United States District Court, E.D. Pennsylvania
U.S. BANK, NATIONAL ASSOCIATION, Plaintiff/Counterclaim Defendant,
MAURY ROSENBERG, Defendant/Counterclaim Plaintiff.
CYNTHIA M. RUFE, District Judge.
Before the Court is U.S. Bank's motion to strike the jury demand and Rosenberg's response thereto. For the reasons below, the motion will be granted.
US Bank has sued to enforce a Settlement Agreement between U.S. Bank on the one hand and several medical imaging companies (collectively referred to throughout this litigation as the "NMI entities") and Rosenberg on the other, as well as a Guaranty executed by Rosenberg. Rosenberg has brought counterclaims alleging abuse of process and wrongful initiation of civil proceedings. Rosenberg has demanded a jury trial with respect to his counterclaims. U.S. Bank has moved to strike because both the Settlement Agreement and the Guaranty contain a waiver of the Seventh Amendment right to trial by jury. Rosenberg argues that the waivers are unenforceable.
The waivers both provide that each party "waives its right to a jury trial of any claim or cause of action based upon or arising out of, directly or indirectly, this agreement or any other transaction document or waiver contemplated hereby and thereby." U.S. Bank's suit clearly is a cause of action directly arising out of those documents. However, Rosenberg argues that the language is not broad enough to encompass his counterclaims and that the jury trial waivers are unenforceable.
II. Governing Law
The burden of proving that a jury waiver is enforceable rests with the party seeking to enforce the waiver. "Because the right of jury trial is fundamental, courts indulge every reasonable presumption against waiver. Nevertheless, as with other constitutional rights, the Supreme Court has long recognized that a private litigant may waive the right to a jury trial in a civil case. To be valid, a jury waiver must be made knowingly and voluntarily based on the facts of the case." "A [contractual] 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."
In this case there are two potentially operative jury trial waivers, one in the Guaranty and one in the Settlement Agreement. Rosenberg signed both in an individual capacity (he also signed the Settlement Agreement as managing director of the NMI entities). Although Rosenberg devotes much of his brief to arguing that his accession to the Guaranty's waiver was not knowing and voluntary and gives far shorter shrift to the waiver in the Settlement Agreement, this Court will consider the enforceability of each.
Rosenberg argues first, that the terms of the waivers do not apply to his counterclaims; second, that even if they do, the waivers were not entered into knowingly and voluntarily; and third, that U.S. Bank should be estopped from arguing that the waivers apply. The Court addresses his arguments in turn.
A. Voluntariness of Waivers
1. Gross Disparity in Bargaining Power
Rosenberg argues that because he is an individual and was unrepresented by counsel in negotiating the Settlement Agreement and the Guaranty, while U.S. Bank is a large financial institution that was represented by counsel in the negotiation and drafted the relevant documents, there is a gross disparity in bargaining power sufficient to invalidate the jury trial waivers. He stresses that he was under enormous pressure from U.S. Bank to sign the Guaranty, that he was not given much time to consider it, and that he was convinced if he failed to sign it, his employees would lose their jobs.
However, Rosenberg's arguments with respect to the Guaranty do not apply with equal force to the Settlement Agreement. At a hearing in previous litigation between these parties in bankruptcy court, Rosenberg testified that he believed the terms of the Settlement Agreement were not only fair "but very beneficial to our company." He further testified that the Agreement took "months" to negotiate. Even if he was not represented by counsel, his prior testimony demonstrates that he bargained with U.S. Bank over the terms of the agreement and indeed had sufficient bargaining power to negotiate favorable terms. Assuming without ...