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Right to a Jury Trial Denied in Revived McAfee Shareholder Case

By George Khoury, Esq. on November 16, 2017 | Last updated on March 21, 2019

In reviving a shareholder action against McAfee, the California Court of Appeals, for the Sixth Appellate District, explained that the plaintiffs still did not have a right to a jury trial. Though the appellate court did revive the case, sending it back down to the court to try the matter as to a few of the several defendants, including McAfee, the matter will only be heard by a judge.

The case itself involves some rather juicy details and allegations of corporate misconduct, including board members acting out of self-interest, rather than on behalf of shareholders. However, the resolution of which state's law to apply and when, particularly as it applied to the right to a jury trial certainly will make the case worth noting.

Appellate Decision of Equity

The appellate court reviewed the lower court's dismissal of the case on summary judgment. The appellate court found that the plaintiffs had presented evidence of triable issues of material fact as to their claims against a few defendants. However, when it came to the claim that the trial court erred in denying the right to a jury trial, the appellate court disagreed, but not without a lengthy discussion.

It reasoned that the claims being made, particularly after examining the prayer for relief, sounded in equity more so than law, and as such, were proper to be tried to a judge rather than a jury. The court, after examining the case, explained that: "As discussed, it is the gist or nature of the action that determines whether a jury trial is available as a matter of right." Despite the cause of action sounding in law, the court found the overall gist sounding in equity.

Details of the Misdeeds

Essentially, the shareholders are alleging that certain high level executives and board members colluded in a buyout, or had conflicts of interest, and as such, violated their fiduciary duties to the shareholders. Specifically, it is claimed that a higher price per share was not sought, and could have been. Furthermore, it is alleged that the CEO lied, and failed to disclose material information that would have influenced the deal and the shareholders' returns.

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