BREAKING NEWS: California Waivers Take a Big Hit

by

City of Santa Barbara v. Superior Court (California-Supreme Court)
(California Supreme Court Holds that Sports and Recreation Waiver and Release and Express Assumption of the Risk Agreements Cannot Exculpate a Party from Gross Negligence; May Have Voided Thousands of Existing Agreements)

Yesterday, the California Supreme Court issued a lengthy published legal opinion addressing the enforceability of waiver and release and express assumption of the risk agreements. The court held that such agreements cannot protect sports and recreation providers and organizers from “gross negligence” liability, which was defined as as either a “want of even scant care” or “an extreme departure from the ordinary standard of conduct.” This ruling is a departure from prior California case law which supported the conclusion that absent a statute providing otherwise, there was no legal distinction among degrees of negligent conduct (e.g. “ordinary negligence” versus “gross negligence”). As an immediate result of this ruling, one can expect that all lawsuits hereinafter filed relative to injuries suffered by participants in sports and recreation will include a cause of action for “gross negligence.” This decision clearly makes it easier for a plaintiff to create triable issues of material fact and defeat motions for summary judgment. More cases will inevitably proceed toward trial resulting in a high percentage of settlements and increased settlement value as the result of reduced leverage. Courts will be reluctant to decide the absence of “gross negligence” as a matter of law, and juries will undoubtedly have a difficult time evaluating and understanding the distinction between “ordinary” and “gross” negligence.

Perhaps more importantly, the court’s decision may end up having the sweeping effect of immediately voiding existing agreements that are currently being used by the industry. The court’s ruling implied that any agreement that purports to cover more than ordinary negligence (e.g., by the use of language such as “any and all negligence” and/or “all forms of negligence”) are unenforceable as contrary to public policy. As a result, every individual and entity using waiver and release and express assumption of the risk agreements needs to promptly evaluate and analyze their current agreements and make revisions necessary to comport with the new state of the law. Please feel free to contact us for additional information and assistance in this regard.

We additionally note that the court’s opinion seriously questioned the enforceability of waiver and release, express assumption of the risk, and indemnity agreements signed by parents on behalf of minor children participating in recreational activities. The court strongly suggested that it would hold that such agreements are void and contrary to public policy. However, the court explained that the viability of minor agreement was not presently at issue and its opinion did not provide a ruling in that regard. Nonetheless, the Court’s statements are an indicator that the minor agreements will face significant challenges in the future.

A more detailed analysis will follow shortly. In the meantime, for additional comment or information on the ruling please contact Cary Agajanian (cary@agajanianlaw.com), Paul Tetreault (paul@agajanianlaw.com) and/or Bill Anthony (bill@agajanianlaw.com).

NOTE: Sports and recreation associations and facility owners and operator, as well as their insurers, need to be proactive to limit the impact of this important decision and the potential financial liability exposures related thereto.

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