By Doyice Cotten
In a case involving a waiver used by USA Cycling, Inc., the US District Court summarized aspects of the Utah waiver law. The case resulted from an injury sustained by the plaintiff while making a preliminary run using a map provided for riders in the event. The map did not warn the rider of a barrier in the street and the plaintiff suffered injury when he struck the unexpected barrier. Whether the waiver protected USA Cycling was at issue. Here are some of the basics presented by the court in Finken v. USA Cycling, 2020.
In Utah, “[i]t is well settled that preinjury releases of claims for ordinary negligence can be valid and enforceable.” (Penunuri v. Sundance Partners, Ltd., 2013) “Indeed . . . the majority of jurisdictions” permit “people to surrender their rights to recover in tort for the negligence of others.”
This does not mean, however, that preinjury waivers are favored. Rather, “the shortcomings of exculpatory clauses . . . provide ample cause to approach preinjury releases with caution.” (Berry v. Greater Park City Co., 2007)
Thus, not all preinjury waivers are valid. “Specifically,
(1) releases that offend public policy are unenforceable;
(2) releases for activities that fit within the public interest exception are unenforceable;
(3) releases that are unclear or ambiguous are unenforceable.” (Penunuri)
Indemnity Agreement Law
As to indemnification provisions, “[i]n general, the common law disfavors agreements that indemnify parties against their own negligence because one might be careless of another’s life and limb, if there is no penalty for carelessness.” (Hawkins v. Peart, 2001)
“Because of this public safety concern,” Utah court’s “strictly construe indemnity agreements against negligence.”
Clarity of the Waiver
The Utah Supreme Court has stated, “[t]o be effective, a release need not achieve perfection . . . . It suffices that a release be clear, unambiguous, and explicit, and that it express an agreement not to hold the released party liable for negligence.”
Whether a contract is facially ambiguous is a question of law. If there is ambiguity as to the intent of the parties, that is a question of fact requiring admission of parol evidence. In this case, however, the court only addresses facial ambiguity because if the Waiver is not clear on its face, it is unenforceable.
Referring to the USA Cycling case, the court stated that
“The waiver has clear language releasing USA Cycling from negligence. What is less clear is negligence from what activity? The Waiver notes “that cycling is an inherently dangerous sport” due to such dangers as “collision with pedestrians, vehicles, other riders, and fixed or moving objects.” It further notes “the possibility of serious physical and/or mental trauma or injury, or death associated with the event.” Id. .
These provisions appear to provide notice about the event itself and the dangers that may arise from it. Finken‘s injuries, however, arose from a pre-ride. When a map is published of a racecourse on a public road, one reasonably anticipates that road is open to travel. Although both defendants knew the road was closed until the race, they did not inform participants of that fact. Thus, they exposed pre-riders to a risk that is not inherent in a race on a public road.
The Waiver goes on to state, however, that it releases “all damages which may be sustained by [Finken] directly or indirectly in connection with, or arising out of, [his] participation in or association with the event, or travel to or return from the event.” The only reason Finken was on the Old Snowbasin Road was in preparation for the event. His pre-ride therefore was in connection with his participation in that 2014 Championship race. Accordingly, the court concludes the Waiver was clear as to USA Cycling.
Public Interest Exception
The public interest exception invalidates a preinjury release when “it attempts to limit liability for activities in which there is a strong public interest.” (Berry)
For recreational activities, however, it has gone one step further.
In Pearce, the Court “join[ed] other states in declaring, as a general rule, that recreational activities do not constitute a public interest and that, therefore, preinjury releases for recreational activities cannot be invalidated under the public interest exception.”
As stated above, Finken‘s pre-ride was done in connection with his expected participation in the 2014 Championship. Because the event and the pre-ride were recreational activities, the court concludes the public interest exception is inapplicable in this case.
Public Policy Exception
The Plaintiff further contends the Waiver is unenforceable because it is contrary to public policy.
“To determine whether a contract offends public policy,” a court must “first determine whether an established public policy has been expressed in either constitutional or statutory provisions or the common law.” (Penunuri).
The Utah Supreme Court also has stated, “for a contract to be void on the basis of public policy, there must be a showing free from doubt that the contract is against public policy.” Thus, this exception should be applied, “if at all, only with the utmost circumspection.”
The court gave a long discussion of whether Utah had a public policy that prohibited the enforcement of the waiver. It looked at statutes related to sports (including biking) and concluded with:
Utah has recognized, however, that if liability insurance must cover inherent and non-inherent risks of a sport, the cost may be prohibitive and thereby hinder holding events or activities that would provide an economic benefit to the state. Hindering such economic benefits would be contrary to one of the stated purposes of the regulation. Thus, one may reasonably conclude that liability for inherent risks may be waived by the bike race participants so as not to hinder the economic benefits to the State.
The court concludes, however, if an operator is allowed to obtain a waiver from participants even for risks that are not inherent in the sport, it would alter one of the elements for a special event permit. Liability insurance is meant to cover liabilities. If all liability has been waived for bike participants, then the purpose for carrying liability insurance is altered as to those participants. Because bike races on highways are prohibited unless the reasonable safety of participants, spectators, and the travelling public may be assured, a balance was struck and cannot be altered via a waiver of liability. Accordingly, the court concludes as a matter of public policy, the Waiver in this case is unenforceable because it attempts to waive liability even for non-inherent risks arising from or associated with the negligent acts of USA Cycling.
So the court ruled that the waiver (in this case) did violate the public policy of Utah. Read the entire decision here.
Photo Credit: Thanks to Alan Light via Flickr.