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Peloton Gets Early Win in Suit Over Classes But Shares Fall (1)

Jan. 20, 2022, 8:52 PMUpdated: Jan. 20, 2022, 10:18 PM

Peloton Interactive Inc. defeated, for now, certification of a consumer class alleging the company misrepresented its library of classes as “ever-growing.”

Neither of the two named plaintiffs have shown they are qualified to represent the class, the U.S. District Court for the Southern District of New York said in a ruling docketed Thursday.

The ruling comes on a day that saw Peloton’s stock drop 24 percent on a report that the company will temporarily halt production of bikes and treadmills. The company slashed its sales forecast in November.

The claims of plaintiff Alicia Pearlman, who alleges violations of Michigan’s consumer protection statute, are insufficient because she fails to explain where and when the statements on which she relied were made, or how she relied on them with “any level of specificity,” the court said.

The other named plaintiff, Eric Fishon, who sought to bring claims under New York’s consumer law, has “credibility issues” that are “sufficiently serious as to render him an inadequate” class representative, the court said.

“Fishon repeatedly impersonated an attorney in correspondence with the very company he is now suing on behalf of a class only months before initiating this lawsuit,” the court said.

Fishon’s complaints to the company, “which were wide-ranging and over a period of months, were related to problems with Fishon’s Peloton hardware and customer service experiences but did not reference any concerns he had about the reduced content in Peloton’s on-demand library,” the court said.

“He then gave testimony regarding those emails that was evasive at best and, based on the court’s review of video of relevant portions of the deposition, approach the perjurious at worst,” the court said.

The court gave counsel for the plaintiffs until Feb. 18, 2022, to file an amended complaint with allegations specific to any new proposed class representative.

The complaint alleges that Peloton ran advertisements describing its library of fitness classes as “ever-growing.”

But in April 2018, Peloton received a cease-and-desist letter from the National Music Publishers Association regarding its use of songs in its on-demand class library, the complaint alleges.

In March 2019, several members of the NMPA sued Peloton, seeking more than $150 million in damages, alleging that Peloton had been using musical works without proper licensing, according to the complaint.

In the face of the lawsuit, the complaint alleges, Peloton removed all classes from its on-demand library that contained one or more of the allegedly infringing songs, constituting over 50% of the total available classes.

The complaint alleges that the class members “overpaid for Peloton’s Membership and Subscription Service because they did not know the truth that Peloton would gut its on-demand digital library.”

Judge Lewis J. Liman issued the opinion.

DiCello Levitt Gutzler LLC, Zigler Law Group LLC, Wexler Wallace LLP and Keller Lenkner LLC represents the proposed class.

Latham & Watkins represents Peloton.

The case is Fishon v. Peloton Interactive Inc., 2022 BL 18615, S.D.N.Y., No. 19-cv-11711, docketed 1/20/22.

(Adds graph on Peloton stock)

To contact the reporter on this story: Peter Hayes in Washington at PHayes@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com

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