Jury Trial Waivers: A Better Alternative Than Arbitration?

Employers seeking alternatives to jury trials have traditionally looked to arbitration agreements. In the Third Circuit and New Jersey, as is the case elsewhere, there is a strong presumption in favor of arbitrability, and courts regularly uphold employee arbitration agreements.

However, arbitration is not the panacea once envisioned. Yes, generally, matters proceed to resolution quicker in arbitration than in a jury trial. Yes, arbitration enables employers to avoid unpredictable jury verdicts. And yes, arbitration offers greater privacy than the judicial system. But what about the significant arbitration costs (which largely need to be borne by employers), the difficulty in disposing of cases on summary judgment (if such motions are even permitted), the perception that arbitrators tend to "split the baby," and the lack of a meaningful appeal process?

Perhaps a better option for employers seeking to avoid jury trials is a jury trial waiver, where a bench trial, rather than an arbitration, is the alternative. While national case law on the issue is sparse and varied, the argument is, if employers can compel employees to resolve employment discrimination claims entirely outside of the judicial process via arbitration, why can't we ask employees to swap an arbitrator for a judge?

The New Jersey courts have looked at this issue several times, most recently on Feb. 25, 2016, in Martelack v. Toys R Us, 2016 (DNJ Feb. 25, 2016). There, a district court judge held that a jury trial waiver contained in a "privacy agreement," a component of the online employment application process, was unenforceable. The (apparently) bolded, fine print clause read as follows:

To the extent permitted by law, if I am hired, I agree as a condition of any employment to waive my right to a jury trial in any action or proceeding related to my employment or the termination of my employment with the Company. I am waiving my right to a jury trial voluntarily and knowingly, and free from coercion. I understand that I have a right to consult with a person of my choosing before signing this application.

In in the Third Circuit, as the court explained, a jury trial waiver is enforceable if it is "knowing and voluntary," meaning: (1) there is no gross disparity in bargaining power between the parties; (2) the parties are sophisticated business entities; (3) the parties had an opportunity to negotiate the contract terms; and (4) the waiver provision was conspicuous. Tracinda...