[A] consumer protection bill that would give courts the power to fine companies that attempt to enforce “abusive” contract terms has been approved by the Legislature and now heads to the governor’s desk.
Supporters say the bill would help level the playing field for consumers and employees who need to bring claims against companies.
They say many corporations draft contracts with terms aimed at deterring legal action against them.
Those terms might say, for example, that a claim needs to be adjudicated within a short amount of time, or in a court at an inconvenient location.
And while these extreme, one-sided requirements, also known in the legislation as “unconscionable” terms, are usually enforceable in court, they succeed at scaring off consumers and employees, according to Rep. Selene Colburn P-Burlington.
“In the face of most terms, most working people simply abandon their claims,” she told reporters Tuesday.
Colburn shared an example of a contract belonging to a Vermont inn that tells its guests that claims must be adjudicated under Dutch law in the Netherlands.
Sen. Jeanette White, D-Windham, spoke of a contract that gives employees six hours to report sexual harassment claims and restricts the place for filing their cases to only Nevada.
But while it would introduce consumer protections, S.105 has drawn widespread opposition from members of Vermont’s recreation industry, who say the proposal would impact contracts like liability waivers, which they rely on to do business.
“This bill would completely undermine all the basic principles of recreation law, including signed acknowledgements of risk, warning and Release/Waiver to the extent it applies,” Molly Mahar, president of the Vermont Ski Areas Association, said in a letter opposing the bill.
“Insuring activities and events that include inherent risks will become very difficult and expensive, if not impossible,” she wrote.
Nonprofits including Special Olympics Vermont and RunVermont, which rely on liability waivers for their events, have also spoken out against the bill.
Under S.105, courts would presume that five types of contract terms are unconscionable.
Among these terms would be waivers of individuals’ rights to assert claims and to seek punitive damages and requirements that claims be settled in an inconvenient location or brought only at a high cost.
Companies would not be punished for having unconscionable terms in their contracts, but only for attempting to enforce them in the event a claim is brought against them.
However, in court, the burden would be on companies to prove these types of terms aren’t unconscionable.
“That is just to sort of tip the scales of justice a little bit to give ordinary people a little more power in the face of these truly abusive contract terms,” Colburn said in an interview.
Companies could face $1,000 fines for attempting to enforce unconscionable contracts.
Rep. Heidi Sheuermann, R-Stowe, said the proposal opens up businesses and nonprofits to a wide array of legal claims and lawsuits and puts the recreation industry at risk.
“There is no problem in the current system,” she said. “The Vermont judiciary has done a competent job of evaluating on a case-by-case basis whether or not some item in a contract is unconscionable.”
No other state has passed a consumer protection bill like S.105.
But Sheuermann pointed out that New Hampshire and Colorado have passed language “to enforce waiver forms and strengthen the inherent risk laws”
“We’re going in completely the opposite direction of states with which we compete for recreational dollars,” she said.
Chip Conquest, D-Wells River, said that S.105 doesn’t do anything to change the recreation industry’s ability its limit its liability as it can under current law.
He said the state’s inherent risk statute, which says that anyone who takes part in any sport in Vermont assumes the risk inherent in that sport, does not change under the proposal.
Colburn said the House Judiciary Committee reviewed liability waivers members of the ski industry brought in when testifying on the bill.
“We and a number of expert legal witnesses who were in the room at the time said ‘You have nothing to worry about,'” Colburn said.
Colburn said the bill won’t affect companies that simply put unconscionable terms in their contracts.
“Just having those terms in a contract is not going to cause an issue for someone,” she said. “What would cause an issue is trying to enforce them.”
A spokesperson for the Gov. Phil Scott did not respond when asked whether the governor planned to sign the bill.