Waiver In Gym Membership Agreement Not Too Broad And Not Barred By TCCWNA

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Contract(pd)Gym memberships are notoriously difficult to cancel. As a result, there is a fair amount of litigation over the cancellation, or attempted cancellation, of gym memberships, many of which are class actions. A recent Appellate Division decision, Mellet v. Aquasid, LLC, was one such lawsuit. As an added bonus, the decision also involves the Truth in Consumer Contract, Warranty, and Notice Act (TCCWNA), a once relatively obscure statute that has recently become popular — or controversial depending on which side of a lawsuit you find yourself — and about which I have written here and here.

In Mellet, defendant was a health club. Plaintiffs were members of the health club. Plaintiffs attempted to cancel their memberships but their requests were declined and the health club continued to bill each of them. When plaintiffs failed to pay, defendant attempted to collect these unpaid fees — which included monthly dues, late fees, collection fees, and administrative fees –  from plaintiffs. In response, plaintiffs filed a putative class action, alleging that defendant's membership agreement and the fees it charged violated New Jersey law, including TCCWNA. The trial court denied plaintiffs' motion for class certification and plaintiffs appealed.

On appeal, plaintiffs raised a number of issues, but the most interesting one involved its claim that the broad waiver in the membership agreement violated TCCWNA. It provides, in part, that "[n]o seller . . . shall . . . enter into any written  consumer contract  . . . which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller . . . as established by State or Federal law at the time." Its purpose was to prevent deceptive practices in consumer contracts by prohibiting the use of illegal terms or warranties, but it has become a favorite of plaintiff's attorneys because consumers can sue under TCCWNA even if they have suffered no injury or loss, and because the statute allows successful plaintiffs to recover attorney's fees as part of their damages. 

In Mellet, the membership agreement that plaintiffs signed contained the following waiver:

I/we accept full responsibility for my/our use of any and all apparatus, appliance, facility, privilege, or service, whatsoever, owned and operated by FF/AFC, or while engaging in any contest, games function, exercise, either on or off the FF/AFC premises, and shall do so at my/out own risk and shall hold FF/AFC, it’s owners, partners, shareholders, directors, officers, employees, representatives, agents and/or affiliated companies, harmless from any and all loss, claim, injury, damage or liability  sustained  or  incurred by me/us, resulting from any act or omission of any owner,  partner, shareholder, directors, officers, employees, representatives, agents and/or affiliated companies hereunder in respect of any such loss, cost, claim injury, damage or liability sustained or incurred by using FF/AFC’s services and facilitates.

Plaintiffs argued that this "overly broad" waiver was unenforceable under New Jersey law, therefore it violated a "clearly established legal right of a consumer" and is barred by TCCWNA.Both the trial court and the Appellate Division disagreed.

The Appellate Division based its decision on two New Jersey cases dealing with liability waivers in health club membership agreements, both of which I wrote about here. These cases generally stand for the proposition that a waiver can shield a health club from injuries sustained "as a matter of negligence that result from a patron's voluntary use of equipment and participation in instructed activity," but not from all civil liability. In one of the cases, plaintiff was injured when the handlebars of her stationary bike dislodged and caused her to fall during a spinning class. The New Jersey Supreme Court held that this incident was covered by the waiver in plaintiff's membership agreement because it occurred while plaintiff was engaged in the type of strenuous activity normally undertaken at a gym, creating an inherent risk of injury. In the other, plaintiff was injured when he slipped and fell on stairs leading from an indoor pool. The Appellate Division held that this was not covered by the waiver in plaintiff's membership agreement because slipping and falling while walking on stairs "could have occurred in any business setting," therefore the "inherently risky nature of defendant's activities as a physical fitness club was immaterial."

In Mellet, the Appellate Division noted that the injuries plaintiffs allegedly suffered "were not for injuries suffered at a health club." Instead, plaintiffs argued that "the mere existence of the [waiver] violates TCCWNA because it exculpates defendant from the type of liability barred [under New Jersey law]." The Appellate Division rejected this argument. It noted that the waiver in plaintiffs' membership agreements did not contain a purported waiver of all negligence, which would be impermissible, and "neither broadly waive[d] exercise-related injuries, nor negate[d] defendant's ordinary duty of care, which may not be waived as contrary to public policy." Accordingly, the waiver was enforceable, and, because it did not, as a result, violate any "clearly established legal right," the agreement was not barred by TCCWNA.

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