On August 18, 2014, the Appellate Division in Walters v. YMCA, A-1062-12T3 (App. Div.), reversed a grant of summary judgment in favor of the Defendant, YMCA, which relied on a broad “hold harmless” provision in its gym membership agreement to bar Plaintiff from seeking compensatory damages based on ordinary negligence. The Appellate panel labeled the accident a “garden variety slip and fall,” where Plaintiff had slipped and fell on steps at the YMCA while walking to the YMCA’s indoor pool. Plaintiff contended the steps incorporated slip resistant rubber on all steps, but for the bottom step where the same was cut off due to wear. As such, Plaintiff asserted the steps were negligently maintained by the YMCA.
At the time of the accident, Plaintiff had been a member of the YMCA for over three years. As part of Plaintiff’s membership agreement, there was an exculpatory or “hold harmless” provision, which stated that the YMCA “will not be responsible for any personal injuries or losses sustained by me while on any YMWCA premise or as a result of a YMWCA sponsored activities.” Relying on this provision, the Trial Court determined that Plaintiff was contractually barred from bringing an ordinary negligence claim under the Supreme Court’s holding in Stelluti v. Casapenn Enters, Inc., 203 N.J. 286 (2010).
However, on appeal, the tribunal opined that the Supreme Court’s Stelluti decision was more limited in nature. The Court in Stelluti upheld the Defendant’s limited exculpatory clause where the Plaintiff was injured while engaged in strenuous physical activities that were, by their very nature, “inherently risky.” The Plaintiff in Stelluti had sustained injuries when the handlebars of her stationary bike dislodged and caused her to fall. Thus, the limited exculpatory clause was applicable “because the injury sustained was foreseeable as an inherent aspect of the nature of the business activity of health clubs.”
Here, Plaintiff did not injure himself while swimming or using the fitness equipment. In contrast, the type of accident Plaintiff sustained, slipping on steps, could have occurred in any business setting. To that end, the Appellate Court determined that the “inherently risky” nature of the YMCA’s business as a fitness club was immaterial to the accident. As such, the Court applied the Gershon v. Regency Diving Ctr., Inc., 368 N.J. Super. 237, 248 (App. Div. 2004), four factor test to decide whether the YMCA’s exculpatory clause should be upheld. Finding the exculpatory clause expansive, the Court held that if it were “applied literally, it would eviscerate the common law duty of care owed by defendant to its invitees, regardless of the nature of the business activity involved.” Thus, the Court concluded that the clause “seeks to shield [the defendant] from all civil liability, based on a one-sided contractual arrangement that offers no countervailing or redeeming societal value.” Accordingly, the contract was declared unenforceable as against public policy and the Court reversed the summary judgment and remanded the proceedings.
Walters provides yet another example of the give and take relationship New Jersey courts have with pre-tort waivers and/or exculpatory agreements. In general, New Jersey courts have held these agreements are disfavored under the law and will be subject to close judicial scrutiny. Courts appear to wrestle over the balance between the principals of freedom to contract and the duty to protect individuals from unfair adhesion contracts. In 2005, the Appellate Division invalidated a pre-tort waiver signed by a parent on behalf of a minor child pursuant to the court’s parens patriae duty to protect the child’s best interest. Hojnowski v. Vans Skate Park, 375 N.J. Super. 568 (App. Div. 2005). The Hojnowski Court held that a parent lacks authority to release a minor’s claim without specific statutory or judicial authority on the grounds the rule is necessary to prevent a minor’s rights from being compromised. However, in 2010 the Supreme Court, in its Stelluti decision, upheld a pre-tort waiver that was knowingly signed by an adult who was engaged in non-essential recreational activities. The Stelluti Court held that “public policy does not demand a per se ban against enforcement of an exculpatory agreement based on the mere existence of a duty recognized in the common law in respect of premises liability.” Id. at 306. As such, the Court opined that negligence could be waived, but injuries resulting from gross negligence or recklessness could not. While Stelluti appeared to have temporarily halted the erosion of pre-tort waivers, Walters now reignites the trend.
The immediate import of the Court’s decision in Walters, is that Stelluti will not be expanded to apply blanket exculpatory protection to Defendants who provide facilities where “inherently risky” activities take place. Instead, under Walters, Stelluti has been reined in to provide a limited area of protection for facility owners. Exculpatory and “hold harmless” provisions will only provide protection to facility owners when those utilizing the facilities are injured in the course of engaging in the specific “inherently risky” activities themselves. As for all other ancillary activities, facility owners will be held to the common law business invitee standard. Thus, Walters further erodes a putative Defendant’s ability to shield itself from liability by use of a pre-tort waiver.
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