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Chris Dunn Wins Case of First Impression In Court Of Appeals, Protecting Commercial Retailers Rights

August 5, 2020

In BJ’s Wholesale Club v. Rosen, Case No. 99, (November 2013), the Court of Appeals of Maryland was asked to consider the enforceability of an agreement executed by a parent on behalf of his minor son, permitting his son’s use of a free supervised play area called the “Incredible Kids’ Club” (Kids’ Club) offered by BJ’s Wholesale Club, Inc. (BJ’s), a commercial wholesale retail center.  The agreement contained both an exculpatory provision and indemnification language; however, the Court’s holding focused on the exculpatory provision.  Judge Lynne A. Battaglia wrote the opinion for the court, and upheld the exculpatory clause in this case.

The Kids’ Club at issue contained a number of different amusement items, which children were permitted to use while their parents shopped.  To use the Kids’ Club, BJ’s required parents to sign an agreement, entitled “BJ’s Incredible Kids’ Club Rules,” which mandated usage restrictions.  Of particular relevance, BJ’s Incredible Kids’ Club Rules contained an exculpatory clause that provided:

I further acknowledge that I have read, understood and I voluntarily agree to abide by all of the rules appearing above and/or rules as posted in the Play Center and registration area. In consideration for this service, I, individually and on behalf of my child, do hereby waive, release and forever discharge BJ’s Wholesale Club, Inc.  . . .  from any and all claims and causes of action of any kind or nature which are in any way related, directly or indirectly, to the use of Play Center which I may have or that hereafter may accrue including any such claims or causes of action caused in whole or in part by the negligence of BJ’s Wholesale Club, Inc.  . . .  I understand that my child is here at my own risk and expense and agree that neither I nor my child will bring any claim or cause of action of any kind or nature against BJ’s Wholesale Club, Inc.  . . .

On July 17, 2005, Russell Rosen executed the “BJ’s Incredible Kids’ Club Rules,” which included the exculpatory clause, on behalf of his three (3) minor children, including his son, Ephraim Rosen.  Approximately fifteen months later, Beily Rosen, his wife, went shopping at the BJ’s’ location and dropped off then five-year old Ephraim at the Kids’ Club where Ephraim was injured after falling from a plastic apparatus called “Harry the Hippo,” according to the Rosens’ Complaint filed in the Circuit Court for Baltimore County.  The Complaint alleged that BJ’s was negligent for placing Harry the Hippo in an area without sufficient padding.  Thereafter, BJ’s filed a motion for summary judgment alleging that no factual matters were in dispute and that, pursuant to the Court of Appeals’ decision in Wolf v. Ford, 335 Md. 525, 644 A.2d 522 (1994), the exculpatory clause was valid and barred the Rosens’ claims as a matter of law.  Judge Thomas J. Bollinger, Sr., of the Circuit Court for Baltimore County, granted summary judgment for BJ’s, and the Rosens filed a timely notice of appeal in the Court of Special Appeals.  In a reported opinion, the Court of Special Appeals reversed the lower court’s decision, striking down both the exculpatory and indemnification clauses and acknowledging that, while the appellate court’s decision in Wolf validated exculpatory clauses, “[t]here are circumstances . . . under which the public interest will not permit an exculpatory clause in a contract[.]”  Rosen v. BJ’s Wholesale Club, Inc., 206 Md. App. 708, 716, 51 A.3d 100 (2012).  BJ’s petitioned the Court of Appeals for a writ of certiorari, which it granted.

First, the Court of Appeals stated that an exculpatory clause is a “contractual provision relieving a party from liability resulting from a negligent or wrongful act.” Black’s Law Dictionary (9th ed. 2009).  By entering into an exculpatory agreement, “the parties expressly . . . agree in advance that the defendant is under no obligation of care for the benefit of the plaintiff, and shall not be liable for the consequences of conduct which would otherwise be negligent.”  Wolf, 335 Md. at 531, 644 A.2d at 525, quoting W. Page Keeton, et al., Prosser and Keeton on the Law of Torts, § 68, at 482 (5th ed. 1984) and citing Restatement (Second) of Contracts § 195 (1981).  Moreover, the Court of Appeals opined that exculpatory clauses are to be construed strictly, requiring that the language of any such clause “clearly and specifically indicates the intent to release the defendant from liability for personal injury caused by the defendant’s negligence.”  Adloo v. H.T. Brown Real Estate, Inc., 344 Md. 254,266, 686 A.2d 298, 304 (1996).

Second, the Court of Appeals cited Wolf, which articulated various exceptions to the general rule upholding exculpatory clauses: (1) intentional harms or the more extreme forms of negligence, i.e., reckless, wanton, or gross; (2) a contract that is the product of grossly unequal bargaining power; and (3) a transaction that affects the public interest.  According to the Court in Wolf, this last category included the performance of public service obligations, e.g., public utilities, common carriers, innkeepers, and public warehousemen, as well as those transactions that are so important to the public good that an exculpatory clause would be “patently offensive,” such that “‘the common sense of the entire community would . . . pronounce it’ invalid.”  Md. Nat’l Cap. P. & P. v. Wash. Nat’l Arena, 282 Md. 588, 606, 386 A.2d 1216, 1228 (1978).After exploring the history of Maryland case law and legislation, the Court of Appeals concluded that there are clear societal expectations that parents are empowered to make decisions pertaining to their children’s welfare, and that a parent’s decisions are generally in the child’s best interest.  Here, Mr. Rosen made a decision to sign an exculpatory agreement on his behalf and that of his children.  According to the Court of Appeals, society’s expectation is that a parent’s decision-making in such a matter is not limited.  Furthermore, Mr. Rosen’s execution of an exculpatory agreement on behalf of Ephraim to allow him to use the Kids’ Club was not a transaction affecting the public interest within the meaning of Wolf. The Court of Appeals also rejected the notion that an agreement prospectively waiving a claim for negligence executed by a parent on behalf of a child should be invalidated because a commercial entity may better be able to bear the risk of loss than a non-commercial entity by purchasing insurance.  Finally, the Court of Appeals stated that it had never applied the parens patriae doctrine to invalidate, undermine, or restrict a decision made by a parent on behalf of his child in the course of the parenting role.  Therefore, the Court of Appeals concluded that the Court of Special Appeals erred by invoking the State’s parens patriae authority to invalidate the exculpatory clause in the Kids’ Club Rules agreement.

The top court’s decision ultimately will have a positive impact on retailers in Maryland.  This holding confirms the societal expectation that parents have given informed consent when they agree to allow their children to participate in activities and in exchange waive the right to pursue negligence claims against the organizers of the activity, including retailers.