A court in the Southern District of New York recently compelled arbitration in the putative class action Skillern et al v. Peloton Interactive, Inc. (No. 1:21-cv-06808), concluding that the defendant did not waive its ability to seek arbitration by defaulting in a prior unrelated arbitration proceeding.  The judge differentiated between this case and a series of other decisions where a movant had failed to pay arbitration fees in an earlier arbitration proceeding involving the same parties.  This case is another helpful precedent strongly favoring arbitration as an alternative dispute resolution process in lieu of class actions.

Peloton, a fitness and media company, included an arbitration and class action waiver clause in its terms of service for its subscription-based live and on-demand exercise classes.  Peloton originally specified arbitration would be held through the American Arbitration Association (“AAA”).  In 2019, Peloton was involved in separate, unrelated arbitration proceedings brought by over 2,700 individual consumers regarding deletion of videos.  Peloton failed to pay the required filing fees to the AAA, and a group of consumers subsequently filed a putative class action against Peloton.  The AAA told Peloton it would not accept any future arbitration matters involving Peloton.

Peloton then removed AAA from its terms of service, instead specifying that arbitration would be conducted through JAMS.  Three of the four named plaintiffs in this case agreed to these modified terms, while the fourth named plaintiff’s spouse agreed. 

The plaintiffs were later charged sales tax while living in states where Peloton subscription services allegedly are tax exempt, and Peloton allegedly did not fully reimburse plaintiffs for the sales tax charged.  Plaintiffs brought a putative class action alleging various breaches of contract and consumer protection laws.

The court granted Peloton’s motion to compel arbitration, distinguishing this case from other cases involving the failure to pay arbitration fees in earlier proceedings.  The judge noted “the key difference” was that in other cases, the parties were “left forever in limbo” since arbitration had begun, then failed due to non-payment of fees.  But arbitration had not yet occurred in this specific case.  Thus, Peloton’s default in unrelated prior arbitration proceedings could not provide a basis for concluding that Peloton waived its ability to arbitrate “completely distinct actions against completely different parties” in this case.  

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Photo of Andrew Soukup Andrew Soukup

Andrew Soukup is a co-chair of the firm’s Class Action Litigation Practice Group. Andrew specializes in representing heavily regulated businesses in class actions, multidistrict litigation, and other high-stakes disputes. Recognized for achieving “big wins in his class action practice,” Andrew has defeated a variety…

Andrew Soukup is a co-chair of the firm’s Class Action Litigation Practice Group. Andrew specializes in representing heavily regulated businesses in class actions, multidistrict litigation, and other high-stakes disputes. Recognized for achieving “big wins in his class action practice,” Andrew has defeated a variety of advertising, consumer protection, privacy, and product defect and safety claims ranging in exposure from millions to billions of dollars.

Andrew’s clients include those in the consumer products, life sciences, financial services, technology, automotive, and media and communications industries. He has helped his clients prevail in litigation in federal and state courts across the country against putative class representatives, government agencies, state attorneys general, and commercial entities.

With a long history of representing companies subject to extensive federal regulation and oversight, Andrew provides a unique ability to help courts understand the complex environment that governs clients’ businesses. Clients turn to Andrew because of his successful outcomes at all stages of litigation, his responsiveness and attention to their matters, his understanding of their businesses, and his creative strategies.

Andrew’s recent successes include:

  • Leading the successful defense of several of the world’s leading companies and brands from claims that they engaged in deceptive marketing or sold defective products, including claims brought under state consumer protection and unfair deceptive acts or practices statutes.
  • Delivering wins in multiple nationwide class actions on behalf of leading financial institutions related to fees, disclosures, and other banking practices, including the successful defense of numerous financial institutions accused of violating the Paycheck Protection Program’s implementing laws, which contributed to Covington’s recognition as a “Class Action Group of the Year.”
  • Helping one of the world’s largest seafood companies defeat ESG-related claims accusing the company of misrepresenting its environmental-friendly production practices.

Andrew has also obtained favorable outcomes for numerous clients in commercial and indemnification disputes raising contract, fraud, and other business tort claims. He helps companies navigate contractual and indemnification disputes with their business partners. And he advises companies on their arbitration agreements, and has helped numerous clients avoid multi-district and class-action litigation by successfully enforcing their arbitration agreements.

Watch: Andrew provides insights on class action litigation, as part of our Navigating Class Actions video series.

 
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