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In re County of Orange

United States Court of Appeals, Ninth Circuit

April 16, 2015

IN RE COUNTY OF ORANGE, COUNTY OF ORANGE, a political subdivision of the State of California, Petitioner,
v.
UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, SANTA ANA, Respondent, TATA CONSULTANCY SERVICES LTD., an Indian corporation; TATA AMERICA INTERNATIONAL CORPORATION, a New York corporation, Real Parties in Interest

Argued and Submitted, Pasadena, California March 4, 2015.

Page 521

[Copyrighted Material Omitted]

Page 522

Petition For Writ Of Mandamus. D.C. No. 8:13-cv-00683-JLS-JC.

SUMMARY [**]

Writ of Mandamus / Erie Doctrine

The panel granted a petition for a writ of mandamus brought by the County of Orange, California, and directed the district court to deny Tata America International Corporation's motion to strike the County's demand for a jury trial.

Under California law, Grafton Partners, L.P. v. Superior Court, 36 Cal.4th 944, 32 Cal.Rptr.3d 5, 116 P.3d 479 (Cal. 2005), pre-dispute jury trial waivers are invalid unless expressly authorized by statute. Federal law, on the other hand, permits such waivers as long as each party waived its rights knowingly and voluntarily.

The panel held that the five factors to apply to a mandamus petition, and announced in Bauman v. U.S. District Court, 557 F.2d 650 (9th Cir. 1977), did not apply in the extraordinary case where, as here, the petitioner claimed erroneous deprivation of a jury trial.

Because no Federal Rule of Civil Procedure or federal law governs pre-dispute jury trial waivers, the panel applied the " relatively unguided" Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), analysis. The panel found that the law governing pre-dispute jury trial waivers was procedural under Erie, and therefore federal courts should apply federal law to determine the validity of a waiver. The panel also concluded that the federal " knowing and voluntary" standard did not necessarily conflict with California's Grafton rule because the federal standard was a constitutional minimum courts use to protect litigants' Seventh Amendment rights to trial by jury. The panel held, therefore, that Erie 's federalism principle required federal courts sitting in diversity to import, as the federal rule, state law governing jury trial waivers, where, as here, state law was even more protective than federal law of the jury trial right. The panel applied California law, and held that the parties' contractual jury trial waiver was unenforceable. The panel concluded that the district court erroneously deprived a California county of a jury trial when it granted Tata America's motion to strike, and mandamus relief was therefore warranted.

Benjamin Parker Broderick (argued), Allan L. Schare, Alexander George Brizolis, and Todd Thodora, Theodora Oringher P.C., Costa Mesa, California, for Petitioner.

William A. Escobar (argued), Kelley Drey & Warren LLP, New York, New York; Allison S. Brehm and Kenneth David Kronstadt, Kelley Drey & Warren LLP, Los Angeles, California, for Real Parties in Interest.

Before: Ronald M. Gould and Richard C. Tallman, Circuit Judges, and Edward R. Korman, Senior District Judge.[*] Opinion by Judge Tallman.

OPINION

Page 523

TALLMAN, Circuit Judge:

This mandamus petition requires us to decide whether, under Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), a federal court sitting in diversity applies state or federal law to determine the validity of a pre-dispute jury trial waiver contained in a contract governed by California law. California and federal law treat such waivers differently: Under California law, pre-dispute jury trial waivers are invalid unless expressly authorized by statute. See Grafton Partners, L.P. v. Superior Court, 36 Cal.4th 944, 32 Cal.Rptr.3d 5, 116 P.3d 479 (Cal. 2005).[1] Federal law, on the other hand, permits such waivers as long as each party waived its rights knowingly and voluntarily. See Palmer v. Valdez, 560 F.3d 965, 968 (9th Cir. 2009). " The compatibility of these provisions, in an action based on [California] law but tried in federal court by reason of the parties' diverse citizenship" implicates the Erie doctrine. Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 419, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996). " Under the Erie doctrine, federal

Page 524

courts sitting in diversity apply state substantive law and federal procedural law." Id. at 427.

Because no Federal Rule of Civil Procedure or federal law governs pre-dispute jury trial waivers, we apply the " relatively unguided" Erie analysis to answer the vertical choice of law question presented here. See Hanna v. Plumer, 380 U.S. 460, 471, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). Doing so, we find that the law governing pre-dispute jury trial waivers is procedural under Erie, and so federal courts should apply federal law to determine the validity of a waiver. But we also conclude that the federal " knowing and voluntary" standard does not necessarily conflict with California's Grafton rule because the federal standard is a constitutional minimum courts use to protect litigants' Seventh Amendment rights to trial by jury.[2] We hold, therefore, that Erie 's federalism principle requires federal courts sitting in diversity to import, as the federal rule, state law governing jury trial waivers where, as here, state law is even more protective than federal law of the jury trial right. Applying California law, we hold that the parties' contractual jury trial waiver is unenforceable. See Grafton, 116 P.3d at 492. And because " the only question presented [here] . . . is whether the district court erred in denying petitioner's request for a jury trial," Mondor v. U.S. District Court, 910 F.2d 585, 586 (9th Cir. 1990), we GRANT the County's petition for writ of mandamus.

I

The dispute underlying this mandamus petition is a simple breach of contract action. In 2007, Plaintiff - Petitioner the County of Orange (the " County" ) hired Defendant - Real Party in Interest Tata America International Corporation and its international affiliate (collectively, " Tata America" ) to develop a property tax management system. In 2008, the parties entered into a contract for professional services to develop and implement the computerized system. The contract became final when the County Board of Supervisors approved it on July 15, 2008. The contract contains an unambiguous clause by which each party agrees to waive its right to a jury trial in any dispute arising out of the contract. That clause provides:

Waiver of Jury Trial.

Each party acknowledges that it is aware of and has had the opportunity to seek advice of counsel of its choice with respect to its rights to trial by jury, and each party, for itself and its successors, creditors, and assigns, does hereby expressly and knowingly waive and release all such rights to trial by jury in any action, proceeding or counterclaim brought by any party hereto against the other (and/or against its officers, directors, employees, agents, or subsidiary or affiliated entities) on or with ...


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