Admiralty Defendant Still May Demand Jury Based On Counterclaims

A plaintiff bringing a case that satisfies the requirements for both admiralty and diversity jurisdiction can elect to proceed on either basis, the primary difference being that a jury generally is not available if plaintiff files a libel in admiralty rather than an ordinary civil complaint. See In re: Chimenti, 79 F.3d 534, 537 (6th Cir. 1996). A plaintiff might want to exclude a jury for strategic reasons, and therefore could elect the admiralty route.

However, In re: Lockheed Martin Corp., No. 06-1344, 2007 WL 2793112 (4th Cir. Sept. 27, 2007), illustrates that a defendant can frustrate that election by bringing a declaratory judgment counterclaim and filing a jury demand. In Lockheed Martin, plaintiff successfully moved to strike defen­dant’s jury demand, arguing that the declaratory judgment claim was merely the “flipside” of plaintiff’s affirmative claims, and that defendant should not be permitted an end-run around plaintiff’s admiralty strategy. Defendant filed a mandamus petition.

Noting a split in the circuits, the appellate court held that 28 U.S.C. § 1333 and Fed.R.Civ.P. 9(h) permitted a defendant to bring proper non-admiralty counterclaims and to have them tried to a jury. The court granted the writ of mandamus.

Mandamus Granted Against Enforcement of Web-Only Amendments To Contract

The Ninth Circuit has addressed as a matter of first impression at the appellate level the question of whether a court should enforce amendments to a contract where the only notice of the changed terms consisted of the amending party posting the revised contract on its website. The court took the case on mandamus and granted the writ, effectively reversing the district court's decision to enforce.

In Douglas v. U.S. Dist. Ct. for the Central Dist. of California, 495 F.3d 1062 (July 18, 2007) (per curiam), plaintiff Douglas had contracted for long distance telephone service. Subsequently, the provider purported to amend the contract to add provisions unfavorable to Douglas, such as additional service charges, a choice-of-law provision applying New York law, a clause requiring disputes to be arbitrated and a waiver of class actions. The new contract was posted to the company's billing website but Douglas alleged that the company never informed its customers of the changes. Only someone who happened to check the posted contract and compared it to a prior one they had saved would have known of the amendments.

After becoming aware of the changes, Douglas filed a class action in federal court. The company moved to compel arbitration, pursuant to the arbitration clause whose addition to the contract was itself in dispute. The district court gave effect to the amendments and granted the motion. Douglas filed a petition for mandamus because he recognized that no ordinary appellate jurisdiction exists over orders compelling arbitration under the Federal Arbitration Act.

Applying its five-factor test for mandamus petitions, the Ninth Circuit found that the prerequisites for issuance of the writ had been met. Most importantly, the district court's ruling was "clearly erroneous as a matter of law" because a party simply cannot amend a contract without its counter-party's agreement, and it is elemental that such agreement requires knowledge by the counter-party. The appellate court held:

"Parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side. FN: Nor would a party known when to check the website for possible changes to the contract terms without being notified that the contract has been changed and how. Douglas would have had to check the contract every day for possible changes. Without notice, an examination would be fairly cumbersome, as Douglas would have had to compare every word of the posted contract with his existing contract in order to detect whether it had changed."

The court distinguished other cases of web-based contractual updates because in each such case the poster had given some form of notice to the counter-party. Moreover, the court found that even if notice of the changes were properly given, the changes probably would not have been enforceable substantively.

The court also found that other mandamus factors were satisfied. Factors amphasizing the absence of remedy on appeal had been met becuase if Douglas were forced to arbitrate he would have had no means to ensure that he could continue as class representative. This case also satisfied the factor favoring mandamus where a district court order raises an issue of law of first impression or raises new and important problems. The Ninth Circuit viewed this case as raising for the first time an issue that would affect a multitude of situations arising from the common practice of communicating with customers through websites.

Mandamus Not Warranted To Prevent Trial From Improperly Being Tried To Jury

The Seventh Circuit has denied mandamus in a case involving a late jury demand.

In In re Linee Aeree Italiane (Alitalia), 469 F.3d 638 (7th Cir. Nov. 27, 2006), the plaintiff demanded a jury trial after the defendants’ status changed from a state-controlled entity (for which a non-jury trial is provided by statute) to a privatized company. Alitalia claimed that the district court should not have allowed plaintiff to make a jury demand based on facts that developed after the initial filing of the case, and sought mandamus. However, the Seventh Circuit concluded that even if Alitalia’s argument about the timing of a jury demand were correct, having to wait to appeal that issue after the entry of final judgment on a jury verdict would not cause Alitalia the sort of irreparable harm required to support mandamus relief. Instead, the appellate court could vacate the judgment and order a bench trial.

Jury Demand Violated Contractual Waiver Of Jury Trial

The Texas Supreme Court has enforced contract language under which a borrower waived the right to a jury trial on any claim or cause of action arising from a promissory note. In re General Electric Capital Corp., 203 S.W.3d 314 (Tex. Sept. 22, 2006).

General Electric brought a non-jury action on the amount remaining unpaid on a note. The trial court originally posted the case to its non-jury docket, but at some point the borrower filed a jury demand and the court moved the case to its jury calendar. The company never received notice from the borrower of the jury demand, but it did receive forms from the court showing the jury docket was being used. Ten months after the jury demand, the company moved to strike the jury demand due to lack of notice and the violation of the contract.

The trial court denied the motion and the appellate court denied relief, but the high court granted mandamus. It found that the contractual language was conspicuous and enforce­able, that the company never waived it, and that the trial court abused its discretion in failing to enforce the contract by striking the jury demand.

Federal Agency's Choice Of Forum Entitled To Same Weight As Non-Government Plaintiff

Under traditional forum non conveniens analysis, a plaintiff's choice of forum will rarely be disturbed unless the balance is strongly in favor of the defendant. However, the Seventh Circuit recently considered a matter of first impression: when the plaintiff is a federal agency, how much weight should be given to its choice of forum. In re Nat'l Presto Industries, Inc., No. 03-1873, 2003 WL 22389815 (Oct. 21, 2003).

The SEC sued National Presto Industries in federal court in Chicago, although defendant was based in Eau Claire, Wisconsin. Defendant moved for transfer of venue, but the district court denied the motion in an interlocutory order not ordinarily appealable. Defendant sought mandamus in the Seventh Circuit. In considering the case, the Seventh Circuit rejected as "unrealistic" the argument that the federal government has such vast resources that no venue could ever be thought to be inconvenient. "Federal agencies have limited resources, and the SEC in particular is often outgunned by the affluent defendants that it sues." The court credited the SEC with choosing to bring the case in a federal district in which the SEC's closest regional office resided.

Having said that, the court concluded that the balance of conveniences in this particular case was a close call that might actually favor defendant. Nevertheless, noting the heavy burden on mandamus, the appellate court held that even though defendant might be able to satisfy the irreparable harm requirement in a denial of a forum non conveniens motion, and even though the balance actually might favor defendant, the balance was not sufficiently "askew as to justify the extraordinary relief" sought through the writ of mandamus.