NJ Supreme Court Rules Fitness Centers Can’t Disclaim All Personal Injury Liability

In a precedential ruling, the Supreme Court of New Jersey recently held that a fitness center could not insulate itself through an exculpatory clause from the ordinary common law duty of care owed by all businesses to its invitees. The case involved a slip and fall inside a New Jersey YMCA.

We also offer the comments of an industry expert, Jean Marie Potter, Chief Executive Officer of NFC Amenity Management in Asbury Park, New Jersey whose firm oversees over 80 health clubs and amenity fitness centers in five states. Her comments are presented in bold italics and preceded by her initials JMP.

The Facts of the Case

James Walters was injured when he slipped and fell, as he walked to the Newark YMCA’s indoor pool. In his negligence lawsuit, he alleged that the tread on the stair was worn, causing him to fall and severely injure his knee. The YMCA sought to dismiss the suit based on an exculpatory, or “hold harmless” provision, in his membership agreement. It stated:

I AGREE THAT THE YMWCA WILL NOT BE RESPONSIBLE FOR ANY PERSONAL INJURIES OR LOSSES SUSTAINED BY ME WHILE ON ANY YMWCA PREMISES OR AS A RESULT OF A YMWCA SPONSORED ACTIVITIES [SIC]. I FURTHER AGREE TO INDEMNIFY AND SAVE HARMLESS THE YMWCA FROM ANY CLAIMS OR DEMANDS ARISING OUT OF ANY SUCH INJURIES OR LOSSES.

The trial court dismissed the suit, relying primarily of Stelluti v. Casapenn Enterprises, in which the New Jersey Supreme Court enforced a similar exculpatory provision. The injury in Stelluti occurred while the plaintiff was riding a spin bike, which the court held was foreseeable as an inherent aspect of the nature of the business activity of health clubs.

In Walters v. YMCA, the issue before the court was slightly different because the plaintiff was injured on the facility’s stairs. On appeal, the New Jersey Supreme Court considered whether an exculpatory clause that insulates a physical fitness club, from liability “for any personal injuries or losses sustained by [a member] while on any [of the club’s] premises” was enforceable when the accident and resulting injuries sustained by the member were not caused by or related to an inherently risky physical fitness activity.

JMP: It is sensible bright-line test put forth by the court. Our insurance carrier does not assume the risk of insuring the health of our patrons while exercising. It will, however, insure the normal risks associated with premises liability.

The Court’s Decision

The Supreme Court of New Jersey ultimately concluded that the broad waiver was unenforceable. As highlighted by the court, the case did not arise from the risks unique to a fitness center, but was rather a “garden variety slip and fall case.” The inherently risky nature of defendant’s activities as a physical fitness club was immaterial to this accident, the court further noted.

In reaching its conclusion, the court relied on long-standing precedent, which holds that an exculpatory agreement “is enforceable only if: (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; or (4) the contract does not grow out of unequal bargaining power or is otherwise unconscionable.”

JMP: We manage many affinity clubs for associations and hotels in several states. Many condominium associations require that members execute a release to use their facilities or as part of becoming an owner-member. My business requires that I examine the lease to determine to what extent my company is responsible for repairs. Generally, if we are the operator, we are responsible for keeping the premises safe and notifying the facility owner of the need for repairs.

With regard to the first two factors, the court held that the exculpatory clause, “if applied literally, would eviscerate the common law duty of care owed by defendant to its invitees, regardless of the nature of the business activity involved. Such a prospect would be inimical to the public interest because it would transfer the redress of civil wrongs from the responsible tortfeasor to either the innocent injured party or to society at large, in the form of taxpayer-supported institutions.”

As to the fourth factor, the court concluded that the membership agreement must be declared unenforceable as a contract of adhesion. The justices specifically noted that the “defendant seeks to shield itself from all civil liability, based on a one-sided contractual arrangement that offers no countervailing or redeeming societal value.”

JMP: Allocation of responsibility and risk of liability is often difficult because many volunteer boards do not distinguish between an operator, a lessee and an owner. We suggest that the respective carriers allocate the risk via subrogation.

If you have questions about the court’s decision or would like to discuss how your business may be impacted, please contact me, James McDonough, or the Scarinci Hollenbeck Labor and Employment attorney with whom you work.