Peloton Class Action to Claim Misrepresentations and Deceptive Practices

Recently, a U.S. District Judge for the Southern District of New York ruled that a class action against Peloton would go forward. The class action lawsuit, based on claims of false advertising and deceptive trade practices, alleges Peloton continued to deceive its consumers by charging them full price for a catalogue of classes that it knew had been significantly decimated by copyright infringement claims brought by the National Music Publishers’ Association.

Peloton Class Action Claims Deceptive Practices and False Advertising

In 2019, the National Music Publishers’ Association sued Peloton, claiming that a number of Peloton’s on-demand classes illegally used music that infringed upon copyrights held by them. While Peloton denied any wrongdoing, it went on to quietly remove the classes in question from its catalogue. This purge affected a significant number of Peloton’s on-demand classes and, according to the plaintiffs of the class action, adversely affected their subscriber experience. Peloton would go on to settle the aforementioned copyright claims with the National Music Publishers’ Association one year later.

Because Peloton largely relies on its subscription services, it uses its on-demand classes as a key component of its offerings. The plaintiffs take issue with the fact, however, that Peloton did not notify its subscribers that it would be scrubbing its on-demand library of so many videos. Instead, the subscribers allege Peloton acted deceptively because it continued to market its library without any change in cost even as it proceeded to remove a large portion of its classes. The filing goes on to say that Peloton acted wrongfully because it knew or should have known such actions would adversely impact its subscribers experience as they expected unqualified access to Peloton’s on-demand and “growing” library. As such, the plaintiffs allege that Peloton made serious misrepresentations to its subscribers.

A Look at Standing in Peloton Class Action

In attempting to have the class action dismissed, Peloton argued that the plaintiffs lack standing and had not shown they relied on such representations in buying Peloton’s equipment and services. The Southern District of New York found that argument unpersuasive, however, holding that such reliance was unnecessary to support allowing the class action to go forward. In his opinion, U.S. District Judge Lewis J. Liman wrote that reliance was not required to support a claim of economic injury in the case at bar. Under New York law, Judge Liman wrote, a court may take into account whether plaintiffs were injured as a result of the effect Peloton’s misrepresentations had on the market.

Specifically, Judge Liman wrote that a plaintiff may plead both injury and causation by alleging that the misleading acts caused a price premium that was charged to the general public, regardless of whether the misrepresentations were seen, and as a result of the subsequent price premium, plaintiff was charged a price he would not have otherwise been charged but for the misrepresentations. With this holding, the court noted that it was departing from previous holdings that required personal exposure to the alleged misrepresentations.

Key Takeaways in the Peloton Class Action Being Allowed 

The District Court for the Southern District of New York ruled that a class action for deceptive practices against Peloton could proceed. The case should be watched by counsel because:

• Of its potential implications for deceptive practices and false advertising law; and

• This holding that a court may take into account misrepresentations had on its respective market could have subsequent impact on future holdings.

For more information about false advertising litigation, see our IP Litigation Services and Industry Focused Legal Solutions pages.