• Grafton Decision Clouds Effectiveness Of Jury Trial Waivers In California
  • June 4, 2004 | Author: Joseph A. Meckes
  • Law Firm: Squire, Sanders & Dempsey L.L.P. - San Francisco Office
  • The California Court of Appeal for the First Appellate District on Feb. 6 held that the California constitution's guaranty of a right to trial by jury rendered unenforceable pre-dispute agreements waiving a jury trial. Grafton Partners L.P. v. Superior Court, 04 C.D.O.S. 1167.

    Under the court's reading, California litigants cannot waive their right to a jury trial until after a lawsuit is commenced, even if the waiver is knowingly made as part of a negotiated agreement between business entities.

    Rejecting contrary authority, the court based its opinion on Article 1, Section 16 of the California constitution, which states, "[t]rial by jury is an inviolate right" that may be waived in a civil case "by the consent of the parties expressed as prescribed by statute." The court reasoned that the term "prescribed by statute" prohibits parties from waiving the right to a jury trial except as expressly set forth by statute. Id. at 1168.

    The Grafton court found that the only methods allowed by statute are available after a lawsuit is already underway, and not before it is filed.

    Although the court recognized that allowing sophisticated business entities to enter into pre-dispute jury waivers can have benefits, the court still determined that it was powerless to enforce them absent statutory authorization. Id. at 1169 n.10. As a result, the court rejected Trizec Properties, Inc. v. Superior Court, 229 Cal. App. 3d 1616 (1991), which had held that jury trial waivers would be upheld if doing so would "best serve the needs of the contracting parties as well as that of our overburdened judicial system." Id. at 1618-1619.

    Although pre-dispute jury waivers are not permitted, the court noted that contractual arbitration agreements are enforceable because California law "effectively permits parties to waive a jury trial by agreeing to arbitrate." Grafton at 1169. Alternative dispute resolution (ADR) arrangements remain unaffected by Grafton under both the California and Federal Arbitration Acts.

    The Grafton decision casts doubts on the effectiveness of jury trial waivers in California. It is not yet clear, however, whether a pre-dispute jury trial waiver will be enforced in federal district courts in California or other courts applying California law despite Grafton. If avoiding the uncertainties and expense of jury trials is an important factor, practitioners may want to consider ADR methods, such as arbitration, or may choose alternate fora for litigation.