Equinox Membership Cancellation Class Action Lawsuit Dismissed

On Monday, allegations that Equinox Holdings Inc. violated New Jersey’s Truth In Lending Act and state consumer fraud protection laws were dismissed by a federal judge.

Lead plaintiffs Lesley McCarthy and Kim Kennedy claimed in their class action lawsuit filed in January of last year that Equinox violated New Jersey law when it made it difficult for members to cancel their gym contracts. The plaintiffs alleged that the fitness company used membership agreements that obligated customers to automatically renew their membership contracts and imposed “unreasonable and unduly onerous requirements” to cancel their memberships.

U.S. District Judge Faith S. Hochberg disagreed, dismissing the Equinox class action lawsuit early this week. Judge Hochberg explained in her order that Equinox’s membership agreement did not establish a debtor and creditor relationship that is required to trigger New Jersey’s Truth In Lending Laws.

“As alleged, the dues paid each month applied only towards the use of the health club for that month,” the judge wrote in her order dismissing the Equinox class action lawsuit. “A transaction without the right to defer payment is outside TILA’s definition of ‘credit,’” she continued.

Judge Hochberg pointed out that under the terms of the contract, there is no point at which a plaintiff would receive a benefit while deferring a debt, even though the contract does require a year-long commitment.

According to Judge Hochberg, the plaintiffs didn’t claim they received any service for a deferred payment or cited any legal authority to support their claim that the membership agreement was a consumer credit transaction. “A ‘consumer credit transaction’ involves the offer or extension of ‘credit’ to a consumer,’ which necessarily ‘involves the granting of a right to defer payment of ‘debts,’” stated the judge, citing a Third Circuit case.

“Here, Plaintiffs purchased a gym membership with a monthly fee,” Judge Hochberg continued. “Each member authorized his or her bank to make monthly payments on the billing date set forth in the membership agreement. The membership agreement, as pled in the Complaint, states: ‘UNPAID BALANCES; Members will not be permitted to use any club until all fees are current.’”

“Thus, until Plaintiffs pay for each month of membership, they may not use Defendant’s services,” Judge Hochberg concluded. “Taking the facts as alleged in the Complaint as true for the purposes of this Motion to Dismiss, Plaintiffs have failed to plead that the agreement gives Plaintiffs any good or service for which they may defer payment under [state law]. Instead, payment is required in advance, or contemporaneously with, each month of service,” Judge Hochberg summarized in her order dismissing the Equinox class action lawsuit.

Judge Hochberg similarly dismissed the plaintiffs’ state law claims, declining to exercise supplemental jurisdiction.

McCarthy and Kennedy are represented by Joseph K. Jones and Benjamin J. Wolf of the Law Offices of Joseph K. Jones LLC.

The Equinox Membership Cancellation Class Action Lawsuit is Lesley McCarthy, et al. v. Equinox Holdings Inc., et al., Case No. 2:14-cv-00037, in the U.S. District Court for the District of New Jersey.