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Covid-19 Liability Risk: Can It Be Waived?

July 24, 2020

Covid-19 related restrictions have lifted across the United States (and in some instances then imposed again). With businesses reopening physical locations and the prospect of schools holding in-person classes this fall, owners, board members, executives and managers all must address potential coronavirus related liabilities. Any owner or operator of a facility where in-person contact occurs is at risk for civil suits and claims for potentially exposing employees, customers or other members of the public to the coronavirus.

In response to these risks, businesses and other institutions have asked employees, customers, and patrons to sign liability waivers. Examples include President Trump’s reelection campaign asking supporters to execute liability waivers before attending rallies.1 This practice has gained significant media attention and has led many to wonder whether these waivers are enforceable.

This article explores the current battle over waivers and offers general guidance on their enforceability. It is important to keep in mind that each state interprets the enforceability of liability waivers differently. This article is not intended to substitute for specific legal advice regarding an individual business’s liabilities or immunities relating to Covid-19 claims. That assessment must be based upon the laws of the jurisdiction in which a business operates.

Enforceability

The question of whether or not a Covid-19 liability waiver is enforceable is a state law specific question. Apart from Louisiana, Montana, and Virginia,2 every state generally accepts and will enforce liability waivers if they meet certain requirements. To address the challenges of the coronavirus, some states have enacted legislation which specifically addresses Covid-19 related liabilities. Georgia,3 Iowa,4 Oklahoma,5 and South Carolina6 have passed legislation which eliminates individual and business liability for civil claims relating to Covid-19. Other states, such as California7 and New York,8 have introduced legislation which would limit the potential liability of certain businesses and institutions, such as manufacturers and colleges.

The issue of Covid-19 related liability has become a topic of discussion at the federal level as well. Many Senate Republicans have asked that liability protection for employers and business owners be included in the anticipated “HEROES Act.” Conversely, Senate Democrats believe this will give businesses an inappropriate “safe harbor,” and encourage inadequate safety protocols.

Those arguing in favor of immunity or protection from civil liability believe that it is supported by public policy. Without such protections, businesses may be forced to close, harming the economy. In regard to those industries deemed essential, such closures may also have public health and other impacts.

Some states already find most liability waivers enforceable. This includes recognizing and enforcing waivers that protect a party from their own negligent conduct, including enforcement of waivers arising from attendance or participation in certain events.9 Other states cite freedom of contracting principles to find in favor of enforcing liability waivers.10

On the other hand, many argue that Covid-19 liability waivers are unlikely to be found enforceable if subjected to existing state contract laws and common law precedents. For example, states generally require liability waivers be clear and unambiguous, and that each party to the waiver have equal, or fair, bargaining power.11 Some states invalidate waivers signed by parents which seek to waive personal injury claims of minors, as a matter of public policy.12

Further, most states invalidate waivers if the claim arises from conduct which is intentional, reckless, or grossly negligent.13 Conduct which is an extreme deviation from the ordinary standard of care, or constitutes a conscious disregard for the rights and safety of others, will generally be deemed grossly negligent and the results of such conduct will not be protected by a liability waiver.14 However, because a person can be infected with Covid-19 without showing symptoms, it may be hard to prove that the conduct of a business was the direct cause of another customer’s infection, let alone that a business was grossly negligent in that regard.

General defenses to contract formation are also likely to be used in an attempt to invalidate Covid-19 liability waivers. These include lack of consideration, prohibitions against contracts of adhesion, incompetence to enter into a contract (such as a contract entered into by a minor or on behalf of a minor), and breadth/vagueness15 as well as public policy.16

Practice Pointers

Almost all states will enforce liability waivers which meet their state-specific requirements. The fact that many states have enacted or introduced legislation which eliminates civil liability for coronavirus claims may indicate that these same jurisdictions will uphold Covid-19 liability waivers. Because Courts have not yet had to address the question of whether or not these waivers are enforceable, it is best practice to have a waiver drafted and executed by all employees and patrons, as it may shield businesses from liability.

At the minimum, liability waivers are required to be drafted in a manner which guarantees the customers’ understanding of the risks associated with the businesses’ services, as well as explicitly stating the rights they intend to waive.17 In interpreting enforceability of liability waivers, courts generally consider whether they abide by the following standards: (i) the contract language must be construed strictly, as exculpatory language is not favored by the law; (ii) the contract must clearly state the intent of the parties with specificity and no “words of general import can establish the intent of the parties;” (iii) if there is any ambiguity, the contract will be construed against the party seeking immunity from liability; and (iv) the burden of establishing immunity is upon the party seeking protection under the exculpatory clause.18 19 20 Using these requirements, businesses should draft a liability waiver which (i) clearly states the risks of exposure to coronavirus, and the risks associated with contraction of Covid-19, (ii) expressly states that the customer/patron fully understands these risks, and is willing to assume these risks, and (iii) expressly states that the customer agrees to release the business from any claims and/or liability in connection with the risks associated with exposure and/or contraction of Covid-19.

Above all, in drafting a waiver competent advice from legal counsel licensed in the jurisdiction where the business operates is critical. In New York a liability waiver is enforceable only if it does not violate the public’s interest, the intention of the parties is expressed in unmistakable language, and the provisions are clear and coherent.21 Many states abide by the general requirements outlined above, but use unique tests to determine if such requirements have been met. Wisconsin, for instance, requires “the form, looked at in its entirety, must alert the signer to the nature and significance of what is being waived.”22

Conclusion

Businesses wishing to shield themselves from potential liability should carefully draft a liability waiver that meets the general requirements outlined in this article, as well as state specific requirements. Although Courts have not yet decided the enforceability of such waivers, the possibility remains that such waivers may protect businesses from liability. It must also be kept in mind that waivers are not a substitute for good health and safety practices. The ultimate protection against liability is to operate in a manner that limits the spread of the virus.

______________

1 See https://www.donaldjtrump.com/events/
2 See Hiett v. Lake Barcroft Cmty. Ass’n, Inc., 244 Ca. 191, 195 (1992); Mont. Stat § 28-2-702; La. Civ. Code art. 2004
3 See Georgia COVID-19 Business Safety Act (SB 359), which will take effect August 1st, 2020
4 See Iowa COVID-19 Response and Back-to-Business Limited Liability Act (SB2338), which took effect July 1st, 2020
5 Oklahoma SB 1946
6 See South Carolina COVID-19 Liability Safe Harbor Act (H. 5527), effective June 24th, 2020
7 See AB 2489, which eliminates the “ABC test” for employment relationships, and also see AB1759, which provides institutions of higher learning immunity from COVID-19 related claims
8 See SB 8463, which would bar COVID-19 related employee tort claims and occupational disease claims against businesses which develop and maintain a business safety plan
9 See Rose v. Nat’l Tractor Pullers Ass’n Inc., 33 F. Supp. 2d 757, 759 (W.D. Wis 1998)
10 See BJ’s Wholesale Club, Inc. v. Rosen, 435 Md. 714, 724-25 80 A.3d 345, 351 (2013)
11 See §8 Williston on Contracts § 19:21 (4th)
12 See Hojnowski ex rel. Hojnowski v. Vans State Park, 375 N.J. Super. 568, 583, 868 A.2d 1087 (App. Div. 2005)
13 See Restatement (Second) of Contracts §195 (1981)
14 See Mero v. City Segway Tours of Washington DC, LLC, 962 F. Supp. 2d 100 (D.D.C. 2013)
15 See Restatement (Second) of Contracts §195 (1981)
16 See Tunkl v. Regents of the University of California, 60 Cal. 2d 98-101 (1963)
17 See 8 Williston on Contracts §19:21 (4th)
18 See Topp Copy Prod., Inc. v. Singletary, 626 A.2d 99 (Pa. 1993)
19 See Harris v. Walker, 119 Ill. 2d 542, 548, 519 N.E.2d 917, 919 (Ill. 1998) (“exculpatory clauses are not favored and strictly construed against the benefitting party”)
20 See Madison v. Superior Court, 250 Cal. Rptr 299, 304, (Cal. Ct. App. 1988)
21 See Gross v. Sweet, 400 N.E.2d 306, 309 (N.Y. 1979)
22 See Rose, 33 F. Supp. 2d 757, 764

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