In Bagley v. Mt. Bachelor, Inc., the Oregon Supreme Court recently refused to enforce the preemptory release the Mt. Bachelor ski resort was requiring patrons purchasing season passes to accept, holding that the release was unconscionable. 356 Or. 542 (2014). The Court specifically found that the release was both procedurally and substantively unconscionable.
In 2005, it was the practice of Mt. Bachelor to require patrons purchasing season passes to sign a “release and indemnity agreement” which provided that the patron was releasing Mt. Bachelor from: “any and all claims for property damage, injury, or death… in any way connected with skiing, snowboarding, or snowriding.” The release further specified: “This release and indemnity agreement shall apply to any claim even if caused by negligence. The only claims not released are those based upon intentional misconduct.” Similar language was also printed on the ski lift passes themselves.
Plaintiff purchased a season pass and executed this release agreement. After using his season pass for much of the season, Plaintiff suffered permanent paralysis from an injury he received after snowboarding over a human-made jump in the “air chamber” terrain park at Mt. Bachelor. Plaintiff filed a personal injury claim against Mt. Bachelor for damages related to his injuries. Mt. Bachelor cited the release signed by Plaintiff as an affirmative defense to the suit and succeeded in having the case dismissed on summary judgment.
The Court of Appeals affirmed the trial court’s decision to grant summary judgment citing the fact that the language of the release “clearly and unequivocally” expressed, and that Mt. Bachelor does not provide an “essential public service” that would make allowing the anticipatory release a violation of public policy. That court found that While people might like to ski, they do not need to ski, and they would be free to walk away rather than accept release terms they did not want to be bound by.
On review, the Supreme Court’s analysis began with the general contract principal that an agreement voluntarily entered into between two parties should not be set aside lightly. However, the Court noted that there has long been an exception requiring that contracts violating greater public policy should not be enforced.
The Court then undertook a lengthy analysis of the doctrine of unconscionablilty. Under the unconscionability doctrine, the Court recognized that a contract can be procedurally unconscionable, substantively unconscionable, or both. Procedural unconscionability focuses only on the formation of the contract and hinges on whether the party bringing a claim had a “meaningful choice” about whether and how to enter the contract. Substantive uncioscionability examines the terms of the contract and whether they produce a result that would be socially unacceptable.
In analyzing this case, the Court found both procedural and substantive unconscionability applied to the release. While analyzing the release for procedural unconscionability, the Court did recognize that the Plaintiff could not have been surprised by the release. It was clearly articulated in the document Plaintiff signed. However, the Court did find many instances of oppression. Mt. Bachelor was a commercial enterprise, dealing with a consumer, not another sophisticated party. The release was presented to Plaintiff on a take-it-or-leave-it-basis. Plaintiff had no opportunity to negotiate the terms of the release or pay an additional fee to escape the release. Finally, the Court found it of importance that there are a limited number of ski areas in Oregon all of which were in the practice of using similar releases. On the basis of these factors, the Court held that the release was procedurally unconscionable.
When considering the substantive unconscionability of the release the Court closely examined other Oregon laws to try and determine the public policy the legislature has been attempting to articulate. The Court first looked at the Business Invitee rule generally applicable in tort law—that a business owner has a heightened duty of care toward patrons with respect to the condition of their premises. Next, the Court looked at ORS 30.970 et. seq. [Skier Responsibility Law] That statute states that “an individual who engages in the sport of skiing, alpine or nordic, accepts and assumes the inherent risks of skiing insofar as they are reasonably obvious, expected or necessary.” The Court interpreted this statute as the legislature’s attempt to relieve ski resorts from the natural dangers associated with skiing—the weather, natural steepness or variation in terrain, forest growth, rocks, the skiers’ failure to ski within their ability, etc. The Court noted that the legislature specifically did not absolve ski resorts from negligent conduct by their employees or agents, or from claims based on man-made conditions such as the features in the Air Chamber terrain park created and maintained by Mt. Bachelor. Finally, the Court cited the fact that other business that provide public accommodation—common carriers and inn keepers—are frequently subject to a stricter duty of care toward their patrons. Taking these three legal policies together, the Court concluded that there is a duty of ski area operators to exercise reasonable case to avoid creating risks of harm to their business invitees. Accordingly the Court found the release signed by Plaintiff to be substantively unconscionable as well.
While the Supreme Court provided a lengthy road-map for analyzing an anticipatory release, it was careful to insist that each release should be examined on its own merits and that the circumstances of the contract and resulting injury will dictate whether the contract is ultimately enforceable.
See link to opinion.