Although the right to a jury trial is guaranteed by the Seventh
Amendment to the U.S. Constitution, like all constitutional rights, it
can be waived by the parties. In Re City of Philadelphia, supra, citing
United States v. Moore, 340 U.S. 616, 621, 71 S.Ct. 524, 95 L.Ed. 582
(1951). See Also: Fed.R.Civ.P. Nos. 38(a), (d); 39. Waiver can be either
express or implied and requires only that the party waiving such right do
so voluntarily and knowingly based on the facts of the case. Seaboard
Lumber Company v. United States, 903 F.2d 1560, 1563 (Fed.Cir. 1990),
citing, inter alia, Commodity Futures Trade Commission v. Schor,
478 U.S. 833, 848, 106 S.Ct. 3245, 92 L.Ed.2d 675 (1986) and Brookhart
v. Janis, 384 U.S. 1, 4, 5, 86 S.Ct. 1245, 16 L.Ed.2d 314 (1966).
In some circumstances, the right to a jury trial can be waived by
inaction or acquiescence. In Re Philadelphia, supra.; Cooper v. Loper,
923 F.2d 1045, 1049 (3d Cir. 1991). The acceptance of contract provisions
providing for dispute resolution in a forum where there is no entitlement
to a jury trial may satisfy the "voluntary" and "knowing" standard.
Given that there is a presumption against waiver, Courts do not uphold
jury trial waivers lightly and the burden of proving that a waiver was
done both knowingly and intelligently falls upon the party seeking
enforcement of a waiver of a jury trial clause. Cottman Transmission
Systems v. Melody, 1994 WL 702913, *1, 1994 U.S. Dist. LEXIS 17773, *2
(E.D.Pa. 1994); Hydramar, Inc. v. General Dynamics Corporation, 1989 WL
159267, *2, 1989 U.S. Dist. LEXIS 15784 *6 (E.D.Pa. 1989), citing Aetna
Insurance Co. v. Kennedy, 301 U.S. 389, 57 S.Ct. 809, 81 L.Ed. 1177
(1937). A waiver is knowing, voluntary and intelligent when the facts
show that (1) there was no gross disparity in bargaining power between
the parties; (2) the parties are sophisticated business entities; (3) the
parties had an opportunity to negotiate the contract terms; and (4) the
waiver provision was conspicuous. Phoenix Four Grantor Trust #1 v. 642
North Broad Street Associates, 2000 WL 1717261, *2, 2000 U.S. Dist. LEXIS
16524, *7 (E.D.Pa. 2000); Today's Man, Inc. v. Nations Bank, N.A., 2000
WL 822500, *4, 2000 U.S. Dist. LEXIS 8710 *12 (E.D.Pa. 2000); Corestates
Bank, N.A. v. Signet Bank, 1997 WL 117010, 1997 U.S. Dist. LEXIS 2686
(E.D.Pa. 1997). See Also: National Equipment Rental, Ltd. v. Hendrix,
565 F.2d 255, 258 (2d Cir. 1977); Hydramar. 1989 WL 159267, *4, 1989
U.S. Dist. LEXIS 15784 at *11.
In this case, the plaintiff relies upon the following provision in the
Amended and Restated Loan Agreement of June 6, 1991 (and the nearly
identical provisions in the Shareholder and Forbearance Agreements
executed that same day)*fn2 in support of its
contention that Casagrande has no entitlement to a jury trial with
respect to First Union's claims against him:
10.15 WAIVER OF JURY TRIAL THE BORROWERS HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, THE NOTES, THE LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN.
BORROWERS HEREBY CERTIFY THAT NO REPRESENTATIVE OR
AGENT OF THE BANK (INCLUDING ITS COUNSEL) HAS
REPRESENTED, EXPRESSLY OR OTHERWISE THAT THE BANK
WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL. THE
BORROWERS ACKNOWLEDGED THAT THE BANK HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE
PROVISIONS OF THIS SECTION 10.15.
Casagrande, in turn, contends that he was not a party to those agreements
in that he signed them only in his capacity as a corporate officer and
that even if he did execute them in his individual capacity, the
plaintiff has not met its burden of proving that the jury trial waivers
were knowingly and voluntarily executed.
In reviewing the documents upon which the plaintiff relies, we observe
that Messrs. Litton and Casagrande appear to have executed the Amended,
Restated and Consolidated Stock Pledge Agreement in their individual
capacities as no corporate designations appear with their signatures.
This is in contrast to the manner in which they executed the Forbearance
Agreement and the Amended and Restated Loan Agreement, in that in
executing both of those documents, Mr. Casagrande and Mr. Litton clearly
wrote in that they were signing as President and Vice President
respectively of MM Group, Inc. As paragraph 63 of the Plaintiff's Amended
Complaint avers, "[p]ursuant to Section 1.3.1 of the Stock Pledge
Agreement executed by Casagrande and Litton, the occurrence of an `Event
of Default' under the Forbearance Agreement, the Amended Loan Agreement
and/or any other Loan Documents would constitute an `Event of Default'
under the Stock Pledge Agreement," we conclude that this lawsuit is "in
respect of any litigation arising out of, under, or in connection with
[the Amended, Restated and Consolidated Stock Pledge Agreement], the
other forbearance agreements
or the loan documents or the transactions contemplated herein or
therein." Accordingly, we must now determine whether the jury trial
waiver executed by Mr. Casagrande was in fact, executed knowingly and
intelligently as required by federal law.
In application of the foregoing four factors and in reviewing the jury
trial waiver itself, we note that it was written in its entirety in all
capital letters under the underlined heading "Waiver of Jury Trial." We
therefore find that the waiver provision at issue was conspicuous.
The existing record in this matter also reflects that Mr. Casagrande is
a pilot reporter for a television station who served as the corporate
president of at least two corporations. Despite the fact that Mr.
Casagrande's deposition testimony often appeared to be vague and
evasive, and thus suggestive of some level of sophistication in the
business world, he nevertheless testified that he executed the signature
pages to the Amended, Restated and Consolidated Stock Pledge, Forbearance
and Amended and Restated Loan Agreements alone, without seeing or reading
the actual documents themselves. These actions are indeed contrary to
what would normally be expected from a sophisticated businessman and thus
we cannot find Mr. Casagrande to have the level of sophistication
necessary to satisfy the test for a knowing and intelligent waiver.
What's more, in further reviewing the record in this matter, we cannot
find any evidence that there was not a gross disparity in bargaining
power between Messrs. Casagrande, Litton and MM Group, Inc. and Fidelity
Bank. Indeed, given MM Group's financial straits at the time the
documents were executed, it is highly likely that there was a severe
disparity in bargaining power between these parties and it is highly
unlikely that the MM Group parties, including Mr. Casagrande, had any
opportunity to negotiate the terms and conditions of the loan
restructuring agreements. In the absence of such evidence, we cannot
grant First Union's motion to strike Mr. Casagrande's jury trial request
as to the claims which it raises in its complaint against him.
An order follows.
AND NOW, ___ this day of ___ 2001, upon consideration of the
Plaintiff's Motion to Strike the Jury Trial Demand of Defendant Robert
Casagrande, it is hereby ORDERED that the Motion is DENIED for the
reasons outlined in the foregoing Memorandum Opinion.