Metropolitan News-Enterprise


Thursday, April 22, 2004


Page 1


High Court to Decide Whether Pre-Dispute Waiver of Right to Civil Jury Trial May Be Enforced


By KENNETH OFGANG, Staff Writer/Appellate Courts


The California Supreme Court yesterday agreed to decide whether pre-dispute  contractual waivers of trial by jury are enforceable under state law.

The justices, at their weekly conference in San Francisco, voted 6-0 to review the Feb. 6 ruling of the First District Court of Appeal’s Div. Five in Grafton Partners LP v. Superior Court (Pricewaterhousecoopers LLP), A102790.

Justice Kathryn M. Werdegar was absent from the court’s weekly conference and did not participate in the vote.

Saying a contrary 1991 decision by this district’s Div. Two was wrong, the First District panel granted a writ of mandate directing that a demand for trial by jury in a putative class action against the world’s largest auditing firm be reinstated.

The suit seeks to hold Pricewaterhousecoopers LLP, among others, responsible for the looting of more than $330 million invested in PinnFund.

The purported mortgage investment firm turned out to be a Ponzi scheme, and its accounts, and those of its founders, were frozen by the Securities and Exchange Commission, but not until most of its assets disappeared.

Chief Executive Officer Michael Fanghella pled guilty to multiple counts of fraud and is serving a 10-year prison term. Six others involved in the scheme also entered guilty pleas.

The complaint in the investors’ suit accuses the auditors of breaching a promise to inform the investors of “any illegal act, material errors, or evidence that fraud may exist as identified during our audits.” The auditors, the complaint says, stood idly by while “Fanghella and his mistress and hangers-on...loosed investor funds in a profligate downpour upon a host of grateful realtors, yacht brokers, luxury car dealers, jewelers, couturiers, and restaurateurs.”

An Alameda Superior Court judge struck the plaintiffs’ jury demand, citing a waiver clause in their agreement with the audit firm. But Justice Mark Simons, writing for the Court of Appeal, said that California does not permit predispute contractual jury waivers.

The civil jury clause, Art. I. Sec. 16 of the state Constitution, permits waiver of trial by jury only as prescribed by statute, Simons explained.

The Legislature, the justice went on to say, has only authorized jury waivers in Code of Civil Procedure Sec. 631. Under that statute, a jury waiver must be made in open court, or in a writing filed with the court, or is inferred from failure to request a jury or to pay jury fees.

The 1991 case was wrongly decided, Simons explained, because the court analyzed the question as one of public policy rather than of enforcing a statute.

The court in that case, Trizec Properties, Inc. v. Superior Court (1991) 229 Cal.App.3d 1616, erroneously analogized to cases upholding predispute arbitration agreements, the justice said.

Simons also rejected the contention that the statutory requirement of a written waiver filed “with the clerk or judge” was satisfied by the defendant’s filing of the parties’ agreement as an exhibit attached to its motion to strike the jury demand. “We decline to read into section authorization for predispute jury waivers that the Legislature has not provided,” the justice said.

In another conference action, the justices denied review of a Court of Appeal ruling that there is no evidentiary privilege in California for communications between a union member and a union representative.

Justices voted 6-0 to deny review in American Airlines v. Superior Court (Di Marco) (2003) 114 Cal. App. 4th 881.

Richard DiMarco, vice president of Local 564 of the Transport Workers Union, unsuccessfully petitioned the state high court to review the Dec. 29 decision of this district’s Court of Appeal, Div. Eight, or at least to depublish Justice Laurence Rubin’s opinion.

The Court of Appeal decision requires DiMarco to disclose the substance of conversations with a former aircraft mechanic who claims he was wrongfully terminated by American Airlines.

Jawad Alamad sued American and 11 supervisors for wrongful termination and for harassment and discrimination based on national origin. American claimed that Alamad was fired for dishonesty, but Alamad alleges that he was constantly subjected to hostility based on his Middle East heritage, and that he was fired for complaining about it.

During discovery, Alamad stated that he had reported the harassment to several persons, including DiMarco, who had previously represented Alamad in a grievance proceeding that resulted in a ruling in favor of American.

DiMarco was subpoenaed for deposition by airline lawyers, and testified that he regularly heard employees using derogatory names toward Alamad. He also testified that several mechanics had been “coerced” into testifying against Alamad during the grievance proceeding, and that several employees who had complained about working conditions had been retaliated against.

The airline’s lawyer then asked him to detail the alleged coercion, to specify which employees were coerced and to identify the sources of the racist remarks, and to identify the employees who had been retaliated against. DiMarco refused, and the airline moved to compel.

Los Angeles Superior Court Judge David Workman denied the motion, saying there “should be a privilege as to communications between a union and its members.”

But Rubin, writing for the Court of Appeal, rejected arguments that state and federal laws allowing laypersons designated by a union to represent a member in certain proceedings create an evidentiary privilege. Nothing in the language of history of those laws indicates any such intent on the part of lawmakers, the justice concluded.

Rubin cited Evidence Code Sec. 911, which precludes recognition of an evidentiary privilege “[e]xcept as otherwise provided by statute.” While the creation of a union representative-union member privilege may be supported by public policies favoring effective union representation and the right to bargain collectively, the justice said, those arguments are appropriately addressed to the Legislature.

Nor is it clear that public policy favors creation of such a privilege, the justice  suggested. That privilege “could severely compromise the ability of employers to conduct investigations pertaining to claims of harassment, discrimination, unlawful conduct, or other employer rules violations, all to the detriment of union members,” Rubin wrote.

In other action at the conference, the justices voted 4-2 to deny review of an order denying a habeas corpus petition brought by Donald Bohana.

Bohana, 66, is serving 15 years to life in prison for the second-degree murder of his girlfriend, Delores Jackson, the ex-wife of singer Tito Jackson.

Jackson died in the backyard pool of Bohana’s Ladera Heights home on Aug. 27, 1994. Bohana, who owned California Life Insurance Corporation when it became insolvent and was vice chairman of the Los Angeles County Aviation Commission, was charged after an investigation that lasted more than two years.

Bohana claims that he and Jackson, whom he had been dating for three months had been swimming, and that she drowned while he briefly went inside the house.


Copyright 2004, Metropolitan News Company