Firms shouldn't rely on enforceability of COVID-19 waivers: Experts

Business Insurance
06/30/2020

Businesses requiring customers to sign COVID-19 liability waivers as they reopen should not expect the documents to absolve them of all liability because it is unclear whether they will be enforced by courts, legal experts say.

While liability waivers are common when individuals sign up for a gym membership, extreme sports activities or attend a baseball game, COVID-19 liability waivers, even though a sound precaution, are untested in the courts, they say.

In addition, the presence of a waiver won’t be a concrete defense against negligence claims, they say.

Waivers in the context of a virus present “unique circumstances,” because COVID-19 can be spread simply through air transmissions, said Randel K. Johnson, Washington-based partner at Seyfarth Shaw LLP.

“These are unparalleled times and the legal system is trying to work with something not encountered since the Spanish flu,” he said.

The issue of COVID-19 liability waivers recently drew national attention when the Trump campaign said it would require anyone attending the president’s June 20 rally in Tulsa, Oklahoma, to agree not to sue the campaign if they contracted the virus.

Eight members of an advance team for the rally tested positive for the coronavirus, as did several journalists who reported from the event, according to news reports.

Meanwhile, various states, such as Arkansas and Louisiana,  have issued executive orders to protect businesses from liability related to COVID-19. At the federal level, Senate Majority Leader Mitch McConnell is pushing for a future pandemic stimulus package to include liability protections for businesses.

Whether courts will consider COVID-19 liability waivers to be enforceable will vary depending on state law, as well as the language of the releases, legal experts say.

The track record with liability waivers is “mixed,” said Jonathan S. Ziss, Philadelphia-based partner at Goldberg Segalla LLP.

“At times they are enforced consistent with their spirit and their language, and at times courts will find they violate public policy in a sense,” he said.

Waivers are “a shield, perhaps not an impermeable shield, perhaps not as large a shield as an event host or as an employer might want, but they do provide some measure of defense if for no other reason than they create another hurdle for a plaintiff to clear,” Mr. Ziss said.

Whether a COVID-19 liability release would be supported by “sufficient consideration” to be determined to be enforceable is a concern, said Jeremy Deutsch, a shareholder in the New York office of Anderson Kill P.C.

Consideration is the benefit that each party receives or expects to receive from a contractual deal.

In the case of a Broadway theater, “how do you identify consideration? Why should I give up a right because you’re selling me something?” Mr. Deutsch said.

“I don’t think consideration would be that I get to see the last performance. Maybe a court will find it’s sufficient consideration, I don’t know,” he said.

Further, a release isn’t a license to be reckless, he said.

“It doesn’t mean … that you don’t have to check theater goers’ temperatures when they come in the theater. … It doesn’t mean you can allow people in without masks, if that’s what the state medical advice is,” Mr. Deutsch said.

While there are many examples of waivers that have been upheld by courts to protect businesses from negligence claims, they are subject to certain sets of criteria, Mr. Johnson said.

For example, the language of the agreement has to be clear, the individual must have understood and consented to the waiver, and the agreement can’t waive liability for willful misconduct or gross negligence, he said.

Courts will also strike down a waiver if it conditions use of an essential service, and they’ll also reject it if it contravenes public policy, he said.

Companies that are transacting with each other have indemnification agreements in place that identify who holds the liabilities, for example if someone were to contract COVID-19, said Jon Drummond, Chicago-based head of casualty broking at Willis Towers Watson PLC.

“To the extent that companies are able to contractually transfer that (risk) to another entity it very much makes sense” as a risk mitigation strategy, Mr. Drummond said.

However, there’s much uncertainty around the ability of a company to push the risk back onto the consumer, he said. “There might be opposition from a judicial standpoint, a legislative standpoint, for those contracts, agreements, and those waivers to stand up,” Mr. Drummond said.

“It’s a risk mitigation tool that has enforceability concerns that are impacted state by state,” he said.

Certain releases are enforceable under the “assumption of risk” concept, for example baseball fans should know that they risk being hit by a ball at a game, Mr. Deutsch said.

For COVID-19 releases, there will not be a “quick and easy” answer, Mr. Deutsch said. “If people end up suing and these get tested, I think we will see conflicting results through different court systems,” he said.

The bottom line is waivers should not be lightly or easily dismissed, Mr. Ziss said.

“I do think they will be a factor in bodily injury litigation and infection-related litigation going forward,” Mr. Ziss said.

And judges may be influenced by the reach of the pandemic, Mr. Drummond said.

“Judges are human beings and many jurors have been personally impacted by COVID-19. There’s a degree of sympathy extended that can influence the ultimate outcome of a particular agreement. That’s something that everyone needs to take into consideration as well,” he said.

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- Business Law Attorney | Anderson Kill P.C.
Jeremy E. Deutsch
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New York

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