Business Litigation

In a recent decision in EpicentRx, Inc. v. Superior Court (July 21, 2025), the California Supreme Court resolved a significant question about the enforceability of contractual forum selection clauses that direct litigation to jurisdictions that do not provide for a civil jury trial. The Court held that, notwithstanding the constitutional right of California residents to a civil jury trial, a forum selection clause does not become unenforceable in California courts simply because a jury trial will not be available in the chosen jurisdiction. This decision reversed the Court of Appeal, which had refused to enforce a Delaware Chancery Court forum selection clause on public policy grounds.

When a defendant is sued in California state court by a plaintiff who resides outside of California or a plaintiff that is a foreign corporation, California law provides an underappreciated but highly effective tool for the defendant to potentially resolve the entire case at an early stage of the litigation when attorney’s fees are in play.

In an October 7, 2024 decision, the California Court of Appeal declined to enforce a forum selection clause in a motorhome warranty that purported to require warranty litigation to take place in Indiana. The case will be of interest to out of state companies selling products in California, and especially litigants seeking to stay California litigation to enforce a contractual agreement to litigate in a different forum.

The California Supreme Court, at the request of the Ninth Circuit, recently considered whether, under California law, a plaintiff may assert a tort claim for fraudulent concealment arising from or related to the performance of a contract. The California Supreme Court answered the question with a qualified “yes,” finding that the economic loss rule does not bar fraudulent concealment claims in all cases. The court ruled that a plaintiff may assert a fraudulent concealment claim based on conduct occurring during a contractual relationship if (1) the elements of the claim can be established independently of the parties’ contractual rights and obligations and (2) the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract.

On July 25, 2024, the California Supreme Court issued its unanimous decision in Quach v. California Commerce Club, eliminating the longstanding requirement under the California Arbitration Act (“CAA”) that a party opposing arbitration show that it had suffered prejudice as a result of the moving party’s delay in attempting to compel arbitration. No. S275121, 2024 WL 3530266 (Cal. July 25, 2024).