When you step into a gym or athletic facility or register others for extra-curricular activities, you are typically presented with a waiver that purports to release someone or something from liability in the event of an injury.
But is the waiver you signed or the waiver your clients are using worth anything more than the paper it is printed on?
If the activity is not otherwise covered by a grant of statutory immunity,1 probably not. The Wisconsin Supreme Court has offered considerable guidance on how to draft an enforceable liability waiver, but it appears businesses are not listening.
Wisconsin law does not favor liability waivers, also called exculpatory agreements.2 Exculpatory agreements are strictly construed against the party seeking to rely upon it.3 One or more of the following defects will cause a liability waiver or exculpatory agreement to be unenforceable – if the waiver:
is overly broad;
serves multiple purposes;
does not inform the signator specifically what is being waived;
does not alert the signator to the significance of what is being waived; and/or
does not give the signator an opportunity to bargain for terms other than those presented.
Dear Liability Waivers: Wisconsin Courts Are Not Impressed
The track record for liability waivers in Wisconsin (also called exculpatory contracts) is abysmal.
In the last forty years, the Wisconsin Supreme Court has not found a single exculpatory contract that did not violate public policy and was therefore enforceable.
Despite the history however, exculpatory contracts are ubiquitous in Wisconsin. Which begs the question: Are businesses interested in having valid, enforceable exculpatory contracts, or just having unenforceable signed writings that could possibly discourage an unsophisticated injured person from consulting counsel?
The purpose of this article is to offer suggestions that weigh in favor of an exculpatory contract being enforceable.
Be warned, though – you are facing an uphill battle. As one author recently noted, the case law offers clues but not solutions.4 To date, the Wisconsin Supreme Court has remained steadfast in playing the role of Lucy holding the football for Charlie Brown when it comes to enforcing exculpatory contracts.
The Wisconsin Supreme Court’s Most Recent Holding: Roberts v. T.H.E. Insurance Company
In 2016, the Supreme Court had another opportunity for a kick at its favorite cat. Indeed, prior to the Court’s decision in Roberts v. T.H.E Ins. Co.5, it proclaimed in 2005: “each exculpatory contract that this court has looked at in the past twenty-five years has been held unenforceable.”6
Against this backdrop, the Court considered the form waiver signed by Patti Roberts, an adult who was injured by a runaway hot air balloon while waiting in line.7 The waiver signed by Ms. Rogers read in pertinent part as follows:
I expressly, willing, 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, takeoff, flight, landing, travel to or from the takeoff 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. …8
Reiterating that Wisconsin law does not favor exculpatory agreements, the Court took the waiver in Roberts to task, holding that it violated public policy and was unenforceable as a matter of law.9
Agreeing that the exculpatory agreement covered the activity, the Roberts Court proceeded to a public policy analysis, which the Court described as the germane analysis,10 continuing the trend of Richards, Yauger and Atkins that broader public policy and the “good of the community” outweighs individual parties’ freedom to contract.11
The Court determined that the exculpatory agreement signed by Roberts was overly broad and all-inclusive, reasoning that it would absolve the defendant for any activity for any reason, known or unknown.12
Broad exculpatory language that could include reckless or intentional conduct; i.e., “… all claims, rights, demands, or causes of action, whether known or unknown, suspected or unsuspected …” is fatal.13
Further compounding the Court’s concerns in Roberts was the waiver’s breadth and scope – it was not clear whether waiting in line was something the plaintiff would have contemplated as being covered by the waiver, especially since she was not required to return the waiver before she got into line.14
In addition, the waiver at issue was a standard agreement printed on the defendant company’s form, offering the plaintiff no opportunity to bargain or to negotiate the exculpatory language.15 Stated differently, the waiver was offered on a take-it-or-leave-it basis. Thus, the Court reasoned, the waiver could not be defended on contract principles, as the freedom of contract is premised on a bargain freely and voluntarily made through a bargaining process that has integrity.16
The Roberts Court also found it significant that the defendant did not discuss the content of the waiver with the plaintiff, much less any of the risks associated with ballooning activities or watching others ride.17
Finally, the plaintiff was not asked if she had any complaints or concerns with the waiver, and did not have an opportunity to negotiate the terms.18 Therefore, the Court held that the waiver was void as a matter of law.19
Where Do We Go From Here?
A valid exculpatory contract that withstands appellate scrutiny in Wisconsin may very well prove to be a legal unicorn.
While the Wisconsin Supreme Court has held that exculpatory clauses are not invalid per se,20 it has never seen one that passed muster. Further complicating matters is that there is no set “test” for exculpatory clauses in Wisconsin, leading one commentator to characterize Wisconsin’s method of examination as a “set of ideologies” that do not afford exculpatory clauses a fighting chance.21
The common thread among invalid exculpatory contracts is greedy drafting. For example, rather than release or waive the ability to sue only for physical injury due to negligent conduct, drafters sought to broadly include all conduct, reckless or intentional, giving rise to any injury whatsoever.22 Drafters sought to have the contract perform multiple functions, rather than just serve as a waiver.23 Finally, the drafters did not give the signator the opportunity to bargain or negotiate the terms presented, instead presenting the waiver on a take-it-or-leave-it basis.24
Conclusion: Contracts Should Serve One Purpose, Be Negotiable
In light of their abysmal track record, a drafter should be guided by the K.I.S.S. principle when endeavoring to draft an enforceable exculpatory contract. The contract should serve one purpose and one purpose only: to release liability for physical injury to the signator caused by the negligent conduct of the business or its employees.
The contract must also give the signator the opportunity to bargain over the terms presented.
How to demonstrate the opportunity to bargain is beyond the scope of this blog article. Fifteen years ago, however, in the wake of Atkins v. Swimwest Family Fitness Center,25 Alexander Pendleton proposed an elegant solution to this conundrum in an article entitled, “Enforceable Exculpatory Agreements: Do They Still Exist?”26 If I were drafting an exculpatory contract, I would start there. Good luck.
This article was originally published on the State Bar of Wisconsin’s Litigation Section Blog. Visit the State Bar sections or the Litigation Section web pages to learn more about the benefits of section membership.
1 Equine activities: Wis. Stat. § 895.481; agricultural tourism: Wis. Stat. § 895.524; alpine sports: Wis. Stat. §§ 895.526, 167.33; sport shooting: Wis. Stat. § 895.527; camping: Wis. Stat. § 895.519; and to a real property owner who opens his or her land to the public for noncommercial recreational use: Wis. Stat. § 895.52. Note that statutory assumption of risk principles as set forth in Wis. Stat. § 895.525 and related case law are beyond the scope of this article.
2 Atkins v. Swimwest Family Fitness Ctr., 2005 WI 4, ¶ 12, 277 Wis. 2d 303, 691 N.W.2d 334.
3 Id. (citing Yauger v. Skiing Enters., Inc. 206 Wis. 2d 76, 81, 557 N.W. 2d 60 (1996); Merten v. Nathan, 108 Wis. 2d 205, 210-11, 321 N.W.2d 173 (1982).
4 The Exculpatory Contract and Public Policy, Ralph C. Anzivino, 102 Marq. L.Rev. 747 (Spring 2019).
5 Roberts v. T.H.E. Ins. Co., 2016 WI 20, 367 Wis. 2d 386, 879 N.W.2d 492.
6 Rainbow Country Rentals & Retail, Inc. v. Ameritech Publ’g, Inc., 2005 WI 153, ¶ 35, 286 Wis. 2d 170, 706 N.W.2d 95. Even the dissent noted: “Such [exculpatory] clauses have been, are, and will continue to be looked upon with disfavor.” Id. ¶ 47.
7 Roberts, 367 Wis. 2d 386, ¶ 5.
8 Id. ¶ 9.
9 Id. ¶¶ 58-63.
10 Id. ¶ 13 (citing Yauger, 206 Wis. 2d at 86).
11 Id. ¶ 14 (quoting Merten, 108 Wis. 2d at 213).
12 Id. ¶ 60.
13 Id.; seealsoAtkins, 277 Wis. 2d 303, ¶ 19; Brooten v. Hickok Rehab. Servs., LLC, 2013 WI App 71, ¶ 12, 348 Wis. 2d 251, 831 N.W.2d 445.
14 Roberts, 367 Wis. 2d 386, ¶ 60.
15 Id. ¶ 61.
16 Id. (citing Richards v. Richards, 181 Wis. 2d 1007, 1016, 516 N.W.2d 118 (1994)).
17 Id. ¶ 62.
19 Id. ¶ 63.
20 Atkins, 277 Wis. 2d 303, ¶ 12; Metter v. Nellis, 2005 WI App 73, ¶ 13, 280 Wis. 2d 753, 695 N.W.2d 861.
21 Comment: Against Public Policy: Enforceability of Exculpatory Clauses, 60 S. Tex. L. Rev. 497, 522 (Summer 2019).
22 Richards, 181 Wis. 2d at 1017-18; Yauger, 206 Wis. 2d at 84; Adkins, 277 Wis. 2d 303, ¶¶ 19-20.
23 Richards, 181 Wis. 2d at 1017; Yauger, 206 Wis. 2d at 87; Adkins, 277 Wis. 2d 303, ¶ 18; Brooten, 348 Wis. 2d 251, ¶ 12.
24 Richards, 181 Wis. 2d at 1019; Adkins, 277 Wis. 2d 303, ¶ 18; Brooten, 348 Wis. 2d 251, ¶ 14; Roberts, 367 Wis. 2d 386, ¶ 61.
25 Atkins, 277 Wis. 2d 303.
26Enforceable Exculpatory Agreements: Do they Still Exist?, Alexander Pendleton, Wisconsin Lawyer, Vol. 78, No. 8 (August 2005).