Liability Waivers are not a Silver Bullet

Increasingly, it seems people have by-and-large socially distanced themselves from social distancing. As once-empty establishments, events and streets refill with people, the threat of coronavirus nevertheless looms and, with it, the inevitable considerations of potential liability.

Americans venturing out to salons and gyms after sheltering in place are being met with a new ritual: signing away their right to sue. Gyms, hair salons, theme parks, dentists and others are asking patrons to sign liability waivers. Coronavirus waivers are even required for would-be lawyers taking the July bar exams in Mississippi and North Carolina. Though some in Congress are contemplating shielding businesses from coronavirus-liability, we predict that waivers of liability will increasingly become the new normal as long as the pandemic continues and perhaps beyond.

So much so that President Donald Trump’s campaign is requiring rally-goers to agree to a waiver in which they agree not to sue the campaign if they contract the virus at a planned Trump rally in Tulsa, Oklahoma. The disclaimer goes on to warn that attending Trump’s rally, attendees and their guests “voluntarily assume all risks related to exposure to COVID-19” and agree not to hold the Trump Campaign, and a slew of other related parties, “liable for any illness or injury.”

This piqued our curiosity, so we wrote up this analysis in which we discuss the laws regarding waivers of liability — generally — and whether the Trump waivers of liability are likely to hold up, specifically (spoiler alert: not really).

What is a waiver?

Waivers are unusual legal creatures that sit at the juncture of two different areas of law — torts and contracts. Tort law is the law of negligence and defines what we owe to each other in everyday life. So, for example, texting while driving is considered grossly negligent. Likewise, businesses are considered negligent when they expose their customers to additional risk, like if they left a banana peel on the floor, or serve unreasonably hot coffee.

Contract law, on the other hand, is about an agreement between two or more people in which there is some form of bargained exchange. A waiver is a contract that puts tort law out of reach. In a typical waiver, you agree that you will not sue another person or business for negligent behavior, or acknowledge that certain activities are inherently risk and that you “assume the risk” of injury or death. If you’ve ever gone to a ball game, taken a cruise, attended an amusement park or gone skiing, you have probably signed some sort of waiver.

Waivers are a matter of state law, which vary widely, and have no single federal law governing them. Some states approach waivers with a “freedom of contract” stance, on the notion that people should have the freedom to agree to whatever they like. In most states, Courts will enforce liability waivers so long as they meet a few certain requirements. In fact, only Connecticut, Montana and Virginia have refused to enforce liability waivers. Louisiana joins Montana and Virginia in categorically refusing to enforce waivers of personal injury claims.See Hiett v. Lake Barcroft Cmty. Ass’n, Inc., 244 Va. 191, 195 (1992); Mont. Stat. § 28-2-702; La. Civ. Code art. 2004.

But even in states that subscribe to a “freedom of contract” perspective, there are limits. Courts generally decline to enforce waivers when the conduct was egregious, like intentional harms or gross negligence. Courts will also strike down waivers if they consider the agreement to be too one-sided or harmful to the public. For instance, a waiver printed on an injured snowboarder’s lift ticket was struck down, as the Court noted the public interest in ensuring ski hills design their jumps with safety in mind.

What determines a waiver’s enforceability?

As mentioned, in most states, courts will routinely enforce liability waivers that insulate a party from liability arising out of that party’s negligent conduct. For example, courts regularly enforce waivers for negligence claims arising from attendance and/or participation in certain events.See, e.g., Grabill v. Adams Cty. Fair & Racing Ass’n, 666 N.W.2d 592 (Iowa 2003) (enforcing liability waiver for event promoter of an automobile race); Rose v. Nat’l Tractor Pullers Ass’n, Inc., 33 F. Supp. 2d 757, 759 (W.D. Wis. 1998) (enforcing liability waiver for tractor pull competition); Mero v. City Segway Tours of Washington DC, LLC, 962 F. Supp. 2d 92 (D.D.C. 2013) (enforcing liability waiver for tour company).

States look to various factors to determine whether waivers should be enforced. Commonly, these includes:

1.  The waiver must be clear and unambiguous.
Generally, this requires two criteria. The waiver must clearly, unambiguously, and unmistakably inform the signer of what is being waived. Second, the waiver — looked at in its entirety — should alert the signer to the nature and significance of what is being waived.See, Rose v. Nat’l Tractor Pullers Ass’n, Inc., 33 F. Supp. 2d 757, 764 (W.D. Wis. 1998). See also, Bender v. CareGivers of Am., Inc., 42 So. 3d 893, 894 (Fla. Dist. Ct. App. 2010) (reversing grant of summary judgment for provider of home health aide services where release did not include the term “negligence” because “an exculpatory agreement must expressly include the term ‘negligence’… to be clear and unequivocal.”).

2.  No waiver for intentional, reckless or grossly negligent conduct.
Most states will not enforce waivers of liability for intentional, reckless or grossly negligent conduct.Restatement (Second) of Contracts § 195 (1981). This means a party is not protected by a liability waiver if, for instance, it engaged in fraud or conduct that was grossly negligent.

3.  Waivers contrary to public policy or unconscionable are not enforced.
Even if liability waivers are clear and unambiguous, they may still be deemed contrary to public policy and therefore unenforceable. The seminal case regarding the public policy rule is Tunkl v. Regents of the University of California which courts across the country routinely cite for their application of the rule. In Tunkl, the court concluded that exculpatory agreements violate public policy if they affect the public interest adversely and identified six factors (Tunkl factors) relevant to this determination.Tunkl v. Regents of the University of California, 60 Cal. 2d at 98-101. The six factors are:
[1] [The agreement] concerns a business of a type generally thought suitable for public regulation.
[2] The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public.
[3] The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards.
[4] As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services.
[5] In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence.
[6] Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents.

Should I utilize a liability waiver for my business?

The short answer, while industry dependent, is generally yes, but you should understand that the enforceability of coronavirus-related liability waivers are far from certain. As such, they should not be relied upon like some sort of miracle elixir. We suggest our clients develop concrete strategies and implement policies that are compliant with the Center for Disease Control and Prevention (the CDC), the World Health Organization (WHO), and Occupational Safety and Health Administration (OSHA) guidelines.

How effective is the Trump rally waiver?

Applying our analysis to the news that the Trump Campaign will be requiring rally-attendees to agree to a waiver of liability, we start at the states the campaign intends to hold rallies in: namely, Oklahoma, Texas, Florida, and North Carolina. In each of these four states, liability waivers are generally enforceable.

One Note: we’re specifically analyzing the strength of the liability waiver and not the strength of a coronavirus lawsuit against the campaign. One big issue remains the difficulty of proving causation; namely, how does a plaintiff prove they caught the coronavirus at the Trump rally and not, say, the burger joint they ate at afterwards?

1.  Oklahoma
Oklahoma law upholds the validity of liability waivers as long as they’re clear, unambiguous and would not be injurious to public health, morals or against public policy.Schmidt v. U.S., 912 P.2d 874 (Okla. 1996).

The language of the waiver is probably clear/unambiguous enough, though an argument can be had that it is overly broad and lacks the requisite specificity to pass the test. However, we think the Trump liability waiver might run into issues when it is subjected to a test of whether or not its enforcement would be injurious to public health or against public policy. Furthermore (and this will be a recurring theme in our analysis) — by tailoring language that focuses on the “inherent risk” of public places, the waiver of liability leaves a big opening for allegations of negligence.

2.  Texas
Texas law requires a waiver of liability to comply with fair notice doctrines, which in turn requires a showing of conspicuousness and express negligence.See, Enserch Corp. v. Parker, 794 S.W.2d 2 (Tex. 1990). The express negligence doctrine requires that the intent be specifically stated in the four corners of the contract. Conspicuousness requires it appearing in larger type, contrasting colors or otherwise calling attention to itself.

We think the liability waiver is weak on both fronts. The language speaks to an “inherent risk of exposure to COVID-19” — and not any negligence on part of the Trump campaign. So, for instance, an argument may be made that the campaign’s negligence increased the inherent risk, and is therefore actionable. Secondly, there is a possible argument that the text is not as distinct and conspicuous as may be required.

3.  Florida
Florida holds liability waivers as valid if the intention is clear and unequivocal and the wording is so clear and understandable that an ordinary party will know what he is contracting away.See, Brooks v. Paul, 219 So.3d 886 (Fla. Dist. Ct. App. 2017).

It’s a bit unclear here. What liability is a rally-attendee waiving, exactly? If it’s just the “inherent risk of exposure to COVID-19 [which] exists in any public place where people are present,” then the wording is clear and understandable. However, what if the campaign could enact social distancing policies within the event center, but declined to do so? Should they utilize temperature guns and hand out PPE like masks? These are the sorts of factors inherent to an analysis of negligence, and we think this waiver of liability is weak to an argument of negligence.

4.  North Carolina
The State of North Carolina holds liability waivers valid, except where it violates a statute, inequality of bargaining power, or is contrary to a substantial public interest.See, Fortson v. McClellan, 508 S.E.2d 549 (N.C. Ct. App. 1998). Seen through this lens, the waiver is weak to both allegations of negligence, as well as an analysis of whether it is contrary to substantial public interest.

Endnotes