A U.S. judge has said Peloton Interactive must face a proposed class action lawsuit accusing the bike and treadmill maker of misleading customers about the ever-growing size of its library of on-demand fitness classes.
The lawsuit stemmed from Peloton's March 2019 decision to purge more than half of its estimated 12,000 on-demand classes, after music publishers sued the New York-based company for streaming songs in its workout videos without proper licensing.
Peloton knew this could happen, but customers said Peloton kept charging full price for bicycles and monthly subscriptions that included copyrighted songs from artists like Adele, Beyonc Luke Bryan, Drake, Ariana Grande, Madonna, Justin Timberlake and Jay Z.
In a 40-page decision, U.S. District Judge Lewis Liman said customers in New York from April 2018 to March 2019 could try to prove they overpaid because Peloton was silent about the imminent removal of much of its digital library.
Liman said it was reasonable to infer from Peloton's claim of an ever-growing library that there would be value associated with the products that resulted in an increase in price when that value was not actually there. Peloton didn't respond immediately to requests for comment.
The plaintiffs' lawyers said they were pleased with Judge Liman's categoric denial of Peloton's latest dismissal motion and that they look forward to prosecuting their clients' and the other class members' claims through trial. Peloton settled a licensing lawsuit by the National Music Publishers' Association and 14 of its members in February 2020.
More recently, the 10 year-old company has struggled with waning demand, losing $757.1 million in the quarter ending March 31 as more people resumed pre-pandemic activities.
Peloton expects to report fiscal fourth-quarter and full-year results on August 25.
The case is Passman et al v Peloton Interactive IncPeloton Interactive Inc, U.S. District Court, Southern District of New York, No.