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News Briefs

By ALM Staff | Law Journal Newsletters |
November 01, 2005

California Supreme Court Decision to Invalidate Jury Trial Waivers Leads to Win for Mail Boxes Etc. Franchisees

The Independent Association of Mailbox Center Owners (“IAMCO”) and 35 Mail Boxes Etc. (“MBE”) franchisees convinced the Fourth District Court of Appeals in California to vacate a trial court order that had denied the franchisees' requests to consolidate their claims and receive a trial, instead of working through mandatory arbitration as outlined in their franchise agreements. IAMCO was formed in March 2000 as an independent trade group of MBE franchisees that were seeking to bring their concerns to franchisor Mail Boxes Etc. in an organized manner.

The appeals court struck down portions of arbitration clauses contained in the franchise agreements as “unconscionable” in a ruling on Sept. 16. The court's decision may reflect two rulings earlier this year by the California Supreme Court that confirmed that California's constitution treats the right to a jury trial as fundamental, and thus it cannot be waived by an agreement signed prior to a conflict. In Grafton Partners L.P., et al. v. The Superior Court of Alameda County, the court held on Aug. 4 that if contracting parties, prior to any dispute, enter into a contractual agreement that waives jury trials, then that agreement is invalid. In Discover Bank v. Boehr, the court held on June 27 that corporations cannot use clauses in their form contracts to bar customers from bringing or participating in class actions against them under California law.

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