On November 9, 2020, the Southern District of New York largely denied a motion to dismiss filed by Peloton, which argued that two plaintiffs failed to state a claim for deceptive trade practices and false advertising under the New York General Business Laws. Among other issues, the case analyzed whether the term “ever-growing” constituted non-actionable puffery and whether statutory consumer protection claims can lie when an allegedly deceptive advertising campaign is arguably clarified by disclosures in a Terms of Service agreement.

• Plaintiffs Alicia Pearlman and Eric Fishon filed suit against Peloton Interactive, Inc. (“Peloton”), bringing claims under Sections 349 and 350 of the New York General Business Laws (“NYGBL”) for deceptive acts and practices and false advertising, respectively.
• Plaintiffs based their claims on Peloton’s representation that its on-demand and live-streamed fitness class library was “ever-growing” and alleged that they relied on this representation when purchasing a Peloton bike and treadmill. According to Plaintiffs, the “ever-growing” representation proved to be false when Peloton subsequently removed more than half of the fitness classes from its library following receipt of a cease-and-desist letter alleging music copyright infringement.
• Peloton argued that the claims should be dismissed because: (1) its Terms of Service to which Plaintiffs had agreed included a statement that it could remove specific classes at any time; (2) the “ever-growing” statement amounted to puffery; (3) “ever-growing” was not a false statement because Peloton continued to add new classes to the library; (4) Plaintiffs failed to allege that they saw the “ever-growing” advertisements prior to their purchases; and (5) Plaintiffs failed to sufficiently allege injury.
• The court rejected each of these arguments in turn, holding:
  • A statement in small print in a Terms of Service agreement that is separate from the allegedly misleading advertisement does not provide a defense against a claim for deceptive trade practices or false advertising because a customer is not expected to search for contradictory terms in a separate document;
  • “Ever-growing” is an objective, factual statement that can be verified and is thus not puffery;
  • “Ever-growing” was potentially misleading because the class library was not in fact always increasing in total size—and even if “ever-growing” instead meant “ever-changing,” “[w]here a representation is capable of two possible reasonable interpretations, the misleading one should not be rejected simply because there is an alternative, non-misleading interpretation”;
  • Plaintiffs do not need to allege that they saw misleading advertisements prior to purchase—their representations that they relied upon the false representations are sufficient; and
  • Access to a smaller number of classes than they believed they would have access to at the time of purchase constitutes a sufficient injury.
• While the court thus found that Plaintiffs had sufficiently stated claims under sections 349 and 350 of the NYGBL, the court dismissed the claims brought by Michigan Plaintiff Pearlman, concluding that she had not sufficiently alleged that her transaction took place in New York so as to bring it within the territorial limits of the NYGBL.
• Read the Southern District of New York’s order granting in part and denying in part Peloton’s motion to dismiss here.