A New Jersey appellate court ruled that Defendants, Retrofitness, LLC; ABC Financial Services, Inc.; and several Retrofitness franchises cannot avoid Jones, Wolf & Kapasi, LLC’s ("JWK") class action lawsuit on behalf of numerous consumers alleging the Defendants’ health club memberships violate New Jersey’s consumer fraud laws.
JWK, along with two other prominent consumer law firms, previously obtained class certification for New Jersey consumers who entered into unconscionable health club contracts, which the Defendants appealed. In partially denying the Defendants’ appeal, the New Jersey appellate court stated the following:
“In the case before us, certification as a class of Subclass #2 – "members of the Class who cancelled or attempted to cancel their Membership Agreement, and who were charged additional monthly payments and/or an annual rate guarantee fee after the cancellation date" – withstands rigorous analysis. The Clubs' cancellation policies take advantage of the likelihood that a significant number of consumers will overlook or forget about the advance notice provisions nine, ten, or eleven months after signing the Membership Agreements. Moreover, the cancellation terms prevent members from cancelling their memberships by email or in person at the Club they joined. In that regard, we note the HCSA requires Membership Agreements to include provisions that the agreements may be cancelled – by "registered or certified mail, return receipt requested, or personally delivered, to the address of the health club specified in the contract" – upon a member's death or disability, or upon a member's change of permanent residence to a location more than twenty-five miles from the health club or an affiliated club. N.J.S.A. 56:8-42 (f) & (g) (emphasis added).
The unreasonableness of restricting cancellation in such a way — especially prohibiting in-person cancellation — is easily illustrated by hypothesizing a similar requirement for members when they first appear at a club to join. Would the concept of fairness encompass a procedure that required prospective members to pick up an application at a club, leave, prepare a transmittal letter, and return the application by registered or certified mail, rather than simply signing the application at the club? The concept, though absurd, illustrates the point.
The point, of course, is that Membership Agreements that impose unduly restrictive cancellation requirements can readily be viewed as frustrating cancellation, thus evidencing the absence of good faith, honesty in fact, and observance of fair dealing; or, in CFA terms, an unconscionable commercial practice intended to extract extra dues from consumers.
The case is Ardino et al. v Retrofitness, LLC, A-2836-16T1, 2019 N.J. Super. Unpub. LEXIS 1169 (App. Div. May 21, 2019) and the Court's decision can be read here.
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