Sports Law Attorney and Expert on Liability Waivers Tackles Key Case

(Editor’s Note: Carla Varriale of Havkins, Rosenfeld, Ritzert & Varriale recently wrote about an important case addressing waivers of liability. Courtesy of Sports Litigation Alert, here’s the summary.)

Online waivers of liability are ubiquitous, thanks to the internet. Are they enforceable, like their paper counterparts? If so, what factors will a court examine that might be instructive to organizations (and attorneys) that craft waivers of liability? A recent decision in the United States District Court for the Southern District of New York provides a framework for analysis and some guidance for drafting a successful online waiver of liability.

In Corwin v. NYC Bike Share, LLC et al, 2017 U.S. Dist. Lexis 29034, plaintiff Ronald D. Corwin, an annual member of the popular Citi Bike bicycle program, sustained serious personal injuries while riding a Citi Bike in Midtown Manhattan. He collided with a concrete wheel stop and violently struck his head on the cement. He sued several defendants, including NYC Bike Share, LLC (the company operating the Citi Bike system). He alleged common-law and gross negligence causes of action and he asserted negligent design, installation and maintenance claims against the other defendants.

All of the defendants moved for summary judgment based on several defenses, including primary assumption of the risk and the lack of a duty to protect or to warn plaintiff of an open and obvious condition. However, the Corwin court initially examined the subject Bicycle Rental, Liability Waiver, and Release Agreement (the “Agreement”) that plaintiff had to sign as a condition of his Citi Bike membership. The Agreement purportedly released plaintiff’s common-law negligence claims against the City of New York, New York City Bike Share, LLC and Alta Planning + Design, a wholly-owned subsidiary who drafted the site plans for the Citi Bike system.^[1]

There was no dispute that in order to become a member of the Citi Bike program, plaintiff had to assent to the release of claims (including personal injury claims) as set forth in the Agreement. This was done through an electronic interface. Although he did not dispute^[2] that he “must have” signed a waiver (electronically), he argued that the waiver was an unconscionable and unenforceable contract of adhesion. He also argued that it was void and against public policy. Because plaintiff did not dispute that he must have entered into a contract, the question of whether plaintiff’s claims were barred depended on the effectiveness of his assent under the circumstances and the enforceability of the waiver provisions as to the various defendants.

According to the Corwin court, the Agreement was a “clickwrap” (also known as a “browsewrap”, “scrollwrap” or a “sign-in-wrap”) agreement. A feature of a “clickwrap” agreement is that the adhering party does not need to use a pen and it requires the user to take affirmative action, such as clicking of a box located on the website that states that he or she has read and agrees to the terms of service. In other words, with a “clickwrap” agreement, the user must expressly and unambiguously manifest assent or rejection prior to being given access to the product.

The Corwin court noted that “clickwrap” agreements are more readily enforceable than other online agreements that do not require the user to take affirmative action for the simple reason that the court can infer that the user was at least on “inquiry notice” of the terms of the putative agreement and that he or she manifested assent to the terms by clicking a box. According to the Corwin court, and the authority it relied on from other New York cases, “clickwrap agreements” are presumptively enforceable.

However, the Corwin court also noted that a user’s clicking of the box, without more, is not sufficient to signal their assent to any contract term. For example, the website must provide “reasonably conspicuous” notice that users are about to bind themselves to contract terms. This is, the court held, a fact-intensive inquiry but there is some judicial guidance.

For example, the Corwin court examined the factors that Judge Weinstein of the Eastern District of New York previously articulated in Berkson v. Gogo LLC, 97 F. Supp. 3d 359, 357 (E.D.N.Y 2015). Although that case involved a class-action lawsuit regarding the purchase of internet service connection while on an airplane, the Berkson court conducted a detailed analysis whether the average internet user would have been informed he or she was binding him or herself. The Berkson court focused on the following factors to determine the issue of whether the alleged notice to a putative user is sufficient:

• the terms of use should not be enforced if a reasonably prudent user would not have had at the very least “inquiry notice” of the terms of the agreement;
• the terms should be enforced when a user is encouraged by the design and content of the website and the agreement’s webpage to examine the terms, such as when they are clearly available through hyperlink;
• conversely, the terms should not be enforced when they are buried at the bottom of a webpage or tucked away in obscure corners; and
• special attention should be paid to whether the site design brought the consumer’s attention to material terms that would alter what a reasonable consumer would understand to be her default rights when initiating an online transaction.

In Corwin, the court applied these factors and determined that NYC Bike Share, LLC established that before a prospective member pays for membership, he or she is shown a “User Agreement” on a page with its own scrollable text box and it can be opened on a new window for ease of viewing and printing. In fact, the “continue” button to proceed to payment would not activate unless the user (such as plaintiff) clicked on a statement certifying that he or she was 18 years old or older and that he or she read and agreed to the conditions set forth in the User Agreement.

The Corwin court also noted that the release language was bolded and underlined. The text of the sections was a normal-sized font but “Releases; Disclaimers; Limited Liability; Assumption of the Risk” headings were in a larger font. Plaintiff had no recollection of reading the language but admitted that he signed whatever he had to sign to obtain his Citi Bike pass.

The Corwin court determined that the language Agreement was enforceable and not unconscionable. The court noted that “[w]hile it is possible to imagine a clearer signaling of the waiver provisions to an unwary or unsophisticated consumer, the terms are not hidden or buried in an obscure part of the website, but rather are in plain view.”

Also, the Corwin court held that the waiver language was not void due to ambiguity, finding the terms were not inconsistent or contradictory. The exculpatory language was clear and coherent and expressly released a defendant from ordinary claims.

Finally, and of particular interest to New York, the court also considered the issue of whether the Agreement was void as against public policy pursuant to New York General Obligations Law Section 5-326. That statute invalidates certain exculpatory clauses in agreements with operators of recreational facilities. The Corwin court, considered the case law and the legislative intent of New York General Obligations Law Section 5-326, and held that the Citi Bike station was not a “facility” within the meaning of the statute. The court determined they were “storage facilities” for bicycles and not facilities for recreation. Moreover, the City’s roadways and bike lanes are public thoroughfares and not places of amusement or recreation (something any City driver can attest to). Either way, the Citi Bike station was not a “place of amusement or recreation” or similar establishment that falls within New York General Obligations Law Section 5-326. Therefore, New York General Obligations Law Section 5-326 did not apply to the Agreement.

Consequently, the Corwin court held that the Agreement effectively released plaintiff’s common-law negligence claims against NYC Bike Share, LLC. The Agreement was not applicable to the City of New York because a release of the City’s duties with respect to maintaining its roadways is non-delegable and would be contrary to public policy. Therefore, plaintiff could proceed with his negligence claims against the City of New York. With respect to APD, the Corwin court determined that they did not owe plaintiff a duty of care. The Corwin court also held that the doctrine of primary assumption of the risk was unavailable (largely because the Citi Bike station was on a public roadway and plaintiff was not injured while participating in a “sporting” activity). Likewise, it held that the “open and obvious” defect defense was not applicable because there was a question of fact whether the wheelstop partially obstructed the pathway utilized by a cyclist such as plaintiff. It was not, therefore, open and obvious and not inherently dangerous as a matter of law.

Corwin offers guidance in crafting waivers and releases, particularly in an electronic format. For example, the waiver and release language must be clear and unambiguous so that an ordinary person can understand the warnings provided and that certain rights are being waived. However, the Corwin decision also highlights that the design of the site (and the online waiver) and interface with the user are also critical factors. The terms should trigger some “inquiry notice” on the part of the user that important rights are being waived. The terms should be clearly visible and encourage a review of the terms, such as through hyperlink. To be enforceable, the language should not be obscured or shrouded in a tiny font. Because exculpatory clauses are material and alter a contracting party’s commonly-understood rights, those clauses should be prominent and unmistakable. Electronic waivers, particularly ones that require assent or acknowledgement before proceeding to the signature stage, are enforceable and may provide valuable protection.

[1] The relevant portions of the Agreement that were analyzed by the Corwin court were:

Section 6. Releases:
In exchange for You being allowed to use any of the Services, Citi Bike bicycles, Stations, Bike Docks, or related information, You . . . do hereby fully and forever release and discharge all Released Persons for all Claims that You have or may have against any Released Person, except for Claims caused by the Released Person’s gross negligence or willful misconduct. Such releases are intended to be general and complete releases of all Claims. The Released Persons may plead such releases as a complete and sufficient defense to any Claim, as intended 3rd beneficiaries of such releases.

“Claims” is defined in the Release Agreement as “any and all claims, injuries, demands, liabilities, disputes, causes of action (including statutory, contract, negligence, or other tort theories), proceedings [or] damages that arise from or relate to (a) any of the Services, including any of the Citi Bike bicycles, Stations, Bike Docks, or related information . . . .” “Released Persons” is defined in the Agreement, as relevant, as including: “(i) NYCBS and all of its owners, managers, affiliates, employees, agents, representatives, successors, and assigns [and] (ii) the City of New York.”

Section 7. Disclaimers:
You do hereby acknowledge and agree that your use of any of the services, Citi Bike bicycles, stations, bike docks, or releated [sic] information, is at your sole risk. . . . All of the services, Citi Bike bicycles, stations, bike docks, or related information are provided “as is” and “as available” (and you rely on them solely at your own risk). . . . You assume full responsibility and risk of loss for using any of the services, Citi Bike bicycles, stations, bike docks, or releated [sic] information, and NYCBS and all other released persons are not liable for any claim attributable to any of the foregoing.

Section 8. Limited Liability:
You do hereby acknowledge and agree that, except as may otherwise be limited by New York General Obligation Law Section 5-326, NYCBS and all other released persons are not responsible or liable for any claim, including those that arise out of or relate to (A) any risk, danger or hazard described in the Agreement, (B) Your use of or inability to use, any of the services, Citi Bike bicycles, stations, bike docks, or releated (sic) information, (C) your breach of this agreement or your violation of any law, (D) any negligence, misconduct, or other action or inaction by you, (E) your failure to wear a bicycle helmet while using Citi Bike bicycle, or (F) any negligence, misconduct, or other action or inaction of any third party. You do hereby waive all claims with respect to any of the foregoing, including those based in contract, tort (including negligence), statutory, or other grounds, even if NYCBS or any of the other released persons has been advised of the possibility of such claims. The total liability of NYCBS and all other released persons for all claims, including those based in contract, tort (including negligence), statutory, or other grounds, is limited to the sum of $100.

 Section 9. Assumption of Risk by Member:
Member agrees that riding a Citi Bike bicycle involves many obvious and not-so-obvious risks, dangers, and hazards, which may result in injury or death to Member or others, as well as damage to property, and that such risks, dangers, and hazards cannot always be predicted or avoided. Member agrees that such risks, dangers, and hazards are Member’s sole responsibility.

[2] Defendants failed to produce an actual copy of his Release Agreement with his electronic signature, or a copy of the Agreement as it existed when he became an annual member and could not prove whether he signed it at all.