Fishon v. Peloton Interactive, Inc.

Background

Peloton sells stationary bicycles and treadmills that provide access to live and on-demand fitness classes through a separate monthly subscription. Its advertising described the class library as “ever-growing.” After receiving a cease-and-desist letter from the National Music Publishers Association and facing a lawsuit alleging unauthorized use of copyrighted music, Peloton removed approximately 5,739 classes—nearly 57% of the available library—from its on-demand collection.

Eric Fishon and other plaintiffs alleged that Peloton’s “ever-growing” description was deceptive and misleading. They alleged that they purchased Peloton products and subscriptions in reliance on that representation, and that the removal of classes and music diminished the value of the subscription. They also alleged that Peloton knew it was using music without the necessary rights and should have disclosed the likely removals earlier. The claims arose under Sections 349 and 350 of the New York General Business Law, which address deceptive business practices and false advertising.

Peloton moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not adequately state a legal claim. Peloton argued that its Terms of Service allowed it to remove content, that “ever-growing” was non-actionable puffery, that the statement was not misleading, and that the plaintiffs had not adequately alleged causation, injury, or a sufficient connection to New York. Peloton also argued that Patrick Yang lacked constitutional standing, but Yang voluntarily dismissed his claims without prejudice while the motion was pending.

Court’s Analysis

Terms of Service. The Terms of Service reserved Peloton’s right to add, modify, or remove content and stated that particular content was not guaranteed to remain available. The court held that these provisions did not defeat the deceptive-marketing claims at the pleading stage. The terms addressed whether particular classes could remain available, but did not disclose that Peloton might remove more than half of its library without replacing those classes with enough new content. The court also noted that the removal language appeared in later fine print rather than prominently alongside the “ever-growing” advertising.

Puffery. The court rejected Peloton’s argument that “ever-growing” was puffery. Puffery consists of vague or exaggerated statements that cannot be proved true or false. The court held that “ever-growing” was an objective, measurable, and testable representation because consumers could understand it to mean that the library would increase in size. The library either grew or shrank, so the statement was not puffery as a matter of law.

Deception and causation. The court held that the complaint plausibly alleged that a reasonable consumer could be misled. It reasoned that a consumer could understand “ever-growing” to mean that the overall library would continually increase, rather than merely that Peloton would keep adding new classes while removing a larger number of existing ones. Whether the statement was actually misleading was not appropriate for resolution on a motion to dismiss.

The court also rejected Peloton’s argument that the plaintiffs had to specifically allege that they saw the advertisement. The complaint reproduced an example of the advertising and alleged that the plaintiffs relied on the “ever-growing” representation when purchasing Peloton products and subscriptions. The court held that these allegations were sufficient to support an inference of causation at this stage. It further stated that reliance is not an element of a private claim under either Section 349 or Section 350, although the plaintiffs still had to allege that they were injured because of the deceptive practice.

Injury. The plaintiffs alleged that they valued Peloton’s promise about the nature of the digital library and would not have purchased the products or subscriptions, or would not have purchased them on the same terms, had they known the truth. The court held that this was enough at the pleading stage. The alleged injury was that the plaintiffs received access to a smaller number of classes than they reasonably believed they would receive when they purchased the products. The court acknowledged that the plaintiffs might face proof-related challenges later, but concluded that they had alleged enough to allow discovery to proceed.

Pearlman’s New York statutory standing. Peloton argued that Alicia Pearlman, whom the opinion identifies as a Michigan resident, had not alleged a sufficient connection between her transaction and New York. The court explained that New York’s consumer-protection statutes generally apply to transactions occurring in New York, not merely to deceptive conduct originating there or transactions involving a New York-based company.

Pearlman alleged that Peloton’s principal place of business was in New York and that the Terms of Service selected New York law and a New York forum and required notices to be sent to Peloton’s New York offices. The court held that those facts, by themselves, did not support an inference that Pearlman’s purchase occurred in New York. Pearlman did not allege that she purchased the product in New York, paid through an electronic or credit-card transaction accepted only in New York, or even identify the specific product she purchased. The court therefore dismissed her claims under Sections 349 and 350.

Disposition

The court granted Peloton’s motion to dismiss with respect to Alicia Pearlman and denied the motion with respect to Eric Fishon. The Clerk of Court was directed to close the motion docket entry. The opinion does not state that Fishon’s claims were finally resolved on the merits; it addresses only whether the complaint could proceed past the dismissal stage.