Grabianski et al v. Bally Total Fitness Holding Corporation et al

Filing 75

Enter MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 9/11/2012: Mailed notice (jdh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JENNIFER GRABIANSKI and JACK
STAPLETON, on behalf of themselves
and others similarly situated,
Plaintiffs,
v.
BALLY TOTAL FITNESS HOLDING CORP.,
and L.A. FITNESS INTERNATIONAL, LLC
Defendants.

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No. 12 C 284

MEMORANDUM OPINION AND ORDER
Plaintiffs Jennifer Grabianski (“Grabianski”) and Jack
Stapleton (“Stapleton”) brought this putative class-action law
suit against Bally Total Fitness Holding Corp. (“Bally”) and L.A.
Fitness International, LLC (“L.A. Fitness”).
holders of lifetime memberships at Bally.

Plaintiffs were

They allege that

following the acquisition of certain Bally clubs by L.A. Fitness,
their lifetime contracts were wrongfully terminated.
defendant brought motions to dismiss.

Each

For the reasons provided,

the motions are granted, but Plaintiffs are given leave to
replead their complaint within 30 days of the date of this order.
I.
The Plaintiffs’ complaint sets forth the following
allegations.

On Nov. 30, 2011, L.A. Fitness acquired 171 clubs

from Bally, located in several states.

Following the

acquisition, Plaintiffs contend that L.A. Fitness “acquired or

otherwise assumed responsibility for” Bally lifetime membership
agreements.

Compl., ¶ 2.

Defendants have either terminated

those contracts or breached them.
Grabianski and Stapleton are both residents of Illinois who
had contracts with Bally.

The contracts at issue were originally

sold decades ago, before most states began to prohibit health
clubs from selling lifetime memberships.1

Bally was one of the

largest owners of health clubs in the United States, but filed
bankruptcy at the end of the last decade.

After emerging from

bankruptcy in 2009, Bally downsized, including by entering into
an Asset Purchase Agreement (“APA”) with Fitness International,
Inc., an affiliate of L.A. Fitness.
Prior to this transaction, Bally owned and operated about
271 fitness clubs in the United States.

The APA provided for the

sale of 171 of those clubs for approximately $153 million.

The

sale included all of the clubs in Illinois and several other
states.

The remaining 100 clubs continue to be operated under

the Bally name.
Since the closing of the APA on Nov. 30, 2011, Plaintiffs
contend, hundreds if not thousands of Bally customers have
learned that their lifetime memberships are no longer being
honored by Bally or L.A. Fitness, and have effectively been

1

In Illinois, such contracts are prohibited by the
Physical Fitness Services Act, 815 ILCS § 645/8(c).
2

terminated.

Plaintiffs and the class members paid in excess of

$1,000 for the lifetime and long term memberships, and also
typically pay an annual fee of between $10 and $25.
Plaintiffs’ and the class’ lifetime and long-term membership
contracts “provide that they may use any Bally’s club in the
country, at any time such clubs are open for business, with no
exception.”

Compl., ¶ 23.

Additionally, holders of Bally

lifetime memberships were permitted to resell those contracts,
and there was a well-developed secondary market for them.
On Dec. 1, 2011, many Bally lifetime members received an
email from Bally notifying them that L.A. Fitness would assume
their memberships effective immediately.

That email said:

Dear Member:
Bally Total Fitness® has made the decision to focus our
portfolio of fitness centers in certain key markets. As
a result, we will be transitioning ownership of a number
of our clubs, including your home club, to Fitness
International, LLC, an affiliate of L.A. Fitness
International, LLC (“LA Fitness”).
LA Fitness will take over the clubs it is acquiring and
assume your membership agreement effective Dec. 1, 2011.
As a result your payments will be collected by LA Fitness
going forward using the same account as did BallyK. You
can find more details on our website and at
www.lafitness.com.
It has been our pleasure to serve you, and we thank you
for your loyalty to Bally Total Fitness through the
years. We wish you continued success in pursuing and
achieving your fitness goals.
Compl., ¶ 24.

3

Plaintiffs contend that L.A. Fitness publicly stated that it
assumed responsibility for the lifetime contracts. Specifically,
L.A. Fitness’ web site said:
Our objective in general is to make this transition as
easy as possible for both the members and employees. We
will be servicing all of the membership agreements that
were acquired from BTF. The majority of the acquired
clubs will remain open, but some will be closing before
the end of the year. If we close a facility, we will
transfer those members’ agreements to a nearby facility,
either an acquired BTF or an LA Fitness. We plan to add
new equipment to many of the clubs, and we also have
plans to remodel, expand or relocate a number of the
clubs to larger and new facilities.
UPDATE LA Fitness has decided to simplify the access
rules and give all of the acquired Bally Total Fitness
(“BTF”) members access to current LA Fitness clubs as
described below:

. BTF “Local” members will have access to LA Fitness
clubs and acquired BTF clubs in the state of enrollment*;
. BTF “National” members will have access to those clubs
in all states*; and
. Acquired BTF members who only have single club access
will continue to have access to that single club (or, if
that club has closed, another BTF or LAF club nearby).
Members who have purchased lifetime memberships at the
acquired BTF clubs will continue to have access as
described above.
Compl., ¶ 25.
Notwithstanding these representations, Plaintiffs contend,
Bally failed to make adequate provisions for members to continue
using

the

facilities

that

Bally

sold

to

L.A.

Fitness.

Additionally, Bally has denied access to its remaining facilities,

4

or provides access only to clubs that are hundreds of miles away
from members’ homes, making their memberships worthless.
Plaintiffs allege that in order to evade its obligations
under the lifetime contracts, Bally has unilaterally imposed a
“home club” or “club of origin” restriction on its members that
does not exist in these contracts.

Following the L.A. Fitness

acquisition, Bally has taken the position that the club where the
membership was originally sold remains the “home club,” even
though the memberships were originally sold decades ago.

Bally

and L.A. Fitness have used this “home club” requirement to
effectively terminate lifetime and long-term membership contracts
because L.A. Fitness will only acknowledge a Bally lifetime
contract when the member’s “home club” is one of the clubs it
acquired.
This has resulted in termination of hundreds, if not
thousands, of valid contracts, Plaintiffs allege, in particular
in these situations:
(1) In some cases, the membership was originally purchased
at a Bally club that closed before the L.A. Fitness acquisition,
and the member was using a Bally club acquired by L.A. Fitness.
These members are being denied access to L.A. Fitness clubs
because L.A. Fitness did not acquire the long-closed Bally clubs,
which Bally claims are the members’ “home club.”

These members

are also effectively locked out of Bally clubs, given that Bally

5

no longer owns or operates any clubs in the region in which the
member resides.
(2) In some cases, the members are secondary purchasers of
Bally lifetime or long-term contracts.

These members typically

reside in a different region than the original purchasers, which
Bally knew because it required secondary purchasers to complete
membership transfer documents.

Nonetheless, Defendants have

refused to recognize the transfer of such memberships to the club
near where the secondary purchaser resides.

These clubs are now

owned by L.A. Fitness, and the secondary purchasers have no way
of using the Bally facilities where their memberships were
originally purchased, which are usually hundreds of miles away
from their homes.
(3) In some cases, the members relocated to a different
region from where they originally purchased their memberships,
and were able to use Bally clubs near their homes prior to the
acquisition.

However, after the L.A. Fitness acquisition, these

members learned that Bally still considers the original Bally’s
facility to be their “home club.”

As a result, these memberships

have not been transferred to L.A. Fitness, and these members can
no longer use the gym facilities near their homes.

They cannot

use the facilities where the memberships were originally
purchased, because these gyms are hundreds of miles away from
their homes.

6

Plaintiffs allege that Bally has deprived Plaintiffs and the
class of the use and enjoyment of their lifetime contracts, and
that L.A. Fitness has failed to honor many of these contracts and
has “attempted to take advantage of Plaintiffs and the Class by
requiring them to purchase new L.A. Fitness memberships if they
wish to have access to the former Bally clubs.”

Compl., ¶ 31.

Plaintiffs contend that L.A. Fitness has attempted to
unilaterally modify the existing lifetime and long-term
membership contracts by charging additional fees and diminishing
the rights that members have under the contracts.

For example,

L.A. Fitness has limited the lifetime contracts by restricting
access to one location, despite the fact that the contracts
entitle members to unrestricted access to all Bally facilities
across the country, denying members access to racquetball courts,
and prohibiting resale of the contracts, despite the fact that
they are transferrable on their terms. Those class members who
have not accepted the modified terms have had their contracts
terminated without compensation.
Plaintiff Stapleton bought Bally “Premier Plus” memberships
for himself and his wife in 1995.

The memberships originated at

a Bally club in St. Louis, and were purchased from former Bally
members.

They cost more than $500 each. Under the terms of the

membership agreements, the Stapletons were not required to pay
Bally a transfer fee, but they completed transfer forms that

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stated that they resided in Elmhurst, Ill.

The lifetime

contracts required Stapleton to pay a $25 annual maintenance fee
for each of the members and “provided unlimited access to all
Bally’s clubs nationwide.”

Compl., ¶ 38.

The Stapletons never

used any Bally’s facilities in St. Louis, and the club of origin
closed many years ago.

The Stapletons used the Bally club in

Villa Park, Ill., which was one of the clubs acquired by L.A.
Fitness on Nov. 30, 2011.

Mr. Stapleton contacted Bally to

request that his membership be transferred to L.A. Fitness so he
could continue to use the club, but was informed that he had
failed to transfer his membership to the Villa Park club, and
that Bally considered a club in St. Louis that Stapleton had
never used, and which was not the club or origin for the contract
he acquired, to be his “home club.”
The Bally employee told Stapleton that since that St. Louis
club was not sold to L.A. Fitness, Bally could not transfer their
memberships to L.A. Fitness.

The St. Louis club is about five

hours from their home; the Stapletons cannot use it.

Mr.

Stapleton then contacted L.A. Fitness. He received an email from
L.A. Fitness informing him that the company would not transfer
his lifetime membership to L.A. Fitness.
Plaintiff Grabianksi bought a “Premier Plus” lifetime
membership in 1999 or 2000 from a former Bally member who
originally purchased the contract at a Bally club in Amherst,

8

N.Y., in 1986.

Grabianski paid a transfer fee of $100 and

provided Bally with transfer paperwork indicating that she
resided in Illinois.
membership.

Grabianski pays a $10 annual fee for her

She has never been to Amherst, N.Y., and used the

Schaumburg, Ill., club, which was acquired by L.A. Fitness.
After the acquisition, Bally told Grabianski that its
records indicated she was a member of the Amherst, N.Y. club, a
club which she had never used.

She was told she could work out

at a Bally club in Wisconsin, more than an hour away from her
home.

On Jan. 6, 2012, Grabianski went to the Schaumburg club,

but was told she was not in the computer system, that L.A.
Fitness did not acquire her membership, and that she would need
to enter into a new membership if she wanted to use the gym.
Grabianski then contacted Bally, which told her there was a
window of time in which she could have transferred her membership
from Amherst, N.Y., to Illinois, but that window closed on Dec.
15, 2011.

A customer service agent for Bally told Grabianksi

that L.A. Fitness was supposed to notify her of her option to
transfer, while L.A. Fitness blamed Bally.

As a result,

Grabianski alleges, she has effectively lost the use of her
lifetime contract.
Plaintiffs bring two claims against Defendants, one for
breach of contract (Count I), and one for violation of the
Illinois Consumer Fraud and Deceptive Business Practices Act

9

(“ICFA”), 815 ILCS 505/1, et seq. (Count II).

The breach of

contract claim alleges that “L.A. Fitness acquired Bally lifetime
and long-term membership contracts and the obligations to provide
gym access and other benefits owed to members pursuant to the
terms of those contracts.” Compl., ¶ 65.

The complaint goes on

to allege, “Once L.A. Fitness acquired 171 clubs from Bally on
Nov. 30, 2011, neither Bally nor L.A. Fitness would honor the
lifetime agreements in accordance with their terms, and, as
alleged above, effectively terminated them.”

Compl., ¶ 66.

Plaintiffs additionally allege that this conduct violated the
implied covenant of good faith and fair dealing in the lifetime
contracts.
The ICFA claim alleges that Defendants’ conduct in failing
to transfer lifetime and long-term membership contracts from
Bally to L.A. Fitness deprived Plaintiffs and the class of the
value of their memberships.

It also asserts that Defendants

concealed from Plaintiffs and the class the cutoff date for
transferring memberships from the members’ “home clubs,”
preventing members from continuing to use their memberships;
concealed the procedures required to maintain those memberships
at clubs near their homes; and imposed new fees and dues in
excess of those permitted under the membership agreements.
Both Bally and L.A. Fitness have moved to dismiss the
Complaint for failure to state a claim under Fed. R. Civ. P.

10

12(b)(6).

Bally’s motion argues, in part, that it cannot be

liable for breach of contract because the complaint alleges that
the contracts at issue were assigned to L.A. Fitness, and because
the contracts at issue provided access to “any Bally clubs in the
country, at any time such clubs are open for business, with no
exception.”

Bally Mem. in Supp. of Mot., 5.

The clubs in

question are no longer owned or operated by Bally, so no claim
for breach of contract may lie against it for failure to allow
access to these clubs, Bally contends.
After Bally’s motion was fully briefed, L.A. Fitness filed
its own motion to dismiss, in which it attached the APA and
argued that it conclusively shows that the lifetime contracts
were not assigned to it, and so the complaint against it should
be dismissed.

Both Defendants also argue that the ICFA claims

are insufficiently pleaded and deficient for various reasons.
II.
To survive a Rule 12(b)(6) motion to dismiss, a complaint
must contain sufficient facts, accepted as true, “to state a
claim for relief that is plausible on its face.”

Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).

Although a complaint's

factual allegations need not be detailed, they must provide more
than “labels, conclusions, or formulaic recitations of the
elements of a cause of action, and allege enough to raise a right
11

to relief above the speculative level.”

Ruiz v. Kinsella, 770 F.

Supp. 2d 936, 941–42 (N.D. Ill. 2011)(citing Twombly, 550 U.S. at
555).

In ruling on such a motion, the question is whether the

facts, accepted as true, “present a story that holds together.”
Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010).
Although generally I may not rely on matters outside the
pleadings in ruling on a motion to dismiss, documents that a
defendant attaches to such a motion are considered part of the
pleadings if they are referred to in the complaint and central to
the plaintiffs’ claims.

Venture Assocs. Corp. v. Zenith Data

Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993) (internal citations
omitted).

This includes written contracts.

See Fed. R. Civ. P.

10(c)(“A copy of any written instrument which is an exhibit to a
pleading is a part thereof for all purposes.”).

While I must

accept the allegations of Plaintiffs’ complaint as true and draw
all reasonable inferences in their favor, when a contract is
considered in ruling on a 12(b)(6) motion, the terms of the
contract control over inconsistent allegations in the complaint.
Centers v. Centennial Mortg., Inc., 398 F.3d 930, 933 (7th Cir.
2005).
III.
A review of Plaintiffs’ Complaint, in light of the motions
to dismiss, reveals certain aspects that require repleading of
the Complaint.

12

A. Breach of Contract Claim
First, Plaintiffs allege that L.A. Fitness acquired their
contracts, but also allege that Bally’s failure to update its
records resulted in their memberships not being transferred to
L.A. Fitness.

(Pls.’ Compl. ¶¶ 5, 44.)

Either L.A. Fitness

acquired the contracts and was required to honor them, or Bally,
perhaps wrongfully, did not assign the contracts to L.A. Fitness.
Both cannot simultaneously be true.

Plaintiffs may of course

plead in the alternative, but they must use a formulation that
indicates this is the course of action they are pursuing.

See

Holman v. Indiana, 211 F.3d 399, 407 (7th Cir. 2000) (citing 5
Charles A. Wright & Arthur R. Miller, Federal Practice and
Procedure § 1282 at 525 (2d ed. 1990) (generally an alternative
claim is drafted in the form of “either-or” and a hypothetical
claim is in the form of “if-then”)).

Plaintiffs have not done

so, but rather have instead brought one breach of contract claim
against both Defendants in one confusingly pleaded count.
Additionally, Plaintiffs’ responses to the motions to
dismiss reveal other problems with the Complaint. For example,
L.A. Fitness’ motion to dismiss includes a copy of the APA, which
it contends conclusively shows that it did not acquire
Plaintiffs’ contracts.
Several provisions of the APA are relevant to the resolution
of this dispute.

First, § 2.1(c)(ii) of the APA, describing
13

those contracts assigned to L.A. Fitness, provides that “Sellers
shall retain (and not sell, assign, transfer or convey to Buyer)
their rights and interests under (x) any membership, personal
training or other Contract that is free, complimentary, bartered
or lifetime . . . .”

The APA further provides, in § 2.3, that

L.A. Fitness shall not assume liability for “any free,
complimentary, lifetime, or bartered Customer Agreement.”

In §

2.4(d), the APA provides that L.A. Fitness is not liable on any
contracts it did not assume.

The APA also contains a definition

of the term “Acquired Members” that restricts the transferred
memberships to those that originated at or near one of the clubs
purchased by L.A. Fitness, or whose memberships, as of the
closing date of the transaction, Bally assigned to one of the
clubs purchased by L.A. Fitness.

APA, § 1.

Throughout their complaint, Plaintiffs refer to the
contracts held by Stapleton and Grabianski as “lifetime
contracts.”

(See Compl., ¶¶ 1, 2, 6, 10, 11, 38, 45.) L.A.

Fitness contends that the APA unambiguously excluded lifetime
contracts from the acquisition, and that to the extent it agreed
to honor certain lifetime contracts, it did so only for business
reasons, and not because it was obligated by contract.
Plaintiffs contend that the term “lifetime” in the APA is
ambiguous, and that to interpret it as excluding Grabianski’s and
Stapleton’s contracts from the asset transfer would contradict
14

L.A. Fitness’s public statements about the transfer of lifetime
contracts.

Plaintiffs contend that discovery and parol evidence

will be needed to ascertain L.A. Fitness’ obligations under the
contract.
Plaintiffs also contend that “lifetime contracts” was used
throughout the complaint as “a term of convenience.”
Resp., 5.

Pls.’

In fact, Plaintiffs argue, Plaintiffs had “Premier

Plus” memberships.

Plaintiffs attach to their response

Stapleton’s contract, which provides the following description of
that membership:
Premier Plus - Provides Member with use of all local and
nationwide Bally Total FitnessK clubs (excluding all
Vertical Club locations and the Executive Club in
Bloomfield Hills, Michigan, memberships for which must be
purchased at those clubs). Other clubs may be built or
acquired after your Date of Contract which may be
excluded from this membership at Seller’s sole
discretion.
When and where available, [sic] also
provides unlimited free racquetball, nursery services for
a fee, the privilege to transfer membership once and a 5
day priority reservation privilege.
The privilege to
transfer the membership is allowed only after the
membership fee has been paid in full, provided Member is
in good standing and pays a transfer fee of $100.

15

(Dkt. No. 64-1, Ex. ¶ 20.)2

Grabianski’s Premier Plus membership

contract was substantially similar to Stapleton’s, according to
Plaintiffs.
First, I cannot find the term “lifetime” in the APA to be
ambiguous.

Under Illinois law, undefined contract terms must be

given their “plain, ordinary and popular meaning.”

See Valley

Forge Ins. Co. v. Swiderski Elec., Inc., 860 N.E.2d 307, 316 (Ill.
2006).3

Lifetime means “the duration of the existence of a living

being or a thing.”
(1991).

Webster’s Ninth New Collegiate Dictionary 690

Further, if a written contract is unambiguous, “then the

scope of the parties’ obligations must be determined from the
contractual language without reference to extrinsic evidence.” SMS
Demag Aktiengesellschaft v. Material Scis. Corp., 565 F.3d 365, 372
(7th Cir. 2009) (citing Air Safety, Inc. v. Teachers Realty Corp.,

2

Plaintiffs did not attach their contracts to their
complaint, but attached Stapleton’s in response to L.A. Fitness’
motion to dismiss. I will consider this, as the contracts are
central to Plaintiff’s claims. However, Plaintiffs also attached
a declaration from their counsel, Eric Lechtzin, in which
Lechtzin states that after Stapleton filed suit, L.A. Fitness
agreed to assume his and his wife’s memberships. (Dkt. No. 64.)
This declaration is outside the pleadings and is not an
appropriate matter for consideration on a motion to dismiss.
3

The APA has an express choice of law provision that
provides that it is governed by Delaware law, § 12.9. L.A.
Fitness suggests that Delaware law might apply, but acquiesces to
the application of Illinois law, at least at this stage of the
case, so I will apply the law of Illinois. See Wehrs v. Benson
York Group, Inc., No. 07 C 3312, 2008 WL 753916, at *2 (N.D. Ill.
March 18, 2008) (internal citations omitted).

16

706 N.E.2d 882, 884 (1999)); see TAS Distrib. Co., Inc. v. Cummins
Engine Co., Inc., 491 F.3d 625, 636 (7th Cir. 2007) (holding that
when a contract is facially unambiguous and contains an integration
clause, the consideration of extrinsic evidence is barred).

The

APA contains an integration clause, § 12.4, and the fact that the
term lifetime is undefined is not enough to make the definition of
“Assumed Contract” in § 2.1(c)(ii) of the APA “reasonably or fairly
susceptible to more than one interpretation.” In re Lakewood Eng’g
& Mfg. Co., Inc., 459 B.R. 306, 329 (Bankr. N.D. Ill. 2011).

So if

the contracts at issue are truly “lifetime” contracts, then L.A.
Fitness is correct that it was not required to assume them and that
its

conduct

in

telling

members

that

it

would

not

honor

the

contracts was not deceptive or wrongful.
However, while the parties focus most of their energies on the
issue of whether the term “lifetime” in the APA is ambiguous, it
appears that the real issue is whether Plaintiffs’ contracts should
properly be considered lifetime contracts.

The word “lifetime”

appears nowhere in Stapleton’s contract. (See Dkt. No. 64, Ex. A.)
The form contract is largely blank, but has “$25 per year,” written
in the “Membership Price” box.

At the bottom of the last page of

the contract is a handwritten note: “Per telephone conversation
with Rhonda Quigley on 10/20/95 the membership dates back to 1983
and the dues will remain at $25 per year.”

The contract is not

measured by Stapleton’s life, nor does it specify any duration, as

17

it appears to be a form contract used solely as a vehicle to
transfer the Premier Plus contract from the previous owners to the
Stapletons.
I note that in arguing that this is a lifetime contract, L.A.
Fitness points to Paragraph 21 of Stapleton’s contract, which L.A.
Fitness contends provides that the contract is renewable as long as
the member is in good standing and membership fees are paid in
full.

In fact, this paragraph refers to “Monthly Dues,” providing

that they may be paid in advance for a full year as annual dues.
This paragraph does not address the duration of the contract or
describe it as a lifetime contract.

Additionally, I note that the

original contract Stapleton and his wife purchased from former
Bally members also did not use the word “lifetime” to measure its
duration.

Rather, it was a three-year membership, renewable

annually for a fee of $25.
L.A. Fitness urges me to consider Plaintiffs’ repeated use of
the term “lifetime” to describe their contract in their Complaint
to

be

judicial

admissions

“lifetime” contracts.

that

the

contracts

at

issue

are

See Murey v. United States, 73 F.3d 1448,

1455 (7th Cir. 1996) (“A judicial admission trumps evidence.

This

is the basis of the principle that a plaintiff can plead himself
out

of

court.”).

It

appears,

however,

that

Plaintiffs

have

retreated from the position that these are lifetime contracts.

If

it is Plaintiffs’ contention that their Premier Plus contracts are
18

not lifetime contracts, and that L.A. Fitness was obligated to
honor them, they should replead their claim against L.A. Fitness to
make this plain. Although allegations in pleadings can be judicial
admissions, at this early stage of the case, it would be improper
to hold Plaintiffs to their characterization of the contracts
without allowing them an opportunity to amend. See, e.g., Dewan v.
Universal Granite and Marble, Inc., No. 08 C 350, 2009 WL 590499,
at * 3 (N.D. Ill. March 6, 2009)(noting that when a party has
amended

its

pleading,

earlier

allegations

are

not

considered

judicial admissions); Morlock v. Shepherd, 99 C 0637, 1999 WL
1212197, at *5 (N.D. Ill. Dec. 16, 1999) (allowing plaintiff to
replead despite damaging concession in original pleading because it
was possible she could state a claim).
L.A. Fitness additionally argues that Plaintiffs cannot be
considered “Acquired Members” under the APA because their
memberships did not originate at the acquired clubs, nor were
they assigned to those clubs at the time of the asset purchase.
L.A. Fitness points to Plaintiffs’ allegations that it was Bally,
not L.A. Fitness, that failed to update its records to reflect
their current home gym.

(See Compl., ¶¶ 5, 44.)

While this is

true, Plaintiffs also allege that they did in fact complete
transfer paperwork with Bally that reflected their current
residences.

(Compl. ¶¶ 38, 47.)

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If this is true, then it

possible that Plaintiffs were in fact “assigned” to the clubs
that L.A. Fitness acquired.
Plaintiffs’ breach of contract claim against Bally is
similarly problematic.

At the time Bally filed its motion,

Plaintiff had not yet submitted Stapleton’s contract, which it
did in response to L.A. Fitness’ motion to dismiss.

Contrary to

Bally’s argument, Plaintiffs were not required to attach copies
of the contracts to their complaint or allege the terms of the
contracts verbatim in order to state a claim for breach of
contract. See Jiang v. Allstate Ins. Co., 199 F.R.D. 267, 272
(N.D. Ill. 2001).

Nonetheless, as noted above, Plaintiffs’

pleading of its breach of contract claim is muddled.

In regard

to Bally, Plaintiff does not specify what contract terms Bally
breached when it allegedly failed to assign Plaintiffs’ contracts
to L.A. Fitness, or when it imposed the so-called “home club
restriction.”

They apparently believe that Bally was required to

assign their contracts, but do not allege a contractual basis
requiring assignment.

Although the federal rules provide for

liberal pleading, “claimants must state enough direct or
inferential allegations to establish the necessary elements under
the selected theory of recovery to survive a 12(b)(6) motion.”
Letisha A. v. Morgan, 855 F.Supp. 943, 947 (N.D. Ill. 1994); see
Zaro Licensing, Inc. v. Cinmar, Inc. 779 F. Supp. 276, 286
(S.D.N.Y. 1991) (holding that a pleading must “at a minimum

20

allege the terms of the contract, each element of the alleged
breach and the resultant damages in a plain and simple
fashion.”).

I note that Plaintiffs have asserted a violation of

the implied covenant of good faith and fair dealing, but this, as
Plaintiffs acknowledge, is not an independent source of
contractual duties.

See Hardaway v. CIT Grp./Consumer Fin. Inc.,

836 F. Supp. 2d 677, 686 (N.D. Ill. 2011) (citing LaSalle Nat’l
Bank v. Metro. Life Ins. Co., 18 F.3d 1371, 1376 (7th Cir.
1994)).

Rather, the implied covenant guides the interpretation

of contractual provisions, and requires a party afforded
discretion by a contractual provision to exercise it “in a manner
consistent with the reasonable expectations of the parties.”
Beraha v. Baxter Health Care Corp., 956 F.2d 1436, 1445 (7th Cir.
1992).

While Plaintiffs need not plead the contract terms

verbatim, they should make plain what contractual obligations
Bally is alleged to have breached.4

4

I note that Bally also contends that it cannot be liable
for breach of contract because of Plaintiffs’ allegation that
Bally assigned the contracts to L.A. Fitness. Bally cites no
support for this contention, however, and it appears not to be
well-taken. While Bally may have assigned its rights and
delegated its responsibilities under the contracts to L.A.
Fitness, the effect of that assignment would ordinarily make both
parties liable on the contracts. Gen. Elec. Railcar Leasing
Servs. Corp. v. Carlson Mktg. Grp., Inc., No. 91 C 5345, 1992 WL
14175, at *3 (N.D. Ill. Jan. 16, 1992); see Strauss v. Stratojac
Corp., 810 F.2d 679, 684 n.4 (7th Cir. 1987) (holding that it is
“well-settled” that “an assignor of a contract remains liable on
the contract after the assignment.”). Thus, if L.A. Fitness
acquired Plaintiffs’ contracts, and failed to honor them, Bally
could be liable for that breach.
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B. ICFA Claim
Plaintiffs’ ICFA claim is similarly infirm.

The ICFA

provides a remedy for “unfair methods of competition and unfair
or deceptive acts or practices” in specified commercial
transactions.”

Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392,

399 (7th Cir. 2011) (quoting 815 ILCS 505/2).

To state a claim

under this statute, a plaintiff must allege the following: (1) a
deceptive act or unfair practice; (2) intent on defendant's part
that plaintiff rely on the deception or unfair practice; and (3)
that deception occurred in the course of conduct involving trade
or commerce.

Wendorf v. Landers, 755 F. Supp. 2d 972, 978–79

(N.D. Ill. 2010) (internal citations omitted).
Defendants argue this is nothing more than a breach of
contract claim clothed in the language of fraud.

A breach of

contract standing alone, “‘does not amount to a cause of action
cognizable under [the ICFA]’” and the ICFA does not apply to
simple breach of contract claims.

Sindles v. Saxon Mortg.

Services, Inc., 2012 WL 1899401, at *4 (N.D. Ill. May
22,2012)(citing Am. Airlines, Inc., v. Wolens, 513 U.S. 219, 233
(1995).

This is true even if a “widespread” or “systematic”

breach of contract is alleged. Greenberger v. GEICO General Ins.
Co., 631 F.3d 392, 400 (7th Cir. 2011).
However, even if Plaintiffs can meet the requirement of
showing more than a widespread breach of contract, Plaintiffs
22

ICFA claim suffers from the same defect as their breach of
contract claim in that it both alleges that Bally failed to
transfer the contracts to L.A. Fitness and that L.A. Fitness
engaged in deceptive conduct in failing to honor the contracts.
These theories appear mutually inconsistent, yet, as noted above,
Plaintiffs have not pleaded them in the alternative, but have
rolled them into one count against both Defendants.

Although

Defendants raise other issues in their motions, it appears that
the best course of conduct is to allow Plaintiffs to replead
their complaint to clarify their theory of the case before going
further.
IV.
For the reasons stated herein, L.A. Fitness’ motion to
dismiss (Dkt. No. 49) is granted, as is Bally’s motion to dismiss
(Dkt. No. 30).

Plaintiffs are given 30 days from the date of

this order to address the deficiences in their complaint noted
herein.

ENTER ORDER:

____________________________
Elaine E. Bucklo
United States District Judge
Dated: Sept. 11, 2012

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