There are certain legal questions that seem to arise repeatedly and in different contexts. One of these questions is: “Can an individual agree by contract to waive the right to a jury trial?” The initial response by lawyers and others alike often is one of skepticism, as the person remembers the idea that the right to a jury trial is a fundamental or constitutional right. But then the second thought wave approaches, as the person considers the fact that courts routinely allow people to contract away their entire right to a trial via binding arbitration agreements. In 2004, in the case of In re Prudential Ins. Co. of Am., the Texas Supreme Court specifically examined the issue and held that contractual jury waivers were enforceable. 148 S.W.3d 124, 127-28 (Tex. 2004) (orig. proceeding). In discussing the issue, the Court addressed the relationship between contractual jury waivers and Alternative Dispute Resolution (ADR). It is this comparison between arbitration clauses and jury-waiver clauses that I find particularly interesting.
Under a typical binding arbitration provision, the parties are waiving their right to: (1) a jury trial, (2) a bench trial (trial before the judge only); and (3) an appeal. Under a contractual jury waiver, the parties are only waiving their right to a jury trial; the right to a bench trial and appeal remains intact. This seems to be an obvious point when it’s laid out in writing, but I think it leads to some interesting questions, including: When would a party prefer to use a jury waiver over a full arbitration provision, especially when arbitration is so judicially favored?
One scenario in which a party might want to only use a jury-waiver provision is when that party wants the opportunity to make new appellate law for the future. With binding arbitration, there is no appeal, and thus no opportunity to create new law. Certain parties, particularly large businesses that will find themselves involved in litigation on a regular basis, have an incentive to help shape the laws that will govern their future deals.
Another reason that parties may choose to utilize a contractual jury waiver is that arbitration may not always be more efficient than a bench trial. It has been my personal experience that arbitrations can, in some cases, be just as expensive as a trial. The timeline for reaching a decision is often shorter in arbitration, but this doesn’t necessarily equate to lower legal fees. Sometimes a shorter timeline simply means that the fees associated with litigation (document discovery, depositions, etc.) are compressed into a shorter window of time. Of course, there is often a greater degree of control over who will hear your case in arbitration. For example, in Travis County, Texas—where our firm is located—the District Courts utilize a central docket system that randomly assigns hearings and trials. Accordingly, even a jury waiver clause with a specific venue provision could not guarantee the case would be heard by a specific judge. In a typical arbitration agreement, however, the parties could agree to use a particular person or panel to hear the case.
Regardless of the particular concerns of a client, when it comes to important contracts or agreements, it usually makes sense to consider whether a jury waiver provision would be useful.
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