Federal court voids release in Vermont based on Vermont’s unique view of release law

Release is thrown out and arbitration clause is deemed unconscionable and modified by the court. The defendant was left with a one sentence assumption of the risk clause.

Littlejohn v. Timberquest Park at Magic, LLC, et. al., 2015 U.S. Dist. LEXIS 96443

State: Vermont, United States District Court for the District of Vermont

Plaintiff: Joseph P. Littlejohn

Defendant: Timberquest Park at Magic, LLC, and Corporate Challenge, Inc., d/b/a Adventure Más

Plaintiff Claims: negligently designed, constructed, and operated the course

Defendant Defenses: Release

Holding: For the Plaintiff

Year: 2015

This is an interesting group of facts about how something simple and easily over looked in building and operating a challenge (ropes) course and a zip line can lead to an accident and then a lawsuit. Combine those facts with the Vermont Supreme Court’s decisions on releases and the defendants lose in this case.

The plaintiff was a 76 year old man. A friend of the plaintiffs purchased tickets online to go to the defendant challenge course at the ski area. The park is a self-guided aerial adventure park where the guest is taught how to clip in and then ascends through the course to the top where they then descend through a series of zip lines.

This is a commercial course purchased for amusement rather than a normal challenge or ropes course which is built for team building or other goals for the benefit of the guests. Meaning the sole purpose of this course is entertainment.

The belay system is called a “smart belay” is attached to the system and the guest at all times.

The trees and poles used to create the course are supported by guy cables or wires. While descending, the course the plaintiff clipped into a guy wire rather than a zip line. He rode the zip line down hitting a tree.

The first issue was the claim by the plaintiff that he was not notified until he arrived at the course that he would be required to sign a release. However it was later agreed that as you started to pay for the course tickets it notified you a release was required.

Upon arrival the plaintiff signed a release on a tablet. The release included a clause that stated any claim for more than $75,000 had to be arbitrated. The arbitration clause required the plaintiff and the defendant to choose one arbitrator who then chose the third arbitrator. The third arbitrator had to be “an officer or director of another company that operates a zip-line course.”

The plaintiff (or his insurance company) sued.

Analysis: making sense of the law based on these facts.

The first issue the court looked at was whether the release was valid under Vermont law. The court looked at four decisions from the Vermont Supreme Court concerning releases and determined the factors needed for a release to be valid in Vermont. In Vermont the factors are not only how the release is written but what the release is attempting to shield from liability.

In Vermont the question is, is “the business is open to the general public without regard to special training or ability and the premises owner is in the best position to assure the safety of visitors.” That means if the defendant is “in control of the location were the injury occurred and whether the premises were open to the general public.”

The court then examined the zip line course and compared it to a ski area. “As this discussion indicates, the court is satisfied that attending a zip-line program is more like visiting a ski area than like taking part in a specialized high-risk sport which requires skill and experience.”

The court found the course was not going to be protected by a release.

The course is designed and controlled by defendants. There is no indication in the record that anyone needs to learn to use the course beyond an initial training class offered at the park. It is even more open to the public than skiing, which typically involves beginner’s lessons and some degree of acquired skill. The zip-line course requires no such training or skill.

The release was void as a release. The court then looked at whether a document would survive as proof the plaintiff assumed the risk. The agreement contained the following clause:

“[t]he Participant … understand[s] that there are inherent risks of participating in the Programs and using the Equipment, which may be both foreseen and unforeseen and include serious physical injury and death.”

This clause survived the agreement and the court was going to allow the clause to be used at trial to show the plaintiff assumed the risk.

The arbitration clause was the next clause in the document, (since it is no longer a release).

As drafted, the clause works in the following way: a claimant seeking damages in excess of $75,000 is required to proceed to binding arbitration. Claims of $75,000 or less are not subject to arbitration. The arbitration panel is composed of three members. Each side chooses one member. The two members then select the third, who must be “an officer or director of any entity that operates an aerial adventure park with zip lines in the United States.” If the first two panel members cannot agree on a third, a judge within the District of Vermont shall appoint the third member “utilizing the selection criteria for the neutral as set forth above.”

The plaintiff argued the arbitration clause was unconscionable.

First, he argues that the provision is procedurally unconscionable because it is contained in small print in a contract of adhesion that was presented to him well after he paid for his tickets. Second, he maintains that the arbitration clause is substantively unconscionable because the third arbitrator is required to be an officer or director of another company that operates a zip-line course, thus tilting the arbitration panel in favor of TimberQuest. Finally, he argues that the arbitration clause lacks mutuality because it has no application to a claim by TimberQuest against a customer.

The first argument was small print. This argument is still raised if for no other purpose then to put in the judge and/or juries mind that the contract is a bad thing. However the court found the print size was the same as the rest of the document and had a “conspicuous header.”

The customer’s signature line is on the second page, giving him an opportunity to read the text before signing. Although the agreement was presented to Littlejohn as a preprinted contract with no real opportunity to negotiate the terms, he could have declined to participate in the course and requested his money back if he objected to the arbitration provision.

As the Vermont Supreme Court has repeatedly pointed out, “unequal bargaining power alone will not nullify a contract.”

The plaintiff then argued that because he was not notified he was required to sign a release until he arrived at the site the arbitration clause should be void. However his friend who purchased the tickets was informed of the requirement and because the plaintiff had not objected when presented with the release this argument failed.

The court looked at the arbitration provisions that the arbitrator had to be picked from the zip line industry was unfair. “Courts have long refused to enforce arbitration clauses which call for the appointment of panel members who are likely to harbor a bias in favor of one side or another.”

The agreement did contain a severability clause. This clause states that if one part of the agreement is void then the void section is thrown out but the rest of the agreement is still valid. Here the severability clause saved what defense was left for the defendant.

The contract between the parties includes a severability clause: “To the extent that any portion of this Agreement is deemed to be invalid under the law of the applicable jurisdiction, the remaining portions of the Agreement shall remain binding and available for use by the Host and its counsel in any proceeding.”

This gave the court the power to enforce the arbitration clause by reforming it altering it to fit the law. “The court will enforce the severability clause to strike the provision requiring the choice of a “neutral” arbitrator who is likely to hold a bias in favor of the zip-line industry. The remaining question is the issue of mutuality.”

The plaintiff then argued that the entire agreement was void because it lacked consideration. He paid for the tickets one day and three weeks later had to sign the release. However this failed. Consideration is does not have a time requirement.

Littlejohn argues that the agreement was unsupported by consideration because he was forced to sign it weeks after he had paid for the tickets. This argument is without merit. “[A]ny performance which is bargained for is consideration.” TimberQuest’s performance in this case was allowing Littlejohn to use its adventure zip-line course. In exchange, Littlejohn’s friend paid for their tickets. Upon arrival at the park, he promised that he would submit his claims to arbitration or agree to limit his recovery in court to $75,000.

The court then set the requirements for the parties to proceed.

As reformed by the court, the arbitration provision is valid. Under the agreement, there is no cap on damages if the participant chooses to go to arbitration. If the participant chooses to go to court, he or she agrees to seek $75,000 or less in damages. This court only has jurisdiction over a diversity case if the amount in controversy “exceeds the sum or value of $75,000.” This provision is strictly construed, and does not extend jurisdiction to a claim for an even $75,000. Thus, Littlejohn may not bring suit in this court. The court accordingly dismisses plaintiff’s negligence claims for lack of subject matter jurisdiction and without prejudice to plaintiff’s right to demand arbitration.

So Now What?

This case is similar to Geographic Expeditions, Inc., v. The Estate Of Jason Lhotka, 599 F.3d 1102; 2010 U.S. App. LEXIS 6606 discussed in Complicated serious of cases created to defend against a mountaineering death. There the release was thrown out because it was so onerous that the court could not stand it.

Under the rational the court determined from the Vermont Supreme Court cases any recreational based activities on land owned by the defendant that is open for business a release will not be valid. Whether nor not a guided operation on federal or state land be subject to this restriction is unknown, however the amount of federal land in Vermont is minimal and not used for recreation.

If the guest is taking the property as in a rental program then the release maybe valid. Renting a car, renting skis or renting a canoe is probably covered by a release in Vermont. However a ski rental shop that is owned by the ski area and incorporates into its release protection for the ski area will probably be void in Vermont.

The next issue is the assumption of risk clause that survived the release.

“[t]he Participant … understand[s] that there are inherent risks of participating in the Programs and using the Equipment, which may be both foreseen and unforeseen and include serious physical injury and death.”

If the courts in Vermont see the word “inherent” as a limiting term, the assumption of the risk clause may fail. Inherent has been defined to mean the risk associated with the sports that are part of the sport. Removal of the inherent risk removes the nature of the sport or activity. Risk would mean all aspects of the activity, not just the inherent ones.

This is a class example where a word has become associated to create a phrase because it “feels good.” However the word either has a different meaning when legally defined than its not legal definition or the definition of the word is not understood. If under Vermont law inherent is a limiting term the actual risks the plaintiff assumes could be very narrowly construed.

Small print is just stupid now days. Courts are still voiding releases if your release or release language is in small print. More importantly if the judge can’t read the document because the print is so small the court will always through the document out. Always make sure the print in any legal document is all the same size and no smaller than the font size required for pleadings in the court.

This case points out two major issues. The first is releases in Vermont as difficult if at all possible to use for outdoor recreation programs and businesses. The exception may be if you are someone not open to the public such as a college or university.

The second issue is whatever document you use, release or acknowledgement of risk agreement it has to be fair. If it is going to stop a lawsuit then it must inform your guests that is the purpose of the agreement. If you are going to assume the risk with the agreement the risks must be identified and the possible injuries must be pointed out. If you require arbitration the arbitration clause must conform to the laws controlling arbitration and the arbitration rules itself which is based on a neutral arbitrator.

Here arbitration was a good idea. However arbitration is not necessarily so. Arbitration has general come to mean you are deciding how much money to pay to the other side. Arbitration is usually quick and a lot less costly. Arbitration in many states limits the damages and in some states arbitrators cannot award punitive damages.

However a well written release in a state that supports release law is better than arbitration. It does not allow for any payment. A motion for summary judgment is fairly quick and easy to file after limited discovery and can be cheaper over all with a better long term effect than arbitration.

If you operate on a state listed here: States that do not Support the Use of a Release you may want to look or may only have the ability to use an assumption of the risk document and arbitration. If you are providing program to minors and your state does not support the use of a release to prevent minor’s claims, arbitration and assumption of the risk is probably best for you. See States that allow a parent to sign away a minor’s right to sue.

Either way you go the agreement must be clear, easily understood, written in English, with print large enough to read and an agreement that court will look at and determine is fair.

The final issue is the court itself. You MUST evaluate your business or program from your guest’s point of view. You know and understand how your course works. Your guest does not have that knowledge. Here a guest could not see the difference between the zip line and a guy line. It is easy enough to attach warning signs on the guy lines.  Rap red tape around the guy lines and tell guest don’t touch anything red.

Look through your program from your guests inexperienced eyes, not your battle worn glasses.

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Author: Outdoor Recreation Insurance, Risk Management and Law

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