The California Supreme Court has issued a new decision invalidating pre-dispute agreements to waive a jury trial in the event of future litigation. Until now, California, along with the vast majority of other States in which this issue had been litigated, permitted pre-dispute jury waivers. However, in Grafton Partners LP v. Superior Court, 05 C.D.O.S. 6887 (August 4, 2005), the California Supreme Court first noted that, under the California Constitution, jury trials may only be waived as expressly provided by the Legislature. The Court then held that the language adopted by the Legislature in Code of Civil Procedure Section 631, subdivision (d), could not be interpreted to authorize waivers entered into before a lawsuit has been filed. The Court left it to the Legislature to determine whether to authorize pre-dispute agreements to waive juries. The Court indicated that the decision does not affect the ability of contracting parties to enter into pre-dispute agreements to arbitrate future disputes, without a jury of course, since pre-dispute agreements to arbitrate had been specifically authorized by the Legislature.

For those who disfavor arbitration and desire the protections afforded by the civil court system, but who nevertheless hope to reduce the cost and uncertainty associated with jury trials, the Court noted another alternative. California Code of Civil Procedure Section 638 authorizes parties in California to agree in a written contract or lease that any claim filed in the California Superior Court arising from that written contract or lease will be heard by a referee rather than by a judge. A referee, who can be anyone to whom the parties agree, sits as a Superior Court judge and hears the case without a jury. He or she is like an arbitrator in that respect. An advantage of this procedure is that the decision is treated just like the decision of a Superior Court and it is therefore subject to judicial review by the Court of Appeal. This may alleviate the concern that some may have about the very limited judicial review afforded in arbitrations. In addition, as the Supreme Court noted in its opinion, C.C.P. Section 638 specifically authorizes pre-dispute referee agreements, unlike the statute before the Court in Grafton.

Gibson, Dunn & Crutcher stands ready to advise as to the full range of alternatives available regarding alternative dispute resolution and to assist in drafting contractual provisions. For additional information, please contact the Gibson Dunn attorney with whom you work.

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