James Duhon v. Activelaf, LLC, D/B/A Skyzone Lafayette and Underwriters at Lloyds, London

Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #057
FROM: CLERK OF SUPREME COURT OF LOUISIANA
The Opinions handed down on the 19th day of October, 2016, are as follows:
BY JOHNSON, C.J.:
2016-CC-0818 JAMES DUHON v. ACTIVELAF, LLC, D/B/A SKYZONE LAFAYETTE AND
UNDERWRITERS AT LLOYDS, LONDON (Parish of E. Baton Rouge)
Accordingly, we find the court of appeal erred in reversing the
district court’s ruling on Sky Zone’s exception of prematurity.
Therefore, the ruling of the court of appeal is reversed, and the
ruling of the district court is reinstated.
REVERSED AND REMANDED TO THE DISTRICT COURT FOR FURTHER
PROCEEDINGS.
WEIMER, J., dissents and assigns reasons.
GUIDRY, J., dissents and assigns reasons.
CLARK, J., concurs with reasons.
HUGHES, J., concurs with reasons.
CRICHTON, J., additionally concurs and assigns reasons.
10/19/2016
SUPREME COURT OF LOUISIANA
No. 2016-CC-0818
JAMES DUHON
VERSUS
ACTIVELAF, LLC, D/B/A SKYZONE LAFAYETTE AND
UNDERWRITERS AT LLOYDS, LONDON
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIRST CIRCUIT, PARISH OF EAST BATON ROUGE
JOHNSON, CHIEF JUSTICE
Patrons of Sky Zone Lafayette, an indoor trampoline park, are required to
complete a “Participant Agreement, Release and Assumption of Risk” document
(“Agreement”) prior to entering the facility. The Agreement contains a clause waiving
the participant’s right to trial and compelling arbitration. Plaintiff, James Duhon, was
a patron at Sky Zone and was injured in the course of participating in the park’s
activities. After Mr. Duhon filed suit seeking damages, Sky Zone filed an exception
of prematurity seeking to compel arbitration pursuant to the Agreement. The district
court overruled Sky Zone’s exception, but the court of appeal reversed, finding the
arbitration provision should be enforced.
For the following reasons, we reverse the ruling of the court of appeal, holding
the arbitration clause in the Sky Zone agreement is adhesionary and therefore
unenforceable.
FACTS AND PROCEDURAL HISTORY
On April 19, 2015, James Duhon, accompanied by three minors, went to Sky
Zone in Lafayette. Upon entering the facility, Mr. Duhon was directed by Sky Zone
staff to a computer screen to check himself and the minors into the facility. Check-in
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required all participants to complete a Participation Agreement which requested names
and dates of birth for all participants, required participants to check three boxes next
to certain terms of the Agreement, and required participants to digitally sign the
Agreement.
The Agreement provided that in consideration for gaining access to Sky Zone
Lafayette and engaging in the services, patrons agreed:
G I acknowledge that my participation in [Sky Zone] trampoline
games or activities entails known and unanticipated risks that
could result in physical or emotional injury including, but not
limited to broken bones, sprained or torn ligaments, paralysis,
death, or other bodily injury or property damage to myself my
children, or to third parties. I understand that such risks simply
cannot be eliminated without jeopardizing the essential qualities
of the activity. I expressly agree and promise to accept and assume
all of the risks existing in this activity. My and/or my children’s
participation in this activity is purely voluntary and I elect to
participate, or allow my children to participate in spite of the risks.
If I and/or my children are injured, I acknowledge that I or my
children may require medical assistance, which I acknowledge
will be at my own expense or the expense of my personal insurers.
I hereby represent and affirm that I have adequate and appropriate
insurance to provide coverage for such medical expense.
G In consideration for allowing me and the minor child(ren)
identified herein to participate in the [Sky Zone] activities and use
the [Sky Zone] facility, I expressly and voluntarily agree to
forever release, acquit, indemnify and discharge [Sky Zone] and
agree to hold [Sky Zone] harmless on behalf of myself, my
spouse, my children, my parents, my guardians, and my heirs,
assigns, personal representative and estate, and any and all other
persons and entities who could in any way represent me, or the
minor children identified herein or act on our respective halves,
from any and all actions or omissions, cause and causes of action,
suits, debts, damages, judgments, costs, including, but not limited
to attorney’s fees, and claims and demands whatsoever, in law or
in equity, for any personal injury, death, or property damages that
I and/or the minor children’s use of [Sky Zone] activities, [Sky
Zone] premises or at offsite and camp activities related to [Sky
Zone]. This waiver is intended to be a complete release of any and
all responsibility or duties owed by [Sky Zone] as indemnitees for
personal injuries, death and/or property loss/damage sustained by
myself or any minor children identified herein while on the [Sky
Zone] premises, or with respect to [Sky Zone] activities, whether
using [Sky Zone] equipment or not, even if such injury or damage
results from [Sky Zone] negligence, [Sky Zone] employee
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negligence, improper supervision, improper maintenance of [Sky
Zone] equipment or premises or negligence by other [Sky Zone]
guests.
G I certify that I and/or my child(ren) are physically able to
participate in all activities at the Location without aid or
assistance. I further certify that I am willing to assume the risk of
any medical or physical condition that I and/or my child(ren) may
have. I acknowledge that I have read the rules, (the “Sky Zone
Rules”) governing my and/or my child(ren)’s participation in any
activities at the Location. I certify that I have explained the [Sky
Zone] Rules to the child(ren) identified herein. I understand that
the [Sky Zone] Rules have been implemented for the safety of all
guests at the Location. I agree that if any portion of this
Agreement is found to be void and unenforceable, the remaining
portions shall remain in full force and effect. If there are any
disputes regarding this agreement, I on behalf of myself and/or my
child(ren) hereby waive any right I and/or my child(ren) may have
to a trial and agree that such dispute shall be brought within one
year of the date of this Agreement and will be determined by
binding arbitration before one arbitrator to be administered by
JAMS pursuant to its Comprehensive Arbitration Rules and
Procedures. I further agree that the arbitration will take place
solely in the state of Louisiana and that the substantive law of
Louisiana shall apply. If, despite the representations made in this
agreement, I or anyone on behalf of myself and/or my child(ren)
file or otherwise initiate a lawsuit against [Sky Zone], in addition
to my agreement to defend and indemnify [Sky Zone], I agree to
pay within 60 days liquidated damages in the amount of $5,000 to
[Sky Zone]. Should I fail to pay this liquidated damages amount
within the 60 day time period provided by this Agreement, I
further agree to pay interest on the $5,000 amount calculated at
12% per annum.
I further grant [Sky Zone] the right, without reservation or limitation, to
videotape, and/or record me and/or my children on closed circuit
television.
I further grant [Sky Zone] the right, without reservation or limitation, to
photograph, videotape, and/or record me and/or my children and to use
my or my children’s name, face, likeness, voice and appearance in
connection with exhibitions, publicity, advertising and promotional
materials.
I would like to receive free email promotions and discounts to the email
address provided below. I may unsubscribe from emails from Sky Zone
at any time.
By signing this document, I acknowledge that if anyone is hurt or
property is damaged during my participation in this activity, I may be
found by a court of law to have waived my right to maintain a lawsuit
3
against [Sky Zone] on the basis of any claim from which I have released
them herein. I have had sufficient opportunity to read this entire
document. I understand this Agreement and I voluntarily agree to be
bound by its terms.
I further certify that I am the parent or legal guardian of the children
listed above on this Agreement or that I have been granted power of
attorney to sign this Agreement on behalf of the parent or legal guardian
of the children listed above.
Mr. Duhon electronically completed the Agreement on behalf of himself and the
minors by checking the three boxes provided in the agreement, furnishing the relevant
personal identifying information, and clicking on an “accept” button. Mr. Duhon and
the minors then entered the facility.
Mr. Duhon asserts he was injured at the facility due to Sky Zone’s negligence.
On August 12, 2015, Mr. Duhon filed suit against Activelaf, L.L.C., d/b/a Sky Zone
Lafayette and its insurer (“Sky Zone”). In response, Sky Zone filed several exceptions,
including an exception of prematurity. Sky Zone alleged that the Agreement contained
a mandatory arbitration clause, thereby rendering Mr. Duhon’s suit premature. Mr.
Duhon asserted he did not knowingly consent to arbitration, and argued the
Agreement was adhesionary and ambiguous.
Following a hearing, the district court determined there was a lack of mutuality
in the Agreement relative to the arbitration clause because only Mr. Duhon was bound
to arbitrate claims. Thus, relying on this court’s decision in Aguillard Auction
Management Corp., 04-2804 (La. 6/29/05), 908 So. 2d 1 and the Third Circuit’s
opinion in Sutton Steel & Supply, Inc. v. Bellsouth Mobility, Inc., 07-146 (La. App.
3 Cir. 12/12/07), 971 So. 2d 1257, the district court refused to enforce the arbitration
agreement and overruled Sky Zone’s exception of prematurity.
The court of appeal granted Sky Zone’s writ and reversed the district court’s
ruling:
There is a strong presumption favoring the enforceability of arbitration
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clauses. The weight of this presumption is heavy and arbitration should
not be denied unless it can be said with positive assurance that an
arbitration clause is not susceptible of an interpretation that could cover
the dispute at issue. Aguillard v. Auction Management Corp., 2004-2804
(La. 6/29/05), 908 So. 2d 1. We find that plaintiff failed to establish that
this arbitration provision is adhesionary, and accordingly, the arbitration
provision should be enforced.
Judge Theriot dissented without reasons, stating he would deny the writ application.
Duhon v. ActiveLaf, LLC, 16-0167 (La. App. 1 Cir. 4/5/16) (unpublished).
On Mr. Duhon’s application, we granted certiorari to review the correctness of
the court of appeal’s ruling. Duhon v. ActiveLaf, LLC, 16-0818 (La. 6/17/16), 192 So.
3d 762.
DISCUSSION
This case involves the legal questions of whether the court of appeal erred in
its “contract of adhesion” analysis of the arbitration clause in the Agreement, and
whether the arbitration clause is unenforceable on general contract principles of
consent or adhesion. Thus, we review the matter de novo. See Aguillard, 908 So. 2d
at 3; Prasad v. Bullard, 10-291 (La. App. 5 Cir. 10/12/10), 51 So. 3d 35, 39;
Horseshoe Entertainment v. Lepinski, 40,753 (La. App. 2 Cir. 3/8/06), 923 So. 2d 929,
934, writ denied, 06–792 (La. 6/2/06), 929 So. 2d 1259.
Louisiana and federal law explicitly favor the enforcement of arbitration clauses
in written contracts. Aguillard, 908 So. 2d at 7. Louisiana Binding Arbitration Law
(“LBAL”) is set forth in La. R.S. 9:4201 et seq. and expresses a strong legislative
policy favoring arbitration. La. R.S. 9:4201 provides:
A provision in any written contract to settle by arbitration a controversy
thereafter arising out of the contract, or out of the refusal to perform the
whole or any part thereof, or an agreement in writing between two or
more persons to submit to arbitration any controversy existing between
them at the time of the agreement to submit, shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in equity for
the revocation of any contract.
As this court recognized in Aguillard, “[s]uch favorable treatment echos the Federal
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Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq.” 908 So. 2d at 7. We noted the LBAL
is virtually identical to the FAA, and determinations regarding the viability and scope
of arbitration clauses are the same under either law, thus federal jurisprudence
interpreting the FAA may be considered in construing the LBAL. Id. at 18. Further,
to the extent that federal and state law differ, the FAA preempts state law as to any
written arbitration agreement in a contract involving interstate commerce. Hodges v.
Reasonover, 12-0043 (La. 7/2/12), 103 So. 3d 1069, 1072; FIA Card Services, N.A.
v. Weaver, 10-1372 (La. 3/15/11), 62 So. 3d 709, 712; Collins v. Prudential Ins. Co.
of America, 99-1423 (La. 1/19/00), 752 So. 2d 825, 827.
The FAA makes arbitration agreements “valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the revocation of any contact.”
9 U.S.C. §2 (emphasis added). The United States Supreme Court has explained that
this provision reflects both a “liberal federal policy favoring arbitration,” and the
“fundamental principle that arbitration is a matter of contract.”
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S. Ct. 1740, 1745, 179
L.Ed. 2d 742 (2011) (citing Moses H. Cone Memorial Hospital v. Mercury Constr.
Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed. 2d 765 (1983) and Rent–A–Center,
West, Inc. v. Jackson, 561 U.S. 63, 67, 130 S.Ct. 2772, 2776, 177 L.Ed. 2d 403(2010)). The Supreme Court has instructed that in line with these principles, courts
must place arbitration agreements on an equal footing with other contracts.
Concepcion, 563 U.S. at 339 (citing Buckeye Check Cashing, Inc. v. Cardegna, 546
U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed. 2d 1038 (2006)). Despite this policy
favoring enforcement of arbitration agreements, the Supreme Court has also
recognized that, under the savings clause in §2, general state contract principles still
apply to assess whether those agreements to arbitrate are valid and enforceable, just
as they would to any other contract dispute arising under state law. Doctor’s
6
Associates, Inc. v. Casarotto, 517 U.S. 681, 686–87, 116 S.Ct. 1652, 1656, 134 L. Ed.
2d 902 (1996). Accordingly, ordinary state-law principles that govern the formation
of contracts are applied when deciding whether the parties agreed to arbitration. First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924, 131
L.Ed. 2d 985 (1995). Importantly, the savings clause in § 2 does not permit courts to
invalidate an arbitration agreement under a state law applicable only to arbitration
provisions. Concepcion, 563 U.S. at 339; Aguillard, 908 So. 2d at 8.
With these principles in mind, we consider whether the arbitration clause in the
Sky Zone Agreement should be invalided under Louisiana law. As an initial matter,
we note the electronic nature of the Agreement in this case is of no legal consequence
and does not fundamentally change the principles of contract. Louisiana law gives
legal effect to both electronic contracts and signatures. See La. R.S. 9:2607. We
interpret and analyze the terms of the Agreement using the same rules that we would
apply to oral and written contracts.
Aguillard is the seminal case from this court addressing the validity of an
arbitration agreement in a standard form contract. In Aguillard, the winning bidder at
a real estate auction brought suit to enforce the auction sales agreement. This court,
pursuant to its authority under La. R.S. 9:4201 and 9 U.S.C. § 2, applied a “contract
of adhesion” analysis to determine the enforceability and validity of an arbitration
agreement in the auction contract. In discussing the “contract of adhesion” doctrine,
we explained: “Broadly defined, a contract of adhesion is a standard contract, usually
in printed form, prepared by a party of superior bargaining power for adherence or
rejection of the weaker party. Often in small print, these contracts sometimes raise a
question as to whether or not the weaker party actually consented to the terms.” 908
So. 2d at 10. This court further stated that “although a contract of adhesion is a
contract executed in a standard form in the vast majority of instances, not every
7
contract in standard form may be regarded as a contract of adhesion. Therefore, we
are not willing to declare all standard form contracts adhesionary; rather, we find
standard form serves merely as a possible indicator of adhesion.” Id. (Internal citations
removed). We made clear that the “real issue in a contract of adhesion analysis is not
the standard form of the contract, but rather whether a party truly consented to all the
printed terms. Thus, the issue is one of consent.” Id. (Internal citations removed). The
court explained:
Consent is called into question by the standard form, small print, and
most especially the disadvantageous position of the accepting party,
which is further emphasized by the potentially unequal bargaining
positions of the parties. An unequal bargaining position is evident when
the contract unduly burdens one party in comparison to the burdens
imposed upon the drafting party and the advantages allowed to that
party. Once consent is called into question, the party seeking to
invalidate the contract as adhesionary must then demonstrate the
non-drafting party either did not consent to the terms in dispute or his
consent was vitiated by error, which in turn, renders the contract or
provision unenforceable.
In summation, a contract is one of adhesion when either its form, print,
or unequal terms call into question the consent of the non-drafting party
and it is demonstrated that the contract is unenforceable, due to lack of
consent or error, which vitiates consent. Accordingly, even if a contract
is standard in form and printed in small font, if it does not call into
question the non-drafting party’s consent and if it is not demonstrated
that the non-drafting party did not consent or his consent is vitiated by
error, the contract is not a contract of adhesion.
Id. at 10-11. Thus, the question we consider is whether Mr. Duhon truly consented to
the arbitration provision in the Agreement.
In concluding the arbitration provision in Aguillard was not adhesionary, we
noted (1) the arbitration provision was contained in a short, two-page document and
was contained in a single sentence paragraph; (2) the arbitration provision was not
concealed; (3) the contract did not lack mutuality because defendants did not reserve
their right to litigate issues arising from the contract; and (4) the parties did not have
a significant difference in bargaining power because a real estate auction is not a
8
necessary transaction that plaintiff was compelled to enter. Id. Thus, while not
declaring a definitive test, this court effectively established a framework for
examining the validity of an arbitration clause within a standard form contract by
generally describing the characteristics of an unenforceable adhesionary agreement.
Finding our analysis in Aguillard instructive, we consider the following factors to
determine the enforceability of the arbitration clause in the Sky Zone Agreement: (1)
the physical characteristics of the arbitration clause, (2) the distinguishing features of
the arbitration clause, (3) the mutuality of the arbitration clause, and (4) the relative
bargaining strength of the parties. After our review of the Agreement in light of the
above factors, we hold the arbitration clause is adhesionary and not enforceable
because of its placement in the Agreement and its lack of mutuality.
Examining the physical characteristics of the arbitration clause, we observe the
arbitration language is consistent in size and font with the other provisions in the
Agreement. However, the lack of distinguishing features and the specific placement
of the arbitration clause serve to conceal the arbitration language from Sky Zone
patrons. The Agreement is structured with check boxes next to the first three
paragraphs, followed by five additional paragraphs without corresponding check
boxes. The first check box is placed next to a single, six-sentence paragraph generally
discussing participants’ risks of injuries and assumption of those risks. The second
check box is placed next to a single paragraph containing two long sentences
purporting to release Sky Zone from any liability. The third check box is placed next
to one long paragraph discussing multiple topics. Specifically, the arbitration language
is located starting in the eleventh line of this third paragraph, following provisions
regarding patrons’ physical ability to participate in the activities, assumption of the
risks, certification that Sky Zone’s rules have been explained to any children, and
expressing agreement to follow those rules.
9
In Aguillard, we noted “the arbitration provision, although not distinguished,
was not concealed in any way, but rather was contained in a single sentence paragraph
separated from the preceding and following paragraphs by double spacing.” 908 So.
2d at 16. Sky Zone argues the paragraph containing the arbitration clause was
sufficiently distinguished and brought to patrons’ attention through the use of the
check box feature. We disagree. Although patrons are required to check a box adjacent
to the top of the third paragraph, significantly no check box was placed next to the
arbitration language. In contrast, the other two check boxes in the Agreement were
placed next to paragraphs limited to one subject matter. The Agreement also contains
five additional paragraphs following the third paragraph that do not include
corresponding check boxes. Each of these are short one-topic paragraphs addressing
such items as Sky Zone’s right to videotape and record patrons and to use recordings
for promotional materials. Thus, looking at the Agreement as a whole, the arbitration
language appears to be the only specific provision not relegated to a separate
paragraph or set apart in some explicit way. Here, the two-sentence provision
mandating arbitration is camouflaged within the confines of an eleven sentence
paragraph, nine of which do not discuss arbitration. The effect of the placement of the
arbitration language is to cloak it within a blanket of boilerplate language regarding
rules and risks of participating in the Sky Zone activities. Thus, although it is
undisputed that Mr. Duhon electronically signed the Agreement, purportedly
demonstrating an acceptance of its terms, under Louisiana contract law, we find Mr.
Duhon did not truly consent to the arbitration provision.
Additionally, the lack of mutuality in the arbitration clause fortifies our finding
that it is adhesionary. The arbitration provision requires only Sky Zone patrons to
submit their claims to arbitration. The entire contract, including the arbitration clause,
repeatedly includes “I acknowledge” and “I agree” language, with the “I” referencing
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the “applicant” – here, Mr. Duhon. Specifically, the Agreement provides if there are
any disputes regarding this agreement “I … hereby waive any right … to a trial and
agree that such dispute shall be … determined by binding arbitration ….” Although
Sky Zone does not expressly reserve itself the right to pursue litigation, nowhere in
the Agreement are “the parties” or Sky Zone particularly bound to arbitration. This is
in stark contrast to the arbitration clause in Aguillard which clearly applied to both
parties by providing: “Any controversy or claim arising from or relating to this
agreement or any breach of such agreement shall be settled by arbitration administered
by the American Arbitration Association under is [sic] rules, and judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.” 908 So. 2d at 4. Thus, in Aguillard, we found the arbitration clause did not
lack sufficient mutuality to invalidate the clause as adhesionary because the arbitration
clause severely limited both the defendants’ and the plaintiff’s right to litigate, and the
defendants did not reserve their right to litigate in the document. Id. at 16. Even more
troublesome in this case is the punitive provision compelling patrons to pay Sky Zone
liquidated damages of $5,000 within sixty days should the patron file suit, with legal
interest added at 12% per year. Sky Zone has no mutual obligation in the Agreement.
The party seeking to enforce an arbitration provision has the burden of showing
the existence of a valid contract to arbitrate. FIA Card Services, 62 So. 3d at 719. Sky
Zone has failed to meet this burden. Considering the lack of mutuality together with
the obscure placement of the arbitration language in the Agreement, and in
comparison to the contract in Aguillard, we are compelled to find the arbitration
clause in the Sky Zone Agreement is adhesionary and unenforceable.
In finding this arbitration clause invalid, we have carefully considered the
Supreme Court’s admonition that, under the doctrine of preemption, state courts
11
cannot adopt defenses that apply only to arbitration or that derive their meaning from
the fact that an agreement to arbitrate is at issue. See, e.g., Concepcion, 563 U.S. at
339; Casarotto, 517 U.S. at 687. Nor can we apply state law rules that stand as an
obstacle to the accomplishment of the FAA’s objectives. Concepcion, 563 U.S. at 343.
We are mindful that setting forth a legal requirement relative to a particular form or
method of distinguishing or highlighting arbitration clauses, or requiring term-for-
term mutuality in an arbitration clause could risk running afoul of the FAA. However,
the Supreme Court has made it clear that state courts may apply standard state law
contract defenses to arbitration agreements. Id. at 339. Our application of Louisiana
contract law to invalidate the arbitration provision in the instant case is consistent with
§ 2 of the FAA, and we find no conflict between our holding today and Supreme
Court decisions discussing preemption.
As explained earlier, consideration of enforceability of contracts of adhesion
is an issue of consent, and determining whether a party truly consented to the contract
terms. Consideration of consent is not limited to arbitration clauses; we consider the
issue of consent in any contract. Lack of consent is a generally applicable contract
defense. See La. C.C. art. 1927. The factors discussed in Aguillard simply provided
a template for considering consent to an arbitration clause contained in a standard
contract. Aguillard did not create a per se rule that any degree of non-mutuality in an
arbitration agreement renders it unenforceable, nor did Aguillard prescribe a definitive
rule that arbitration agreements must be delineated a particular way to be enforceable.
Considering the Aguillard analysis in its entirety, it is clear we viewed the arbitration
provision in the context of the overall contract and the surrounding circumstances, and
our determination was based on weighing several factors. Were we not to consider
factors relative to consent when examining the validity of an arbitration agreement,
we would be operating in contravention to the mandate of the Supreme Court by
12
treating arbitration agreements differently from other contracts. Thus, we find our
application of Louisiana contract law to invalidate the arbitration provision in this case
is consistent with the savings clauses in § 2 of the FAA and La. R.S. 9:4201.
CONCLUSION
The determination of whether an arbitration clause in a standard form contract
is adhesionary is necessarily made on a case by case basis. Based on the facts of this
case, the concealment of the arbitration clause and the lack of mutuality compels us
to find the arbitration clause in the Sky Zone Agreement is adhesionary and
unenforceable. Accordingly, we find the court of appeal erred in reversing the district
court’s ruling on Sky Zone’s exception of prematurity.1 Therefore, the ruling of the
court of appeal is reversed, and the ruling of the district court is reinstated.
DECREE
REVERSED AND REMANDED TO THE DISTRICT COURT FOR
FURTHER PROCEEDINGS.
1
Because we hold the arbitration clause is adhesionary and unenforceable based on
consideration of the factors set forth in Aguillard, we pretermit discussion of Mr. Duhon’s additional
arguments relative to ambiguity of the Agreement or whether the scope of the arbitration clause
covers personal injury.
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10/19/16
SUPREMECOURT OF LOUISIANA
NO. 2016-CC-0818
JAMES DUHON
VERSUS
ACTIVELAF, LLC, D/B/A SKYZONE LAFAYETTE
AND UNDERWRITERS AT LLOYDS, LONDON
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT,
PARISH OF EAST BATON ROUGE
WEIMER, J., dissenting.
I agree with the majority’s assessment that the factors outlined in Aguillard v.
Auction Management Corp., 04-2804 (La. 6/29/05), 908 So.2d 1, are an appropriate
starting point for analyzing the issue presented in this matter.1 See Duhon v.
ActiveLaf, LLC, 16-0818, slip op. at 7 (La. 10/__/16). However, I respectfully
disagree with the majority’s conclusion that analysis of the Sky Zone Agreement
using Aguillard’s four-factor “framework” supports a finding that the arbitration
clause is adhesionary and not enforceable. To the contrary, I find the arbitration
clause to be valid and enforceable. I also find that analysis of the clause using
Aguillard’s factors, viewed in light of the strong and, as Aguillard describes it,
“heavy” presumption in favor of arbitration, dictates that finding of enforceability.
Aguillard, 04-2804 at 25, 908 So.2d at 18.
As the majority recognizes, a contract of adhesion is broadly defined as “a
standard contract, usually in printed form, [often in small print,] prepared by a party
1
While I dissented in Aguillard, I did so solely on grounds that there was a threshold legal question
that I believed needed to be resolved before reaching the issue of the enforceability of the arbitration
clause: whether the arbitration clause at issue even applied in light of the fact that the Auction
Agreement for the Purchase and Sale of Real Estate had been completed. Aguillard, 04-2804 at 1,
980 So.2d at 20-21 (Weimer, J., dissenting.).
of superior bargaining power for adherence or rejection of the weaker party.”
Duhon, 16-0818, slip op. at 7-8 (quoting Aguillard, 04-2804 at 9, 908 So.2d at 8-9.)
(Emphasis added.) Pursuant to this definition, a predicate factor to consider in
determining whether a contract is adhesionary is the existence of unequal bargaining
power. Indeed, this is one of the four factors delineated in the Aguillard analysis.
Yet, the majority opinion does not mention, much less weigh, this factor in
conducting its analysis–this, despite the fact that there must be unequal bargaining
power for the contract to meet the definitional hurdle of a contract of adhesion in the
first instance.
In this case, it is clear that, as in Aguillard, there was not “such a difference
in bargaining positions between the parties so as to justify the application of the
principle of contract of adhesion to the arbitration clause.” Aguillard, 04-2804 at 22,
908 So.2d at 16-17. As Aguillard explained in defining a contract of adhesion,
“[o]wing to the necessities of modern life a particular kind of contract has been
developed where one of the parties is not free to bargain.” Id., 04-2804 at 10, 908
So.2d at 9 (quoting Saul Litvinoff, Consent Revisited: Offer, Acceptance, Option,
Right of First Refusal, and Contracts of Adhesion in the Revision of the Louisiana
Law of Obligations, 74 La.L.Rev. 699, 757-59 (1986-1987)). Such a lack of
bargaining power exists where “[t]he party in the weaker position is left with no other
choice than to adhere to the terms proposed by the other.” Id. (Emphasis added.)
Typical examples of such contracts include those entered into with “airlines, public
utilities, railroad or insurance companies.” Id.In Aguillard, this court recognized that the relative bargaining positions of the
real estate auctioneer and the individual auction participant involved in that case were
not so unequal as to justify invalidating the arbitration clause on grounds of adhesion,
2
reasoning that, although the participant was required to sign the agreement containing
the arbitration clause in order to participate in the auction, “the underlying
transaction, the real estate auction, [was] not ... such a necessary transaction” that the
participant “was compelled to enter it.” Id., 04-2804 at 22-23, 908 So.2d at 16-17.
Indeed, the participant could have avoided arbitration by not signing the agreement,
not participating in the auction, and simply walking away. See id. 04-2804 at 22, 908
So.2d at 17. Under such circumstances, the court found “nothing sufficient to
establish the [auctioneers] were in such a superior bargaining position as to render the
[auction participant] a far weaker party or the contract adhesionary.” Id. 04-2804 at
23, 908 So.2d at 17.
The rationale of the court in Aguillard applies with equal force to the Sky
Zone Agreement at issue in this case. Here, the Agreement concerns not a “necessity
of modern life,” but a purely voluntary recreational activity. The plaintiff was not
compelled–physically, economically or otherwise–to visit the trampoline park, jump
on its trampolines, or sign the Agreement containing the arbitration clause. Jumping
on a trampoline is simply not a practical necessity of modern living like water,
electricity, or even airline flight. Like the auction participant in Aguillard, the
plaintiff, here, retained the ultimate bargaining chip in this situation: he could have
refused to sign Sky Zone’s Agreement, walked away, and pursued an alternative form
of recreational activity. Given these circumstances, there is simply no evidence to
establish that Sky Zone was in such a superior bargaining position as to render the
plaintiff a far weaker party or the contract adhesionary.
Further, and also contrary to the majority, I find nothing in the Sky Zone
Agreement, itself, that would call into question the validity of the plaintiff’s consent
to the terms of the Agreement. This determination is based on my analysis of the
3
three factors that are addressed in the majority’s Aguillard analysis–(1) the physical
characteristics of the arbitration clause; (2) the distinguishing features of that clause;
and (3) the mutuality of the clause–and my differing conclusions as to each.
In addressing the first Aguillard factor–the physical characteristics of the
arbitration clause–the majority acknowledges that “the arbitration language is
consistent in size and font with the other provisions in Agreement.” Duhon, slip op.
at 9. In fact, the clause is not in small print or otherwise unreadable, but is just as
legible as every other word in the Agreement. The majority apparently concedes,
therefore, and I agree, that the physical characteristics of the arbitration clause weigh
in favor of finding the clause enforceable.
In addressing the second of the Aguillard factors–the distinguishing features
of the clause–the majority, in my view, falls into error. It downplays the very feature
that distinguishes the arbitration clause and calls its attention to the participant: the
box located next to the paragraph in which the clause appears, a box which must be
affirmatively checked before the Agreement can be completed. The majority chooses,
instead, to focus solely on the fact that the arbitration language is not set out in a
stand-alone paragraph to reach the conclusion that it is “camouflaged” and “cloak[ed]
... within a blanket of boilerplate language” to such an extent that plaintiff could not
have not consented to its terms, despite affirmatively indicating by checking the
electronic box that he did just that. See Duhon, 16-0818, slip op. at 10. While it is
true that the arbitration clause appears in a paragraph not limited to the single topic
of arbitration, more than one-half of that paragraph concerns the agreed-upon
arbitration, its procedure, its locale, governing law, and the consequences for refusing
or otherwise breaching the agreement to arbitrate.2 The arbitration language is hardly
2
See Duhon, 16-0818, slip op’n at 3.
4
camouflaged. Further, the majority’s suggestion, that failure to set the arbitration
language out in a stand-alone paragraph fails to sufficiently distinguish the arbitration
clause, ignores the check box. See Duhon, 16-0818, slip op. at 10. The presence of
that box is akin to, and has the same legal force and effect as, requiring the plaintiff
to initial next to the paragraph, a requirement that affirmatively alerts the participant
to the contents and significance of the paragraph.3 Like the arbitration provision in
Aguillard, and contrary to the majority, I find the arbitration language in the Sky
Zone Agreement was not concealed in any way and that the use of the electronic
check boxes reasonably distinguished the clause.
Finally, as to the third Aguillard factor, the mutuality of the obligation to
arbitrate, the majority acknowledges that “Aguillard did not create a per se rule that
any degree of non-mutuality in an arbitration agreement renders it unenforceable,”4
and that “requiring term-for-term mutuality in an arbitration clause could risk running
afoul of the [Federal Arbitration Act],”5 but then inexplicably invalidates the
arbitration clause in the Sky Zone Agreement precisely because it lacks the term-for-
term mutuality that it acknowledges the law does not require, and may even prohibit.6
In truth, the only difference between the arbitration clause in Aguillard and the one
in the Sky Zone Agreement is the use of the “I” in the Sky Zone Agreement.
However, the mere use of the word “I” does not render the clause non-mutual,
3
Modern technology has introduced what is referred to as a “clickwrap” agreement as a mechanism
for having a “user manifest his or her assent to the terms of the ... agreement by clicking on an icon.”
See Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 429 (2nd Cir. 2004).
4
See Duhon, 16-0818, slip op. at 13.
5
See Duhon, 16-0818, slip op. at 12.
6
See Duhon, 16–0818, slip op. at 11-13.
5
particularly in light of the fact, acknowledged by the majority, that the Agreement
does not reserve to Sky Zone the right to pursue litigation.7
Consequently, unlike the majority, I find an analysis of all four of the factors
outlined in Aguillard leads to the conclusion that the Sky Zone Agreement is not
adhesionary and is valid and enforceable. This conclusion is strengthened, not only
by the strong legislative policy that favors arbitration,8 but also by the long-standing
principle that signatures to documents are not mere ornaments.9 As Aguillard notes:
“It is well[-]settled that a party who signs a written instrument is presumed to know
its contents and cannot avoid its obligations by contending that he did not read it, that
he did not understand it, or that the other party failed to explain it to him.” Id., 04-
2804 at 22, 908 So.2d at 17. In this case, as in Aguillard, the plaintiff signed the
Agreement acknowledging that he “had sufficient opportunity to read this entire
document ... understand this Agreement and ... voluntarily agree to be bound by its
terms.”10 As in Aguillard, there was no evidence that the plaintiff was not in an
equal bargaining position with Sky Zone because the plaintiff could have avoided
arbitration and the contractual provisions as a whole by simply not signing the Sky
Zone Agreement and pursuing an alternative recreational activity. Also as in
Aguillard, there is nothing in the Sky Zone Agreement itself–its physical or
distinguishing characteristics–that would call into question the validity of the
plaintiff’s consent to the terms of the Sky Zone Agreement as indicated by his
signature. I would affirm the decision of the court of appeal.
7
See Duhon, 16-0818, slip op. at 11.
8
See Duhon, 16-0818, slip op. at 5 (citing La. R.S. 9:4201, et seq.).
9
See Tweedel v. Brasseaux, 433 So. 2d 133, 137 (La. 1983) (quoting Boullt v. Sarpy, 30 La.Ann.
494, 495 (La. 1878)).
10
See Duhon, 16-0818, slip op. at 4.
6
10/19/2016
SUPREME COURT OF LOUISIANA
NO. 2016-CC-0818
JAMES DUHON
VERSUS
ACTIVELAF, LLC, D/B/A SKYZONE LAFAYETTE
AND UNDERWRITERS AT LLOYDS, LONDON
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIRST CIRCUIT, PARISH OF EAST BATON ROUGE
GUIDRY, J., dissents and assigns reasons.
I respectfully dissent from the majority’s reversal of the ruling of the court of
appeal. In my view, the arbitration clause in the Sky Zone Agreement is not part of
a contract of adhesion which would render it unenforceable.
As the majority correctly states, a contract of adhesion is a “standard contract,
usually in printed form, prepared by a party of superior bargaining power for
adherence or rejection of the weaker party.” Aguillard v. Auction Management Corp.,
2004-2804, 2004-2857, p.9 (La. 6/29/05), 908 So.2d 1, 8-9. It is undisputed that the
real issue in a contract of adhesion analysis is consent, whether the non-drafting party,
considered to be the weaker party, truly consented to all the printed terms. Id. In
addressing the issue of consent, a court must look to the form, print, or unequal terms
of the contract by considering the factors set forth in Aguillard, namely, the physical
characteristics and distinguishing features of the arbitration clause, the relative
bargaining position of the parties, and the mutuality or lack thereof in the arbitration
clause. Id., 2004-2804, 2004-2857, p. 9, 908 So.2d at 17.
As an initial matter, I disagree with the majority’s finding that the arbitration
clause was hidden and camouflaged within the Sky Zone Agreement in such a way
that would indicate the plaintiff’s consent to the agreement could be called into
question. Neither the print nor the font size of the arbitration clause differed from
that of the remainder of the contract executed by the plaintiff. The standard form
agreement was relatively short and straightforward, consisting of a total of nine
paragraphs, three of which were set off with boxes to be checked to signify the
patron’s consent. The arbitration clause, while not set off alone, consisted of one-half
of a paragraph that was required to be checked off. The clause commenced midway
through the paragraph and ran until the end of the paragraph. The plaintiff does not
dispute that he checked off the box reflecting his consent to the terms of the arbitration
clause.
Furthermore, the record is absent any evidence that the plaintiff was not in an
equal bargaining position with the defendants. At the heart of the transaction, the
plaintiff was seeking admittance to a recreational facility. Indisputably, this was not
a contract to which the plaintiff was compelled to enter into the terms. He could have
simply elected to not sign the agreement and bypass the recreational activity. Instead,
the plaintiff signed the arbitration agreement acknowledging that he had sufficient
opportunity to read the entire document and understood its terms. Having signed the
agreement, the plaintiff cannot seek to avoid his obligations by contending that he did
not read or understand it. Basic contract law dictates that a party who signs a written
instrument is presumed to know its contents and cannot avoid its obligations by
contending that he did not read it, that he did not understand it, or that the other party
failed to explain it to him. Coleman v. Jim Walter Homes, Inc., 2008-1221, p. 7 (La.
3/17/09), 6 So.3d 179, 183 (citing Tweedel v. Brasseaux, 433 So.2d 133, 137
(La.1983)). To overcome the presumption, the party has the burden of proving with
reasonable certainty that he was deceived. Id. The plaintiff is unable to satisfy this
burden, because there is no evidence in the record that the plaintiff made any effort
to contact the defendant for an explanation or to discuss the terms of the contract in
2
any respect.
Next, the arbitration clause at issue substantially mirrors the Aguillard
arbitration clause, which this court found to be mutual. The plaintiff has not shown
anything in the clause that reserves Sky Zone’s right to litigate disputes related to the
agreement that is not equally afforded to the plaintiff. As such, the majority errs in
finding the lack of mutuality as to the parties.
Finally, in Aguillard, this court addressed the presumption of arbitrability:
[E]ven when the scope of an arbitration clause is fairly debatable or
reasonably in doubt, the court should decide the question of construction
in favor of arbitration. The weight of this presumption is heavy and
arbitration should not be denied unless it can be said with positive
assurance that an arbitration clause is not susceptible of an interpretation
that could cover the dispute at issue. Therefore, even if some legitimate
doubt could be hypothesized, this Court, in conjunction with the
Supreme Court, requires resolution of the doubt in favor of arbitration.
Id., 04-2804 at 18, 908 So.2d at 25.
In light of the controlling law indicating the favorable consideration afforded
arbitration agreements, coupled with the plaintiff’s failure to satisfy his burden of
proving the contract was adhesionary, the majority erred in invalidating the contract.
Accordingly, I respectfully dissent and would affirm the ruling of the court of appeal.
3
10/19/16
SUPREME COURT OF LOUISIANA
No. 2016-CC-0818
JAMES DUHON
VERSUS
ACTIVELAF, LLC, D/B/A SKYZONE LAFAYETTE AND
UNDERWRITERS AT LLOYDS, LONDON
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIRST CIRCUIT, PARISH OF EAST BATON ROUGE
CLARK, J., concurring.
I find that the contract at issue lacks mutuality to such an extent that the
contract is adhesionary. Not only does the contract bind only patrons to
arbitration, the contract stipulates that if a patron files a lawsuit against Sky Zone,
the patron is liable for $5,000 in liquidated damages. At the same time, Sky Zone
is free to file a lawsuit against the patron without any penalty.
10/19/16
SUPREME COURT OF LOUISIANA
No. 2016-CC-0818
JAMES DUHON
VERSUS
ACTIVELAF, LLC, D/B/A SKYZONE LAFAYETTE AND
UNDERWRITERS AT LLOYDS, LONDON
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIRST CIRCUIT, PARISH OF EAST BATON ROUGE
Hughes, J., concurring.
Although I do not agree that the arbitration language was hidden, I concur
that it lacked mutuality, and thus with the result.
1
10/19/16
SUPREME COURT OF LOUISIANA
No. 2016-CC-0818
JAMES DUHON
VERSUS
ACTIVELAF, LLC, D/B/A SKYZONE LAFAYETTE AND
UNDERWRITERS AT LLOYDS, LONDON
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIRST CIRCUIT, PARISH OF EAST BATON ROUGE
CRICHTON, J., additionally concurs and assigns reasons.
I agree with the majority decision, and write separately to emphasize that I
do not view this decision as a rejection of arbitration agreements. To the contrary,
Louisiana law favors the enforcement of arbitration agreements. See La. R.S.
9:4201 (Validity of arbitration agreements). Consistent with the Federal
Arbitration Act (“FAA”), arbitration agreements must be placed “upon the same
footing” as other types of contracts.” Scherk v. Alberto-Culver Co., 417 U.S. 506,
511 (1974); see also 9 U.S.C. § 2. But just as Louisiana law should not create
obstacles to the enforceability of arbitration agreements, see AT&T Mobility LLC v.
Concepcion, 563 U.S. 333 (2011) (applying the FAA to preempt a state law
condition to the enforceability of an arbitration agreement), neither should
Louisiana law create exceptions for arbitration agreements that do not exist for
other types of contracts.
Without question, arbitration can be a waiver of the traditional access to our
judicial system. And so, applying Aguillard v. Auction Management Corp., 04-
2804 (La. 6/29/05), 908 So. 2d 1, this waiver must be in accord with Louisiana
contract law, otherwise a party’s consent may be called into question. Thus, a
1
business entity or individual seeking to draft a contract that includes an arbitration
agreement must meet all of the elements of an enforceable contract.
By concealing the existence of the arbitration agreement, this agreement
deprives a party of redress in the justice system. To make a bad situation worse,
this agreement does not bind Sky Zone to arbitration, yet it penalizes a Sky Zone
patron—but not Sky Zone—for seeking to initiate a lawsuit. These blatant
asymmetries exhibit a stunning lack of draftsmanship and fail to adhere to the
principles set forth in Aguillard. Accordingly, in my view, this Court is bound to
deem this agreement unenforceable.
2