New Jersey upholds release for injury in faulty bike at fitness club

Decision helps define gross negligence in New Jersey.

Stelluti v. Casapenn Enterprises, LLC, d/b/a Powerhouse Gym, 203 N.J. 286; 1 A.3d 678; 2010 N.J. LEXIS 750

The New Jersey Supreme Court in Stelluti v. Casapenn Enterprises, LLC, held that a release signed by a patron was valid even thought it was considered an adhesion contract and an exculpatory agreement.

The plaintiff signed up for the club signing a Membership Agreement, A Member Information form, a Health/Safety Consent form and the Powerhouse Fitness Waiver & Release Form. The release was a pre-printed from which stated in part:

This waiver and release of liability include, without limitation, all injuries which may occur as a result of, (a) your use of all amenities and equipment in the facility and your participation in any activity, class, program, personal training or instruction, (b) the sudden and unforeseen malfunctioning of any equipment, (c) our instruction, training, supervision, or dietary recommendations, and (d) your slipping and/or falling while in the club, or on the club premises, including adjacent sidewalks and parking areas.
….
To the extent that statute or case law does not prohibit releases for negligence, this release is also for negligence on the part of the Club, its agents, and employees.
….

The plaintiff immediately went and entered into a spinning class. As she stood up on the pedals the first time the handle bar dislodged and the plaintiff fell suffering several injuries.

The plaintiff sued for “negligence in failing to maintain and set up the bike, failing to properly instruct her on its use, failing to provide warnings and safe equipment, and other claims.” The plaintiff argued that she was not told she was signing a release and was not provided a copy of the release.

This is an important point. For some reason, recreation businesses and providers are hesitant or afraid to provide copies of their release forms to participants. Don’t be. Would you sign a contract to buy a house without keeping a copy of the agreement? A release is no different (and may be of greater value). If a patron or guest wants a copy of the release or any other document they may sign, give them one. If they want a copy of the release signed by them, make them a copy. It may prevent a lawsuit just because they did not remember what they signed.

I have always argued that some lawsuits do not start because people know they signed the release, so they don’t sue. If they have a copy of the release, it is well written, covers everything and is legal in the appropriate state, the signor may not sue upon reading it.

The defendant Casapenn d/b/a Powerhouse filed a motion for summary judgment, which was upheld by the trial court and the appellate court of New Jersey. The case was then appealed by the plaintiff to the New Jersey Supreme Court.

The court found that the pre-printed release offered by the defendant and signed by the plaintiff was a contract of adhesion. A contract of adhesion is a contract “presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity for the adhering party to negotiate.” The general issue is the party presented with the contract cannot negotiate the contract as it is presented on a take it or leave it basis. In some cases, contracts of adhesion are void or voidable because of the unequal bargaining power of the parties and the take it or leave it position of the party signing the agreement.

Here the court found that it was a contract of adhesion. However, the plaintiff was not in a position where her only choice was to sign the contract. The court stated she could have:

…taken her business to another fitness club, could have found another means of exercising aside from joining a gym, or could have sought advice before signing up and using the facility’s equipment.
Because the plaintiff had other options with other businesses, she was not forced to sign the contract. That is normally one of the tests to determine if a contract is void or unconscionable did the plaintiff have no choice but to sign the agreement and no other options except to sign with the defendant. If that is answered affirmatively, then the release may be voidable as an adhesion contract. However, if there are other options releases are normally not adhesion contracts. Contracts of adhesion are as also known as exculpatory agreements.

Under New Jersey law, there is a four point test to determine if the contract is enforceable if it is found to be an exculpatory agreement. The contract is enforceable only if:

(1) it [the agreement] does not adversely affect the public interest;
(2) the exculpated party is not under a legal duty to perform;
(3) it does not involve a public utility or common carrier; or

(4) the contract does not grow out of unequal bargaining power or is otherwise unconscionable.

Another way at looking at the four part test is:

“noting such considerations as “the subject matter of the contract, the parties’ relative bargaining positions, the degree of economic compulsion motivating the ‘adhering’ party, and the public interests affected by the contract.””

Here third point does not apply so the court only had to look at points 1, 2 and 4. Here because the plaintiff had the opportunity to exercise at another club, at home or could have sought more advice about the equipment from the defendant, the tests of 1, 2 and 4 were met.

A basic constitutional freedom of all parties is to contract. As such the courts are hesitant to interfere with purely private agreements such as fitness club agreements.

The court applied this reasoning in looking at the next series of tests, which should be applied to exculpatory agreements: whether the party giving up his or her legal rights made the decision “voluntarily, intelligently and with the full knowledge of its legal consequences.” Parties who sign contracts are presumed to have read or understood the terms of the contract. That is a standard legal conclusion. You signed it. Therefore, you read it, and you understood it.

Absent fraud, deceit or misrepresentation, a contract between two parties will not be voided by the court based on a claim that one party did not understand the agreement.

One way the release could have been voided by the court was if the actions of the defendant were found to be grossly negligent. The court defined gross negligence in this type of case if the defendant’s employees or management had:

…been aware of a piece of defective exercise equipment and failed to remedy the condition or to warn adequately of the dangerous condition, or if it had dangerously or improperly maintained equipment,

This places a reasonable burden on any recreation provider to respond when they learn of a problem. Whether it is defective padding on a ski slope or a broken piece of equipment in a health club, once the owner, employee or management knows of the problem, the problem must be fixed.

This decision is in line with most states concerning injuries from malfunctioning health club equipment. A release bars the claims of the plaintiff absent knowledge that the equipment is broken.

A release cannot be used as an excuse not to keep the health club or the business up to the standard of care. A release will stop a lawsuit for those problems that management did not know about.

So?
 
There are several important issues here to remember.

1) Here the release was a separate agreement. There was no buried language in the middle of the form which gets health clubs in trouble. Don’t be afraid to protect yourself from a lawsuit. Make your release easy to understand and identifiable as a release.
2) If you run a health club, and you learn that a piece of equipment is broken, take it out of service and fix it before you allow anyone to use it. If you don’t, your release may not protect you from a gross negligence claim.
3) If someone wants copies of documents they sign cheerfully give them one. If someone asks you why you don’t give everyone a copy, just say very few people want a copy so you are trying to save paper.
a) Put copies of your documents on line so everyone can access them. That way you can never be accused of hiding issues from your clients.
b) Have clients sign the documents online so you don’t waste any paper.
4) Have an attorney make sure your release, an all of your other agreements are not considered adhesion agreements under your state law. It is difficult to do without a review of the relevant law, but it will make the difference between a successful and unsuccessful defense to a lawsuit.

Other New Jersey Decisions discussed:
 
Another fitness club sued for failing to use AED on hand.

Really, you should be prepared for a lawsuit when you host a 3-legged race.
What do you think? Leave a comment.

Copyright 2010 Recreation Law (720) Edit Law, Recreaton.Law@Gmail.com

© 2010 James H. Moss

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One Comment on “New Jersey upholds release for injury in faulty bike at fitness club”

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