Avoiding a jury trial in the US court system

Depending on the law of the individual state, pre-dispute jury waivers may be unenforceable. See, for example, Grafton Partners, L.P. v. Superior Court, 36 Cal. 4th 944 (2005). Thus, a provision in the parties’ agreement purporting to waive either side’s right to trial by jury may end up being held unenforceable. For this reason, such provisions should not be relied on to avoid a jury trial in the US.

A more effective approach would be to include a mandatory arbitration provision in the parties’ agreement. A pre-dispute agreement to arbitrate future disputes can effectively waive a party’s right to a jury, provided it is not deemed procedurally or substantively unconscionable. Further, such a provision has a much greater chance of being enforced according to its terms if the parties make it expressly governed by the Federal Arbitration Act (FAA).

The FAA is a federal statute which is found at 9 U.S.C. §§ 1 et seq. It was enacted in 1925 and is emphatically pro-arbitration.

As some practitioners may know, US civil litigation rules are subject to two parallel sets of laws and procedures: state law and its rules of civil procedure, and federal law and its rules of civil procedure. When it comes to arbitration, the application of one or the other of these regimes may result in dramatically different outcomes.

As noted above, and in contrast to many state statutes, the FAA is emphatically pro-arbitration. Where applicable, it preempts state law that would deny the strict enforcement of the parties’ arbitration agreement or place procedural burdens on the enforcement of such agreements. For this reason, pre-dispute arbitration provisions should expressly provide that those provisions will be interpreted and enforced pursuant to the FAA and not under state law.

An example of how the FAA may operate to override contrary state statutes is as follows:

Some US states have procedural statutes which allow a court to decline enforcement of an arbitration agreement if the underlying lawsuit also includes parties or entities which are not themselves parties to the arbitration agreement. See California Code of Civil Procedure § 1281.2(c). The concept here is that a state court judge will not send either the entire, or part of, a controversy to arbitration unless all the litigants are party to the arbitration agreement.

The FAA takes a different approach. Where the arbitration agreement is expressly governed by the FAA and mandates the application of federal (and not state) procedures, the court will likely send the contracting parties to arbitration even if there are remaining parties before the court which are not themselves bound by any arbitration agreement. See, e.g. Itoh & Co., Inc. v. Jordan International, 552 F.2d 1228, 1231-32 (7th Cir. 1977).

An alternative to arbitration would be a judicial reference. Under California law, parties can agree in advance that any future controversy between them will be heard by a referee – often a retired judicial officer. The scope of such a reference is broad: “[t]o hear and determine any or all of the issues in an action or proceeding, whether of fact or law, and to report a statement of decision” (California Code of Civil Procedure § 638). Like arbitration, a judicial reference would be a permissible way to avoid a jury trial.

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