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Enforcing Jury Waiver Clauses
William DeSantis, Ballard Spahr LLP
If a business has the potential for many small claims, it may seek to minimize liability by entering into pre-dispute contracts that require arbitration. However, there may be certain industries where a business is better served by a pre-dispute jury waiver.
As a general rule, contractual jury waivers are enforced if the waiver was knowing and voluntary. Because the right to a jury trial is fundamental, many courts have held that there is a presumption against a waiver and that jury waiver provisions should be construed narrowly.
On the other hand, most courts recognize that parties have freedom to contract as they please, and that jury waivers are not contrary to public policy.
Courts will look at several factors to determine whether a jury waiver is enforceable, including the opportunity to negotiate, the relative bargaining power of the parties, and whether the contract was reviewed by counsel. Each jury waiver provision is considered case-by-case.
Opponents of arbitration are working to limit the use of pre-dispute arbitration agreements. While the enactment of legislation may be unlikely, there is the possibility of a regulatory response from the Consumer Financial Protection Bureau. In fact the CFPB is presently undertaking a required study of consumer arbitration provisions.
Given the possibility of restrictions on arbitration clauses, a prudent business should include a jury waiver clause in all contracts, in the event the arbitration clause is not enforced.