Construction Law Insights

Fluor Enters. v. Mitsubishi Hitachi Power Sys. Ams., Inc., 2019 U.S. Dist. LEXIS 65470, 2019 WL 1620755 (E.D. Va. April 16, 2019)

In February of 2012, Mitsubishi Hitachi Power Systems Americas, Inc. (“Mitsubishi”) entered into a Turbine Supply Agreement (“TSA”) with Virginia Electric and Power Company (“VEPCO”) to sell turbine generators to VEPCO for a power generating facility (the “Brunswick Project”). In July of 2012, VEPCO contracted with Fluor Enterprises, Inc. (“Fluor”) for Fluor to construct the Brunswick Project (the “Fluor Contract”). Around the same time, VEPCO assigned the TSA to Fluor through a Partial Assignment, Assumption, and Coordination Agreement (“Assignment Agreement”), but VEPCO retained the obligation to pay Mitsubishi per the terms of the TSA. Both the TSA and the Assignment Agreement contained jury trial waiver provisions.

Fluor alleged that Mitsubishi breached the TSA because it delivered parts late, improperly labeled, or that did not meet the minimum quality requirements and that Mitsubishi failed to pay Fluor the liquidated damages it is entitled to pursuant to the TSA. Mitsubishi brought a defamation suit against Fluor based on statements made by Fluor’s CEO during an August 3, 2017 earnings meeting with shareholders. Thereafter, Fluor moved to strike Mitsubishi’s jury demand pursuant to Rule 39(a)(2). The court in an October 12, 2018, decision previously denied an earlier motion to strike filed by Fluor pursuant to Rule 12(f) on the basis that it was untimely.

The Court granted Fluor’s motion to strike. The party seeking to enforce a waiver must show that consent to the waiver was both voluntary and informed. In considering whether the waiver was voluntarily, a court will consider: (1) the parties’ negotiations concerning the waiver provision; (2) the conspicuousness of the provision in the contract; (3) the relative bargaining power of the parties; and (4) whether the waiving party’s counsel had an opportunity to review the agreement. Zaklit v. Glob. Linguist Sols., LLC, 53 F. Supp. 3d 835, 855 (E.D. Va. 2014). The Court found that Fluor satisfied the factors. The parties did not dispute that the negotiations involved discussions regarding the jury trial waiver provisions, the provisions were conspicuous in each agreement and emphasized in part with capital letters, the parties had relatively even bargaining power, and each party was represented by counsel during negotiations.

The Court did not agree with Mitsubishi that its defamation claim fell outside the purview of the agreements and their jury waiver provisions because jury trial waivers are construed broadly to encompass related tort claims and the alleged defamatory statements were in relation to the Brunswick Project.

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