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7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 WALTER HODGES, on Behalf of CASE NO. 20cv1158-LAB-AHG 11 Himself and on Behalf of All Others 12 Similarly Situated, ORDER:
13 Plaintiff, 1) GRANTING DEFENDANTS’ 14 vs. EX PARTE MOTION FOR LEAVE TO FILE REPLY 15 AMERICAN SPECIALTY HEALTH [Dkt. 37]; 16 INCORPORATED and AMERICAN 2) DISMISSING FIRST SPECIALTY HEALTH FITNESS, AMENDED COMPLAINT 17 INC. WITHOUT PREJUDICE; 18 Defendants. and 3) DENYING MOTION TO 19 DISMISS AS MOOT 20 [Dkt. 25] 21 Plaintiff Walter Hodges brought this action and behalf of himself and two 22 putative classes against Defendants American Specialty Health Inc. and 23 American Specialty Health Fitness, Inc. Hodges’ First Amended Complaint 24 (“FAC”) alleges that Defendants act as a middleman between their customers 25 and fitness clubs, charging a monthly fee in exchange for basic membership 26 access to fitness clubs that are part of Defendants’ network but owned and 27 operated by third parties. Hodges alleges that Defendants continued to charge 1 the COVID-19 pandemic prevented members from accessing the fitness 2 clubs. Based on these allegations, Hodges seeks to represent two putative 3 classes of Defendants’ customers who were allegedly charged membership 4 fees while under government orders directing them not to use fitness clubs. 5 But Hodges doesn’t plausibly allege facts under which his proposed 6 national and Texas classes are sufficiently homogeneous. Different states in 7 the nation, and different counties in Texas, permitted different levels of gym 8 access, so it’s not plausible (without more facts than the FAC alleges) that 9 every member of either class had no access to Defendants’ gym network. 10 Because Hodges hasn’t persuaded the Court that the FAC plausibly alleges 11 facts under which “there are questions of law or fact common to the class,” the 12 FAC is DISMISSED WITHOUT PREJUDICE. Defendants’ Ex Parte Motion for 13 Leave to File a Reply to Plaintiff’s Response to the Order to Show Cause and 14 Opposition to Request for Judicial Notice is GRANTED. (Dkt. 37). The motion 15 to dismiss the FAC under Fed. R. 12(b)(6) is DENIED AS MOOT. (Dkt. 25). 16 BACKGROUND 17 Hodges is a resident of Bexar County, Texas. (Dkt. 22 ¶ 13.) In or before 18 2019, he agreed to pay Defendants a monthly fee in exchange for access to 19 their nationwide network of over 9,000 fitness centers. (Id. ¶¶ 1, 13). But in 20 March 2020, the COVID-19 pandemic hit, leading many state and local 21 governments to issue orders restricting gym access. (See id. ¶ 13.) Some 22 required that some or all gyms in their jurisdiction close; some recommended 23 that they close; some reduced their permissible capacity; and some directed 24 residents to remain at home except for essential activities, a category that 25 typically didn’t include going to the gym. (See Dkt. 36-5.) In Bexar County, the 26 local government ordered residents to stay at home and fitness centers to 27 close. (Dkt. 22 ¶ 13, 41.) Hodges couldn’t access a gym in Bexar County, nor 1 id. ¶ 41); Bexar County, Texas, Executive Order NW-03, March 23, 2020 2 (available at https://www.bexar.org/DocumentCenter/View/26253). But 3 Defendants continued charging Hodges a monthly membership fee. (Dkt. 22 4 ¶¶ 44–45.) Hodges brought this action, asserting ten claims. Central to these 5 claims are the allegations that Defendants breached: 1) a duty to stop 6 charging Hodges while he didn’t have access to gyms in Defendants’ network; 7 and 2) a duty to inform Hodges that they had a policy of continuing to charge 8 customers when all gyms in the network were closed. 9 Hodges seeks to bring these claims on behalf of two classes, relying on 10 the class form to invoke the Court’s subject matter jurisdiction under the Class 11 Action Fairness Act (“CAFA”). The putative classes are defined as: 12 1) The “National Class”: “All individuals in the United States who were 13 charged a membership fee by Defendants at any time when they 14 were under a ‘stay at home,’ ‘shelter in place’ or similar order due to 15 the COVID-19 pandemic and not provided [a] refund. Excluded from 16 this Class are Defendants’ officers and directors.” (Dkt. 22 ¶ 134.) 17 2) The “Texas Class”: “All residents of Texas who were charged a 18 membership fee by Defendants at any time when they were under a 19 ‘stay at home,’ ‘shelter in place’ or similar order due to the COVID-19 20 pandemic and not provided [a] refund. Excluded from this Class are 21 Defendants’ officers and directors.” (Id.) 22 The Court ordered Hodges to show cause why his complaint shouldn’t 23 be dismissed for lack of jurisdiction. (Dkt. 35, the “OSC”.) In its OSC, the Court 24 directed Hodges to confirm that his proposed nationwide classes presented 25 “questions of law or fact common to the class” as required by Fed. R. Civ. P. 26 23(b). (Dkt. 35.) 27 The OSC reasoned that the core question in this case is whether 1 asked, for any customer under a “stay at home” order or similar order, on the 2 ground that such customers “did not have access to any fitness center” while 3 such orders were in place. (See Dkt. 22 ¶ 13.) As the Court pointed out, those 4 orders “were far from uniform and included plenty of exceptions, so some 5 would cut off gym access and some wouldn’t.” (Dkt. 35 at 3.) The resulting 6 dissimilarities in level of gym access would “impede the generation of common 7 answers,” making the alleged classes nonviable. Wal-Mart Stores, 564 U.S. 8 at 350. 9 DISCUSSION 10 A plaintiff asking a federal court to hear a case “must plausibly allege all 11 jurisdictional elements.” Brownback v. King, 141 S. Ct. 740, 749 (2014). Here, 12 jurisdiction depends on the application of the Class Action Fairness Act, which 13 permits the Court to preside over certain class actions, so Hodges must 14 plausibly allege facts, which, accepted as true, would establish that the 15 proposed classes satisfy the requirements of Fed. R. Civ. P. 23. 16 To establish the commonality required to maintain a class, a plaintiff 17 must identify common questions that are likely to “generate common answers 18 apt to drive the resolution of the litigation.” Wal-Mart Stores, Inc. v. Dukes, 564 19 U.S. 338, 350 (2011). “Any competently crafted class complaint literally raises 20 common questions.” Id. at 349 (quoting Nagareda, Class Certification in the 21 Age of Aggregate Proof, 84 N.Y.U.L.Rev. 97, 131–32 (2009)). Satisfying the 22 commonality element requires more: a plaintiff must “demonstrate that the 23 class members have suffered the same injury.” Id. at 349–50 (cleaned up). 24 “What matters to class certification . . . is not the raising of common 25 ‘questions’—even in droves—but rather, the capacity of a class-wide 26 proceeding to generate common answers apt to drive the resolution of the 27 litigation. Dissimilarities within the proposed class are what have the potential 1 supra, at 132. 2 As a result, a putative class fails to satisfy the commonality requirement 3 where some of its members are uninjured, either because they were 4 unaffected or because Defendants didn’t breach a duty to them. See In re Rail 5 Freight Surcharge Antitrust Litig., 934 F.3d 619, 623–24 (D.C. Cir. 2019) 6 (where alleged antitrust conduct led 12.7% of class members to suffer 7 “negative overcharges,” putative class lacked common injury); Fjeld v. Penske 8 Logistics, LLC, Case No. CV 12-3500-GHK (JCGx), 2013 WL 8360535 at *5 9 (C.D. Cal. Aug.
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7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 WALTER HODGES, on Behalf of CASE NO. 20cv1158-LAB-AHG 11 Himself and on Behalf of All Others 12 Similarly Situated, ORDER:
13 Plaintiff, 1) GRANTING DEFENDANTS’ 14 vs. EX PARTE MOTION FOR LEAVE TO FILE REPLY 15 AMERICAN SPECIALTY HEALTH [Dkt. 37]; 16 INCORPORATED and AMERICAN 2) DISMISSING FIRST SPECIALTY HEALTH FITNESS, AMENDED COMPLAINT 17 INC. WITHOUT PREJUDICE; 18 Defendants. and 3) DENYING MOTION TO 19 DISMISS AS MOOT 20 [Dkt. 25] 21 Plaintiff Walter Hodges brought this action and behalf of himself and two 22 putative classes against Defendants American Specialty Health Inc. and 23 American Specialty Health Fitness, Inc. Hodges’ First Amended Complaint 24 (“FAC”) alleges that Defendants act as a middleman between their customers 25 and fitness clubs, charging a monthly fee in exchange for basic membership 26 access to fitness clubs that are part of Defendants’ network but owned and 27 operated by third parties. Hodges alleges that Defendants continued to charge 1 the COVID-19 pandemic prevented members from accessing the fitness 2 clubs. Based on these allegations, Hodges seeks to represent two putative 3 classes of Defendants’ customers who were allegedly charged membership 4 fees while under government orders directing them not to use fitness clubs. 5 But Hodges doesn’t plausibly allege facts under which his proposed 6 national and Texas classes are sufficiently homogeneous. Different states in 7 the nation, and different counties in Texas, permitted different levels of gym 8 access, so it’s not plausible (without more facts than the FAC alleges) that 9 every member of either class had no access to Defendants’ gym network. 10 Because Hodges hasn’t persuaded the Court that the FAC plausibly alleges 11 facts under which “there are questions of law or fact common to the class,” the 12 FAC is DISMISSED WITHOUT PREJUDICE. Defendants’ Ex Parte Motion for 13 Leave to File a Reply to Plaintiff’s Response to the Order to Show Cause and 14 Opposition to Request for Judicial Notice is GRANTED. (Dkt. 37). The motion 15 to dismiss the FAC under Fed. R. 12(b)(6) is DENIED AS MOOT. (Dkt. 25). 16 BACKGROUND 17 Hodges is a resident of Bexar County, Texas. (Dkt. 22 ¶ 13.) In or before 18 2019, he agreed to pay Defendants a monthly fee in exchange for access to 19 their nationwide network of over 9,000 fitness centers. (Id. ¶¶ 1, 13). But in 20 March 2020, the COVID-19 pandemic hit, leading many state and local 21 governments to issue orders restricting gym access. (See id. ¶ 13.) Some 22 required that some or all gyms in their jurisdiction close; some recommended 23 that they close; some reduced their permissible capacity; and some directed 24 residents to remain at home except for essential activities, a category that 25 typically didn’t include going to the gym. (See Dkt. 36-5.) In Bexar County, the 26 local government ordered residents to stay at home and fitness centers to 27 close. (Dkt. 22 ¶ 13, 41.) Hodges couldn’t access a gym in Bexar County, nor 1 id. ¶ 41); Bexar County, Texas, Executive Order NW-03, March 23, 2020 2 (available at https://www.bexar.org/DocumentCenter/View/26253). But 3 Defendants continued charging Hodges a monthly membership fee. (Dkt. 22 4 ¶¶ 44–45.) Hodges brought this action, asserting ten claims. Central to these 5 claims are the allegations that Defendants breached: 1) a duty to stop 6 charging Hodges while he didn’t have access to gyms in Defendants’ network; 7 and 2) a duty to inform Hodges that they had a policy of continuing to charge 8 customers when all gyms in the network were closed. 9 Hodges seeks to bring these claims on behalf of two classes, relying on 10 the class form to invoke the Court’s subject matter jurisdiction under the Class 11 Action Fairness Act (“CAFA”). The putative classes are defined as: 12 1) The “National Class”: “All individuals in the United States who were 13 charged a membership fee by Defendants at any time when they 14 were under a ‘stay at home,’ ‘shelter in place’ or similar order due to 15 the COVID-19 pandemic and not provided [a] refund. Excluded from 16 this Class are Defendants’ officers and directors.” (Dkt. 22 ¶ 134.) 17 2) The “Texas Class”: “All residents of Texas who were charged a 18 membership fee by Defendants at any time when they were under a 19 ‘stay at home,’ ‘shelter in place’ or similar order due to the COVID-19 20 pandemic and not provided [a] refund. Excluded from this Class are 21 Defendants’ officers and directors.” (Id.) 22 The Court ordered Hodges to show cause why his complaint shouldn’t 23 be dismissed for lack of jurisdiction. (Dkt. 35, the “OSC”.) In its OSC, the Court 24 directed Hodges to confirm that his proposed nationwide classes presented 25 “questions of law or fact common to the class” as required by Fed. R. Civ. P. 26 23(b). (Dkt. 35.) 27 The OSC reasoned that the core question in this case is whether 1 asked, for any customer under a “stay at home” order or similar order, on the 2 ground that such customers “did not have access to any fitness center” while 3 such orders were in place. (See Dkt. 22 ¶ 13.) As the Court pointed out, those 4 orders “were far from uniform and included plenty of exceptions, so some 5 would cut off gym access and some wouldn’t.” (Dkt. 35 at 3.) The resulting 6 dissimilarities in level of gym access would “impede the generation of common 7 answers,” making the alleged classes nonviable. Wal-Mart Stores, 564 U.S. 8 at 350. 9 DISCUSSION 10 A plaintiff asking a federal court to hear a case “must plausibly allege all 11 jurisdictional elements.” Brownback v. King, 141 S. Ct. 740, 749 (2014). Here, 12 jurisdiction depends on the application of the Class Action Fairness Act, which 13 permits the Court to preside over certain class actions, so Hodges must 14 plausibly allege facts, which, accepted as true, would establish that the 15 proposed classes satisfy the requirements of Fed. R. Civ. P. 23. 16 To establish the commonality required to maintain a class, a plaintiff 17 must identify common questions that are likely to “generate common answers 18 apt to drive the resolution of the litigation.” Wal-Mart Stores, Inc. v. Dukes, 564 19 U.S. 338, 350 (2011). “Any competently crafted class complaint literally raises 20 common questions.” Id. at 349 (quoting Nagareda, Class Certification in the 21 Age of Aggregate Proof, 84 N.Y.U.L.Rev. 97, 131–32 (2009)). Satisfying the 22 commonality element requires more: a plaintiff must “demonstrate that the 23 class members have suffered the same injury.” Id. at 349–50 (cleaned up). 24 “What matters to class certification . . . is not the raising of common 25 ‘questions’—even in droves—but rather, the capacity of a class-wide 26 proceeding to generate common answers apt to drive the resolution of the 27 litigation. Dissimilarities within the proposed class are what have the potential 1 supra, at 132. 2 As a result, a putative class fails to satisfy the commonality requirement 3 where some of its members are uninjured, either because they were 4 unaffected or because Defendants didn’t breach a duty to them. See In re Rail 5 Freight Surcharge Antitrust Litig., 934 F.3d 619, 623–24 (D.C. Cir. 2019) 6 (where alleged antitrust conduct led 12.7% of class members to suffer 7 “negative overcharges,” putative class lacked common injury); Fjeld v. Penske 8 Logistics, LLC, Case No. CV 12-3500-GHK (JCGx), 2013 WL 8360535 at *5 9 (C.D. Cal. Aug. 9, 2013) (whether class members were provided meal and rest 10 breaks owed only to employees didn’t fulfill commonality requirement absent 11 common answers as to misclassification of class members as independent 12 contractors); Wong v. AT&T Mobility Svcs. LLC, Case No. CV 10-8869- 13 GW(FMQx) at *5–6 (C.D. Cal. Oct. 20, 2011) (same). 14 Hodges, then, must allege facts plausibly supporting the inference that 15 all members of his proposed classes suffered the same injury. He identifies 16 six common questions purportedly raised by his pleading: 1) whether all gyms 17 in Defendants’ network were closed from April 3, 2020 to April 23, 2020; 2) 18 whether Defendants charged the full fee to putative class members from April 19 3, 2020 to April 23, 2020; 3) whether it is a breach of Defendants’ agreement 20 to charge putative class members when all gyms in Defendants’ network are 21 closed; 4) whether Defendants had a policy of charging membership fees even 22 if all gyms in their network were closed; 5) whether Defendants failed to inform 23 class members that they would be charged even when the gyms in their 24 network were closed; and 6) whether Defendants’ representations were likely 25 to deceive the average consumer.1 But the FAC’s factual allegations don’t 26 1 The FAC doesn’t raise any question specific to the period from April 3, 2020 27 to April 23, 2020—if Hodges intends to narrow the class period shore up his 1 raise any of these questions: it doesn’t plausibly allege that all gyms in the 2 Defendants’ network were closed, and each of the other five questions 3 proceeds on the assumption that that unalleged fact is true. And without 4 sufficient allegations that all in-network gyms were closed, the class members 5 aren’t alleged to have suffered a common injury. 6 Hodges bases the allegation that all gyms in the Defendants’ network 7 were closed on a patchwork of state and local “stay at home” orders. But 8 statewide orders in at least five states, including Texas, didn’t apply to all 9 fitness centers or were non-mandatory. (See Dkt. 36-5 at 13, 237, 271, 309, 10 315).2 And although many fitness centers closed during the pandemic without 11 being ordered to, Hodges doesn’t offer any allegation supporting the inference 12 that the voluntary and mandatory closures together shuttered all gyms in 13 Defendants’ network in Texas or the United States. 14 This dissimilarity—that some members of the class lost access to 15 Defendants’ network, but there’s no plausible allegation that all of them did— 16 robs the putative class-wide proceeding of any capacity to “generate common 17 answers apt to drive the resolution of the litigation.” Hodges alleges nothing to 18 suggest that Defendants owed any duty to stop charging customers who still 19 had access to fitness centers. The FAC fails to plausibly allege that these 20 customers suffered the same injury as customers who were under more 21 stringent restrictions, so it doesn’t satisfy the jurisdictional pleading 22 requirement for its claims based on Defendants’ alleged failure to stop 23
24 2 The Court grants Hodges’ unopposed request to take judicial notice of the state “stay at home” orders compiled in Exhibit B to his response to the Order 25 to Show Cause. The other documents that Hodges asks the Court to take 26 judicial notice of aren’t relevant to the Court’s conclusion or are duplicative of allegations that the Court accepts as true at this stage, so judicial notice isn’t 27 necessary. (See, e.g., Dkt. 22 ¶¶ 29–32 (alleging that various fitness center 1 charging class members during the pandemic. 2 The remaining three questions that Hodges offers relate to alleged 3 misrepresentations or omissions regarding Defendants’ alleged policy of 4 continuing to charge customers when all gyms in their network were closed. 5 But again, each of these questions proceeds from a factual premise that the 6 FAC doesn’t plausibly allege. And because a class member who enjoyed 7 continuous access to in-network gyms wouldn’t have suffered any injury from 8 the alleged misrepresentation, the class didn’t suffer a common injury in 9 connection with Hodges’ misrepresentation theories, either. 10 CONCLUSION 11 The FAC’s broad and amorphous proposed classes can’t be sustained 12 on the factual allegations and judicially noticeable facts before the Court. 13 Defendants allegedly owed each class member a duty to stop monthly 14 charges for gym access, a duty allegedly triggered by class members’ lack of 15 such access. Class members were also allegedly harmed by a policy of 16 continuing to charge them when they didn’t have any gym access. But the 17 FAC doesn’t provide factual allegations sufficient to support the conclusion 18 that all class members lost gym access, so it doesn’t allege that they suffered 19 a common injury. Without tailoring his class definition to fit the facts alleged, 20 Hodges doesn’t allege a plausible class to support CAFA jurisdiction. And 21 because “stay at home” orders in different states and within Texas subjected 22 the 9,000 gyms in Defendants’ network to widely varying restrictions, the Court 23 finds that the request for jurisdictional discovery is “based on little more than 24 a hunch” that it would yield facts sufficient to plausibly support the present 25 class definitions. Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008). 26 That request is DENIED. The FAC is DISMISSED WITHOUT PREJUDICE for 27 lack of subject matter jurisdiction. Hodges may file an amended complaint 1 || correcting the deficiencies identified by this order on or before October 28, 2 || 2021. 3 IT IS SO ORDERED. 4 || Dated: September 30, 2021 enuf A ( Zn 5 Hon. LARRY ALAN BURNS 6 United States District Judge
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