Arbitration or Court and Releases: Be Careful What You Sign!

Can an individual waive his or her right to file a lawsuit and provide a release before even participating in an event?  The answer to both questions is yes.

Arbitration is generally a procedure where parties’ claims are decided by a private third party, an arbitrator, who is hired to decide a dispute.  There is no jury and very limited appeal rights.  Arbitrators’ decisions are enforceable by courts.  While in some disputes arbitration might be good forum to resolve controversies, personal injury lawyers generally disfavor arbitration because their clients lose the ability to submit their claim to a jury of their peers.  Oftentimes, however, an individual will sign a form, for example, when you register at a hotel during vacation, by which he or she agrees that all disputes will be decided by arbitration.  What happens if you have an accident and are seriously injured, or assaulted as a result of negligent security?  If you agreed to arbitration, you would lose your right to have the claim and damages decided by a jury.  Arbitration clauses are valid and the only sure way of not being bound by it is not to sign an agreement to arbitrate.  There is a federal statute upholding such agreements as “valid, irrevocable and enforceable,” and generally will only be deemed unenforceable if they are products of fraud, duress, unconscionability or other typical defenses of contracts.  States cannot limit the use of arbitration because of federal preemption.  So, if you want to reserve your right to a jury trial or having your case adjudicated by a jury or judge with full appellate rights, you must avoid signing an agreement to arbitrate.

It may be, however, that you cannot even present a claim in any forum because you released the claim before you even had it!  The leading case in this area is Sharon v. City of Newton, 437 Mass. 99 (2002), which involved a cheerleader who was injured during cheerleading practice.  Previously, the child’s father signed a form entitled “Parental Consent, Release from Liability and Indemnity Agreement, “ which released the City of Newton from any claims the child may have as a result of her participation in Newton’s physical education athletic programs.  The court noted that “[a] party may, by agreement, allocate risk and exempt itself from liability it might subsequently incur as a result of its own negligence.”  Thus, “prospective” releases are valid.  There may be defenses to the enforceability of such a release (e.g., fraud or, again, other contractual defenses).  Also, such releases generally will not be enforced if there is gross negligence or a violation of statutory duty; and other claims simply may not be waived, such as implied warranties regarding consumer goods or warranties of habitability for rental housing.

So be careful what you sign, as you can release any potential future claims you may have, and even if you have not released the claim, you may be limited to a less favorable forum, arbitration, when you would rather present your claim before a jury (or judge) with full appellate rights.