On the Fid Guru Blog, Euclid Fiduciary’s Daniel Aronowitz has an excellent deep dive on the question of jury trials in breach of fiduciary duty litigation under ERISA, asking the questions of, first, whether they are really coming and, two, if so, is that a good or a bad thing (his take clearly appears to be that it is a bad thing).

We will start here with the eat your vegetables part of this post, or the part where we discuss doctrine and not opinions. Dan does a terrific job with the history of the long-standing barrier to jury trials in ERISA cases, including with the jurisprudential underpinnings. From there, he explains the cracks in the wall, whereby courts are beginning to consider allowing jury trials, specifically addressing the potential liabilities of fiduciaries for excessive fee and similar alleged problems with large benefit plans. Dan’s post is built around the upcoming scheduled trial in the Yale University breach of fiduciary duty class action; as explained at the outset of the post, “barring a last-minute settlement and inevitable scheduling delays, a jury of ordinary citizens from Hartford, Connecticut is going to decide if the Yale University plan fiduciaries committed fiduciary malpractice in choosing the investments and monitoring the fees of its retirement plan.”

But is this a good or a bad thing? Dan clearly comes down on the side that adding jury trials to the ERISA litigation world is not a wise development, an entirely defensible position that should be held by any self-respecting insurance industry executive. And why is that? Well, first, because adding jury trials into the mix will prove expensive for fiduciary liability insurers, and not only for the obvious reasons. Speaking broadly and based solely on my own experience, jury trials are certainly at least marginally more expensive for insurers to fund than are bench trials for a variety of reasons. But the increase in defense costs linked to the rise of jury trials in this context isn’t just a question of the relative cost of conducting a jury trial relative to the cost of bench trials.

Instead, it is driven by the fact that the possibility of jury trials is likely to increase the number of trials and the amount sought in settlement of these types of cases. Throughout all areas of the law, plaintiffs’ lawyers operate on the belief that the availability of a jury is favorable to them, that they have a chance to win regardless of the strength of a particular case so long as they can just get to a jury (in other words, manage not to lose at the motion stage or be forced into a bench trial or an arbitration) and that the settlement value is higher if the defendant or its insurer has to contend with the vagaries of a jury. And frankly, based on thirty years of experience on both sides of the “v,” they are not wrong to think this way.

However, from a merits perspective, it is not entirely clear that jury trials in this context are by definition a bad thing. Juries in this context are not deciding the doctrinal questions that are primarily driving the vagaries in court decisions, but are instead applying those doctrinal decisions to the facts of a given case. That’s the general purpose of a jury, obviously. I don’t tend to accept the premise that juries are too easily driven by passion or misled by clever lawyers, or similar criticisms of their role in deciding cases. Instead, I find that, more often than not, they are roughly comparable to judges in executing the fact finding role. The real question is the need for control on those occasions when jury findings or verdicts are off base because of misapplication by a jury of the law or excessive sympathy for a plaintiff or an underlying dislike of a corporate defendant – but in that instance, the court possesses the necessary tools to address any such distortion driven by the jury system.