Surprising Ruling in New Jersey Case

P1100260By Doyice Cotten

James Walters joined a YMCA and signed a membership agreement containing a waiver. About three years later, he suffered injury when he slipped on a step while walking to the YMCA pool – allegedly because the slip resistant rubber on the stairs was worn off the bottom step. The trial court granted summary judgment ruling that the waiver language protected the club against liability for negligence (Walters v. YMCA, 2014 N.J. Super. LEXIS 117.

Cause of Action

The plaintiff’s argument was that his cause of action “is predicated on the ordinary common law duty of care owed by all business operators to its invitees, and thus it is completely unrelated to the inherent risky nature of the activities offered by health clubs.”

The trial court judge rejected the argument that the waiver applies only to claims based on engaging in the kind of  risky activities offered by health clubs. The judge found the pool area was “just another type of equipment that is being offered by the health club.”

The Walters appellate court, relying on an analysis of the state Supreme Court ruling in Stelluti v. Casapenn Enterprises, Inc. (2010), disagreed and reversed the trial court decision. In Stelluti, the Supreme Court enforced a health club waiver because the injured party had been engaged in exercise using a piece of equipment – the business of the club.  The Supreme Court stated:

. . . the standard we apply here places in fair and proper balance the respective public-policy interests in permitting parties to freely contract in this context (i.e. private fitness center memberships) and requires private gyms and fitness centers to adhere to a standard of conduct in respect of their business. Specifically, we hold such business owners to a standard of care congruent with the nature of their business, which is to make available the specialized equipment and facility to their invitees who are there to exercise, train, and to push their physical limits. That is, we impose a duty not to engage in reckless or gross negligence. We glean such prohibition as a fair sharing of risk in this setting, which is also consistent with the analogous assumption-of-risk approach used by the Legislature to allocate risks in other recreational settings with limited retained-liability imposed on operators. (Italics added).

The Walters appellate court went on to quote from Stelluti:

 . . . we feel no obligation to reach and discuss the validity of other aspects of the agreement not squarely presented by the facts of Stelluti’s case. Thus, we need not address the validity of the agreement’s disclaimer of liability for injuries that occur on the club’s sidewalks or parking lot that are common to any commercial enterprise that has business invitees. With respect to its agreement and its limitation of liability to the persons who use its facility and exercise equipment for the unique purpose of the business, we hold that it is not contrary to the public interest, or to a legal duty owed, to enforce [the defendant]’s agreement limiting its liability for injuries sustained as a matter of negligence that result from a patron’s voluntary use of equipment and participation in instructed activity. As a result, we find the exculpatory agreement between [the defendant] and Stelluti enforceable as to the injury Stelluti sustained when riding the spin bike. (Italics added).

The  exculpatory language in the YMCA agreement read:

I AGREE THAT THE YMWCA WILL NOT BE RESPONSIBLE FOR ANY PERSONAL INJURIES OR LOSSES SUSTAINED BY ME WHILE ON ANY YMWCA PREMISES OR AS A RESULT OF A YMWCA SPONSORED ACTIVITIES [SIC]. I FURTHER AGREE TO INDEMNIFY AND SAVE HARMLESS THE YMWCA FROM ANY CLAIMS OR DEMANDS ARISING OUT OF ANY SUCH INJURIES OR LOSSES.

The Unanswered Question

The Walters appellate court reasoned that since the accident occurred when plaintiff slipped on a step and fell, as he walked to defendant’s indoor pool (and not while swimming in the pool or using any physical fitness equipment), the accident was a typical “slip and fall” that could have occurred in any business setting. The court cited Stelluti who stated that “[b]usiness owners owe to invitees a duty of reasonable or due care to provide a safe environment for doing that which is in the scope of the invitation.” The Walters appellate court then endeavored to answer the question the Supreme Court left unanswered:

. . . whether an exculpatory clause that insulates a physical fitness club, like defendant, from liability “for any personal injuries or losses sustained by [a member] while on any [of [**9]  the club’s] premises” is enforceable when the accident and resulting injuries sustained by the member/invitee was not caused by or related to an inherently risky physical fitness activity.

The Walters appellate court went on to say that a waiver is enforceable only if:

1) it does not adversely affect the public interest;

2) the exculpated party is not under a legal duty to perform;

3) it does not involve a public utility or common carrier; or

4) the contract does not grow out of unequal bargaining power or is otherwise unconscionable.

The Walters appellate court recognized several important considerations:

1)      the freedom to contract and the right of competent adults to bind themselves as they see fit.

2)      Waivers have historically been disfavored in law and thus have been subjected to close judicial scrutiny.

3)      Any ambiguities in language about the scope of an exculpatory agreement’s coverage, or doubts about its enforceability, should be resolved in favor of holding a tortfeasor accountable.

4)      The law does not favor exculpatory agreements because they encourage a lack of care.

5)      A waiver construed to its outermost limits of protection . . . [would preclude] literally any and all claims or causes of action[.] [Such a prospect] threatens an adverse impact upon the public interest. An unbounded waiver of liability unjustifiably eviscerates those protections for business invitees. (Stelluti, appellate court)

The Walters appellate court felt that enforcement of such an expansive waiver under these conditions would devastate the common law duty of care owed by defendant to its invitees and would not be in the public interest. The court was particularly bothered by the fact that the waiver 1) applied to all injuries on the premises, 2) all injuries as a result of YMCA sponsored activities, and 3) was a one-sided contractual arrangement.

Ruling

The appellate court ruled that such a contract must be declared unenforceable as against public policy. It did emphasize, however, that “we do not hold here that all business operators are precluded from contractually bargaining away their common law duty owed to invitees to provide a reasonably safe environment for doing that which is in the scope of the invitation. (Italics added.) Author’s NOTE: This is the first case in memory in which the activity waiver did not cover an injury such as this.