Good news for commercial lenders and those in other business contracts, with a word of caution.
On July 21, 2025, the California Supreme Court held in EpicentRx, Inc. v. Superior Court of San Diego that an exclusive forum selection clause designating the Delaware Court of Chancery (where civil jury trials are unavailable) is not automatically barred by California’s public policy favoring jury trials. This ruling reverses the troubling Court of Appeal decision in Handoush v. Lease Financing Group, LLC (2019) 41 Cal App.5th 729, which refused to enforce a New York forum selection clause in an equipment lease sought to be enforced in California because it would deprive a California resident of a jury trial.
The per se rule of Handoush is gone. And the burden of proof on challenging a forum selection clause has been restored to the challenger on all grounds including the improperly elevated unavailability of a jury through the agreed forum. Included in the ruling is this refreshing finding; “California has a strong public policy in favor of the right to a jury trial and against predispute waivers of that right. But California does not have a strong public policy against forum selection clauses or agreements to litigate in a jurisdiction that does not recognize the same civil jury trial right.” (Emphasis added.)
But the battle is not over. Do not overlook the Court’s conditioning words, potentially limiting the opinion to “arms-length commercial transactions between sophisticated parties….” In EpicentRx, the litigants were shareholders and their corporation in a novel cancer treatment venture. They were not a “sophisticated” lessor, on one side, and its commercial lessee counterparty, now widely deemed a helpless “consumer” through recent changes in state regulatory schemes, on the other. And the Court offered this further tidbit: “[W]e do not foreclose the possibility that the extent of a civil jury trial right in the selected forum may otherwise be relevant to the enforceability of a forum selection clause” “in other contexts and under other theories.”
Critically, for purposes of assessing ultimate enforceability of these clauses and outright jury waivers, the plaintiff minority shareholders’ argument at the trial court in EpicentRx – that the clause was “not freely and voluntarily negotiated at arms’ length” – was never fully considered there or in the Court of Appeal; it was shunted aside by the singular focus on the validity of the per se rule of Handoush, and the Supreme Court declined to pick it up. So lenders and other plaintiffs who seek to enforce forum selection provisions in California need to brace for the ”unequal bargaining power” and other “public policy” arguments. But presumptive validity of forum selection clauses – with no exception for jurisdictions that allow jury waivers – has been properly restored. The decision in EpicentRx is truly heartening.
