Louisiana does not allow the use or releases. A trampoline park tried to use an assumption of risk agreement with an arbitration clause and liquidated damage’s clause which the LA Supreme Court found to be a contract of Adhesion.Posted: March 26, 2018
If you are going to have check boxes, then every paragraph has to have check boxes.
State: Louisiana, Supreme Court of Louisiana
Plaintiff: James Duhon
Defendant: Activelaf, LLC, D/B/A Skyzone Lafayette and Underwriters at Lloyds, London
Plaintiff Claims: Negligence
Defendant Defenses: Mandatory Arbitration
Holding: for the Plaintiff
Louisiana does not allow the use of a release so amusement and recreation businesses always scramble to find ways to protect themselves. However, you can go too far.
This trampoline park had an arbitration clause hidden in a paragraph. The Louisiana Supreme Court determined that made the agreement and adhesion contract and voided the agreement.
The plaintiff sued. The defendant filed a motion to require mandatory arbitration as required under the agreement. The trial court denied the motion, and the defendant appealed. The defendant appealed the trial court decision to the appellate court which upheld the mandatory arbitration clause. The plaintiff appealed, and the Supreme Court of Louisiana reversed the appellate court and held the arbitration clause was not enforceable.
The contract, as explained by the court, has terms that become important in this decision’s analysis. The contract included a video and photography release, allowed the defendant to email the signors, waives the signor’s right to sue, mandatory arbitration clause and a liquidated damage’s clause requiring the signor to pay the defendant $5,000 if the plaintiff sued.
Three paragraphs then had boxes next to them had that to be checked. The rest of the paragraphs did not.
The total issues of the agreement, the fact the important clauses were not identified, and only three paragraphs required check boxes were of issue before the court.
Analysis: making sense of the law based on these facts.
The court found that signing the agreement electronically did not mean anything.
As an initial matter, we note the electronic nature of the Agreement in this case is of no legal consequence and does not fundamentally change the principles of contract. Louisiana law gives legal effect to both electronic contracts and signatures. We interpret and analyze the terms of the Agreement using the same rules that we would apply to oral and written contracts.
Louisiana law, like federal law, favor arbitration clauses. Arbitration does not require on the court system, allows hiring of an agreeable arbiter by the parties, is much cheaper and much quicker than a trial.
The plaintiff argued the agreement in this case was adhesive. If a contract is found to be an adhesion contract, the contract is void. The court defined an adhesion contract as:
Broadly defined, a contract of adhesion is a standard contract, usually in printed form, prepared by a party of superior bargaining power for adherence or rejection of the weaker party. Often in small print, these contracts sometimes raise a question as to whether or not the weaker party actually consented to the terms.
The court stated that just because a contract was a standard form contract does not immediately mean it was an adhesion contract. “Therefore, we are not willing to declare all standard form contracts adhesionary; rather, we find standard form serves merely as a possible indicator of adhesion.”
The court then looked at other cases and came up with the following test to determine if the arbitration clause in a contract was adhesionary. The court must look at:
(1) the physical characteristics of the arbitration clause, (2) the distinguishing features of the arbitration clause, (3) the mutuality of the arbitration clause, and (4) the relative bargaining strength of the parties.
The test is not a definitive test, but one that the court must use and apply to all arbitration clauses and evaluate each clause.
Using those four requirements the court looked at the clause in this agreement.
The first problem the court found was the arbitration clause was hidden in the agreement. There was no check box for the paragraph which contained the clause, no heading, no bold type, nothing to indicate there was an important clause in the paragraph.
However, the lack of distinguishing features and the specific placement of the arbitration clause serve to conceal the arbitration language from Sky Zone patrons. The Agreement is structured with check boxes next to the first three paragraphs, followed by five additional paragraphs without corresponding check boxes.
Additionally, the paragraph containing the arbitration clause contained several different legal points. Consequently, the court thought the arbitration clause was hidden in the agreement and difficult to find.
Thus, looking at the Agreement as a whole, the arbitration language appears to be the only specific provision not relegated to a separate paragraph or set apart in some explicit way. Here, the two-sentence provision mandating arbitration is camouflaged within the confines of an eleven-sentence paragraph, nine of which do not discuss arbitration. The effect of the placement of the arbitration language is to cloak it within a blanket of boilerplate language regarding rules and risks of participating in the Sky Zone activities.
Consequently, the court held the plaintiff did not consent to the arbitration clause.
The court then went on to find more issues with the agreement. The court found there was no mutuality in the arbitration clause. Meaning the plaintiff was bound to arbitrate and the defendants were not.
The court was also disturbed when it found a punitive provision which required an injured patron, if they sued, to pay the defendant $5,000.00 within sixty days of filing a lawsuit. The $5,000 would earn interest at 12% per year.
Even more troublesome in this case is the punitive provision compelling patrons to pay Sky Zone liquidated damages of $5,000 within sixty days should the patron file suit, with legal interest added at 12% per year. Sky Zone has no mutual obligation in the Agreement.
The court found the arbitration clause was adhesionary and unenforceable.
Considering the lack of mutuality together with the obscure placement of the arbitration language in the Agreement, and in comparison to the contract in Aguillard, we are compelled to find the arbitration clause in the Sky Zone Agreement is adhesionary and unenforceable.
The case could proceed to trial.
The decision had two short concurring decisions and one dissenting decision.
So Now What?
Here three items doomed the defendant. The first was the check boxes. Electronically, the check boxes do not provide the same problems as with a paper agreement. However, having three check boxes next to relatively unimportant clauses and no check boxes next to the clause at issue disturbed the court and found it an attempt to hide the arbitration clause from signors.
The second was the fact a major clause in a contract was hidden. It was mixed in a paragraph with other legal clauses and not pointed out as an important clause.
The third was the clause requiring the plaintiff to pay the defendant if they filed suit. Honestly, this one caught me off guard. There was no legal basis for it. Nothing was required by a party to do or not to do such as sue and lose. Filing a lawsuit was going to cost the plaintiff $5,000.
Arbitration clauses are good in those states that do not recognize a release. See States that do not Support the Use of a Release. You do not want to use an arbitration clause if you are in a state where releases are valid. Arbitration does not allow motions; you just go to a hearing. When you have the opportunity to win by using the release, the arbitration clause may set you up for a longer fight. Also, arbitrators are more than likely to split decisions, providing some benefit to both sides of the arbitration.
Many state laws encouraging arbitration clauses also limit the types of damages an arbitrator can award. Many do not allow an arbitrator to award punitive damages. If you are in a recreation industry where damages may be excessive, arbitration may provide a benefit.
A release allows you to win without having to pay the plaintiff anything. If you have a state that supports a release, use a release.
Arbitration clauses require more work than simply requiring arbitration. You need to define what type of arbitration, where and how the rules will be applied. You just can’t require it without knowing what you are getting yourself into.
For other cases looking at Louisiana law on releases and recreation see:
Articles looking at arbitration clauses in outdoor recreation.
Copyright 2018 Recreation Law (720) 334 8529
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Poorly written release and allegation of duress push whitewater rafting ligation to Pennsylvania Appellate court.Posted: September 28, 2015
Release probably not written by an attorney, signed in one state for rafting in another state and probably one where the economics suggest an insurance company is playing plaintiff.
Plaintiff: Erin Mcdonald
Defendant: Whitewater Challengers, Inc., and Whitewater Challengers Outdoor Adventure Center, T/D/B/A Whitewater Challengers, Inc.
Plaintiff Claims: a. Failing to provide a river guide / instructor in plaintiff’s boat;
b. Failing to provide a properly inflated raft;
c. Failing to advise Plaintiff on the grade and / or class of the whitewater rapids;
d. Failing to properly instruct Plaintiff on how to safely and effectively maneuver fast and difficult rapids; and
e. Allowing an unsafe number of inexperienced rafters to operate a raft.
Defendant Defenses: Release
Holding: For Defendants
The plaintiff was a teacher at a school that brought 72 kids whitewater rafting with the defendant on the Lehigh River. The school was located, and the plaintiff lived in New York. The defendant was located and the Lehigh River, where the rafting occurred, was in Pennsylvania.
While still at work two days before the trip her supervisor handed a release which she signed. The release had a venue clause which means any lawsuit must be in Pennsylvania but not a jurisdiction clause.
While rafting the plaintiff’s boat struck a rock ejecting the plaintiff from the raft which injured her.
The plaintiff and defendant filed various motions prior to trial. The plaintiff wanted New York law to apply because she had signed the release in New York and was from New York. (The plaintiff wanted the suit brought under New York law because New York does not recognize releases. See States that do not Support the Use of a ReleaseThe defendant wanted Pennsylvania law to apply, which generally upholds releases.
The court ruled against both parties and denied the release because the plaintiff made an allegation that she was forced to sign the release (duress) therefore, the release should be void. The trial court approved a motion to appeal these issues prior to trial and the appellate court accepted the appeal.
Analysis: making sense of the law based on these facts.
The plaintiff started her argument with three theories on the location where the release was signed was the proper jurisdiction for interpreting the law, New York.
The plaintiff also argued that because the defendant did not have a jurisdiction clause in its release, then obviously the defendant wanted New York law to apply.
Finally, she argued that because her medical bills and treatment would be generated and done in New York that law should apply.
She maintains that because she signed the release in New York, the contract was formed in New York. As a New York resident, McDonald asserts she is entitled to the benefit of New York law. McDonald claims that if Whitewater intended for Pennsylvania law to apply, then it should have included such a clause in its release. She points out that most of her medical treatment occurred in New York and that the New York State Insurance Fund has an interest in recouping her lost wages and medical expenses.
The court started its examination of the law to be applied by first looking at whether tort law or contract law applied. Tort law is the law of injuries and has different requirements to prove jurisdictional issues than contract law, which is what a release is. The court found that contract law applied without much analysis on how it came to that decision.
The court then looked at how a conflict of law’s decision was to be made by the courts when deciding in a contract basis where the contract is silent on the issue of jurisdiction.
…the first step in a choice of law analysis under Pennsylvania law is to determine whether [an actual] conflict exists between the laws of the competing states. If no [actual] conflict exists, further analysis is unnecessary. An actual conflict exists if “there are relevant differences between the laws.
The analysis of what law applies; New York or Pennsylvania is extensive. If only one state would be harmed (the interests of the party from that state), then the issue is a false conflict. If the interests of both states would be harmed (the residents of both states would be harmed) by the decision, then the issue is a true conflict issue. “In such a situation, the court must apply the law of the state whose interests would be harmed if its law were not applied.”
A third situation would exist if the parties of neither state would be harmed. This is called a “neither jurisdiction” issue. This occurs when the law of both states is identical.
In sum, in Pennsylvania, a conflict-of-law analysis not involving a statutory or contractual choice of law clause, first requires determining whether the laws in question actually conflict. If relevant differences between the laws exist, then we next classify the actual conflict as a “true conflict,” “false conflict,” or “unprovided-for conflict.”
Instantly, a New York statute voids clauses immunizing recreational facilities from liability for negligence because they violate New York’s public policy. Pennsylvania, however, recognizes the validity of such exculpatory clauses when they govern voluntary and hazardous recreational activities.
The court determined that this is a true conflict case where both parties would be harmed, based on their desire for the jurisdiction to be applied in their state.
The next issue once a true conflict has been determined is for the court to determine who (what state) would be harmed the most by a decision. “We thus ascertain whether New York “or Pennsylvania has the greater interest in the application of its law to the question now before us.”
The actual analysis came down to how the court looked at the issues.
But, comparable to the insurance policy in Walter, the instant release was executed for the purpose of protecting Whitewater, a Pennsylvania business that “had the right to expect that [the release] conformed to [Pennsylvania] law and that the laws of [Pennsylvania] would apply in interpreting the [release].” “[I]t seems only fair to permit” Whitewater to rely on Pennsylvania law when it acted within Pennsylvania. Whitewater should not be placed in jeopardy of liability exceeding that created by Pennsylvania law just because McDonald is a visitor from New York, a state offering higher protection.
The court decided that the law of Pennsylvania would apply. Because the activity where the accident occurred giving rise to the litigation occurred in Pennsylvania the court determined Pennsylvania law would control.
After carefully weighing the sovereign interests at stake, which include contacts establishing the significant relationships with each sovereign, we hold that Pennsylvania has the greater interest in the application of its law to this case.
The court then went into the analysis of the plaintiff’s claim the release should be thrown out because it was signed under duress.
[McDonald] had testified in her deposition that on May 17, 2006, the Headmaster of the School of the Holy Child handed the Release form to [McDonald], while she was between classes and walking through the school hallway and told her to sign it, since she would be one of the chaperones for the students on the rafting trip.
[McDonald] alleges she signed the Release form without reading it.
The plaintiff stated she did not read the release; however, because she had been on a previous whitewater trip.
The plaintiff next argued that she had no choice but to sign the release because it was required by her job. The court then looked at the issues the plaintiff faced in her annual performance evaluations and found that she would not suffer financially if she had not gone on the trip, therefore, she could not claim she was forced to sign the release.
The defendant argued that it did not compel or force the plaintiff to sign the release. If anyone did, her employer did. Since her employer was not a party to the contract, the release, then there could not be any duress.
To constitute duress or business compulsion there must be more than a mere threat which might possibly result in injury at some future time, such as a threat of injury to credit in the indefinite future. It must be such a threat that, in conjunction with other circumstances and business necessity, the party so coerced fears a loss of business unless he does so enter into the contract as demanded.
Because the defendant was not the party “forcing” the plaintiff to sign she could walk away from the release.
Instantly, we frame Whitewater’s question as whether one party to a contract can invoke duress when that duress was allegedly imposed by a non-party and not by the other party to the contract. More precisely, we examine whether McDonald can void the release by claiming the School of the Holy Child economically compelled her to sign the release with Whitewater. McDonald’s presumption is that economic compulsion, i.e., duress, by a non-party to a contract can be “transferred.”
Because the plaintiff was free to walk away from the rafting trip and consequently, the release, the court agreed with the defendant and found there was no duress. “It follows that the School of the Holy Child could not elicit the assent of McDonald by duress.”
Nor did the plaintiff ever claim that the defendant compelled her to sign the release, the only party that a claim of duress against whom the claim could be found. The defendant provided recreational services, which are not something that a claim of duress can be used.
Because a release is not a contract of adhesion, the plaintiff was not forced to sign it.
Thus, an exculpatory clause is not typically analyzed within the framework of whether it is a contract of adhesion. (“The signer is under no compulsion, economic or otherwise, to participate, much less to sign the exculpatory agreement, because it does not relate to essential services, but merely governs a voluntary recreational activity.”).
The court found that the plaintiff could not be compelled by anyone and was not compelled by the defendant to sign the release.
The court then looked at whether the release was viable under Pennsylvania law.
It is generally accepted that an exculpatory clause is valid where three conditions are met. First, the clause must not contravene public policy. Secondly, the contract must be between persons relating entirely to their own private affairs and thirdly, each party must be a free bargaining agent to the agreement so that the contract is not one of adhesion.
If the release is found to be valid, it must still be examined under Pennsylvania to see if it meets four more tests.
…unless the language of the parties is clear that a person is being relieved of liability for his own acts of negligence. In interpreting such clauses we listed as guiding standards that: 1) the contract language must be construed strictly, since exculpatory language is not favored by the law; 2) the contract must state the intention of the parties with the greatest particularity, beyond doubt by express stipulation, and no inference from words of general import can establish the intent of the parties; 3) the language of the contract must be construed, in cases of ambiguity, against the party seeking immunity from liability; and 4) the burden of establishing the immunity is upon the party invoking protection under the clause.
The court looked at Pennsylvania law and found releases were valid for inherently dangerous sporting activities.
Regarding the first element needed for a valid exculpatory clause, Pennsylvania courts have affirmed exculpatory releases for “skiing and other inherently dangerous sporting activities,” such as snowtubing and motorcycle racing. Other activities include automobile racing, paintballing, and whitewater rafting. Thus, Pennsylvania courts have held exculpatory clauses pertaining to inherently dangerous sporting activities do not “contravene any policy of the law.”
The court also found the release would be valid if it was between two parties for their own private affairs.
With respect to the second element, our Supreme Court held “[t]he validity of a contractual provision which exculpates a person from liability for his own acts of negligence is well settled if the contract is between persons relating entirely to their own private affairs.”
The court then examined the release and found it spells out the intention of the parties with particularity and shoes the intent of the parties to release the defendant from liability.
The court held the release was enforceable.
So Now What?
This case is long but brings up some interesting arguments to void releases and does a good job of explaining Pennsylvania law on releases.
First the argument that by leaving a specific clause out of a release is proof the person offering the release agrees to the lack of the clause is very scary. Most releases out there leave out a lot. I signed one the other day for an activity that left out both a jurisdiction and venue clause. I signed the release in Nevada where activity occurred. If injured, I would be allowed to sue the California Corporation in Nevada because by not putting the clause in the release it agreed to jurisdiction different from the venue clause.
Thankfully, this argument did not fly. However, it will be picked up in the future and used more often. You cannot tell when a judge or appellate panel will adopt it.
The duress argument is also valid. Duress cannot occur for recreational activities because like the public policy argument, the guest is free to walk away and loses nothing necessary for life. The duress argument is another one that might be brought when the person on the trip is therefore, more than their own enjoyment.
If they are an employee or volunteer of a church or other youth group, if they are required to do public service if they have an employer who wants them to participate, the argument is valid for duress; however, the wrong defendant is being sued. The duress must be brought by the person you are suing to void the release, not the person who made you sign it.
At the same time, it brings up the argument that this might be a subrogation claim brought by the plaintiff’s health insurance carrier or possibly worker’s compensation carrier. If the plaintiff was successful in arguing that the whitewater rafting, trip was part of her employment her injuries, lost wages, and other expenses would be covered by worker’s compensation. Her worker’s compensation insurance carrier then using the subrogation clause in the policy would have the right to sue any party that was the cause for the injuries.
A defense available to the plaintiff also bars any claims made by the insurer when applying the subrogation clause to sue. So a release signed by the plaintiff stops her lawsuit and also here insurer’s lawsuit.
Not having an enforceable jurisdiction clause in a release sent this litigation from the trial court to the appellate court and back again. In this case, it took nine years from the date of the accident, May 2006, and seven years from the start of the lawsuit, July 2008, for the case to be settled. The addition of “and jurisdiction” to the release would have probably ended the case before it got started.
Think about the stress of dealing with a lawsuit against you for seven years.
If you think, the analysis is painful to read, it is. The decision is 27 pages long. There is an entire semester of class on this one subject in law school called “Choice of Laws.” The analysis each time one party claims the lawsuit should be somewhere else or the law applied to the case should be other states not the state where the lawsuit is, is extensive. These cases also take forever.
A case where a person died on a river trip in Arizona was brought in Texas. Six years after the death the Texas Supreme Court sent the case to Arizona where it started all over again. Moki Mac River Expeditions, v. Drugg, 221 S.W.3d 569; 2007 Tex. LEXIS 188; 50 Tex. Sup. J. 498
Of note in the decision but not brought out in the decision was the fact the defendant does not put a guide in every boat on this section of the Lehigh River. One of the claims made by the plaintiff was “a. Failing to provide a river guide / instructor in [McDonald’s] boat;…”
For more articles on Jurisdiction and Venue see:
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