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February 2019

Gordon & Rees Class Action Team Obtains Appellate Victory Regarding Novel Issue Of Law

Gordon & Rees attorneys Peter Siachos, Don Derrico, Jack Cohn, Matt Gallo and R. Andrew Scott earned a key victory before the Second Circuit Court of Appeals in a putative class action alleging that gym members were retaliated against for bringing claims against the gym under consumer protection statutes.  The class representatives contended that Gordon & Rees' client, one of the largest fitness clubs in the country, improperly required members to pay a surcharge to utilize a handful of "elite" clubs.  After bringing multiple causes of action under the consumer protection laws of the various states where the client operates, the class representatives gym memberships were terminated by the client.  The plaintiffs then amended their complaint against the client to include class claims for retaliation. They sought injunctive relief to prevent the client from terminating memberships of members who sue under consumer protection laws, and to force reinstatement of the already-terminated members.  The plaintiffs appealed to the Second Circuit after the District Court denied the injunction, finding that the plaintiffs were not irreparably harmed, and that the likelihood of success on the merits was "very poor."  

On appeal, and with the help of an amicus brief and appearance by the National Association of Consumer Advocates, the plaintiffs argued that allowing retaliatory membership cancellation would discourage persons from bringing claims under the consumer protection statutes. The Second Circuit was not persuaded and upheld the District Court’s finding that "'deprivation of attendance at a few of the many exercising facilities in the area is not 'irreparable harm' where many such health clubs with exercise facilities are available in the area.'" The Court also stated that "[c]onsumers facing the prospect of lost access to a particular good or service can generally find an adequate replacement elsewhere in the marketplace," and found the plaintiffs’ arguments generally to be "without merit."  Importantly, in ruling on a novel issue of law, the Second Circuit found that legal authorities regarding retaliatory firings of workers who sue their employers are inapplicable to consumers against whom  providers of products or services retaliate.

Jacob C. Cohn
Donald G. Derrico
Matthew P. Gallo
Peter G. Siachos