Court Opinion

ID: 9774805
Source: CourtListenerOpinion
Date Created: 2023-08-29 18:34:19.054589+00
Date Added: 2024-06-11T07:32:16.292451
License: Public Domain

*37Justice SAYLOR,
concurring.
I join the majority opinion, and write to express my belief that, in the future, this Court should use more precise language than has been used in a line of past decisions regarding the enforceability of liability releases contained in adhesion contracts.
The majority references decisional law from this Court explaining that, for an exculpatory clause to be enforceable, it must satisfy several conditions, one of which is that it cannot be a contract of adhesion. See Topp Copy Prods. v. Singletary, 533 Pa. 468, 471, 626 A.2d 98, 99 (1993). The majority concludes that the release was not an invalid adhesion contract because it pertained to a voluntary recreational activity rather than essential services. See Majority Opinion, Op. at 27-28, 2 A.3d at 1190-91. As the majority recognizes, this analysis is consistent with holdings of the Superior Court, see id. at 27-28, 2 A.3d at 1190-91 (quoting Valeo v. Pocono Int’l Raceway, 347 Pa.Super. 230, 232-33, 500 A.2d 492, 493 (1985)), as well as two federal district courts, see id. at 27, 2 A.3d at 1190-91 (citing Schillachi v. Flying Dutchman Motorcycle Club, 751 F.Supp. 1169, 1172-73 (E.D.Pa.1990), and Grbac v. Reading Fair Co., 521 F.Supp. 1351, 1355 (W.D.Pa.1981), aff'd, 688 F.2d 215 (3d Cir.1982)).
Based on this line of decisions, the law, as it presently exists, supports the position that the release was not an adhesion contract. However, I believe that the case law to this effect is not well grounded, and that the manner in which it has developed has added unnecessary confusion to the issue because, by definition, an adhesion contract is simply one that the customer must accept or reject, with little or no opportunity to bargain over its terms, regardless of its subject matter. See id. at 27, 2 A.3d at 1190 (quoting Black’s Law Dictionary to the effect that an adhesion contract is a “standard-form contract prepared by one party, to be signed by the party in a weaker position, usu[ally] a consumer, who adheres to the contract with little choice about the terms”). In other words, as a general proposition an adhesion contract is a take-it-or-leave-it agreement that the customer must sign in order to purchase the goods or services in question, regardless of the *38nature of those goods or services — that is, irrespective of whether they pertain to the essentials of life or mere recreational activities. See generally Carnival Cruise Lines v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) (upholding a forum-selection clause in an adhesion contract for a pleasure cruise).
Unfortunately, in my view, the case law pertaining specifically to liability releases has applied a specialized definition for adhesion agreements whereby an agreement to immunize a seller from liability for negligence only constitutes a contract of adhesion if the customer is under a substantial economic compulsion to consummate the transaction, which presumably is not true of voluntary recreational activities. As noted, this specialized use of terminology is not well grounded. It can be traced to a decision of this Court from the 1960s involving a residential lease. See Galligan v. Arovitch, 421 Pa. 301, 219 A.2d 463 (1966). The Court in Galligan refused to apply a release clause to the tenant’s suit because the clause did not cover the area of the premises where she was injured. See id. at 303, 219 A.2d at 465. After the Court reached this holding, the authoring Justice — Mr. Justice Cohen — writing only for himself, proceeded to opine that, because a residential tenant lacks bargaining power concerning a prospective lease agreement with the property owner, there can be no meeting of the minds as to the specific provisions of the lease, including any release from liability in favor of the landlord. Justice Cohen did not reference any authority for this proposition, and ultimately only cited to a passage in a law review note to support his conclusion that such clauses need not always be enforced. See id. at 304, 219 A.2d at 465 (citing Note, The Form 50 Lease: Judicial Treatment of an Adhesion Contract, 111 U. Pa. L.Rev. 1197, 1206 (1963)). Notably, that portion of the Note discussed judicial invalidation of liability releases contained in adhesion contracts based on the harshness of the result as well as factors unique to adhesion contracts; it did not suggest that the determination of whether a take-or-leave contract is properly labeled an adhesion contract depends on the level of economic compulsion experienced by the tenant.
*39Notwithstanding its status as dicta expressing the opinion of a single Justice, that portion of Galligan was relied upon, in Employers Liability Assurance Corporation v. Greenville Business Men’s Association, 423 Pa. 288, 224 A.2d 620 (1966), for the concept that all releases contained in adhesion contracts are invalid. See id. at 291-92, 224 A.2d at 623. Employers Liability, in turn, was referenced in Princeton Sportswear Corporation v. H & M Associates, 510 Pa. 189, 507 A.2d 339 (1986), for a similar proposition. See id. at 193, 507 A.2d at 341. In turn, both Greenville and Princeton Sportswear were cited in Topp Copy as support for the position that exculpatory clauses are invalid if they appear in contracts of adhesion. See Topp Copy, 533 Pa. at 471, 626 A.2d at 99. Topp Copy and Employers Liability comprise the primary authority that the present majority references in reciting the rule — which now appears to be embedded in Pennsylvania law — that exculpatory provisions are invalid if they amount to contracts of adhesion. See Majority Opinion, Op. at 25-27, 2 A.3d at 1189-90.
In my view, Justice Cohen’s basic premise in Galligan — that there can never be a meeting of the minds as to the provisions of an adhesion agreement — appears doubtful, as there is no apparent reason why a tenant or consumer could not read, understand, and agree to the terms of an adhesion form contract, or alternatively, refuse to go forward and, instead, seek another supplier offering more desirable terms. See generally Richard A. Posner, Economic Analysis of Law 127 (5th ed. 1998) (Economic Analysis) (“The sinister explanation for the form contract is that the seller refuses to dicker separately with each purchaser because the buyer has no choice but to accept his terms. This assumes an absence of competition.”). Moreover, since the 1960s, courts and legal scholars have attained a better understanding of market dynamics and the potential benefits of standard form contracts, see, e.g., Carnival Cruise Lines, 499 U.S. at 594, 111 S.Ct. at 1527 (“[I]t stands to reason that passengers who purchase tickets containing a forum clause like that at issue in this case benefit in the form of reduced fares reflecting the savings that the cruise line enjoys by limiting the fora in which it may be *40sued.”); Economic Analysis, at 128 (“It is not obviously wiser for the consumer to decide to pay more for a product than to decide to give up one of his legal remedies against the seller.”),1 and inquiries into such issues as “fundamental fairness,” id. at 595, 111 S.Ct. at 1528, and unconscionability, see, e.g., Lechmere Tire & Sales Co. v. Burwick, 360 Mass. 718, 277 N.E.2d 503, 506 (1972), predominate over any concept that adhesion contracts are invalid per se as not reflecting a meeting of the minds. This Court’s recent decision in Salley v. Option One Mortgage Corp., 592 Pa. 323, 925 A.2d 115 (2007), for example, noted that the degree of economic compulsion motivating the customer is but one of several factors to be considered in evaluating whether an adhesion contract is unconscionable and, thus, unenforceable. See id. at 341, 925 A.2d at 125 (quoting Delta Funding Corp. v. Harris, 189 N.J. 28, 912 A.2d 104, 111 (2006)). Although the adhesion contract in Salley involved an agreement to arbitrate disputes rather than to release the provider from liability, the principles enunciated regarding adhesion contract validity are not unique to arbitration clauses.
In the end, I believe that the tendency among some courts to describe take-or-leave contracts for voluntary amusement *41or recreational services as not constituting adhesion contracts — -when they clearly are — reflects a desire to give effect to the essential understanding that such contracts should, under proper circumstances, be enforced notwithstanding the lack of any opportunity for the customer to bargain over specific terms. In my view, it would be better to recognize that such terminology is anomalous because, as noted, it is inconsistent with the terms employed relative to adhesion contracts in other settings, and, just as important, it does not reflect the reality that take-or-leave contracts are, by definition, adhesion contracts whether or not they pertain only to voluntary recreational activities or amusements. Accordingly, in the future, I would recast the relevant prong of the exculpatory clause validity analysis as pertaining to whether the contract as a whole is unconscionable, and determine unconscionability based on general principles.

. Judge Posner proffers the following explanation as to form contracts generally:
When a transaction is between a large corporation and an ordinary individual, it is tempting to invoke the analogy of duress ... and conclude that the terms of the deal are coercive.... The purchaser can sign it or not as he pleases but there is no negotiation over terms. It is an easy step ... to the conclusion that the purchaser lacked a free choice and therefore should not be bound by onerous terms. But there is an innocent explanation: that the seller is trying to avoid the costs of negotiating and drafting a separate agreement with each purchaser. These costs, of which probably the largest is the cost of supervising the employees and agents who engage in the actual contract negotiations on the company's behalf, are likely to be high for a large company that has many contracts. Consistent with the innocent explanation, large and sophisticated buyers, as well as individual consumers, often make purchases pursuant to printed form contracts.
Economic Analysis, at 127. In the present case, it was clear that Lori could not dicker over the terms of the form contract, particularly as her signature was the nineteenth of 39 signatures on the form in question. See R.R. at 58a.