Exec Says Tough Mudder Won’t Split and Can Pay Settlement

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An executive at Tough Mudder says that despite allegations from runners who filed a class action lawsuit claiming that Tough Mudder financially injured them by moving a race location, the company will pay its settlement over the issue and is not planning to split into two companies to avoid doing so.

This announcement was made on Monday by Don Baxter, President of Tough Mudder Incorporated.

Tough Mudder is a fitness company that operates a gym chain and a number of “runs” in which participants face a muddy obstacle course.

Baxter says that the company did consider splitting Tough Mudder into two companies — one entity running the gyms and the other operating the obstacle course runs, but decided to not make this move.

Baxter’s assurance came after U.S. District Judge Timothy S. Hillman requested that the company prove that it was not planning to split into two.

Runners who filed a Tough Mudder class action lawsuit worried that the company would split into two, a move which would allegedly enable the company to avoid paying a settlement. The plaintiffs claimed that the newly formed entity that controls the runs did not have enough assets to pay the company.

The runners asked Judge Hillman to grant their motion for a temporary restraining order that would  temporarily prevent Tough Mudder from splitting their company in two.

The runners claimed that the company was intending to do this to dissipate their assets so they would not have to pay the settlement.

The Tough Mudder race schedule class action lawsuit was filed in 2014 by runners who claimed that the company moved a race, the Mudderella Boston to Maine at the last minute.

Allegedly, this move, along with another change of race location announced along the way, financially injured participants who had made travel plans to participate in the race in its original location.

The company agreed to settle the lawsuit in October 2014. Then, the runners claimed that in the fall of 2018, the company planned to split in two in an effort to dissipate their assets enough that they would not have to pay the $236,000.

The runners claimed that the race side of the business was struggling while the gym side of the business was succeeding, and if the two were split as they claimed was the plan, the race side of Tough Mudder would not have enough funds to pay the settlement.

According to Baxter’s statement, “while Tough Mudder considered such a transaction in fall 2018, the company decide not to pursue that transaction.”

The company did previously acknowledge that it was unable to pay the settlement amount thus far, claiming that “temporary and unforeseen circumstances beyond Tough Mudder’s control rendered it unable to pay the settlement amount when due.” However, Baxter claimed most recently that the company did indeed have funds to pay the settlement amount.

Despite the settlement between Tough Mudder and the company, Judge Hillman still expressed concern over the runners’ argument. Allegedly, he believed that the runners had not presented valid legal arguments, instead mostly presenting facts of the case and requesting compensation.

The runners are represented by James L. O’Connor, C. Deborah Phillips and Patrick J. Osborne of Nickless Phillips & O’Connor, and Barry M. Altman of Altman & Altman.

The Tough Mudder Class Action Lawsuit is Pazol, et al. v. Tough Mudder Inc., et al., Case No. 4:19­-cv-40010, in the U.S. District Court for the District of Massachusetts.