Legal Memorandum: Enforceability of Dispute Resolution Agreements

Issue: Is a dispute resolution agreement enforceable if a defendant has not demonstrated that plaintiff knowingly and voluntarily waived their constitutional right to trial by jury?

Area of Law: Alternative Dispute Resolution, Constitutional Law
Keywords: Dispute resolution agreement; Waiver of a right to jury trial
Jurisdiction: Federal, Virgin Islands
Cited Cases: 546 U.S. 1030; 116 P.3d 479; 400 F.3d 370; 482 U.S. 483; 222 F. 1006; 670 N.W.2d 129; 500 U.S. 20; 517 U.S. 681; 388 U.S. 395; 145 F.3d 619; 565 F.2d 255
Cited Statutes: U.S. Const. amend. VII; 5 V.I.C § 815; 9 U.S.C. § 2; Cal. Lab. Code § 229
Date: 11/01/2007

The Federal Arbitration Act (FAA) generally compels enforcement of arbitration agreements, but not if those agreements fail to meet standards of state or territorial law that are generally applicable to all contracts.  As a matter of generally applicable Virgin Islands law, no contract that waives a right guaranteed by the U.S. Constitution is enforceable unless the waiver was both knowing and voluntary. 

The right to a trial by jury in a civil trial is a fundamental right guaranteed by the federal Constitution.  U.S. Const. amend. VII.  As one federal court of appeals has observed, “It is elementary that the Seventh Amendment right to a jury is fundamental and that its protection can only be relinquished knowingly and intentionally.  Indeed, a presumption exists against its waiver.”  Nat’l Equip. Rental, Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977) (citations omitted). 

Section 815 of the Virgin Islands Code of Civil Procedure states:  “An agreement that waives a right guaranteed by the Constitution of the United States, is unenforceable, unless the waiver of the right is agreed to knowingly and voluntarily.”  5 V.I.C § 815.  By its terms, the statute applies to all contracts and agreements and is meant “to ensure that all agreements and contracts are entered into fairly and with full knowledge of all the consequences.”  (Office of Senator Ronald E. Russell, Press Release of 09/04/06.)  Senator Ronald Russell, sponsor of the bill, indicated in a press release that “[t]he Bill prevents entities, […]

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