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The California Supreme Court on Thursday struck down a controversial business practice in which companies agree to waive their rights to a jury trial before any dispute occurs. Writing for a unanimous court, Chief Justice Ronald George agreed with the 1st District that a jury trial is guaranteed by the state constitution. “In light of our determination … it would not be appropriate to enforce such a waiver and thereby deny the right to jury trial to a party who has timely and properly requested such as trial and complied with other applicable statutory prerequisites,” George wrote. Justices Joyce Kennard, Marvin Baxter, Ming Chin and Carlos Moreno concurred, as did 2nd District Court of Appeal Justice Vaino Spencer, sitting by assignment. Justice Kathryn Mickle Werdegar recused herself. In a separate concurrence, Chin said he was “reluctantly” joining the majority and asked that the state Legislature legalize the practice known as predispute jury waivers. Chin suggested that such waivers could help unburden the trial court system. “As the majority acknowledges, our decision is out of step with the authority in other state and federal jurisdictions, most of which have permitted pre-dispute jury waivers,” Chin wrote. Such agreements began gaining popularity in the 1990s among businesses that did not want juries deciding their cases. The case, Grafton Partners v. Superior Court, 05 C.D.O.S. 6887, began in 2002 when two businesses, Grafton Partners and Allied Capital Partners, sued their auditor, PricewaterhouseCoopers, claiming that PwC had breached its contract and violated professional duties. The companies said PwC did not inform them during a 1998 audit that a company that Grafton and Allied had invested in had been involved in an illegal Ponzi scheme and had siphoned off millions of dollars in phony commissions. Alameda County Superior Court Judge Ronald Sabraw denied Grafton and Allied a jury trial because they had signed a predispute waiver agreement with PwC. The 1st District reversed that ruling in February 2004. The Supreme Court case was closely watched by many business and consumer groups. More than a dozen filed amicus curiae briefs in the case. “I was very gratified to get a six-zip decision, and one that accords with our own view of the law,” said Jerome Falk, a partner at Howard, Rice, Nemerovski, Canady, Falk & Rabkin who represented Grafton Partners. Daniel Kolkey, a former justice on Sacramento’s 3rd District Court of Appeal who favors waivers and represented PwC, declined to comment on the case Thursday. Kolkey is a partner in Gibson, Dunn & Crutcher’s San Francisco office. But during oral arguments he had argued that the 1st District had misunderstood the clear language of Civil Code of Procedure — 631(d)(2), which provides for the waiver of a jury trial “by written consent filed with the clerk or judge.”

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