pandemic refund claim plausibly alleged

Rothman v. Equinox Holdings, Inc., 2021 WL 1627490, No. 2:20-cv-09760-CAS-MRWx (C.D. Cal. Apr. 27, 2021)

Another pandemic refund case. This one found a misrepresentation adequately pled with respect to the refund provision of plaintiff’s membership contract with the defendant, a gym company. The Membership Agreement allegedly said that: “Buyer should be aware that if the Club closes, although the Club will remain legally liable to Buyer for a refund, Buyer may risk losing his or her money if the Club is unable to meet its financial obligations to Members.” This could have misled a reasonable consumer to believe that the club would “provide a monetary refund for any period during which their clubs are closed.” Equinox argued that he hadn’t pled any representation that refunds would be automatic, and that the contract statement was “a non-actionable statement of legal opinion.”

But the statement was plausibly misleading and the agreement didn’t contain any language requiring members to affirmatively request a refund. It plausibly suggested that Equinox was required to issue a refund in the event of a club closure, and it wasn’t a “mere prediction or opinion regarding uncertain future events” but “a promise regarding the import of particular factual circumstances, namely that when a club closes—as plaintiff alleges his has—consumers will be entitled to receive a refund.”

Equinox urged that it was implausible that a reasonable consumer would have anticipated a global pandemic and public health orders closing the gym. But “[t]he relevant question is not whether plaintiff could have anticipated that the club would close due to a global pandemic. It is whether plaintiff reasonably attached importance to the existence of a promise to refund his money in the event that the club closed, for any reason.”

Equinox sought dismissal of the equitable claims under Sonner. The court found dismissal premature since there was no pending motion for injunctive relief that would require the Court to determine the adequacy of plaintiff’s legal remedies.  Anyway, the plaintiff couldn’t necessarily “quantify [his] actual damages for future harm” with any certainty; he cannot currently predict whether, when, or for how long Equinox may be required to close the Equinox clubs in the future due to the ongoing pandemic. But punitive damages claims were dismissed for want of an adequate basis.