Securities and Exchange Commission v. Merrill ( 2022 )

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND SECURITIES AND EXCHANGE * COMMISSION, * Plaintiff, Civil Action No. RDB-18-2844 * v. * KEVIN B. MERRILL, et al. * Defendants. * * * * * * * * * * * * * MEMORANDUM ORDER This Court conducted a hearing on November 15, 2022, for oral arguments concerning various pending motions, including Relief Defendant Amanda Merrill’s “Motion for Order for Determination of Jury Trial Right” (ECF No. 446). Plaintiff Securities and Exchange Commission (“SEC”) opposes Amanda Merrill’s Motion. (ECF No. 449). For the reasons stated on the record and briefly explained below, Amanda Merrill’s Motion for Determination of Jury Trial Right is DENIED. Amanda Merrill argues that the disgorgement of her property is essentially an unjust enrichment claim which necessitates a right to a jury trial under the Seventh Amendment. (ECF No. 446-1). The SEC aptly notes that “disgorgement is a permissible form of equitable relief, and there is no right to a jury trial on equitable claims.” (ECF No. 449 at 4.) The Seventh Amendment bestows a right to a jury trial “[i]n [s]uits at common law….” U.S. Const. amend. VII. The Supreme Court has held that disgorgement is a remedy founded in equity. Liu v. Sec. Exch. Comm’n., 140 S. Ct. 1936, 1943 (2020) (“a remedy tethered to a wrongdoer's net unlawful profits, whatever the name, has been a mainstay of equity courts”). Where a claim is founded in equitable relief, there is no right to a jury trial. “While the Seventh Amendment guarantees a jury trial in cases ‘at common law,’ no constitutional provision guarantees … jury trials for cases tried in equity or in admiralty.” Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 152–53 (4th Cir. 1995). Consequently, a claim of disgorgement does not elicit a right to a jury trial under the Seventh Amendment. Sec. Exch. Comm’n. v. Rind, 991 F.2d 1486, 1493 (9th Cir. 1993) (“a defendant is not entitled to a jury trial where the Commission sues for disgorgement of illicit profits”); see Sec. Exch. Comm’n. v. Bravata, 3 F. Supp. 3d 638, 661 (E.D. Mich. 2014), aff'd sub nom. United States v. Bravata, 636 F. App'x 277 (6th Cir. 2016) (finding relief defendants have no right to jury trial in disgorgement claims). Despite Amanda Merrill’s attempt to label the SEC’s claims against her as founded in “unjust enrichment”, the SEC seeks disgorgement of Amanda Merrill’s personal property. As explained above, disgorgement is an equitable remedy to which no Seventh Amendment right to jury trial attaches. Amanda Merrill does not have a right to a jury trial, and her Motion seeking one (ECF No. 446) is not founded in law. Accordingly, IT IS this 16th day of November 2022, hereby ORDERED that Relief Defendant Amanda Merrill’s “Motion for Order for Determination of Jury Trial Right” (ECF No. 446) is DENIED. _______/s/_______________ Richard D. Bennett United States District Judge