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 has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which…

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which were defeated through dispositive pre-trial motions.
Andrew is co-chair of the firm’s Class Action Litigation practice group.

Andrew has helped his clients achieve successful outcomes at all stages of litigation, including through trial and appeal. He has helped his clients prevail in litigation against putative class representatives, government agencies, and commercial entities. Representative victories include:

  • Delivered wins in multiple nationwide class actions on behalf of large financial companies related to fees, disclosures, and other banking practices, including the successful defense of numerous lenders accused of violating the Paycheck Protection Program’s implementing laws, which contributed to Covington’s recent recognition as a “Class Action Group Of The Year.”
  • Successfully defending several of the nation’s leading financial institutions in a wide variety of litigation and arbitration proceedings involving alleged violations of RICO, FCRA, TILA, TCPA, FCBA, ECOA, EFTA, FACTA, and state consumer protection and unfair and deceptive acts or practices statutes, as well as claims involving breach of contract, fraud, unjust enrichment, and other torts.
  • Successfully defended several of the nation’s leading companies and brands from claims that they deceptively marketed their products, including claims brought under state consumer protection and unfair deceptive acts or practices statutes.
  • Obtained favorable outcomes for numerous clients in commercial disputes raising contract, fraud, and other business tort claims.

Because many of Andrew’s clients are subject to extensive federal regulation and oversight, Andrew has significant experience successfully invoking federal preemption to defeat litigation.

Andrew also advises clients on their arbitration agreements. He has successfully helped numerous clients avoid multi-district class-action litigation by successfully enforcing the institutions’ arbitration agreements.

Clients praise Andrew for his personal attention to their matters, his responsiveness, and his creative strategies. Based on his “big wins in his class action practice,” Law360 named Mr. Soukup a “Class Action Rising Star.

Prior to practicing law, Andrew worked as a journalist.

Photo of Tomoaki Takaki Tomoaki Takaki

Tomo Takaki is an associate in the Los Angeles office, where his practice focuses on litigation, white collar criminal defense, and internal investigations.