Another Day, Another Lawsuit About Injuries Suffered At A Gym (Another Reason For Me Not To Go To The Gym)

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

Weight lifters (pd)
I have written about the enforceability of waivers in health club membership agreements before, including just last week. Now the Appellate Decision has issued another decision on this same topic, Crossing-Lyons v. Town Sports International, Inc., which nicely illustrates the types of injuries that are covered by these agreements and those that are not.

First, a little background. The two seminal cases on this issue are Stelluti v. Casapenn and Walters v. YMCA , both of which I have written about before.

In Stelluti, plaintiff was injured when the handlebars of her stationary bike dislodged and caused her to fall during a spin class. The New Jersey Supreme Court held that these injuries were covered under the broad release in plaintiff's membership agreement. It reasoned that exercising entails vigorous physical exertion (depending, of course, on the person exercising – I am not sure my time on the stationary bike this morning was terribly vigorous), and that the member assumes some risks — faulty equipment, improper use of equipment, inadequate instruction, inexperience, poor physical condition of the user, or excessive exertion — as a result. While a health club must maintain its premises in a condition safe from known or discoverable defects, it need not ensure the safety of members who voluntarily assume some risk by engaging in strenuous physical activities that have a potential to result in injuries.  

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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. 

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Clear Arbitration Provision, Negotiated By Sophisticated Party While Represented By Counsel Deemed Enforceable

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

Arbitration def (pd)The headline of this post is a little like "Dog bites man." But, given the recent trend in New Jersey of "man bites dog" type cases where courts have invalidated arbitration provisions that once seemed unambiguous (look here, here, and here for examples), the headline should make more sense.

In Columbus Circle NJ LLC v. Island Construction Co., LLC, the Appellate Division enforced an arbitration provision contained in a construction contract. Plaintiff was a single-member LLC that retained defendant to build a $1.9 million home on the bay in Avalon, New Jersey. Plaintiff's representative circulated an initial draft contract for the project that used the standard American Institute of Architects (AIA) forms. These forms contain a provision entitled "BINDING DISPUTE RESOLUTION," which, as the name suggests, requires the parties to choose "the method of binding dispute resolution" for any claims between them that are not resolved by mediation. In the draft it circulated, plaintiff's representative checked off "Arbitration pursuant to Section 15.4 of AIA Document A201-2007," rather than "Litigation in a court of competent jurisdiction." Before it was signed, the attorney for the LLC's sole member reviewed the draft and proposed changes, as did defendant, but none of these changes appear to have altered the dispute resolution provision.

During construction, disagreements arose between the parties regarding the cost of the project, leading both parties to terminate the contract. When mediation apparently failed, defendant filed a demand for arbitration. Three months later, plaintiff sued in state court. Defendant successfully moved to dismiss plaintiff's complaint and compel arbitration, and Plaintiff appealed.

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One Minute for Oral Argument? Motion Decided in 60 Seconds Doesn’t Survive Appeal.

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

Stopwatch (pd)
"We anticipate that the court will engage counsel with more patience on remand."

I assume this is not something a trial court wants to see at the end of an opinion from an appellate court. But, this was precisely how the Appellate Division ended its decision in Midland Funding v. Bordeaux. The case, which involved the enforceability of an arbitration provision, is notable as much for the manner in which it was decided by the trial court as the legal issues at play in the decision.

In Midland Funding, plaintiff sued defendant over $1,018.04 in consumer debt that plaintiff purchased from the original creditor. In response, defendant denied liability and asserted a counterclaim alleging plaintiff violated the Fair Debt Collections Practices Act. During discovery, defendant moved to compel plaintiff to answer interrogatories. Plaintiff responded with a motion to compel arbitration. On the eve of the return date of that motion, defendant moved for summary judgment. Oral argument on these motion was adjourned for approximately 30 days. 

When oral argument was eventually held, it did not last long. The Appellate Division noted that the transcript "show[ed] that the oral argument hearing began at 9:10 a.m. and concluded at 9:11 a.m." In the span of a minute, the trial court concluded that defendant's credit card agreement "contain[ed] an arbitration agreement," therefore "[i]t's going to arbitration." The trial court also denied defendant's summary judgment motion without explanation and declared that defendant's motion to compel answers to interrogatories was moot.

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Party Cannot Lose Its Right To Jury Trial For Violating Procedural Rules

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

Jury (pd)It is not often that a case that starts in the Special Civil Part — New Jersey's small-claims court — ends up before the New Jersey Supreme Court. But this is exactly what happened in Williams v. American Auto Logistics. It could not have been cost effective for the plaintiff to see this case through two separate bench trials, two separate appeals to the Appellate Division, and finally an appeal to the Supreme Court. But the issue in the case was so important that, notwithstanding the costs, the effort was likely worthwhile.

In Williams, plaintiff had his car shipped from Alaska to New Jersey by defendant. After he picked up the car, he discovered water damage in the trunk. Plaintiff sued in the Special Civil Part after efforts to amicably resolve the dispute failed. Plaintiff did not demand a jury trial in his complaint, but defendant did in its answer. At the pretrial conference, the trial court referred the parties to mediation, which was unsuccessful. Upon returning from mediation, defendant waived its jury demand. Plaintiff objected, but the trial court granted defendant's request. In support of its decision, the trial court noted that plaintiff had violated Rule 4:25-7 by failing to make the requisite pretrial submissions. (Among other things, Rule 4:25-7 requires parties to submit proposed voir dire questions, jury instructions, and jury verdict forms.) The trial court held that it could deny plaintiff's request for a jury trial as a sanction for this failure. Therefore, the case proceeded to a bench trial, where the trial court found no merit to plaintiff's claims.

Plaintiff appealed and the Appellate Division reversed and remanded. It held that a jury demand can only be withdrawn by consent, even when only one party demanded a jury trial and that party seeks to withdraw the demand. It further explained that "a trial judge may impose sanctions, including striking the jury demand, on a party that fails to submit the requisite pretrial information," but that the trial court in Williams erred by "allowing a single party to unilaterally waive the jury demand."

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