Friday, September 28, 2007

Fourth Circuit issues opinion on jury trials in admiralty cases

In Re: LOCKHEED MARTIN CORP, Lockheed was denied a jury trial on Lockheed's counterclaim seeking money damages in an admiralty case. The dispute was over damage to a ship and National originally filed a declaratory judgment action seeking a finding that any claim by Lockheed was time barred under the relevant insurance policy. Once the district judge denied a jury trial on the counterclaim, Lockheed filed a petition for writ of mandamus, arguing that it had a Seventh Amendment right to a jury trial which the district court violated. The Fourth Circuit held that Lockheed did have a right to a jury trial.

Although the action sounds in admiralty, that is only because National won the race to the courthouse door and made the Rule 9(h) designation first. Beacon Theatres, however, requires us to ignore National’s status as the declaratory judgment plaintiff and to instead look to how the action otherwise would have proceeded. Without the declaratory judgment vehicle, Lockheed would have sued National for breach of the insurance policy, a claim over which admiralty and "law" courts have concurrent jurisdiction. As the plaintiff, Lockheed would have been entitled under the saving-to-suitors clause to designate its claim as a legal one as to which there is a Seventh Amendment right to jury trial.

The "saving to suitors" clause is found in 28 U.S.C.A. § 1333 (West 2006), and states that "district courts shall have original jurisdiction, exclusive of the courts of the States, of: (1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled." The effect of the saving-to-suitors clause is to permit maritime in personam claims to be pursued in federal court as maritime (and thus non-jury) claims, in state court as legal claims, or in federal court as legal claims (for which a jury trial is available) if an independent basis for federal court jurisdiction exists. Under this clause, Lockheed had a right to proceed at law on its claim of breach of insurance contract.

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