A patron's fall off a stationary bike meets a court's support of waiver protection for clubs.

Why do courts in some jurisdictions fail to uphold waivers, while other courts will accept them in most cases? Often, the reason is a belief that waivers encourage a lack of care. As a result, a court will closely scrutinize and invalidate a waiver if it is found to violate public policy or is overly broad, or if it is clear that the individual signing the document did not understand what he or she was signing.

"What represents a reasonable standard of care?" was a question raised in Stelluti v. Caspenn Enterprises, d/b/a Powerhouse Gym [408 N.J. Super. 435; 975 A.2d 494 (2009)], with the key issue being whether the waiver signed by the plaintiff mitigated or eliminated altogether the defendant's duty of care.

On the morning of Jan. 13, 2004, Gina Stelluti arrived at the Powerhouse Gym and enrolled as a new member. After paying her first monthly fee and signing all necessary paperwork, including an exculpatory agreement, Stelluti enrolled in a group cycling class. Having never attended a group cycling class before, Stelluti informed the instructor of her inexperience. The instructor advised Stelluti to watch her during the class and, in preparation, strapped Stelluti's feet into the pedals of a stationary bike and adjusted her seat. The bike's seat adjusted both horizontally and vertically, while the handlebars were designed to be moved up or down in set positions using a threaded, spring-loaded snap-pin that automatically settled in the next hole in the handlebar stem.

When class began, Stelluti started pedaling in a seated position. After a short while, the instructor told the class to assume a standing position. As Stelluti got out of her seat, the handlebars came off the bike and she fell to the floor, sustaining an injury that caused permanent chronic pain in both her upper and lower extremities, as well as her neck.

In addition to suing the bike manufacturer for product liability (the two parties settled out of court), Stelluti sued Powerhouse for negligence in failing to properly maintain and set up the stationary bike, and for failing to properly instruct Stelluti in its use. Powerhouse moved for summary judgment, arguing that Stelluti's claims against the club were barred under the exculpatory agreement that she signed when she joined the club. Stelluti, however, argued that the waiver should be held void because she did not read the document before she signed it and, she claimed, no one actually told her that she was signing an exculpatory agreement. In granting Powerhouse's motion for summary judgment, the court ruled that the exculpatory agreement was unambiguous and enforceable. The court also found inconsequential Stelluti's claim that she did not read or understand the agreement when it was presented to her.

Stelluti appealed to the Superior Court of New Jersey, Appellate Division, and argued that the exculpatory agreement was adhesive (meaning imbalanced in favor of one party over the other, with the implication that it was not freely bargained) against public policy and unenforceable. In addition, Stelluti argued that Powerhouse's acts and omissions in allowing her to use dangerous equipment on its premises rises beyond ordinary negligence and should be regarded as gross negligence, or some other more severe form of conduct.

The court began its analysis by stating that if there were no exculpatory agreement, there would be no question that Powerhouse owed a duty of care to invitees such as Stelluti who come onto its premises. This duty of care, the court ruled, flows from the notion that Powerhouse and its employees were in a superior position to ensure that the facility and equipment on site were in a reasonably safe condition. Accepting, therefore, the underlying proposition that Powerhouse owed a duty of care to patrons such as Stelluti, the court ruled that the pivotal question was whether the exculpatory agreement eliminated that duty.

In reviewing the exculpatory agreement, the court noted that it was a preprinted form prepared by Powerhouse and was one of several documents executed by new members or guests of the club. The agreement covered two full pages and was labeled as a "Waiver & Release Form" in a larger font at the top of its first page. The court noted (negatively) that there were no places designated for a patron to initial any particular sections of the form, apart from the signature line on the bottom of the second page. Finally, the court noted that as a practical matter, any exculpatory agreement is a non-negotiable document or a contract of adhesion. Anyone who declines to sign the form would be prohibited from using the facility.

However, the court ruled, not all contracts of adhesion are unenforceable. In reviewing the exculpatory agreement used by Powerhouse, the court held that even though it had some concerns about Stelluti's allegations that no Powerhouse staff member provided an oral explanation of the agreement when it was presented to her for her signature, the court ruled that there was no doubt that the exculpatory agreement covered Stelluti's accident. Moreover, the court continued, even though the law does not typically favor exculpatory agreements because they encourage a lack of care, providing health clubs with the protection of a waiver agreement benefits the public at large. Without such insulation from lawsuits, health clubs faced with potentially large financial exposures for any injuries that inevitably will occur on their premises, even in the best-maintained and safest clubs, will be forced to raise their member fees to exorbitant levels - or even worse, be forced out of the marketplace altogether.

As Stelluti illustrates, a waiver can be an effective tool in insulating a health club from ordinary negligence. However, it is important for club administrators to remember that waivers do not shield their businesses from more extreme conduct such as reckless, willful or intentional acts that diminish the safe condition of its equipment or facility. If Powerhouse, or any other fitness club, sharply deviated from ordinary standards of care, public policy would dictate that any exculpatory agreement in use be held void.

While Powerhouse's omissions did not end up hurting the club, things could easily have gone the other way. In short, it is essential that organizations follow proper procedures when using waivers. Ideally, the document should be one page long and, like Powerhouse's, clearly titled. In addition, when asking members or guests to sign a waiver, a club must make certain that the people waiving their right to sue know what they are signing.