California Supreme Court Strikes Down Jury Waiver Clauses

In a unanimous opinion, the California high court held in Grafton Partners v. Superior Court (PricewaterhouseCoopers), [2005 DJDAR 9387 (Cal. Aug. 4, 2005)] that in the absence of any legislation expressly permitting parties to waive their constitutional right to a jury trial prior to the commencement of a lawsuit, pre-dispute jury waivers contained in contracts cannot be enforced by California trial courts. When parties to a contract have their disputes resolved in the courts of California, the California Constitution accords them the right to a jury trial, which can only be waived “by consent of the parties expressed as prescribed by statute.” (Cal. Const. art. I '16.) After considering the arguments of defendant PricewaterhouseCoopers, as well as the arguments presented in amicus briefs filed by 11 different organizations in favor of jury waivers, that California Code of Civil Procedure section 631 permits pre-dispute contractual jury waivers, the high court, applying established rules of statutory interpretation, found section 631 applies only to jury waivers made after a dispute arises between the parties and does not prescribe a method or right to waive a jury trial prior to a dispute arising between the parties.

PricewaterhouseCoopers was not alone in its position. It had relied on a 1991 California Court of Appeal opinion upholding a pre-dispute jury waiver under Section 631 and was supported in the California Supreme Court review by numerous organizations, including the Commercial Finance Association, the California Bankers Association, the California Mortgage Bankers Association, the Chamber of Commerce of the United States of America, the California Chamber of Commerce and the American Institute of Certified Public Accountants.