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CALIFORNIA SUPREME COURT FINDS PREDISPUTE WAIVER OF JURY TRIAL UNENFORCEABLE

The Supreme Court of California affirmed an appellate court’s decision that a predispute waiver of a jury trial is unenforceable because it is not authorized by California law and therefore is inconsistent with the State’s Constitution. Grafton Partners v. PriceWaterhouseCoopers, No. S123344, slip op. at 2-3 (Cal. Sup. Ct. Aug. 4, 2005). The case arose from Grafton Partners’ action against PriceWaterhouseCoopers alleging, among other things, negligence on behalf of PWC in its provision of services to Grafton. As part of its suit, Grafton demanded a trial by jury. Relying on Grafton’s contractual waiver of its right to demand a jury trial, the trial court granted PWC’s motion to strike the jury trial demand. On appeal, the appellate court rejected PWC’s attempted enforcement of the predispute contractual waiver of jury trial as violative of the California Constitution and reversed the trial court’s decision.

Agreeing with the appellate court’s decision, the Supreme Court first examined the State’s Constitution and, quoting the appellate court, stated that “‘California[’s] constitutional history reflects an unwavering commitment to the principle that the right to a civil jury trial may be waived only as the Legislature prescribes. . . .’” Id. at 8. Noting that Section 631 of the California Code of Civil Procedure is the sole statutory provision governing waiver of a jury trial in a civil action, the Court next turned to examine its provisions. Of the six ways to accomplish a waiver set forth in Section 631, PWC attempted to rely on Section 631(d)(2), which permits a waiver by written consent filed with the clerk or judge. Id. at 11. The Court rejected PWC’s reliance on this provision because it construed Section 631 to apply only once an action is pending, which would require the execution of any contractual waiver of jury trial and the filing of such waiver to occur while the action was pending. Id. at 12-13. Because the parties had agreed to the waiver of a trial by jury before any action was filed, the Court found the waiver to be unenforceable. The Court reached its decision regarding Section 631(d)(2) by examining both the plain language of the provision and its legislative history. Id. at 14-19.

Throughout its decision, the Court distinguished between the enforceability of arbitration provisions, which also result in waiver of a trial by jury, and predispute jury waiver provisions. The Court noted that predispute arbitration provisions differ from predispute jury trial waivers in that they (i) are specifically authorized by statute, (ii) result in avoidance of the judicial forum altogether and (iii) conserve judicial resources far more than using a judge instead of a jury to adjudicate a case. Id. at 9 and 22.

The Court specifically rejected a request to apply its decision only prospectively. Id. at 26. Accordingly, until such time as the California legislature acts to authorize predispute waivers of jury trials, such waivers will be unenforceable under California law.

􀂗 Jeff Langer and Margaret Stolar