The Wisconsin Supreme Court issued a decision this week that is likely to have a profound effect on businesses and their insurers that rely on standard releases or waiver of liability forms in order to limit the exposure associated with activities engaged in by the insured’s customers. This alert summarizes the decision and concludes with guidelines to follow in reviewing a release or waiver form for potential enforceability issues.
In Atkins v. Swimwest Family Fitness Center, 2005 WI 4, the family of Dr. Charis Wilson brought a wrongful death action against Swimwest after the doctor drowned while using Swimwest’s four foot deep lap pool. At the time she first attended Swimwest, Dr. Wilson was given a guest registration card that contained the following waiver release statement:
I AGREE TO ASSUME ALL LIABILITY FOR MYSELF WITHOUT REGARD TO FAULT, WHILE AT SWIMWEST 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.
Dr. Wilson signed the guest registration and waiver release statement without asking any questions. Before entering the pool, Dr. Wilson advised the staff she did not need any assistance in getting into the water. It was also established that Dr. Wilson knew how to swim and was seen by staff swimming in the pool before her death.
Because Dr. Wilson signed the waiver release statement, the trial court dismissed her family’s lawsuit. Specifically, the trial court held that the waiver constituted a valid exculpatory provision, releasing Swimwest from all liability.
The Wisconsin Supreme Court reversed the trial court, however, holding the release unenforceable because it was against public policy. The Court cited the following reasons for its decision: 1) the release was overbroad and all-inclusive; 2) the guest’s waiver of liability was insufficiently highlighted; and 3) the guest did not have the opportunity to bargain over the terms of the release. Because the release was invalid, the doctor’s family was allowed to pursue its wrongful death claim against Swimwest.
The Court’s analysis started with the proposition that waivers of liability are not favored under Wisconsin law and will be construed against the party drafting them. Despite this disfavored status, waivers of liability have generally been upheld in Wisconsin. The standards that govern those forms that will be enforced and those that will be rejected, however, have not been clearly articulated.
Releases of liability are reviewed for validity under two bodies of law, contract law and public policy. Under contract law, the primary question is whether the activity in question was covered under the terms of the release. Most recently, contract law analysis has been supplanted by public policy analysis. Public policy is a very broad and discretionary concept that focuses on the court’s perception of, "the good of the community."
The release was considered defective, in part, because it failed to define the term "fault." Although the term "fault" is frequently associated with the concept of "negligence," the Court was unwilling to make that correlation. A release is overbroad and unenforceable if it attempts to release the drafting party from its own intentional or reckless misconduct. This rejection of very broad release language is problematic for insureds because, as a release becomes limited only to very specific risks, the overall utility of the release diminishes accordingly.
The release was also criticized because it served as a guest registration, as well as a release, and did not sufficiently highlight the release portion of the document from the guest registration portion. It is worth noting that the entire card in question was only 5 ½ inches by 5 ½ inches in size. The guest registration portion of the card consisted of only a number of lines of identifying guest information.
The Court held that affording the customer the option of either signing the release or not using the facility is not considered a sufficient opportunity to "bargain". The language used by the majority suggests that an opportunity to bargain is now a required element of a valid waiver of liability. The absence of an opportunity to bargain over release language is an almost universal feature of how standardized release forms are used in modern commerce.
It is possible that a more carefully drafted release form will withstand judicial scrutiny in the future. However, the broad language used by the Court in invalidating Swimwest’s release form makes that outcome a difficult one to predict, or rely on, with any degree of confidence. The dissenting justice, Justice Wilcox, predicted that the Court’s decision will make it virtually impossible to enforce any exculpatory agreement in Wisconsin. Justice Wilcox went on to note the decision’s burden on businesses desiring to, "conduct their affairs in an orderly fashion."
The Atkins decision has created considerable uncertainty over the future enforceability of any waiver of liability agreement. In reviewing standard form releases for their potential enforceability, the following guidelines will, at least, increase the odds that a waiver of liability will be upheld on review:
- The guest/customer should be asked to sign a separate release document that does not contain unrelated contractual provisions.
- The specific risks that the customer agrees to assume and the consequences of assuming those risks should be identified as clearly as possible.
- The risks that the customer agrees to assume must be ones that result from negligent, and not intentional or reckless conduct
- The operative language releasing the insured from possible liability should be clearly spelled out and highlighted, if possible.
- Although potentially quite impractical, the guest/customer should be afforded some opportunity to comment on and/or object to the language of the release or alternatively, to specifically waive any objections to the language of the release.
One of the concurring justices, Justice Roggensack, criticized the broad language used by the Court in requiring an opportunity to bargain.