James Duhon v. SkyZone Lafayette, No 2016-CC-0818

On April 19, 2015, James Duhon and three children went to SkyZone, an indoor trampoline park, in Lafayette, LA.  In order to use the facility, Mr. Duhon had to sign a document that included a waiver of his right to pursue a remedy in court.  Mr. Duhon “agreed” to arbitrate any claims against SkyZone as a result of his presence on and use of the facility.  Mr. Duhon was injured while at SkyZone, allegedly due to SkyZone’s negligence, and filed a lawsuit accordingly.  SkyZone filed an exception of prematurity and sought to compel arbitration pursuant to the agreement that Mr. Duhon had signed.  The district court overruled SkyZone’s exception, but the court of appeal reversed the district court and found that the arbitration provision should be enforced.  Mr. Duhon appealed this decision to the Supreme Court of Louisiana.  The Louisiana Supreme Court held that the arbitration clause in the agreement was an adhesion agreement and, thus, unenforceable.

In arriving at its answer the Louisiana Supreme Court followed the framework established in a prior decision, Aguillard Auction Management Corp., 908 So. 2d 1 (2005) and “considered the following four factors to determine the enforceability of the arbitration clause in the SkyZone 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.”

With regard to the physical characteristics and distinguishing features  of the arbitration provision,  the court focused on the size of the font, the style of the font, and the placement of the provision.  Here, the arbitration provision was tucked into the eleventh line of a paragraph concerned mainly with references to physical ability to participate in the activities at SkyZone.  The Court believed that the arbitration provision was not sufficiently identifiable from the rest of the provision and was camouflaged into the paragraph.  Therefore, the manner in which the arbitration provision was portrayed did not bring the patrons’ attention to its presence, and, thus, it was unlikely that Mr. Duhon actually consented to arbitration.

With regard to the apparent lack of mutuality between the parties, the court noted that the entirety of the contract refers only to the party signing the contract and does not bind the drafting party to the same restrictions.  Furthermore, the arbitration provision does not refer to “the parties” as those who are bound by arbitration; the provision only restricts the non-drafting party to pursue arbitration and forces that party to forego judicial determination.  Therefore, implicitly in the contract SkyZone has the choice of whether to pursue arbitration or litigation, while the non-drafting party may only pursue arbitration.  Lastly, the court believes that the $5,000 penalty for filing a lawsuit against SkyZone is dispositive of the lack of bargaining power between the two parties.  Due to the lack of mutuality and unequal bargaining power leading to significant advantages for the drafting party, the court found that the arbitration provision in the SkyZone contract fails for a lack of mutuality.

The Supreme Court of Louisiana decided this case by applying Louisiana State law because “the Supreme Court has made it clear that state courts may apply standard state law contract defenses to arbitration agreements.”  The court qualified its holding and stated that arbitration provision enforceability disputes are made on a case by case basis when determining whether or not the contract is adhesionary.

The dissenting opinions would have found the arbitration agreement to be enforceable because they believe the parties were not wanting mutuality upon the agreement, and the majority opinion did not weigh in on the unequal bargaining power in conducting its analysis.  Most specifically, the dissent hangs its hat on the fact that Mr. Duhon was not being forced to attend SkyZone, as this was a pure volitional action for recreation.  Further, he was not compelled physically, economically, or otherwise to visit SkyZone or sign the agreement.  If Mr. Duhon did not agree with all provisions of the agreement, he could have simply left the establishment and taken his business elsewhere.  Therefore, there was no lack of bargaining power between the two parties.  The dissent would have enforced the arbitration provision between the two parties on the belief that Mr. Duhon consented to the arbitration provision found in the agreement that he signed in order to use the SkyZone facility.

This summary was prepared for ArbitrationInfo.com by Jonathan Doss, a second year student at the University of Missouri School of Law.