1. Waving Waivers Good-Bye November 1, 2010
Is your parental liability waiver unenforceable? Recent court decisions out of Michigan
indicate that waivers may no longer hold up in court.
By VICTOR VEPRAUSKAS, a partner with the business law practice group of Bloomfield Hills,
Michigan-based Beier Howlett P.C.
Toss out the parental liability waivers and
replace them with an increased insurance
policy? Recent court decisions indicate that
the traditional pre-injury liability waiver,
signed by parents to allow their child's
participation in a range of activities, may no
longer hold up in court.
For decades, businesses, schools and
nonprofit organizations have used parental
liability waivers as a tool to shift financial risk
and manage costs of liability and insurance
premiums. However, according to a June
18, decision by the Michigan Supreme
Court, the traditional pre-injury liability
waiver is no longer enforceable under
Michigan law.
Ramifications of this decision are expected
to be far-reaching, as organizations of all
types are currently left open to liability in
Michigan. From school districts hosting field
trips, to traveling sports teams, to
amusement park or dance/gymnastic
businesses, the hosting organization is not
protected by a parent's signature on the pre-
injury waiver under Michigan common law.
By not enforcing parental pre-injury waivers,
it will be nearly impossible for organizations,
whether nonprofit or for-profit, to assess and
manage the risk as to any activities related
to minors. This uncertainty adversely affects
an organization's profitability and hinders
growth.
Although the parental liability waiver has
long been the accepted release form for an
organization hosting activities for minors
from day camp to travel sports, the Michigan
Supreme Court noted that a parent or
guardian has no authority
to bind his child by
contract (absent special
circumstances), and a
parental pre-injury waiver
is a contract. Michigan's
common law rule is that a
minor lacks the capacity
to contract for his or herself. The court also
held that it is clear a minor cannot empower
an agent or attorney to act for him or her in
Michigan.
The case, Woodman v. Kera LLC, involved
a 5-year-old child who broke his leg by
falling off an inflatable slide at a birthday
party held in a commercial Bounce Party
facility. Although the parents signed a waiver
before the child engaged in the activity, they
were able to successfully sue the facility
after the injury despite having executed a
pre-injury liability waiver. The Michigan
Supreme Court did not differentiate between
a for-profit organization's activities versus a
nonprofit organization's activities.
A child can, however, be bound by a
parent's act when a statute grants that
authority to a parent.
The statutory authority of a parent to bind a
child has been subject to litigation for years.
Legislation, House Bill 4970, was proposed
in Michigan to modify Michigan's common
law rule. The HB 4970 would add Section
5109 to Michigan's Estates and Protected
Individuals Code (EPIC). The bill would
allow parents or guardians of a minor to
provide a written release from liability. The
bill would only apply to injuries sustained by

2. minors who were actively participating in a
recreational sport sponsored or organized
by nongovernmental, nonprofit organizations
arising from ordinary negligence.
Although Michigan amended EPIC in April,
the amendments were adopted without
Section 5109 of HB 4970.
As of Sept. 1, HB 4970 has not been
adopted. Even if HB 4970 was made law in
Michigan, it would not address all the issues
to avoid litigation. The bill does not protect
for-profit businesses. Also, the bill focuses
on ordinary versus gross negligence, which
would be subject to litigation if the bill was
adopted in its current form.
Given the constant flux in law of every state,
how can an organization protect itself?
There are several tools that an organization
can still use in an attempt to reduce its
liability and mitigate risk, which include:
parental liability waivers; an assumption of
risk form; and parental indemnifications.
One may ask why an organization would
use a parental < liability waiver > in a state
that does not enforce them. First, it is
possible that the law of a state, such as
Michigan, changes to enforce parental
liability waivers. Also, the use of a parental <
liability waiver does not put an organization
in any worse position without such a waiver.
Such a waiver may even prevent lawsuits or
facilitate a quick resolution. Finally, there are
states, such as California, that do enforce
parental pre-injury liability waivers. One
solution may be to have a provision in the
waiver that expressly provides that the
governing substantive law will be the law of
a state that enforces such parental waivers.
The intent would be to have a court in a
state that does not enforce parental waivers
have to apply the substantive law of a state
that does enforce such waivers.
Another way to attempt to reduce liability is
to use an assumption of risk form. This
should be a separate form from any waiver,
but the language should also be included in
a waiver. The idea with this tool is to set
forth very specifically all of the inherent risks
and dangers of the activity to be participated
in by the minor. This document as well as
the waiver can be offered into evidence as
proof that the organization warned the
parent and minor of the risks involved with
the activity so as to assist in triggering the
assumption of risk defense.
The third way an organization can attempt to
limit liability is use of parental
indemnifications. The Michigan Supreme
Court Justice that wrote the opinion in
Woodman v. Kera alluded to the use of a
parental indemnity as an alternative to
reduce liability. However, the other justices
commented that such issue was not before
the court and would likely be held to directly
contravene the compelling policy reasons
that exist for the historic common law rule.
While courts in a number of states have held
that such indemnity agreements are
unenforceable because they produce the
same effect as parental pre-injury liability
waivers, other states have upheld such
parental indemnity agreements. It is
recommended that a parental
indemnification be carefully drafted as a
separate document and expressly provide
the substantive law to be applied be that of a
state that upholds such agreements.
With no clear solution to the liability issue as
to minors, any organization that provides
activities for minors should consult with its
insurance agents and attorneys to determine
how best to limit liability from claims
involving minors. Professionals advising
organizations that have activities for minors
must stay abreast of the applicable law as to
parental liability waivers. The key is to
determine the "applicable law" as to parental
liability waivers or any other document used
in an attempt to manage an organization's
risk.
The analysis must also take into account the
specific facts of each case, such as for-profit
versus nonprofit, ordinary negligence versus
gross negligence, or common law versus
specific statute, and of course the specific
state law.
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