On May 1st, Indiana Governor Eric Holcomb announced Indiana’s “Back on Track” plan, a five-stage roadmap to reopen the state for business. As businesses begin reopening under this plan, they must take steps to keep employees and customers safe from communicating Covid-19 and safeguard against potential liability if a customer contracts the disease at the business location. An express waiver or release agreement offers one potential shield from liability. While this may seem like an overly cautious and extraneous step, businesses do owe their customers a duty of care.
Below, we address the potential for Covid-19 claims against businesses and possible options to reduce liability under such a claim through an express wavier or release agreement. These agreements are generally enforced in Indiana, and as a practical concern, there are new ways to streamline the process to make signing such an agreement seamless.
Indiana Premises Liability Law
Under Indiana law, a plaintiff must prove three elements: (1) a duty owed to the plaintiff, (2) a breach of that duty by the defendant, and (3) the breach proximately caused the plaintiff’s damages.1 In Indiana, most customers are considered “invitees” pursuant to which businesses owe the highest duty of care and must exercise reasonable care for the customer’s protection while at the business.
Indiana courts will consider two questions when assessing liability: (i) whether the business owner knew or should have known of the hazard; and (ii) whether the business owner should expect its invitees will recognize the hazard. Although business owners lack actual knowledge that Covid-19 exists at their business, every business should nevertheless treat its facility as if Covid-19 is present because of the virus’s invisible nature.
Business owners should inform their customers in multiple formats of Covid-19’s potential hazards and ways to protect themselves. For example, businesses may consider conspicuously posting guidance from the Centers for Disease Control (“CDC”), any state and/or local health agencies, or other applicable regulatory authorities.
Indiana Liability Waiver/Release
In addition to preventive measures, businesses should consider waiver of liability or release of liability agreements as a way to reduce potential liability. Indiana courts generally enforce waiver and release agreements for negligence-based claims.2
Although some states automatically void or choose not to enforce waiver or release agreements, Indiana will uphold such agreements in certain contexts. A business and their customers can agree to be under no obligation of care for each other, and thus, not be liable for Covid-19 claims. But to be enforceable, these waivers must be “specific” and “explicit.” A release may be deemed unenforceable by operation of law if it is:
- not expressed in clear, definite, and unambiguous language in the agreement,
- made with vast disparity of bargaining power between the parties to the agreement, or
- contrary to public policy.
Indiana will void releases where there is unequal bargaining power between a business and a customer such that the customer did not “knowingly and willingly” execute the release.3 Indiana courts will also void releases that are unconscionable, as well as those against public interest for utilities, carriers, and other types of businesses generally thought to be suitable for regulation or which are necessary for some members of the public.4
The enforceability of an express waiver or release for Covid-19 will depend on the type of business and underlying facts. For example, if the business seeking to enforce a waiver is a healthcare provider, a court may invalidate the agreement if the healthcare services are essential because the customer may lack real freedom in signing it. But the waiver will likely be upheld if the waiver fully advises the customer of all known risks, the customer understands those risks, the customer has a clear alternative to the business’s services, and the customer willingly chooses to participate in the business’s services nonetheless.
As a practical matter, electronic waiver forms and mobile applications make the execution process simple for customers. However, because releasing liability must be done knowingly and willingly, the agreement must be signed prior to the customer’s participation in the business’s services and not after the fact.
Here at Jackson Kelly, we regularly advise business clients on various operational and financial matters. If you have questions about customer waiver agreements in the context of your business or would like us to help draft a waiver agreement tailored to your business, please feel free to reach out any time and we would be happy to do anything we can to help.
1 Rider v. McCamment, 938 N.E.2d 262, 266 (Ind. Ct. App. 2010).
2 While there currently is no binding precedent on claims founded in strict liability, Indiana courts have posited that express releases of any and all liabilities would be enforceable as long as negotiation over risk allocation occurs and specific language in the release is used or proof of knowing assumption of risk is offered. See McGraw-Edison Co. v. Ne. Rural Elec. Membership Corp., 678 N.E.2d 1120 (Ind. 1997).
3 LaFrenz, 360 N.E.2d at 608.
4 Clark v. Donahue, 885 F. Supp. 1159, 1163, 1995 WL 231617 (S.D. Ind. 1995) (citing Pinnacle Computer Serv., Inc. v. Ameritech Publishing, Inc., 642 N.E.2d 1011, 1014 (Ind. Ct. App. 1994)).