Thursday, January 30, 2014

Court of Appeals Upholds Retailer's Waiver Agreement

In BJ’s Wholesale Club Inc. v. Russell Rosen et al., No. 99, September Term 2012, argued Sept. 10, 2013, the Court of Appeals addressed the enforceability of a waiver agreement that a retailer required parents to sign prior to their children being allowed to enter a play area.  Pursuant to that agreement, all claims against the retailer involving the play area were waived. 

In July 2005, Russell Rosen (Mr. Rosen) signed a waiver on behalf of his three minor children so that they could enter the play area at BJ’s Wholesale Club.  Approximately fifteen months after the waiver agreement was signed Beily Rosen (Mrs. Rosen), took the Rosens’ five-year-old son to the play area at BJ’s Wholesale Club.  While using the play area, the Rosens’ son suffered a large acute epidural hematoma in the right temporal region as a result of falling head-first onto concrete floor covered only by a thin layer of carpet from a three-foot tall plastic figure, “Harry the Hippo.”  

The Rosens’ filed suit against BJ’s Wholesale Club, claiming that BJ’s Wholesale Club had a duty to exercise reasonable care which it breached by placing a toy designed for children to climb in an area surrounded by concrete floor with only a thin layer of carpet over it.  BJ’s Wholesale Club denied the Rosens’ allegation of negligence and filed a counterclaim against the Rosens in which it alleged breach of contract for failing to indemnify, defend, and hold it harmless pursuant to the indemnification clause in the waiver agreement.

The Circuit Court for Baltimore County granted BJ’s Wholesale Club’s Motion for Summary Judgment.  The Court of Special Appeals reversed and struck down the waiver agreement.  BJ’s Wholesale Club sought review, and, the Court of Appeals held that the waiver agreement was enforceable.

In its opinion the Court of Appeals stated that exculpatory clauses, like the waiver agreement at issue, are generally valid and enforcing them is consistent with the policy of freedom to contract.  However, traditionally, as the Court noted such clauses are not upheld “in transactions affecting the public interest.”  The Court examined societal expectations under both statutory and common law and discussed different pieces of legislation that empower parents “to make significant decisions on behalf of their children.” 

In addition, the Rosens argued that the state’s interest in protecting children limits the ability of parents to make decisions that adversely affect the well-being of their children.  This argument was unsuccessful, and the Court asserted that it has “never applied parens patriae to invalidate, undermine, or restrict decision, such as the instant one, made by a parent on behalf of her child in the course of the parenting role.” 

Ultimately, the Court of Appeals determined that Mr. Rosen’s execution of the exculpatory agreement on behalf of his son did not violate public interest.  Thus, parent’s by signing such an agreement are responsible for weighing their child’s welfare against the risks associated with signing such an agreement.  

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