Fruitstone v. Spartan Race Inc.

• Decision Date: 28 May 2020
• Docket Number: Case No. 1:20-cv-20836-BLOOM/Louis
• Citation: 464 F.Supp.3d 1268
• Parties: Aaron FRUITSTONE, on behalf of himself and all others similarly situated, Plaintiff, v. SPARTAN RACE INC., Defendant.
• Court: U.S. District Court — Southern District of Florida

464 F.Supp.3d 1268

Aaron FRUITSTONE, on behalf of himself and all others similarly situated, Plaintiff,

v.SPARTAN RACE INC., Defendant.

Case No. 1:20-cv-20836-BLOOM/Louis

United States District Court, S.D. Florida.

Signed May 28, 2020

Entered May 29, 2020

Barbara Cabrera Lewis, Joseph M. Kaye, The Moskowitz Law Firm, PLLC, Miami, FL, Howard Mitchell Bushman, Adam M. Moskowitz, The Moskowitz Law Firm, PLLC, Coral Gables, FL, Andrew Steven Friedman, Pro Hac Vice, Francis J. Balint, Jr., Pro Hac Vice, Nada Djordjevic, Pro Hac Vice, Bonnett Fairborn Friedman & Balint, P.C., Phoenix, AZ, Bradley J. Watkins, Pro Hac Vice, Paul M. Scott, Pro Hac Vice, Steven G. Blackerby, Pro Hac Vice, Brown, Readdick, Bumgartner, Carter, Strickland & Watkins LL, Brunswick, GA, for Plaintiff.

Scott A. Bassman, Matthew Alexander Green, Cole, Scott, Kissane, P.A., Fort Lauderdale, FL, for Defendant.

ORDER

BETH BLOOM, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court upon Defendant's Motion to Transfer this Case under 28 U.S.C. § 1404(a) or, in the Alternative, Motion to Dismiss Plaintiff's Amended Complaint, ECF No. [24] ("Motion"). Plaintiff filed a Response, ECF No. [32] ("Response"), to which Defendant filed a Reply, ECF No. [34] ("Reply"). The Court has considered the Motion, the Response, the Reply, the record in this case, the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is denied.

I. BACKGROUND

On April 13, 2020, Plaintiff filed the operative First Amended Class Action Complaint, ECF No. [15] ("Complaint"). The Complaint asserts three causes of action: violation of the Massachusetts Consumer Protection Law, Massachusetts General Laws, Chapter 93A (Count I), violation of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201 et seq. ("FDUTPA") (Count II), and unjust enrichment (Count III).

According to the Complaint, Defendant is a widely-known obstacle course race organizer that conducts the "Spartan Races," which races have attracted millions of participants worldwide. Id. at ¶¶ 1, 16. Plaintiff alleges that, in addition to collecting funds based on registration racer fees, parking services and bag check fees, Defendant has "extracted millions of additional dollars from consumers, through an unfair and deceptive self-enrichment scheme that violates state consumer protection laws" in Massachusetts and Florida based on a "mandatory ‘Racer Insurance Fee.’ " Id. at ¶¶ 2, 17. Specifically, Defendant "purchased a group insurance policy through CHUBB that covers each racer and costs Spartan Race much less than what they represent ($14) to all racers." Id. The Complaint states that each time a consumer registers for a Spartan Race event, Defendant "charges a mandatory, non-transferable, and non-refundable ‘Racer Insurance Fee’ " of $14, which operates as a "secret revenue source" because the insurance fee costs Defendant less than $1 per racer per day. Id.¹ Id. at ¶¶ 2-4. Defendant's website allegedly represents that, in reference to the Racer Insurance Fee, Defendant "purchases accident medical insurance from a licensed third-party insurance carrier[.]" Id. at ¶¶ 4, 19. This fee, moreover, is billed to race registrants as a distinct line-item entry that is separate from Defendant's registration fee and from other fees and taxes collected by Defendant. Id.

Plaintiff alleges that the racer insurance Defendant requires is "basically worthless" because it is "(1) always secondary to any insurance that most of the racers already have, (2) it is non-refundable if the race is canceled, postponed, or delayed by Spartan or the racer, (3) has a large $500 deductible, and (4) is required along with a waiver absolving any liability by Spartan for any resulting injury." Id. at ¶ 5. Further, registrants must pay the Racer Insurance Fee again each time they defer or reschedule their race. Id. at ¶¶ 5, 18. According to Plaintiff, Defendant's representations and marketing materials "create in a reasonable consumer the false impression that the $14 ‘Racer Insurance Fee’ is used solely to pay for accident insurance for the benefit of the registrant." Id. at ¶ 6. "In truth, Spartan secures that insurance through a group policy, issued by a third-party insurer, that affords racers secondary insurance coverage at a tiny fraction of the cost Spartan charges them," and Defendant "pockets nearly all of the $14 Race Insurance Fee as a hidden profit center for the company, undisclosed to consumers." Id. See also id. at ¶ 21.

The Complaint maintains that Defendant's marketing description and charging of the Racer Insurance Fee is "objectively likely to deceive any reasonable consumer into believing that the $14 charge reflects the cost of the insurance coverage being passed through to that consumer." Id. at ¶ 7.² Plaintiff asserts that Defendant's representations "would lead a reasonable consumer to believe that the $14 ‘Racer Insurance Fee’ is used solely to purchase insurance on behalf of the registrant." Id. at ¶ 20. In this respect, Plaintiff alleges that, as the Racer Insurance Fee is a distinct line item when Defendant invoices race participants, Defendant "creat[es] the impression that the fee is a pass-through to the third-party insurance carrier." Id. at ¶ 37. He adds that the alleged unfair and deceptive scheme "emanated from Spartan's headquarters in Massachusetts." Id. at ¶ 8.

According to the Complaint, Plaintiff registered for a Spartan "Sprint" race in Palm Beach, Florida in April 2019, completed the online registration process, and paid the $14 Racer Insurance Fee "[i]n reliance on Spartan's foregoing misrepresentations and omissions[.]" Id. at ¶¶ 22-24. He now brings a putative nationwide and Florida class action with classes comprised of persons that paid the Racer Insurance Fee in connection with any races organized by Defendant during the applicable limitations period. Id. at ¶ 26.

Defendant now moves to transfer the action to the District of Massachusetts or, alternatively, to dismiss the Complaint with prejudice pursuant to Rules 12(b)(1) and 12(b)(6), Fed. R. Civ. P. See generally ECF No. [24]. According to Defendant, the Massachusetts federal court is the "more convenient forum for this litigation" and the action "should have been brought" there. Id. at 2. Defendant asserts that if the Court declines to transfer the case, dismissal with prejudice is appropriate as to each count. Specifically, regarding Count I, Plaintiff lacks Article III standing to assert claims under Massachusetts law. Id. at 3, 16-18. As to Count II, the parties entered into a binding contract, the Waiver, ECF Nos. [24-2] and [24-3], that expressly disclosed that Plaintiff's registration payment total included a "mandatory administrative and racer insurance fee," and because Defendant did not make any misrepresentation or misstatement as to how the $14 fee is calculated or allocated, no reasonable consumer could believe the Racer Insurance Fee would be distributed solely to a third-party insurance carrier. Id. at 3, 18-21. Finally, Count III fails because it is barred by the existence of the Waiver that Plaintiff executed. Id. at 4, 21-22.

In response, Plaintiff contends that Defendant falls "far short of its burden" to establish that transfer is warranted. ECF No. [32] at 1. Additionally, he asserts that no count should be dismissed because he "(1) adequately alleges his FDUTPA claim, premised on a ‘pass-through’ theory of liability; (2) has standing to assert a Massachusetts consumer protection claim against Spartan on behalf of the putative nationwide class; and (3) states a claim for unjust enrichment which this Court in authority uncited by Spartan squarely recognizes as actionable." Id. In particular, Plaintiff maintains that Defendant "attempts to recast [his] action as involving what it now claims is a ‘mandatory administrative and racer insurance fee,’ based on its contorted reading of a single reference found in a document not at issue in this lawsuit." Id. (internal citation omitted).

In the Reply, Defendant asserts that the balance of factors favors transfer given the burden it faces in litigating in Florida. ECF No. [34] at 2-8. It then reargues that the FDUTPA claim fails to state a cause of action because Defendant's allegations "regarding the mandatory ‘Racer Insurance Fee’ omit Plaintiff acknowledged the Waiver (twice), which fully disclosed Plaintiff's ‘order total includes a mandatory administrative and racer insurance fee ($14.00) for each event registration.’ " Id. at 8 (emphasis omitted). Defendant adds that the case law Plaintiff cites is distinguishable and that "Plaintiff completely distorts what the Spartan website actually provides[.]" Id. at 8-9. Further, it maintains that Plaintiff lacks standing to assert his Massachusetts consumer protection claim and that Geis v. Nestle Waters N. Am., Inc. , 321 F. Supp. 3d 230 (D. Mass. 2018), cited in the Response, is distinguishable because it did not involve multi-state statutory claims. Id. at 9-10. Finally, it asserts that the unjust enrichment claim fails because there is an express contract (the Waiver) governing the subject matter and relationship of the parties and "Plaintiff may not assert an unjust enrichment claim based on fees that were charged in accordance with the Waiver[.]" Id. at 10-11 (emphasis omitted).

The Motion, accordingly, is ripe for consideration.

II. LEGAL STANDARDS

A. Motion to Transfer

The transfer statute, 28 U.S.C. § 1404(a), which embodies a codification and revision of the forum non conveniens doctrine, see Piper Aircraft Co. v. Reyno , 454 U.S. 235, 253, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981), provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." " Section 1404(a) reflects an increased desire to have federal civil suits tried in the federal system at the...