Facts

Plaintiffs filed a class action lawsuit against defendant 24 Hour Fitness regarding its practice of charging monthly membership dues after defendant recorded a request to cancel or terminate the corresponding club membership. According to plaintiffs, the disputed charges were made using electronic fund transfers, whereby defendant automatically withdrew funds from a settlement class member's bank or credit/debit/charge card account after defendant recorded a request to cancel or terminate the corresponding monthly membership.

The class representatives brought this action against defendant based on violations of Racketeer Influenced Corrupt Organizations Act (RICO), the Electronic Fund Transfer Act (EFTA), and California's Unfair Competition Law (UCL).

PLAINTIFF'S CONTENTIONS:
Plaintiffs contended that 24 Hour Fitness took the charges at issue by fraudulently representing to its payment processors (the entities that processed the electronic payments on behalf of defendant) that it had authorization to withdraw these membership dues from settlement class members' bank or credit/debit/charge accounts.

DEFENDANT'S CONTENTIONS:
24 Hour Fitness denied all liability for plaintiffs' claims and asserted that it acted lawfully, that it has made no misrepresentations to payment processors, to its members, or to anyone else, and that settlement class members authorized the charges involved in this case in their membership agreements.

24 Hour Fitness also asserted many other defenses to plaintiffs' claims.

Result

Pursuant to the settlement agreement, 24 Hour Fitness provided every class member, for each dues charge at issue, with either a cash payment of $20 or a three-month club access certificate giving the user a free pass to any 24 Hour Fitness club for three consecutive months. 24 Hour Fitness also paid attorneys' fees and costs of $8,443,712 and incentive payments of $10,000 to each of the nine class representatives. 24 Hour Fitness also permanently ceased the practice of debiting monthly membership dues after it records a request to cancel or terminate the corresponding club membership at issue in the litigation. The court valued the settlement at $295,891,283 including the relief to class members, injunctive relief and attorney fees and costs.

Other Information

MEDIATOR: Antonio Piazza. FILING DATE: Oct. 2, 2006.