The U.S. Court of Appeals for the Second Circuit zeroed in on potential defects in jury instructions as it heard oral arguments in an appeal of a class action lawsuit against Yale University, signaling that it may order a new trial. Employees alleged that Yale violated its fiduciary duty under ERISA by mismanaging their retirement plan. Although the jury found that Yale had violated its fiduciary duty and caused a loss, it also found that Yale owed the employees zero dollars in damages. The case is Vellali v. Yale University, Case Numbers 23-1082 and 23-1172, U.S. Court of Appeals for the Second Circuit.
At different points in the proceedings, all three judges on the Second Circuit panel questioned the instructions the jury received before issuing its 2023 verdict in favor of Yale. Judge Eunice C. Lee, who joined the court in 2021 following her nomination by President Joe Biden, focused on the lack of clarity of the jury instruction, which in her estimation, obviated the workers' failure to object to the jury instruction. Judge Joseph F. Bianco, a Trump nominee who joined the court in 2019, also questioned how the jury could have concluded that Yale owed zero damages at the same time that they found Yale's breach had caused a loss. Finally, even Judge Steven J. Menashi, another 2019 Trump nominee, referred to a “mistake” in the jury instructions that could have affected the jury's verdict. Nonetheless, Judge Menashi did not appear convinced that the mistake in the jury instructions resulted in an erroneous verdict.
The employees argued on appeal that the trial court judge erroneously instructed the jury that Yale could avoid damages if it could prove that a prudent fiduciary “could have” made the same decisions. According to the employees, the judge should have instructed the jury that Yale could avoid damages only if it could prove that a prudent fiduciary “would have” – not “could have”- made the same decisions.
Yale filed a cross-appeal, arguing that the jury verdict should be affirmed. In the alternative, the school argued that the workers should not be entitled to a jury trial if the Second Circuit grants a new trial.
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