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The First District Court of Appeal has challenged the long-held notion that a contractual pre-dispute jury waiver in favor of a court trial is enforceable under California law. In Grafton Partners LP. v. Superior Court( PricewaterhouseCoopers LLP), 03 C.D.O.S. 1167, the court ruled on Feb. 6 that pre-dispute jury waivers in the judicial forum are rendered unenforceable by Article I, Section 16 of the California Constitution because only the Legislature may prescribe the methods for waiving a civil jury. In Grafton, petitioners Grafton Partners retained real-party-in-interest PricewaterhouseCoopers to perform an independent accounting audit. The parties’ engagement letter contained a pre-dispute jury waiver should litigation arise from the parties’ business arrangement. A dispute later arose, and Grafton Partners demanded a jury trial. PWC moved to strike the demand based on the waiver clause, and the trial court granted the motion, relying on the Second District Court of Appeal’s opinion in Trizec Properties, Inc. v. Superior Court, (1991) 229 Cal.App.3d 1616. Grafton Partners’ writ petition to the First District followed. Justice Mark Simons, writing for a unanimous panel of the First District, ultimately issued a peremptory writ of mandate directing Alameda County Superior Court to set aside its order granting PWC’s motion to strike the demand for jury trial and to enter an order denying the motion. The court reasoned that the Trizeccase, upon which the trial court relied, failed to consider California’s constitutional history regarding jury waiver. Specifically, it reasoned that the constitutional history of California reflects an “unwavering commitment” to the principle that the right to a civil jury trial may be waived only as the Legislature prescribes, even in the face of policy arguments, that the interests of the parties and the courts would benefit from a relaxation of this requirement. Presiding Justice Barbara Jones and Justice Linda Gemello concurred. The court reasoned that while “good policy arguments can be made to support or oppose contractual pre-dispute jury waivers,” the constitution does not permit courts to fashion waiver procedures on a case-by-case basis: “As yet, the Legislature has not made the difficult policy choices involved, and �we will not and cannot do what the Legislature could have, but did not do.’” Grafton Partners, citing People v. Castille, (2003) 108 Cal.App.4th 469, 490. In reaching its decision, the Graftoncourt outlined the constitutional history behind the right to jury trials. It pointed out that the right to a jury trial was firmly established when the California Constitution was adopted in 1849. Article 1, Section 3 mandated that “[T]he right of trial by jury shall be secured to all, and remain inviolate for ever; but a jury trial may be waived � in all civil cases in the manner to be prescribed by law.” Further, Article I, Section 6, the current jury waiver provision of the California Constitution, unambiguously provides that only the Legislature may “prescribe” a jury waiver method. In addition, prior to Trizec, the constitutional requirement that the Legislature exclusively prescribe the methods for jury waiver became firmly rooted in case law. See People v. Metropolitan Surety Co., (1912) 164 Cal. 174, 177-178 and Robinson v. Puls, (1946) 28 Cal.2d 664, 666. In short, the court found that the Trizecreasoning was faulty because it ignored California constitutional history, which makes clear that a jury waiver cannot be enforced unless prescribed by the Legislature. The Graftoncourt noted that Code of Civil Procedure � 631 is the only statute authorizing waiver of a jury trial in favor of a court trial, and that the case before it did not fall within its provisions. Section 631(d) allows jury waiver in the following ways: 1) by failing to appear at trial, 2) by written consent filed with the clerk/judge, 3) by oral consent, in open court, entered into the minutes, 4) by failing to timely demand a jury, 5) by failing to deposit advance jury fees, and 6) by failing to deposit jury fees after commencement of trial. The court rejected the argument that the waiver in the engagement letter complied with subdivision (d)(2) because it was filed “with the clerk or judge” as an exhibit to the motion to strike the demand for jury trial. The court concluded that � 631 presupposes a pending civil action and that both the execution of the waiver, and its filing, must occur during the pendency of the action. The Graftoncourt similarly rejected PWC’s argument that, by codifying the right to freedom of contract in Civil Code � � 1549, 1550 and 1556, the Legislature has prescribed the means under which parties can waive the right to a civil jury trial. The court reasoned that it would be illogical to read the broad grant of contractual authority under these sections to allow an alternative means for jury waivers, particularly given that � 631 is expressly designated as the sole authority for such waivers. Notably, while steadfastly defending the constitutional right to trial by jury, the Graftondecision does not invalidate the waiver of the right to a jury trial expressed or implied in pre-dispute arbitration or judicial reference agreements. Indeed, the California Supreme Court has previously held that arbitration agreements are not unconstitutional merely because they waive the right to trial by jury. See Madden v. Kaiser Foundation Hospitals, (1976) 17 Cal.3d 699. In Madden, the California Arbitration Act was challenged as unconstitutional on the basis that it failed to conform to � 631. Rejecting this challenge, the Maddencourt concluded that � 631 relates exclusively to the manner in which a party can waive his right to demand a jury trial instead of a court trial. It reasoned that � 631 does not prevent parties from avoiding jury trial by not submitting their controversy to a court of law in the first instance. The Maddendecision was thus predicated on the distinction between an agreement opting for a court trial in the judicial forum (which is governed by � 631), and an agreement opting out of the judicial forum entirely. The Graftoncourt relied on this distinction in rejecting the Trizeccourt’s reasoning (and PWC’s argument) that the Maddencourt’s approval of pre-dispute arbitration agreements “supported” the conclusion that a pre-dispute jury trial waiver was enforceable. The court reasoned that the Legislature’s authorization of agreements to resolve disputes in a nonjudicial forum and the accompanying waiver of a “package of procedural rights” does not imply approval of agreements to modify the judicial forum to eliminate one of those rights. In so doing, the court curiously reinjected policy into the equation, noting that “[t]here is both a federal and state public policy in favor of enforcing an agreement to arbitrate disputes,” while there is no comparable state policy favoring trials in the judicial forum. “To the contrary,” the court held, “there exists a longstanding public policy in favor of trial by jury.” Policy then, appears to be an ingredient fertile for judicial consideration in analyzing the enforceability of arbitration agreements, though not so in analyzing a waiver of the right to trial by jury in the judicial forum. Given the conflict and constitutional implications raised by the Trizecand GraftonPartners’ decisions, it is likely that this issue will be soon heard by the California Supreme Court. For now, however, the right to trial by jury remains inviolate, at least in the First District, and if only with respect to pre-dispute waiver of jury trials in the judicial forum. David Martinez is an associate at Robins, Kaplan, Miller & Ciresi in Los Angeles where he specializes in complex litigation. He can be reached at [email protected] . Dean A. Martoccia is a litigation associate at Seyfarth Shaw in Los Angeles. He can be reached at [email protected] . • Practice Center articles inform readers on developments in substantive law, practice issues or law firm management. Contact News Editor Candice McFarland with submissions or questions at [email protected]or go to www.therecorder.com/submissions.html.

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