Barclay v. ICON Health & Fitness, Inc., File No. 19-cv-2970 (ECT/DTS)

CourtU.S. District Court — District of Minnesota
Writing for the CourtEric C. Tostrud United States District Court
PartiesTeeda Barclay, Erin Ovsak, and Nicole Nordick, individually and on behalf of all others similarly situated, Plaintiffs, v. ICON Health & Fitness, Inc. and NordicTrack, Inc., Defendants.
Decision Date15 October 2020
Docket NumberFile No. 19-cv-2970 (ECT/DTS)

Teeda Barclay, Erin Ovsak, and Nicole Nordick, individually and on behalf of all
others similarly situated, Plaintiffs,
v.
ICON Health & Fitness, Inc. and
NordicTrack, Inc., Defendants.

File No. 19-cv-2970 (ECT/DTS)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

October 15, 2020


OPINION AND ORDER

Karl L. Cambronne, Bryan L. Bleichner, and Christopher P. Renz, Chestnut Cambronne PA, Minneapolis, MN; Nathan D. Prosser, Hellmuth & Johnson, PLLC, Edina, MN; W.B. Markovits, Terence R. Coates, and Justin C. Walker, Markovits, Stock & DeMarco, LLC, Cincinnati, OH, for Plaintiffs Teeda Barclay, Erin Ovsak, and Nicole Nordick.

Caitlinrose H. Fisher, X. Kevin Zhao, and Lawrence M. Shapiro, Greene Espel PLLP, Minneapolis, MN, for Defendants ICON Health & Fitness, Inc. and NordicTrack, Inc.

Plaintiffs allege that NordicTrack treadmills each of them purchased cannot achieve or maintain the continuous horsepower Defendants represented the treadmills were capable of. Plaintiffs have asserted several claims on their own behalf and on behalf of proposed nationwide and Minnesota-specific classes of persons who also purchased NordicTrack treadmills. Defendants raise several issues in two motions. Defendants' first motion seeks to compel arbitration of Plaintiffs' claims individually pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 3, 4, and Federal Rule of Civil Procedure 56. ECF No. 28. With their second motion, Defendants seek dismissal of some or all of Plaintiffs' claims for lack of

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personal jurisdiction, lack of subject-matter jurisdiction, and for failure to state a claim upon which relief can be granted, all pursuant to Federal Rule of Civil Procedure 12. ECF No. 23. With their Rule 12 motion, Defendants also ask that Plaintiffs' allegations regarding their proposed nationwide class be stricken from the operative complaint. Id. Defendants' motions will be granted in part. There is not subject-matter jurisdiction over Plaintiffs' request for prospective injunctive relief. Claims asserted by two of the three Plaintiffs, Teeda Barclay and Nicole Nordick, are arbitrable as a matter of law. With respect to the third Plaintiff, Erin Ovsak, discovery is necessary to determine whether her claims are arbitrable.1 Once that discovery is completed, the Parties also will have the opportunity to further address Utah law governing whether Ovsak is bound to arbitrate her claims. Defendants' motions will be denied in all other respects, at least for the time being.

I

Plaintiffs and Defendants are of diverse citizenship. Plaintiffs are Minnesota citizens. Second Am. Compl. ¶ 14 [ECF No. 22]. Defendant ICON Health & Fitness owns Defendant NordicTrack. Id. ¶ 28. Both ICON and NordicTrack are incorporated under Utah law, and each maintains its principal place of business in Utah. Id. ¶¶ 28, 29.

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Plaintiffs purchased NordicTrack treadmills. ICON, Plaintiffs allege, "is the world's largest manufacturer and marketer of fitness equipment." Id. ¶ 28. ICON sells treadmills under the NordicTrack brand. Id. ¶ 29; Cox Decl. ¶ 4 [ECF No. 33]. Barclay, Ovsak, and Nordick each purchased a NordicTrack treadmill. Barclay "purchased a NordicTrack 6.5 S treadmill online through Amazon.com on or about June 3, 2019[.]" Second Am. Compl. ¶ 16. Barclay "paid over $500" for the treadmill and planned to use the treadmill for exercise in her Coon Rapids, Minnesota home. Id. ¶¶ 16, 18. Ovsak "purchased a NordicTrack Commercial 2950 treadmill online directly from Defendants' website on or about February 13, 2016," paying more than $2,000 and planning to use the treadmill "for ordinary use" in her Breckenridge, Minnesota home. Id. ¶¶ 19, 21. Nordick "purchased a NordicTrack T7.5 S treadmill online through NordicTrack.com on or about January 22, 2019," paying more than $1,500 and planning to use the treadmill for exercise "in her home located just outside Breckenridge, Minnesota." Id. ¶¶ 22, 24.

In purchasing their treadmills, Plaintiffs relied on Defendants' representations concerning the treadmills' continuous horsepower ratings. Continuous horsepower is "a measurement of [a] motor's ability to maintain and continuously produce power over an extended period of time without exceeding the current rating of the motor." Id. ¶ 41. Put another way, continuous horsepower is the "minimum horsepower delivered [by the treadmill's motor] at all points during a workout." Id. ¶ 44 (quotation and emphasis omitted). Each Plaintiff alleges that, before purchasing her NordicTrack treadmill, she read content on NordicTrack's website describing the treadmill's continuous horsepower rating. See id. ¶¶ 17, 20, 23. Each alleges that Defendants' representations regarding the

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treadmills' continuous horsepower ratings were "a material factor" in her purchasing decision and that she "would not have purchased" the treadmill "or would have paid less but for" these representations. Id.

Plaintiffs allege that Defendants' representations concerning the treadmills' continuous horsepower ratings were false. This is the core allegation underlying Plaintiffs' claims. Specifically, Plaintiffs allege that "NordicTrack consistently and prevalently advertises and markets that the [t]readmills [it sold to Plaintiffs] operate at a continuous horsepower [or "CHP"] of between 2.6 CHP and 4.25 CHP," but that "all NordicTrack treadmills operate in household use well below NordicTrack's continuous horsepower representations and maintain similar continuous horsepower regardless of the misrepresented CHP." Id. ¶ 7. Plaintiffs allege that Defendants base their treadmills' continuous horsepower ratings "on an inflated laboratory testing power draw (amperage) not possible in household use." Id. ¶ 48. Because "[m]ost electrical outlets in American homes are equipped with the standard 15-amps . . . and have an accompanying 120-volt circuit," id. ¶ 34, and not the "inflated laboratory testing power draw," id. ¶ 48, Plaintiffs allege that the continuous horsepower Defendants advertised cannot be achieved in a household setting and is therefore "false and misleading," id.

Plaintiffs assert claims in ten separate counts, two on behalf of a proposed nationwide class, and eight on behalf of a proposed Minnesota class. The two proposed classes consist of "[a]ll persons" either in the United States or Minnesota "who purchased a NordicTrack treadmill, during the maximum period of time permitted by law, for personal, family, or household purposes, and not for resale." Id. ¶¶ 69-70. On behalf of

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themselves and the proposed nationwide class, Plaintiffs allege claims for breach of express warranty (Count 1), id. ¶¶ 93-104, and breach of express warranty under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. (Count 2), id. ¶¶ 105-124. On behalf of themselves and the proposed Minnesota class, Plaintiffs allege claims for breach of express warranty in violation of Minn. Stat. § 336.2-313 (Count 3), id. ¶¶ 125-137, breach of implied warranty in violation of Minn. Stat. § 336.2-314 (Count 4), id. ¶¶ 138-151, breach of warranty under the Magnuson-Moss Warranty Act (Count 5), id. ¶¶ 152-162, violation of the Minnesota Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.43, et seq. (Count 6), id. ¶¶ 163-173, violation of the Minnesota Consumer Fraud Act, Minn. Stat. § 325F.68, et seq. (Count 7), id. ¶¶ 174-178, violation of the Minnesota False Statement in Advertising Act, Minn. Stat. § 325F.67 (Count 8), id. ¶¶ 179-185, violation of the Minnesota Unlawful Trade Practices Act, Minn. Stat. § 325D.13 (Count 9), id. ¶¶ 186-201, and negligent misrepresentation (Count 10), id. ¶¶ 202-211. Plaintiffs seek many remedies. These include "compensatory, exemplary, and statutory" damages, restitution, disgorgement, attorneys' fees, injunctive relief, declaratory relief, pre- and post-judgment interest, and "any such other and further relief the Court deems just and equitable[]" (though it's hard to hypothesize what that might be). Id. at 61, ¶¶ 3-10.

After purchasing their NordicTrack treadmills, Barclay and Nordick signed up as members of ICON's iFit service, and the iFit "Terms of Service" then in effect included an arbitration clause. iFit is "a brand operated by ICON" that "connect[s] people with fitness coaches." Am. Brammer Decl. ¶ 3 [ECF No. 45]. "Many individuals [who] purchase NordicTrack treadmills also register for iFit memberships . . . [to] access iFit's training

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support technology while they exercise." Id. ¶ 4. Barclay registered as an iFit member on June 18, 2019. Id. ¶ 17; Barclay Decl. ¶ 5 [ECF No. 38]. Nordick registered as an iFit member on March 4, 2019. Am. Brammer Decl. ¶ 16; Nordick Decl. ¶ 5 [ECF No. 39]. The record contains no evidence showing precisely how Barclay or Nordick registered as an iFit member. The record does show the same four possible registration methods were available on the dates Barclay and Nordick registered. Am. Brammer Decl. ¶¶ 8, 20-22. They could have registered using iFit's mobile application. Id. ¶ 8. They could have registered on the iFit.com website's registration page. Id. ¶ 20. They could have "unlocked and activated [one of] ICON's Bluetooth-equipped treadmills on iFit.com[.]" Id. ¶ 21. Or they could have registered by setting up one of "ICON's touchscreen-equipped treadmills on their embedded console touchscreen[.]" Id. ¶ 22. Each of these methods would have required Barclay and Nordick to "click a box" that read either "CREATE ACCOUNT," "PLACE ORDER," "START TRIAL," or "NEXT." Id. ¶¶ 8, 20, 21, 22. Adjacent to (either immediately below or left of) each of these boxes appeared a statement alerting the registrant that by clicking on the box, she agreed to the hyperlinked iFit "Terms of Use," among other contracts. Id. When Barclay and Nordick registered as iFit members, the iFit Terms of Use included the following arbitration provision:

You acknowledge and agree that ICON may, at its sole discretion, require you to submit any disputes
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