Faulty Waivers

A drowning death leaves all exculpatory agreements in the state of Wisconsin under water.

Waivers (or exculpatory agreements) are reviewed under state law, and not every state reviews them in the same way. However, it is generally accepted that in all states except Louisiana, New Mexico, Montana and Virginia, a well-written waiver signed by an informed adult will protect service providers from lawsuits arising from ordinary negligence. In those four states, no matter how old or informed the signer, the courts have held that all waivers are invalid, since they are contrary to those states' public policy.

Now, make that five states. Even though the Wisconsin Supreme Court declared that waivers are not invalid, per se, its decision in Atkins v. Swimwest Family Fitness Center [691 N.W.2d 334 (Wisc. 2005)] would appear to place Wisconsin among those states prohibiting the use of all waivers.

Swimwest Family Fitness Center is an instructional swimming facility located in Madison. On May 3, 2001, Charis Wilson visited the facility as part of a physical therapy and rehabilitation program. Upon entering the facility, Wilson was informed that because she was not a member, she would have to fill out a guest registration card and pay a fee before swimming.

The entire form was printed on a five-and-a-half-inch-square card. Wilson filled out the form and signed it without asking any questions.

Before entering the pool, Wilson was asked if she needed help getting into the water. Wilson stated that she did not require any assistance, and was observed by the lifeguard on duty performing a sidestroke up and down the length of the pool. Soon after Wilson began swimming, however, another Swimwest employee spotted her near the bottom of the pool. After being pulled from the pool and rushed to the hospital, Wilson died the next day. The official cause of death was listed as drowning.

As a result of Wilson's death, her son, Benjamin Atkins, filed a wrongful-death action against Swimwest. Atkins complained that Swimwest was negligent in the operation of the facility and in the management and observation of the pool area, and that procedures to safeguard against the risk of drowning were not followed. The trial court and the Court of Appeals both dismissed Atkins' suit, concluding that the guest registration and waiver form signed by Wilson constituted a valid exculpatory provision releasing Swimwest from liability.

On appeal to the Wisconsin Supreme Court, Atkins argued that Swimwest's waiver was unenforceable for three reasons: 1) the waiver language was overly broad; 2) the form served two purposes (guest registration and waiver of liability), making it uncertain whether Wilson was fully notified about the nature and significance of the document she signed; and 3) Wilson did not have any opportunity to bargain over the language of the waiver.

In reviewing whether the form violated public policy, the Wisconsin Supreme Court held that in the absence of legislation that prohibits them, waivers of liability generally should be upheld. The court, however, also acknowledged the legal tension between the right to contract freely in the management of one's affairs without government interference, and the legal responsibility for one's negligent acts. Citing two of its recent decisions, Yauger v. Skiing Enters. Inc. [206 Wis. 2d 76, 557 N.W.2d 60 (1996)] and Richards v. Richards [181 Wis. 2d 1007, 513 N.W.2d 118 (1994)], the court held that it must balance this tension by consistently requiring that exculpatory contracts contain two components in order to survive a public policy challenge. First, the agreement must clearly, unambiguously and unmistakably inform the signer of the rights he or she is waiving. Second, the agreement must clearly and unequivocally communicate to the signer the nature and significance of the document being signed.

Applying this test, the court agreed with Atkins and found that the broadness of the waiver's language raised questions about its meaning and demonstrated its one-sidedness. In particular, the court found that the word "fault" used by Swimwest was not clear, and could potentially bar any claim arising under any scenario. While Swimwest alleged that "fault" was synonymous with "negligence," the court ruled that "fault" was susceptible to a broader interpretation, which could also include a reckless or intentional act. Any contract interpretation that included reckless or intentional conduct, the court held, would clearly place the exculpatory clause in violation of public policy. Therefore, if Swimwest wanted to make clear that the signer was releasing it from negligent acts, the court held that it should have included the word "negligence" in the waiver.

The court also found that the broadness of the exculpatory language made it difficult to ascertain exactly what was within Wilson's or Swimwest's scope of understanding at the time. In order for such an agreement to be valid, the court held that it was essential that the parties, in light of all the circumstances, knowingly agreed to excuse the defendants from liability. Wilson, the court ruled, likely would not have contemplated drowning in a 4-foot-deep pool with a lifeguard on duty when she signed the guest registration and waiver form.

In addition, the court held that the form did not provide adequate notice of the waiver's nature and significance. For example, the form served two purposes; it was both a "Guest Registration" application and a "Waiver Release Statement." The court ruled that the waiver should have been on a separate document from the guest registration, since a separate document would have provided Wilson with more adequate notice of what she was signing. A separate signature line could have been provided, the court also noted, but was not. As a result, the court held that it was impossible to say with certainty whether Wilson was fully aware of the nature and the significance of the document being signed.

Finally, the court agreed with Atkins that while Wilson had an opportunity to read the form and ask questions, she had no opportunity to bargain over its terms. According to witnesses' testimony, Wilson was told that the form included a waiver, and she allegedly took her time reading the card. The court concluded, however, that this information alone was not sufficient to demonstrate a bargaining opportunity. An exculpatory clause, wrote the court, cannot be enforced when it is part of a standardized agreement that offers little or no opportunity to bargain.

In spite of this finding, it should be noted that two of the three judges involved in the decision ruled that such an opportunity was not required. For example, the concurring judge in the case held that all that was necessary for a waiver to be valid was for the language to be clear and for the waiver to unambiguously and unmistakably inform the signer of the rights he or she was waiving. The lack of an opportunity to bargain was only a fact that a court could consider in evaluating the totality of the circumstances surrounding the execution of a waiver. In his view, the court's majority opinion -- with which he concurred, in part -- was an unnecessary broadening of the law.

While the Atkins decision makes Wisconsin the only state to require that the parties to a waiver have the opportunity to negotiate over the exculpatory language, it will be interesting to see if any other courts follow the decision. In fact, since two of the three judges ruled that the opportunity to bargain was not essential, it will be interesting to see if the decision upholds the next legal challenge in Wisconsin. For now, however, the opportunity to bargain is an essential component of a contractual waiver in the state of Wisconsin.

As a result, the court has effectively removed the ability of most sport and recreational facilities and businesses to limit any type of liability by contract. Facilities and businesses will be open to more lawsuits, thus making it more expensive for recreational facilities in the state to remain in business. Also, the decision complicates the staffing and operation of most facilities, either requiring that an owner always be present at the facility or that a front-desk employee be authorized to "bargain" about the terms of a release of liability -- an extremely unrealistic scenario. In short, while the Wisconsin Supreme Court may have accepted the theoretical use of waivers, its decision in Atkins leaves little possibility that an exculpatory agreement could be enforceable there.