Last week, Judge Liman allowed certain claims against Peloton to proceed based on allegations that Peloton lured customers with promises of an “ever-growing” library of classes that had in reality been cut in half in the preceding months.
Peloton argued that its Terms of Service shielded it from the claim, but Judge Liman disagreed:
Defendant argues that because Plaintiffs agreed to these terms when they subscribed to Peloton’s service, Defendant cannot be held liable for deceptive practices for conduct authorized by the terms. According to Defendant, even if the “ever-growing” statement was deceptive, the Terms of Service overcome the deception because Peloton reserved the right to remove content at any time. Nor can Defendant be held liable for its failure to disclose the purportedly inevitable class removals, for the same reason. Defendant points to a number of cases that it argues support the proposition that New York courts dismiss claims under the NYGBL where the defendant expressly disclosed its right to take the actions of which a plaintiff complains.
Defendant’s arguments are based on a non-sequitur. Peloton’s Terms of Service may have protected it from a breach of contract or similar claim for the removal of a particular class or group of classes. However, the Terms of Service do not relieve Peloton from a deceptive marketing claim based on the allegation that Peloton advertised its library as ever-growing while knowing that it would be diminishing or shrinking in size.
Judge Liman dismissed claims under New York’s consumer protection statutes brought by one of the plaintiffs (a Michigan resident) on the grounds that out-of-state customers could not avail themselves of the consumer protections intended for New York residents, but allowed these claims brought by New York residents to proceed.