When Equinox acquired its Yorkville Toronto club in 2012 Deputy Judge Paul J Martial concluded the fitness company also acquired quotcertain assetsquot of the preexisting facility including quotthe rights in and to the member agreementsquot Photo by Stuart Goldman

When Equinox acquired its Yorkville, Toronto, club in 2012, Deputy Judge Paul J. Martial concluded the fitness company also acquired "certain assets" of the pre-existing facility, including "the rights in and to the member agreements." (Photo by Stuart Goldman.)

Judge Orders Equinox to Pay Damages to Former Member Over Lifetime Contract Dispute

In a January 23 judgment, Deputy Judge Paul J. Martial determined that Equinox breached an inherited price-locked contract with one of its members in Yorkville, Toronto, Canada, where the fitness company opened a new club with new membership rates.

A Toronto, Canada, Small Claims Court judge has ordered Equinox Holdings Inc., New York, to pay nearly $13,000 in damages and fees to a local man who alleged the fitness company did not honor his lifetime membership contract.

On March 31, the fitness company’s attorneys dropped a pending appeal against Phil Downe, who was formerly a member at a Yorkville, Toronto, club acquired by Equinox. Downe told Club Industry that other longtime Yorkville club members are considering legal action against Equinox with similar allegations.

Downe was originally a member at Yorkville Fitness, where, in 2003, he said he signed a guaranteed lifetime contract at a rate of $69 per month. Downe told Club Industry he received the guarantee in writing from the club operators.

The club changed hands and became The Yorkville Club in 2004. It was then purchased by Equinox in 2012 and, after renovations, was re-established as Equinox Yorkville in February 2016.

Equinox representatives notified Downe that, due to the renovations, his monthly membership rate would increase to $120—a price that was said to be lower than the standard rate charged to most members.

Downe refused to pay the newly proposed rate, arguing that the club renovations did not justify the increase. In late 2015, an Equinox representative notified Downe that his membership would be terminated if he refused to pay the new rate. Downe then filed a lawsuit in claims court, where he elected to represent himself.

In a January 23 judgment, Deputy Judge Paul J. Martial concluded that the termination warning constituted a breach of agreement on the part of Equinox. Martial subsequently granted Downe $12,072.62 in damages and $740 in court fees.

Court documents note that Equinox's legal counsel acknowledged the company inherited “certain assets of The Yorkville Club ... which included the rights in and to the member agreements.”

Documents obtained by Club Industry indicate that Equinox was seeking to appeal Martial’s judgment in divisional court in Toronto. This appeal was abandoned as of March 31.

“[You must] make sure if you have any kind of price protection, that it’s clear and there’s no perverse incentives for club owners or potential new owners to cancel your contract,” Downe told Club Industry. “You have to make sure they can’t get out of it with a hidden clause, some way to circumvent so they can terminate.

“It’s the best gym in the area, and I can walk to it,” Downe said, noting he will not be returning to the club after the judgment. “The money's not going to make me happy. Getting back to the gym at my $69 rate is all I wanted.”

Equinox was unavailable for comment.

Equinox currently operates 86 health clubs in the United States, Canada and the United Kingdom. The company ranked No. 5 on Club Industry's 2016 Top 100 Clubs list with an estimated 2015 revenue of $1.07 billion.

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