Oregon Supreme Court finds release signed at ski area is void as a violation of public policy. Less than a week later the lawsuits are being filed in droves.Posted: January 5, 2015
This is a monumental decision that will affect all recreational activities in Oregon, not just ski areas. A decision that will give injured plaintiffs of any recreational activity the opportunity to void releases for any number or reasons.
State: Oregon Supreme Court
Plaintiff: Myles A. Bagley, Al Bagley, and Lauren Bagley
Defendant: Mt. Bachelor, Inc., dba Mt. Bachelor Ski and Summer Resort
Plaintiff Claims: negligent in the design, construction, maintenance, and inspection of the jump in the terrain park.
Defendant Defenses: Release
Holding: for the Plaintiff
Prior Article written about the Appellate Decision in this Case: Rare issue this case looked at a release signed by a minor that prevented a suit for his injuries after turning age 18
The facts of this case have been copies from Rare issue this case looked at a release signed by a minor that prevented a suit for his injuries after turning age 18
This is a rare review of release or contract law because the odds are against it. A contract is voidable by the minor when the minor signs the contract. However, if the contract is, in effect, when the minor reaches the age of majority, the minor can either disaffirm the contract which puts the parties back in the position before the contract was signed or if he or she fails to do that he or she takes advantages of the benefits of the contract and continues to use it the contract is in force.
To determine the age of majority or the age a minor becomes an adult in each state see The age that minors become adults.
The minor signed a season pass release at the defendant ski area. His father signed a minor release and indemnity agreement. Two weeks later and before the plaintiff had started snowboarding, he turned 18. Once he started snowboarding, after reaching age 18, he boarded at the defendant’s resort 26 different days, and his pass was scanned 119 times.
Going through the terrain park where he seemed to spend most of his time, the plaintiff was injured on a jump which resulted in permanent paralysis.
The minor and his parents sued the resort. The trial court dismissed his complaints after the defendant filed a motion for summary judgment based on the release the minor had signed.
The court also brought out in this case, signs posted at lifts terminals which restated the ticket was a release of liability. Oregon is the only court that had held that a lift ticket purchased to ski was a release. See Silva v. Mt. Bachelor, Inc., 2008 U.S. Dist. LEXIS 55942.
Analysis: making sense of the law based on these facts.
The court first stated it had not reviewed releases in decades. The court then reviewed the legal importance of contracts.
It is a truism that a contract validly made between competent parties is not to be set aside lightly. (“When two or more persons competent for that purpose, upon a sufficient consideration, voluntarily agree to do or not to do a particular thing which may be lawfully done or omitted, they should be held to the consequences of their bargain.”). The right to contract privately is part of the liberty of citizenship, and an important office of the courts is to enforce contractual rights and obligations. (so stating). As this court has stated, however, “contract rights are [not] absolute; * * * [e]qually fundamental with the private right is that of the public to regulate it in the common interest.”
The only contracts that will not be enforced, according to this decision, are those that are contrary to law, morality or public policy.
It is elementary that public policy requires that * * * contracts [between competent parties], when entered into freely and voluntarily, shall be held sacred and shall be enforced by the courts of justice, and it is only when some other overpowering rule of public policy * * * intervenes, rendering such agreement illegal, that it will not be enforced.
The court then looked at what issues surrounding or in a contract will void a contract based on a public policy issue. It is not that a contract may be harsh to one party to the contract. “…[t]he test is the evil tendency of the contract and not its actual injury to the public in a particular instance…” However, the court then did a 180-degree turn and stated that in this case:
Thus, for the sake of convenience–if not doctrinal convergence–we address the parties’ public policy arguments in the context of our analysis of whether, in the particular circumstances of this case, enforcement of the release would be unconscionable.
The court then proceeded to build its argument on why this contract was a violation of public policy. It first divided public policy into two types procedural or substantive.
Procedural unconscionability refers to the conditions of contract formation and focuses on two factors: oppression and surprise.
Oppression exists when there is inequality in bargaining power between the parties, resulting in no real opportunity to negotiate the terms of the contract and the absence of meaningful choice. Surprise involves whether terms were hidden or obscure from the vantage of the party seeking to avoid them.
Generally speaking, factors such as ambiguous contract wording and fine print are the hallmarks of surprise.
In contrast, the existence of gross inequality of bargaining power, a takeit- or-leave-it bargaining stance, and the fact that a contract involves a consumer transaction, rather than a commercial bargain, can be evidence of oppression.
Substantive unconscionability was then defined as how the terms of the contract are viewed.
… generally refers to the terms of the contract, rather than the circumstances of formation, and focuses on whether the substantive terms contravene the public interest or public policy.
Either issue, whether the issues in how the contract was created, procedural unconscionability, or the terms of the agreement itself, substantive unconscionability, can void a contract.
The court then went to review the contract in light of any legislation related to the activity. Although Oregon has a Skier Responsibility Act, the court did not find it was instructive in this case.
The court did find that under Oregon law, it could void a release if the results would be harsh. “Finally, this court has held that another factor for determining whether an anticipatory release may be unenforceable is the possibility of a harsh or inequitable result for the releasing party.”
The court then listed the ways a contract could be voided under Oregon law.
We glean from those decisions that relevant procedural factors in the determination of whether enforcement of an anticipatory release would violate public policy or be unconscionable include whether the release was conspicuous and unambiguous; whether there was a substantial disparity in the parties’ bargaining power; whether the contract was offered on a take-it-or-leave-it basis; and whether the contract involved a consumer transaction.
Relevant substantive considerations include whether enforcement of the release would cause a harsh or inequitable result to befall the releasing party; whether the releasee serves an important public interest or function; and whether the release purported to disclaim liability for more serious misconduct than ordinary negligence.
The court refused to provide details or procedures that would void a contract. Rather the court relied on a “totality of the circumstances” test. This means it provides great leeway for a court to determine if the facts swayed a judge, not whether the facts met any set requirements.
Nothing in our previous decisions suggests that any single factor takes precedence over the others or that the listed factors are exclusive. Rather, they indicate that a determination whether enforcement of an anticipatory release would violate public policy or be unconscionable must be based on the totality of the circumstances of a particular transaction.
The court then compared the ways it had found (created) to void a contract under Oregon law to the present situation.
This was not an agreement between equals. Only one party to the contract-defendant-was a commercial enterprise, and that party exercised its superior bargaining strength by requiring its patrons, including plaintiff, to sign an anticipatory release on a take-it-or-leave-it basis as a condition of using its facilities.
This analysis completely ignored the fact the contract covered recreational activities that most other states have found remove the take it or leave it bargaining issue. The exception being Atkins v. Swimwest Family Fitness Center, 2005 WI 4; 2005 Wisc. LEXIS 2 See Wisconsin decision has left the status of release law in Wisconsin in jeopardy
The court found because the plaintiff had no opportunity to negotiate the terms or cost then there was an inequality of bargaining power between the plaintiff and the defendant. “Simply put, plaintiff had no meaningful alternative to defendant’s take-it-or-leave-it terms if he wanted to participate in downhill snowboarding.”
The court found this alone was not enough to void the release. The court then looked at whether the results of enforcing the contract would be harsh and found this to be true.
As pertinent here, we conclude that the result would be harsh because, accepting as true the allegations in plaintiff’s complaint, plaintiff would not have been injured if defendant had exercised reasonable care in designing, constructing, maintaining, or inspecting the jump on which he was injured. And that harsh result also would be inequitable because defendant, not its patrons, has the expertise and opportunity to foresee and control hazards of its own creation on its premises, and to guard against the negligence of its employees.
This analysis completely ignores the issue of whether or not the plaintiff could have examined the jump or had gone over the jump before. The defendant had introduced evidence that the season pass had been used dozens of times prior to the accident.
The court then ignored the Oregon Skier Responsibility Law and stated that even though the act had reduced the liability of a ski area it had not changed its common law liability for those conditions that are not inherent in the activity.
Skier Responsibility Law provides that “[t]o the extent an injury is caused by an inherent risk of skiing, a skier will not recover against a ski area operator; to the extent an injury is a result of [ski area operator] negligence, comparative negligence applies
The court summed up its analysis to this point stating.
In short, because (1) accepting as true the allegations in plaintiff’s complaint, plaintiff would not have been injured if defendant had exercised reasonable care in designing, constructing, maintaining, or inspecting the jump on which he was injured; and (2) defendant, not its patrons, had the expertise and opportunity–indeed, the common law duty–to foresee and avoid unreasonable risks of its own creation on its business premises, we conclude that the enforcement of the release would cause a harsh and inequitable result, a factor that militates against its enforcement.
The court then looked at whether a ski area served an important public interest or function. The court found it did by adding an exception to the essential public service requirement stating that serving the public was enough.
However, like other places of public accommodation such as inns or public warehouses, defendant’s business premises–including its terrain park–are open to the general public virtually without restriction, and large numbers of skiers and snowboarders regularly avail themselves of its facilities. To be sure, defendants’ business facilities are privately owned, but that characteristic does not overcome a number of legitimate public interests concerning their operation
Because the public was invited to ski, the release violated Oregon Public Policy.
Accordingly, we reject defendant’s argument that the fact that skiing and snowboarding are “non-essential” activities compels enforcement of the release in this case. Instead, we conclude that defendant’s business operation is sufficiently tied to the public interest as to require the performance of its private duties to its patrons
The court then looked at the legal issues in a way I have never heard of before. The court accepted the plaintiff’s argument that the release was intended to prevent claims for negligence as well as for gross negligence, reckless, or intentional conduct. Although the court did not accept the argument in this case, it left the argument open for future cases.
The court summed up its opinion over a page and a half. The fact the release was written broadly caused the court’s concern.
That said, the release is very broad; it applies on its face to a multitude of conditions and risks, many of which (such as riding on a chairlift) leave defendant’s patrons vulnerable to risks of harm of defendant’s creation
However, the entire basis of its analysis was the court did not like the fact this injured plaintiff would not recover.
In the ultimate step of our unconscionability analysis, we consider whether those procedural and substantive considerations outweigh defendant’s interest in enforcing the release at issue here.
So Now What?
This case not only opened up lawsuits against ski areas but turned any recreation provider into a target. In just two weeks since the decision came down several high-dollar lawsuits have been filed in Oregon. See Mt. Hood Meadows snowboarder claims teen slammed into her, sues teen’s parents for $955,000 and Fallen tree causes Portland mountain bike racer to crash, fracture neck, $273,000 suit says.
By stating that any provider was subject to the public policy exception to releases, the court effectively found that anyone injured by a recreation provider could have their releases voided.
If you are Oregon and have a release you may want to put in that the release is only for claims of ordinary negligence. This violates every principal I have espoused over the years, but here the court found that failing to have such a clause may make an argument for voiding a release.
This decision is stretched to reach its decision, and it is written quite vaguely and broadly giving future plaintiff’s dozens of ways of voiding a release. Catastrophic injuries are going to be more likely, based on this analysis, to void a release; however, those are the ones that attract the money.
Oregon ski area ticket prices are going to increase because Oregon ski area insurance is going up.
What do you think? Leave a comment.
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