What’s in that Waiver?

A recently decided case from the New Jersey Appellate Division analyzed the waiver form a trampoline park requires before customers and their children are permitted to enter.  A father electronically signed a waiver form for his son to play at the SkyZone Indoor Trampoline Park.  The waiver contained standard provisions that SkyZone would not be held liable for any injuries that occurred at the SkyZone. During their time at the SkyZone, the father’s son suffered a fractured ankle while playing trampoline dodgeball.

When the father filed a complaint against Skyzone he discovered the waiver also contained an arbitration clause.  The arbitration clause stated the father agreed to “waive any right . . . to a trial and agree[d] that such dispute shall be…  determined by binding arbitration.” Further, the agreement stated he “waived his right to maintain a lawsuit against [SkyZone].

The Trial Court initially agreed with SkyZone and sent the matter to arbitration rather than a trial.  However, after an appeal the Appellate Division reversed and held the arbitration clause to be unenforceable. The Appellate Division’s opinion stated the arbitration clause “did not clearly and unambiguously inform the father that he was giving up his right to bring claims … in a court of law and have a jury decide the case.”

Although Skyzone argued that a recent U.S. Supreme Court case supported their position, the Appellate Court still disagreed with Skyzone and sided with the father, finding that the Arbitration Clause was unenforceable.  The relevant case law provided arbitration agreements must be a product of “mutual assent,” meaning that both of the parties must understand the terms within the agreement.  Further, for a plaintiff to fully surrender his rights to a jury trial, he must have full knowledge of those rights in the first place.

The Arbitration Clause the father signed only referred to waiving rights to “a trial,” but did not explain this includes giving up rights to bring claims in court or to have a jury resolve the issue.  Further, the Arbitration Clause stated that disputes would be decided by binding arbitration but did not explain what arbitration was, or how it was different from a regular court proceeding.

This case makes it clear that arbitration agreements need to be clear and explanatory so that it can be fully understood what rights an individual has and what rights they are waiving.  If the arbitration agreement does not explain what arbitration is, or how it differs from a regular court proceeding, or does not explain that the individual signing is giving up their right to bring claims in a court and in front of a jury, New Jersey courts may hold that arbitration agreement to be unenforceable.

All business owners should review their contracts and agreements to ensure they have a valid arbitration clause.

If you have any questions about this case, the difference between a trial and arbitration, or any other legal need, please call Ward, Shindle and Hall.