Hawaii’s deceptive trade practices act sends this case and release back to the trial courtPosted: April 1, 2013
Court agrees that the issue of not finding out that you had to sign a waiver until the time of the activity might be a deceptive practice.
This is a very interesting case. A couple booked several activities through a third party booking agency. The activity in question was a horseback ride. The plaintiffs had booked the ride several months in advance of the ride and upon showing up, were handed a release.
Upon arriving at the defendants, the plaintiff read the waiver and signed it and passed it on to her husband. The husband signed it, testifying in his deposition that he relied on his wife to read such documents.
The record demonstrates that the Courbats were given adequate time and opportunity to fully review the waiver presented to them before they signed it and that both knew that by signing it; they were waiving legal rights in return for being allowed to participate in the ride.
Of note was a statement made by the court that no guest of the defendant had ever refused to sign the waiver.
During the ride, one horse kicked the plaintiff in the shin causing her an injury. She and her husband sued for negligence, gross negligence and for unfair and deceptive practices.
The defendant responded with the plaintiff assumed the risk, the release barred the plaintiff’s claims and the ranch had done nothing to bring it into the purview of the Hawaiian Deceptive Trade Practices Act. (HRS §§ 480-2 and 480-13)
The trial court had granted the defendant’s motion for summary judgment, and the decision was appealed.
Summary of the case
The court spent the most time on the issue that booking a ride several months in advance and not finding out that a waiver had to be signed on arrival was a deceptive practice.
…they assert that the Ranch’s practice of booking ride reservations through an activity company, receiving payment prior to the arrival of the guest, and then, upon the guest’s arrival at the Ranch, requiring the guest to sign a liability waiver as a precondition to horseback riding is an unfair and deceptive business practice to which the remedies of HRS ch. 480 apply.
The plaintiffs did not argue that the waiver was deceptive, only the fact that they were not informed that a waiver had to be signed. If the practice was found to be deceptive, then the waiver would be void.
The Courbats do not allege that the waiver itself is deceptive; rather, they urge that the deceptive practice at issue was the booking agent’s failure to inform them of the waiver requirement during the negotiation and execution of the underlying contract. Nevertheless, if any deceptive omission occurred with respect to the negotiation and execution of the original contract, the operation of HRS § 480-12, see supra note 1, would render both the original contract and the waiver, signed afterward, void.
After analyzing the fact the court found that there was an issue: “…whether a waiver requirement would be materially important in booking a horseback tour remains one for the trier of fact.”
However, if the trier of fact (jury) finds that a failure to warn the plaintiff was not deceptive, then the waiver would be valid.
The court then looked at the wavier to determine if met Hawaiian law. The court found that if the plaintiff signed the wavier, then the plaintiff was bound by its terms. Waivers, exculpatory contracts, are valid if they are “knowingly and willingly made and free from fraud.”
Waivers can be voided for three reasons in Hawaii.
“‘exculpatory clauses will be held void if the agreement is
(1) violative of a statute,
(2) contrary to a substantial public interest, or
(3) gained through inequality of bargaining power.'”
The court then looked at what was a public interest and found a public interest had the following characteristics:
 It concerns a business of a type generally thought suitable for public regulation.
 The party seeking exculpation is engaged in performing a service of great importance to the public, which is often [***30] a matter of practical necessity for some members of the public.
 The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards.
 As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive ad-vantage of bargaining strength against any member of the public who seeks his services.
 In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence.
 Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller of the service, subject to the risk of carelessness by the seller or his agents.
Recreational activities are unsuitable for public regulation; therefore, they do not violate the Hawaiian public interest definition that would void a release.
…while such waivers may be contracts of adhesion, in that they are presented on a “take-it-or-leave-it” basis, they are not unconscionable, but “are of a sort commonly used in recreational settings” and “are generally held to be valid.
Contracts of adhesion are ‘unenforceable if two conditions are present: (1) the contract is the result of coercive bargaining between parties of unequal bargaining strength; and (2) the contract unfairly limits the obligations and liabilities of, or otherwise unfairly advantages, the stronger party.
Because the plaintiffs had time to read and review the waiver, there was no coercion.
The court reviewed one final issue, waivers under Hawaiian law, like most other states do not stop claims for gross negligence or willful misconduct.
Consequently, the case was sent back for a jury to determine if the acts of the defendant, by and through its booking agency, acted deceptively or if the acts of the defendant were grossly negligent. If so the plaintiff would win the suit. If the acts of the defendant were not deceptive or the defendant was not grossly negligent the defendants would win at trial.
There was a dissent which found that the acts were not deceptive by law.
So Now What?
It is so easy to avoid most of the issues that were part of this appeal. One some signs up for a trip or activity, whether through you or a third party, they must be informed that they are going to sign a release.
It is that easy. Put it on the receipt, put it on the website, put it on the paperwork, in the brochure; put it everywhere. If you are in a state where the release is valid you will not go through the time, cost and expense of this type of litigation.
Every state has a deceptive trade practice’s statute. The statutes are enacted to protect consumers from dishonest businesses. The court did not examine the facts in light of an intentional act; just the practice alone was deceptive.
Don’t learn the act, just inform your guests.
Plaintiff: Lisa Courbat and Steven Courbat
Defendant: Dahana Ranch, Inc.
Plaintiff Claims: negligence, gross negligence, violation of the Hawaiian Deceptive Trade Practices statute.
Defendant Defenses: assumption of the risk, release, did not violate the deceptive practices act
Holding: reversed and sent back for trial
What do you think? Leave a comment.
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