Capped and Dismissed – Arbitration Provision with Damages Cap in Zip-Line Waiver and Release Enforced (VT)

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Littlejohn v. Timberquest Park at Magic, LLC (Vermont)
(trial court disposition)

The seventy-six year old plaintiff was severely injured while participating in an adventure zip-line course in Vermont.  Plaintiff had never participated in an adventure course before.  Despite having received instruction from the zip-line facility, the plaintiff mistakenly attached his equipment to a guy wire, thinking it was a zip-line cable.  While descending, he ran into a tree that anchored the other end of the guy wire.  He sued the zip-line facility alleging that it negligently designed, constructed, and operated the course.

Plaintiff’s friend had purchased their tickets for the adventure course online through the facility’s website.  Plaintiff arrived at the facility, and they were presented with a “Release of Liability, Waiver of Claims, Indemnification, and Arbitration Agreement” to sign.  Plaintiff contended that the website had not warned them that they would be required to sign a liability waiver in order to participate in the activities.  The agreement was presented in digital format on an electronic device, and plaintiff was instructed to read and sign it electronically.  The agreement specifically included a provision pursuant to which the plaintiff agreed to submit any claims in excess of $75,000 to binding arbitration.  Alternatively, if plaintiff filed a lawsuit in court, the agreement provided that plaintiff agreed that his damages would be capped at $75,000.  The agreement further attempted to require the arbitration panel or court (as applicable) to decide the enforceability of the agreement as a “threshold matter.”

The facility filed a motion for partial summary judgment seeking a declaration that the $75,000 damages cap contained in the arbitration clause was enforceable.  Plaintiff opposed the motion, arguing that the damages cap violated public policy and was unconscionable.  Plaintiff also filed a cross-motion for summary judgment seeking to have the waiver and release agreement declared void and unenforceable, which prompted the facility’s response cross-motion for summary judgment seeking a dismissal of plaintiff’s claims based on the waiver and release agreement.

Reviewing the public policy factors under Vermont law, the U.S. District Court found that the exculpatory clauses of the agreement (the waiver of claims, the assumption of risk from negligence; and the indemnity provisions) were not enforceable.  The Court explained its decision:

“It recognizes the longstanding rule that business owners are responsible for the safety of their premises. It also recognizes the expectation that a recreational activity which is open to the general public will be reasonably safe for use by all users.  In other words, the business cannot contract out of liability for negligence in the design, maintenance and operation of its business premises.”

In further justifying its decision, the Court noted that “attending a zip-line program is more like visiting a ski area than like taking part in a specialized high-risk sport which requires skill and experience.”  The zip-line facility “sells tickets to all comers” and “requires no prior training.”  It was something that was “open to all without restriction.”  Moreover, the court was “designed and controlled by the defendants.”

Notwithstanding the foregoing, the Court noted that the assumption of risk provisions in the agreement plaintiff signed remained valid (the agreement included a severability clause) and that the defendant was free to assert assumption of risk as a defense.  Thus, presumably the facility could offer the assumption of risk provisions as evidence of the plaintiff’s voluntary assumption of the risks inherent in the zip-line activities.

As to the arbitration provision, the Court ultimately held that it was enforceable.  Plaintiff had argued that the provision was substantively unconscionable because it required that the arbitrator be selected from within the zip-line industry, which would result in bias against the plaintiff.  The Court recognized the possibility of bias, but noted that the bias could be for (a friend) or against (a competitor) the defendant facility.  Regardless, the Court cited and enforced the severability clause to strike the requirement that the arbitrator be selected from the zip-line industry.  Plaintiff also argued that the arbitration provision was a contract of adhesion because it lacked mutuality (only the plaintiff was forced to submit claims to arbitration).  However, the Court noted that the agreement to arbitrate was part of a larger contract that was supported by consideration such that it dd not fail for lack of mutuality.  Finally, plaintiff had argued that the agreement that he signed was unsupported by consideration because he was forced to sign it weeks after he had paid for the tickets.  However, the Court stated that the argument lacked merit as “[A]ny performance which is bargained for is consideration.”  The defendant’s performance was allowing the plaintiff to use the adventure course on the day of the incident.

Since the arbitration provision was enforceable, the plaintiff’s damages in court were capped at $75,000.  As a result, the U.S. District Court lacked subject matter jurisdiction (the Court only has jurisdiction over a diversity case if the amount in controversy “exceeds the sum or value of $75,000”).  Therefore, the Court granted the facility’s motion for partial summary judgment and dismissed the plaintiff’s claim for lack of jurisdiction.

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