Waiver agreements are exculpatory contracts. Despite the oft-repeated mantra that exculpatory contracts are not invalid per se, the Wisconsin appellate courts have not enforced an exculpatory contract in many years. See Brooten v. Hickok Rehab. Servs., LLC, 2013 WI App 71, ¶ 7, 348 Wis. 2d 251, 831 N.W.2d 445. In fact, in 2005, the supreme court observed that “each exculpatory contract that [the court] has looked at in the past 25 years has been held unenforceable.” Bourne v. Quarles & Brady, LLP, 2013 WI App 128, 351 Wis. 2d 225, 838 N.W.2d 866. An exculpatory contract is disfavored and so will be strictly construed against the party seeking to enforce it. Roberts v. T.H.E. Ins. Co., 2016 WI 20, ¶48, 367 Wis. 2d 386, 879 N.W.2d 492 (citing Atkins v. Swimwest Family Fitness Ctr., 2005 WI 4, ¶ 12, 277 Wis. 2d 303, 691 N.W.2d 334.)
The first inquiry when analyzing an exculpatory contract is whether the contract language is broad enough to cover the activity at issue. If it is not, then the contract does not apply in the first instance, and the analysis ends. If the contract is broad enough to cover the activity at issue, then the contract is subjected to a public policy analysis. Id. For all practical purposes, every case that has considered an exculpatory contract has been resolved on public policy grounds. Courts consider and weigh several public policy factors when analyzing an exculpatory contract. It is unclear whether a single public policy factor, standing alone, is enough to invalidate an exculpatory contract, or whether some combination of factors is required; the supreme court itself reached conflicting results in earlier cases.
The appellate courts have applied various public policy considerations over the years to determine whether exculpatory language is barred by public policy. In Atkins, a woman drowned while swimming in a four-foot-deep lap pool with a lifeguard on duty. Her minor son brought a wrongful death action, alleging negligent operation of the pool. Prior to entering the pool, the decedent had signed a Guest Registration card which included the following Waiver Release Statement:
I agree to assume all liability for myself without regard to fault, while at Swimwest family fitness center. I further agree to hold harmless Swimwest fitness center, or any of its employees for any conditions or injury that may result to myself while at the Swimwest fitness center. I have read the foregoing and understand its contents.
Id., ¶ 4.
The “Guest Registration” portion of the card consisted of some blank lines for the guest to fill in their personal information, such as name and address, immediately above the quoted “Waiver Release Statement.” A single signature line appeared immediately below the Waiver Release Statement. Every word in the form, including the questions in the short Guest Registration section, was capitalized. The phrase, “Waiver Release Statement” was also in boldface. Every word in the document was capitalized. The supreme court applied several public policy considerations to find that the Waiver Release Statement was unenforceable.
In Roberts, a woman was injured by a hot air balloon basket after the tether line securing it had snapped during high winds. The hot air balloon was tethered to the ground by three lines at a charity event. The balloon operator would take up to the length of the tether then back to the ground. Ms. Roberts decided she would like to go for a ride and got in line to do so. While in line, she was given a liability waiver form to review and sign. She did so and remained in line for 20-30 minutes before the accident occurred. The liability waiver included the following:
I expressly, willingly, and voluntarily assume full responsibility for all risks of any and every kind involved with or arising from my participation in hot air balloon activities with Company whether during flight preparation, take-off, flight, landing, travel to or from the take-off or landing areas, or otherwise.
Without limiting the generality of the foregoing, I hereby irrevocably release Company, its employees, agents, representatives, contractors, subcontractors, successors, heirs, assigns, affiliates, and legal representatives (the “Released Parties”) from, and hold them harmless for, all claims, rights, demands or causes of action whether known or unknown, suspected or unsuspected, arising out of the ballooning activities . . . .
Like Atkins, the Roberts court found the liability waiver unenforceable on several public policy grounds.
A. Breadth and Clarity of Intent
One key public policy consideration is whether the contract is worded so broadly that it may apply to damages caused by reckless or intentional acts. A waiver of liability for an intentional act is invalid as a matter of law on public policy grounds. Atkins, ¶ 19; see also Merten v. Nathan, 108 Wis. 2d 205, 212, 321 N.W.2d 173 (1982). Significantly, the fact that the injured party claims only negligence does not appear to impact the analysis. If the contract is worded so broadly that it could apply to intentional wrongdoing, it will be interpreted as doing so (i.e., interpreted against the party seeking to enforce it) even where no claim of intentional wrongdoing is made. Id.
While no court has explicitly held that an exculpatory contract must use the word “negligence,” “we consider that it would be very helpful for such contracts to set forth in clear and express terms that the party signing it is releasing others from their negligent acts.” Id., ¶ 20, quoting Dobratz v. Thomson, 161 Wis. 2d 502, 525, 468 N.W.2d 654 (1991).
Also as part of this consideration, the courts will assess whether it is possible to determine from the contract language precisely what the contracting parties contemplated; specifically whether, in light of all the circumstances, it can be said that the specific accident which happened was within the contemplation of the parties when they signed the agreement. Id., ¶ 21.
The Atkins court held that the exculpatory clause, and in particular the use of the vague word “fault,” was broad enough to cover reckless or intentional acts even though the plaintiff was not alleging reckless or intentional conduct. Id., ¶¶ 19-20.
The court also held that the exculpatory language was so broad that it was difficult to determine what precise risks the parties had contemplated would be waived. While the risk of drowning while swimming seems obvious (and the court acknowledged as much), “Wilson likely would not have contemplated drowning in a four-foot deep pool with a lifeguard on duty, when she signed the guest registration and waiver form. The question is not whether swimming carries with it the risk of drowning, but rather whether Wilson, herself, likely contemplated that risk.” Id., ¶ 22.
In Yauger v. Skiing Enters., 206 Wis. 2d 76, 557 N.W.2d 60, an 11-year old skier was killed when she struck a concrete ski lift tower pylon. Prior to the ski season, her father signed an “application” for a season family lift ticket. Id. at 79. The application stated: “I agree that  [t]here are certain inherent risks in skiing and that we agree to hold [the ski resort] harmless on account of any injury incurred . . . on the [ski resort] premises.” Id. at 79. “Inherent risks” and “premises” were not defined. Id. at 84-85. The Yauger court unanimously concluded that the agreement was void as against public policy because: (1) it failed to clearly, unambiguously, and unmistakably explain to the signatory that he was accepting the risk of Hidden Valley's negligence; and (2) the form when considered in its entirety failed to alert the signer to the nature and significance of the document being signed. Id. at 78.
B. Whether the Contract Provides Adequate Notice of Its Nature and Significance
A second important consideration is whether the format and appearance of the exculpatory language provides adequate notice to the person who signs it that s/he is waiving legal rights. Many of the exculpatory contracts the courts have considered serve two purposes, e.g., the exculpatory clauses are included within a single document which also serves as a guest registration form, for example, with only one signature line appearing on the document.
This was the case in Atkins, where the guest registration information and the Waiver Release Statement were both included on a small card with a single signature line. The court concluded that “the exculpatory language appeared to be part of, or a requirement for, a larger registration form.” Id., ¶ 23. “The waiver in this case could have been a separate document, providing Wilson with more adequate notice of what she was signing. Also, a separate signature line could have been provided, but was not. ‘Identifying and distinguishing clearly between those two contractual arrangements could have provided important protection against a signatory's inadvertent agreement to the release.” Id. (citing Richards v. Richards, 181 Wis. 2d 1007, 1011, 513 N.W.2d 118 (1994)).
Significantly, the court so held despite extraneous evidence that the decedent (who was a physician) was also verbally told about the waiver language by a pool employee, and that the decedent actually took the time to read the entire form. Id., ¶ 25.
Courts also consider whether the exculpatory language is sufficiently conspicuous to put the party signing on notice of its existence; e.g., whether the language is set off by virtue of its size, font, or color, and again whether a separate signature line is provided for the exculpatory language. Id., ¶ 24. The exculpatory language in Atkins was not conspicuous enough because all the language on the form, including the guest registration language, was capitalized
C. Opportunity to Bargain
The face of the exculpatory contract must also reflect an opportunity for the person to bargain over its terms. Id., ¶ 25. Again, the fact that the person is given the opportunity to read the form and to ask questions about it is not sufficient; “[t]he form itself must provide an opportunity to bargain.” Id. The Waiver Release Statement in Atkins did not satisfy this concern: “Wilson was without an opportunity to negotiate in regard to the standard exculpatory language used in the form. She was forced to either sign the form or not swim at Swimwest.” Id., ¶ 26.
Similarly, the Richards court held that the contract was void as against public policy because, among other reasons, the release was in a standardized agreement printed on the Company's form, offering little or no opportunity for negotiation or free and voluntary bargaining. Richards, 181 Wis. 2d 1007, 1011.
D. Other Cases
Applying the public policy considerations from Atkins, the court of appeals invalidated an exculpatory clause in a case involving injuries arising from equipment failure at a health club. Brooten v. Hickok Rehab. Servs., LLC, 2013 WI App 71, 348 Wis. 2d 251, 831 N.W.2d 445. The plaintiff in Brooten was severely injured when a weight bench he was using failed. He had signed a very lengthy and detailed “Waiver and Release of Liability” form when he joined the club.
The form, which was over one full page long, appeared to have been written to specifically address the concerns raised in Atkins and related cases. First, the Waiver and Release of Liability form stood alone; it was not joined to a registration or membership application form, so on its face it served just one purpose. Second, the form made specific reference to waiver of liability based upon the negligence of the club employees or of anyone else. Third, the form explicitly referenced waiver of claims for injury caused by “equipment failure.” Fourth, while the bulk of the form was in plain type, the title, “Waiver and Release of Liability”, was in boldface and underlined, and the final sentence immediately above the signature line [“I have read the above waiver and release and by signing it agree it is my intention to exempt and relieve Chetek Fitness 24/7 from liability for personal injury, property damage or wrongful death caused by negligence or any other cause”] was in all caps. Id., ¶ 4.
The court of appeals nevertheless held that the exculpatory language was void and unenforceable, because a) it was presented on a take-it-or-leave-it basis, with no opportunity to bargain; b) it was impermissibly broad and all-inclusive, since even though it specifically referenced negligence, it also at other points referenced “negligence, accidents, breaches of contract, or other causes” (emphasis added), and so was broad enough to include intentional acts, even though the plaintiff was only claiming negligence; c) it included not only a waiver of liability but also a requirement that the claimant defend and indemnify the club from any and all claims; and d) the “defend and indemnify” language was not highlighted but was instead buried in the body of the form.
The court of appeals focused on a perceived lack of clarity to void an exculpatory clause in the unpublished case of Cass v. Am. Home Assur. Co., 2005 Wisc App LEXIS 408. The plaintiff in Cass was injured on a ski hill when an employee of the ski club struck him with a snowmobile while driving up the hill to investigate reports that some young people were building ski jumps. The release of liability language stated that it applied to all risks “with respect to the design, construction, inspection, maintenance, or repair of the conditions on or about the premises or facilities, including equipment or the operation of the ski area, including but not limited to grooming, snow making, trail design, ski lift operations, including loading and unloading, conditions on or about the premises, and conditions in or about the terrain park including man made features, or my participation in skiing, snow boarding, or other activities in the area . . ..” Id.
After criticizing this seemingly very specific and detailed language for being a run-on sentence which lacked clarity, the court focused on the specific nature of the employee's activity at the time the accident occurred.
The release says nothing about Granite Peak's monitoring other users on the hill or the possibility of snowmobiles or other maintenance vehicles operating against the flow on active ski hills. . .. Granite Peak insinuates the employee went to “inspect conditions on Granite Peak premises.” Granite Peak's argument is based on a strained, non-contextual argument of the release.
We acknowledge that, if the jumps present a danger to other users, Granite Peak likely has an obligation to remove them. But the employee testified he was on his way to investigate the users, not to inspect the condition of the ski hill. We do not believe the two activities are necessarily synonymous. While this might be viewed as splitting definitional hairs . . ., we see nothing implicit in the release that covers either the negligent monitoring of other patrons or negligent use of the snowmobile.
Cass's very strict application of the “lack of clarity” prong of the public policy inquiry seems to effectively compel drafters to anticipate and enumerate not only every conceivable risk that may give rise to injury, but every alternative manner in which that risk may be articulated.
One of the few cases where an exculpatory release was upheld is Werdehoff v. Gen'l Star Indem. Co., 229 Wis. 2d 489, 600 N.W.2d 214 (Ct. App. 1999), where the plaintiffs were injured racing motorcycles at Road America after they crashed on an oil slick, which they alleged was present due to negligent maintenance of the track. The court held that the negligence claims were barred by an exculpatory release the plaintiffs had signed before racing.
However, while the contract in Werdehoff satisfied some of the public policy considerations applied in later cases like Atkins(e.g., it was on a single piece of paper that did not serve any other function, and key words and phrases were capitalized), it did not satisfy all of them and likely would not be enforced today. For example, while the Werdehoff contract referenced the release of all claims for negligence several times, it also purported to release claims for injury “whether caused by the negligence of the releasees or otherwise.” Id., n. 3. Under current law, this would likely be deemed overly broad because it could encompass claims of intentional wrongdoing. Further, the contract appeared on its face to be take-it-or-leave-it; if the plaintiffs did not sign it, they could not race on the track. The court made no reference to the lack of an opportunity to bargain, which is one of the key considerations under current interpretation.
Given the chilling effect of these rulings, there appears to be little desire by drafters to pursue their waiver agreements in court rendering them worthless. However, it is impossible to know how many potential litigants are dissuaded from pursuing their case after reviewing the contract they signed before injury.
 Without explicitly acknowledging it was doing so, the court of appeals in Cass voided the waiver language based on that single public policy consideration. The court did not even discuss any of the other recognized considerations.
There are no comments for this post. Be the first and Add your Comment below.
Leave a Comment