Hanks v. Powder Ridge Restaurant Corp.

Brief Fact Summary.

Hanks (Plaintiff) sued Powder Ridge Restaurant Corp. (Defendant) for negligence after being injured at Defendant’s winter resort. Defendant claimed that the waiver Plaintiff signed released it from all liability, even for negligence.

Facts.

Plaintiff and four children went to Powder Ridge, a winter resort operated by Defendant in order to go snowtubing. None of the five had snowtubed at Powder Ridge before, but the resort allowed all individuals over six years old or forty-four inches tall to participate, regardless of prior experience. Before participating, Defendant required customers to sign a waiver that released Defendant from liability for injuries, including those resulting from negligence. Plaintiff read and signed the waiver. During the snowtube run, Plaintiff’s foot was caught between the tube and the side of the run, resulting in severe injuries leading to multiple surgeries. Plaintiff sued Defendant for negligence and Defendant moved for summary judgment based upon the waiver. The trial court granted Defendant’s motion, finding that Plaintiff’s acceptance of the waiver agreement released Defendant from liability. Plaintiff appealed, arguing that a person of ordinary intelligence reasonably would not have thought that the agreement released Defendant from injuries caused by negligence, and that the agreement violates public policy because the operator of a recreational operation that services the public cannot release itself from liability for negligence.

Issue.

Is an exculpatory clause in a waiver a violation of public policy even when it is clearly stated and well-drafted?

Held.

(Sullivan, C.J.) Yes. An exculpatory clause in a waiver signed by customers at a winter resort violates public policy even when it is clearly stated and well-drafted. In Hyson v. White Water Mountain Resorts of Connecticut, Inc., 829 A.2d 827 (Conn. 2003), the plaintiff sued after being injured while snowtubing at this same resort. The plaintiff in that case had also signed an exculpatory agreement, although that agreement did not specifically disclaim liability in cases of negligence. The court decided that the agreement did not bar recovery for negligence because the law disfavors exceptions from negligence in situations where the public has the right to expect a safe operation and a reasonable person signing the agreement might believe that the agreement only disclaimed liability for injuries resulting from the inherent dangers of the activity. Here, the agreement Plaintiff signed does expressly disclaim liability for injuries resulting from its own negligence. Although parties are free include whatever provisions they wish in a contract, terms that are against public policy are unenforceable.

Exculpatory provisions conflict with the policy considerations underlying the tort system, which is to compensate innocent parties and to shift the risk of loss to those in the best position to prevent it. Tunkl v. Regents of the University of California, 383 P.2d 441 (Cal. 1963) provides the standard for determining whether a waiver of liability violates public policy. These agreements violate public policy where they harm the public interest, based upon six factors: 1) whether the waiver concerns a business commonly thought of as publicly regulated; 2) whether the party disclaiming liability is engaged in performing a service of great importance to the public; 3) whether the party serves any member of the public who asks; 4) whether the party disclaiming liability has a superior bargaining position against the members of the public seeking the service; 5) whether the party with superior bargaining power presents the public with a standardized exculpatory adhesion contract; and 6) whether, as a result of the transaction, the person or property of the consumer comes under the control of the seller and is at risk of carelessness by the seller. These factors are a guide, but not the final word. The final determination of whether a waiver harms the public interest comes from considering the totality of the circumstances in the context of societal expectations.

Defendant provides snowtubing services to the general public, with minimal restrictions, suggesting to the public that this activity is safe for the whole family. Society expects that recreational activities geared towards the family will be reasonably safe, especially when the customers come under the control of the operator. Here, Plaintiff’s person came under the control of Defendant as a result of this transaction, subject to its carelessness. Plaintiff had a reasonable expectation of a thrilling, but reasonably safe, experience. Plaintiff lacked the knowledge, experience, or authority to determine whether the operation was running safely. It is illogical to require the public to bear the costs of risks that they do not control. The agreement was an adhesion contract. Consumers did not have equal bargaining power, as they either signed or did not participate. Defendant argues that it did not have superior bargaining power because snowtubing is not an essential public service. Even in the context of voluntary activities, bargaining power can be unequal. Recreational activities are an important part of life for the majority of people and participation is promoted by public policy. The agreement at issue here violates that public policy and is unenforceable.

This court does not follow the majority of states in upholding adhesion contracts releasing businesses operating recreational activities from liability for injuries caused by negligence. Reversed and remanded.

Dissent.

(Norcott, J.) Parties may include whatever provisions on which they agree in a contract, including a provision assigning the risk of injury to the consumer. Although contracts that violate public policy are unenforceable, an analysis of the Tunkl factors demonstrates that this contract does not violate public policy. 1) This business is not of a type commonly thought of as publicly regulated, which weighs in favor of Defendant; 2) snowtubing is not an important public service, also in Defendant’s favor; 3) the resort was open to the public, weighing in Plaintiff’s favor; 4) Plaintiff’s would have suffered no harm from turning down the waiver and not participating, so Defendant did not have a superior bargaining position, weighing in Defendant’s favor; 5) the contract was a standardized exculpatory adhesion contract, a factor in Plaintiff’s favor; and 6) the Plaintiff did not put his person or property under Defendant’s control as a result of the transaction, such as an unconscious person on the operating table, another factor in Defendant’s favor. The majority of the Tunkl factors, and the approach adopted by the vast majority of states, support upholding the waiver in this case. Members of the public who do not wish to release the operator from liability can refrain from participating in the activity. The average person is capable of reading a waiver and deciding not to participate because of the risks he is being asked to assume. The trial court properly granted summary judgment.

Discussion.

Neither the majority opinion or dissent are particularly persuasive. The majority’s argument that customers cannot abandon voluntary recreational activities instead of signing the waiver is unfounded. Likewise, the dissent’s analysis under the Tunkl factors is unpersuasive since Tunkl concerned a release signed by patients being admitted to the hospital.