Brief Fact Summary. Granfinanciera, S.A. (Petitioners) appeal the judgment of both the Court of Appeals for the Eleventh Circuit and the District Court, which affirmed the judgment against Petitioner without discussing Petitioners’ claim that they were entitled to a jury trial.
Synopsis of Rule of Law. A person who has not submitted a claim against the bankruptcy estate has a right to a jury trial when sued by the trustee in bankruptcy to recover damages for a fraudulent monetary transfer.
Issue. Whether a person who has not submitted a claim against bankruptcy estate has a right to a jury trial when sued by the trustee in bankruptcy to recover an allegedly fraudulent monetary transfer?
Held. Yes. Judgment is reversed and remanded for further proceedings consistent with this opinion. The Seventh Amendment entitles persons who have not submitted a claim against a bankruptcy estate to a jury trial. In order to determine that a party is entitled to a jury trial under the Seventh Amendment, the court must first compare statutory action to common law actions brought in the court of England. The court must also examine the remedy sought and determine whether it is legal or equitable in nature. Actions to recover fraudulent transfers were often brought in common law in the court of England and the actions were conducted before juries. Second, in the instant case, the nature of the relief Respondents seeks strongly supports the finding that the right he invokes is legal rather than equitable. The question is whether the Seventh Amendment confers a right to a jury trial in the face of Congress’ decision to allow a non-Article II tribunal to adjudicate the claims against them. Providing jury trials in fraudulent conveyance actions may impede swift resolution of bankruptcy proceedings and increase Chapter 11 reorganizations. However, these considerations are insufficient to overcome the right to a jury trial. The court here does not decide whether the current jury trial provision permits bankruptcy courts to conduct jury trials in fraudulent conveyance actions. The court however does determine that the Seventh Amendment entitles Petitioners to the jury trial they requested.
Dissent. Respondent’s action would have sounded in equity in England at common law. The majority’s decision may threaten the efficacy of bankruptcy courts and the Seventh Amendment should not be used as a tool to reach this result. Concurrence. The concurrence disagrees with the majority. The federal government needs to be a party for a case to revolve around public rights.
Discussion. The majority in this case states that it must give deference to Congress’ judgment on constitutional issue, but denies the existence of evidence demonstrating that Congress had exercised any in the present case.