KENNETH J. SILVER
LA FITNESS INTERNATIONAL, LLC
MEMORANDUM RE: APPROVAL OF SETTLEMENT AND ATTORNEYS’ FEES
The proposed class action settlement in this case reached between counsel was the subject of a notice to the putative class and received preliminary approval from the Court. Following a hearing on September 19, 2013, and review of the extensive papers submitted in support of the settlement, as well as the single objection, the Court has determined that under the facts and law the settlement should be approved.
This case was brought as a class action against defendant L.A. Fitness (“LAF”), on behalf of former members of LAF, who asserted that they incurred additional monthly billing charges after they attempted to cancel their monthly-dues membership agreements, and on behalf of all persons who were allegedly subject to LAF’s misleading contract provisions and other practices. LAF, a privately owned company with headquarters in Irvine, California, owns and operates over 500 fitness clubs in 28 states across the United States. This case centers upon LAF’s practices with regard to securing memberships on a monthly basis, specifically difficulties that members had in cancelling their membership agreements, and the alleged misrepresentations made by LAF about its cancellation policies.
The case was extensively and vigorously litigated by very competent counsel. At the outset of the case, the Court held a number of hearings, at which it noted the potential complexities of the case and the significant discovery burdens which the plaintiffs’ discovery requests sought to impose on defendant – discovery that would only be justified if the case were determined to be an appropriate class action under Fed.R.Civ.P. 23. In fact, the asymmetrical nature of the discovery warranted the Court, after extensive hearings on discovery disputes between the parties, to require significant cost shifting. The Court held that for plaintiffs to achieve the additional discovery they sought, plaintiffs should bear a large portion of the defendant’s expense. See Boeynaems v. L.A. Fitness Int’l, LLC, 285 F.R.D., 331 (E.D. Pa. 2012).
1. Summary of Settlement Terms
Shortly after the Court issued that opinion, the parties informed the Court that they had embarked upon serious settlement discussions before an independent mediator, a former federal district judge, which resulted in the Settlement Agreement now before the Court for approval. Stated briefly, there are several different categories of class members, which determine the settlement and what they will receive:
Class A – These individuals paid an additional monthly fee for membership after they expressed intent to cancel. They will receive one-third of that monthly fee (approximately $15) as class settlement proceeds, or a forty-five (45) day pass to any LAF facility.
Class B – LAF consumers in this category attempted to cancel, but their cancellation notice was never timely processed. The settlement terms for this group are divided into three categories:
a. Those with written proof of mailing the cancellation will get a full refund equal to 100% of the damages they could recover in this case, up to monthly payments for one year (approximately $420) less any refunds. This group will also receive a free 45-day facility pass.
b. Those with some proof of cancellation, but not specific proof of mailing, will receive 50% of their additional monthly payments for one year, less any refund, plus a 45-day pass.
c. All others in this group will receive a 60-day club pass, if they file a claim, but no proof will be required.
In addition, the settlement offers significant equitable relief to the members of the class in that LAF has agreed to revise its policies, procedures, and notices to members to make the circumstances and procedures under which an LAF member can cancel and/or receive a full refund more easily understandable.
The passes that class members will receive will be fully transferrable.
In addition, and very significant, LAF has agreed to pay the full amount of counsel fees and costs, plus the ...