Peloton’s music troubles give it consumer protection troubles over “ever-growing library” claim

Fishon v. Peloton Interactive, Inc., 2020 WL 6564755, No. 19-cv-11711
(LJL) (S.D.N.Y. Nov. 9, 2020)

Peloton streams live and on-demand fitness classes requiring
a monthly subscription fee. Certain Peloton ads described the library of
fitness classes as “ever-growing.” But in March of 2019, however, in response to
a lawsuit from music publishers, Peloton removed approximately 5,739 classes,
or nearly 57% of the total available classes, from its library. Plaintiffs
alleged that the “ever-growing” claim was deceptive and misleading.

The court dismissed the NYGBL claim of the Michigan
plaintiff, but not of the NY plaintiff.  

First, the terms of service, which authorized Peloton to
remove content from its library at any time, did not protect Peloton. Statements
buried in contracts can’t, in general, avoid false advertising claims. “A
reasonable consumer, having viewed Peloton’s advertisements on its website and
having decided to purchase a Peloton product based on the understanding that
the library would grow ‘should not be expected to discover the truth’ and that
such understanding was false from the Terms of Service.” Moreover, being able
to remove content at any given time was not inconsistent with a promise of an “ever-growing”
library, and so the TOS didn’t dispel the alleged falsity. “The Terms of
Service do not disclose that Peloton might remove over half of its library
without simultaneously replacing that half with even more classes.”

Puffery: “Ever-growing” was objective and testable. “The
library either increased in size or it shrunk.”

Deceptive/misleading: This was a factual question not
appropriately resolved on a motion to dismiss, despite Peloton’s argument that
it was constantly adding new content, nearly 24 hours of live content per day. “Ever-growing”
is not the same thing as “ever-changing.” “A consumer attracted to a grocery
store by its advertisement of a growing selection of foodstuffs would be
surprised to learn on each visit that the number of products on sale was
decreasing, although the store was replacing the items it removed with a
smaller number of new products…. A reasonable consumer thus would not
understand as a matter of law when he or she purchased the Peloton product
based on the representation that the library was ever-growing that the library
was shrinking in size at the same time Peloton was adding new classes.”

Plaintiffs also properly pled causation even without
alleging that they saw the misleading ads, since reliance isn’t required and
Section 349/350 claims are not fraud claims that must be pled with
particularity. “[A]n allegation that the defendant was injured because she
relied on the misleading statement to her detriment is not a ‘[t]hreadbare
recital[ ] of the elements of a cause of action,’ but rather “an allegation of
fact as to how she came to be injured that—if proven—supports the establishment
of that element…. The manner in which the plaintiff came to rely upon the
deceptive act—and whether it can be proved—is a further issue of proof and not
something that needs to be pleaded in detail for a complaint to proceed.”

So too with injury: The complaint alleged that “Plaintiffs
attributed value to Peloton’s promises regarding the nature and characteristics
of its on-demand digital library and would not have purchased the hardware and
corresponding Peloton Membership, or would not have purchased it on the same
terms, if they knew the truth.” That was enough for now.

 

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