The indulgence of reasonable presumptions: Federal Court contractual civil jury trial waivers.

• Date: 01 October 2003
• Author: Andersen, Joel
• Published date: 01 October 2003
• Author: Andersen, Joel

INTRODUCTION

Large institutions such as banks, franchisers, international companies, and lessors distrust juries' ability to properly resolve disputes and award reasonable damages. As a result, these and other actors have attempted to limit juries' potential influence on the contracts to which they are parties. They have done so through contractual jury trial waiver clauses (1) in these agreements. (2)

The Seventh Amendment to the Constitution guarantees the jury trial right. (3) Whether the right is determined to exist in an individual instance is a matter of federal common law, (4) which merely preserves the jury trial right as it existed when the Amendment was adopted in 1791. (5) Although the Seventh Amendment guarantees the right to a jury trial, it does not mandate one. As with other constitutional rights, this right may be waived. (6)

For those issues that may go to a jury, Federal Rule of Civil Procedure ("FRCP") 38 creates a procedure for demanding or waiving the jury trial right. (7) FRCP 38 establishes a bright-line rule that places the demand burden on the party seeking a jury trial. (8) That is, a litigant must specifically demand a jury trial, and if she does not, she waives this right. In addition to this passive waiver procedure, a litigant may also actively waive her jury trial right by contract in anticipation of potential litigation. (9)

In disputes over whether a jury trial has been passively waived under FRCP 38, the Rule clearly provides where the burden of proof in demanding a jury trial lies: the burden is placed on the party seeking the jury trial right to demonstrate she has not waived this right. (10) The placement of this burden is not so clear for contractual jury trial waivers. The issue of where to place the burden is ultimately a conflict between two asserted rights: the Seventh Amendment and the freedom of contract. On one hand, the Seventh Amendment guarantees the right to a jury trial. (11) Courts that place the burden on the party seeking enforcement of the contractual waiver value the fundamental jury trial right over the liberty of contract. (12) They ground their holdings on the jury trial right's hallowed place among the Bill of Rights and the Supreme Court's declaration of the right as fundamental, (13) relying heavily on the Court's statement in Aetna Insurance Co. v. Kennedy (14) that "as the right of jury trial is fundamental, courts indulge every reasonable presumption against waiver." (15) On the other hand, individuals have the right to freely and mutually enter into contracts. (16) Courts that have placed the burden on the party seeking to avoid enforcement appear to value liberty of contract over the right to a jury trial. (17) Instead of indulging a presumption against waiver, these courts hold there should be a presumption in favor of the validity of such a waiver contract. (18)

Although nearly every federal circuit has addressed the issue of burden placement in contractual jury trial waiver disputes, their opinions have included minimal thoughtful analysis. (19) Federal courts generally recognize contractual jury waivers as valid if they were voluntary and knowing; (20) however, courts disagree as to who bears the burden of proving or disproving the waiver's validity. Currently, seven federal circuits place the burden of proving that a contractual jury trial waiver was voluntary and knowing on the party seeking to enforce the waiver. (21) The Sixth Circuit, on the other hand, places the burden on the party seeking a jury trial in contravention of the waiver. (22)

Among courts that adopt the majority position--those that place the burden on the party seeking to enforce the jury trial waiver--most simply conclude that the court is persuaded, without analysis, that the burden should be placed on the party seeking to uphold the waiver. (23) Several courts note the jury trial right as fundamental, or note the presumption in favor of jury trials as espoused in Aetna. (24) Some merely point to what the majority of courts have held and hold likewise. (25) Most, however, offer no justification whatsoever for where they place the burden, or what that burden actually entails. (26) More importantly for this Note, no court in the majority has actually analyzed what Aetna's "every reasonable presumption" means in concrete terms, or how the specific facts in Aetna inform the analysis. Also, no court has been explicit about whether a presumption shifts any or all three of the burdens of proof: pleading, production, and persuasion. (27) The Sixth Circuit, which places the burden of proof on the party seeking to void the waiver, engages in more analysis of the issue than courts in the majority of circuits, but its analysis suffers from similar shortcomings. (28) Its cases note a presumption in favor of liberty of contract, but they fail to explain what that presumption entails or how it comports with the presumption against waivers. (29)

Observing this split, one is still left with the impression that courts on either side have yet to truly tackle the burdens of proof and presumption issues. (30) This is understandable. (31) Courts have used the term presumption in a dizzying array of ways, (32) and unlike the courts interpreting the Aetna language seem to suggest, (33) there is clearly no one definition of the term. It is also clear that not all of the uses of the term necessarily entail a shift in one of the burdens of proof. (34) Thus, given the lack of analysis by courts on either side of the split, and given the incredible confusion generally on the use of the term presumption, this Note employs the most systematic of available approaches. (35) It draws on the framework of evidentiary presumptions and the six presumption types catalogued by scholars (36) to decipher Aetna's "every reasonable presumption" language. (37) Only by doing this can one analyze the use of the presumption term in Aetna to determine, in a more logical way than the courts have done, if a burden should be shifted, and if so, which one. (38)

This Note argues that in the case of federal contractual jury trial waiver disputes, courts should adhere only to a permissive presumption in favor of jury trials. Part I contends that Aetna is best understood as establishing a permissive presumption rather than a mandatory burden-of-production-shifting presumption. Part II argues that multiple policy reasons weigh in favor of adhering to a permissive presumption rather than a mandatory burden-of-production-shifting presumption.

1. AETNA INSURANCE CO. V. KENNEDY ESTABLISHES A NON-BURDEN-SHIFTING PERMISSIVE PRESUMPTION

   The law imposes three burdens that a party must satisfy to prove its case. (39) The first is the burden of pleading, or convincing the court that one has sufficiently stated a claim for relief under the law based on the alleged factual assertions. (40) The second is the burden of production, where one party must demonstrate sufficient evidence to allow a factfinder to find in that party's favor. (41) The third is the burden of persuasion, where one party must convince the factfinder of some proposition in order to render a verdict for that party. (42) The party initiating the suit or seeking a change in the status quo usually bears these three burdens; (43) however, legislatures and courts occasionally shift one or more of the burdens, usually for public policy reasons. (44)

   Presumptions are one way for legislatures and courts to shift burdens. In evidentiary terms, they essentially allow the factfinder to presume that a fact is true if some predicate fact is shown. (45) That is, if the predicate fact A is proved, then the fact B is presumed to follow. The type of presumption being used determines how strong the connection must be from A to B.

   Evidence scholars catalogue six presumption types, not all of which shift a burden: (46) permissive inferences; (47) permissive presumptions; (48) mandatory burden-of-pleading-shifting presumptions; (49) mandatory burden-of-production-shifting presumptions; (50) mandatory burden-of-persuasion-shifting presumptions; (51) and conclusive presumptions. (52)

   Although Federal Rule of Evidence ("FRE") 301 provides a default rule for presumptions in federal court, (53) it is used only when the law creating the presumption does not specify its effect. (54)

   The majority of circuits that have placed the burden of proof in contractual jury trial waiver disputes on the party seeking to uphold the waiver have done so by relying on the Supreme Court's statement in Aetna Insurance Co. v. Kennedy that "courts indulge every reasonable presumption against waiver." (55) No court, however, has actually investigated the facts and holding of Aetna, nor has any court parsed the words in this quote to determine the precise nature of this presumption. (56) This Part examines Aetna and argues that even if it appears to establish a mandatory burden-of-production-shifting presumption when limited to its own facts (a situation that did not involve a contract dispute), when applied to a contractual jury trial waiver dispute, it establishes only a permissive presumption. This Part further contends that the Sixth Circuit is correct in holding that the burden of proof should not be shifted from the party seeking to avoid the waiver.

   The question presented in Aetna to the Supreme Court was "[w]hether, by their request for directed verdicts, the parties waived their right to trial by jury." (57) At trial, plaintiff Bogash (who had acquired Kennedy's interest) and defendant Aetna Insurance Co., having introduced their evidence and agreed upon the amount of loss sustained, both submitted requests for peremptory-jury instructions and for a directed verdict in their respective favor. (58) The district court refused both sides' requests and submitted the case to the jury. (59) The jury found for Aetna, and Bogash appealed. (60) The circuit court of appeals held that the district court...