## Facts

- Minority shareholders of LaPorte City Cooperative Elevators brought a shareholder derivative action on behalf of the cooperative.
- The suit alleged the cooperative’s former manager committed negligent breach of fiduciary duty and fraudulent misrepresentation, and sought compensatory and punitive damages.
- The suit also alleged former directors and the cooperative’s lender and loan officer were negligent in performing their duties, causing financial loss to the cooperative.
- Plaintiffs filed the derivative action in equity but demanded a jury trial.
- Defendants asserted legal affirmative defenses (including comparative fault and failure to mitigate) and claimed statutory immunity, then moved to strike the jury demand.
- The district court struck the jury demand on the ground that shareholder derivative actions are equitable and therefore tried to the court.
- Plaintiffs obtained interlocutory review of the jury-trial ruling.

## Issues

1. Whether shareholders bringing a derivative action are entitled to a jury trial when the pleadings include legal claims and requests for money damages and defendants assert legal affirmative defenses.
2. Whether the right to jury trial under the Iowa Constitution turns on the “essential character” of the action or on the legal/equitable character of particular claims, remedies, or defenses within the case.

## Decision

- The Iowa Supreme Court affirmed the order striking the jury demand.
- The court held there is no right to a jury trial in a shareholder derivative action, even when the complaint pleads legal theories and seeks money damages and even when defendants assert legal defenses.
- The case was to proceed as a bench trial in equity.

## Legal Principles

- A shareholder derivative action is inherently equitable because shareholders sue on the corporation’s rights when those controlling the corporation refuse to act.
- The Iowa Constitution preserves the jury-trial right for “cases at law,” determined by historical classification: actions triable to a jury at common law, not suits in equity.
- Courts classify the jury-trial entitlement by the action’s essential character, not by the form of relief requested or by the presence of legal claims or affirmative defenses.
- Derivative actions are treated as a single equitable vehicle for jury-trial purposes; issues are not partitioned into jury-triable and court-triable components merely because the pleadings contain legal elements.
- The nature of the action is not converted from equity to law by defendants’ assertion of legal defenses such as comparative fault.

## Conclusion

Because a shareholder derivative lawsuit is an equitable proceeding in which shareholders assert the corporation’s rights, the constitutional jury-trial guarantee for cases at law does not apply, and the presence of legal claims, damages requests, or legal defenses does not create a jury-trial right.


Weltzin v. Nail, 618 N.W.2d 293 (Iowa 2000)