Gym owners, dance studios, night clubs, martial arts clubs, and other businesses often require their customers to sign liability waivers before they are allowed to engage in potentially dangerous physical activities. However, do these liability waivers really protect business owners from potential liability? In light of a recent Wisconsin Court of Appeals’ Decision, the answer is “not necessarily”.
The Wisconsin Court of Appeals recently issued a Decision in Brooten v. Hickok Rehabilitation Services, LLC, 2013 WL 1809763, voiding a liability waiver signed by an individual when he signed up at a local health club and was subsequently injured. The waiver, at issue, read as follows:
Waiver and Release of Liability
In agreeing to participate in fitness activities at Chetek Fitness 24/7, I agree as follows:
I fully understand and acknowledge that recreational and fitness activities have (a) inherent risks, dangers, and hazards and such exists in my use of any equipment and my participation in these activities; (b) my participation in such activities and/or use of such equipment may result in injury or illness including, but not limited to bodily injury, disease, strains, fractures, partial and/or total paralysis, death or other ailments that, could cause serious disability; (c) these risks and dangers may be caused by the negligence of the representatives, employees, or volunteers of Chetek Fitness 24/7, the negligence of the participants, the negligence of others, accidents, breaches of contract, or other causes; (d) by my participation in these activities and for use of equipment, I hereby assume all risks and dangers and all responsibility for any losses and/or damages whether caused in whole or in part by the negligence or the conduct of the representatives, employees, or volunteers of Chetek Fitness 24/7, or by any other person.
In agreeing to participate in fitness related activities at Chetek Fitness 24/7, I acknowledge that certain injuries are possible. These include but are not limited to: Minor or major bone fracture, scrapes, abrasions, lacerations, head or body bumps, bruises, muscle, tendon, or ligament strains or sprains. These might be caused by: Slips, falls, and other gravity-related mishaps, equipment failure, overstraining, or exceeding physical limitations, human error, disregard for guidelines, rules, and standard practice, ignorance or inattention.
I, on behalf of myself, my personal representatives and my heirs, hereby voluntarily agree to release, waive, discharge, hold harmless, defend, and indemnify Chetek Fitness 24/7 and its representatives, employees, and volunteers from any and all claims, actions or losses for bodily injury, property damage, wrongful death, loss of services or otherwise which may arise out of my use of any equipment or participation in these activities. I specifically understand that I am releasing, discharging, and waiving any claims or actions that I may have presently or in the future for the negligent acts or other conduct by the representatives, employees, and volunteers of Chetek Fitness 24/7.
I HAVE READ THE ABOVE WAIVER AND RELEASE AND BY SIGNING IT AGREE IT IS MY INTENTION TO EXEMPT AND RELIEVE CHETEK FITNESS 24/7 FROM LIABILITY FOR PERSONAL INJURY, PROPERTY DAMAGE OR WRONGFUL DEATH CAUSED BY NEGLIGENCE OR ANY OTHER CAUSE. (Citation omitted).
Brooten signed the waiver. Later, he was injured when a bench he was using to perform a bench press weight lifting exercise failed and slipped into the decline position. Brooten brought several claims against the gym and, when the trial court granted the gym summary judgment based on the signed waiver agreement, Brooten appealed. The Wisconsin Court of Appeals held the waiver unenforceable and reversed the trial court decision.
This must be an anomaly, right, a “rogue” decision? Not at all. The Wisconsin Court of Appeals noted in its Decision: “Wisconsin case law does not favor such agreements”. The Court further noted that “[I]ndeed, each exculpatory contract that this court has looked at in the past 25 years has been held unenforceable”.
While liability waivers have traditionally been analyzed along both contract and public policy grounds, the Court of Appeals noted in Brooten that the contractual analysis has been de-emphasized in the case law and that public policy is “the germane analysis for exculpatory clauses.” In other words, the notion of “freedom of contract” has been “de-emphasized” in favor of other considerations.
The Court held that the liability waiver signed by Mr. Brooten was contrary to public policy and, therefore, is void based on three factors: (1) the waiver was presented on a take-it-or-leave-it basis, affording Brooten no opportunity to bargain; (2) the waiver was impermissibly broad and all-inclusive; and (3) the agreement “exceeded the contemplation of the parties.”
The Brooten Decision was based primarily on an influential 2005 decision, Atkins v. Swimwest Family Fitness Center, 277 Wis.2d 303, 309-10 (2005). Atkins involved a physician who signed a guest Waiver Release Statement at a Madison swimming facility to use the facility on a one-time basis. The physician, Wilson, drowned while at the facility, and her minor son filed suit against the facility for wrongful death. The Wisconsin Supreme Court overturned the Circuit Court’s grant of summary judgment in favor of the swimming center and invalidated the liability waiver as void for violation of public policy.
The Atkins Court acknowledged the general principle of freedom of contract, noting that “public policy” is defined as “that principle of law under which freedom of contract or private dealings is restricted by law for the good of the community.” Ultimately, there were several factors the Court highlighted as contributing to the conclusion the liability waiver signed by Wilson (more generally referred to as an “exculpatory clause”) was void – overly broad, one-sided, no opportunity to bargain, and lack of conspicuous language.
The Wisconsin Supreme Court has not held that liability waivers are invalid per se, though they are strongly disfavored. Boilerplate, standard waivers available on the internet or through “self-help” services are likely to be overly broad and to contain other factors that make them suspect under public policy analysis. For example, if the waiver includes language exculpating the business from “reckless or intentional conduct,” it will be held void in Wisconsin. In addition, any indemnity provisions should be conspicuous.
All of this is not to say that liability waivers should not be used by business owners. Rather, they should be given proper attention. They should be narrowly, carefully drafted with your business in mind and, where possible, to the specific customer. They should be updated regularly.
Insurers of businesses that rely on liability waivers also need to be mindful that risks vary by state based on the state’s laws with respect to enforcement of liability waivers. In those states in which liability waivers are disfavored, such as Wisconsin, proper attention should be paid early on to conducting a thorough factual investigation rather than foregoing what might be considered an “expensive” investigation because of what is perceived to be a strong legal defense based on the signed waiver.
If you are a business owner with questions about tailoring liability waivers for your business or an insurer with questions about whether such waivers will limit liability of your insured, feel free to contact Richard Schuster at email@example.com for further assistance.