Passman v. Peloton Interactive, Inc.
| Docket Number | 19-cv-11711 (LJL) |
| Decision Date | 02 May 2023 |
| Parties | ERIC PASSMAN and ISHMAEL ALVARADO, individually and on behalf of all others similarly situated, Plaintiffs, v. PELOTON INTERACTIVE, INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Named Plaintiffs Eric Passman (“Passman”) and Ishmael Alvarado (“Alvarado” and, together with Passman “Named Plaintiffs”) move, pursuant to Federal Rule of Civil Procedure 23, for an order certifying this case as a class action, appointing Named Plaintiffs as class representatives, and appointing the law firms of Keller Postman LLC, DeCello Levitt LLC, and Ziglar Law Group, LLC as class counsel. Dkt. No. 226. Defendant Peloton Interactive, Inc. (“Peloton” or “Defendant”), moves for an order excluding the expert reports and testimony of J. Michael Dennis and Colin B. Weir pursuant to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Dkt. No. 240.
For the following reasons, the motion to exclude the expert reports and testimony of Dennis and Weir is denied and the motion for class certification is denied.
The parties engaged in discovery for the purpose of filing and contesting the present motion for class certification and the related motion to strike. See Dkt. No. 212. The following facts are taken from the parties' submissions in connection with the motion for class certification and the motion to strike “and the Court resolves factual disputes as necessary for the disposition of” the motions. See Loc. 3621, EMS Officers Union, DC-37 AFSCME, AFL-CIO v. City of New York, 2022 WL 17175798, at *1 (S.D.N.Y. Nov. 22, 2022) (quoting Kassman v. KPMG LLP, 416 F.Supp.3d 252, 258 (S.D.N.Y. 2018)).
Named Plaintiffs bring this action against Defendant alleging violations of New York's consumer fraud statutes, New York General Business Law (“NYGBL”) Sections 349 and 350. Defendant is an exercise equipment and media company that sells stationary bicycles (“Peloton Bike”) and treadmills (“Peloton Tread”) online, over the phone, and in showrooms. Dkt. No. 250-2 at 5, 7-8. In addition to selling the Peloton Bike and Peloton Tread (collectively, “Peloton Hardware”), Defendant also sells monthly subscriptions (“Peloton Memberships”), which allow subscribers to watch live and pre-recorded (or “on-demand”) fitness classes through Peloton Hardware's built-in interactive touchscreens. Id. at 5-6. Peloton also sells a digital application that allows users to take classes on non-Peloton Hardware. Dkt. No. 250-3. Passman purchased a Peloton Bike and one-year Peloton Membership directly from Defendant in early 2017. Dkt. No. 257-6 at 4-5, 7. Alvarado purchased a used Peloton Bike with his wife from a friend in January 2019 and purchased a Peloton Membership. Dkt. No. 250-4 at 36-37, 40-41; Dkt. No. 257-1 ¶ 3.
The action stems from statements made by Defendant on its website and other media that it offered subscribers an “ever-growing” or “growing”[1] library of live and on-demand studio classes (the “Challenged Statement”). See, e.g., Dkt. Nos. 232-14, 232-15, 232-15, 232-16, 232-17; see also Dkt. No. 253-3 at 1-3. The Challenged Statement appeared in only a subset of Peloton's advertisements, see Dkt. No. 253-4 (), and did not appear in any television advertisements, see Dkt. No. 250-10 at 136. In April 2018, while it was making the Challenged Statement, Defendant received a cease-and-desist letter regarding its alleged copyright infringement of songs appearing in classes in its on-demand class library. Dkt. No. 232-22. In March 2019, several members of the National Music Publishers' Association collectively filed a lawsuit against Defendant. See Dkt. No. 232-23. On March 25, 2019, in response to that lawsuit, Defendant removed approximately 6,500 on-demand classes from its library, leaving approximately 7,000 classes available to its members. Id.; Dkt. No. 255-10.
Named Plaintiffs bring this action on behalf of a class defined as “[a]ll purchasers of the Peloton Hardware and/or the corresponding Peloton Membership subscription from April 9, 2018 through March 25, 2019 [(the “Class Period”)] in the State of New York.” Dkt. No. 195 (“Third Amended Complaint”) ¶ 106. As currently pleaded, Named Plaintiffs allege that Defendant's representation that its library was “ever-growing” was false and misleading, because, at the time it made the Challenged Statement, it knew that it would be removing a large proportion of its on-demand digital library. See generally Third Amended Complaint ¶¶ 116-54. As a result, each of the putative class members suffered injury caused by the Challenged Statement by overpaying for Peloton Hardware and Peloton Memberships. See id.
This case was initiated by complaint in December 2019 by Eric Fishon, Alicia Pearlman, and Patrick Yang, individually and on behalf of all others similarly situated, bringing claims for violations of NYGBL Sections 349 and 350. Dkt. No. 1. On August 4, 2020, and pursuant to an unopposed request, the Court ordered the voluntary dismissal of Yang. Dkt. No. 61. On November 9, 2020, the Court granted a motion to dismiss the claims of Pearlman-a Michigan resident-without prejudice because she lacked statutory standing under the New York statute, but it denied a motion to dismiss Fishon's claims. See Fishon v. Peloton Interactive, Inc., 2020 WL 6564755 (S.D.N.Y. Nov. 9, 2020).
On January 21, 2021, plaintiffs Fishon and Pearlman filed a first amended complaint. Dkt. No. 81. Peloton again moved to dismiss Pearlman's claims, contending that Pearlman had not pleaded facts sufficient to show that she had statutory standing to sue under NYGBL Sections 349 and 350. Dkt. Nos. 88-89. The Court, once again, dismissed Pearlman's claims under the NYGBL, explaining that the amendment failed to cure the deficiencies identified in the original complaint. Fishon v. Peloton Interactive, Inc., 2021 WL 2941820, at *5 (S.D.N.Y. July 12, 2021). The Court, however, granted leave for Pearlman to amend her complaint to plead her cause of action under Michigan law. Id.
On July 26, 2021, Plaintiffs filed a second amended complaint, with Fishon bringing claims under NYGBL Sections 349 and 350 and Pearlman bringing a claim under the Michigan Consumer Protection Act (“MCPA”), Michigan Compiled Laws § 445.901, et seq. Dkt. No. 106. On August 9, 2021, Defendant moved to dismiss Pearlman's claims in that complaint. Dkt. No. 107. On September 16, 2021, Fishon and Pearlman moved to certify the putative classes; Fishon moved for certification of a class of “[a]ll purchasers of the Peloton hardware and/or the corresponding Peloton Membership subscription from April 9, 2018 through March 25, 2019 in the State of New York,” while Pearlman sought certification of a class of “[a]ll purchasers of the Peloton hardware and/or the corresponding Peloton Membership subscription from April 9, 2018 through March 25, 2019 in the State of Michigan.” Dkt. No. 118 at 9. The Court granted Defendant's motion to dismiss Pearlman's claim under the MCPA, concluding that Pearlman did not allege with the requisite specificity facts supporting her reliance on Peloton's statements that its on-demand library of fitness classes was “ever-growing,” as was required under the Federal Rule of Civil Procedure Rule 9(b) standard applicable to her MCPA claim for which reliance was an essential element. Fishon v. Peloton Interactive, Inc., 2022 WL 179771, at *8 (S.D.N.Y. Jan. 19, 2022). The Court also denied the motion for class certification by Fishon on the grounds that Fishon was not an adequate class representative. Id. at *11-12.
On February 18, 2022, Named Plaintiffs Passman and Alvarado, previously absent class members, filed the Third Amended Complaint. Dkt. No. 195. Defendant moved to dismiss the Third Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), Dkt. Nos. 196-97, 202, and Plaintiffs opposed that motion, Dkt. No. 201. On August 11, 2022, the Court denied the motion to dismiss the Third Amended Complaint. Dkt. No. 207; see Fishon v. Peloton Interactive, Inc., 2022 WL 3284670 (S.D.N.Y. Aug. 11, 2022).
On October 17, 2022, Named Plaintiffs filed this motion to certify the class, supported by the declaration of Alex J. Dravillas, the expert declarations of Dennis and Weir, and a memorandum of law. Dkt. Nos. 226-33. On November 14, 2022, Defendant filed a memorandum of law in opposition to the motion for class certification and its motion to strike Plaintiff's expert declarations and supporting memoranda of law; the motion and the opposition to the motion for class certification were supported by the declarations of Megan A. Behrman and the expert declarations of Joel H. Steckel, PhD, Rebecca Kirk Fair, and Bruce A. Strombom, PhD. Dkt. Nos. 241-59. On November 30, 2022, Plaintiffs filed a reply memorandum of law in further support of its motion for class certification, an affidavit of Dravillas, and reply affidavits of Charles F. Dender and Benjamin F. Whiting. Dkt. Nos. 263-66. Named Plaintiffs also filed a response to the motion to strike the expert reports along with declarations of Dravillas and reply declarations of Dennis and Weir. Dkt. Nos. 268-73. On December 16, 2022, Defendant filed a supplemental memorandum of law in opposition to the motion for class certification and a supporting declaration, Dkt. Nos. 274-75, to which Named Plaintiffs responded and filed opposing declarations on December 27, 2022, Dkt. Nos. 277-79. On December 22, 2022, Defendant filed a reply memorandum of law in further support of its motion to strike the expert reports. Dkt. No. 276.
On April 12, 2023, the Court heard oral argument...
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