UPDATES & ANALYSIS

Right to a jury does not apply to Consumer Fraud Act claims brought by the Attorney General, Iowa Supreme Court rules

by Rox Laird | June 7, 2023

Because Iowa’s Consumer Fraud Act is enforced through civil proceedings aimed at making victims whole and preventing future fraudulent actions rather than punishment, defendants accused of violating the Act are not entitled to a trial by jury, the Iowa Supreme Court held in a decision handed down May 26.

The State brought a civil action in Polk County District Court against defendants Travis Autor, Regenerative Medicine and Anti-Aging Institutes of Omaha, and Omaha Stem Cells, alleging they violated the Iowa Consumer Fraud Act and the Older Iowans Act (which provides for additional penalties for violations against persons age 65 or older) by engaging “in false, misleading, and deceptive conduct and unfair practices.” [Go to On Brief to read our earlier analysis of this case.]

The Attorney General asked for preliminary and permanent injunctions, disgorgement of all ill-gotten gains, and civil penalties.

The District Court denied the defendants’ demand for a trial by jury. In their appeal of that ruling to the Iowa Supreme Court, the defendants argue the Iowa Constitution requires a jury trial in their case because the State seeks monetary remedies of up to $40,000 per violation under the Consumer Fraud Act, penalties of up to $5,000 per violation under the Older Iowans Act, and joint and several liability.

In its unanimous May 26 ruling written by Justice David May, the Iowa Supreme Court rejected that argument and affirmed the District Court.

The Iowa Consumer Fraud Act (CFA), Iowa Code section 714.16, is enforced in part through civil actions brought by the Attorney General through “equitable proceedings.”

By “equitable proceeding” the Legislature referred to the jurisdiction of Iowa courts to hear cases where the court has the power to grant remedies, such as an injunction, as opposed to a civil liability suit seeking monetary damages.

Although Article 1, Section 9, of the Iowa Constitution states in part that “The right of trial by jury shall remain inviolate,” the right to trial by jury is not absolute in all civil cases. A civil action under the Consumer Fraud Act is one such exception.

The words “shall remain” mean that the right that existed when the Constitution was adopted, and at that time a jury was available in actions at law, the Court said, but “there was not — and is not — a jury right for cases within the court’s equitable jurisdiction.”

As to whether the Legislature was acting within its power when it required that Consumer Fraud Act actions “shall be by equitable proceedings,” the Court looked at the “essential nature of the cause of action, rather than solely at the remedy.”

Citing its earlier decisions on this question, the Court said that in Consumer Fraud Act cases, “the essential nature of the action is equitable” and “we believe it was competent for the legislature to provide for ‘the complete disposition’ of CFA civil actions through ‘equitable proceedings.’”

As for the defendants’ argument that a jury must be available by right because the Consumer Fraud Act provides for monetary remedies, the Court said the essential nature of a CFA action is equitable and not inherently legal.

“Although the defendants say that some of those remedies (especially the civil penalties and disgorgement) are punitive,” May wrote, “we look at them through a different lens. We agree with the attorney general that those remedies are aimed at equitable and remedial goals of making victims whole, extracting ill-gotten gains, and ‘protecting Iowa consumers’ by encouraging compliance with the law.”

The Court added a caveat, however, pointing out that its May 26 ruling does not apply to private causes of action under the Consumer Fraud Act.

“It is important to recognize that this opinion only addresses the cause of action available to the attorney general under section 714.16. A separate provision — that is not at issue in this case — permits consumers to ‘bring an action at law to recover actual damages’ as well as ‘equitable relief’ under the CFA,” May wrote. “Nothing we have said in this opinion applies to this separate private cause of action.”

Tags: Iowa Supreme Court 2022-23