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Jon Dohring

Econ 495

11-27-2007

Kayla Lashley v. East County Gymnastics

The Case

On October 14, 1999, Kayla Lashley was injured while participating in a gymnastics class at the East County Gymnastics Center. She was 9 years old at the time. Lashley fell from the uneven bars, resulting in nerve damage and severe injury to her elbow. Although Kayla and her mother had signed a Minor Release and Waiver of Liability and Indemnity Agreement indicating that they were aware of the dangerous nature of gymnastic training, they sued East County Gymnastics for negligence for failing to provide the proper level of precautions necessary to ensure the safety of the gymnasts.

The plaintiffs, Kayla Lashley and her mother, Robin Lashley, claimed that the defendant, Molly Turek as the owner of East County Gymnastics, failed to provide a suitable number of mats under the bars on which Lashley was working. They also alleged that the defendant failed to adequately supervise, or train employees to provide proper supervision to, the gymnasts.

The uneven bar, the event on which the plaintiff was injured, is made up of two separate bars, a high bar and a low bar. Lashley’s instructor during the time of the accident, Melissa Machado, testified that she had moved the safety mat under the low bar, based on her judgment of where Lashley was likely to land if she slipped. In the middle of her routine, however, Lashley slipped off the high bar, landing “completely off the mat with her feet in the air.[i]” Immediately after the accident, Machado told Lashley’s mother that she should have pulled the mat further under the high bar, or that there should have been another mat, so that the entire area under both bars would have been covered.

Lashley’s mother sued for damages for “personal injury and premises liability.[ii]” The court ruled in favor of the defendant, however, stating that although East County Gymnastics was indeed negligent, the plaintiffs had forfeited any right to sue when they signed the waiver. The plaintiffs appealed, but the appellate court affirmed the district court’s decision with a unanimous ruling.

The Issue

The issue in this case is a debate between the harmful nature of negligence versus the protection of a signed waiver, and to what degree must an injurer be negligent in order to cancel an indemnity agreement.

There are three different types of negligence: simple negligence, contributory negligence, and comparative negligence. The Mirriam-Webster’s Dictionary of Law provides definitions for each:

Simple negligence: “Failure to exercise the degree of care expected of a person of ordinary prudence in like circumstances in protecting others from a foreseeable and unreasonable risk of harm in a particular situation.[iii]”

Contributory negligence: “Negligence on the part of an injured party that combines with the negligence of another in causing the injury, sometimes so as to diminish or bar the recovery of damages for the injury.[iv]”

Comparative negligence: “Negligence allocated between the plaintiff and the defendant with a corresponding reduction in damages paid to the plaintiff.[v]”

Kayla Lashley v. East County Gymnastics illustrates a case regarding simple negligence; the plaintiff was on a gymnastic apparatus and gave no reason to dispute that she was doing all she could to hang onto the bar. The defense made no attempt to assert otherwise, thus eliminating any possibility of contributory or comparative negligence.

In cases of negligence, the “reasonable person” rule is used. When deciding whether an accident could have been avoided by either party, courts do not try to measure the actual costs to each specific party for providing safeguards. Instead, they measure the costs that the average person would bear in an identical situation. For instance, a wealthy person would not be expected to provide more than the average number of safeguards simply because he could afford it. This rule helps lower information costs, as the court doesn’t have to determine the actual ability of the plaintiff or defendant to pay, but merely that of the “reasonable person.[vi]”

Another guideline that is commonly employed in negligence cases is the notion that one cannot use custom as a defense against negligence. If this were the case, there would be no incentives for firms to change their level of safeguards due to possible increased risks in the workplace; they would still not be deemed negligent as long as they were providing the average level of safeguards in their industry. Additionally, firms could conspire to maintain an inefficiently low amount of safeguards, thus reducing their costs and placing the burden of risk onto their customers[vii].

Saglimbeni v. West End Brewing Co. provides a good illustration of both the reasonable person standard and the guideline that one cannot use compliance with custom as a defense. In the case, the plaintiff had been injured by an exploding bottle that had been packaged by West End Brewing Co. The defendant claimed that it could not be held liable because it followed the standard practice of the industry. The court, however, stated that “proof of standard practice was not necessarily conclusive on the issue of negligence; that it was the defendant’s duty to exercise the care that a reasonable prudent and careful person would exercise,” and ruled for the plaintiff.[viii]

One very important tool used in negligence cases is the Learned Hand formula. In 1947, Judge Learned Hand created a formula to determine both the appropriate level of safeguards and whether or not a party is to be held negligent in any given circumstance. Defining “B” as the cost of precautions, “P” as the probability of injury, and “L” as the amount of loss in the event of an injury, a party is negligent if and only if B < P x L. Put in English, this formula states that a party is deemed negligent if the amount of the loss multiplied by the likelihood of that loss occurring is greater than the cost of preventing the loss[ix].

An important aspect to note about this formula is not dependent on any one factor alone, but on the interaction of all three factors. Thus, it does not simply matter, for instance, if there is an infinitesimal chance of a loss occurring, or that the loss itself is extremely small. A reasonable person would only bear the risk if the B < P x L[x].

Were it not for the waiver signed by the plaintiffs, Kayla Lashley v. East County Gymnastics would have been a clear case of negligence on the part of the instructor, as acknowledged by the court. An easy way to see this is by using the Learned Hand formula. In this case:

B = the cost of providing one more mat

P = the probability that the gymnast would fall, and

L = the damage done to the plaintiff if she fell.

According to gymnastics-, the most expensive gymnastics mat is $218.00[xi]. While it would take significant time to determine the probability of a gymnast falling from the high bar, similar studies of gymnastics injuries can be used as a reasonable estimate. One study, for instance, reported that 9% of all collegiate-level training sessions resulted in injury[xii]. Although this is not entirely reflective of the situation in Lashley v. East County Gymnastics, as the plaintiff was only 9 years old at the time and therefore clearly not a collegiate athlete, it does provide an adequate percentage of gymnastic risk. In actual fact, the probability of Kayla Lashley being injured might have even been higher, as she was less experienced than the average college gymnast. The dollar amount of the loss was not included in the case, but the lowest price of an elbow surgery was approximately $1,500[xiii].

Plugging in these numbers, the formula yields:

B = $218.00, P = .09, L = $1,500, and P x L = $135

At first glance, it appears that the gym would not be negligent, as $218.00 > $135, but the probability used in this formula was only for one practice session. Over the course of a week, there are 7 such workout sessions, each of which has a 9% chance of resulting in injury, while the price of a mat remains constant. If we were to calculate the break-even probability, the level at which a person would be indifferent between providing or not providing the safeguards, we would get:

$218 > P x $1500, so the break-even level of P = 14.5%

This probability of injury is more than covered in just two practice sessions, indicating that the gym would certainly be negligent for failing to provide the extra mat. Additionally, the numbers used in the calculations were extremes that only benefited the gym. Using average probabilities and prices for each good, it is likely that the gym would have been found negligent after only one practice session.

The waiver signed by the plaintiffs, however, released the gym from lawsuits based on claims of simple negligence. The most notable clauses from the waiver, as stated in the case, are:

There are risks and dangers associated with participation in gymnastics…These risks and dangers may be caused by the action, inaction, or negligence of…others.

I/We accept and assume such risks…for the losses and/or damages…, however caused in whole or in part by [East County Gymnastics}.

In deciding its ruling, the court cited the doctrine of express assumption of risk, stating:

Express assumption of risk occurs when the plaintiff, in advance, expressly consents to relieve the defendant of an obligation of conduct toward him, and to take his chances of injury from a known risk…The result is that…being under no duty, the defendant cannot be charged with negligence.[xiv]

The court ruled that so long as the express agreement does not violate public policy, it will be “upheld as a complete defense to a negligence action.[xv]”

The doctrine of express assumption of risk was covered in the case of Saenz v. Whitewater Voyages, Inc. In 1990, a group went on a three day rafting tour with Whitewater Voyages Inc. on the American River. Before the trip, the party signed a Release and Assumption of Risk Agreement that detailed all possible risks and received a safety talk about the dangers of whitewater rafting. The tour leader stated specifically that “Whitewater rafting is not a Disneyland ride, and you can get hurt and even die.[xvi]” During the voyage, one of the participants was thrown into the river and drowned. His parents sued Whitewater Voyages Inc. for negligence, but the court ruled for the defendant, stating that because the decedent had expressly assumed the risks that lead to his death, Whitewater was not to be held liable for any negligent activity[xvii].

Another precedent cited in Lashley detailed the requirements for a negligence action. In Ann M. v. Pacific Plaza Shopping Center, a woman was sexually assaulted at her place of employment and sued the landlord for failing to provide adequate security. The defendant presented evidence that there had been no prior crimes in that part of the premises, and that there was no reason to believe that there would be any present or future crimes. The court agreed with the defendant, stating that the defendant did not have a duty to provide security guards in that area because the crime was not foreseeable[xviii]. The rule established in this case stated that:

A negligence action requires a showing that the defendant owed the plaintiff a legal duty, the defendant breached that duty, and the breach was the proximate or legal cause of injuries suffered by the plaintiff.[xix]

Lashley’s mother claimed that East County Gymnastics failed to perform their duty by failing to properly position the mats under the bars. This precedent ended up working against the plaintiff, however, when the court ruled that the gym did not in fact have such a duty, as such negligence was covered by the indemnity agreement.

The final key precedent cited in this case was Bennett v. United States Cycling Federation, which dealt with a situation in which a plaintiff was able to get around the effects of a waiver and still receive a judgment in a negligence suit. In 1987, a cyclist entered a bicycle race which required him to sign an indemnity agreement. During the race, the cyclist was hit by a car and was severely injured. He brought a suit against the United States Cycling Federation, claiming that it was negligent for not closing the track to cars. Upon reviewing the waiver, the court found that it did in fact state that it would block cars from entering the streets, and the court awarded damages to the plaintiff[xx].

Once again, this precedent worked in favor of East County Gymnastics, as the waiver specifically stated that East County Gymnastics would not be held responsible for its staff’s negligence. The injury to the plaintiff was not caused by an additional source not covered in the waiver, so Bennett v. United States Cycling Federation also provides support for the defendant.

Incentives and Implications

There is one key incentive for negligence rules, which is that they incentivize both potential injurers and potential victims to take the efficient amount of precautions. In economics, efficiency is reached when an individual’s marginal cost equals his marginal benefit, and these incentives help ensure that the market ends up at the efficient quantity of safeguards. Using the Learned Hand formula, which essentially captures this marginal cost/benefit analysis, potential victims and injurers can determine the appropriate amount of safeguards necessary to be considered not negligent. Because a person is only liable if they are negligent, the possiblility of a lawsuit ensures that people will take all cost-justified precautions to prevent accidents.

Another benefit of negligence rules is that they promote lower court costs. Particularly with the introduction of the Learned Hand formula, potential litigants have a good idea of whether or not the court will rule in their favor before bringing the case to trial. They can quickly and easily apply the formula to judge for themselves whether they were negligent or not. This reduces overall costs, as courts will not have to go through a long and expensive trial trying to determine the accuracy of facts and which party is ultimately responsible.

Indemnity agreements also come with their own set of incentives and implications. One such implication is that firms are able to offer more dangerous activities than they would under strict negligence laws, as they will be less afraid of lawsuits. There are many fun activities that contain large amounts of risk that firms are not necessarily able to control. Some extreme sports, for example, have many variables that must be dealt with, such as vehicle performance and road conditions, that would be far too expensive to control. These hazardous activities are obviously for risk-takers who seek the thrill and are not necessarily too worried about possible dangers. The information costs alone of determining the risks, let alone the cost of preventing them, could prove to be so expensive that firms might be prohibited from offering such activities.

One good example that illustrates this idea is skydiving. In the United States, one must sign a waiver releasing the company from liability in the event of a tragic accident, such as a parachute not opening or a high-impact landing that results in injury. In such a risky sport, there are many elements that could go wrong that could lead to very serious consequences. Were it not for this waiver, the firm would not be likely to provide this service, as they would be exposed to all kinds of lawsuits. The indemnity agreement allows them to take thrill-seekers skydiving and still feel safe that they are covered from potential legal action.

Another implication of these waivers, as also seen in negligence rules, is that they also help promote reduced litigation costs. When a client signs an indemnity agreement, he acknowledges that he is expressly aware of the risks involved, and that he chooses to participate in that activity anyway. Traditionally, when people become injured, there is a tendency to find someone else to blame and make them pay. If they have signed a document releasing the injurer from liability beforehand, however, they know that they will lose if they take the issue to court.

There is, however, one large disincentive created by these waivers. If a firm requires its clients to sign an indemnity agreement, it has no incentive to provide a proper level of safeguards. It can simply disclose all possible risks in the agreement and be safe from any possible negligence lawsuit, without having to take all the necessary precautions. Of course, even waivers don’t cover gross negligence, but they certainly provide a fair amount of leeway that allows for the less-than-efficient quantity of safeguards.

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[i] Court of Appeal of California, Kayla Lashley v. Easy County Gymnastics. Case no. A093357, filed November 13, 2001

[ii] IBID

[iii] , Mirriam-Webster’s Dictionary of Law

[iv] , Mirriam-Webster’s Dictionary of Law

[v] , Mirriam-Webster’s Dictionary of Law

[vi] Posner, Economic Analysis of Law, Aspen Publishers, Page 171

[vii] Posner, Economic Analysis of Law, Aspen Publishers, Page 171-172

[viii] Supreme Court of New York, Benjamin Saglimbeni v. West End Brewing Co. Filed July 7, 1948

[ix] Posner, Economic Analysis of Law, Aspen Publishers, 167-168

[x] Posner, Economic Analysis of Law, Aspen Publishers, page 170

[xi] Professional Athletics Gymnastics Equipment -

[xii] Seeley and Bressel, Journal of Sports Science & Medicine -

[xiii] Low Cost Affordable Surgery, Arthroscopic Elbow Surgery -

[xiv] Court of Appeal of California, Kayla Lashley v. Easy County Gymnastics. Case no. A093357, filed November 13, 2001

[xv] IBID

[xvi] Court of Appeal of California, Saenz v. Whitewater Voyages Inc., Case no. A049465, filed December 31, 1990

[xvii] IBID

[xviii] Supreme Court of California, Ann M. v. Pacific Plaza Shopping Center, Case no. S030815, filed December 16, 1993

[xix] Court of Appeal of California, Kayla Lashley v. Easy County Gymnastics. Case no. A093357, filed November 13, 2001

[xx] Court of Appeal of California, Albert I. Bennett v. United States Cycling Federation, Case no. B022865, filed August 4, 1987

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