Liability releases no longer protect resorts from lawsuits alleging negligence.

The Oregon Supreme Court's recent decision that liability waivers violate the public interest and are invalid and "unconscionable" is the most significant court ruling in Oregon's recreational industry in years.

Resort operators worry that the decision will open the door to frivolous lawsuits and raise legal and insurance costs that will be passed onto skiers and snowboarders.

Supporters applaud the court for rejecting the release as a "take-it-or-leave-it" contract that puts all the power in the hands of resort operators and none in the hands of skiers and snowboarders.

Because the issues at stake are powerful and far-reaching and could apply to everything from the Portland Marathon to Cycle Oregon as well as the operations of all Oregon ski resorts, it is worth examining this decision in some detail.

A Bad Crash in a Terrain Park

Myles Bagley was 17 years old when he bought a season pass to Mount Bachelor. As part of the deal, his father had to sign a liability release that stated in part:

I/we agree to release and indemnify Mt. Bachelor, Inc., its officers and directors, owners, agents, landowners, affiliated companies, and employees (hereinafter ‘Mt. Bachelor, Inc.’) from any and all claims for property damage, injury, or death which I/we may suffer or for which I/we may be liable to others, in any way connected with skiing, snowboarding, or snowriding. This release and indemnity agreement shall apply to any claim even if caused by negligence. The only claims not released are those based upon intentional misconduct. (Emphasis mine.)

That fine-print language should be familiar to Oregon skiers and snowboarders, because it is commonly used as a way to protect resorts from lawsuits. You either agree to release the resort's liability, or you don't get to buy a pass. You sign away your rights to sue for negligence, no matter what happens. A chair could fall off the lift and land on your child, and you would have no case.

Bagley, an advanced snowboarder, used his pass for at least 26 days that winter. Each time he went to board a chairlift he passed a sign that read in part, "YOUR TICKET IS A RELEASE: The back of your ticket contains a release of all claims against Mt. Bachelor, Inc. and its employees or agents."

And then on February 16, 2006, Bagley went off a jump at Bachelor's Air Chamber Terrain Park and crashed badly on the landing, breaking his back. He was left paralyzed from the waist down at the age of 18.

His family sued in Deschutes County Circuit Court in 2008, arguing that Bagley would not have been injured if Bachelor had "exercised reasonable care" in designing, constructing, maintaining, and inspecting the jump on which he was injured.

Mount Bachelor's attorneys responded that the waiver Bagley signed was conspicuous and unambiguous, and that the resort cannot be expected to control the behavior of individual skiers and snowboarders: "Only he controlled his speed, course, angle, ‘pop’ and the difficulty of his aerial maneuver. Skiing and snowboarding require the skier to exercise appropriate caution and good judgment. Sometimes, even despite the exercise of due care, accidents and injuries occur."

The Bagley family argued that it would be unconscionable to let the resort escape all responsibility for allegedly operating unsafely, but the Circuit Court cited the signed liability release in throwing out the lawsuit, and the Oregon Court of Appeals agreed.

'This was not an agreement between equals'

On December 18, 2014, the Oregon Supreme Court ruled that the lower courts had erred, and that liability releases violate the public interest and are  "unconscionable" - and therefore invalid.

To understand the decision it is worth considering what the court meant by "unconscionable." The concept of unconscionability is meant to address several problems with contracts, including deception, refusal to bargain, and imbalance of power. The Court did not suggest that a release is a deception. But it did note that the ski resort holds far more power than the skier or snowboarder and that the contract clearly favors the more powerful party, the resort, which does not need to bargain with the individual because it is in full control.

"This was not an agreement between equals," wrote Associate Justice David V. Brewer. "Only one party to the contract—defendant—was a commercial enterprise, and that party exercised its superior bargaining strength by requiring its patrons, including plaintiff, to sign an anticipatory release on a take-it-or-leave-it basis as a condition of using its facilities."

The Court also noted that liability releases are not protected or guaranteed by the Oregon Ski Safety Act, which was written in response to a case between an injured skier and Mt. Hood Meadows in 1981.

That statute defines the inherent risks of skiing as

those dangers or conditions which are an integral part of the sport, such as changing weather conditions, variations or steepness in terrain, snow or ice conditions, surface or subsurface conditions, bare spots, creeks and gullies, forest growth, rocks, stumps, lift towers and other structures and their components, collisions with other skiers and a skier’s failure to ski within the skier’s own ability.

When an injury is caused by one of those "inherent risks," a skier or snowboarder cannot sue a ski area operator. However, "to the extent an injury is a result of negligence," skiers and snowboarders may sue.

The Court ruled that resorts must accept responsibility for negligence:

Skiers and snowboarders have important legal inducements to exercise reasonable care for their own safety by virtue of their statutory assumption of the inherent risks of skiing. By contrast, without potential exposure to liability for their own negligence, ski area operators would lack a commensurate legal incentive to avoid creating unreasonable risks of harm to their business invitees.

To read the Court's decision in its entirety, click here.

As a result of the Oregon Supreme Court decision against liability releases, the Bagleys have earned the right to resume their lawsuit against Mount Bachelor. Their case will return to Deschutes County Circuit Court for trial. The family's original suit in 2008 sought $21.5 million.

Far-reaching implications

Richard Rizk, a Portland lawyer and Mount Hood skier who handles skiing and snowboarding cases, says, "In my opinion the Supreme Court made the correct decision. It makes sense. You can’t contract away negligence... That stuff on the back of the ticket in the tiny print that you can’t even read - you can’t call that a valid contract."

Dave Byrd, director of risk and regulatory affairs for the National Ski Areas Association, says the industry's biggest concern with the Bagley ruling is that is will lead to more frivolous lawsuits and add new expenses that will have to be passed onto consumers:

The biggest concern is that it is going to lead to far more frivolous litigation... We use the release to get out of lawsuits early, before we have to spend a lot on defense costs. Now without that, we have to go through all of discovery, with depositions and  document production, and it’s a terribly expensive process with outside attorneys. So it makes the value of the lawsuits that much higher for  a plaintiff’s lawyer. Because it forces companies and organizations to settle cases early, so they don’t have to spend all that money on defense costs.

Byrd also predicts that insurance rates will probably rise. “These costs are going to trickle down to the consumer at some point," he says. "Higher insurance premiums, higher litigation costs - that will get passed on."

Oregon is hardly the only state to reject liability releases for ski areas. Vermont resorts lost their ability to require releases in a landmark case in 1995, and New York and Alaska also have rejected them. An Alaska statute specifically prohibits ski area operators from requiring skiers to enter into agreements releasing them from liability in exchange for the use of the facilities.

On the other hand, numerous states including Oregon's West Coast neighbors Washington and California still allow them. "We hope this doesn’t spill over into the neighboring states," says Byrd. "Because if you think of Washington, Oregon and California, these are serious economic engines for recreational activity, whether it’s skiing or mountain biking or surfing or rock climbing. Many of these organization in this recreational economy are small organizations that need the protection of liability releases."

Rizk says it is too early to claim the decision will open the floodgates to frivolous lawsuits against resorts. He notes that juries have sided with resorts and against individual skiers and snowboarders in several recent lawsuits, and even without liability waivers, resorts still have ample legal protection. "There’s still an Oregon statute that protects the ski resorts from the inherent dangers of skiing," he says.

The difference now is in cases of alleged negligence — including how a resort is designed, built, tested and operated. That change could have wide implications in terrain parks for sure, and it could extend into all sorts of other recreational activities as well, including marathons, bike rides, rock-climbing gyms, kid camps and much more. I haven't heard of any lawsuits that resulted directly from the Oregon Supreme Court decision, but I imagine we'll be seeing some eventually, and it will be interesting to see how they proceed.

The Bagley case is back in Deschutes County Court, awaiting a court date.

As for the future, here are just a few of the large questions raised by the Supreme Court decision:

  1. How will this affect the design and building of terrain parks?
  2. How will it affect ski and snowboard shops, including gear rentals and repair?
  3. Will resorts be forced to raise prices?
  4. Will resorts consider two-tiered pricing, with lower prices for people who sign liability releases?

So what do you think of all this? Opinions?