Pre-printed release allows most claims to proceed
Basically, a release you buy as a form or from a print shop is not valid and will not get you out of a lawsuit. Releases must be written by an attorney for your business as this bicycle retailer learns in with this decision.
The plaintiff was a 77-year-old man who purchased a bicycle from the retailer, the Sports Authority (TSA). The bicycle was made by Pacific Cycle, Inc., and Dorel Industries, Inc. The brakes on the bicycle were center pull brakes and after riding the bike a half-dozen times the plaintiff used the brakes and fell. He claimed center pull brakes were only for experts, and he was not an expert cyclist. The plaintiff claimed:
Count I that Defendants were negligent, careless, and reckless because TSA failed to provide proper training in the use of high-performance brakes at the point of sale and Pacific Cycle installed brakes designed for experienced riders on a bicycle meant for the general public’s use. In Count II, Plaintiff alleges that Defendants are strictly liable for his injuries because the bicycle was placed in the stream of commerce and sold in a defective and unreasonably dangerous condition.
At the time, the plaintiff bought the bike; he completed a “sales/repair ticket” which included release language and language that stated the plaintiff had been educated in the use of the bike and the brakes. “I have been shown the proper way to operate the shifting, braking and release mechanisms of this bicycle.” The sales/repair ticket was a form used by man bike shops.
The defendant retailer The Sports Authority filed a motion for summary judgment, which led to this appeal. The basis of the appeal was:
(1) the release agreement Plaintiff signed expressly releases TSA from liability, (2) TSA had no duty to train Plaintiff, (3) Maryland law provides a statutory defense to sellers in defective design cases such as this, and (4) Plaintiff’s disregard for the written warnings is an intervening cause of his injury and provides a defense to strict liability.
Summary of the case
Release written poorly
The first argument the court looked at was the issue of the release that was part of the Sales/Repair Ticket. The release only released the retailer and did not release the manufacturers. This allowed the plaintiff to argue the release should not allow the defendant retailer out of the case because their issues were no different from the two other defendants not protected by the release. The court agreed. Although there was nothing wrong with the release, because it did not protect all the defendants, it could not be used for just one defendant.
Arguments to void release under Maryland law
Under Maryland law, a court looks at a release or contract to determine the effect of the release based on the intentions of the parties. This requires a release to be written properly under Maryland law. Here the court did not find the release was written in a way to cover the interpretation the retailer was arguing. The major issue was the language did not protect the other defendants so those claims that were joint against the other defendants and TSA, kept TSA in the lawsuit. If the plaintiff had not named the other defendants, the release would have protected TSA. Simply put the language of the release did not cover the claims of the plaintiff.
The court also looked at what it took to void a release under Maryland law.
(1) when the party protected by the clause intentionally causes harm or engages in acts of reckless, wanton, or gross negligence; (2) when the bargaining power of one party to the contract is so grossly unequal so as to put that party at the mercy of the other’s negligence; and (3) when the transaction involves the public interest.
The issues that void a release are basically the same under Maryland law as in other states. The first one is the acts of the defendant intentionally harmed the plaintiff. No contract protects against intentional acts, and no insurance policy covers intentional acts. If you do something intentionally that injures someone you are going to write a check. The next two issues are similar to public policy arguments. The first is the plaintiff has no choice but to contract with the defendant and no choice but to take the contract on the terms offered by the defendant. The second is a purer public policy argument where the item offered by the defendant is public interest such as utilities, food or public transportation. Under Maryland law, a public interest that cannot use a release is:
…the performance of a public service obligation, e.g., public utilities, common carriers, innkeepers, and public warehousemen. It also includes those transactions, not readily susceptible to definition or broad categorization, that-are so important to the public good that an exculpatory clause would be “patently offensive,” such that “the common sense of the entire community would . . . pronounce it” invalid.
The court found that the sale of a bicycle did not fall within any of the categories in this case that would void the release.
Failure to name defendants specifically
The next argument is one that has been made several times in releases and bicycle shops. Many bicycle shops purchase pre-printed forms from bicycle companies that include a release. The forms cover rentals, repair checklists, inventory issues, etc. The release does not name the defendant, but just refers to the “bicycle shop.” This argument has been made several times in other cases and someday may succeed. Here it did not, because the court found it was clear enough to the parties that the term bicycle shop referred to TSA in the release. However, as stated above, the release kept the lawsuit going because it only referred to the bicycle shop, not the manufacturers.
Release stated the plaintiff had been educated in how to use the bicycle
The next argument the court reviewed was the statement in the release that said the plaintiff has been shown the “the proper way to operate the shifting, braking and release mechanisms of this bicycle….” The court quickly dismissed the argument that the plaintiff should not be held to this defense because the plaintiff signed the agreement, so he had been instructed.
The court then looked at the plaintiff’s argument that the bicycle shop had failed to train the plaintiff in how to ride the bike and operate the equipment. The court held that there can be no negligence where there is no duty. Bicycle shops have no requirement to train people in how to ride a bike. Remember negligence has for things that must be proven to win a lawsuit. The first is there must be a duty between the plaintiff and the defendant. Here, the shop had no duty to train a buyer in how to ride a bicycle.
Expert Witness not qualified
One interesting issue the court looked at was the plaintiff’s attempt to establish a duty on the part of the retailer to train a buyer using an expert witness. The expert witness testified that there was a duty to train a buyer on how to use and ride a bike. However, the court found the expert witness’s credentials did not show any retail experience that would allow the expert to give that opinion retailer issues. An expert can only provide an opinion on those things he has training, knowledge, education or experience in. Because the expert witness’s resume or CV did not show any retail experience, the court questioned his ability opining about those issues. The court did give the plaintiff two weeks to come back with an additional statement showing that expert did have retail experience.
Maryland “sealed container” defense
The next issue was an argument raised by the defendant retailer, TSA, based on a Maryland statute. The statute is called the “sealed container” defense. The statute says a retailer cannot be held liable under a product’s liability claim for a product that has not been changed by the retailer. The defense is effective if the product is sold in a sealed container not changed or altered by the retailer. Here, however, the court found the bike had been sold out of the box. For the statute to provide a defense the bike would have to have been sold by the store in the original box the bike came to the store in.
The defense also failed because the defendant retailer hired a third party to build the bike.
The basis for the theory behind the statute is a retailer could not have found any defect in the product if they never opened the box the product came in. Courts in product liability claims hold that any person in the chain of sale from the manufacturer to the final seller is liable for a product liability claim because anyone of them could have discovered the defect in the product and prevented the injury to the consumer.
The court withheld its ruling on this issue until a later time because TSA hired the third party to build the bikes as stated above which further confused the defense.
Strict Liability Claim
Strict liability is a claim in product’s liability cases that argues the manufacturer and others in the chain of commerce are liable for placing a dangerous product into the hands of a consumer. Strict liability claims have very few defenses other than the item was not defective and unreasonably dangerous. Under Maryland law, a product is defectively dangerous if:
…if it is dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchased it with the ordinary knowledge common to the community as to the product’s characteristics….
A strict liability claim can be beaten if the manufacturer can prove that the consumer was warned of the risks. Here the court looked at the owner’s manual about the brakes and found the plaintiff’s strict liability argument did not apply. The manual informed the plaintiff of the risks.
It cannot be said enough, written about enough or argued enough, owner’s manuals are critical and must notify people of the issues, warn consumers of all risks of a product.
Here because the plaintiff failed to adhere to the warnings in the owner’s manual, the strict liability claim was dismissed.
So Now What?
This case was not over after the decision, and it had no other appeals to determine what happened with the case. Probably, the case settled sometime after this appeal was written. However, the case is very informative on the issues of Maryland law and product’s liability issues in general.
1. If you are going to use a release, have a release written that works in your state, for your business, for your legal issues. Make sure your release protects you and everyone else that should be protected. Here the release was written badly. The release escaped the claim of the defendant retailer not being identified but failed to protect the other people in the chain of sale, which allowed the case to continue. Ultimately, the release did not protect the retailer.
You, your suppliers, distributors, manufacturers, bike builders, other riders, and everyone else reasonable connected to the release, sale or event should be protected.
2. Sell the right product to the right person. This case never would have happened if the plaintiff had purchased a bicycle he understood and knew how to use.
This does not mean you cannot upsell someone or move them into better products. However moving someone who has not ridden a bike in a while from a coaster brake to hand brakes, requires a little more thinking. If you don’t have the right bike, is it worth the money you are going to make on the sale to make a customer this unhappy.
3. If you are a manufacturer make sure if you are selling in the US (or North America, for that matter) that your release is written in English and contains are the necessary warnings. Written in English does not mean translated from a foreign language into English, but translated and written in English.
Warning labels have to cover everything. You may not consider them warnings; they may just be educational issues. However, the court will look at that education as a warning label.
Any warning label on the bike or product should also be repeated in the manual.
I strongly suggest that all owners’ manuals be available on your website also. Also in the owner’s manual make sure that the manual instructs the purchaser to refer to the website for changes, updates or new warnings.
4. Always make sure that every manual, hangtag, sticker, or warning that comes in the box from the manufacturer goes out the door with the product when the bike is sold. The strict liability defense would have failed if the warning label had been left on the shop floor, and the sole issue of the case would have been how much, not if.
5. If you are a manufacturer, tell your retailers to protect you or better, develop a program where retailers, and you work together from the beginning to beat lawsuits. Make sure the retailer has a good release that protects all parties. Make sure the retailer knows to tell purchases to read the owner’s manual and to go to your website to learn more about the product.
6. If you are a manufacturer make your website more than just a sales site. It is a place where people can learn how to use your product. (And having a “community” site where other consumers using the product improperly tell your new customers how to use it improperly is not an answer.) Education and information are an effective way to keep customers happy and stop lawsuits.
This lawsuit would have ended if the release had been written properly. Buying a release from a form’s seller or a printing shop is buying trouble, not a defense. Nor is a release a stroke of luck. A well-written release in 43 states stops lawsuits. (See States that do not Support the Use of a Releasefor the states that do not support a release.)
For more product liability articles see:
For additional articles on cycling legal issues see:
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