In re County of Orange

The Erie doctrine's federalism principle requires federal courts sitting in diversity to import, as the federal rule, state law governing jury trial waivers where state law is more protective of the right to a jury trial than federal law.

The County of Orange (the “County”) hired Real Party in Interest Tata America International Corporation (“Tata America”) to develop a property tax management system. The service contract stated that each party waived its right to a jury trial if a dispute arose. The contract also stated that disputes would be resolved under California law. The County sued Tata America for breach of contract, and demanded a jury trial. Tata America filed a motion to strike the demand, which the district court granted, invoking the Erie doctrine. The district court concluded that federal law applies when jury trial waivers are at issue. The County then filed a petition for writ of mandamus. The Ninth Circuit considered what law federal courts sitting in diversity should apply when determining “the validity of a jury trial waiver clause when state law is more protective than federal law of the right to a jury trial.” The panel reviewed precedent cases, which held that federal procedural law governs jury trial waivers. Under federal law, the evaluation of such waivers is done using the “‘knowing and voluntary’” standard. However, the panel found that California law protected the right to a jury trial more than the federal minimum standard. Thus, the panel held that “federal courts sitting in diversity must apply the relevant state law to evaluate the validity of a pre-dispute jury trial waiver when that law is more protective than federal law.” Based on this holding, the panel found that the jury trial waiver within the contract was unenforceable under California law. The panel concluded that the district court erred when it granted Tata America’s motion to strike the County’s jury trial demand, and granted the County’s petition for writ of mandamus. PETITION GRANTED.