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Complicated serious of cases created to defend against a mountaineering death.

Wrong documents used in front of the wrong judge. However, the concept of fairness wins out when the court is presented with a fatality and over bearing agreements.

Geographic Expeditions, Inc., v. The Estate Of Jason Lhotka, 599 F.3d 1102; 2010 U.S. App. LEXIS 6606

GeoEx, Geographic Expeditions, a California company runs guided trips on Mount Kilimanjaro. A mother and son from Colorado wanted to climb Mount Kilimanjaro and signed up for the climb. While climbing the mountain, the son experienced fatigue and trouble sleeping. He was sent back down the mountain with an assistant guide. During the descent, he died.

The plaintiffs claim the deceased died because GeoEx did not recognize and properly treat the deceased condition. Supplemental oxygen was available but not administered nor was a “rapid descent” ordered.
GeoEx is not a physician and diagnosing illness by anyone other than a physician is illegal, but who cares in litigation…..

HAPE is difficult to diagnose by a physician. Someone with HAPE may not be able to descend quickly and oxygen rarely does anything to treat HAPE.

There is a screw up because someone did not get the correct medical information in front of a judge.

The defendant in this case did not use a release. Instead it used a complicated document identified as a “participation contract.” This agreement had a clause that stated:

I agree that in the unlikely event a dispute of any kind arises between me and GeoEx, the following conditions apply: (a) the dispute will be submitted to a neutral third-party mediator in San Francisco, California, with both parties’ equally dividing the costs of such a mediator. If the dispute cannot be resolved through mediation, then (b) the dispute will be submitted for binding arbitration to the American Arbitration Association in San Francisco, California; (c) the dispute will be governed by California law; and (d) the maximum amount of recovery to which I will be entitled under any circumstances will be the sum of the land and air cost of my trip with GeoEx. I agree that this is a fair and reasonable limitation on the damages, of any sort whatsoever, that I may suffer.

A suit was filed in California by the plaintiff. The California judge held under California law that the agreement was unconscionable. California has a specific statute that holds if a judge finds a contract clause unconscionable it can throw the clause out.

Cal Civ Code § 1670.5 (2010)
§ 1670.5. Unconscionable contract
(a) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
(b) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

The court found the following parts of the contract as unconscionable. The contract required mandatory arbitration with the costs to be split by both parties. Even if the deceased’s survivors won the arbitration, they still had to indemnify GeoEx. The total amount of money the deceased family could win was what they spent on the trip, or in this case $16,000.

Unconscionable is a legal term that means the parties were in an unequal bargaining position. The was offered the contract on a take it or leave it basis and the terms of the contract are so one-sided and unfair to the wronged party that the contract is unconscionable. Another term applied to contracts of this type is adhesion.
GeoEx argued that the contract was the same as other outfitters would use and the court did not believe them. [Well Yes and No. I do not know of an outfitter that would not use a release. However, I’m not sure about a participate contract.]

This was in a decision in the California Court System Lhotka v. Geographic Expeditions, Inc., 181 Cal. App. 4th 816; 104 Cal. Rptr. 3d 844; 2010 Cal. App. LEXIS 114

GeoEx then filed a complaint in the Federal Court to compel arbitration of the claim as set forth in the contract. The federal court trial judge dismissed the complaint. Geographic Expeditions, Inc., Petitioner, v. The Estate Of Jason Lhotka, 2008 U.S. Dist. LEXIS 105691. The dismissal was appealed and overturned. Geographic Expeditions, Inc., v. The Estate Of Jason Lhotka, 599 F.3d 1102; 2010 U.S. App. LEXIS 6606.

This decision centered on whether the defenses of GeoEx removed the case from Federal jurisdiction. To maintain a case in Federal Court the parties must be from different states and the amount in controversy must be more than $75,000. Here the parties are from California and Colorado. The issue was if the arbitration clause was upheld then the damages would be limited to the amount the parties spent on the trip which was the limitation in the contract they signed or $16,000.

So?

At this point, I’m not sure what the status of the case is. This is what I know.

1. You need to use a release. Releases are recognized by the courts and accepted by the courts. Releases are used by everyone and probably not subject to this type of attack.
2. Contracts for non-necessities or as in this case recreation are not held to the standard of review as a contract for necessities or something that a family must have to survive. This court ignored this proposition.
3. The court brought up the ancient idea that the contract was unconscionable because it was the only option and un-modifiable by the parties. This may force companies to offer to allow people to take a trip without signing a release for a different price. But what price can you come up with to write a check for any injury?
4. The arbitration clause prevented the deceased family from recovering their damages, even if they proved gross negligence. The arbitration clause really ticked off the California court.

The simple fact is if you screw up, and you prevent lawsuits to the point that the court finds the position of the injured party to be unconscionable. The court is going to make sure you lose. If your contracts are not only one-sided but punitive on top of that, the court is going to throw out your agreements.

You can stop a lawsuit. Most states agree with this idea. You cannot stop an injured party from suing and expect them to pay you if you do. Courts do not uphold indemnification clauses in releases. Nor will they uphold an indemnification clause or a fee splitting clause like this when the parties are at such unequal bargaining position and the damages are so great.

Win, but don’t attempt, in advance, to beat your guests into the ground to do so.
For other cases on release see:

Sky Diving Release defeats claim by Naval Academy student
Aspen Skiing Company Release stops claim by injured guest hit by an employee on snowmobile.
If you make a promise to attract participants, you must come through on your promises.
New Florida law allows a parent to sign away a child’s right to sue for injuries.

For general articles about releases see: What is a Release?

What do you think? Leave a comment.

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