CALIFORNIA SUPREME COURT DECLARES PREDISPUTE JURY TRIAL WAIVERS ARE NOT ENFORCEABLE
On August 4, 2005, in Grafton Partners, et al. v. Superior Court, the California Supreme Court refused to uphold a predispute jury trial waiver. In reaching this decision, the Court expressly overruled Trizec Properties, Inc. v. Superior Court, 229 Cal. App. 3d 1616 (1991) which previously held that predispute jury trial waivers were permissible even in the absence of statutory authorization.
In Grafton Partners, PriceWaterhouseCoopers, LLP contracted with two partnerships to perform various audits. In the retainer agreement, the parties mutually agreed that in the event a dispute arose concerning services or fees, none of the parties would demand a jury trial. Nevertheless, in the lawsuit filed against PriceWaterhouseCoopers, it demanded a jury trial.
The California Supreme Court held that predispute jury trial waivers are unenforceable and that parties may only waive a jury trial after the lawsuit is filed.
However, the California Supreme Court made it clear that its holding does not preclude predispute jury trial waivers contained in valid and enforceable arbitration agreements because the California Legislature has statutorily authorized predispute arbitration agreements.
Accordingly, the only enforceable way to agree to a predispute waiver of a jury trial is through a properly drafted arbitration agreement.
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