Sunday, August 21, 2005

Jury Waivers & Arbitration: two sides of one side

An interesting story in the August 8th Recorder brought to my attention a ruling of the California Supreme Court, which on August 4th held in the case of Grafton Partners v. Superior Court that pre-dispute jury trial waivers were not enforceable under the California Constitution. To that, Jurygeek can only say "Bravo." However, the logical implications of the actual ruling in Grafton Partners is problematic.

What the California Supreme Court held was that Section 179 of the California Civil Practice Act outlined the methods in which a jury trial could legitimately be waived, and because a pre-dispute contractual waiver was not enumerated in that statute, it could not be deemed a valid waiver. Well enough.

However, the California Court found arbitration agreements unproblematic. Because jury trial waivers prescribed the guidelines for procedures in court, while arbitration agreements merely avoided the court altogether, they were (somewhat disingenuously) differentiated. An arbitration agreement necessarily waives a jury trial (as well as a bench trial); what the California Court achieved was to put more protection on a part than on the whole.

The Court managed to cite a lot of high-falutin' language to the extend that "[t]he right of trial by jury is too sacred in its character to be frittered away or committed to the uncontrolled caprice of every judge or magistrate in the State," Exline v. Smith 5 Cal. 112, 113 (1855); the right to trial by jury is considered so fundamental that ambiguity in the statute permitting such waivers must be "resolved in favor of according to a litigant a jury trial," Loranger v. Nadeau 215 Cal. 362, 368, 10 P.2d 63 (1932), overruled on other grounds in Reich v. Purcell 67 Cal.2d 551, 555, 63 Cal.Rptr. 31, 432 P.2d 727 (1967), and that "lower courts have observed that the right to trial by jury is so important that it must be "zealously guarded" in the face of a claimed waiver," Byram v. Superior Court, 74 Cal.App.3d 648, 654, 141 Cal.Rptr. 604 (1977).

Nice language. But if the right to trial by jury is so sacred that it needs to be zealously protected, shouldn't it (at the very least) be made explicit in an arbitration agreement? But the minute it is made explicit, wouldn't it run afoul of Grafton Partners?

Through technical distinctions, the California Supreme Court has managed to square the circle. Yet their arguments are ultimately unpersuasive: they have made a distinction without a difference. This is the sort of case that puts courts, and lawyers, in a bad light as technocrats with no interest in preserving Constitutional rights. They have allowed jury trial to be waived - but only if the waiver is implicit, in a form that prevents the consumer from being confronted with that which he is giving away.

Consider a recent case. A homeowner contracted with a termite eradication company. The boilerplate on the back of the contract contained an arbitration agreement. The termite eradication tech drilled through the fuel-oil line, placing termiticide and fuel oil in the water supply and in the foundation of the home.

Nasty stuff. Destroyed the value of the house. Surprise! Homeowner couldn't sue, and had to come up with over seven thousand dollars up front to initiate arbitration. Had to hire their own attorney, by the hour, to arbitrate, because they couldn't win enough money to make it worthwhile for a lawyer to take the case on contingency fees.

The termite eradication company was fully aware of the damage their techs could cause. A homeowner would have no reason to suspect this sort of damage was even possible. Yet the arbitration clause was fully enforceable.

All that Grafton Partners accomplished was to ensure more arbitration clauses in more contracts, in place of jury waivers. Both should be equally objectionable. Perhaps California judges view Grafton Partners as a victory, in that it reduces the number of cases they have to deal with. But for those who are to be denied their day in court, Grafton Partners is a disaster, and an abdication of the duty of our courts to enforce our State and federal Constitutions when the result of such enforcement is politically disfavored.


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