Judge: Roy Payne
Holding: Motion to Strike Third-Party Plaintiff’s Request for Trial by Jury DENIED
In 2010 plaintiff sued Pharmerica seeking a declaratory judgment. In 2011, Pharmerica filed a third party complaint against PharMaster, which included a jury demand. Pharmaster filed a motion to strike that jury demand, citing a waiver clause in one of the operative documents, which provided that: “each of the parties hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this agreement.”
Judge Payne noted first that the U.S. Supreme Court has long held that “as the right of jury trial is fundamental, courts indulge every reasonable presumption against waiver” citing Aetna Ins. Co. v. Kennedy to Use of Bogash, 301 U.S. 389, 393, 57 S.Ct. 809 (U.S. 1937). He also noted that this holding has been echoed more recently by the Fifth Circuit, citing Jennings v. McCormick, 154 F.3d 542, 545 (5th Cir. 1998). With respect to clauses waiving the right to a jury, he noted that they "are construed strictly and any ambiguity will be interpreted against the contract's author” citing Smith v. Lucent Technologies, Inc., 2004 WL 515769 (E.D. La. 2004), and that the burden of persuasion on an express jury waiver claim is on the party asserting the waiver, citing RDO Financial Services Co. v. Powell, 191 F.Supp.2d 811, 813 (N.D.Tex. 2002).
All that having been said, he said that "reading the section as a whole" (again, it appears that context matters) showed that the drafter of the clause intended that any lawsuit to enforce or challenge the provisions of the agreement should be brought in Delaware and proceed without a jury trial, but that "the instant action is not such a case."
This action was not brought by either of the parties to the Asset Purchase Agreement and does not arise out of that agreement. The counts of the Third Party Complaint that derive from the main demand, such as contribution and indemnity, have nothing to do with any specific terms of the Asset Purchase Agreement. The waiver clause does not state that a jury trial shall not be available for any “claims” relating to the agreement, but rather shall not be available for any “legal proceeding” arising out of or relating to the agreement. This action does not fall within any fair understanding of that term, especially resolving any ambiguity against the movant. Given the burden upon the movant, the strict construction owed to jury waiver clauses, and the obligation to indulge any reasonable argument against waiver, the Court finds that movants have not carried their burden to establish an enforceable jury waiver in this case.