In Juries We Don't Trust

CORPORATE AMERICA HAS A growing mistrust — if not a downright resentment toward — the jury system. But because the business community does not want to be viewed as anti-citizen, the apprehension is masked in complaints about greedy, predatory lawyers engaged in lawsuit abuse. Indeed, some of these lawyers have become very rich by holding corporate offenders responsible for causing sickness, injury and financial loss.

The corporate world is seeking to allay its fears in part by endorsing a wave of proposed federal and state legislation that would restrict civil lawsuits against corporations and limit the ability of citizens and injured businesses to go to court. However, even without federal or state laws to restrain jury verdicts, many U.S. firms, including waste companies, are circumventing the judicial system by forcing their customers and employees to settle disputes by arbitration. But since arbitration does not always save time and money [See “Not Always the Right Move,” Waste Age, Sept. 2004, p. 32], some company owners have been willing to return to the courts but only with a big exception: no jury trials. “Sue my company if you must,” a business owner might say, “but the case will be heard by a judge.”

Fearing a bias in favor of plaintiffs, an increasing number of companies have inserted a jury waiver into their contracts and service agreements. These waivers have been seen for years in residential leases, employment contracts, loan agreements and other promissory notes.

Now, in other settings, more and more contracts and written engagements with customers, suppliers and service providers contain explicit rejection of trial-by-jury.

“Why put your fate in the hands of a jury that may have its own hidden agendas and prejudices?” said Ken Singleton, general counsel at Cushman & Wakefield, New York, a real estate services firm where senior employees must sign a waiver. “I'd rather take my odds with a judge,” he told The Wall Street Journal.

Over the years, courts have generally enforced contract provisions calling for binding arbitration. And jury waivers have been upheld in litigation between business entities. An emerging issue is whether a company, particularly a large firm, can successfully force individuals to forgo a jury trial with no dispute actually pending.

The California Supreme Court has agreed to decide whether a pre-dispute jury waiver violates the state's constitution. An intermediate-level appeals court ruling invalidated all such waivers. Elsewhere, a decision from the Texas Supreme Court is expected soon on the merits of a jury waiver in a commercial lease. Meanwhile, courts in other states, including New York, Massachusetts and Florida, have allowed jury waivers in contracts. In Georgia, a waiver cannot be enforced.

If so-called tort reform legislation again fails in Congress, some firms may opt for a home-remedy jury waiver, which, with a nod to Nike, may just do it.