Simpson v. Peloton Interactive, Inc.

Background

Brody Simpson purchased a Peloton bike and accessory package for $2,454.00 and a 39-month prepaid subscription to Peloton’s fitness service for $1,521.00. When he made the purchases and first accessed the service, he agreed to Peloton’s Terms of Service, which included a binding individual-arbitration clause governed by the Federal Arbitration Act (FAA).

Peloton had advertised its library of live and on-demand classes as “ever-growing.” On March 25, 2019, Peloton removed approximately 53.6% of its classes after litigation alleged that Peloton lacked appropriate copyright licenses for music used in those classes. Simpson then filed an arbitration demand under the Kansas Consumer Protection Act. He alleged that Peloton misrepresented the size of its library and should have known it lacked required music licenses for more than half of its classes.

Arbitration Award

After a hearing, the arbitrator issued an interim award finding that Simpson had been promised an “ever-growing” library and that Peloton failed to deliver it. The arbitrator later issued a final award ordering Peloton to pay Simpson $253.50 in damages, $96,597.00 in attorneys’ fees, and $7,917.82 in costs. Peloton paid the award in full before Simpson filed this federal petition, and Peloton did not oppose confirmation.

Court’s Analysis

The court first considered whether a live legal dispute still existed because Peloton had already paid the award. It held that the Federal Arbitration Act allows a party to seek confirmation of an award and that an ongoing case or controversy exists until the court enters a confirmation order. Prior payment therefore did not prevent the court from exercising jurisdiction or confirming the award.

Under the FAA, a court must confirm an arbitration award when the parties agreed to court judgment and no statutory ground for vacating, modifying, or correcting the award applies. In an unopposed confirmation proceeding, courts evaluate the request in a manner similar to an unopposed motion for summary judgment. Judicial review is highly deferential: the award need only have a minimally supportable justification, and the court may vacate it only on specified statutory grounds or, more rarely, for disregard of the law.

The court found no timing problem or applicable statutory exception. It also found that the arbitrator’s final award was well reasoned and supported by more than the required justification. Because the award stated specific amounts, the court did not need to conduct a further damages inquiry.

Disposition

Judge Valerie Caproni granted Simpson’s petition to confirm the arbitration award. The court confirmed $253.50 in damages, $96,597.00 in attorneys’ fees, and $7,917.82 in costs; directed the Clerk of Court to enter judgment for those amounts; terminated the open motions; and closed the case.