The Appellate Division of the New Jersey Superior Court recently enforced an exculpatory clause in a gym membership agreement that waived an injured patron's right to sue for personal injuries.
 
In Stelluti v. Casapenn Enterprises, LLC d/b/a Powerhouse Gym, the plaintiff, Gina Stelluti, purchased a gym membership at 8:30 a.m. on January 13, 2004 at Powerhouse Gym.  She was injured less than an hour later when she fell from a "spin" bicycle.  She claimed that the handlebars unexpectedly disconnected from the bike. The actual cause of the handlebar disconnect was not firmly established. The plaintiff's liability expert concluded that the accident was caused by negligent maintenance or failure to properly engage the handlebars in the bike frame. The Powerhouse Gym's expert suggested that the accident was caused by a product defect.
 
The contract signed by plaintiff that morning contained, among other things, the following language:
 
     You (each member, guest, and all participating family

     members) agree that if you engage in any physical

     exercise or activity, or use any club amenity

     on the premises or off premises including any

     sponsored club event, you do so entirely at your own risk.
 
     You agree that you are voluntarily participating in

     these activities and use of these facilities and premises

     and assume all risks of injury, illness, or death.
 
     This waiver and release of liability includes,

     without limitation, all injuries which may occur as a

     result of, (a) your use of all amenities and equipment

     in the facility and your participation in any activity,

     class, program, personal training or instruction,

     (b) the sudden and unforeseen malfunctioning

     of any equipment,(c) our instruction, training, supervision,

     or dietary recommendations, and (d) your slipping

     and/or falling while in the club, or on the club premises,

     including adjacent sidewalks and parking areas.
 
The plaintiff filed suit against the gym and the manufacturer of the equipment. Powerhouse Gym argued that the waiver of liability clause required the plaintiff's claims to be dismissed. The plaintiff argued that the waiver of liability clause was not enforceable as a matter of law because it was a contract of adhesion and violated public policy.  At her deposition, the plaintiff testified that she did not read the contract and that no one explained the waiver of liability clause.
 
The trial court ruled in favor of Powerhouse Gym, finding that the agreement was binding.  The plaintiff appealed and the appellate court upheld the trial court's ruling. The appellate court noted that the plaintiff was not required to sign the agreement and that she could have continued to shop for a gym. The court acknowledged that the law does not favor such agreements because they encourage a lack of care, but nonetheless, found that this particular agreement did not trigger or violate any public policy concerns.  
 
Finally, the court noted that public policy considerations do require that such exculpatory clauses be limited to ordinary negligence.  Therefore, there is no protection for acts or omissions that are reckless, willful or wanton. The court also suggested that the portion of the clause which waived liability for "slipping or falling" on adjacent sidewalks or parking areas may be subject to a different analysis should that issue be brought before the court in a future case.

 

In Bardis v. First Trenton Insurance Co., the plaintiff was injured in an automobile accident.  The at-fault driver had only $15,000.00 in insurance coverage, and his carrier settled the claim for the policy limit. Bardis was insured by First Trenton Insurance Co. and made a claim for Underinsured Motorist ("UIM") coverage under his policy. First Trenton did not deny liability, but disputed the validity of the causal connection between Bardis' claimed injuries and the automobile accident. Bardis filed suit against First Trenton for the UIM coverage.
 
At trial, Bardis requested that the judge advise the jury that First Trenton was the defendant rather than refer to the at-fault driver as if he were the defendant. The trial judge denied the application. Bardis appealed after the jury returned a verdict in favor of First Trenton.
 
The case went before the N.J. Supreme Court, which concluded that there are strong reasons supporting the rule that the UIM trial proceed in the name of the at-fault driver rather than the insurer.  It found that, ordinarily, there is no reason to identify the UIM carrier, but the decision to identify the UIM carrier as the true defendant will remain within the sound discretion of the trial judge should circumstances dictate.
 
The Court expressed its concern that references to insurance coverage might distract jurors from a fair evaluation of the evidence because references to insurance might motivate an award of damages based on a jury's perception of an insurer as having "deep pockets."
 
The Court also noted that there is no prejudice to the plaintiff or potential for confusion because, in reality, it is the fault of the other driver and the plaintiff's resulting injuries that are the sole focus. Identifying the insurance carrier is entirely irrelevant to any issue in the proceeding.
 
This ruling may also have significance in the subrogation context in that the Court's opinion provides a strong basis to bar reference to the identity of the subrogating insurance carrier. As with UIM claims, the sole focus in subrogation actions is the liability and damages between the insured and the defendant against whom recovery is sought.