24 Hour Lawsuit Settlement Approved

LOS ANGELES -- A settlement has been reached in the class-action lawsuit Friedman vs. 24 Hour Fitness USA Inc.

The United States District Court, Central District of California, granted preliminary approval of a settlement on March 29. The case officially closed after a hearing on final approval on July 12.

The lawsuit was first filed on Oct. 2, 2006, on behalf of 1.5 million former 24 Hour Fitness members who claimed that the San Ramon, CA-based company took monthly payments out of member accounts after they had canceled their memberships. The suit claimed 24 Hour violated the Racketeer Influenced and Corrupt Organization Act (RICO), the Electronic Fund Transfer Act (EFTA) and state consumer laws.

According to terms of the settlement, 24 Hour agreed to provide either a payment of $20 or a three-month club access certificate entitling settlement class members to use any 24 Hour club for three consecutive months for every claim form submitted by a settlement class member. The value of the three-month pass is at $149.99 to $199.99.

Both parties provided evidence in the case that the average amount charged after cancellation was $25, so the $20 benefit option reimburses about 80 percent of the average class member’s actual damages, according to the court’s final order and judgment.

24 Hour also agreed to:

• Make incentive award payments to each of the named class representative plaintiffs who brought the litigation.
• Pay the total cost for administering the settlement.
• Pay attorneys’ fees and costs. (The court approved $8 million in legal fees and $353,712.32 in total costs, according to the final order and judgment.)
• Stop collecting dues charges for monthly dues after the company receives a request for cancellation or termination of a monthly membership.

The settlement’s benefits are for those members who were charged dues between Oct. 2, 2002, and Feb. 28, 2010, for a monthly membership at 24 Hour on or after the day 24 Hour received a notice of cancellation for the membership.

Those excluded from this settlement class include former and current members of the settlement class in the case of Weir vs. 24 Hour Fitness USA.