To determine whether a party is entitled to a jury trial under U.S. Const. amend. VII, the court must first compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, the court must examine the remedy sought and determine whether it is legal or equitable in nature. The second stage of this analysis is more important than the first. If, on balance, these two factors indicate that a party is entitled to a jury trial under the Seventh Amendment, the court must decide whether the U.S. Congress may assign and has assigned resolution of the relevant claim to a non-Article III adjudicative body that does not use a jury as factfinder.
Petitioner corporations appealed a decision of the Court of Appeals, which affirmed a bankruptcy court's denial of petitioners' request for a jury trial and entry of judgment in favor of respondent Chapter 11 trustee, in respondent's action to avoid fraudulent transfers and recover damages under 11 U.S.C.S. §§ 548(a)(1)-(2), 550(a)(1). Respondent Chapter 11 bankruptcy trustee filed suit in district court against petitioner corporations seeking to avoid allegedly fraudulent transfers and to recover damages under 11 U.S.C.S. §§ 548(a)(1)-(2), 550(a)(1). The proceedings were referred to a bankruptcy court, where the judge denied petitioners' request for a jury trial and entered judgment for respondent after a bench trial.
Does the U.S. Const. amend. VII protect petitioners' right to a jury trial?
On appeal affirming the judgment the Court reversed, holding petitioners had not submitted claims against the bankrupt estate and were therefore entitled to a jury trial notwithstanding the fact that under 28 U.S.C.S. § 157(b)(2) fraudulent conveyance suits were designated core proceedings triable in bankruptcy court, a non-Article III tribunal. The Court found that U.S. Const. amend. VII protected petitioners' right to a jury trial because the suit against them was legal rather than equitable in nature and involved matters of private rather than public rights. The Court acknowledged that jury trials in some fraudulent conveyance actions would impede proceedings and increase expenses, but held that those considerations were insufficient to overcome the clear command of U.S. Const. amend. VII.