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Court of Appeal:
Forum-Selection Clause Is Invalid if It Means Jury Waiver
Opinion Says Contractual Term Requiring That Any Litigation Take Place in State of Washington Must Be Ignored Where the Parties’ Agreement Specifies Court Trial, Only, a Term Unenforceable in California
By a MetNews Staff Writer
The Court of Appeal for this district yesterday reversed a judgment dismissing an action brought by the Comedy Store, the Sunset Strip venue featuring stand-up comics, holding that a judge erroneously put the burden on the plaintiff to show why an action should not be removed to the State of Washington based on a forum selection clause in the parties’ agreement.
That contract, Justice Audra Mori of Div. Four noted, contains a pre-dispute jury waiver which, in California, is unenforceable but which is valid in Washington.
The right to a jury trial in civil cases, Mori said, is regarded by California courts as “fundamental.” Under decisional law, she wrote, it was the defendant’s “burden to show that Washington provided the Store with the same or greater rights to a jury trial than California, or a Washington court would apply California law to decide the enforceability of the predispute jury waiver.”
But, the justice said, Los Angeles Superior Court Judge Lisa K. Sepe-Wiesenfeld placed the burden on the Comedy Store to show why the case should not be dismissed based on the choice-of-forum clause.
Forum-Selection Clause
The contract, entered into by the Comedy Store and Moss Adams, an accounting firm, provides that “each Party hereby irrevocably…consents to the exclusive jurisdiction and venue of the appropriate state or federal court located in King County, state of Washington, in connection with any dispute hereunder or the enforcement of any right or obligation hereunder.”
The plaintiff sued because the firm, which did work in connection with the comedy club’s application for federal funds based on being shuttered during the pandemic, failed to alert it to the impending cessation of the grant program, resulting, it claims, in it not submitting its paperwork on time, thus losing $8.5 million.
Based on statements by Sepe-Wiesenfeld indicating that it was up to the Comedy Store to show why the forum selection-clause should be ignored, “we will not presume the trial court properly applied the law,” adding:
“We conclude the trial court erred in failing to consider whether Moss Adams met its burden to show litigating in Washington would not diminish the Store’s unwaivable right to a jury trial.”
Offer of Stipulation
Moss Adams argued that it had offered to stipulate that a trial in a Washington court would take place before a jury, and that a Washington court would enforce its pledge. But, Mori said, it remains that the contract provides for a jury waiver which Washington courts apply.
She noted that Miss Adams “supplies no authority” showing that a Washington judge “could disregard a contract term…because a party has made a post-contractual offer not to enforce it.”
Mori wrote that “the purported stipulation was an unaccepted offer, and a court order could not transform it into a binding modification or stipulation,” adding:
“Moss Adams has provided no authority suggesting a Washington court would enforce an unaccepted offer. Indeed, it appears Washington state courts do not enforce stipulations that lack mutual assent.”
Sepe-Wiesenfeld, in ordering dismissal of the Los Angeles action, declared that the Comedy Store, by virtue of the stipulation, has an entitlement to a jury trial in a Washington court.”
However, Mori remarked, Moss Adams “does not show that a Washington court would accord full faith and credit to an order based upon a stipulation that lacks mutual assent.”
The case is The Comedy Store v. Moss Adams LLP, B327404.
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