Lead Opinion
delivered the opinion of the Court.
In this appeal, we must determine whether a parent can bind a minor child to either a pre-injury waiver of liability or an agreement to arbitrate. In January 2003, twelve-year old Andrew HojnowsM was injured while skateboarding at a skate park facility operated by defendant Vans, Inc. (Vans). On a previous visit to the facility, Andrew’s mother had executed a release on Andrew’s behalf. That release contained a clause agreeing to submit any claims against Vans to arbitration, as well as a provision limiting Vans’ liability. After Andrew and his parents (plaintiffs) brought suit seeking recovery for Andrew’s injuries, Vans filed for commercial arbitration. Plaintiffs then moved to enjoin arbitration and to invalidate the liability release signed by Andrew’s mother.
The trial court found that plaintiffs were bound by the arbitration provision and dismissed their complaint without prejudice. The court declined to rule on whether the liability release was valid, concluding that that issue should be determined by the arbitrator. On appeal, the Appellate Division unanimously voted to uphold the arbitration provision but divided on the validity of the liability release. The majority determined that a pre-injury release of liability executed by a parent on behalf of a minor child violates public policy and is therefore unenforceable. The dissent argued that the court should have deferred to the parent’s decision to enter into the agreement and enforced the waiver. We affirm the majority and hold that although a parent may agree to bind a minor child to an arbitration provision, which in essence constitutes a choice of forum, a parent may not bind a minor child to a pre-injury release of a minor’s prospective tort claims resulting from the minor’s use of a commercial recreational facility. Pursuant to our parens patriae duty to protect the best interests of the child, we will not enforce such a release in the context of this case.
I.
In January 2003, twelve-year old Andrew Hojnowski and his mother, Anastasia Hojnowski, visited a Vans Store in Moorestown, New Jersey. Defendant Vans operated the retail store that sold skateboards and related merchandise and maintained a recreational skateboard facility. To enter the skate park, Vans required Andrew’s mother to sign an exculpatory release. It appears that Andrew’s mother did not execute a release on the date in question but had executed a release in December 2002, which Vans had kept on file.
The release, entitled “RELEASE AND WAIVER OF LIABILTY AND JURY TRIAL WITH INDEMNITY (FOR ALL VANS SKATEPARKS, STORES AND FACILITIES (COLLECTIVELY, ‘PARKS’) IN NEW JERSEY),” begins by stating:
Please read this document. It affects Your legal rights against Vans, Inc. if you are injured. Do not sign this document unless you understand it. If You are a minor, Your parent or guardian is required to sign this legal document.
The document then provides, in relevant part:
2. Can You Make A Claim Por Money If You Are Injured?
If you are injured and want to make a claim, you must file a demand before the American Arbitration Association (the “AAA”)____ You agree that any dispute between You and Vans will be decided by the AAA. Vans, Inc. will pay all costs of the arbitration for You____
3. Vans Is Asking You To Give Up Legal Rights in Order to Enter This Park
Because using Vans’ Park, or even entering the Park as a spectator may increase your risk of harm, Vans is asking you to give up certain valuable legal rights. Here are the rights you are giving up when you sign this document:
(a) You give up your right to sue Vans in a court of law.
(b) You give up your right to a trial by jury.
(c) You give up the right to claim money from Vans if you are injured unless Vans intentionally failed to prevent or correct a hazard caused by unsafe equipment or devices.
(d) You give up the right to claim money from Vans if you wait more than one year from the injury in order to make a claim.
(e) You give up the right to claim money from Vans, Inc. if you are injured by another person.
(f) You give up the right to recover damages to punish or make an example of Vans, Inc.
4. Rights You Do Not Give Up
You do not give up the right:
(a) To have safe equipment, structures and devices at the Park for Your intended use.
(b) To claim compensation for Your injury from Vans, Inc. if you are hurt because the equipment, structures and devices at the Park are not safe for Your intended use.
(e) To make a claim if Vans, Inc. or anyone working for Vans, Inc. intentionally hurts you.
5. Who Is Bound By This Document?
You are bound by this document. Anyone who has or can obtain Your rights is also bound by this document, such as Your family, relatives, guardians, executors or anyone responsible for You____
6. Other Information Important For You To Know
You have the right to demand money if You believe Vans, Inc. intentionally caused You harm. If parts of this document are determined to be invalid, then that portion will be unenforceable and the remainder of the document will continue in full legal force and effect____
Following those provisions, Andrew’s mother answered “Yes” to the question: “Do You understand that You are giving up rights by signing this document if You are hurt?” The document also informed customers that “[b]y signing this document You agree that Vans, Inc. may rely on Your answers.” Andrew’s mother signed the release on Andrew’s behalf in the space provided beneath that provision.
Plaintiffs claim that, during his use of Vans’ facility in January 2003, Andrew suffered a fractured femur when an aggressive skateboarder, about whom his parents had complained to Vans, forced him off a skateboard ramp. Consequently, in August 2003, Andrew, acting through his parents as guardians ad litem, and his parents, in their own right, filed suit against Vans. Their complaint alleges that Vans “negligently fail[ed] to supervise the activities at the skate park, negligently failed to control activities of aggressive skateboarders, negligently failed to warn Plaintiffs’ parents that the activities of aggressive skateboarders would not be monitored, and negligently failed to provide a safe place to skateboard.” Plaintiffs also filed suit against an unnamed corporate owner and insurance company. Vans responded by filing a demand for commercial arbitration with the American Arbitration Association.
On appeal, the Appellate Division unanimously affirmed the trial court’s grant of summary judgment concerning the validity of the arbitration provision. Hojnowski v. Vans Skate Park, 375 N.J.Super. 568, 574-75,
The majority concluded that, under the circumstances of this matter, a parent lacks the authority “to sign a pre-tort agreement limiting the liability of a tortfeasor to exclude negligent conduct” and therefore voided the release. Id. at 588,
[w]ere [the court] to decide otherwise, [it] would be relieving an alleged wrongdoer from its traditional legal responsibility to provide compensation for injuries caused by its negligence and shifting the economic burden to families, public welfare agencies and private charities without any concomitant benefit to either an injured child or his parents.
[Id. at 590, 868 A.2d 1087.]
Judge Fisher dissented, arguing that the court should have enforced the liability waiver and deferred to a parent’s decision regarding such matters. Id. at 591-92,
Vans appealed to this Court as of right on the issue of the validity of the pre-injury release of liability. R. 2:2-l(a)(2). We also permitted the Pacific Legal Foundation to submit a brief as amicus curiae on that issue and granted plaintiffs’ petition for certification on the question whether a parent can bind a minor child to arbitration.
II.
We first address whether New Jersey’s public policy permits a parent to release a minor child’s potential tort claims arising out of the minor’s use of a commercial recreational facility. Plaintiffs argue that
Defendant recognizes that the enforcement of parental liability waivers has been “treated in varied fashions by different states.” However, defendant asserts that “[t]he more substantial and well-considered decisions favor enforcement of exculpatory agreements based on the fundamental right of parents to raise their children as they decide.” Defendant further contends that it is “erroneous” to equate pre-tort releases of liability with post-tort releases because “[t]he conflict of interest and potential for harm to befall a minor are far different in the context of a release of an accrued tort claim where settlement funds are present and may be misappropriated.” Finally, defendant claims that “[without enforceable [rjeleases many activities available to children may be forced to close due to liability concerns.”
A.
We begin our analysis of that issue by noting that there is ambiguity in the pre-injury release concerning whether the agreement extinguishes or merely limits plaintiffs’ ability to recover against defendant for negligence. For example, although paragraph 3(c) provides that plaintiffs have “give[n] up the right to claim money from [defendant] unless [defendant] intentionally failed to prevent or correct a hazard caused by unsafe equipment or devices,” paragraph 4(b) states that plaintiffs have not “give[n] up the right to claim compensation [if] the equipment, structures and devices at the Park are not safe for [their] intended use.” We need not determine the precise scope and meaning of those terms, however, because we hold that the public policy of New Jersey prohibits a parent of a minor child from releasing a minor child’s potential tort claims arising out of the use of a commercial recreational facility.
B.
Exculpatory agreements have long been disfavored in the law because they encourage a lack of care. See, e.g., Gershon v. Regency Diving Ctr., 368 N.J.Super. 237, 247,
The relevant public policy implicated in this matter is the protection of the best interests of the child under the parens patriae doctrine. Parens patriae refers to “the state in its capacity as provider of protection to those unable to care for themselves.” Black’s Law Dictionary 1144 (8th ed.2004). In keeping with that policy, the Legislature and the courts historically have afforded considerable protections to claims of minor children. The most significant of those protections concerns the compromise or release of a minor’s post-injury claims. Under Buie 4:44, after a minor has suffered a tortious injury, a minor’s parent or guardian may not dispose of a minor’s existing cause of action without statutory or judicial approval. See Moscatello ex rel. Moscatello v. Univ. of Med. & Dentistry of N.J., 342 N.J.Super. 351, 361,
Although the Rule governing post-injury settlements is not dispositive of our treatment of pre-injury releases, we find that the purposes underlying the post-injury settlement rule also apply in the present context. First, children deserve as much protection from the improvident compromise of their rights before an injury occurs as Rule 4:44 affords them after the injury. Moreover, at the time a parent decides to release the potential tort claims of his or her child, the parent may not fully understand the consequences of that action and may not have even read the waiver before signing. As the Utah Supreme Court has noted:
These clauses are ... routinely imposed in a unilateral manner without any genuine bargaining or opportunity to pay a fee for insurance. The party demanding adherence to an exculpatory clause simply evades the necessity of liability coverage and then shifts the full burden of risk of harm to the other party. Compromise of an existing claim, however, relates to negligence that has already taken place and is subject to measurable damages. Such releases involve actual negotiations concerning ascertained rights and liabilities. Thus, if anything, the policies relating to restrictions on a parent’s right to compromise an existing claim apply with even greater force in the preinjury, exculpatory clause scenario. [Hawkins v. Peart,37 P.3d 1062 ,1066 (Utah 2001) (emphasis added).]
Further, in both the pre- and post-injury context, it is necessary to ensure that children retain the ability to seek compensation for an injury. When a parent signs a pre-injury release of liability and the child is later injured, the parent is
Those concerns are even more acute in the context of commercial premises liability. In New Jersey, “[bjusiness owners owe to invitees a duty of reasonable or due care to provide a safe environment for doing that which is in the scope of the invitation.” Nisivoccia v. Glass Gardens, Inc., 175 N.J. 559, 563,
In finding that the exculpatory provision in this matter is invalid, we are in agreement not only with our own State’s case law, but also with the overwhelming majority of other jurisdictions. See, e.g., Fitzgerald, supra, 111 N.J.Super. at 108,
Although we recognize that jurisdictions are not uniform on the question of waiver, our research discloses that the only published decisions in which such agreements have been upheld are in connection with non-commercial ventures, such as volunteer-run or non-profit organizations. See, e.g., Hohe v. San Diego Unified Sch. Dist., 224 Cal.App.3d 1559, 274 Cal.Rptr. 647, 648-50 (1990) (upholding parental agreement releasing any claims of minor child resulting from child’s participation in school-sponsored event); Gonzalez v. City of Coral Gables,
Accordingly, in view of the protections that our State historically has afforded to a minor’s claims and the need to discourage negligent activity on the part of commercial enterprises attracting children, we hold that a parent’s execution of a pre-injury
C.
In so holding, we find that defendant’s remaining contentions and those of the dissent below are unconvincing. First, we are not persuaded by the argument that we should allow for parental liability releases because a pre-injury release of a minor’s potential tort claims is no different than a parent’s decision not to bring suit on a minor’s behalf. That argument ignores the fact that, under the tolling provisions of N.J.S.A 2A:14-21, a minor retains the right to sue for most personal injuries for two years after reaching the age of majority, N.J.S.A 2A:14-2. One of the rationales behind the tolling provision is that a child should not “be penalized for the ignorance or neglect of his parents or guardian in failing to assert [his or her legal] rights.” O’Connor v. Altus, 67 N.J. 106, 131-32,
Nor do we accept the argument that a parental release of liability on behalf of a minor child implicates a parent’s fundamental right to direct the upbringing of his or her child. Although parents undoubtedly have a fundamental liberty interest “in the care, custody, and control of their children,” Troxel v. Granville, 530 U.S. 57, 65, 120 S.Ct. 2054, 2060, 147 L.Ed.2d 49, 56 (2000), the question whether a parent may release a minor’s future tort claims implicates wider public policy concerns and the parens patriae duty to protect the best interests of children. See Cooper, supra,
We also reject defendant’s argument that enforcing parental releases of liability is necessary to ensure the continued viability of businesses offering sports activities to minors. We do not view tort liability as an unreasonable economic restraint on the ability of business owners to operate commercial recreational facilities. See Scott, supra,
Finally, the dissent below argued that invalidating parental releases of liability “is at odds with our Legislature’s willingness to render participants solely responsible for injuries resulting from the inherent risks of similar activities.” Hojnowski, supra, 375 N.J.Super. at 593,
III.
The second issue that we must decide is whether a parent can bind a minor child to an agreement to arbitrate future disputes arising out of a commercial recreation contract. Plaintiffs contend that “[although] arbitration is an approved alternative to a jury trial, an unsophisticated parent, about to have [his or her] child enter a recreational facility, should not be permitted to bind [his or her] child to a waiver of a trial by jury.” Defendant counters that this Court should enforce the parent’s agreement to submit the minor’s claims to arbitration because the Appellate Division previously upheld such an agreement in Allgor v. Travelers Insurance Co., 280 N.J.Super. 254,
A.
Federal policy has favored the enforcement of arbitration agreements for many years. In 1925, Congress enacted the Federal Arbitration Act (FAA), 9 U.S.C.A §§ 1-16, to reverse then existing judicial hostility to arbitration agreements and “to place arbitration agreements upon
A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such a contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. [Emphasis added.]
Although the FAA applies to both state and federal judicial proceedings, state contract-law principles generally govern a determination whether a valid agreement to arbitrate exists. See, e.g., First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985, 993 (1995) (“When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally ... should apply ordinary state-law principles that govern the formation of contracts.”). However, “a state cannot subject an arbitration agreement to more burdensome requirements than those governing the formation of other contracts.” Leodori v. CIGNA Corp., 175 N.J. 293, 302,
In New Jersey, arbitration also is a favored means of dispute resolution. See, e.g., Martindale v. Sandvik, Inc., 173 N.J. 76, 84-85,
B.
In light of the strong public policy favoring the settlement of disputes through arbitration, we conclude that allowing a parent to bind a minor child to arbitrate future tort claims is not contrary to our duty as parens patriae to protect the best interests of the child. As opposed to a pre-injury release of liability, a pre-injury agreement to arbitrate does not require a minor to forego any substantive rights. Rather, such an agreement specifies only the forum in which those rights are vindicated. See, e.g., Global Travel Mktg., Inc. v. Shea,
[t]he ancient practice of arbitration “[i]n its broad sense, ... is a substitution, by consent of the parties, of another tribunal for the tribunal provided by the ordinary processes of law. The object of arbitration is the final disposition, in a speedy, inexpensive, expeditious, and perhaps less formal manner, of the controversial differences between the parties.”
[Carpenter v. Bloomer, 54 N.J.Super. 157, 162,148 A.2d 497 (App.Div.1959) (quoting E. Eng’g Co. v. City of Ocean City, 11 N.J. Misc. 508, 510-11,167 A. 522 (Sup.Ct.1933)).]
Further, although this Court previously has not ruled on the issue, permitting arbitration of a minor’s claims is consistent with New Jersey ease law discussing the enforceability of arbitration agreements that affect the rights of children. For example, in Allgor, supra, the Appellate Division concluded that a father’s contractual agreement to submit to arbitration disputes arising under his underinsured motorist policy also bound his minor son who filed a claim under that policy. 280 NJ.Super. at 262-65,
[w]e do not agree with those who fear that by allowing parents to agree to arbitrate child, support, we are interfering with the judicial protection of the best interests of the child. We see no valid reason why the arbitration process should not be available in the area of child support; the advantages of arbitration in domestic disputes outweigh any disadvantages.
[Id. at 109, 477 A.2d 1257 (emphasis added).]
Finally, a review of case law from other jurisdictions reinforces our conclusion that a parent should be permitted to bind a minor child to arbitration. In Global Travel Marketing, supra, the Florida Supreme Court recently reversed a Florida Court of Appeals ruling, upon which plaintiffs relied, which held that parents lack authority to bind a minor child to arbitrate prospective claims arising out of a commercial travel contract for an African safari. 908 <So.2d at 394-95. In finding that such agreements are “not contrary to the public policy of protecting children,” id. at 405, the court recognized a “crucial” distinction between an outright waiver of a minor’s legal claims and a waiver of the forum in which the claims are presented, id. at 403.
The Ohio Court of Appeals reached a similar conclusion in Cross, supra, 132 Ohio App.3d 157,
[a] parent’s consent and release to arbitration only specifies the forum for resolution of the child’s claim; it does not extinguish the claim. Logically, if a parent has the authority to bring and conduct a lawsuit on behalf of the child, he or she has the same authority to choose arbitration as the litigation forum.
[Ibid.']
See also Doyle v. Giuliucci, 62 Cal. 2d 606, 43 Cal.Rptr. 697,
Although we recognize that certain cases from other jurisdictions have found a minor’s claims to be non-arbitrable, those cases are distinguishable because they were decided solely on the basis of the individual contracts at issue in those appeals. They did not directly rule on the larger issue presented by this appeal—whether a parent can bind a minor child to arbitrate future disputes. Fleetwood Enters. Inc. v. Gaskamp,
IV.
We affirm the judgment of the Appellate Division and refer this matter to the arbitrator for further proceedings consistent with this opinion.
Notes
On appeal, plaintiffs did not raise the issue of the enforceability of the arbitration provision or the pre-injury liability release against the parents in their own right. Accordingly, our analysis is limited to a determination of the enforceability of those provisions against the minor child. Because the issue is not before us, we neither express nor imply an opinion concerning whether a waiver-of-rights provision of the nature entered into by the parties would be enforceable as against an adult.
N.J.S.A. 2A:24-1 to -11 was superseded by a modified version of the Arbitration Act, N.J.S.A. 2A:23B-1 to -32, effective January 1, 2003, and applicable to agreements entered into on or after that date, NJ.S.A. 2A:23B-3a. Because the arbitration agreement at issue in this appeal was executed prior to that date, this matter is governed by the former statute.
Concurrence Opinion
concurring in part and dissenting in part.
I am in full agreement -with that portion of the majority’s decision that affirms enforcement of the parties’ agreement to subject their dispute to arbitration. I part company from my colleagues, however, in so far as they have chosen to invalidate the
Although the majority declines to express any view on whether the waiver would be invalid if enforced against an adult, it is noteworthy that the waiver does not appear to involve any of the grounds that New Jersey courts have heretofore invoked to invalidate an exculpatory waiver. For example, the waiver does not exempt defendant from liability for a “future intentional tort or willful act or gross negligence.” Kuzmiak v. Brookchester, Inc., 33 N.J.Super. 575, 580,
Contracts of this nature are not favored by the law. They are strictly construed against the party relying on them and clear and explicit language in the contract is required to absolve a person from such a liability.
[McCarthy v. NASCAR, Inc., 87 N.J.Super. 442, 450,209 A.2d 668 (Law Div.1965), aff'd, 90 N.J.Super. 574,218 A.2d 871 (App.Div.1966), aff'd, 48 N.J. 539,226 A.2d 713 (1967).]
See also Gershon v. Regency Diving Ctr., Inc., 368 N.J.Super. 237, 247,
The fact that exculpatory waivers receive narrow construction from courts does not render such waivers unenforceable. Previously, we have stated that “[wjhere [exculpatory agreements] do not adversely affect the public interest, exculpatory clauses in private agreements are generally sustained.” Mayfair Fabrics v. Henley, 48 N.J. 483, 487,
In my view, recreational activities such as skateboarding do not implicate the “public interest.”
Invoking the “best interests” of children under the parens patriae doctrine, the majority holds that the waiver is invalid as against public policy, and analogizes the instant situation to the requirement under Rule 4:44 that parental settlement of a minor’s post-injury claims receive judicial approval. There is an important difference between the present pre-injury waiver and the circumstances Rule 4:44 seeks to address. “Our rules for friendly settlements, R. 4:44-1 et seq., are intended to minimize or prevent conflicts of interest from occurring and to assure the reasonableness of settlements.” Zukerman v. Piper Pools, 232 N.J.Super. 74, 90,
Assuming, nonetheless, that a pre-injury contractual setting is similar to a post-injury setting, that does not support the conclusion that all waivers entered into on behalf of minors are unenforceable, a conclusion that simply goes too far. Rule 4:44 does not bar parental settlements. Rather, the rule requires judicial scrutiny “to ensure the reasonableness of settlements.” Zukerman, supra, 232 N.J.Super. at 90,
I acknowledge that as a general rule, minors can, before they reach the age of majority, disaffirm contracts into which they enter. Mechanics Fin. Co. v. Paolino,
However, contracts entered into by minors can be enforceable if the contract is approved by a court. Indeed, as noted, Rule 4:44 allows settlement agreements involving minors to be enforced so long as a reviewing court determines that the agreement is “reasonable.” Zukerman, supra, 232 N.J.Super. at 90,
Although our Legislature has not yet enacted similar legislation, freedom of contract principles lead me to the conclusion that a pre-tort waiver entered into by a minor, or ratified by a parent on behalf of a minor, should be enforceable when a reviewing court or arbitrator determines that the waiver was reasonable and not based on unequal bargaining positions. See Simmons v. Parkette Nat’l Gymnastic Training Ctr., 670 F.Supp. 140, 144 (E.D.Pa. 1987) (invalidating minor’s pre-injury waiver and relying, in part, on the fact that “there was no court involvement in the transaction”). If the reasonableness of the waiver is approved, then a minor should be barred from disaffirming the contract, an approach that is consistent with Rule 4:44. It differs somewhat from Rule 4:44 in that I would allow a trial court to review the “reasonableness” of a pre-tort waiver when a defendant, post-injury, raises the waiver as a defense to a suit brought by an injured party.
Post-injury review of pre-injury waivers eliminates the certainty that is provided by Rule 4:44 or, for example, the process established by statute in California and New York, all of which mandate that courts review contracts at the time they are executed. Potential defendants may, however, wish to bear the risk of such uncertainty given the benefits of any waiver ultimately upheld as reasonable. Absent action by the Legislature, I would permit court or arbitrator review and approval, as described, to validate a minor’s
Accordingly, I would affirm in part, reverse in part, and remand the matter for further proceedings.
Justice RIVERA-SOTO joins in this opinion.
For affirmance—Chief Justice PORITZ and Justices LONG, ZAZZALI, ALBIN and WALLACE—5.
For affirmance in part/reversal in part/remandment—Justices LaVECCHIA and RIVERA-SOTO—2.
That conclusion is in accord with the majority of jurisdictions that have addressed the subject; they have concluded that recreational activities do not implicate the public interest. See, e.g. Chauvlier v. Booth Creek Ski Holdings, Inc., 109 Wash.App. 334,
Under Rule 4:44 litigants must obtain court approval at the time of entry into the settlement agreement. Requiring judicial approval at the time that a minor enters into a pre-injury waiver would be impractical and inefficient. Review would have to be limited to situations when an injury actually occurs. The reviewing court, of course, would have to view the "reasonableness” of the waiver as of the time that the waiver was executed.