INSIGHT: Business Liability in a Pandemic—Carefully Drafted Waivers May Help

As businesses operate amid the uncharted pandemic, they have begun to face lawsuits by patrons claiming they contracted Covid-19 while on the business’s premises.

The fear of widespread liability related to Covid-19 has led Congress and many states to consider blanket liability immunity for all businesses related to it. A vast majority of this legislation relates to health-care providers, essential businesses, and/or personal protective equipment manufacturers.

A few states have gone further and provided liability immunity for all businesses. In states that have not implemented liability immunity for businesses, some companies require their patrons to sign liability waivers, attempting to shield the company from Covid-19 claims.

These waivers may provide businesses some measure of protection from negligence where the businesses are also in compliance with applicable Covid-19 regulations. It is important businesses draft waivers carefully.

State Action Providing Covid-19 Liability Immunity

States issuing legislation or executive orders providing liability immunity for non-health-care, non-essential, and non-PPE businesses include, but are not limited to, Alabama, Arkansas, Georgia, Iowa, Kansas, Louisiana, Mississippi, North Carolina, Oklahoma, Utah, and Wyoming.

The extent to which a business is immune and the requirements to maintain that immunity vary under each state’s statute, but these states generally do not extend immunity to gross negligence, recklessness, or intentional conduct. See e.g., Ga. Code Ann. § 51-16-2(a).

A viable option for companies in states that have not passed legislation is to have patrons sign liability waivers.

Waivers to Protect Against Covid-19 Claims

Generally, a business owner has a duty to ensure that its premises are reasonably safe for invitees and is required to use reasonable care to learn of any dangerous conditions on its premises. Thus, as a threshold matter, the most prudent action a business can take to mitigate liability is to remain in compliance with local, state, and federal regulations, orders, and guidelines related to Covid-19.

Compliance with applicable regulations will help ensure a business is considered to have acted reasonably. Even if a business faces claims by an infected patron, the patron will find it hard to establish causation due to the highly contagious nature of Covid-19.

Indeed, in California, U.S. District Judge Dale S. Fischer recently dismissed two actions against Princess Cruise Lines on the basis that the plaintiffs in each case failed to allege they had actually contracted Covid-19 while aboard their ship. See Rumrill v. Princess Cruise Lines Ltd. and Wortman v. Princess Cruise Lines Ltd.

While the court dismissed with leave to amend, the court’s decisions illustrate that establishing causation will be one of the heaviest burdens for potential plaintiffs. Until case law develops further in the courts, businesses may consider a properly drafted liability waiver to protect themselves from potential Covid-19 claims.

Courts generally disfavor exculpatory clauses, but liability waivers shielding a party against liability for its own negligence have been found enforceable in most states where certain conditions are met.

The general consensus is that for a liability waiver to be enforceable, the waiver must be:

• Clear,
• Unequivocal,
• Conspicuous, and
• Not against public policy.

The factual circumstances surrounding the waiver will be key in determining whether the waiver offends public policy. A liability waiver from a business with a recreational purpose (i.e., movie theatre, gym, etc.) is more likely to be considered enforceable compared to a liability waiver from an essential business (i.e., doctor, dentist, etc.).

Key Provisions to Include in a Waiver

Businesses seeking to draft a liability waiver for Covid-19 should consider including the following:

1. A conspicuous title in all CAPITALS, BOLDED and UNDERLINED;
2. An acknowledgment that Covid-19 is a highly contagious disease most often transmitted from person to person;
3. A clear statement of the risks associated with exposure to Covid-19;
4. A clear statement that the business has taken preventative measures to limit the patron’s exposure to Covid-19 but that such preventative measures cannot guarantee the patron will not be exposed to or contract Covid-19 while on the business’s premises;
5. A clear statement that the patron acknowledges the risks associated with exposure to Covid-19 and that the business cannot guarantee that the patron will not be exposed to Covid-19;
6. A clear statement that the patron expressly intends to assume all risks associated with potential exposure to Covid-19 while on the business’s premises and releases the business from liability premised on negligence;
7. Specific inclusion of the word “negligence”;
8. Signature of the patron.

Courts may enforce a properly drafted liability waiver, but it will only protect a business from its own negligence and not from gross negligence, reckless conduct, willful/wanton conduct, or intentional acts.

Opening a business to the public but failing to comply with applicable regulations may be considered grossly negligent given the known risks associated with Covid-19. A waiver, no matter how well drafted, may not protect the business absent its reasonable compliance with these measures.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

Jennifer C. Glasser is a litigation partner in Akerman LLP’s Miami office, and focuses her practice on complex commercial disputes, business torts, private equity litigation, and civil theft cases. She represents local, national, and international companies in the hospitality industry, providing strategic advice on operations, preventative counseling, and risk mitigation.

Eric D. Coleman is a litigation associate in Akerman’s Miami office, and focuses his practice on complex business litigation, including commercial disputes, breach of contract claims, fraud claims, and shareholder derivative actions.