Happy New Year From The California Supreme Court! A Home Run Ruling In Nalwa v. Cedar Fair

In the law, there aren’t many things that can rightfully be called a home run.  The vast majority of “big” decisions out there are not total wins for one side, but are judged to be “big” because, in the main, their result effects a shift in the law or undoes a prior bad result even while, in some modest measure, containing a small victory for the “loser.”  The recent Supreme Court Obama-care decision is a perfect illustration: the Court upheld the individual mandate (the big win for liberals all over the country) while making clear that the individual mandate is, in reality, a tax (a small victory for conservatives).  On New Year’s Eve, though, the California Supreme Court issued a rare home run opinion in Nalwa v. Cedar Fair – an opinion that eviscerates the prior poorly-reasoned decision of the California Court of Appeals and unambiguously establishes the right of amusement and recreation facilities to assert the primary assumption of the risk defense to avoid costly and uncertain trial practice.  Even more remarkable, although the decision was a 6-1 majority (a strong victory to be sure), the Court of Appeals reasoning – that California’s public policy precludes the applicability of the assumption of the risk doctrine to the recreation industry entirely – was unanimously rejected.  There is simply no way to view this decision as anything but a complete home run for both Cedar Fair and the amusement industry in general.

I won’t go into a lot of detail about the background of the Nalwa case as I have written about it previously in some detail.  (See here, here, here, and here if you would like).  Here’s the short version:  In 2005, Dr. Simriti Nalwa took her two children to Great America in Santa Clara, California and, while there, took them on the bumper car ride.  During the ride, the car she and her son were riding in was bumped from behind and from the front and, during the bumping, Dr. Nalwa braced herself and broke her wrist. She sued the park (then owned by Paramount, but now by Cedar Fair), claiming, in essence, that the park did not do enough to prevent her injuries.  The trial court granted summary judgment in favor of Cedar Fair on the basis of the primary assumption of the risk doctrine – essentially finding that there is an inherent risk in riding bumper cars that a guest will be injured from bumping and that Cedar Fair had no duty to minimize those inherent risks.  The Court of Appeals reversed this ruling, finding 1) that the primary assumption of the risk doctrine had no applicability to amusement parks (or any other recreational activities) because they were not “sports,” 2) that California’s public policy, embodied in its amusement safety regulations, precluded the assumption of the risk defense, and 3) that recreational facilities could absorb the cost of liability given the large profits they were making on their facilities.  The California Supreme Court overturned the Court of Appeal’s decision – entirely, and unanimously, rejecting its reasoning.

In reaching its decision, the Court put to rest, permanently, any argument that might have previously existed as to whether the assumption of the risk defense was limited only to sports or could be applied to other recreational activities.  The Court found that both the Plaintiffs and the Court of Appeals had taken an overly restrictive view of prior case law in pointing out that the Supreme Court’s prior rulings on primary assumption of the risk dealt only with sporting activities.  The Supreme Court noted out that this was only because the few prior cases to have considered the issue only dealt with sports, and, thus, the fact that the Court had not yet dealt with a recreation case did not mean that the doctrine did not apply, only that the Court had not yet had the opportunity to apply it in that context.  Indeed, the Court held, the doctrine does apply, and for good reason:

Allowing voluntary participants in an active recreational pursuit to sue other participants or sponsors for failing to eliminate or mitigate the activity’s inherent risks would threaten the activity’s very existence.

In essence, the Court found that if Cedar Fair, and other recreation-industry operators, were required to minimize the risks inherent in bumper cars, they would have to make such extreme changes to the experience as to fundamentally change it – and the law will not interfere with voluntary recreation to such a degree.

The Court also rejected the Court of Appeals reasoning that California’s ride regulations – which no party claimed to have been violated – prevented amusement operators from asserting the primary assumption of the risk doctrine as a defense in litigation.  The Court found that no one – not the legislature and not park guests – expects a visit to a recreational facility to be completely free of the risk of injury, and the amusement regulations do not demand otherwise.  As the Court noted,

A small degree of risk inevitably accompanies the thrill of speeding through curves and loops, defying gravity or, in bumper cars, engaging in the mock violence of low-speed collisions.  Those who voluntarily join in these activities also voluntarily take on their minor inherent risks.  As for the rest:  “The timorous may stay home.”

This is an important statement, and one that should not be ignored by future courts in future cases.  Too often courts view the amusement industry as having an obligation to ensure guest safety.  But the job of the industry is not to ensure safety, it is to safeguard it.  As the Court correctly found, when you subject the human body to the physics involved in an amusement ride, there is simply no way to ensure an injury-free experience.  The best that can be done – and it is done exceedingly well in this industry – is to safeguard our guests from injury by not doing anything that would increase the risks inherent in the ride itself.  If that is taken care, so will be the overwhelming majority of our guests.  No one forces anyone to visit an amusement park or to ride a ride once there, and if a guest does not want to accept the risks that come along with the experience, however minor they may be, the guest can choose not to participate and thereby ensure his or her safety completely.  In other words, only the guest can ensure their safety – an operator simply cannot.

The Court also summarily rejected what, in my opinion, was one of the most-troubling aspects of the Court of Appeals prior decision.  In ruling that the assumption of the risk defense did not apply to amusement operators, the Court of Appeals noted that amusement operators are “best situated to minimize any risks associated with [their] rides, both because of [their] control and because of the profits such parks make.”  In an earlier post, I took great issue with this statement because it injected a financial consideration into a rule of law and wrongly assumes that all amusement operators have the financial resources of Cedar Fair.  The California Supreme Court agreed with this criticism:

A rule imposing negligence duties on sponsors, organizers, and operators of recreational activities would encompass not only commercial companies like defendant but also noncommercial organizations without extensive budgets or paid staff.  Such groups might not easily afford insurance to cover injuries that are inherent risks of the activity; nor could they readily collect large fees from participants to cover that cost. 

This is exactly the point I argued earlier, and it is exactly the right result.  The vast majority of our industry do not have the resources of Cedar Fair, Universal, Six Flags, or Disney.  The Court of Appeals decision would have held mom-and-pop owners of an FEC to the same financial standard as a multi-billion dollar park chain.  The California Supreme Court wisely decided that this was patently unfair and rejected that notion entirely.

Finally, as if there were any doubt as to the validity of the Court of Appeals’ reasoning, it must be noted that not even the dissenting voice on the Court agreed with it.  Justice Kennard dissented from the majority’s opinion, but not to argue that the Court of Appeals was right.  Rather, Justice Kennard simply expressed her long-standing view that the primary assumption of the risk doctrine should be jettisoned entirely – even as to sports – in favor of a rule (formerly in place in California) that would excuse defendants from liability only upon proof that a particular plaintiff had actually or impliedly consented to the risks of the activity.  The main difference between what the majority said and what Justice Kennard said was in who gets to decide what the risks are and whether they were assumed by the guest.  Under Justice Kennard’s view, judges are incapable of determining what the inherent risks of participation are and, as such, the jury should get to decide, after hearing evidence at trial, whether the plaintiff fully appreciated and accepted whatever risks existed such that the operator may be excused from liability.  The majority of the Court however squarely rejected that argument, finding that judges could draw upon their own experience, as well as other sources submitted by the parties before trial, to determine what the inherent risks of participating were and that the jury need not be involved in that determination.  However, no one, not the majority nor Justice Kennard, bought what the Court of Appeals was selling.  Viewed that way, while the Nalwa decision was not unanimous, it was a unanimous rejection of the Court of Appeals. 

While Nalwa is, at bottom, only a state-court decision and, consequently, only directly impacts operators in California, it is nonetheless a very important case in our industry.  Decisions of high-courts in California have influenced both case law and legislative efforts around the country and, as such, it is reasonable to believe that this case will have an impact on cases raising similar issues elsewhere.  By the same token, had the case gone the other way, it could have been equally influential in making life more difficult for operators outside of California as well.  While California is not generally thought of as a bastion of good law for any industry, this case is very good law for our industry and a great way start to 2013.