Bankruptcy Judge Martin R. Barash of Woodland Hills, Calif., exercised discretion by waiving enforcement of a local rule when it would have resulted in the loss of the right to a jury trial. Judge Barash invoked his discretion to avoid grappling with the possible invalidity of the local rule governing demands for jury trials.
Although seldom used, the statute and rules allow bankruptcy judges to conduct jury trials if everyone consents. Assuming the proceeding is one that may be heard by a bankruptcy judge, the statutory authority in 28 U.S.C. § 157(e) allows a bankruptcy court to conduct a jury trial if the district court allows “and with the express consent of all the parties.”
Fleshing out procedures governing jury demands, Rule 38(b) of the Federal Rules of Civil Procedure requires a written demand for a jury trial not more than 14 days “after the last pleading directed to the issue is served.” Rule 38(d) waives the right to a jury trial if the demand is not timely. Rule 28 is made applicable in adversary proceedings by Bankruptcy Rule 9015(a).
Bankruptcy Rule 9015(b) tracks Section 157(e) and Rule 38(b) by allowing a bankruptcy judge to conduct a jury trial if the district court allows, if a timely demand was made under Rule 38(b), and if the parties jointly or severally file a “statement of consent within any applicable time limits specified by local rule.”
Where Judge Barash sits in the Central District of California, the district court adopted a general order allowing bankruptcy judges to conduct jury trials with the parties’ express consent.
In turn, the local bankruptcy rules require a jury demand in compliance with Rule 38(b), plus a statement indicating whether or not the party consents to jury trial in bankruptcy court. Within 14 days of that statement, other parties must file a statement of consent or nonconsent to jury trial in bankruptcy court. Another provision in the local rule waives a jury trial if a party fails to file and serve a demand as required by the local rule.
In the case at bar, the defendant made a proper demand for a jury trial but did not comply with the local rule requiring a statement of consent or nonconsent to a jury trial in bankruptcy court.
Invoking the local rule, the plaintiff-trustee contended that the defendant waived any right to a jury trial given its noncompliance with the local rule requiring a statement about consent to jury trial in bankruptcy court. Judge Barash rejected the idea.
Arguably, the local rule was invalid to the extent it would invalidate an otherwise proper jury demand simply because there was no additional statement of consent or nonconsent to jury trial in bankruptcy court.
Judge Barash avoided ruling on whether the local rule was invalid by relying on another local rule giving the bankruptcy judge discretion to waive application of any local rule. He said there should be no waiver of a right to a jury trial when the party “has made a timely and otherwise proper demand under FRCP 38(b).”
Because the defendant was adamant about having a jury trial in bankruptcy court, Judge Barash upheld the defendant’s right to a jury trial but gave the trustee 14 days to consent or withhold consent to jury trial in bankruptcy court.