Update on Jury Waivers – California

We recently discussed the then-pending case, Grafton Partners vs. Superior Court (PriceWaterhouseCoopers), in a posting about the trend toward using jury trial waivers as an alternative to arbitration clauses in contracts. Here’s an update:

The California Supreme Court has ruled that a pre-dispute waiver of the right to a jury trial is not enforceable in that state, but don’t expect that ruling to influence the trend in other states to permit such waivers.

While California law sometimes influences courts in other states, it is unlikely to have such an effect on this issue because the decision deals with specific language in the California Constitution. Instead, in this case the court was cognizant, and perhaps somewhat sensitive, to the fact its decision was contrary to the national trend of decisions on this issue. The most interesting discussion appeared in a concurring opinion by Justice Ming W. Chin, who urged the legislature to pass a law expressly permitting pre-dispute jury waivers.

“As the majority acknowledges, our decision is out of step with the authority in other state and federal jurisdictions, most of which have permitted pre-disupte jury waivers. The Texas Supreme Court recently observed that ‘nearly every state court that has considered the issue has held that parties may agree to waive their right to trial by jury in certain future disputes, including the supreme courts in Alabama, Connecticut, Missouri, Nevada and Rhode Island. The same is true of federal courts.’”

Justice Chin observed that only the supreme courts of Georgia and, now, California had held the waivers unenforceable.

Adopting the view of the underlying appeals court, Justice Chin argued that such waivers offer an attractive middle ground between jury trials and arbitration; “agreements between parties to resolve future disputes by court trial would minimize fears of excessive jury awards while affording greater procedural safeguards than those available in arbitration.”

Arbitration provisions, which are enforceable in California, drew some criticism. Justice Chin quoted the Texas Supreme Court: “by agreeing to arbitration, parties waive not only their right to trial by jury but their right to appeal, whereas by agreeing to waive only the former right, they take advantage of the reduced expense and delay of a bench trial, avoid the expense of arbitration and retain their right to appeal.”