Are Pre-Dispute Jury Trial Waivers a Bargain for Employers over Arbitration? It Depends on the Employee

By Elloie, Christian N. | Defense Counsel Journal, January 2009 | Go to article overview

Are Pre-Dispute Jury Trial Waivers a Bargain for Employers over Arbitration? It Depends on the Employee


Elloie, Christian N., Defense Counsel Journal


INTRODUCTION

IN 1991, the Supreme Court issued an opinion that greatly impacted employment law and the resolution of employment disputes. The case of Gilmer v. Interstate/Johnson Lane Corp. became the groundbreaking decision in the movement favoring the enforcement of mandatory arbitration provisions in employment agreements. (l) In the years following Gilmer, many employees were required to agree to arbitrate any future employment disputes as a condition of their employment. However, the movement appears to be changing directions. As employers realize that arbitration may not provide the benefits it once boasted, some are turning to another alternative--a predispute jury trial waiver as a provision of the employment agreement. (2) The waiver requires the parties to agree that potential employment disputes will be heard only by bench trial, as opposed to by an arbitrator or jury.

Legal advisors are beginning to advocate for the increased use of predispute jury trial waivers, to both their clients and the legal community. (3) However, it is important to note that the courts which have decided employee challenges to jury trial waivers do not support broad use of such waivers. (4)

This article examines the emphasis courts have placed on the relative bargaining power between the employer and employee, the education and business sophistication of the employee, and the employee's occupation. Case law supports my opinion that careful consideration should be given to the education, occupation, and business sophistication of the employee, as pre-dispute jury trial waivers are more likely to be upheld where the employee is a professional or executive.

Part I provides background information of the issue at hand. It begins by examining the contractual waiver of the fundamental right to a jury trial in the commercial context and concludes with an examination in the employment context. Part II examines the benefits of a mandatory bench trial compared to jury trials and arbitration. In addition, Part II discusses several benefits in favor of the employer versus the employee. Part III examines the court decisions where employees sought to challenge the validity of the jury trial waiver in their employment agreement. Particular attention is paid to the courts' emphasis on bargaining power, as well as the education and occupation of the employee, despite whether the jury waiver was upheld. Included is a table summary of the cases which provides a snapshot comparison of the employee's position with that of the employer, and the court's bargaining power analysis in each opinion. Part IV notes the influence state law and state court decisions may have on the enforcement of pre-dispute jury waivers in the employment context.

Part V presents my contention that careful consideration should be given to the education, occupation, and business sophistication of the employee, before deciding whether to implement jury trial waivers, The degree of disparity in bargaining power between the parties receives significant weight in the employment context. Employees categorized as professionals or executives have been found to have bargaining power sufficient to uphold pre-dispute jury trial waivers. (5)

I. BACKGROUND

A. Waiver of the Right to a Jury Trial

The right to a jury trial in the civil context is a fundamental constitutional right provided by the Seventh Amendment. (6) However, the right to a jury trial is not a requirement and thus can be waived. (7) Furthermore, prior to a dispute parties to a contract may waive the right to a jury trial in a written agreement, but the waiver must be entered into knowingly and voluntarily. (8) Almost all states agree that the right may be contractually waived prior to litigation. (9) However, once it is determined that the right applies in a given case, there arises a presumption against its waiver. (10) Contractual jury trial waivers are widely enforced in the commercial context, in both federal and state courts. …

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