Nov 23 2010
A lawsuit that commenced on October 2, 2006 alleged that 24 Hour Fitness, the nation's largest privately owned fitness center chain, violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Electronic Fund Transfer Act ("EFTA"), and engaged in unfair and fraudulent business practices, as well as other violations of California's consumer protection statutes in charging monthly membership dues by unauthorized electronic funds transfer ("EFT") after members provided notice of cancellation of their memberships. 24 Hour Fitness asserted that the class members had authorized the charges and denied any wrongdoing. The Court made no determination that 24 Hour Fitness had done anything wrong.
After 4 years of hard fought litigation, United States District Court Judge A. Howard Matz approved a class action settlement agreement that provided a $20 monetary reimbursement or a 3-month all-access membership certificate, valued between $150-$200, to just over 1.53 million class members nationwide. In Friedman v. 24 Hour Fitness, plaintiffs alleged fees had been deducted from their bank or credit card accounts after giving 24 Hour Fitness notice that they were cancelling their gym memberships.
Following protracted settlement negotiations, both sides entered into a settlement agreement that provided valuable benefits to the settlement class and puts a complete stop to the practice going forward. Melissa Harnett, co-lead counsel from Wasserman, Comden, Casselman & Esensten, stated, "It speaks volumes of the professionalism involved from all sides that we were able to establish an agreement that reimburses approximately 80% of an average class member's actual damages for the charges at issue."
Jeffrey Keller, co-lead counsel from Keller Grover, LLP, also stated, "We are very proud of the results of this settlement because it is bound to bring change to the whole health club industry. We secured not only the benefit for those people subject to these charges in the past but also the commitment of the largest privately owned fitness center chain in the country to stop this practice forever. This case is a big win for all gym users and not just the former members of 24 Hour Fitness in the class."
In approving the settlement, valued at over $295 million, which includes the value of the 3-month all-access membership certificates and the long-term value of stopping the practice going forward, Judge Matz noted that class counsel were "stellar in [their] representation of the class" in what amounted to a very challenging case that involved "as much, if not more, time and effort and concern and rulings than any class action I can recall."
Regarding the settlement, 24 Hour Fitness states that: "24 Hour Fitness values its members and we strive to offer the best fitness experience in the industry. We are responsive to our members' concerns and we have settled this case so we can continue to focus on our overall goal of helping people make fitness a way of life."
Source:
Wasserman, Comden, Casselman & Esensten, LLP