NJ Federal Court Addresses Several Waiver Issues:

By Doyice Cotten

284617740_e58abe9d1f_zIn a recent New Jersey case (Kang v. LA Fitness of South Plainfield, 2016), the court addressed several issues relating to waivers. Among them was 1) non-reader or speaker of English, 2) font size, 3) national association standards, 4) failure to read the waiver, 5) failure to explain the waiver, 6) failure to initial a provision of the waiver, and 7) contract of adhesion.

Ms Kang was injured while working out on the chin/dip assist pull-up machine. She filed suit claiming negligence and challenged the enforceability of the waiver she had signed when she joined the club. The issues and their resolution follow.

Non-reader & Non-Speaker of English

She claimed there was a lack of mutual assent because neither Kang nor her husband read or spoke English. Further, LA Fitness knew as much but knew that Kang’s daughter was present to translate. Kang argues that she did not “clearly, unequivocally, and decisively surrender her rights” as is required for a valid waiver under New Jersey law.

The court did not agree with the plaintiff’s arguments. It said that Kang’s inability to speak English does not bar her from becoming contractually bound. It quoted New Jersey law

In the absence of fraud or imposition, when one fails to read a contract before signing it, the provisions are nevertheless binding, and the party is conclusively presumed to understand and assent to its terms and legal effect . . . . Even illiterate individuals have been held bound by a signed contract in the absence of misrepresentation. One who signs a document in those circumstances should know its contents or have it read (or otherwise have the contents made known) to him or her.

Font Size

Kang also claimed that the waiver violated the New Jersey Plain Language Act, which among other things, calls for 10 point type or greater; the contract used 8 point type. The court noted that a court can use its discretion as to how much consideration it gives to the statutory guidelines. The court determined that the type size of the waiver was no less than the remainder of the document, was enclosed with a border, and has an all caps heading; the court ruled that the waiver was not in violation of  the Plain Language Act.

Violation of National Association Standards

Kang alleged that, while there are no statutes specific to fitness clubs, LA Fitness did violate standards established by several national associations for the fitness industry. The court held that the standards do not apply with the force of law in New Jersey so they do not constitute public policy.

Failure to Read the Waiver

Kang claims that since she could not read English, it was impossible for her to read the document. But, as stated earlier, in New Jersey one who signs a document should know its contents; a signed contract is binding in the absence of fraud or misrepresentation.

Failure of LA Fitness to Explain the Contract

Kang’s claim that LA Fitness did not explain the contract to her or her daughter was unavailing. The court noted that the daughter could read and could have explained it to Kang. The court referred to precedent in the Supreme Court ruling in Stelluti v. Casapenn Enterprises (2010) in which the court enforced a waiver that was not explained to the defendant; this court followed suit in ruling the explanation was unnecessary.

Failure to Initial a Waiver Provision

Kang did not initial a blank next to the waiver provision and claimed that the failure to do so indicated that she did not agree to that section. The court stated that it was not aware of any requirement that one must initial a waiver provision in order for the waiver to be enforceable. It pointed out that she did sign the membership agreement containing the waiver and that absent fraud, her signature bound her to its terms.

A Contract of Adhesion?

One final claim by Kang was that the contract was one of adhesion. A contract of adhesion is one that is a standardized printed form, presented on a take-it-or-leave-it basis, and provides no opportunity to negotiate.

This court referred to the Stelluti case in pointing out that a contract of adhesion can be enforceable. The Supreme Court stated that bargaining power was not unequal because Stelluti could have gone to another club or could have gotten her exercise in another way. Subsequently, the Stelluti court stated that the contract was adhesionary, but was enforceable because it was not unconscionable.

Like the defendant in Stelluti, Kang

was not under any undue pressure to execute the agreement and she could have sought advice before signing. Indeed, her daughter was present to translate. … Thus, in accordance with Stelluti, the Court finds that although the LA Fitness membership agreement may have been offered on a “take-it-or-leave-it” basis, it is not void on the basis of unconscionability.

Risk Management Take-away

This case addresses a number of issues of interest to the waiver user or waiver creator. The waiver passed muster on all of the issues, but a risk manager should realize the suit might have been avoided if the club had employed better risk management procedures.

LA Fitness Mistakes:

  1. Though it is not mandated, by taking time to be certain the non-reader/non-speakers of English know what they are signing, the suit could possibly be avoided.
  2. LA Fitness should have used a larger print size for the document; another judge could have ruled the waiver unenforceable due to the small print.
  3. LA Fitness would be wise to discontinue use of blanks within the agreement and require the signature alone.
  4. LA Fitness would be wise to implement national standards in the club. It should produce a safer environment and reduce injuries.

It is worth noting that the idea that an adhesionary waiver is against public policy and makes sport, fitness, and recreation waivers unenforceable is incorrect. In most states, courts are in agreement with the Stelluti court in holding that clients are not at a disadvantage in bargaining power because they could patronize other providers or get their fitness/recreation in another way – so they are under no duress to sign the agreement.

Photo Credit: Thanks to Robert Douglass on Flickr.