LA Fitness says it will honor most of the benefits that will be issued in a settlement from a class-action lawsuit filed by members of Urban Active, which LA Fitness acquired last month.
The lawsuit, David and Laurie Seeger, et al. v. Global Fitness Holdings LLC (dba Urban Active), was filed in Boone Circuit Court, Boone County, KY, regarding potential errors and misrepresentations with respect to Urban Active membership contracts. The settlement agreement was signed on May 31, 2012. The court is scheduled to hold a hearing to approve the settlement on Nov. 30.
The plaintiffs’ allegations against Urban Active relate to its membership contract, tanning services agreement, child care services agreement and personal training contracts. The allegations include forgery, fraud, breach of contract, concealment and non-disclosure, and violations of the Kentucky Consumer Protection Act. Plaintiffs allege that Urban Active improperly charged members’ credit or debit cards or bank accounts after they had canceled their contracts.
Plaintiffs include anyone who purchased one of the agreements from Urban Active at any time between Nov. 1, 2007, and June 22, 2012. Urban Active, Lexington, KY, had denied any wrongdoing or liability to the plaintiffs.
The settlement benefits, according to the Lexington (KY) Herald-Leader, are a free 30-day membership, a free month of child-care service, three free tanning sessions and a free group personal training session for members who had those respective contracts with Urban Active.
LA Fitness tells Club Industry that its deal to acquire Urban Active was an asset purchase and that Urban Active is solely responsible for any lawsuits against them prior to the acquisition. (Similar class-action lawsuits were filed against Urban Active last year in Ohio.) However, all but the tanning services will be honored in the settlement agreement in this case, according to the Irvine, CA-based company. Louisville, KY, TV station WAVE reported that tanning will no longer be offered in the city’s three former Urban Active clubs.
“While we were not a party to the class-action suit in Kentucky and have not assumed any of the related liabilities, we did agree to honor certain 30-day passes, group fitness vouchers and babysitting services vouchers that Urban Active may be issuing in settlement of that suit,” Jill Grueling, executive vice president of operations at LA Fitness, said in an email to Club Industry.
LA Fitness finalized its acquisition of all 36 Urban Active clubs on Oct. 25 in Ohio, Kentucky, Tennessee, Georgia, Nebraska, North Carolina and Pennsylvania. The company closed one Urban Active club in Mason, OH.
LA Fitness and Urban Active members who had multi-club membership plans in certain areas of the country will now have access to more clubs without an increase to their membership rate, says Grueling, who adds that LA Fitness is working on increasing the number of group fitness classes being offered in markets such as Nashville, TN, Lexington and Northern Kentucky.
Grueling confirmed to Club Industry that LA Fitness and Urban Active were in active discussions for “several months” regarding the deal.
“The deal had to be right for everyone—this one was,” says Grueling.
A spokesperson for Urban Active said that CEO Royce Pulliam is not conducting interviews at this time. However, when the deal was announced in September, Pulliam told Lexington TV station WKYT that Urban Active had had discussions with LA Fitness about a possible sale for the past several years and that the timing was right, calling the sale a bittersweet moment.
With the acquisition now final, LA Fitness has 551 clubs.