Rob Bovarnick is a business lawyer in Philadelphia who has spent his entire career representing businesses and their principals in matters ranging from general corporate representation to litigation to workouts and reorganizations. In the fitness and health industry, Rob represents personal trainers, clubs, product developers and a manufacturer of nutritional supplements. He can be reached at rmb@rbovarnick.com or 215-568-4480. His Web site is www.rbovarnick.com.
Virtually every health club agreement contains language limiting the labiality of the club in case a member or visitor is injured. These agreements, called either limited liability agreements or exculpatory clauses, are valid where three conditions are met. First, the clause must not be against public policy. Second, the contract must be between parties relating entirely to their own private affairs. Third, each party must be in a position to be able to freely bargain for the product or service being purchased.
Once an exculpatory clause is determined to be valid, it might still be unenforceable unless the language of the parties is clear that a person is being relieved of liability for their own acts of negligence.
In interpreting such clauses, the courts have listed as guiding standards that:
A case in Minnesota provides an example of where the exculpatory clause was upheld. In that case, a member signed a release and was working out with a trainer. After about 15 to 20 minutes, the member complained of a headache in the back of her head. The trainer said it was probably from the lack of using those muscles before. The member continued the workout and developed pain in her neck, shoulder and arm. She told the trainer but continued to exercise. It turns out that she was injured and needed a cervical diskectomy. She sued the club, contending that the release was unenforceable since it was ambiguous and a contract of adhesion. The court ruled in favor of the club, holding that the release was sufficiently specific and the contract was not of adhesion.
As a general rule, courts will not enforce exculpatory clauses that are contrary to the public interest, based upon the principle that a party providing essential public services should be required to fulfill its obligation to the public. For example, some courts commonly invalidate the releases that public schools require students or parents to sign before students may participate in school athletic programs.
A release violates public policy if there is either a disparity of bargaining power between the parties to the agreement or if the type of service being offered by the benefited party is either a public or an essential service.
A disparity of bargaining power exists if the contract is a contract of adhesion (a contract that is for a necessary service, presented on a “take it or leave it” basis on an unwilling or unknowing public) and are for services that cannot be readily obtained elsewhere. The complaining party must show there was a disparity in bargaining power, or that there was no opportunity for negotiation and that the services could not be obtained elsewhere. The fact that a party had no opportunity to negotiate the terms of an exculpatory agreement by itself is not enough to show a disparity in bargaining power. Courts also examine whether the party signing the release was a voluntary participant in the activity.
A public or essential service includes a service generally thought suitable for public regulation. These include common carriers, hospitals and doctors, public utilities, innkeepers, public warehousemen and employers, and services involving hazardous activities. These types of service providers generally have a duty to take reasonable care to protect members of the public against foreseeable risk of danger. When it comes to health club owners, the question is whether swimming pools can come under the category of a public or essential service. While the answer to this is generally no, it is important to determine whether there is a state statute relating to the maintenance of swimming pools. If so, an argument can be made that since the swimming pool is subject to public regulation the exculpatory clause is unenforceable.
A case from California shows an applicable exculpatory clause. In that case, a person joined a club that had a pool. Almost two years after the member joined, he was walking to the pool when he slipped and fell on the pool deck. The next day he discovered an accumulation of algae on the pool deck, in the area where he fell. The member sued the club. The club filed a motion for summary judgment (a request that the court rule in favor of a party without the need of a trial). The member opposed the motion, arguing that the club violated the Los Angeles Health and Safety Code requiring proper maintenance of swimming pools. The court found the Code is part of a detailed law to protect the public and as such, is outside the scope of exculpatory clauses.
Another exception to exculpatory clauses is for gross negligence. It is generally recognized that parties cannot waive liability for conduct that rises to the level of gross negligence. A good, basic, definition of gross negligence is “want of even scant care.” While this is a very difficult standard to meet, it is not impossible. In a case in Colorado, the court stated that no release agreement can relieve a person of liability for willful or wanton negligence. In that case, the court upheld a finding of willful and wanton negligence where the sponsors of an automobile race had knowingly failed to fill water barrels that formed a barrier to protect spectators in the pit area.
It is important that the language in an exculpatory clause is clear and neither ambiguous nor misleading. If the language is ambiguous or misleading, a court may find the exculpatory agreement to be unenforceable. Different courts have different standards of what constitutes ambiguous language. Some courts say that the release must include the word “negligence,” while others do not require this word so long as the language is clear and unmistakable.
Lack of knowledge of an exculpatory clause does not necessarily void the clause. In a case in Illinois, the court stated that lack of knowledge of an exculpatory clause is relevant only if the location of the clause and the contract, the size of its print or the fact that there is no reference to the clause on the front page of the contract raises suspicions. The court noted that a clearly printed “notice to the buyer” stressing the importance of reading the entire contract appeared directly above the plaintiff’s signature on her health club membership contract.
Even if you have an exculpatory clause in your contracts, it is a good idea to have it reviewed by your attorney to make sure it is consistent with the current law in your state.