On May 30, 2003, the Pennsylvania Supreme Court held that plaintiffs are not entitled to a jury trial under 42 Pa.C.S. § 8371, Pennsylvania’s bad faith statute. The ruling in Mishoe v. Erie Ins. Co. and Hamer v. Federal Kemper Ins. Co., 824 A.2d 1153 (Pa. May 30 2003), puts to end an era of relative uncertainty about whether or not plaintiffs are entitled to a jury trial under the statute in state court.
Plaintiff Arguments
In an opinion authored by Justice Nigro, the Court rejected two arguments advanced by the plaintiffs. First, counsel for the plaintiffs argued that the right to a jury trial in bad faith cases is conferred upon plaintiffs by the bad faith statute, which provides, in pertinent part, “In an action arising under an insurance policy, if the Court finds that the insurer has acted in bad faith towards the insured, the Court may take all of the following actions…” 42 Pa. C.S. § 8371. Reasoning that because the term "court" as used in the statute has been defined otherwise to mean "judge," and because there was absence of any legislative history indicating an intent to provide the plaintiffs with a right to jury trial under the statute, the court rejected the argument that the statute should be construed to allow jury trials. Plaintiffs also argued that because the statute allows for the awarding of punitive damages, a responsibility traditionally in the domain of a jury, a right to a jury trial exists for plaintiffs under the statute. While conceding that punitive damage awards are traditionally in the domain of juries, the Court ruled that this fact alone was insufficient to confer a right to a jury trial to plaintiffs under the statute.
The plaintiffs also argued that right to a jury trial is constitutionally mandated because the Pennsylvania Constitution guarantees that "[t]rial by a jury shall be as heretofore, and the right thereof remain inviolate." Pa. Const. Art. 1, Sec. 6. Thus, the Constitution preserves the right to a jury trial for all causes of action which allowed for jury trials at the time the Constitution was adopted in 1790. The Pennsylvania Supreme Court held that because it had already concluded that there was no common law tort cause of action for bad faith against an insurer (see D’Ambrosio v. Pennsylvania Nat’l Mut. Cas, Ins. Co., 431 A.2d 966 (Pa. 1981)), the bad faith cause of action was not one in which a plaintiff was entitled to a jury trial at the time the Pennsylvania Constitution was adopted.
The Decision
The Mishoe case was decided by a 3-2 vote, with two justices not participating in the decision. The majority’s reasoning was very similar to its reasoning when it determined that there was no right to a jury trial for plaintiff’s under the Pennsylvania Human Relations Act in Wertz v. Chapman Twp, 741 A.2d 1272 (Pa. 1999). In Wertz, Justice Castille was the lone dissenter, reasoning that a jury trial could be afforded under a statute and the Constitution even if the statute does not explicitly provide for it and such a right did not exist at the time the Pennsylvania Constitution was enacted.
Interestingly, however, Justice Castille changed his mind and supplied the majority with the deciding vote in Mishoe. While stating that Mishoe and Hamer were not strictly controlled by stare decisis due to Wertz, Justice Castille offered that "there is an insufficient distinction between the two as to warrant distinction of, or departure from, Wertz." Justice Castille also offered that he felt Wertz was a difficult case to decide, and added that "it is important that our approach to these matters be consistent." Thus, in deciding Mishoe and Hamer, Justice Castille appeared to rely more on the spirit behind the Court’s institutional restriction of stare decisis than his own reasoning in Wertz. It is worthy to note, however, that if Justice Castille had maintained a position in Mishoe and Hamer comparable to the position he articulated in Wertz, the Mishoe court would presumably have reached the opposite result.
Justice Cappy, in his dissent, would have held that the Court mistakenly read and applied Wertz. The result, according to Justice Cappy, was that the Wertz decision was given "a breadth and effect that was not intended, is not required and will be problematic in the future." Justice Cappy also accused the majority of failing to follow the dictates of the Statutory Construction Act of 1972, 1 Pa.C.S. Sec. 1501, et seq. This failure, he wrote, lead to the court’s erroneous finding in Mishoe and Hamer.
Impact on Future Lawsuits
Importantly, the Supreme Court’s holding impacts a plaintiff’s right to a jury trial under the bad faith statute only in state court actions in Pennsylvania. In suits brought under the statute in federal court, a plaintiff is entitled to a jury trial via the Seventh Amendment. The Federal Courts have long held that such a right existed prior to the adoption of the federal constitution, making jury trials available in federal court. See e.g., Younis Bros. & Co. Inc. v. CIGNA Worldwide Ins. Co., 882 F. Supp. 1468 (E.D. Pa. 1994); Klinger v. State Farm Mut. Auto. Ins. Co., 115 F.3d 230 (3d Cir. 1997).