There is a world history of pandemics that, at one point or another, crippled civilizations or dynasties. In America's more recent history, our country has experienced the Spanish Flu (1918 – 1920), the Asian Flu (1957 – 1958), and the H1N1 Swine Flu (2009 – 2010). Though the Swine Flu is in our society's most recent memory, the current Coronavirus infection and death numbers have already surpassed the total Swine Flu infection and death numbers. The Coronavirus (COVID-19) has wreaked havoc on Americans and their interactions with each other because of the rapid rate at which the virus spreads. Businesses have been impacted due to governmental orders to temporarily close or greatly reduce their services. But with proper action, the spread of the virus will slow, the economy will rebound, and people will return to the extracurricular activities they enjoy.
As our country presses forward, the Coronavirus will change the way business owners conduct business – including operators in the outdoor sports and recreation business.
On May 5, 2020, North Carolina Governor Roy Cooper signed Executive Order No. 138 (the "Order"), which modifies Executive Order No. 121 (also known as The North Carolina "Stay at Home" Order). The Order signaled the beginning of Phase 1, effective 5:00 p.m. on May 8, 2020, and the gradual reopening of North Carolina. On May 20, 2020, Governor Cooper signed Executive Order No. 141, which outlines "Phase 2" of reopening North Carolina and will begin on May 22, 2020, at 5:00 p.m. (also known as the North Carolina "Safer at Home" Order). The Order removes the distinction between essential and non-essential businesses, which were defined in Executive Order No. 121, thus allowing many businesses originally deemed non-essential to reopen.
Additionally, the Order explicitly provides that outdoor activities are allowed and that day camps and programs for children and teens are permitted to resume if they are able to adhere to certain guidelines and social distancing requirements. Phase 2 allows for overnight camps for children and teens to resume, also as long as requirements are met. As North Carolina moves through Phase 1 and into Phase 2, several state parks will reopen to the public. Phase 2 does not permit Mass Gatherings of more than ten people indoors or more than twenty-five people outdoors nor does it allow for indoor fitness facilities to reopen. Please click HERE for a summary of what Phase 2 allows and does not allow.
As outdoor sports and recreation businesses prepare to eventually reopen, business owners should evaluate their legal documents to determine if the business is adequately protected in the event of this continuing pandemic or another pandemic. Two items to consider are the contractual language in event contracts and liability waivers.
Update Contractual Language Regarding Event Cancellation or Postponement
Outdoor sports and recreation businesses that provide services such as race organization, adventure vacations, guided excursions, exhibition management, or outdoor recreation conference organization have been forced to cancel or postpone events if the event was scheduled to take place during one of the many state or local government orders to shut down.
Businesses that plan these events often expend costs associated with the event as the planning progresses. In light of the Coronavirus, most businesses should revise their contractual language involving event production, especially in cases where there is a "no refund" policy.
If the current contractual language does not address governmental orders related to government-ordered shutdowns, pandemics, or does not contain a force majeure provision, then the contract likely should be revised to include such provisions.
The contractual language that addresses pandemics and governmental orders to shut down can help limit the business's financial liability in the event of event cancellation or postponement due to a future pandemic or governmental order to shut down.
Update Liability Waivers
Outdoor sports and recreational activities come with inherent risks for participants and sometimes even for event spectators. When a participant or spectator gets injured during the activity, there is potential liability exposure to the other participants, the event organizers, and the activity providers. Liability exposure is greatly reduced with a proper liability waiver signed by the participant or agreed to by the spectator before the activity begins.
There are several key components to an effective liability waiver. One such component is the assumption of risk provision. This provision identifies (1) the activity at hand, (2) the inherent risks associated with engaging in or observing such activity, and (3) that these risks cannot be eliminated no matter the level of care taken to avoid injury.
In light of the Coronavirus, outdoor sports and recreation business owners should examine the assumption of risk provision in their liability waivers. They should seek legal guidance in adding language to provide that participants are at risk of coming into contact with certain communicable diseases or viruses similar to COVID-19. The waiver should also be updated to reflect that participants agree to waive claims arising from injury, illness, or death associated with these assumed risks.
Ward and Smith routinely advises clients regarding the preparation and updating of liability waivers. As part of that process, it recently launched an Online Liability Waiver Review to assist business owners in the effort to review their current waiver and revise where appropriate so that outdoor sport and recreation activities can resume.
Many runners and tri-athletes are looking eagerly to the day when they will once again be allowed to sign up for and compete in races and events. Others are awaiting the return of guided white-water rafting trips, lazy days floating on a tube down a local river, or visiting an adventure center to challenge themselves on a ropes or zip line course. Owners of these outdoor sports and recreation operations should use this time to get their documents in order to protect themselves against potential future lost revenue or liability in the event of another pandemic or if a government order to shut down occurs.