United States: Are Jury Trial Waivers Enforceable In Wisconsin?

Last Updated: June 1 2016
Article by Mindy F. Rice

New Wisconsin Court of Appeals Case Finds Jury Trial Waiver Unenforceable and Substantively and Procedurally Unconscionable

New Case Finds Jury Trial Waiver Unenforceable Under Wisconsin Law

In Parsons v. Associated Banc-Corp, No. 2014AP2581, 2016 WL 2637446 (Wis. Ct. App. May 10, 2016), a recent Wisconsin Court of Appeals case, the Court found a jury trial waiver in form loan documents to be unenforceable.1  It remains to be seen whether Wisconsin courts would reach the same conclusion in a more typical commercial transaction.  There are a few states, including California and Georgia, that have held pre-litigation waivers of the right to trial by jury to be unenforceable2, but the vast majority of states have upheld the enforceability of contractual jury trial waivers if given knowingly and voluntarily.3  This case introduces some doubt as to whether Wisconsin follows the majority approach on the enforceability of contractual jury trial waivers, although there certainly should be a number of ways to distinguish an ordinary course commercial transaction from the case at issue.

Factual Background

An analysis of the facts is helpful here because the nature of the underlying transaction seems to have significantly influenced the Court's analysis.

The Court states the facts of the incident underlying the litigation as follows, based on the complaint filed by the Parsons, the loan documents referred to below, and an affidavit of Taft Parsons, Jr.:  In 2002, Taft Parsons, Jr. and Carol Parsons (the "Parsons") planned to build a series of 12 townhouses in their neighborhood, starting by converting their home and the adjacent properties that they owned to townhouses.  The Parsons engaged Central City Construction ("CCC") as the general contractor for the project through an acquaintance, Joseph Bowles, CCC's vice president.  Mr. Bowles introduced them to Michael Woyan, the head of an organization called People's Action Redevelopment Commission, who told them he would assist with locating financing for the project.  Mr. Woyan later presented the Parsons with commitment papers for two loans from State Financial Bank4 (the "Bank"), each signed by Aaron Moeser, the loan officer in charge of the matter.  In 2011, Mr. Moeser, Mr. Woyan and Mr. Bowles were indicted on federal charges relating to a separate but similar loan transaction.5 The Parsons signed the commitment papers which provided for a home equity loan in the amount of $40,000 and a construction loan in the amount of $774,000.  The Parsons subsequently entered into a "Standard Form of Agreements Between Owner and Design/Builder" with CCC (the "Contract").  CCC failed to complete any of its obligations under the Contract during the succeeding six months.  Approximately seven months after executing the Contract, Mr. Bowles, Mr. Woyan and Mr. Moeser presented the Mr. Parson with a set of pre-printed loan documents, including a note, a disbursing agreement, a loan agreement, a mortgage and a closing statement.  The complaint alleges that the Parsons were not given any time to review the documents or consult with an attorney before signing the documents, and that Mr. Moeser threatened to withdraw the construction loan if the documents were not signed right away.  The documents signed by the Parsons provided that the loans were secured by the Parsons' home, and that only the Bank and the title company, not the Parsons, could approve disbursements of the loans to CCC.  The promissory note included in the packet contained a fairly standard waiver of the right to trial by jury in any transactions arising out of the loan documents or out of the relationship between the Parsons and the Bank.  After the loan documents were signed, multiple construction draws were approved and disbursed despite the fact that the Parsons objected to the disbursements and that no work had actually been done on the townhouses.6 In 2005, a tax levy was imposed on the assets of CCC, the Bank stopped funding construction draws and the Parsons filed for bankruptcy.

In 2011, five years after Associated Bank ("Associated") acquired State Financial Bank, the Parsons filed suit against Associated alleging a pattern of racketeering activity, and alleging negligent hiring, supervision and training of Mr. Moeser.  The Parsons' complaint and subsequent amended complaint contained a jury demand.  The litigation proceeded for three years, with Associated participating in the litigation, filing multiple pleadings and participating in two pre-trial hearings without objecting to the jury trial demand.  However, at the third pre-trial hearing in 2014, Associated  raised an off-the-record objection to the jury trial and subsequently filed a motion to strike the jury trial demand, citing the jury trial waiver in the promissory note signed by Mr. Parsons.7  The Circuit Court granted Associated's motion and the Parsons appealed.

The Court of Appeals Concludes the Bank Waived its Right to Object to a Jury Trial

The Court states that the right to a trial by jury is a constitutional right that can be waived. The Court also states that Associated's failure to object to the jury trial waiver for three years constitutes Associated's forfeiture of the right to object and waiver of the right to contest the manner in which the case would be tried.  The Court holds that Associated is equitably estopped from raising an objection to a jury trial three years into the litigation.  This holding could have been sufficient to dispose of the case; however, the court goes on to analyze the underlying enforceability of the jury trial waiver.8

The Court of Appeals Invalidates the Jury Trial Waiver Because it Was Not Knowing and Voluntary

Acknowledging that there was no Wisconsin authority addressing the validity of a pre-litigation jury trial waiver, the Court looked to analogous Wisconsin law and the law of other jurisdictions for guidance. The Court states that a contractual pre-litigation jury trial waiver is not enforceable if not given knowingly and voluntarily.  The Court analyzes four factors in determining whether the waiver was given knowingly and voluntarily in this case, while noting that these factors are not the only factors that can be considered in making this determination.  The four questions the court considered were:  (1) Was the clause negotiated?  (2) Was the clause conspicuous?  (3) What was the bargaining power between the parties?  (4) Was the party against whom the waiver is being enforced given the opportunity to have counsel review the provision?  The Court found that the waiver was not given knowingly and voluntarily even though the clause was conspicuous and stated by its terms that it was given knowingly and voluntarily.  The determining factors seem to have been that the clause was not negotiated, the borrower was not given time to review the documents or seek the advice of counsel, and that the borrower essentially had no bargaining power in this particular situation.9

The Court of Appeals Finds the Jury Trial Waiver to Be Unconscionable

Finally, although the Court had already stated that the waiver was unenforceable because it was not knowing and voluntary, the Court proceeded to an unconscionability analysis and found that the jury trial waiver was both procedurally and substantively unconscionable. In light of the facts alleged, the finding of procedural unconscionability is unsurprising, but the discussion of the substantive unconscionability is potentially applicable to a wide range of commercial transactions involving parties with unequal bargaining power.  The Court appears to object to the breadth of the waiver because it applies to all loan documents as well as any other transaction between the Bank and the borrower.  The Court notes that the provision was not negotiated and that the bank gave up nothing of value in exchange for the waiver, and in finding the jury waiver to be unconscionable, the Court states that a provision is substantively unconscionable if it unreasonably favors the more powerful party.10

Note that the 7th Circuit (in a split from other federal circuit courts) applies state law in diversity jurisdiction cases in determining whether a jury trial waiver is enforceable, rather than federal law.11 Under federal law, jury trial waivers are generally enforceable.12 Therefore, the effect of this decision cannot be avoided by litigating in federal court rather than in state court.

Alternative Approaches for Lenders

In light of this decision, lenders (and other institutional parties that include these provisions in their standard form documents) should consider making their jury trial waivers conspicuous and captioned with an easily understood heading.  An additional alternative approach would be to specify in term sheets that the jury trial waiver will be included in the underlying loan documentation, thus giving borrowers advance notice of the waiver and the opportunity to seek alternative financing before the loan documents are prepared.  In forbearance agreements, where the lender is agreeing not to take action it is otherwise entitled to take, lenders could include the following, or other similar language, in the jury trial waiver provision:  "This jury trial waiver constitutes a substantial consideration for and inducement to the lender to enter into this agreement."  In many commercial loan transactions, borrowers will have engaged counsel to assist with the financing documentation.  In cases where the borrower does not appear to have the assistance of counsel, lenders may want to forward the loan documents with a cover e‑mail indicating that the loan documents contain important provisions affecting the borrower's rights, including a waiver of the right to trial by jury, and that the bank advises that its borrowers consult with counsel prior to executing the documents.  Obviously, borrowers should be given time and opportunity to review the loan documents prior to signing them, and the opportunity to have counsel review and comment on the documents.  If the loan documents are signed in person, lenders may want to consider obtaining written evidence that such opportunity was given to the borrower.

Reinhart will continue to monitor this important issue and will provide additional alerts as further developments occur.  If you have questions about this update, or loan documentation issues generally, please contact your Reinhart attorney or any member of the Reinhart Banking and Finance team.


1 This case was recommended for publication, but is as yet unpublished.  Until published, it may be cited as persuasive, but not controlling authority.

2 See, e.g., Bank S., N.A. v. Howard, 444 S.E.2d 799 (Ga. 1994); Grafton Partners L.P. v. Superior Court, 116 P.3d 479 (Cal. 2005).

3 See, e.g., Uribe v. Merchants Bank, 642 N.Y.S. 2d 23 (App. Div. 1996), GreatAmerica Leasing Corp. v. Cozzi Iron & Metal, Inc. 76 F. Supp. 2d 875 (N.D. Ill. 1999) (relying on Illinois state law); Jay M. Zitter, Annotation, Contractual Jury Trial Waivers in State Civil Cases, 42 A.L.R.5th 53, WESTLAW (database updated May 2016).

4 In 2006, State Financial Bank was acquired by Associated Bank.  References to the Bank after 2006 are to Associated Bank, as successor to State Financial Bank.

5 United States v. Moeser, 758 F.3d 793 (7th Cir. 2014).

6 At a certain point after Mr. Parsons objected, a new disbursing agreement was signed that required Mr. Parsons to approve disbursements; however, CCC continued to submit disbursement requests directly to the Bank, with Mr. Bowles's signature in place of Mr. Parsons's signature, and the Bank continued to approve the disbursements.

7 Parsons, 2016 WL 2637446, ¶¶ 2-13.

8 Id. ¶¶ 16, 21-23.

9 Id. ¶¶ 26, 28-31.

10 Id. ¶¶ 33-39.

11 IFC Credit Corp. v. United Business & Indust. Fed. Credit Union, 512 F.3d 989, 991-992 (7th Cir. 2008).

12 See, e.g., Tracinda Corp. v. DaimlerChrysler AG, 502 F.3d 212 (3d Cir. 2007).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Mindy F. Rice
Similar Articles
Relevancy Powered by MondaqAI
Anderson Kill
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Anderson Kill
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions