A tossed-out class action lawsuit against a New Jersey health club has established a critical precedent in the Garden State over whether membership contracts are subject to the New Jersey Retail Installment Sale Act (RISA). The October 2017 ruling—in favor of health club operators and the power of their membership agreements—was highlighted in a recent blog by Sean X. Kelly on IHRSA.org.
In February 2014, plaintiffs Robert Mellet and Betty Evans signed 20-month membership contracts at Future Fitness, Cherry Hill, New Jersey. Several months later, both plaintiffs wished to terminate their memberships and ceased monthly payments. According to state court documents, Mellet was charged $1,256 in dues as well as late and administrative fees; Evans was charged $198 for a declined payment and was continually charged her for monthly dues.
The plaintiffs promptly filed a lawsuit claiming Future Fitness' fee collections violated RISA along with the Consumer Fraud Act (CFA), Health Club Services Act (HCSA) and the Truth in Consumer Contract, Warranty, and Notice Act (TCCWNA). Additionally, they argued their claims represented at least 18,000 others dating back to April 2008.
In April 2016, Judge Anthony Pugliese of Camden County Superior Court ruled against the plaintiffs' request for class certification and granted the defendant's motion for summary judgment. Multiple appeals for Robert Mellet v. Aquasid, LLC were also rejected in 2017, according to the New Jersey Law Journal. On Oct. 16, 2017, the New Jersey Supreme Court also declined to hear the case and officially published a prior appellate decision, making the decision a precedent.
On appeal, the plaintiffs had claimed RISA includes health club contracts because the act's language states it applies to "services." However, appellate division judges Amy O’Connor, Mary Gibbons Whipple and Hany Mawla ruled this case did not fall under RISA's purview, which only applies to "a security agreement, chattel mortgage, conditional sales contract or other similar instrument, and any contract for the bailment or leasing of goods," according to the Journal, despite noting, "RISA is to be construed liberally in favor of the consumer."
The judges also decided health club contracts cannot be covered by RISA because they fail to fall within the definition of "other similar instruments."
“We fail to see how a health club membership agreement is similar to any of the enumerated instruments," Mawla wrote for the panel. "Health club members are not in the category of consumers RISA is designed to protect, because these contracts do not involve the sale of goods. For these reasons, we agree with the trial judge [that] RISA does not apply and affirm dismissal of that count of plaintiffs’ complaint."
In his blog, Kelly said the case inadvertently established a critical precedent in the state for health club operators.
"Until now, it has been an open question as to whether health club membership agreements in New Jersey are subject to the restrictions of the New Jersey Retail Installment Sale Act (RISA)," he wrote.