Pennsylvania Supreme Court Rules that Parents Cannot Bind their Minor Children to Arbitration Agreements

It astonishes me how many cases I come across involving children injured at trampoline parks or similar amusements. In March of this year, a court granted the motion of a Sky Zone in Illinois to compel arbitration. Last year, a case against an Urban Air in Chicago was similarly sent to arbitration. A Texas court also sent a claim against the local Urban Air to arbitration. Parents, don’t take your kids to these places or, if you do, make a big stink about the waiver of liability/assumption of risk form. Tell them that if they are operating an amusement that involves foreseeable risks, they ought to take precautions against those risks, including insurance, instead of shifting those risks to their paying clientele.

That’s probably not going to happen. But one state is sending a clear message to the venues. In Santiago v. Philly Trampoline Park, LLC, the Pennsylvania Supreme Court relates the stories of two families with very similar claims. In both cases, a parent took their child to the trampoline park, Sky Zone, and signed an arbitration agreement on behalf of the child. In both cases, the child was injured when an adult got into the children’s area and jumped on the children’s trampoline, sending a child flying with wonderful comic effect — if you happen to be a sadist. The suits were brought by the parent who did not bring the child to the trampoline park and claimed not to be bound by their spouse’s agreement to arbitrate.

The Superior Court held that the arbitration agreements signed by one parent were not binding on the non-signatory parent. Sky Zone gave three reasons why non signatory parents should be bound. First, the signatory parents acted on implied authority as agents of the non-signatory parents. Second, the non-signatory parents also had apparent authority, as there was no evidence that the non-signatory parents objected to the children being taken to Sky Zone. Finally, there was agency by estoppel because the children were injured months after their parents signed the waiver, and the non-signatory parents did nothing to prevent additional visits to the venue.

Pennsylvania law does not assume that spouses act as one another’s agents. They can do so, but there must be factual allegations, beyond marriage, to show that, in this case, the signatory spouses acted on behalf of their partners. Sky Zone failed to make any such showing.

Sky Zone next argues that, because the non-signatory parents did nothing to prevent their spouses from taking the children to the trampoline park, Sky Zone’s employees were entitled to assume that the signatory parents had apparent authority to do so on behalf of their non-signatory spouses. Based on the non-signatory parents’ failure to prevent their spouses from taking their children to the venue, Sky Zone argued that they should be estopped from denying their spouses’ authority to do so. The Supreme Court rejected these arguments, finding that the Superior Court properly applied the law to find that neither of the signatory parents was acting as an agent of their spouse when they signed the [a]greement.”

The Court then turned to the question of whether an arbitration agreement signed by a parent on the child’s behalf can be enforced against the child. The court provided a thoughtful, thorough discussion of the “legal disability” that the law imposes on minors for their own protection. While Sky Zone argued that an arbitration agreement is nothing more than a forum-selection clause, the Court disagreed. “Because an agreement to arbitrate forfeits the minor’s right to have a claim adjudicated in court, it is an unsanctioned exercise of power over the minor’s property by a natural guardian, and therefore unenforceable.”

The Court’s position is, to say the least, an outlier, but it is not without some inherent appeal. When Congress passed the Federal Arbitration Act, it characterized the Act as merely procedural, much as Sky Zone does. Subsequently, courts have come to view arbitration as substantive, not procedural, because choosing arbitration instead of litigation can be outcome-determinative. The Court’s conclusion thus aligns in some ways with contemporary views of arbitration clauses. The Court provides reasons for its rejection of the notion that arbitration is merely a procedure: it removes from minors procedural protections and thus “fundamentally changes the minors’ rights in their causes of action and thwarts their protection.”

The case thus pits two strong state interests against one another. At least in theory, the Commonwealth of Pennsylvania favors the settlement of disputes via arbitration. In this case, however, the state interest in protecting minors overrides the state interest in promoting arbitration. Even if arbitration operates as a forum-selection clause, it is “the selection of a forum devoid of judicial protection of the minor’s interests.” Parents cannot intermeddle in the property interests of their children, which include legal causes of action. It follows that parents cannot forfeit their children’s rights to adjudicate claims in a forum that can ensure the minor’s interests. In the Court’s view, arbitration cannot do that.

The opinion was issued on behalf of a four-Justice majority. Justice Brobson, joined by Justice Dougherty, concurred in part and dissented in part. These Justices agreed that a parent cannot bind a non-signatory spouse, but they dissented from the Majority’s blanket rule that parents can never bind their children to arbitration.

Thanks to Tamar Meshel (above) for sharing the case with me.