Solugen Inc. v. M3 Chem. Grp. LLC

529 F.Supp.3d 685

SOLUGEN INC., Plaintiff,

v.M3 CHEMICAL GROUP LLC and James Mulloy, Defendants.

Civil Action No. 4:19-cv-01658

United States District Court, S.D. Texas, Houston Division.

Signed March 29, 2021

Daniel John Ringquist, Ahmad Zavitsanos et al., Todd W. Mensing, Shawn M. Bates, Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., Houston, TX, for Plaintiff.

Eric G. Osborne, Ryan T. Holt, Pro Hac Vice, Sherrard Roe Voigt Harbison, PLC, Nashville, TN, Alex Benjamin Roberts, Beck Redden LLP, Houston, TX, for Defendant M3 Chemical Group, LLC.

Alex Benjamin Roberts, Beck Redden LLP, Houston, TX, Ryan T. Holt, Sherrard Roe et al., Nashville, TN, for Defendant James Mulloy.

MEMORANDUM AND OPINION GRANTING MOTION FOR JURY TRIAL

Charles Eskridge, United States District Judge

The motion by Plaintiff Solugen, Inc. for jury trial pursuant to Rule 39 of the Federal Rules of Civil Procedure is granted.

1. Background

Solugen is a Houston-based chemical manufacturer. Defendant M3 Chemical Group, LLC is a Tennessee limited liability corporation headquartered in Nashville. They entered into a consulting agreement in May 2018 and amended that agreement in August 2018. See Dkt 40 at ¶¶ 15, 21.

Defendant James Mulloy is M3's sole member. Solugen alleges that the amended agreement required him to personally create a new biocide product and to subregister biocides from other companies. Id. at ¶¶ 11–17. Solugen asserts that Mulloy failed to meet a number of milestones within certain phases outlined in the amended agreement. Id. at ¶¶ 22–44, 73–74. It also asserts that Mulloy otherwise breached the confidentiality and noncompete provisions within the agreement. Id. at ¶¶ 45–70.

At issue here is simply whether trial will be to a jury or to the bench. The pertinent pleadings reflect an escalating cascade of claims, counterclaims, answers, and amendments.

Solugen filed its initial complaint solely against M3 in May 2019, raising claims for breach of contract and fraudulent inducement. Dkt 1. It made no jury demand. M3 answered in July 2019 and brought counterclaims for breach of contract and declaratory judgment. Dkts 15, 16. Solugen answered the counterclaims. Dkt 23.

Solugen then filed a first amended complaint in August 2019, again solely against M3. Dkt 24. That complaint reiterated the breach-of-contract and fraudulent-inducement claims, while adding another for declaratory judgment. It again made no jury demand. M3 answered later that month and maintained its counterclaims. Dkt 26.

M3 then moved in March 2020 to bring amended counterclaims based on the same causes of action. Dkts 34, 36. Solugen that same day itself moved for leave to file a second amended complaint and an amended answer to M3's amended counterclaims. Dkt 37. Both motions were granted. Dkts 38, 39. The amended counterclaims were deemed filed, as M3 had already docketed them. See Dkt 36. Solugen filed its second amended complaint later in March 2020. See Dkt 40. It added Mulloy as a party defendant, while also bringing additional claims. Solugen now asserts claims against both M3 and Mulloy for breach of contract, fraudulent inducement, declaratory judgment, money had and received, and promissory estoppel. And this time, Solugen demanded a jury trial.

Solugen later filed an amended answer to M3's counterclaims. Dkt 41. But M3 again amended its breach of contract and declaratory judgment counterclaims, to which Solugen filed a further amended answer. Dkts 42, 48. And M3 and Mulloy recently filed a further amended answer to the second amended complaint in March 2021. Dkt 115.

Solugen filed the subject motion for jury trial in April 2020. Dkt 45.

2. Legal standard

This order issues as the COVID-19 pandemic appears now at last to be relaxing its grip, at least somewhat, in Texas and across the country. Jury trials—both civil and criminal—were halted due to health exigencies arising from a communicable disease capable of transmission between persons spending substantial periods of time in close proximity. For example, see General Order No 2020-3, CARES Act Authorization for Video and Audio Conferencing in Criminal Proceedings (Mar 30, 2020). Calling jurors to service simply wasn't possible until the phenomenon was better understood and brought under control.

The last jury trial completed in the Houston Division prior to mandated lockdowns occurred just over one year ago, with a verdict rendered on March 20, 2021. See Legacy Separators LLC v. Halliburton Energy Services Inc. et al. , No 4:14-cv-02081 (Judge Andrew Hanen). Several others were halted midtrial at that time. A series of general orders has since delayed recommencement in cautious steps with an eye towards now-familiar tracking statistics on positive-test trends, hospital and ICU capacity, and, sadly, mortality rates. For example, see Special Order No H-2020-09, In re: Court Operations in the Houston and Galveston Divisions Under the Exigent Circumstances Created by the COVID-19 Pandemic (April 3, 2020) (postponing criminal and civil jury trials at least until May 31, 2020). Attempts to proceed were made in the Fall of 2020, with three jury trials of short duration accomplished in October and November. But deteriorating statistics amidst a notable surge brought that to a halt.

With several vaccines created and deployed with astonishing speed, Texans began receiving "shots in arms" in December of 2020, prioritized to the elderly, essential workers, and the infirm. See Texas Department of State Health Services, News Release of December 14, 2020. And Governor Greg Abbott has now announced that vaccinations for all Texans over the age of sixteen commences this day, March 29, 2021. See Texas Department of State Health Services, News Release of March 23, 2021. As such, and if present trends continue, the Houston Division of the Southern District of Texas will again begin calling prospective jurors for trial service as of May 10, 2021. See Special Order No H-2021-11.

The temporary suspension of the ability to proceed with jury trials isn't the most substantial of the many hardships endured during these times. Far from it. But it is one of them. A discussion of background principles is appropriate. What's more, it provides necessary context by which to properly discern the validity of the late demand for jury trial by Solugen in this action.

a. Background principles

The Seventh Amendment to the United States Constitution states, "In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law." Suits at common law refers to those actions, as here, "in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered." Granfinanciera, S.A. v. Nordberg , 492 U.S. 33, 41, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989) (emphasis in original), quoting Parsons v. Bedford , 28 U.S. 433, 447, 3 Pet. 433, 7 L.Ed. 732 (1830) (Story, J).

This right to jury trial in civil matters had existed for centuries in the English legal tradition, long prior to our own Constitution. Sir William Blackstone published his Commentaries on the Laws of England in four volumes commencing in 1765, quite proximate to the American Revolution. He there traced origin of the right to Magna Carta in 1215 and times earlier, noting that establishment and use of jury trial "was always so highly esteemed and valued by the people, that no conquest, no change of government, could ever prevail to abolish it." Sir William Blackstone, 3 Commentaries on the Laws of England 350 (reprinted by Robert Bell, 1st American ed 1772). Even if the ultimate first roots are obscured, he observed that "the more it is searched into and understood, the more it is sure to be valued," while further describing the right to trial by jury as "the glory of the English law" and "the most transcendent privilege which any subject can enjoy or wish for, that he cannot be affected, either in his property, his liberty, or his person, but by the unanimous consent of twelve of his neighbors and equals." Id. at 350, 379; see also Hon Jennifer Walker Elrod, W(h)ither The Jury? The Diminishing Role of the Jury Trial in Our Legal System , 68 Wash & Lee L Rev 3, 7 (2011).

When ratified, the Constitution guaranteed the right of jury trial only in criminal matters. US Const Art I, § 2, cl 3. James Wilson explained during the ratification debates that similar guarantee didn't obtain in civil cases because of a lack of uniformity among the states, making it "therefore impracticable, on that ground, to have made a general rule." James Wilson, State House Speech (Oct 6, 1787), as published in 4 The Founders’ Constitution 392 (Philip B. Kurland & Ralph Lerner, eds, 1987). But it was the very expression of this guarantee in criminal causes that engendered Anti-Federalist concern of its implied exclusion or outright abolishment in civil causes. For example, see Federal Farmer, no 4 (Oct 12, 1787), as published in 5 The Founders’ Constitution at 354; Cincinnatus, no 2 (Nov 8, 1787), as published in 4 The Founders’ Constitution at 394–95. And the writing of Federal Farmer perhaps captures best what was feared might be lost:

The jury trial, especially politically considered, is by far the most important feature in the judicial department in a free country; and the right in question is far the most valuable part, and the last that ought to be yielded, of this trial. Juries are constantly and frequently drawn from the body of the people, and freemen of the country; and by holding the jury's right to return a general verdict in all cases sacred, we secure to the people at large, their just and rightful controul in the judicial department. If the conduct of judges shall be severe and arbitrary, and tend to subvert

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