Nothing is Sacred: Why Georgia and California Cannot Bar Contractual Jury Waivers in Federal Court

public policy against [them].”118 He noted that these waivers are an “attractive middle ground” between a jury trial and arbitration by minimizing excessive jury awards while better protecting the parties’ rights.119 Grafton has, like Bank South, generated much criticism.120 F. The Georgia and California Constitutions and Statutes do not Necessarily Prohibit Contractual Jury Waivers The U.S. Supreme Court set forth the principle, which Justice SearsCollins recognized in her dissent in Bank South, that pre-dispute agreements are enforceable unless they clearly violate law or public policy.121 Thus, contractual jury waivers are enforceable in Georgia and California unless the relevant constitutional and statutory provisions clearly express or necessarily imply otherwise. Any ambiguity must be interpreted in favor of enforceability to uphold freedom of contract. The Georgia constitutional and statutory provisions merely state methods to waive a jury. Thus, these provisions do not expressly state or necessarily imply that they prescribe the only methods. The California constitutional provision states that a jury may be waived as provided by statute. This provision, however, does not mean that a jury may only be waived by statute. Similarly, a provision of the Texas Constitution reads: “The Legislature shall pass such laws as may be needed to regulate [the right to a jury].”122 But the Texas Supreme Court, In re Prudential Insurance Co. of America held that a contractual jury trial waiver was enforceable because “[n]othing in the constitutional provisions themselves suggests that parties are powerless to waive trial by jury under any other circumstances, before or after suit is filed.”123 California’s constitutional history does not clearly indicate that the means of waiver are reserved to the legislature alone. The earlier constitutional provision did not expressly state or necessarily imply that a jury may only be waived as “prescribed by law.” The debates shed no light on whether the framers rejected proposals to delete this language to reserve the methods of waiver to the legislature or whether they intended to incorporate the rule from Exline. At best, this history merely suggests that only the California Legislature may determine methods of waiver. 118 Id. at 493–94 (quoting Okura & Co. v. Careau Group, 783 F. Supp. 482, 488 (C.D. Cal. 1991)). 119 Id. at 493 (internal quotations omitted). 120 Julia B. Strickland & Stephen J. Newman, Shock Waives, 29 LOS ANGELES LAWYER, Mar. 2006, at 22 (arguing that Grafton is a “paternalistic” decision that will reduce certainty in the marketplace); Carl Grumer & Thomas McMorrow, A Call for Contractual Jury Waivers in California, 28 LOS ANGELES LAWYER, Dec. 2005, at 44 (arguing that Justice Chin’s call “deserves strong and widespread support” because Grafton will harm the state’s economy by increasing litigation costs). 121 See supra Part I.B. 122 TEX. CONST. art. I, § 15. 123 148 S.W.3d 124, 130 (Tex. 2004). THOMLEY 1/27/2009 10:34 AM 2008] Nothing is Sacred 139 California Code of Civil Procedure section 631, while stating that a jury may be waived “only” as provided therein, is inapplicable to contractual jury waivers. In Madden v. Kaiser Foundation Hospitals, the California Supreme Court found arbitration agreements enforceable under this provision because it “presupposes a pending action” and thus does not apply to pre-dispute jury trial waivers.124 In Grafton, the court clarified that Section 631 applies only once parties have submitted their dispute to a court of law.125 Thus, because other statutes have not made arbitration the only method of pre-dispute waiver, contractual jury waivers are enforceable, despite this provision. The Georgia and California supreme courts, unlike the U.S. Supreme Court, saw legislative ambiguity as a complete bar on contractual jury waivers. This drastic approach harks back to the outmoded views in Morse and Nute rather than a sensible, modern view of pre-dispute agreements. As the dissents in Bank South and Grafton pointed out, public policy that supports arbitration agreements surely supports contractual jury waivers. Further, as Justice Chin argued in Grafton, Georgia and California may protect the right to a jury by applying strict standards of waiver. II. COMPARISON OF FEDERAL INTERESTS WITH GEORGIA’S AND CALIFORNIA’S INTERESTS A. Federal Courts have an Interest in Enforcing Agreements that Reduce the Expense and Delay of Litigation Federal courts have a paramount interest in enforcing private agreements. Congress has declared a strong public policy in favor of freedom of contract, reflected in the primary purpose of the FAA, “to enforce private agreements into which parties had entered, a concern which requires that [federal courts] rigorously enforce agreements to arbitrate.”126 The U.S. Supreme Court has stated that freedom of contract is a “sacred” liberty of the citizen and it is “paramount” that courts take care “not lightly to interfere with [it].”127 The Court also said that the “usual and most important function of courts” is to protect the parties’ legitimate expectations where the agreement does not violate law or public policy.128 Federal courts have an even stronger interest in promoting freedom to enter into agreements that resolve disputes efficiently. Federal procedure is designed “to secure the just, speedy, and inexpensive determination of 124 552 P.2d 1178, 1186–87 (Cal. 1976). 125 Grafton Partners, L.P. v. Superior Court, 116 P.3d 479, 486 (Cal. 2005). 126 Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625–26 (1985) (internal quotations omitted). 127 Baltimore & Oh. Sw. Ry. Co. v. Voigt, 176 U.S. 498, 505 (1900) (internal quotations omitted). 128 See id. (internal quotations omitted). THOMLEY 1/27/2009 10:34 AM 140 Chapman Law Review [Vol. 12:127 every action.”129 Congress supported arbitration agreements because they save the time and expense of litigating in a judicial forum.130 Jury trials cost much more for courts and litigants than bench trials. Eliminating the jury has been shown to reduce trial time by fifty percent.131 Thus, contractual jury waivers, like arbitration agreements, serve one of the main purposes of the justice system by making litigation more efficient.132 By resolving disputes efficiently, contractual jury waivers also help the larger economy. Parties that have more control over their disputes have a deeper satisfaction with the judicial process.133 Thus, they are more likely to enter into and rely on their agreements. Courts that enforce parties’ legitimate expectations thus promote reliance and certainty in the marketplace.134 Further, the waivers avoid the costs of grossly excessive verdicts granted by ‘runaway juries.’135 Lastly, businesses that avoid these costs can reduce the charges that they pass on to consumers.136 B. Georgia’s and California’s Interests in Barring Contractual Jury