May 2015
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Ninth Circuit Holds Jury Waiver in Agreement
Governed by California Law Unenforceable in
Federal Court Where Federal Jurisdiction Is
Based on Diversity of Citizenship
By Cynthia M. Cohen, John F. Hilson & Calista Wu
On April 16, 2015, the U.S. Court of Appeals for the Ninth Circuit granted the County of Orange’s
petition for writ of mandamus in In re County of Orange, __ F.3d __, No. 14-72343, 2015 WL
1727240 (9th Cir. Apr. 16, 2015). 1 In doing so, it held that “district courts sitting in diversity must
apply California’s rule on pre-dispute jury trial waivers to contracts governed by California law” and
that the district court had erroneously applied the federal “knowing and voluntary” standard to uphold
the parties’ jury waiver. 2 Under California law, pre-dispute jury trial waivers are unenforceable as a
matter of public policy, unless expressly authorized by statute. 3 On the other hand, federal law
permits such jury waivers in civil cases if the waiver is made knowingly and voluntarily. 4 The County
of Orange ruling makes clear that, within the Ninth Circuit, parties to an agreement governed by
California law containing a pre-dispute jury trial waiver cannot expect a more favorable result from a
federal court sitting in diversity jurisdiction than from a state court. Both courts would apply California
law and deny the enforceability of the waiver.
Pre-Dispute Jury Trial Waivers
The Seventh Amendment to the U.S. Constitution guarantees the right to a jury trial “[i]n Suits at
common law, where the value in controversy shall exceed twenty dollars.” 5 Just as with other
constitutional rights, the right to a jury trial in a civil suit can be waived. 6
Pre-dispute jury trial waivers typically provide that the parties to an agreement waive their right to a
jury trial for any disputes arising out of or relating to the agreement or transaction. 7 For a host of
reasons—expense, perceived bias, etc.—these waivers have become quite common in commercial
contracts and other types of agreements. 8
Background of the Case
In County of Orange, the underlying dispute was a simple breach of contract action. The County of
Orange (the “County”) had hired Tata America International Corporation and its international affiliate
(collectively, “Tata America”) to develop a property tax management system. The parties entered into
an agreement that contained the following jury waiver:
1
Waiver of Jury Trial. Each party acknowledges that it is aware of and has had the
opportunity to seek advice of counsel of its choice with respect to its rights to trial by
jury, and each party, for itself and its successors, creditors, and assigns, does hereby
expressly and knowingly waive and release all such rights to trial by jury in any action,
proceeding or counterclaim brought by any party hereto against the other (and/or
against its officers, directors, employees, agents, or subsidiary or affiliated entities) on
or with regard to any matters whatsoever arising out of or in any way connected with
this Contract and/or any other claim of injury or damage. 9
The agreement also provided that it was to be governed by the laws of California.
When a dispute arose, the County filed an action in the U.S. District Court for the Central District of
California and asserted claims of “promissory fraud, fraudulent misrepresentation, fraudulent
concealment, negligent misrepresentation, and breach of contract” under California law. 10 Because the
Complaint included a jury trial demand, Tata America filed a motion to strike the County’s jury trial
demand based upon the waiver. The parties disputed whether federal or California law applied to the
determination of whether the jury demand should be stricken. The district court granted Tata
America’s motion to strike and held that the right to a jury trial and any waiver of that right are
federal procedural issues controlled in federal court by federal law. In support of its ruling, it cited to a
bedrock principle of diversity jurisprudence first announced in a U.S. Supreme Court decision from the
1930s. 11 Applying federal law, the district court held that the County had knowingly and voluntarily
waived its right to a jury trial. The County filed a petition for writ of mandamus.
The Ninth Circuit’s Analysis
The court noted that the grant or denial of a writ of mandamus depended on whether the district court
had erred in striking the jury trial demand. This required the court to determine, under Erie and its
progeny, whether federal district courts sitting in diversity are to apply federal or state law to evaluate
the validity of a pre-dispute jury trial waiver. Generally, under Erie, “federal courts sitting in diversity
apply state substantive law and federal procedural law.” 12
The court noted that “courts (including ours) generally recognize that a party’s right to a jury trial in
federal court is a federal issue controlled by federal law.” 13 However, describing the issue as one of
first impression in the Ninth Circuit, the court proceeded to more specifically frame the issue in the
case as follows: “What law should federal courts sitting in diversity apply to determine the validity of a
jury trial waiver clause when state law is more protective than federal law of the right to a jury
trial?” 14
The court explained that the Ninth Circuit and several sister circuits, including the First, Second, Third,
Fourth, Sixth, and Tenth Circuits, have held that federal courts sitting in diversity must use federal law
to determine the enforceability of a jury waiver. It also noted that the Seventh Circuit, however, has
held that “even if federal law governs whether a litigant waived its right to a jury trial in federal court,
federal courts should import the state rule of decision to determine the validity of a pre-dispute waiver
because ‘there is no general federal law of contracts after Erie.’” 15 The court declared, however, that
the issue in the instant case was distinguishable from prior decisions by the Ninth Circuit and these
sister circuits due to “the way California law deals with the validity of pre-dispute waivers.” 16 The court
explained that “[u]nder California (and Georgia) law, parties to a contract cannot waive their right to a
jury trial before a dispute commences, and any contractual provision seeking to effect such a waiver is
unenforceable unless expressly authorized by statute.” 17
2
After noting that classifying a law as either substantive or procedural for Erie purposes is “‘sometimes
a challenging endeavor,’” the court held that “rules dictating when a party waives its right to a jury
trial are procedural” under Erie, but that “California’s rule is substantive.” 18 The court also held that
“federal procedural law governs the validity of a pre-dispute jury trial waiver in federal court.” 19 This
could and should have ended the inquiry, but it did not.
The court explained that federal courts could “‘give effect to the substantive thrust of [California’s
rule] without untoward alteration of the federal scheme for the trial and decision of civil cases.’” 20 The
court declared that the federal “knowing and voluntary” standard is in fact “not a generally applicable
federal rule, but rather a federal constitutional minimum” for protecting the Seventh Amendment right
to a jury trial. 21 The court further declared that “a federal constitutional minimum is inapplicable
where, as here, state law is more protective than federal law of federal constitutions rights” and that
“[t]here is, thus, no federal rule that governs the validity of a pre-dispute jury trial waiver when state
law is more protective than federal law of the jury trial right.” 22
Focusing on the situation that exists when state law is more protective than federal law, the court
noted that in the absence of a countervailing federal rule or interest, federal courts should adjudicate
state-created rights in a manner that closely resembles the way in which a state court would
adjudicate that same right. It highlighted that “[t]his goal is particularly important where, as here, the
state rule has a ‘substantive thrust.’” 23 The court explained that by adopting as the federally
prescribed rule of decision the law that would be applied by state courts in the state whose law
governs the agreement, “federal courts can ensure uniform protection of Seventh Amendment rights
by permitting parties to waive those rights—at minimum—knowingly and voluntarily . . . while still
adhering to California’s Grafton rule.” 24
The Result
The Ninth Circuit held that, where the state law is more protective of the Seventh Amendment right to
a jury trial than federal law, federal courts in diversity cases must adopt the state law as the federal
rule. Because the parties’ agreement was governed by California law, which is more protective of the
right to a jury trial than the federal “knowing and voluntary” standard, the court held that the district
court erred by applying the federal standard. Accordingly, although the County had knowingly and
voluntarily waived its right to a jury trial, California law governed the validity of the waiver, and under
California law, the waiver was unenforceable.
What the Decision Means
The Ninth Circuit’s opinion in County of Orange expands the effect of Grafton with respect to predispute jury trial waivers. The court adopted a result that it could have avoided had it simply ruled
that whether the parties were entitled to a jury trial was a procedural question and, therefore,
governed by federal, not state, law. The court declined to do this. Instead, it reached for a broader
principle, holding that in the Ninth Circuit, jury trial waivers in agreements governed by California law
will be unenforceable, unless expressly authorized by California statute. Thus, any possibility that
might previously have existed if an action were filed in, or removed to, federal court in the Ninth
Circuit in an effort to obtain a more favorable result as to the enforceability of such a jury waiver has
been eliminated. The opinion does not reach the issue of whether a federal court sitting in diversity
jurisdiction in California would also strike the jury waiver even if the agreement were governed by
substantive law (e.g., New York law) that enforces knowing jury waivers. That issue should be decided
not based on policy grounds, but on a traditional choice-of-law analysis. Nonetheless, the manner in
which the Ninth Circuit reached for the broader holding reflects an antagonism to jury trial waivers in
3
the Ninth Circuit. Consequently, including an enforceable choice-of-venue provision, as well as a
complementary choice-of-law provision, should be considered and may well prove determinative.
It is clear that in order to increase the likelihood that a pre-dispute jury trial waiver in an agreement
will be enforced, the parties should strongly consider selecting law other than the law of California 25 as
the governing law for disputes arising out of or relating to a proposed agreement.
Additionally, the parties should consider selecting alternative forms of dispute resolution, such as
arbitration or judicial reference proceedings. 26 Arbitration and judicial reference proceedings each
provide a forum for disputes to be heard before a neutral third party instead of a jury. In arbitration
proceedings, the parties submit their dispute to an arbitrator or panel of arbitrators to receive a
binding decision. Absent very limited circumstances, arbitration decisions are not appealable. In
judicial reference proceedings, the parties submit their dispute before a chosen judicial referee who
will hear the dispute and issue a decision that will become the judgment of the court. 27 Judgments
entered after a judicial reference proceeding are appealable like any other judgment. Although
arbitration and judicial reference agreements also effectively result in a waiver of the right to a jury
trial, these agreements are explicitly authorized by California statute. 28 Therefore, parties to
agreements governed by California law who wish to avoid jury trials should thoroughly consider these
alternative forms of dispute resolution and carefully evaluate the respective benefits and drawbacks of
each.
In light of the Ninth Circuit’s holding in County of Orange, parties to agreements must now exercise
additional caution if they wish to avoid a jury trial, but strategic alternatives still remain.

If you have any questions concerning these developing issues, please do not hesitate to contact any of
the following Paul Hastings lawyers:
Los Angeles
Orange County
Peter Burke
1.213.683.6338
peterburke@paulhastings.com
Cynthia M. Cohen
1.213.683.6275
cynthiacohen@paulhastings.com
Katherine Bell
1.714.668.6238
katherinebell@paulhastings.com
Robert Keane
1.213.683.6341
robertkeane@paulhastings.com
Jennifer Hildebrandt
1.213.683.6208
jenniferhildebrandt@paulhastings.com
Calista Wu
714.668.6266
calistawu@paulhastings.com
Jennifer Yount
1.213.683.6008
jenniferyount@paulhastings.com
John Francis Hilson
1.213.683.6300
johnhilson@paulhastings.com
Paul Hastings LLP
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4
1
Id. at *10.
2
Id. at *9.
3
Grafton Partners L.P. v. Superior Court, 116 P.3d 479, 484, 488 (Cal. 2005); see also CAL. CONST. art I, § 16; CAL. CIV.
PROC. CODE § 631.
4
See Palmer v. Valdez, 560 F.3d 965, 968 (9th Cir. 2009).
5
U.S. CONST. amend VII.
6
See, e.g., United States v. Moore, 340 U.S. 616, 621 (1951).
7
See General Contract Clauses: Waiver of
4508?q=jury+waiver (last visited May 16, 2015).
8
See Jane Spencer, Companies Ask People to Waive Right to Jury Trial, WALL ST. J., Aug. 17, 2004,
http://www.wsj.com/articles/SB109269232752592826 (“So-called jury waivers, which require people to give up the
right to have cases heard by their peers, are now appearing in a wide range of routine contracts.”).
9
In re County of Orange, 2015 WL 1727240, at *2.
10
Id.
11
See Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).
12
Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 426 (1996).
13
In re County of Orange, 2015 WL 1727240, at *4.
14
Id. (emphasis added).
15
Id. at *6 (quoting IFC Credit Corp. v. United Bus. & Indus. Fed. Credit Union, 512 F.3d 989, 991–92 (7th Cir. 2008)).
16
Id.
17
Id. (citing Grafton Partners L.P., 116 P.3d at 484).
18
Id. at *7.
19
Id. at *8.
20
Id.
21
Id.
22
Id.
23
Id. at *9.
24
Id.
25
Because Georgia law also prohibits pre-dispute jury trial waiver provisions, see Bank S., N.A. v. Howard, 444 S.E.2d
799, 800 (Ga. 1994) (“We conclude, therefore, that pre-litigation contractual waivers of jury trial are not provided for
by our Constitution or Code and are not to be enforced in cases tried under the laws of Georgia.”), and because North
Carolina has a statutory provision prohibiting the pre-dispute waiver of jury trials, see N.C. GEN. STAT. § 22B-10 (“Any
provision in a contract requiring a party to the contract to waive his right to a jury trial is unconscionable as a matter of
law and the provision shall be unenforceable. This section does not prohibit parties from entering into agreements to
arbitrate or engage in other forms of alternative dispute resolution.”), the drafter would want to avoid the law of those
states as well.
26
If an agreement involves real property located in California as collateral, the parties should take additional precautions
with respect to drafting any arbitration or judicial reference provisions to avoid violating California’s One Form of Action
and Security First rules. See CAL. CIV. PROC. CODE § 726(a).
27
Id. § 644.
28
Id. §§ 638, 1281; Grafton Partners L.P., 116 P.3d at 487–90.
Jury
Trial,
PRACTICAL
LAW,
http://us.practicallaw.com/9-523-
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