A contract with an arbitration provision is held valid, giving waiver users even more security.
As nearly everyone knows by now, in most states a well-written waiver, signed by an adult, can be an effective tool in protecting fitness and recreation providers from negligence liability. What is not so clear, however, is what happens when such waivers are entered into by a minor, or ratified by his or her parent on his or her behalf. The reason minors present such a difficult case is because as a general rule, minors can, before they reach adulthood, disaffirm any contract into which they enter. Since this general rule is not altered by a parent's signature, contracts involving minors are only enforceable if approved by a court. A good example of some of the issues raised at the place where minors and waivers intersect is Hojnowski v. Vans Skate Park [187 N.J. 323; 901 A.2d 381 (2006)]. Andrew Hojnowski was 12 years old when he was injured while skateboarding at a Moorestown, N.J., facility operated by Vans Inc. During one of Andrew's previous visits to the skate park, Andrew's mother had executed a release on Andrew's behalf. The release, which Vans required everyone to sign before being allowed to enter the skate park, contained a clause agreeing to submit any claims against Vans to arbitration, as well as provisions limiting Vans' liability for injury. On the day of his injury, Andrew suffered a fractured femur when he was forced off a skateboard ramp by another skateboarder. Andrew and his parents, believing that Vans was negligent for failing to provide proper supervision and to warn of the dangers posed by other skateboarders, filed a lawsuit. In their lawsuit, the Hojnowskis argued that the pre-injury release and arbitration provision signed by Andrew's mother should be invalidated based on New Jersey public policy. In examining the document signed by Andrew's mother, the trial court held that the agreement was valid, and that the Hojnowskis were bound by the waiver's arbitration provision. Similarly, the trial court concluded that the issue of the release's validity should, itself, be determined by the arbitrator. On appeal, the appellate court also unanimously voted to uphold the arbitration provision. That court, however, determined that a pre-injury release of liability executed by a parent on behalf of a minor child violated public policy and was, therefore, unenforceable. The Supreme Court of New Jersey began its analysis by noting that exculpatory agreements have long been disfavored in the law because they encourage a lack of care. For that reason, such agreements must be closely scrutinized and will be invalidated if they violate public policy, particularly when injuries result from intentional or reckless conduct. In the present case, the court found that the release signed by Andrew's mother violated the state's public policy of protecting individuals unable to care for themselves. In support of its finding, the court noted that the New Jersey Legislature and courts have historically afforded considerable protections to the claims of minors. Those public policy concerns, the court held, are even more acute when dealing with commercial facilities. As noted by the court, business owners owe people invited onto their property a duty to provide a safe environment. The theory behind this duty is that business owners are in the best position to control the risk of harm. Since the facility operator is in the best position to inspect the premises for unsafe conditions, train his or her employees with regard to the facility's proper operation and regulate the types of activities permitted, the court held that it was only reasonable that the risk of loss should fall on them. In addition, facility operators are in the position to reduce their risk by obtaining insurance and spreading the cost among its customers. Minors, on the other hand, are not in a position to discover hazardous conditions or insure against those risks. The court also found that there is an expectation among users of commercial facilities that the facility will be reasonably safe for the purpose for which it was intended and which is within the scope of the invitation. This is especially important, the court ruled, when the facility's patrons are minors. While recognizing that not all jurisdictions agree about whether such waivers are invalid, the Supreme Court of New Jersey noted that its decision to invalidate the release was in line with the overwhelming majority of other jurisdictions. In addition, the court found that even in those jurisdictions in which such agreements have been upheld, the majority of cases involved noncommercial ventures, such as volunteer-run or nonprofit organizations. As for the validity of parental liability releases in non-commercial settings, the court refused to offer an opinion. The court did note, however, that volunteer, community and nonprofit organizations involve different policy considerations than those associated with commercial enterprises. Such a distinction, the court found, was supported by the fact that the state Legislature has granted civil immunity from negligence to certain volunteer athletic coaches, managers, officials and sponsors of nonprofit sports teams, while not providing similar immunities from negligence in the commercial realm. Accordingly, in view of the legal protections that the state has historically afforded to minors and the need to discourage negligent activity on the part of commercial enterprises that attract children, the court ruled that a parent's execution of a pre-injury release of a minor's future tort claims arising out of the use of a commercial recreational facility was unenforceable. Having determined that a parent may not bind a minor to a pre-injury release, the court next examined whether a parent could bind a minor to an agreement to arbitrate future disputes. The Hojnowskis argued that although arbitration is an approved alternative to a jury trial, an unsophisticated parent should not be permitted to waive the right of his or her child to a trial by jury. Vans, however, argued that the Hojnowskis should be bound to submit the case to arbitration because public policy favors the arbitration of disputes. In ruling that a parent could bind his or her child to an agreement to arbitrate future disputes, the court found that both New Jersey and federal policy have favored the enforcement of arbitration agreements for many years. In distinguishing the arbitration clause from a pre-injury release clause, the court found that such agreements do not require a minor to forego any substantive rights. An arbitration agreement only specifies the forum for resolution of the claim; it does not extinguish the claim. Arbitration clauses requiring a minor to submit his or her claim to arbitration, the court found, are also consistent with case law in New Jersey and other jurisdictions. Therefore, in the absence of any allegations relating to fraud, duress or unconscionability in the signing of the contract, and finding that the agreement to arbitrate was written in clear and unambiguous terms, the court concluded that a parent's agreement to arbitrate is valid and enforceable against any tort claims asserted on a minor's behalf. While the Supreme Court of New Jersey's decision in Hojnowski is important to commercial fitness and recreation providers, it is interesting for two other reasons. First, the court noted that volunteer, community and nonprofit organizations are bound by different policy considerations than commercial fitness and recreational facilities. Therefore, while the court refused to express an opinion on the validity of waivers in noncommercial settings, it would seem that the use of waivers in a noncommercial setting might still be allowed. A second important element of the decision is that the court upheld the arbitration provision in the release, which it in essence said constituted a choice of forum. This ruling is important because the arbitration process offers fitness and recreation providers a quick and inexpensive alternative to the courts for solving all types of disputes.