On February 25, 2015, the parties to a Telephone Consumer Protection Act (“TCPA”) class action lawsuit filed a proposed settlement agreement which may require health club operator Life Time Fitness (“LTF”) to pay up to $15 million in damages. The settlement comes just 3 months after the plaintiffs’ class action lawsuit was transferred to the federal courts and a consolidated class action complaint was filed. The settlement is a significant blow to LTF, as all named plaintiffs in the class action lawsuit are current or former members of LTF’s fitness centers.
TCPA Class Action Allegations against Life Time Fitness
According to the complaint, LTF retained a text message marketer that used computer software designed to “blast” text messages to thousands of telephone numbers simultaneously. The subject text messages promoted the goods and services of LTF. Surprisingly, the lead named plaintiff is a current member of LTF’s gyms, while the remaining four named plaintiffs are former members. According to the complaint, none of the plaintiffs provided the requisite prior express written consent to receive text messages.
Terms of $15 Million TCPA Class Action Settlement
Although the potential total value of the settlement payment to be made by LTF is $15 million, the terms of settlement are quite unique. Specifically, class members can opt to receive one of two possible “awards”: a cash award or a membership award. The cash award provides a one-time payment of $100, subject to certain pro rata adjustments articulated in the settlement agreement. The membership award provides either a three month Life Time Gold membership to a club of the settlement member’s choice or $250 in credit to be applied towards a new or renewed membership with LTF. Class representatives will receive $5,000 each, and LTF will pay attorneys’ fees in an undisclosed amount.
As we have previously reported, beginning October 16, 2013, the TCPA required businesses and marketers to obtain prior express written consent from consumers before sending certain text messages and engaging in other forms of telemarketing. The changes in the law also removed the “prior business relationship” exemption. The LTF settlement should serve to warn businesses and marketers of the importance of receiving prior express written consent from consumers before telemarketing to them.