SEC v. Cuban Shows Importance of U.S. Jury System

By Tom Melsheimer and Judge Craig Smith

(December 12) – When our city’s best-known billionaire Mark Cuban bounded out of Dallas’ federal courthouse two months ago after being cleared of insider-trading allegations filed by the U.S. Securities & Exchange Commission, there was reason for all of us to set aside our cynicism and take a moment to savor what had transpired.

This wasn’t a big game in which we can share a sense of collective victory, nor was it simply a rich guy’s ability to buy justice. We don’t cheer Cuban’s outcome in SEC v. Cuban because of his popularity or the way the news reports make a horse race out of such matters. Cuban’s legal victory is important because he stood up to heavy-handed government lawyers by relying on a legal tool that thankfully is available to all of us.

While the boisterous Dallas Mavericks owner had opportunities to settle and make the allegations go away, which would carry the implication to some that he had done something wrong, Cuban said from the start that his legal battle was about far more than money. It was about the principle of fair play, so to speak, which is something that our forefathers wisely saw as crucial to our justice system.

Cuban relied upon one of our most sacred constitutional rights – a jury trial – which allows any of us to stand up to government excess or resolve business disputes. Given their experiences with the excesses of prerevolutionary crown courts, our founding fathers viewed the right to a trial by jury as being so important that it is spelled out and guaranteed in two separate amendments to the U.S. Constitution: the Sixth Amendment guarantees jury trials and due process in criminal matters, and the uniquely American Seventh Amendment provides for jury trials to resolve civil matters such as Cuban’s.

While trials before a jury of one’s peers are increasingly rare as big business interests push mandatory arbitration clauses and tort reform measures are narrowing access to courts, it’s important to note that Cuban’s case shows that the jury system, although battered, remains a powerful public resource that is alive and well in the 21st century.

Even The Wall Street Journal’s famously anti-tort editorial page said as much in describing Cuban’s case: “One virtue of the jury system is that it invites the average person’s common sense as a check on the excesses of law enforcers.”

For these reasons, the steady decline in jury trials is cause for concern. The number of state and federal civil court trials in Texas last year was less than half the number compared to 15 years ago when Judge Patrick Higginbotham of the 5th U.S. Circuit Court of Appeals sounded the alarm about powerful interests mounting against the civil justice system. “There are certain elites in this country who don’t trust juries,” the Reagan appointee presciently said. “The future of our jury system is very much in danger.”

The loss of constitutional rights usually represents a very sensitive issue for many Americans, but somehow our right to a jury trial is slipping away with little notice. We have a vigorous gun lobby but no jury lobby. We believe a robust jury system is more important to our safety as citizens than the right to own a gun. The cost of civil litigation certainly is cause for concern. While the Constitution assures that indigent criminal defendants have access to court-appointed counsel, there is no such provision for indigent civil litigants who cannot afford representation.

But at a time when government overstep has become increasingly commonplace, when authorities move to seize assets first and ask questions later, and whistle-blowers have nowhere else to turn, we need our civil justice system more than ever.

The SEC v Cuban verdict wasn’t a case of a wealthy defendant getting off on a technicality. It was a demonstration that our civil justice system remains an important tool that can level the playing field for each of us.

Tom Melsheimer, managing principal in Fish & Richardson’s Dallas offices, was lead trial attorney for Mark Cuban in SEC v. Cuban. Craig Smith presides over the 192nd State District Court in Dallas County.