Green Light Given to Customer Lawsuit Over Pelaton’s Business Practices

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A federal judge in New York has allowed a class action lawsuit to proceed against Peloton based on its allegedly deceptive business practices.

Peloton sells high-end indoor exercise bikes and requires that all users must also purchase a monthly subscription that provides streaming live and on-demand cycling classes.   The on-demand classes are a substantial part of Pelaton’s offerings, and they include a wide variety of popular songs to motivate subscribers in their workouts.  At the start of COVID, with gyms closed and people quarantined in their homes, Pelaton experienced a huge surge in sales.

In 2019, a group of ten music publishing companies belonging to the National Music Publishers’ Association (NMPA) sued Pelaton for $150 million, claiming Pelaton had violated their copyrights by using more than 1,000 of their songs in its streaming fitness classes without properly licensing them.  The publishers later raised their demand to $370 million.  In response, Peloton filed a counterclaim, alleging that the NMPA had violated antitrust laws by coordinating its member publishers to collectively negotiate licenses.  The counterclaim was dismissed in January 2020.  Thereafter, the parties announced they had agreed to settle the lawsuit for an undisclosed amount of money,

After Peloton was accused of infringing over 1,000 songs, it quietly removed from its catalog each on-demand class containing any accused songs.  Based on the large number of accused songs, this resulted in a substantial amount of classes removed.  The plaintiffs in the class action lawsuit claim that Pelaton engaged in deceptive business practices because it did not notify its subscribers that it would be removing all these classes, but instead continued to market its library without any change in cost.  The plaintiffs allege that Pelaton made serious misrepresentations to its subscribers because it knew or should have known that they expected access to Peloton’s entire library of classes when they signed up.

Seeking dismissal of the case, Pelaton argued that the plaintiffs had failed to show that they relied on Pelaton’s representations concerning its on-demand class library when they bought Pelaton’s bikes and subscription services.  However, the judge ruled that plaintiff’s reliance was not required for the case to move forward, and that the court could look instead at the effect that Pelaton’s representations had on the overall market when assessing plaintiffs’ injuries.





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