Facts
- Grafton Partners L.P. and related entities retained PricewaterhouseCoopers L.L.P. (PwC) to audit partnership accounts under a March 1999 engagement letter.
- The engagement letter included release/indemnification terms and a clause stating the parties agreed not to demand a jury trial in any action arising from PwC’s services or fees.
- In June 2002, Grafton sued PwC for negligence, misrepresentation, and related claims arising from PwC’s alleged failure to disclose and alleged concealment of fraudulent business practices discovered during the audit.
- Grafton demanded a jury trial in a March 2003 amended pleading.
- PwC moved to strike the jury demand based on the engagement letter’s predispute jury-trial waiver; the trial court granted the motion and set the matter for a bench trial.
- Grafton sought writ relief; the Court of Appeal granted relief, concluding that a predispute contractual jury waiver is not an authorized method of waiver under the governing statute.
- The California Supreme Court granted review.
Issues
- Whether California Code of Civil Procedure § 631 permits enforcement of a predispute contractual waiver of the right to a civil jury trial.
- Whether § 631’s enumerated methods of waiving a jury trial are exclusive, thereby barring other forms of waiver not listed.
Decision
- The California Supreme Court agreed with the Court of Appeal and held that predispute contractual waivers of the civil jury-trial right are not enforceable under California law.
- The Court interpreted § 631 as setting out the exclusive means by which a civil litigant may waive the right to jury trial; a waiver made before any dispute arises is not among those means.
- The Court rejected the argument that predispute jury waivers should be treated like arbitration agreements, reasoning that arbitration is authorized and regulated by a separate statutory scheme.
- The Court affirmed writ relief directing that the jury demand not be stricken, allowing the action to proceed as a jury trial absent a valid statutory waiver.
Legal Principles
- The California Constitution protects the civil jury-trial right as “inviolate,” and courts may not create additional waiver mechanisms beyond those authorized by statute.
- Code of Civil Procedure § 631 provides an exclusive list of methods for waiving a civil jury trial; waiver by predispute contract is invalid unless the Legislature authorizes it.
- Arbitration agreements are not treated as comparable authority for enforcing predispute jury waivers because arbitration’s displacement of jury trial rests on specific legislative authorization.
Conclusion
A clause in a contract executed before any controversy arises cannot waive the right to a civil jury trial in California; absent legislative authorization, only the waiver methods enumerated in Code of Civil Procedure § 631 are effective, so the jury demand in the dispute against PwC could not be stricken based on the engagement letter.