BCCI Holdings v. Khalil

Citations: 182 F.R.D. 335; 42 Fed. R. Serv. 3d 723; 1998 U.S. Dist. LEXIS 15927; 1998 WL 710452Docket: No. Civ.A. 95-1252(JHG)

Court: District Court, District of Columbia; October 8, 1998; Federal District Court

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The memorandum opinion and order issued by District Judge Joyce Hens Green addresses a civil lawsuit stemming from the 1991 collapse of the Bank of Credit and Commerce International (BCCI). The Court Appointed Fiduciaries accuse Sheikh Abdul Raouf Hasan Khalil of participating in a conspiracy to unlawfully acquire and maintain control over First American Corporation and First American Bankshares, Inc. (collectively "First American") using nominee shareholders to mask financial irregularities. Khalil, a former senior Saudi government official and shareholder in BCCI holdings, seeks a jury trial after failing to make a timely demand when the complaint was filed in 1995. The court rejected his motion for a jury trial, referencing the Seventh Amendment, which preserves the right to a jury in civil suits but noting that this right has not been universally applied to the states. The memorandum highlights a shift in historical context and legal interpretation regarding jury trials since the Amendment's adoption, particularly in light of Supreme Court rulings that have limited its application.

Rules 38 and 39 establish that the right to a jury trial in federal civil cases is waived unless a party affirmatively demands it within ten days after the last pleading relevant to a jury-triable issue. Failure to make this demand is considered a waiver of the Seventh Amendment right to a jury trial. Once all parties waive this right, the court will try issues not demanded for jury trial. However, the court has discretion to grant a jury trial upon motion, regardless of a party's failure to demand one. 

Courts have identified factors to consider when exercising discretion under Rule 39(b), including the delay in making a demand, reasons for the delay, potential prejudice to the non-moving party, complexity of issues, and impact on the court’s schedule. Two main perspectives exist regarding the burden of persuasion in Rule 39(b) motions: the permissive view places the burden on the non-moving party to demonstrate strong reasons against granting a jury trial, while the restrictive view requires the moving party to show special circumstances. This Circuit's historical decisions lean towards the restrictive view, though recent cases show some support for the permissive view. 

The text of Rule 39(b) suggests that trials should be by the Court post-waiver unless a jury trial is granted, indicating that granting such motions is generally an exception. Both views have merit, with the restrictive view emphasizing the importance of not undermining Rule 38(d), while the permissive view highlights the significance of the civil jury. The Court finds these arguments balanced and notes that neither rule requires an inherent presumption, advocating for flexibility to ensure just, speedy, and inexpensive case resolutions.

Appellate courts have established guidelines for trial judges regarding late requests for jury trials, focusing on the justifiability of the litigant's delay and the absence of prejudice to opposing parties. In Pierce v. Underwood, the court adopted a presumption-neutral approach to Rule 39(b), requiring that each motion be evaluated on its own merits without bias towards granting or denying. Relevant factors include the length of the delay, reasons for the delay, potential prejudice to plaintiffs, complexity of issues, and rights of other parties.

In this case, Khalil filed a jury trial request nearly three years after the complaint and fourteen months after the answer, citing counsel's inadvertence as the reason for the delay. The court accepted this explanation but noted that the significant time elapsed, coupled with the completion of discovery and reliance on a bench trial, weighed against granting the jury trial. Plaintiffs argued they would face substantial prejudice if the request were granted, having made strategic decisions during discovery under the assumption of a bench trial. They highlighted issues related to witness testimonies and deposition preparations that would have differed for a jury trial. Khalil contended that plaintiffs' claims of prejudice were unsubstantiated, suggesting both parties operated under the impression of a jury trial throughout discovery. The court decided against holding an evidentiary hearing to resolve these credibility concerns, aiming to avoid further litigation on the matter.

The Court is not required to accept unsubstantiated claims of prejudice, yet the plaintiffs have demonstrated sufficient, plausible evidence of prejudice that weighs against granting Khalil's motion. Regarding the complexity of the issues, the evaluation does not concern whether a jury could understand the facts, as the parties agree that the factual elements are manageable for jury comprehension. The discussion focuses on whether the complexity justifies a bench trial over a jury trial under Rule 39(b). In some cases, a jury trial might streamline presentations to align with jurors' common sense, while in others, a bench trial could offer greater procedural efficiency. The current case involves complex allegations requiring expert testimony related to the banking industry and depositions, which would be more efficiently handled in a bench trial, allowing the Court to process information more rapidly. Furthermore, considerations regarding the administration of justice highlight that the Court must account for other litigants awaiting trial. Since no jury was demanded, the Court scheduled this trial for two weeks, with several other civil jury trials planned immediately afterward.

Granting Khalil’s motion for a jury trial would necessitate delaying multiple trials by at least one week and could postpone this trial by six to nine months, adversely affecting the plaintiffs’ interest in an expedited resolution due to Khalil's declining health. This situation favors a bench trial. Khalil contends that a jury trial is preferable to mitigate any appearance of bias from the presiding judge, who has overseen related criminal and civil cases. However, the court finds this argument unconvincing for several reasons: 

1. The judge has not prejudged any issues, and the case will be solely evidence-based.
2. There is no actual bias or prejudice, and thus no appearance of it. 
3. Efficient court management often requires assigning related matters to the same judge, which courts prefer despite potential conflicts.

Judges are expected to compartmentalize prior knowledge and remain impartial, and the procedural safeguards of Rule 52 of the Federal Rules of Civil Procedure further ensure fairness. Consequently, the court denies Khalil’s motion for a jury trial, ordering that the case will be tried before the court on January 25, 1999, with each side allotted 25 hours for their presentations.

Each party is allotted 25 hours for trial proceedings, which includes opening statements, closing arguments, direct examinations of their witnesses, and cross-examinations of the opposing party's witnesses. Time is deducted from this 25-hour limit whenever counsel speaks. Additionally, admissible deposition transcripts can be submitted to the deputy clerk for inclusion in the trial record without needing to be read aloud. 

Motions in limine must be filed by November 6, 1998, with oppositions due by November 13, 1998, and any replies by November 18, 1998. Service of legal memoranda must occur on the same day as filing, either by hand or via facsimile. If exhibits cannot be served the same day, they should be sent by overnight express mail for morning delivery. Pretrial Statements must be submitted by November 23, 1998, adhering to Local Rule 209(b), and should be prepared under the assumption that all motions in limine will be denied, noting potential impacts on trial presentations if any motions are granted.

BCCI refers to the collective plaintiff entities, including various BCCI Holdings and subsidiaries. At oral argument, Khalil’s counsel claimed a jury demand was included in Khalil's answer in a separate case against First American, but the Court's filed copy lacks this demand. The trial was initially set for a jury based on First American’s demand. Khalil's counsel later explained that the demand was mistakenly omitted during retyping. Khalil was informed about settlement discussions but opted not to participate. Ultimately, First American dismissed its case against Khalil, citing overlapping allegations and identical beneficiaries for any judgment.