Health Club Waiver Invalidated After Sauna Fire

Regular readers of AB already know that for a court to uphold a waiver, it must be written properly. As a general rule, for the courts to enforce a waiver or exculpatory clause, the document must not only inform the party giving up his or her legal rights of the risks involved in membership or participation in activities, but also show that the decision to enter into the agreement was made voluntarily, intelligently and with the full knowledge of its legal consequences.

A good illustration of the analysis used by the courts when trying to determine if a waiver or exculpatory clause is enforceable is Semeniken v. Town Sports International Inc., t/a New York Sports Clubs Spa Partners Inc. [2010 N.J. Super. Unpub. LEXIS 2681].

While using the steam room of the New York Sports Club in Livingston, N.J., Yury Semeniken found an unmarked spray bottle that contained eucalyptus oil. Semeniken took the bottle with him when he went into the sauna, and began to spray it above the sauna's heating element. Upon spraying the oil a second time, Semeniken was engulfed in flames and suffered scarring and respiratory injuries.

Semeniken sued New York Sports Club's owner, Town Sports International Inc., for negligence, pointing out that while the bottle he used was unmarked, the oil was delivered to the club in large jugs bearing labels warning, in part: "Flammable! Avoid open flame. DO NOT pour directly onto rocks in the sauna." In addition, the vendor supplied free deluxe spray bottles bearing similar warnings regarding the oil's flammability. Semeniken argued that had TSI stored the oil in one of these free bottles or another bottle with a similar warning, he would not have sprayed the oil above the sauna's heating element.

TSI countered that Semeniken voluntarily signed a membership agreement containing an exculpatory clause. "Any strenuous athletic or physical activity involves certain risks," the waiver read in part. "Members represent that they are aware that the possibility that accidents or injuries of any kind may be sustained by reasons of or in connection with the use of the facilities."

In evaluating the enforceability of the exculpatory clause, the Superior Court of New Jersey, Essex County, held that to be enforceable, an exculpatory clause must reflect the unequivocal expression of the party giving up his or her legal rights, and that the decision was made voluntarily and with the full knowledge of its legal consequences. In addition, citing the New Jersey Supreme Court's decision in Gershon v. Regency Driving Center [368 N.J. Super 237, 247 (App. Div. 2004)], the court ruled that even if such an unequivocal expression were made, the exculpatory clause would only be enforceable if it satisfied the following four conditions:

1. it does not adversely affect the public interest;
2. the exculpated party is not under a legal duty to perform;
3. it does not involve a public utility or common carrier; and
4. the contract does not grow out of unequal bargaining power or is otherwise unconscionable.

In applying the above standard to the exculpatory clause in Semeniken's membership agreement, the court held that it was unenforceable, and TSI's motion for summary judgment was denied.

Looking first at whether Semeniken understood the exculpatory clause, the court found that the membership agreement did not expressly state that he agreed to give up his legal right to sue TSI, nor did Semeniken believe he was doing so by signing a contract stating that he was aware of the risks associated with exercise. Accordingly, the court ruled, the exculpatory clause did not pass the threshold requirement for enforceability.

While the court could have stopped there, it went on to apply the four conditions of the Gershon test to TSI's membership agreement. The latter two were easily dispensed with — health clubs were found to be neither public utilities nor common carriers, and Semeniken and TSI were found to be in an equal position of bargaining power. The first two prongs, however, which the court examined together, determined that the exculpatory clause did not satisfy the Gershon test.

Health clubs have a common-law duty to their invitees to make reasonable inspections of the property and remedy any reasonably discoverable defects, the court said. Since the storage of flammable eucalyptus oil near a sauna constitutes a dangerous condition, the court held that TSI was required to either remove the oil or post warnings of the oil's flammability on or near the spray bottles. Yet, the mere existence of a common-law duty was not sufficient to overrule TSI's waiver; the court would have to determine, by considering the nature of the activity and the inherent risks involved, whether the clause adversely affected the public interest.

While it was clear that the public had an interest in encouraging exercise and in respecting freedom of contract, the court held that those interests did not outweigh the public's interest in protecting people from physical injuries resulting from health clubs' negligence in areas that are not exercise-related — such as being engulfed in flames when in a sauna. Subjecting health clubs to liability for this sort of negligence would not chill the public's interest in encouraging exercise through the establishment of health clubs, the court found, in the way that holding clubs liable for all exercise-related risks would. Rather, requiring health clubs to take responsibility for the safety of their patrons, particularly with regard to risks that are not inherent to exercise, could actually serve the public interest in encouraging exercise through health club membership, by increasing member confidence in gym safety.

Health and recreational facilities everywhere should heed the Semeniken decision and take a close look at their waiver language. Is the document titled "Waiver & Release Form," or something else? While every state is different, to be safe, the form should explicitly identify itself as a waiver; state that the club member agrees to engage in club activities at their "own risk" and "release and discharge the health club from any and all claims of negligence by the club and its employees"; and that the user "assumes all risks" associated with using the facility or services.

Legal Action

Discussions are ongoing between the Wolfpack of Loyola University and the Wolfpack of N.C. State over Loyola's use of the nickname and logo. The negotiation followed a March letter sent from N.C. State assistant general counsel Shawn Troxler to Loyola officials contending that the latter school's use of "Wolfpack" constitutes trademark infringement.

Trademark law rests on the owner registering a concept even more than it does on the owner originating it, and in this case the Loyola Wolfpack has the N.C. State Wolfpack beat by a decade or more. (Not to further confuse the issue, but the school in question here is the New Orleans Loyola, not the one in Chicago.) Loyola began using the term in the 1930s, while N.C. State's usage for athletic and sporting events, the Charlotte Observer recently observed, began in 1947. However, N.C. State registered the trademark in 1983, after Loyola had discontinued its intercollegiate athletic program. The NAIA school reinstated its program in 1991.

N.C. State officials say there's a possibility of confusion in the marketplace, but among the options it is proposing is allowing Loyola to license the nickname for a fee, or requiring the school to use "Wolfpack" in combination with Loyola but not as a stand-alone nickname. In 2008, N.C. State's settlement with the University of Nevada Wolf Pack allowed the latter's use of the name as two words, but barred Nevada from using red and white, or from showing its wolf donning a top hat (N.C. State's wears a sailor's cap).