted to determine whether the action was “basically” legal or equitable. If the action was basically legal, all issues as to which the jury right applied were sent to the jury; after its verdict, the judge determined any undecided issues and ruled on the equitable claims. If the action was basically equitable, the court not only decided the equitable issues, but it also could invoke the quaintly named “clean-up doctrine” and rule on any “incidental” legal issues in the case, thereby obviating the need for a jury.

         Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302 (3d ed. 2017).

The flaw in this approach is that the basic decisional unit in determining the existence of a right to a jury trial is not the case. It I the particular issues within a case on which a trial by jury is demanded. “The Seventh Amendment question depends on the nature of the issue to be tried rather than the character of the overall action.”

         Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302 (3d ed. 2017)(quoting Ross v. Bernhard, 396 U.S. 531, 538 (1970)).

         “[T]here is a strong federal policy favoring trial by jury of issues of fact. The strength of this policy in itself may provide the answer in cases in which the historical test gives no clear guidance.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302.1 (3d ed. 2017). “[T]he right to a jury trial is not governed only by static history, as such an approach would ignore important developments since 1791 that changed the basic assumptions on which the two systems [of law and equity] operated.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302.1 (3d ed. 2017). “To the extent that procedural and remedial developments since 1791 have made it possible now for common law procedures and remedies to be adequate, these must be taken into account, and a right to a jury trial recognized, even though that would not have been the result in times past.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302.1 (3d ed. 2017)(citing In re Harbour, 840 F.2d 1165, 1172 (4th Cir. 1988)). “inasmuch as equity still intervenes only when the remedy at law is inadequate, there is a built-in capacity for adjustment in the scope of the Seventh Amendment as future systemic alterations expand or contract the category of actions at law.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302.1 (3d ed. 2017). “First, the scope of equitable jurisdiction must be measured in light of the legal remedies and procedures currently available, which are always subject to change. Second, when an issue is common to both legal and equitable claims in the same proceeding, it must be tried first to a jury.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302.1 (3d ed. 2017)(citing Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959)). “[I]f the claim for a money judgment is triable to a jury, it still must be so tried although it is asserted in a suit in which the basic relief sought is equitable.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302.1 (3d ed. 2017)(citing Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962)). “[A]t a minimum, the Beacon Theatres and Dairy Queen cases lend impetus toward finding a right to trial by jury in doubtful cases.” Charles Alan Wright et al., 9 Federal Rules and Procedure § 2302.1 (3d ed. 2017)(citing Gefen v. United States, 400 F.2d 476, 479 (5th Cir. 1968)).

         “The right to a jury trial as declared in the Seventh Amendment is preserved inviolate.” J.R. Simplot v. Chevron Pipeline Co., 563 F.3d 1102, 1115 (10th Cir. 2009). For Seventh Amendment jury trial determination purposes, the “nature of the issues presented and the remedies sought determines whether an action qualified as ‘legal.'” Elm Ridge Exploration Co., LLC v. Engle, 721 F.3d 1199, 1222 (10th Cir. 2013). “Whether defendants are entitled to jury trial . . . is determined by the legal or equitable nature of similar claims at the time the Seventh Amendment was ratified.” Parks v. Consumer Law Assoc., LLC, 2010 WL 3905442, at *2 (slip op.)(Bankr. D. Kan. September 29, 2010)(Nugent, J.).

         RELEVANT TEXT OF THE FEDERAL RULES OF CIVIL PROCEDURE

         Rule 38 - Right to a Jury Trial; Demand

(a) Right Preserved. The right of trial by jury as declared by the Seventh Amendment to the Constitution-or as provided by a federal statute-is preserved to the parties inviolate.
(b) Demand. On any issue triable of right by a jury, a party may demand a jury trial by:
(1) serving 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; and
(2) filing the demand in accordance with Rule 5(d).
(c) Specifying Issues. In its demand, 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 the issues so triable. If the party has demanded a jury trial on only some issues, any other party may-within 14 days after being served with the demand or within a shorter time ordered by the court-serve a demand for a jury trial on any other or all factual issues triable by jury.
(d) Waiver; Withdrawal. A party waives a jury trial unless its demand is properly served and filed. A proper demand may be withdrawn only if the parties consent.
(e) Admiralty and Maritime Claims. These rules do not create a right to a jury trial on issues in a claim that is an admiralty or maritime claim under Rule 9(h).

Fed. R. Civ. P. 38 (emphases in original).

         Rule 39 - Trial by Jury or by the Court

(a) When a Demand Is Made. 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:
(1) the parties or their attorneys file a stipulation to a nonjury trial or so stipulate on the record; or
(2) 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.
(b) When No Demand Is Made. Issues on which a jury trial is not properly demanded are to be tried by the court. But the court may, on motion, order a jury trial on any issue for which a jury might have been demanded.
(c) Advisory Jury; Jury Trial by Consent. In an action not triable of right by a jury, the court, on motion or on its own:
(1) may try any issue with an advisory jury; or
(2) may, with the parties' consent, try any issue by a jury whose verdict has the same effect as if a jury trial had been a matter of right, unless the action is against the United States and a federal statute provides for a nonjury trial.

Fed. R. Civ. P. 39 (emphases in original).

         ANALYSIS

         The Court disposes of the Motion for a Bench Trial with this Memorandum Opinion. Applying the first prong of the two-part Granfinanciera v. Nordberg test to the case's fiduciary-duty claims, the Court concludes that the Plaintiffs' breach-of-fiduciary-duty claims would have fallen to the English courts of equity in 1791. Applying the second prong of the Granfinanciera v. Nordberg test to the case's fiduciary-duty claims, the Court concludes that the Plaintiffs' breach-of-fiduciary-duty claims are legal in nature. Accordingly, the Court concludes that the Plaintiffs' breach-of-fiduciary-duty claims ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.