The Seventh Amendment guarantees the right of trial by jury for “Suits at common law.” But defining when a suit is “at common law” can be surprisingly tricky. More than two hundred years after the Seventh Amendment’s enactment, the matter remains heavily litigated and unresolved.

For the first time in U.S. history, plaintiffs suing an employer for breach of ERISA fiduciary duties resulting in excessive fees have received a jury trial. ERISA, the Employee Retirement Insurance Security Act, requires employers sponsoring retirement plans to behave prudently with plan money. (Full disclosure: This case was litigated by my former firm, and I was at the firm during the trial.) The court held that the 7^th Amendment jury trial right for “Suits at common law,” applies to such claims, despite plaintiffs seeking relief under ERISA’s provision for “other appropriate equitable relief.” The scope of the 7^th Amendment jury trial right is no simple matter, but the court in Yale University got it right, and in so doing protected a vital constitutional right.

The case involves the distinction between suits at “law” and suits at “equity.” Historically, the British courts of law split and shared jurisdiction with the “Chancellor’s court,” which heard equity cases. In law, claims were advanced seeking, predominantly, monetary damages. In equity, by contrast, courts typically awarded such remedies as injunctions and specific performance (in a nutshell, orders for people to take or refrain from taking certain actions). Although the Federal Rules of Civil Procedure merged law and equity into a single form of action, the distinction lives on in some states, most famously Delaware, where corporate law matters go to the Court of Chancery because they concern trusts.

The right to a jury trial depends on both the nature of the action and the nature of the remedy. In ERISA cases, the statutory action is undoubtedly equitable in nature. This makes sense, as Congress was consciously adopting portions of the common law of trusts. As Justice Antonin Scalia has explained, “appropriate equitable relief” means relief that was “typically available in equity” pre-merger. Monetary relief is permitted in such cases because it takes the form of surcharge, an equitable remedy consisting of an injunction requiring a fiduciary (like an employer) to pay for a loss that resulted from his breach. In most cases, plaintiffs sue because, for instance, the employer caused them to pay excessive fees to an investment firm or recordkeeper. But there is no segregated fund from which the funds will be collected; indeed, they are not even in the hands of the defendant. These are historical markers of equitable remedies: recovery from segregated funds unjustly obtained is equitable. Without those markers, the Supreme Court has held that monetary damages are legal rather than equitable, because they were not typically available in equity.

In sum, these cases present an equitable claim for relief, together with a remedy not typically available in equity pre-merger. While both the claim and the remedy sought matter for the 7^th Amendment analysis, the Supreme Court has made clear that the remedy is the more important. So ERISA cases seeking monetary relief against employers for money paid to third parties should be decided by juries; they seek legal relief, albeit under an equitable statutory right.

Until now, all courts before which the matter reached trial have (wrongly) rejected this conclusion. In general, these courts have read the Supreme Court’s precedent holding monetary damages to be legal damages narrowly, because that case dealt with a suit by a fiduciary against a non-fiduciary. These courts have instead applied the “previously available in equity” test strictly, holding that the collection sought in these cases is surcharge, an exclusively equitable remedy. These reeds are too thin, though, for the denial of a constitutional right, as the court in Yale rightly held.

So in Yale, score one for the defendants, who received the jury verdict, but score another for the Constitution, whose 7^th Amendment received some much-needed recognition.