Fishon v. Peloton Interactive, Inc.

Background

Eric Fishon, Alicia Pearlman, and Patrick Yang sued Peloton Interactive, Inc. individually and on behalf of a proposed class. They alleged that they bought Peloton products based on Peloton’s representations that its on-demand fitness library was “ever-growing,” but that approximately 57% of the library was later removed. They asserted claims under Sections 349 and 350 of the New York General Business Law.

Peloton sought permission to take short, remote depositions of 21 unnamed proposed class members. Those individuals were among more than 2,700 consumers who had previously filed arbitration demands against Peloton asserting similar claims. The 21 individuals had been represented in arbitration by the same law firm that represented the named plaintiffs in this case. After the American Arbitration Association declined to administer the disputes because Peloton had not paid administrative fees, the law firm contacted its clients about their options, including litigation against Peloton.

Peloton said the depositions were needed to support two arguments at the class-certification stage: that individual questions about causation and injury would outweigh common questions, and that the named plaintiffs’ claims were not typical of the proposed class. The plaintiffs argued that a common “price premium” theory could address causation and injury for the class as a whole.

Legal Standard

The court explained that discovery from unnamed proposed class members before a class-certification decision requires balancing the defendant’s right to develop its defense against the burden on people who are not yet parties to the case. The court adopted a standard requiring a strong showing that the discovery is not intended to harass anyone or alter class membership, is narrowly limited to plainly relevant subjects, and does not impose an undue burden considering the need for the information and whether similar information is available from a party.

The court also emphasized that proposed class members generally should not be forced to take affirmative steps merely to remain eligible for relief in an “opt-out” class action. At the same time, the Federal Rules of Civil Procedure do not categorically prohibit discovery from unnamed proposed class members, and defendants must be allowed to develop evidence relevant to class certification.

Court’s Analysis

The court found no evidence that Peloton sought the depositions to harass the individuals or change who could participate in the proposed class. It also found a reasonable basis for believing that the individuals could provide information relevant to class certification. Because they had previously asserted similar claims and had been represented by counsel, the court concluded that they were not complete strangers to the dispute.

The court determined that the proposed depositions were relevant to issues including typicality, commonality, and predominance. The named plaintiffs had all bought the most expensive Peloton hardware products, apparently directly from Peloton, during one month. The proposed class, however, included people who bought only digital subscriptions, bought hardware second-hand, paid different prices, or purchased products at different times when the size of Peloton’s library varied.

The court did not decide whether those differences would ultimately prevent class certification. It held only that the testimony was plainly relevant to Peloton’s defense at that stage and could not be obtained through other means. The court also stated that an individual deponent could seek to have a subpoena quashed or modified under Rule 45 if that person could show an undue burden based on individual circumstances.

Disposition

The court granted in part Peloton’s motion. It permitted Peloton to take 10 initial remote depositions of unnamed proposed class members on issues related to class certification, rather than the requested 21. If those depositions left important class-certification issues insufficiently covered, Peloton could move for permission to take additional depositions. Peloton had to pay the deposition costs, but not attorneys’ fees, and had to provide appropriate technology when necessary.

The order did not decide the merits of the New York consumer-protection claims or whether the proposed class would be certified. Judge Lewis J. Liman directed the Clerk of Court to terminate the motion.