Peloton Interactive Inc. allegedly failed to tell investors that its Tread+ product could injure or kill children and pets, according to a new would-be class lawsuit filed Thursday in federal court in New York.
The exercise equipment and workout streaming company claimed to prioritize safety but didn’t disclose how its newest treadmill could harm children and pets, investors told the U.S. District Court for the Eastern District of New York. The company in March announced that a child had died in a “tragic accident” involving the Tread+ and gave users some safety tips.
Peloton reaffirmed its commitment to safety in October after recalling the pedals on thousands of its exercise bikes due to injury reports, according to the new lawsuit brought by an individual investor. But safety wasn’t actually a priority because the company was “aware of serious injuries and death resulting from the Tread+ yet did not recall or suggest a halt of” its use, the complaint says.
The U.S. Consumer Product Safety Commission warned the public April 17—a Saturday—to stop using the Tread+ if they lived with pets or small children. Peloton’s share price closed down 7.3% after trading resumed April 19, according to a Bloomberg report.
The company’s shares dropped $16.28, or more than 14%, by the time markets closed April 21, the investor complaint says.
Consumers filed a class action against Peloton over safety concerns April 21.
Causes of Action: Exchange Act §10(b)—Using a manipulative or deceptive device or contrivance for a securities transaction in violation of SEC rules (15 U.S.C. §78j); SEC Rule 10b-5—Employing a device, scheme, or artifice to defraud, making untrue statements or omitting facts, or engaging in any act, practice, or course of business that operates as a fraud or deceit (17 C.F.R. §240.10b-5).
Relief: Damages with interest; attorneys’ fees; court costs.
Potential Class Size: Hundreds or thousands who acquired Peloton securities from Sept. 11, 2020, through April 16, 2021.
Response: Peloton didn’t immediately respond to a request for comment Thursday.
Attorneys: The Rosen Law Firm PA represents the investors.
The case is Wilson v. Peloton Interactive Inc., E.D.N.Y., No. 1:21-cv-02369, complaint filed 4/29/21.