106 Cal.App.5th 784
Cal. Ct. App.2024Background
- The Comedy Store, a Los Angeles stand-up venue, hired Moss Adams LLP to assist in applying for a federal Shuttered Venue Operator Grant during the COVID-19 pandemic.
- The parties’ service agreement included a Washington choice of law and forum selection clause, as well as a predispute jury trial waiver.
- The Comedy Store alleged Moss Adams’s failure to act timely prevented it from applying for an $8.5 million grant.
- After an initial dismissal in federal court for lack of diversity jurisdiction, the Store refiled in California Superior Court, asserting several tort and statutory claims.
- Moss Adams moved to dismiss based on the Washington forum selection clause; the trial court granted the motion after Moss Adams unilaterally stipulated not to enforce the jury waiver in Washington.
- The Store appealed, arguing the forum selection clause should not be enforced due to California’s public policy prohibiting predispute jury waivers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Burden of Proof on Forum Selection Clause | Moss Adams must show WA law preserves CA jury rights | Burden is on The Store to show clause is unreasonable | Moss Adams had burden due to unwaivable CA rights |
| Effect of Unilateral Stipulation by Defendant | Stipulation is not binding without mutual assent | Stipulation is a contract; court order makes it binding | Stipulation not enforceable; lacked Store’s consent |
| Substantive Diminution of Rights | WA permits predispute jury waivers, unlike CA | WA guarantees jury trial; promise not to enforce waiver | Moss Adams failed to show rights not diminished |
| Public Policy and Use of Unenforceable Clauses | Allowing such stipulations encourages bad contracts | Stipulations are a practical solution | Enforcing stipulation undermines CA public policy |
Key Cases Cited
- Grafton Partners v. Superior Court, 36 Cal.4th 944 (Cal. 2005) (predispute contractual jury waivers are unenforceable in California)
- Handoush v. Lease Finance Group, LLC, 41 Cal.App.5th 729 (Cal. Ct. App. 2019) (burden on party seeking to enforce forum clause if unwaivable rights at issue)
- Verdugo v. Alliantgroup, L.P., 237 Cal.App.4th 141 (Cal. Ct. App. 2015) (forum selection clause must not diminish California statutory rights)
- Lathrop v. Thor Motor Coach, Inc., 105 Cal.App.5th 808 (Cal. Ct. App. 2024) (unilateral stipulations to forgo unenforceable terms do not rehabilitate forum selection clauses)