Bagley v. Mt. Bachelor, Inc.

No. 72 December 18, 2014 543

IN THE SUPREME COURT OF THE

STATE OF OREGON

Myles A. BAGLEY,

individually,

Petitioner on Review,

and

Al BAGLEY,

individually;

and Lauren Bagley,

individually,

Plaintiffs,

v.

MT. BACHELOR, INC.,

dba Mt. Bachelor Ski and Summer Resort,

Respondent on Review,

and

John DOES 1-10,

Defendants.

(CC 08CV0118SF; CA A148231; SC S061821)

En Banc

On review from the Court of Appeals.*

Argued and submitted May 7, 2014.

Kathryn H. Clarke, Portland, argued the cause and filed

the briefs for petitioner on review. With her on the briefs was

Arthur C. Johnson.

Andrew C. Balyeat, Balyeat & Eager, LLP, Bend, argued

the cause and filed the brief for respondent on review.

Michael J. Estok, Lindsay Hart, LLP, Portland, filed

a brief on behalf of amicus curiae Oregon Association of

Defense Counsel.

______________

*  Appeal from Deschutes County Circuit Court, Stephen P. Forte, Judge. 258

Or App 390, 310 P3d 692 (2013).

544 Bagley v. Mt. Bachelor, Inc.

Kristian Roggendorf, Roggendorf Law LLC, Lake

Oswego, filed a brief on behalf of amicus curiae Oregon Trial

Lawyers Association.

BREWER, J.

The decision of the Court of Appeals is reversed. The judg-

ment of the trial court is reversed, and the case is remanded

to that court for further proceedings.

Plaintiff brought a negligence action against defendant ski area operator

for injuries he sustained while snowboarding over a jump in defendant’s terrain

park. The trial court granted defendant’s summary judgment motion, agreeing

with defendant that, prior to using defendant’s facilities, plaintiff had released

defendant from future liability for his injuries, including those caused by defen-

dant’s negligence, and rejecting plaintiff’s argument that enforcement of the

release would violate public policy and would be unconscionable. The Court of

Appeals affirmed. Held: (1) Enforcement of the release in this case would be both

procedurally and substantively unconscionable because of the legally significant

disparity in the parties’ bargaining power, the unfairly adhesive nature of the

release, and the public interest that is affected by the performance of defendant’s

private duties toward its patrons, given the large numbers of the general public

using defendant’s facilities virtually without restriction and the degree to which

the personal safety of defendant’s patrons is subject to the risk of defendant’s

carelessness; and (2) those unconscionability considerations are not outweighed

by defendant’s interest in enforcing the release, in light of the fact that defendant

was in a better position than plaintiff to guard against risks created by its own

conduct.

The decision of the Court of Appeals is reversed. The judgment of the trial

court is reversed, and the case is remanded to that court for further proceedings.

Cite as 356 Or 543 (2014) 545

BREWER, J.

The issue on review in this case is whether an antic-

ipatory release1 of a ski area operator’s liability for its own

negligence in a ski pass agreement is enforceable in the face

of an assertion that the release violates public policy and

is unconscionable. Plaintiff suffered serious injuries while

snowboarding over a jump in defendant ski area operator’s

“terrain park,” and brought this action alleging that defen-

dant was negligent in the design, construction, maintenance,

and inspection of the jump. Defendant moved for summary

judgment based on an affirmative defense of release; plain-

tiff filed a cross-motion for partial summary judgment on

the ground that the release was unenforceable as a matter

of law. The trial court granted defendant’s summary judg-

ment motion and denied plaintiff’s cross-motion. Plaintiff

appealed, asserting, among other arguments, that the trial

court erred in concluding that the release did not violate

public policy and that it was neither substantively nor pro-

cedurally unconscionable. The Court of Appeals affirmed.

Bagley v. Mt. Bachelor, Inc., 258 Or App 390, 310 P3d 692

(2013). Because we conclude that enforcement of the release

would be unconscionable, we reverse and remand.

FACTS AND PROCEDURAL BACKGROUND

We review the trial court’s rulings on summary

judgment to determine whether “there is no genuine issue

as to any material fact” and whether “the moving party is

entitled to prevail as a matter of law.” ORCP 47 C. We view

the historical facts set out in the summary judgment record,

along with all reasonable inferences that may be drawn from

them, in the light most favorable to the nonmoving party—

plaintiff on defendant’s motion for summary judgment, and

defendant on plaintiff’s cross-motion. Id.; Vaughn v. First

Transit, Inc., 346 Or 128, 132, 206 P3d 181 (2009). The

historical facts in the record largely relate to the enforce-

ability of the release at issue. Defendant’s summary judgment

motion did not address the issues of negligence, causation, or

damages. Therefore, insofar as those issues are relevant to

1

By “anticipatory release,” we refer to an exculpatory agreement that pur-

ports to immunize—before an injury occurs—the released party from liability for

its own tortious conduct.

546 Bagley v. Mt. Bachelor, Inc.

the enforceability of the release, we accept as true the allega-

tions in plaintiff’s complaint. ORCP 47 C (adverse party on

summary judgment has burden of producing evidence only

“on any issue raised in the motion as to which adverse party

would have burden of persuasion at trial”).

On September 29, 2005, plaintiff purchased a sea-

son pass from defendant for use at defendant’s ski area.

Plaintiff was a skilled and experienced snowboarder, hav-

ing purchased season passes from defendant for each of the

preceding three years and having classified his skill level as

of early 2006, before being injured, as an “advanced expert.”

Upon purchasing the season pass, plaintiff executed a writ-

ten “release and indemnity agreement” that defendant

required of all its patrons. That document provided, in per-

tinent part:

“In consideration of the use of a Mt. Bachelor pass and/or

Mt. Bachelor’s premises, I/we agree to release and indem-

nify Mt. Bachelor, Inc., its officers and directors, owners,

agents, landowners, affiliated companies, and employees

(hereinafter ‘Mt. Bachelor, Inc.’) from any and all claims

for property damage, injury, or death which I/we may suf-

fer or for which I/we may be liable to others, in any way

connected with skiing, snowboarding, or snowriding. This

release and indemnity agreement shall apply to any claim

even if caused by negligence. The only claims not released

are those based upon intentional misconduct.

“* * * * *

“The undersigned(s) have carefully read and under-

stand this agreement and all of its terms on both sides

of this document. This includes, but is not limited to, the

duties of skiers, snowboarders, or snowriders. The under-

signed(s) understand that this document is an agreement

of release and indemnity which will prevent the under-

signed(s) or the undersigneds’ estate from recovering dam-

ages from Mt. Bachelor, Inc. in the event of death or injury

to person or property. The undersigned(s), nevertheless,

enter into this agreement freely and voluntarily and agree

it is binding on the undersigned(s) and the undersigneds’

heirs and legal representatives.

“By my/our signature(s) below, I/we agree that this

release and indemnity agreement will remain in full force

Cite as 356 Or 543 (2014) 547

and effect and I will be bound by its terms throughout this

season and all subsequent seasons for which I/we renew

this season pass.

“See reverse side of this sheet * * * for duties of skiers,

snowboarders, or snow riders which you must observe.”

(Capitalization omitted.) 2 The reverse side of the document

detailed the “Duties of Skiers” under ORS 30.985 and ORS

30.990 and also included a printed notification that “Skiers/

Snowboarders/Snowriders Assume Certain Risks” under

ORS 30.975—the “inherent risks of skiing.”3

On November 18, 2005, plaintiff began using the

pass, which stated, in part:

“Read this release agreement

“In consideration for each lift ride, the ticket user

releases and agrees to hold harmless and indemnify

Mt. Bachelor, Inc., and its employees and agents from all

claims for property damage, injury or death even if caused

by negligence. The only claims not released are those based

upon intentional misconduct.”

(Capitalization omitted.) Further, the following sign was

posted at each of defendant’s ski lift terminals:

“YOUR TICKET IS A RELEASE

“The back of your ticket contains a release of all claims

against Mt. Bachelor, Inc. and its employees or agents.

2

Although defendant relies on several documents that, it asserts, separately

and collectively released it from liability for plaintiff’s injuries, for convenience we

refer to those documents in the singular throughout this opinion as “the release.”

In addition to the releases discussed in the text, plaintiff’s father also executed a

“minor release and indemnity agreement” on plaintiff’s behalf, containing essen-

tially the same terms as the other releases, because plaintiff was not yet eighteen

years old when he bought the season pass. Plaintiff asserted before the trial court

and the Court of Appeals that he was entitled to—and effectively did—disavow

the release after he reached majority. For reasons explained in its opinion, the

Court of Appeals affirmed the trial court’s rejection of that argument. Plaintiff

did not seek review of that holding in this court and we do not address it here.

3

As elaborated below, Oregon has enacted statutes specifically pertaining

to skiing and ski areas. See ORS 30.970 - 30.990. Those statutes, among other

provisions, set out the “duties” of skiers, require that ski area operators inform

skiers of those duties, establish notice requirements and a statute of limitations

pertaining specifically to injury or death while skiing, and provide that those

who engage in the sport of skiing accept and assume the risks inherent in that

activity.

548 Bagley v. Mt. Bachelor, Inc.

Read the back of your ticket before you ride any lifts or use

any of the facilities of Mt. Bachelor, Inc. If you purchase

a ticket from someone else, you must provide this ticket

release information to that person or persons.

“Skiers and lift passengers who use tickets at this

resort release and agree to hold harmless and indemnify

Mt. Bachelor, Inc., its employees and agents from all claims

for property damage, injury or death which he/she may suf-

fer or for which he/she may be liable to others, arising out

of the use of Mt. Bachelor’s premises, whether such claims

are for negligence or any other theory of recovery, except for

intentional misconduct.

“If you do not agree to be bound by the terms and con-

ditions of the sale of your ticket, please do not purchase the

ticket or use the facilities at Mt. Bachelor.

“Presentation of this ticket to gain access to the prem-

ises and facilities of this area is an acknowledgment of your

agreement to the terms and conditions outlined above.”

(Capitalization in original.)

Beginning on November 18, 2005, plaintiff used

his season pass to ride defendant’s lifts at least 119 times

over the course of 26 days that he spent snowboarding at

the ski area. On February 16, 2006, while snowboarding

over a human-made jump in defendant’s “air chamber”

terrain park, plaintiff sustained serious injuries resulting

in his permanent paralysis. Approximately four months

later, plaintiff provided defendant with notice of his inju-

ries under ORS 30.980(1), which requires that “[a] ski area

operator shall be notified of any injury to a skier * * * within

180 days after the injury[.]” Within two years after he was

injured, plaintiff brought this action; his complaint alleged

negligence on defendant’s part in designing, constructing,

maintaining, and inspecting the jump on which plaintiff

was injured. Defendant answered, in part, by invoking the

affirmative defense of release, pointing to the above-quoted

documents.

In its summary judgment motion, defendant

asserted that plaintiff “admittedly understood that he [had]

entered into a release agreement and was snowboarding

under its terms on the date of [the] accident.” Defendant

Cite as 356 Or 543 (2014) 549

argued that the release conspicuously and unambiguously

disclaimed its future liability for negligence, and that the

release was neither unconscionable nor contrary to public

policy under Oregon law, because “skiers and snowboarders

voluntarily choose to ski and snowboard and ski resorts do

not provide essential public services.” Thus, defendant rea-

soned, there was no material issue of fact as to whether the

release barred plaintiff’s action, and defendant was entitled

to judgment as a matter of law.

In his cross-motion for partial summary judgment,

plaintiff asserted that the release was unenforceable because

it was contrary to public policy and was “both substantively

and procedurally unconscionable.” The trial court rejected

plaintiff’s public policy and unconscionability arguments,

reasoning that “[s]now riding is not such an essential ser-

vice which requires someone such as [p]laintiff to be forced

to sign a release in order to obtain the service.” Accordingly,

the trial court granted summary judgment in defendant’s

favor and denied plaintiff’s cross-motion for partial sum-

mary judgment.

As noted, the Court of Appeals affirmed. The court

initially observed that the line between the public policy and

unconscionability doctrines on which plaintiff relied was not

clearly delineated:

“We assume without deciding that the ‘void as contrary

to public policy’ doctrine pertaining to this type of case has

not been superseded by later-evolved principles concerning

substantive unconscionability. See Restatement[ (Second)

of Contracts] § 208 comment a [(1981)] (unconscionability

analysis generally ‘overlaps’ with public-policy analysis).”

Bagley, 258 Or App at 403 n 7. The court then proceeded sep-

arately to analyze plaintiff’s arguments. It first concluded

that the release did not violate public policy. In particu-

lar, the court understood plaintiff to rely on an uncodified

Oregon public policy that gives primacy to the tort duties of

landowners and business operators to provide safe premises

for invitees. In rejecting plaintiff’s argument, the Court of

Appeals relied on several factors. First, the court observed

that the release “clearly and unequivocally” expressed

defendant’s intent to disclaim liability for negligence. Id. at

550 Bagley v. Mt. Bachelor, Inc.

405 (“[W]e are hard-pressed to envision a more unambigu-

ous expression of ‘the expectations under the contract’[.]”).

Second, the court noted that anticipatory releases that dis-

claim liability only for ordinary negligence do not neces-

sarily offend public policy where they pertain exclusively

to recreational activities and, most importantly, where the

party seeking to relieve itself from liability does not pro-

vide an essential public service. Id. The court noted that a

ski resort primarily offers recreational activities that, with

possible exceptions that do not apply in this case, such as

training for search-and-rescue personnel, do not constitute

essential public services. Id. at 406. Third, the court stated

that plaintiff’s claims were based on ordinary negligence

and did not implicate a violation of any heightened duty of

care. Id.

The court then rejected plaintiff’s unconscionability

argument for essentially the same reasons. First, the court

concluded, the release was not procedurally unconscionable

in that it did not surprise plaintiff (that is, it was conspicu-

ous and unambiguous) and it was not impermissibly oppres-

sive, because, even though offered on a “take it or leave it

basis,” plaintiff always could choose not to engage in the

nonessential recreational activity that defendant offered.

Id. at 407-08. The court also concluded that the release was

not essentially unfair and, therefore, was not substantively

unconscionable. Id. at 409. Although “favorable” to defen-

dant, the release was not impermissibly so, the court stated,

because a person does not need to ski or snowboard, but

rather merely desires to do so. That is, the patron is free to

walk away rather than accept unjust terms. Id. at 409-10.

For those reasons, the court affirmed the trial court’s

summary judgment rulings and its dismissal of plaintiff’s

action.

ANALYSIS

The parties’ dispute in this case involves a topic—

the validity of exculpatory agreements—that this court has

not comprehensively addressed in decades. Although the spe-

cific issue on review—the validity of an anticipatory release

of a ski area operator’s liability for negligence—is finite and

Cite as 356 Or 543 (2014) 551

particular, it has broader implications insofar as it lies at

the intersection of two traditional common law domains—

contract and tort—where, at least in part, the legislature

has established statutory rights and duties that affect the

reach of otherwise governing common law principles.

It is a truism that a contract validly made between

competent parties is not to be set aside lightly. Bliss v.

Southern Pacific Co. et al, 212 Or 634, 646, 321 P2d 324

(1958) (“When two or more persons competent for that pur-

pose, upon a sufficient consideration, voluntarily agree to

do or not to do a particular thing which may be lawfully

done or omitted, they should be held to the consequences

of their bargain.”). The right to contract privately is part

of the liberty of citizenship, and an important office of the

courts is to enforce contractual rights and obligations. W. J.

Seufert Land Co. v. Greenfield, 262 Or 83, 90-91, 496 P2d

197 (1972) (so stating). As this court has stated, however,

“contract rights are [not] absolute; * * * [e]qually fundamen-

tal with the private right is that of the public to regulate it

in the common interest.” Christian v. La Forge, 194 Or 450,

469, 242 P2d 797 (1952) (internal quotation marks omitted).

That “common,” or public, interest is embodied,

in part, in the principles of tort law. As a leading treatise

explains:

“It is sometimes said that compensation for losses is the

primary function of tort law * * * [but it] is perhaps more

accurate to describe the primary function as one of deter-

mining when compensation is to be required.

“* * * * *

“[Additionally, t]he ‘prophylactic’ factor of preventing

future harm has been quite important in the field of torts.

The courts are concerned not only with compensation of the

victim, but with admonition of the wrongdoer.”

W. Page Keeton, Prosser and Keeton on the Law of Torts § 4,

20-25 (5th ed 1984). See also Dan B. Dobbs, The Law of

Torts § 8, 12 (2000) (most commonly mentioned aims of tort

law are compensation of injured persons and deterrence of

undesirable behavior). A related function of the tort system

552 Bagley v. Mt. Bachelor, Inc.

is to distribute the risk of injury to or among responsible

parties. Keeton, Prosser and Keeton § 4, 24-25.4

One way in which courts have placed limits on the

freedom of contract is by refusing to enforce agreements

that are illegal. Uhlmann v. Kin Daw, 97 Or 681, 688, 193

P 435 (1920) (an illegal agreement is void and unenforce-

able). According to Uhlmann:

“An agreement is illegal if it is contrary to law, morality

or public policy. Plain examples of illegality are found in

agreements made in violation of some statute; and, stat-

ing the rule broadly, an agreement is illegal if it violates a

statute or cannot be performed without violating a statute.”

Id. at 689 (internal citation omitted); see also Eldridge et al.

v. Johnston, 195 Or 379, 405, 245 P2d 239 (1952) (“It is

elementary that public policy requires that * * * contracts

[between competent parties], when entered into freely and

voluntarily, shall be held sacred and shall be enforced by the

courts of justice, and it is only when some other overpow-

ering rule of public policy * * * intervenes, rendering such

agreement illegal, that it will not be enforced.”).

In determining whether an agreement is illegal

because it is contrary to public policy, “[t]he test is the evil

tendency of the contract and not its actual injury to the public

in a particular instance.” Pyle v. Kernan, 148 Or 666, 673-74,

36 P2d 580 (1934). The fact that the effect of a contract

provision may be harsh as applied to one of the contracting

parties does not mean that the agreement is, for that rea-

son alone, contrary to public policy, particularly where “the

contract in question was freely entered into between parties

in equal bargaining positions and did not involve a contract

of adhesion, such as some retail installment contracts and

insurance policies.” Seufert, 262 Or at 92.

As we discuss in more detail below, courts deter-

mine whether a contract is illegal by determining whether it

violates public policy as expressed in relevant constitutional

and statutory provisions and in case law, see, e.g., Delaney v.

4

See also Rizutto v. Davidson Ladders, Inc., 280 Conn 225, 235, 905 A2d

1165 (2006) (fundamental purposes of the tort system are “compensation of inno-

cent parties, shifting the loss to responsible parties or distributing it among

appropriate entities, and deterrence of wrongful conduct.”).

Cite as 356 Or 543 (2014) 553

Taco Time Int’l, Inc., 297 Or 10, 681 P2d 114 (1984) (looking

to those sources to determine whether discharge of at-will

employee violated public policy), and by considering whether

it is unconscionable. With respect to the doctrine of uncon-

scionability, one commentator has explained:

“The concept of unconscionability was meant to counteract

two generic forms of abuses: the first of which relates to pro-

cedural deficiencies in the contract formation process, such

as deception or a refusal to bargain over contract terms,

today often analyzed in terms of whether the imposed-

upon party had meaningful choice about whether and how

to enter the transaction; and the second of which relates

to the substantive contract terms themselves and whether

those terms are unreasonably favorable to the more pow-

erful party, such as terms that impair the integrity of the

bargaining process or otherwise contravene the public

interest or public policy; terms (usually of an adhesion or

boilerplate nature) that attempt to alter in an impermissi-

ble manner fundamental duties otherwise imposed by the

law, fine-print terms, or provisions that seek to negate the

reasonable expectations of the nondrafting party, or unrea-

sonably and unexpectedly harsh terms having nothing to

do with price or other central aspects of the transaction.”

Richard A. Lord, 8 Williston on Contracts § 18.10, 91

(4th ed 2010). As that passage suggests, the doctrine of

unconscionability reflects concerns related specifically to

the parties and their formation of the contract, but it also

has a broader dimension that converges with an analysis

of whether a contract or contract term is illegal because it

violates public policy.5

5

This court has not distinguished between contracts that are illegal because

they violate public policy and contracts that are unenforceable because they are

unconscionable. However, a difference in focus between the two concepts has been

described in this way:

“[O]ur public policy analysis asks whether the contract provision at issue

threatens harm to the public as a whole, including by contravening the con-

stitution, statutes, or judicial decisions of [this state]. In contrast, an uncon-

scionability analysis asks whether the agreement, by its formation or by its

terms, is so unfair that the court cannot enforce it consistent with the inter-

ests of justice.”

Phoenix Ins. Co. v. Rosen, 242 Ill 2d 48, 61, 949 NE2d 639 (2011). As that passage

suggests, the two doctrines are aimed at similar concerns: unfairness or oppres-

sion in contract formation or terms that are sufficiently serious as to justify the

conclusion that the contract contravenes the interests of justice.

554 Bagley v. Mt. Bachelor, Inc.

Recognizing that convergence, this court often has

relied on public policy considerations to determine whether a

contract or contract term is sufficiently unfair or oppressive

to be deemed unconscionable. See, e.g., William C. Cornitius,

Inc. v. Wheeler, 276 Or 747, 754-55, 556 P2d 666 (1976) (treat-

ing lessee’s unconscionability defense as grounded in public

policy); Cone v. Gilmore, 79 Or 349, 352-54, 155 P 192 (1916)

(analyzing unconscionability challenge to contract enforce-

ment based on public policy considerations); Balfour v. Davis,

14 Or 47, 53, 12 P 89 (1886) (referring to unconscionability

interchangeably with public policy considerations). Other

authorities also have described the two doctrines in func-

tionally the same terms, see, e.g., E. Allen Farnsworth, 1

Farnsworth on Contracts § 4.28, 577 (3d ed 2004) (com-

paring unconscionability to violation of public policy), or

as involving substantially overlapping considerations, see

Restatement (Second) of Contracts § 208 comment a (1981)

(policy against unconscionable contracts or contract terms

“overlaps with rules which render particular bargains or

terms unenforceable on grounds of public policy”).

As discussed, the Court of Appeals concluded that

the release at issue here did not violate public policy and

was not unconscionable for essentially the same reasons: it

was conspicuous and unambiguous, and it related to a rec-

reational activity, not an essential public service. Likewise,

neither party has suggested that different legal standards

apply in determining whether the release at issue in this case

violates public policy or is unconscionable. Thus, for the sake

of convenience—if not doctrinal convergence—we address

the parties’ public policy arguments in the context of our

analysis of whether, in the particular circumstances of this

case, enforcement of the release would be unconscionable.6

Oregon courts have recognized their authority to

refuse to enforce unconscionable contracts since the nine-

teenth century. See Balfour, 14 Or 47 (refusing to award

attorney fees because amount specified in contract was

6

We emphasize that it is not necessary to decide in this case whether the doc-

trines always are identical in practical effect or whether they may vary in their

application depending on the particular circumstances of a given case. It suffices

to say that we discern no difference in their practical application in this case and,

therefore, for the sake of convenience, we consider plaintiff’s violation of public

policy theory in the context of his unconscionability arguments.

Cite as 356 Or 543 (2014) 555

unconscionable); see also Caples v. Steel, 7 Or 491 (1879)

(court may refuse specific performance if bargain is uncon-

scionable). Unconscionability is “assessed as of the time

of contract formation,” and the doctrine “applies to con-

tract terms rather than to contract performance.” Best v.

U.S. National Bank, 303 Or 557, 560, 739 P2d 554 (1987)

(“Unconscionability is a legal issue that must be assessed as

of the time of contract formation.”); Tolbert v. First National

Bank, 312 Or 485, 492 n 4, 823 P2d 965 (1991) (same).

Unconscionability may be procedural or substan-

tive. Procedural unconscionability refers to the conditions

of contract formation and focuses on two factors: oppression

and surprise. See, e.g., John Edward Murray, Jr., Murray

on Contracts § 96(b), 555-56 (4th ed 2001) (describing

components of procedural unconscionability). Oppression

exists when there is inequality in bargaining power between

the parties, resulting in no real opportunity to negotiate the

terms of the contract and the absence of meaningful choice.

Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or App 553,

566-67, 152 P3d 940, 948 (2007); Acorn v. Household Intern.

Inc., 211 F Supp 2d 1160, 1168 (ND Cal. 2002). Surprise

involves whether terms were hidden or obscure from the

vantage of the party seeking to avoid them. Id. Generally

speaking, factors such as ambiguous contract wording and

fine print are the hallmarks of surprise. In contrast, the

existence of gross inequality of bargaining power, a take-

it-or-leave-it bargaining stance, and the fact that a contract

involves a consumer transaction, rather than a commercial

bargain, can be evidence of oppression.

Substantive unconscionability, on the other hand,

generally refers to the terms of the contract, rather than

the circumstances of formation, and focuses on whether

the substantive terms contravene the public interest or

public policy.7 See Restatement § 208; Lord, Williston on

7

It sometimes can be difficult to categorize the factors on which a determi-

nation of unconscionability may be based as distinctly procedural or substantive,

and even factors usually considered in assessing procedural unconscionability can

help establish a violation of public policy. For example, the passage quoted above

from Lord, Williston on Contracts § 18.10, 356 Or at 553, suggests that adhesive

and fine-print terms may be substantively unconscionable. Indeed, the author

goes on to say that “[t]he distinction between procedural and substantive abuses

* * * may become quite blurred.” Lord, Williston on Contracts § 18.10 at 108-11.

556 Bagley v. Mt. Bachelor, Inc.

Contracts § 18.10 at 91. Both procedural and substantive

deficiencies—frequently in combination—can preclude enforce-

ment of a contract or contract term on unconscionability

grounds. Restatement § 208.8

Identifying whether a contract is procedurally

unconscionable requires consideration of evidence related

to the specific circumstances surrounding the formation of

the contract at issue. By contrast, the inquiry into substan-

tive unconscionability can be more complicated. To discern

whether, in the context of a particular transaction, substan-

tive concerns relating to unfairness or oppression are suffi-

ciently important to warrant interference with the parties’

freedom to contract as they see fit, courts frequently look to

legislation for relevant indicia of public policy. When rele-

vant public policy is expressed in a statute, the issue is one

of legislative intent. See Uhlmann, 97 Or at 689-90 (so stat-

ing). In that situation, the court must examine the statu-

tory text and context to determine whether the legislature

intended to invalidate the contract term at issue.9 Id.

8

In some jurisdictions, courts require both procedural and substantive

unconscionability before they will invalidate a contract. See, e.g., Armendariz v.

Found. Health Psychcare Servs., Inc., 24 Cal 4th 83, 114, 99 Cal Rptr 2d 745, 6 P3d

669, 690 (2000) (procedural and substantive unconscionability must both be pres-

ent in order for a court to exercise its discretion to refuse to enforce a contract or

clause under the doctrine of unconscionability); Blue Cross Blue Shield of Ala. v.

Rigas, 923 So 2d 1077, 1087 (Ala 2005) (“To avoid an arbitration provision on the

ground of unconscionability, the party objecting to arbitration must show both

procedural and substantive unconscionability.”). This court has not addressed

that issue, and because, as explained below, we conclude that both procedural

and substantive considerations support the conclusion that the release here is

unconscionable, we do not decide that issue in this case.

9

Many jurisdictions that limit or prohibit the use of anticipatory releases

from negligence liability on public policy grounds do so as a matter of statutory

enactment, rather than common law. For example, Great Britain and the States

of Louisiana and Montana have statutory provisions that forbid contracts excul-

pating one party from liability for negligence that results in personal injury.

Unfair Contract Terms Act of 1977, ch 50, § 2(1) (Eng) (“A person cannot by refer-

ence to any contract term or to a notice given to persons generally or to particular

persons exclude or restrict his liability for death or personal injury resulting from

negligence.”); La Civ Code Ann art 2004 (“Any clause is null that, in advance,

excludes or limits the liability of one party for causing physical injury to the other

party.”); Mont Code Ann § 28-2-702 (“All contracts that have for their object,

directly or indirectly, to exempt anyone from responsibility * * * for violation of

law, whether willful or negligent, are against the policy of the law.”); see also

Miller v. Fallon County, 222 Mont 214, 221, 721 P2d 342 (1986) (under statute,

prospective release from liability for negligence is against the policy of the law

Cite as 356 Or 543 (2014) 557

Frequently, however, the argument that a contract

term is sufficiently unfair or oppressive as to be unenforce-

able is grounded in one or more factors that are not expressly

codified; in such circumstances, the common law has a sig-

nificant role to play. As the commentary to the Restatement

(Second) of Contracts explains:

“Only infrequently does legislation, on grounds of public

policy, provide that a term is unenforceable. When a court

and illegal, despite being a private contract between two persons without signifi-

cant public implications).

Some states use statutes to make anticipatory releases from liability for

negligence void as against public policy as to businesses providing recreational

activities to the public. NY Gen Oblig Law § 5-326 (every contract between rec-

reational business owner and user of facility, pursuant to which owner receives

payment for use of facilities, that exempts owner from liability for damages

resulting from owner’s negligence “shall be deemed void as against public policy

and wholly unenforceable”); Haw Rev Stat § 663-1.54(a) (“Any person who owns

or operates a business providing recreational activities to the public * * * shall be

liable for damages resulting from negligent acts or omissions of the person which

cause injury.”).

Other states have enacted more narrowly crafted statutes that deal with

specific recreational activities, including skiing. For example, an Alaska stat-

ute specifically prohibits ski area operators from requiring skiers to enter into

agreements releasing them from liability in exchange for the use of the facilities.

Alaska Stat Ann § 05.45.120. In North Carolina, a statute imposes a duty on ski

area operators “[n]ot to engage willfully or negligently in any type of conduct

that contributes to or causes injury to another person or his properties.” NC Gen

Stat § 99C-2(c)(7); NC Gen Statute § 9C-3 (violation of duties of ski area operator

that causes injury or damage shall constitute negligence); see also Strawbridge v.

Sugar Mountain Resort, Inc., 320 F Supp 2d 425, 433 (WD NC 2004) (in light of

statutory duty imposed on ski area operators not to negligently engage in conduct

that causes injury, exculpatory clause on back of lift ticket was unenforceable).

Still other states have statutes that pertain specifically to skiing and,

although not addressing releases, prescribe ski area operator duties and provide

that operators will be liable for a violation of those duties. Colo Rev Stat § 33-44-

104(1) (violation of duties of ski area operator constitutes negligence to extent

such violation causes injury to any person or damage to property); see also

Anderson v. Vail Corp., 251 P3d 1125, 1129-30 (Colo App 2010) (if ski area oper-

ator violated statutory duties, exculpatory agreement would not release operator

from liability); Idaho Code § 6-1107 (“Any ski area operator shall be liable for loss

or damages caused by its failure to follow the duties set forth in [other sections of

the Idaho Code pertaining to duties of ski area operators], where the violation of

duty is causally related to the loss or damage suffered.”); NM Stat Ann § 24-15-11

(to same effect); ND Cent Code § 53-09-07 (same); W Va Code § 20-3A-6 (same);

Utah Code Ann § 78B-4-401(public policy of Utah Inherent Risks of Skiing Act

is to make ski area operators better able to insure themselves against the risk

of loss occasioned by their negligence); see also Rothstein v. Snowbird Corp., 175

P3d 560, 564 (Utah 2007) (by extracting a pre-injury release from plaintiff for lia-

bility due to ski resort’s negligent acts, resort breached public policy underlying

Utah Inherent Risks of Skiing Act).

558 Bagley v. Mt. Bachelor, Inc.

reaches that conclusion, it usually does so on the basis of a

public policy derived either from its own perception of the

need to protect some aspect of the public welfare or from

legislation that is relevant to the policy although it says

nothing explicitly about enforceability.”

Restatement § 178 comment b.

This court has considered whether enforcement of

an anticipatory release would violate an uncodified public

policy in only a few cases. Although, in those cases, this

court has not expressly analyzed the issue through the lens

of unconscionability, it has followed an approach that is

generally consistent with the application of that doctrine.

That is, the court has not declared such releases to be per se

invalid, but neither has it concluded that they are always

enforceable. Instead, the court has followed a multi-factor

approach:

“Agreements to exonerate a party from liability or to

limit the extent of the party’s liability for tortious conduct

are not favorites of the courts but neither are they automat-

ically voided. The treatment courts accord such agreements

depends upon the subject and terms of the agreement and

the relationship of the parties.”

K-Lines v. Roberts Motor Co., 273 Or 242, 248, 541 P2d 1378

(1975).

In K-Lines, this court upheld a limitation of liability

contained in a commercial sales agreement. The court held

that the fact

“[t]hat one party may possess greater financial resources

than the other is not proof that such a disparity of bar-

gaining power exists that a limitation of liability provisions

should be voided.

“When the parties are business concerns dealing in

a commercial setting and entering into an unambiguous

agreement with terms commonly used in commercial trans-

actions, the contract will not be deemed a contract of adhe-

sion in the absence of evidence of unusual circumstances.”

Id. at 252-53. The court also noted that, in an earlier deci-

sion, it had stated:

Cite as 356 Or 543 (2014) 559

“ ‘There is nothing inherently bad about a contract provi-

sion which exempts one of the parties from liability. The

parties are free to contract as they please, unless to permit

them to do so would contravene the public interest.’ ”

Id. at 248 (quoting Irish & Swartz Stores v. First Nat’l Bk.,

220 Or 362, 375, 349 P2d 814 (1960), overruled on other

grounds by Real Good Food v. First National Bank, 276 Or

1057, 557 P2d 654 (1976)).10

Soon after deciding K-Lines, this court, in Real

Good Food, held that a bank—serving as a bailee for

depositors—could not limit its liability for the negligence of

its employees. Relying on the Restatement (Second) of Torts,

the court held:

“Where the defendant is a common carrier, an innkeeper,

a public warehouseman, a public utility, or is otherwise

charged with a duty of public service, and the agreement

to assume the risk relates to the defendant’s performance

of any part of that duty, it is well settled that it will not

be given effect. Having undertaken the duty to the pub-

lic, which includes the obligation of reasonable care, such

defendants are not free to rid themselves of their public

obligation by contract, or by any other agreement.”

Id. at 1061 (quoting Restatement (Second) of Torts § 496B

comment g (1965)).11 The court in Real Good Food concluded

that “[b]anks, like common carriers and utility companies,

10

In K-Lines, which, as noted, involved a commercial transaction, the

court distinguished between releases from liability for ordinary negligence and

releases involving more serious misconduct, concluding that the latter violate

public policy, but that the former are not necessarily unenforceable. K-Lines, 273

Or at 249.

11

Restatement (Second)of Torts § 496B provides:

“A plaintiff who by contract or otherwise expressly agrees to accept a risk

of harm arising from the defendant’s negligent or reckless conduct cannot

recover for such harm, unless the agreement is invalid as contrary to public

policy.”

According to the comments to that section, an exculpatory agreement should

be upheld if it is freely and fairly made, if it is between parties who are in an equal

bargaining position, and if there is no societal interest with which it interferes.

Restatement (Second) of Torts § 496B comment b. Comments e-j set out a non-

exclusive list of situations in which releases may interfere with societal interests,

insofar as they are contrary to public policy. Among other things, in addition

to situations like those described in the passage quoted above, the Restatement

refuses to give effect to express liability releases where there is a substantial

disparity in bargaining power. Restatement (Second) of Torts § 496B comment j.

560 Bagley v. Mt. Bachelor, Inc.

perform an important public service,” and the release there-

fore violated public policy and was unenforceable. 276 Or at

1061.

Finally, this court has held that another factor for

determining whether an anticipatory release may be unen-

forceable is the possibility of a harsh or inequitable result

for the releasing party. Commerce & Industry Ins. v. Orth,

254 Or 226, 231-32, 458 P2d 926 (1969) (so stating); Estey

v. MacKenzie Engineering Inc., 324 Or 372, 376-77, 927 P2d

86 (1996) (court’s inquiry into intent of parties to immunize

against negligence “focuse[s] not only on the language of the

contract, but also on the possibility of a harsh or inequitable

result that would fall on one party by immunizing the other

party from the consequences of his or her own negligence”).

We glean from those decisions that relevant proce-

dural factors in the determination of whether enforcement

of an anticipatory release would violate public policy or be

unconscionable include whether the release was conspicuous

and unambiguous; whether there was a substantial dispar-

ity in the parties’ bargaining power; whether the contract

was offered on a take-it-or-leave-it basis; and whether the

contract involved a consumer transaction. Relevant sub-

stantive considerations include whether enforcement of the

release would cause a harsh or inequitable result to befall

the releasing party; whether the releasee serves an import-

ant public interest or function; and whether the release pur-

ported to disclaim liability for more serious misconduct than

ordinary negligence. Nothing in our previous decisions sug-

gests that any single factor takes precedence over the others

or that the listed factors are exclusive. Rather, they indicate

that a determination whether enforcement of an anticipa-

tory release would violate public policy or be unconscionable

must be based on the totality of the circumstances of a par-

ticular transaction. The analysis in that regard is guided,

but not limited, by the factors that this court previously has

identified; it is also informed by any other considerations

that may be relevant, including societal expectations.12

12

Justice Peterson eloquently described the role of societal expectations in

informing the development of both the common law and legislation:

“The beauty and strength of the common-law system is its infinite adapt-

ability to societal change. Recent decisions of this court are illustrative. In

Cite as 356 Or 543 (2014) 561

With those principles in mind, we first consider the

factors that usually are described as procedural, viz., those

pertaining to the formation of the agreement. Plaintiff does

not contend that the release was inconspicuous or ambigu-

ous; that is, plaintiff does not contend that he was surprised

by its terms. Thus, that factor weighs in favor of enforcement.

Other procedural factors, however, point in a differ-

ent direction. This was not an agreement between equals.

Only one party to the contract—defendant—was a commer-

cial enterprise, and that party exercised its superior bar-

gaining strength by requiring its patrons, including plain-

tiff, to sign an anticipatory release on a take-it-or-leave-it

basis as a condition of using its facilities. As the Restatement

(Second) of Torts, section 496B, explains, a release may not

be enforced

“where there is such a disparity in bargaining power

between the parties that the agreement does not represent

a free choice on the part of the plaintiff. The basis for such

a result is the policy of the law which relieves the party

who is at such a disadvantage from harsh, inequitable, and

Heino v. Harper, 306 Or 347, 349-50, 759 P2d 253 (1988), the court abolished

interspousal immunity, holding ‘that the common-law rule of interspousal

immunity is no longer available in this state to bar negligence actions

between spouses.’ In Winn v. Gilroy, 296 Or 718, 734, 681 P2d 776 (1984), the

court abolished parental tort immunity for negligent injury to minor chil-

dren. Nineteen years earlier, in Wights v. Staff Jennings, 241 Or 301, 310, 405

P2d 624 (1965), stating that ‘it is the function of the judiciary to modify the

law of torts to fit the changing needs of society,’ the court held that a seller

of a product may be held strictly liable for injuries to a plaintiff not in privity

with the seller.

“The development of the common law occurs in an environment in which

tensions abound. On occasion, the Legislative Assembly passes laws in

response to decisions of this court. Products liability decisions of this court

led to the enactment of a series of products liability statutes now found in

ORS 30.900 to 30.927. A decision of this court involving an injury to a skier,

Blair v. Mt. Hood Meadows Development Corp., 291 Or 293, 630 P2d 827,

modified, 291 Or 703, 634 P2d 241 (1981), led to the enactment of statutes

concerning skiing activities, ORS 30.970 to 30.990.

“On the other hand, this court, in deciding common-law issues presented

to it, has ascertained public policy by looking to legislative enactments. The

legislature is incapable of passing laws that govern every conceivable sit-

uation that might arise, however. The common-law court is the institution

charged with the formulation and application of rules of governing law in

situations not covered by constitution, legislation, or rules.”

Buchler v. Oregon Corrections Div., 316 Or 499, 518-19, 853 P2d 798 (1993)

(Peterson, J., concurring).

562 Bagley v. Mt. Bachelor, Inc.

unfair contracts which he is forced to accept by the neces-

sities of his situation. The disparity in bargaining power

may arise from the defendant’s monopoly of a particular

field of service, from the generality of use of contract clauses

insisting upon assumption of risk by those engaged in such

a field, so that the plaintiff has no alternative possibility of

obtaining the service without the clause; or it may arise from

the exigencies of the needs of the plaintiff himself, which

leave him no reasonable alternative to the acceptance of

the offered terms.”

Id. comment j (emphasis added).

Also, plaintiff had no opportunity in this case to

negotiate for different terms or pay an additional fee for

protection against defendant’s negligence. What makes the

substantial disparity in the parties’ bargaining positions

even more significant in this circumstance is the limited

number of ski areas that provide downhill skiing and snow-

boarding opportunities in Oregon, and the generality of

the use of similar releases among that limited commercial

cohort.13 Simply put, plaintiff had no meaningful alternative

to defendant’s take-it-or-leave-it terms if he wanted to par-

ticipate in downhill snowboarding. Although that factor is

not, by itself, dispositive,

“[w]hen one party is in such a superior bargaining position

that it totally dictates all terms of the contract and the only

option presented to the other party is to take it or leave

it, some quantum of procedural unconscionability is estab-

lished. The party who drafts such a contract of adhesion

bears the responsibility of assuring that the provisions of

the contract are not so one-sided as to be unconscionable.”

Strand v. U.S. Bank Nat. Ass’n, 693 NW2d 918, 925 (ND

2005).

We next consider the substantive factors that are

relevant to our inquiry. The parties have identified the fol-

lowing relevant factors: whether enforcement of the release

would cause a harsh or inequitable result; whether defen-

dant’s recreational business operation serves an import-

ant public interest or function; and whether the release

13

In an excerpt from the transcript of plaintiff’s deposition that was included

in the summary judgment record, plaintiff testified that he had never been to a

ski resort where a release such as the one at issue here was not required.

Cite as 356 Or 543 (2014) 563

purported to disclaim liability for more serious misconduct

than ordinary negligence.

We begin with the question whether enforcement

of the release would cause a harsh and inequitable result

to befall the releasing party, in this case, plaintiff. As dis-

cussed, this court has recognized the importance of that

consideration in other cases. See, e.g., Estey, 324 Or at 376.

As pertinent here, we conclude that the result would be

harsh because, accepting as true the allegations in plain-

tiff’s complaint, plaintiff would not have been injured if

defendant had exercised reasonable care in designing, con-

structing, maintaining, or inspecting the jump on which he

was injured. And that harsh result also would be inequita-

ble because defendant, not its patrons, has the expertise and

opportunity to foresee and control hazards of its own cre-

ation on its premises, and to guard against the negligence

of its employees. Moreover, defendant alone can effectively

spread the cost of guarding and insuring against such risks

among its many patrons.

Those public policy considerations are embodied

in the common law of business premises liability. Business

owners and operators have a heightened duty of care toward

patrons—invitees14 —with respect to the condition of their

premises that exceeds the general duty of care to avoid

unreasonable risks of harm to others. Hagler v. Coastal

Farm Holdings, Inc., 354 Or 132, 140-41, 309 P3d 1073

(2013); Garrison v. Deschutes County, 334 Or 264, 272, 48

P3d 807 (2002) (business invitee rule is a “special duty”).

As this court explained in Woolston v. Wells, 297 Or 548,

557-58, 687 P2d 144 (1984):

“In general, it is the duty of the possessor of land to make

the premises reasonably safe for the invitee’s visit. The pos-

sessor must exercise the standard of care above stated to

discover conditions of the premises that create an unreason-

able risk of harm to the invitee. The possessor must exer-

cise that standard of care either to eliminate the condition

14

An “invitee” is “[a] person who has an express or implied invitation to enter

or use another’s premises, such as a business visitor or a member of the public to

whom the premises are held open.” Bryan A Garner, Black’s Law Dictionary 846

(8th ed 1999).

564 Bagley v. Mt. Bachelor, Inc.

creating that risk or to warn any foreseeable invitee of the

risk so as to enable the invitee to avoid the harm.”

Furthermore, a business operator’s obligation to make its

premises reasonably safe for its invitees includes taking

into account the use to which the premises are put. See,

e.g., Ragnone v. Portland School Dist. No. 1J, 291 Or 617,

621 n 3, 633 P2d 1287 (1981) (so stating); Mickel v. Haines

Enterprises, Inc., 240 Or 369, 371-72, 400 P2d 518 (1965)

(owner must “take reasonable precautions to protect the invi-

tee from dangers which are foreseeable from the arrange-

ment or use of the premises.”).

The legislature has statutorily modified those duties

to some extent in the Skier Responsibility Law, ORS 30.970

to 30.990. Under ORS 30.975, skiers assume certain risks:

“In accordance with ORS 31.600 [pertaining to contrib-

utory negligence] and notwithstanding ORS 31.620 (2)

[abolishing the doctrine of implied assumption of risk], an

individual who engages in the sport of skiing, alpine or nor-

dic, accepts and assumes the inherent risks of skiing inso-

far as they are reasonably obvious, expected or necessary.”

ORS 30.970(1) describes “inherent risks of skiing”:

“ ‘Inherent risks of skiing’ includes, but is not limited to,

those dangers or conditions which are an integral part of

the sport, such as changing weather conditions, variations

or steepness in terrain, snow or ice conditions, surface or

subsurface conditions, bare spots, creeks and gullies, forest

growth, rocks, stumps, lift towers and other structures and

their components, collisions with other skiers and a skier’s

failure to ski within the skier’s own ability.”

ORS 30.985 prescribes the duties of skiers, which generally

deal with behaving safely while skiing.

By providing that a skier assumes the “inherent

risks of skiing,” ORS 30.975 reduced ski area operators’

heightened common law duty to discover and guard against

certain natural and inherent risks of harm. However, the

Skier Responsibility Law did not abrogate the common-law

principle that skiers do not assume responsibility for unrea-

sonable conditions created by a ski area operator insofar as

those conditions are not inherent to the activity. See Nolan

Cite as 356 Or 543 (2014) 565

v. Mt. Bachelor, Inc., 317 Or 328, 336, 856 P2d 305 (1993)

(Skier Responsibility Law provides that “[t]o the extent an

injury is caused by an inherent risk of skiing, a skier will

not recover against a ski area operator; to the extent an

injury is a result of [ski area operator] negligence, compar-

ative negligence applies”). It follows that the public policy

underlying the common-law duty of a ski area operator to

exercise reasonable care to avoid creating risks of harm to

its business invitees remains applicable in this case.

In short, because (1) accepting as true the allega-

tions in plaintiff’s complaint, plaintiff would not have been

injured if defendant had exercised reasonable care in design-

ing, constructing, maintaining, or inspecting the jump on

which he was injured; and (2) defendant, not its patrons,

had the expertise and opportunity—indeed, the common-

law duty—to foresee and avoid unreasonable risks of its

own creation on its business premises, we conclude that the

enforcement of the release would cause a harsh and inequi-

table result, a factor that militates against its enforcement.

To continue our analysis, we next consider whether

defendant’s business operation serves an important public

interest or function. The parties sharply disagree about

the importance of that factor to our resolution of this case.

According to defendant, that factor is paramount here,

because, as a matter of law, anticipatory releases of negli-

gence liability are unenforceable only when a defendant pro-

vides an “essential” public service.

Although this court has not previously addressed

that precise issue in the context of a release involving a rec-

reational activity, other courts have done so. As defendant

observes, courts in several jurisdictions that lack statutory

prohibitions of anticipatory releases of liability for negligence

have upheld such releases (at least in part) on the ground

that the activity at issue did not involve an “essential” pub-

lic service.15 However, courts in other jurisdictions have

15

See, e.g., Malecha v. St. Croix Valley Skydiving Club, Inc., 392 NW2d 727

(Minn App 1986) (upholding an exculpatory agreement entered into between a

skydiving operation and a patron); Chepkevich v. Hidden Valley Resort, 607 Pa 1,

2 A3d 1174 (2010) (skiing); Pearce v. Utah Athletic Foundation, 179 P3d 760 (Utah

2008) (bobsledding); Benedek v. PLC Santa Monica, LLC, 104 Cal App 4th 1351,

129 Cal Rptr 2d 197 (2002) (health club); Henderson v. Quest Expeditions, Inc.,

174 SW3d 730, (Tenn Ct App 2005) (whitewater rafting).

566 Bagley v. Mt. Bachelor, Inc.

taken the opposite approach, concluding that, regardless

of whether the release involves an essential public service,

anticipatory releases that immunize a party from the conse-

quences of its own negligence can violate public policy or be

unconscionable.

For example, in Dalury v. S-K-I, Ltd., 164 Vt 329,

670 A2d 795 (1995), the Vermont Supreme Court rejected

the argument that anticipatory releases of negligence liabil-

ity necessarily are enforceable in the context of recreational

activities because such activities are not essential. 670 A2d

at 799. In that case, the plaintiff sustained serious inju-

ries when he collided with a metal pole that formed part of

the control maze for a ski-lift line. He brought a negligence

action against the defendant ski area operator, alleging that

it had negligently designed, built, and placed the maze pole.

The trial court granted the defendant’s motion for summary

judgment based on an anticipatory release that the plaintiff

had signed absolving the defendant of liability for negligence.

On appeal, the court noted that the release was

conspicuous and unambiguous, but it nevertheless con-

cluded that the release violated public policy. Id. at 797. The

court began its analysis with the Restatement (Second) of

Torts  § 496B comment b, which states that an anticipatory

release should be upheld if (1) it is freely and fairly made,

(2) between parties who are in equal bargaining positions,

and (3) there is no societal interest with which it interferes.

Dalury, 670 A2d at 797. The parties’ dispute focused on

the last issue. The defendant urged the court to conclude

that, because skiing—like other recreational activities—is

not a necessity of life, the sale of a lift ticket is a purely

private transaction that implicates no public interest. The

court concluded that “no single formula will reach the rele-

vant public policy issues in every factual context.” Id. at 798.

Rather, the court stated that it would consider “the totality

of the circumstances of any given case against the backdrop

of current societal expectations.” Id.

The court found a significant public policy consider-

ation in the case in the law of premises liability; in partic-

ular, the court stated, business owners—including ski area

operators—owe a duty of care to make their premises safe

Cite as 356 Or 543 (2014) 567

for patrons where their operations create a foreseeable risk

of harm. Id. at 799. The court observed that

“[d]efendants, not recreational skiers, have the expertise

and opportunity to foresee and control hazards, and to

guard against the negligence of their agents and employ-

ees. They alone can properly maintain and inspect their

premises, and train their employees in risk management.

They alone can insure against risks and effectively spread

the cost of insurance among their thousands of customers.

Skiers, on the other hand, are not in a position to discover

and correct risks of harm, and they cannot insure against

the ski area’s negligence.

“If defendants were permitted to obtain broad waivers

for their liability, an important incentive for ski areas to

manage risk would be removed with the public bearing the

cost of the resulting injuries. * * * It is illogical, in these

circumstances, to undermine the public policy underlying

business invitee law and allow skiers to bear risks they

have no ability or right to control.”

Id.

Turning to the defendant’s argument that the

release was enforceable because ski resorts do not provide

an essential public service, the court stated that,”[w]hile

interference with an essential public service surely affects

the public interest, those services do not represent the uni-

verse of activities that implicate public concerns.” Id. The

court held that, “when a facility becomes a place of public

accommodation, it ‘render[s] a service which has become of

public interest in the manner of the innkeepers and com-

mon carriers of old.’ ” Id. at 799-800 (quoting Lombard v.

Louisiana, 373 US 267, 279, 83 S Ct 1122, 10 L Ed 2d 338

(1963)) (internal quotation marks omitted).

Finally, the court’s analysis was informed by a

statute that placed the “inherent risks” of any sport on

the participant, insofar as the risks were obvious and

necessary.16 The court stated that “[a] ski area’s own

16

Vermont Statutes Annotated title 12, section 1037, provides:

“Notwithstanding the provisions of section 1036 of this title, a person

who takes part in any sport accepts as a matter of law the dangers that

inhere therein insofar as they are obvious and necessary.”

568 Bagley v. Mt. Bachelor, Inc.

negligence * * * is neither an inherent risk nor an obvi-

ous and necessary one in the sport of skiing,” and, there-

fore, “a skier’s assumption of the inherent risks of skiing

does not abrogate the ski area’s duty to warn of or cor-

rect dangers which in the exercise of reasonable prudence

in the circumstances could have been foreseen and cor-

rected.” Dalury, 670 A2d at 800 (internal quotation marks

omitted).17

We, too, think that the fact that defendant does not

provide an essential public service does not compel the con-

clusion that the release in this case must be enforced. As the

court stated in Dalury, “[w]hile interference with an essen-

tial public service surely affects the public interest, those

services do not represent the universe of activities that

implicate public concerns.” 670 A2d at 799. It is true that

ski areas do not provide the kind of public service typically

associated with government entities or heavily regulated

private enterprises such as railroads, hospitals, or banks.

See Real Good Food, 276 Or at 1061 (“Banks, like common

carriers and utility companies, perform an important public

service, and, for that very reason, are subject to state and

federal regulation.”). However, like other places of public

accommodation such as inns or public warehouses, defen-

dant’s business premises—including its terrain park—are

open to the general public virtually without restriction, and

large numbers of skiers and snowboarders regularly avail

themselves of its facilities. To be sure, defendants’ business

facilities are privately owned, but that characteristic does

17

For similar reasons, the Connecticut Supreme Court also has declined to

enforce an anticipatory release of negligence liability in the face of the defendant’s

contention that recreational activities do not implicate the public interest. Hanks

v. Powder Ridge Restaurant Corp., 276 Conn 314, 885 A2d 734 (2005). Hanks

was a negligence action brought by a plaintiff who was injured when his foot was

caught between his snowtube and the artificial bank of a snowtubing run at a ski

resort operated by the defendant. The defendant relied on an anticipatory release

that the plaintiff had signed that purported to absolve the defendant from liabil-

ity for its negligence. The court acknowledged that the release was conspicuous

and unambiguous, but ultimately agreed with the Vermont Supreme Court that

determining what constitutes the public interest required consideration of all

relevant circumstances, including that the plaintiff lacked sufficient knowledge

and authority to discern whether, much less ensure that, the snowtubing runs

were maintained in a reasonably safe condition. Id. at 331. Thus, the court held,

“it is illogical to permit snowtubers, and the public generally, to bear the costs of

risks that they have no ability or right to control.” Id. at 332.

Cite as 356 Or 543 (2014) 569

not overcome a number of legitimate public interests con-

cerning their operation.18

The major public interests at stake are those

underlying the law of business premises liability. The pol-

icy rationale is to place responsibility for negligently cre-

ated conditions of business premises on those who own or

control them, with the ultimate goal of mitigating the risk

of injury-producing accidents. Hagler, 354 Or at 140-41;

Garrison, 334 Or at 272. In that setting, where a business

operator extends a general invitation to enter and engage

in activities on its premises that is accepted by large num-

bers of the public, and those invitees are subject to risks

of harm from conditions of the operator’s creation, their

safety is a matter of broad societal concern. See Dalury, 670

A2d 799 (“[W]hen a substantial number of such sales take

place as a result of the [operator’s] general invitation to

the public to utilize the facilities and services in question,

a legitimate public interest arises.”). The public interest,

therefore, is affected by the performance of the operator’s

private duties toward them. See, e.g., Strawbridge v. Sugar

Mountain Resort, Inc., 320 F Supp 2d 425, 433-34 (WD

NC 2004) (holding, under North Carolina law, that “the

ski industry is sufficiently regulated and tied to the public

interest” to preclude enforcement of anticipatory release,

based on the principle that “a party cannot protect himself

by contract[ing] against liability for negligence * * * where

* * * public interest is involved, or where public interest

requires the performance of a private duty”). Accordingly,

we reject defendant’s argument that the fact that skiing

and snowboarding are “non-essential” activities compels

enforcement of the release in this case. Instead, we con-

clude that defendant’s business operation is sufficiently

tied to the public interest as to require the performance of

its private duties to its patrons.

18

Public accommodations laws that prohibit discrimination against poten-

tial users of the facility are just one example of limitations imposed by law that

affect the use of defendant’s premises. See, e.g., ORS 447.220 (explaining purpose

of ORS 447.210 to 447.280 to make places of public accommodation accessible to

persons with disability); ORS 447.210 (defining public accommodation to include

“places of recreation”); ORS 659A.403 (prohibiting discrimination in places of

public accommodation); ORS 659A.400 (defining places of public accommodation

for purposes of ORS 659A.403 to include places offering “amusements”).

570 Bagley v. Mt. Bachelor, Inc.

Finally, we consider the nature of the conduct

to which the release would apply in this case. Defendant

makes a fair point that, although the release purports to

immunize it from liability for any misconduct short of inten-

tional conduct, plaintiff’s claim is based on ordinary neg-

ligence. Defendant notes that this court has held that an

anticipatory release violates public policy where it purports

to immunize the releasee from liability for gross negligence,

reckless, or intentional conduct, but a release that disclaims

liability only for ordinary negligence more often is enforced.

K–Lines, 273 Or at 249. That statement is correct as a gen-

eral comment on the validity of anticipatory releases, but,

of course, whether any particular release will be enforced

depends on the various factors that we discuss in this opin-

ion. In the circumstances of this transaction, the fact that

plaintiff’s claim is based on negligence rather than on more

egregious conduct carries less weight than the other sub-

stantive factors that we have considered or than it would,

for example, in a commercial transaction between parties of

relatively equal bargaining power.19

SUMMARY AND APPLICATION

To summarize, our analysis leads to the conclusion

that permitting defendant to exculpate itself from its own

negligence would be unconscionable. As discussed, import-

ant procedural factors supporting that conclusion include

the substantial disparity in the parties’ bargaining power in

the particular circumstances of this consumer transaction,

and the fact that the release was offered to plaintiff and

defendant’s other customers on a take-it-or-leave-it basis.

There also are indications that the release is sub-

stantively unfair and oppressive. First, a harsh and inequi-

table result would follow if defendant were immunized from

negligence liability, in light of (1) defendant’s superior ability

to guard against the risk of harm to its patrons arising from

its own negligence in designing, creating, and maintaining

its runs, slopes, jumps, and other facilities; and (2) defen-

dant’s superior ability to absorb and spread the costs asso-

ciated with insuring against those risks. Second, because

19

Defendant does not contend that the release would be enforceable against

a claim based on alleged gross negligence or reckless conduct.

Cite as 356 Or 543 (2014) 571

defendant’s business premises are open to the general public

virtually without restriction, large numbers of skiers and

snowboarders regularly avail themselves of its facilities, and

those patrons are subject to risks of harm from conditions

on the premises of defendant’s creation, the safety of those

patrons is a matter of broad societal concern. The public

interest, therefore, is affected by the performance of defen-

dant’s private duties toward them under business premises

liability law.

In the ultimate step of our unconscionability

analysis, we consider whether those procedural and sub-

stantive considerations outweigh defendant’s interest in

enforcing the release at issue here. Restatement (Second) of

Contracts § 178 comment b (“[A] decision as to enforceability

is reached only after a careful balancing, in the light of

all the circumstances, of the interest in the enforcement

of the particular promise against the policy against the

enforcement of such terms.”). Defendant argues that, in

light of the inherent risks of skiing, it is neither unfair nor

oppressive for a ski area operator to insist on a release from

liability for its own negligence. As defendant explains,

“[W]hen the plaintiff undertook this activity, he exposed

himself to a high risk of injury. Only he controlled his

speed, course, angle, ‘pop’ and the difficulty of his aerial

maneuver. Skiing and snowboarding requires [sic] the

skier to exercise appropriate caution and good judgment.

Sometimes, even despite the exercise of due care, accidents

and injuries occur.”

Further, defendant contends, denying enforcement of such

a release

“improperly elevates premises liability tort law above the

freedom to contract, fails to take into account the counter-

vailing policy interest of providing recreational oppor-

tunities to the public, fails to recognize that certain rec-

reational activities are inherently dangerous and fails to

consider the fact that the ski area operator has little, if any,

control over the skier/snowboarder.”

Defendant’s arguments have some force. After all,

skiing and snow boarding are activities whose allure and

risks derive from a unique blend of factors that include nat-

ural features, artificial constructs, and human engagement.

572 Bagley v. Mt. Bachelor, Inc.

It may be difficult in such circumstances to untangle the

causal forces that lead to an injury-producing accident.

Moreover, defendant is correct that several relevant fac-

tors weigh in favor of enforcing the release. As discussed,

the release was conspicuous and unambiguous, defendant’s

alleged misconduct in this case was negligence, not more

egregious conduct, and snowboarding is not a necessity of

life.

That said, the release is very broad; it applies on its

face to a multitude of conditions and risks, many of which

(such as riding on a chairlift) leave defendant’s patrons vul-

nerable to risks of harm of defendant’s creation. Accepting

as true the allegations in plaintiff’s complaint, defendant

designed, created, and maintained artificial constructs,

including the jump on which plaintiff was injured.20 Even

in the context of expert snowboarding in defendant’s terrain

park, defendant was in a better position than its invitees to

guard against risks of harm created by its own conduct.

A final point deserves mention. It is axiomatic that

public policy favors the deterrence of negligent conduct.

2 Farnsworth on Contracts § 5.2, 9-12 (“[i]n precedents

accumulated over centuries,” courts have relied on policy

“against the commission or inducement of torts and similar

wrongs”). Although that policy of deterrence has implica-

tions in any case involving the enforceability of an anticipa-

tory release of negligence liability, here, that policy bolsters

the other considerations that weigh against enforcement of

the release. As the parties readily agree, the activities at

issue in this case involve considerable risks to life and limb.

Skiers and snowboarders have important legal inducements

to exercise reasonable care for their own safety by virtue

of their statutory assumption of the inherent risks of ski-

ing. By contrast, without potential exposure to liability for

their own negligence, ski area operators would lack a com-

mensurate legal incentive to avoid creating unreasonable

risks of harm to their business invitees. See Alabama Great

Southern Railroad Co. v. Sumter Plywood Corp., 359 So 2d

20

We reiterate that the issues of whether defendant actually was negligent

in one or more of the particulars alleged by plaintiff, whether and the extent to

which plaintiff was comparatively negligent, and the extent to which either par-

ty’s negligence actually caused plaintiff’s injuries, are not before us on review.

Cite as 356 Or 543 (2014) 573

1140, 1145 (Ala 1978) (human experience shows that excul-

patory agreements induce a lack of care). Where, as here,

members of the public are invited to participate without

restriction in risky activities on defendant’s business prem-

ises (and many do), and where the risks of harm posed by

operator negligence are appreciable, such an imbalance in

legal incentives is not conducive to the public interest.

Because the factors favoring enforcement of the

release are outweighed by the countervailing considerations

that we have identified, we conclude that enforcement of the

release at issue in this case would be unconscionable.21 And,

because the release is unenforceable, genuine issues of fact

exist that preclude summary judgment in defendant’s favor.

It follows that the trial court erred in granting defendant’s

motion for summary judgment and in denying plaintiff’s

cross-motion for partial summary judgment, and that the

Court of Appeals erred in affirming the judgment dismiss-

ing plaintiff’s action.

The decision of the Court of Appeals is reversed.

The judgment of the trial court is reversed and the case is

remanded to that court for further proceedings.

21

By so concluding, we do not mean to suggest that a business owner or oper-

ator never may enforce an anticipatory release or limitation of negligence liability

from its invitees. As explained, multiple factors may affect the analysis, includ-

ing, among others, whether a legally significant disparity in the parties’ bargain-

ing power existed that made the release or limitation unfairly adhesive, whether

the owner/operator permitted a patron to pay additional reasonable fees to obtain

protection against negligence, the extent to which the business operation is tied

to the public interest, including whether the business is open to and serves large

numbers of the general public without restriction, and the degree to which the

personal safety of the invitee is subjected to the risk of carelessness by the owner/

operator.