Harper v. 24 Hour Fitness, Inc.
In the Court of Appeal of the State of California
22 October 2008
Cite as 2008 SOS 5820

Class Certification on Unfair Competition & False Advertising Held Proper

Harper and Salzwedel were members of 24 Hours Fitness Center. During their membership, they entered into prepaid, multi-year V.9.96 contracts.

The dispute arises as regards the terms of the renewal period. Harper, et al contend that the right to renew extended for three years, the same period as the term if their initial memberships while 24 Hours Fitness maintains the renewal clause provided for annual renewals only.

Upon expiration of their initial membership periods, 24 Hours Fitness refused to allow Harper et al to renew for a new-three year term at the guaranteed rate, permitting renewals at the specified rate for an annual term only.

Thus, Harper et al sued 24 Hours Fitness, Inc. Subsequently, they filed a third amended punitive class action complaint on behalf of themselves and others similarly situated. They alleged that 24 Hours Fitness’ contracts and sales techniques were deceptive and falsely implied that members who prepaid their dues for the entire contract term were entitled to keep their dues at the same rate if they renewed their membership when the initial term expired.

The complaint alleges causes of action for unfair competition and false advertising in violation of sections 17200 and 17500, unfair or deceptive practices under the Consumers Legal Remedies Act, breach of contract and common law fraud and deceit.

After Harper, et al files motion, the trial court granted limited class certification, allowing class treatment for Harper, et al’s UCL claims, but denying class certification as to their unconscionability claims.

This case is an appeal by Harper, et al contesting the trial court’s subsequent order decertifying a limited class that had previously been recognized for their unfair competition claims under Business and Professions Code. They are challenging the 24 Hours Fitness’ form contract used to enroll its members.

The Court of Appeal ruled in favor Harper, et al. saying that reversal of the trial court’s decision is warranted because the decertification order is largely predicated on its erroneous legal assumptions concerning the relief available in an individual action under sections 17200 and 17500.

The Court, in conclusion, ruled that because Proposition 64 modified unfair competition and false advertising laws by imposing new standing requirements limiting relief to named parties in an action absent class certification, trial court erred in decertifying class based on assumption that scope of relief available to plaintiffs in individual actions for unfair competition and false advertising afforded same scope of relief and restitution as a class action.

The Court said that although ongoing difficulty in properly identifying class members from defendants’ records could be considered as part of a properly conducted evaluation of superiority of proceeding by class action, the need to individually examine each potential class member’s individual contract with defendant did not demonstrate a lack of ascertainability or manageability or establish that common questions of fact or law did not predominate.