Until now, it has been an open question as to whether health club membership agreements in New Jersey are subject to the restrictions of the New Jersey Retail Installment Sale Act (RISA). That question has now been answered with an important victory for health clubs in New Jersey.
In Mellet v Aquasid, plaintiffs filed a class action alleging that RISA governs health club membership agreements. RISA includes restrictions on late fees and collection charges commonly found in membership agreements. Plaintiffs also claimed that the release of liability in the agreement was facially illegal.
Also included was a claim that the agreements violated the Health Club Services Act by not properly setting forth the monthly fees. On the basis of these allegations, plaintiffs asserted claims under TCCWNA and Consumer Fraud Act and sought millions of dollars in damages and fees on behalf of a class of over 18,000 members.
The trial court not only denied certification, but dismissed the entire case. On appeal, the appellate division affirmed the decision of the trial court in an unpublished decision. In specifically holding that RISA simply does not govern health club memberships, the court observed:
“The defendant argues plaintiffs were paying not to eventually own but rather to utilize the gym's facilities and equipment, and, thus, the RISA claim was properly dismissed. We agree.”
The appellate division also upheld the validity of the waiver provision and rejected the HCSA claims.
The plaintiff asked the New Jersey Supreme Court to hear the matter, seeking a reversal. On October 16, 2017, the Supreme Court declined to hear the case, leaving the appellate victory intact. In addition, the Court formally “published” the appellate decision, giving the decision formal status as precedent. The decision is expected to be of assistance to other health clubs in similar cases pending in New Jersey.