Corporate sponsors should not be considered ‘risk managers’

Corporate sponsors should not be considered ‘risk managers’
The court says sponsors can’t be held accountable for participants’ injuries at sporting event.
Corporate sponsors who put up money to support a sporting event should not be held accountable in the case of an injury involving a participant, according to a recent Ontario Court of Appeal ruling.

Earlier this month, the Ontario Court of Appeal upheld a motion that had dismissed a lawsuit against Bank of Montreal, Rogers Communications Inc., and Umbro Inc., among others, in Boudreau v. Bank of Montreal. The decision states Rogers, Umbro, and BMO did not have a legal duty to Joey Boudreau, a soccer player who suffered a spinal cord injury during an Ontario Soccer Association tournament in Hamilton.

The motion judge had agreed with the defendants that “facts pleaded did not establish a relationship of sufficient proximity between the appellant and the respondents to ground a duty of care or to support the appellant’s claim in negligence.” The Court of Appeal said it saw no error in the motion judge’s decision and dismissed the appeal.

“This decision is good and correct in both law and policy because in terms of the law it’s consistent with the handful of other decisions in Canada that have drawn the distinction between a sponsor who simply sponsors in the sense of providing money to an organization — and in return is getting benefit of promotion of their brand or opportunity to advertise — from a sponsor who is actually actively involved in the operation of the event or organization putting on the event,” says Peter Pliszka, a partner with Fasken Martineau DuMoulin LLP who represented Rogers and Umbro.

Boudreau had been a participant in a soccer game at the Soccerworld facility in Hamilton. During a game he jumped up to head the ball and collided with a player on the opposing team. Boudreau was knocked off balance and landed on his head. He suffered a spinal cord injury and is now a paraplegic.

The Ontario Soccer Association had obtained insurance for its members, however its coverage for Boudreau’s injuries was limited to $40,000. He then launched lawsuits against several defendants, including the OSA, Soccerworld, players and referees, as well as the corporate sponsors.

“The allegation was the duty the sponsors owed the plaintiff was to make inquiries of the OSA about what type of accident insurance the OSA had taken out for the players and to ensure the amount was adequate. That really was easier said than done,” says Pliszka.

“That would mean the corporate sponsor would be put in the role of being a risk manager for the organization and the event. That’s not always going to be as easy. I think a lot of people would be surprised to think it was possible for someone to suffer a spinal cord injury from an indoor soccer match when thinking about the risks inherent in indoor soccer.”

He points out the Court of Appeal decision is positive because an opposing one could ultimately lead to “sponsor chill” which would see companies declining opportunities to sponsor events.

“Companies would just back off from sponsoring and at the end of the day everyone suffers,” he says.

In light of the case, Pliszka says it would be wise for companies to seek advice on the wording of their sponsorship contracts to make sure they have “iron clad language” that confirms they are not, by agreeing to provide sponsorship funding, assuming any risks or other potential liability simply by virtue of being a funding sponsor.

The case provides a precedent to rely on, says Sara Perry, a marketing, advertising, and entertainment lawyer with Heenan Blaikie LLP.

“Now that we have an Ontario Court of Appeal decision finding that there is insufficient proximity between corporate sponsors and individual participants to give rise to a duty of care owed by the sponsors to the plaintiff, I would recommend corporate sponsors in Canada include a provision in their commercial sponsorship agreements that the governing law be that of the Province of Ontario,” says Perry.

She adds corporate sponsors of any event should seek an indemnification from the event organizers for any third party claims in respect of any damages, liabilities, losses, costs, or expenses of any kind arising out of the particular event.

“In the event that a corporate sponsor is joined in a claim (as was the case for Rogers, Umbro, and BMO) the event organizer would be responsible for indemnifying those parties from any resulting liability or cost,” she says. “We sometimes receive push back from event organizers when requesting this deal point be added to the contract, however, once explained it is typically agreed to by the parties.”

As the court confirmed, says Perry, in its capacity as a corporate sponsor, the corporation has little control over the organization or the management of the event or the participants or attendees.

“Of course the more control a sponsor exerts over a particular event or its management the less likely the sponsor will be able to distance itself from any responsibility owing towards the event participants,” she says.

In addition, indemnification provisions typically will not extend to cover the negligent acts or willful misconduct of a sponsor or its representatives.

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