Choice-of-Law Provision Fails: Waiver Falls under Vermont Law

By Doyice Cotten

16289028355_173015dd0e_zBrian Kearney was seriously injured while competing in a USSA sanctioned amateur downhill ski race at Okemo Mountain Resort in Ludlow, Vermont, in February, 2015. USSA members were eligible to participate and membership required signing a liability waiver (Kearney v. Okemo Limited Liability Company, 2016).

The waiver contained the following exculpatory provision:

Member hereby unconditionally WAIVES AND RELEASES ANY AND ALL CLAIMS, AND AGREES TO HOLD HARMLESS, DEFEND AND INDEMNIFY USSA FROM ANY CLAIMS, present or future, to Member or his/her property, or to any other person or property, for any loss, damage, expensive, or injury (including DEATH), suffered by any person from or in connection with Member’s participation in any Activities in which USSA is involved in any way, due to any cause whatsoever, INCLUDING NEGLIGENCE and/or breach of express or implied warranty on the part of USSA.

The waiver also contained a choice-of-law provision, which stated that it would be “construed in accordance with, and governed by the substantive laws of the State of Colorado, without reference to principles governing choice or conflict of laws.”

Plaintiff admitted joining the USSA, but denied having signed a waiver. The waiver was electronic (a click-wrap waiver) and was such that one could not join the organization without checking the box agreeing to the waiver. Membership could be gained only after clicking the waiver box.

 Choice of Law Issue

Kearney asked the court to disregard the Colorado choice-of-law clause in the release and apply Vermont law to the instant dispute. The issue was critical because such a waiver was enforceable under Colorado law and was against public policy under Vermont law.

The court examined Vermont’s choice-of-law rules since a federal court must apply the choice-of-law rules of the forum state where jurisdiction is predicated on diversity of citizenship. Vermont law provides that waivers are evaluated under principles of contract law and the Vermont Supreme Court has adopted the Restatement (Second) of Conflict of Laws (the “Restatement”) for choice-of-law questions in contract matters. This provides

(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.

(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or

application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issueand which, under the rule of§ 188,3 would be the state of the applicable law in the absence of an effective choice of law by the parties. (Bold Emphasis Added)

The court found the issue before it was not one which the parties could have resolved by an explicit provision in their agreement. It then looked at the exceptions to the rule.

 No Substantial Relationship Exception

The court found Colorado had no “substantial relationship” to the parties or the transaction. Plaintiff resides in New York; USSA is a Utah corporation; and Okemo is a Vermont entity. Further, the incident occurred in Vermont, not Colorado. Vermont, on the other hand, had a significant relationship to the parties — Okemo is a Vermont corporation; the competition was held in Vermont; plaintiff was issued a lift ticket by Okemo requiring all disputes to be litigated in Vermont; inspection and training runs in Vermont; and the injury occurred in Vermont.

Public Policy Exception

Colorado law would produce a result that conflicts with the fundamental policy of Vermont. Courts applying Vermont law consistently hold such waivers are against important public policies of the state; waivers in ski contracts have been held to be enforceable under Colorado law. In addition, Vermont has a “materially greater interest” than Colorado in the determination of this issue; Vermont courts have consistently held that ski resorts should be responsible for skier safety.

In light of these factors, the court held that the choice-of-law provision does not control in this case; Vermont law should prevail.

Ruling

The court ruled that even though the race was a high risk activity, it fell under the Dalury v. S-K-I, Ltd., 164 Vt. 329, 670 A.2d 795 (1995) ruling holding such waivers unenforceable. The court denied the Okemo request for summary judgment.

Photo Credit: Thanks to the U.S. Department of Agriculture on Flickr.