Gascho v. Global Fitness Holdings, LLC
Filing
95
REPORT AND RECOMMENDATIONS re 89 MOTION to Intervene: The Magistrate Judge RECOMMENDS that this motion be DENIED. Objections to R&R due within fourteen (14) days of the date of this Order. Signed by Magistrate Judge Norah McCann King on 9/3/2013. (er1)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
AMBER GASCHO, et al.,
Plaintiffs,
vs.
Civil Action 2:11-cv-436
Judge Smith
Magistrate Judge King
GLOBAL FITNESS HOLDINGS, LLC,
Defendant.
REPORT AND RECOMMENDATION
I.
Background
The Court has previously set forth the background of this case:
On April 13, 2011, Plaintiffs initiated this class action
against Defendant Global Fitness Holdings, LLC, d/b/a Urban
Active (“Global Fitness”), in the Court of Common Pleas for
Franklin County, Ohio.
Global Fitness is a Kentucky
limited
liability
corporation
that
operates
fitness
facilities in Ohio.
Plaintiffs are residents of Ohio who
entered into membership and/or personal training, child
care and/or tanning contracts at Global Fitness’s Ohio
Urban Active gym facilities.
Plaintiffs allege that they
were financially wronged as members of Urban Active fitness
clubs in Ohio.
Defendant removed this action to this Court on May 19,
2011, pursuant to the Class Action Fairness Act (“CAFA”),
as codified at 28 U.S.C. §§ 1332(d) and 1453.
In this
lawsuit,
Plaintiffs
have
alleged,
inter
alia,
that
Defendant engages in common practices of misrepresenting
the terms and conditions of contracts at the time of sale,
making
unauthorized
deductions
from
Plaintiffs’
bank
accounts, failing to provide consumers with copies of
contracts at the time of signing, failing to orally inform
consumers at the time of signing of their right to cancel,
failing to provide copies of “notice of cancellation”
documents in the form required under Ohio law, and failing
to honor contract cancellations. As a result of this
alleged activity, Plaintiffs assert the following claims:
violation of the Ohio Consumer Sales Practices Act
(“OCSPA”) (Counts I and II); violation of the Ohio Prepaid
Entertainment Contract Act (“OPECA”) (Count III); violation
of the Ohio Deceptive Trade Practices Act (“ODTPA”) (Count
IV); unjust enrichment (Count V); conversion (Count VI);
and breach of contract (VII).
Opinion and Order, Doc. No. 83, pp. 1-2.
Upon motion, Doc. No. 36,
the Court dismissed Counts IV and VI and limited Counts I, II, and III
to certain allegations.
Opinion and Order, Doc. No. 69.
On April 15, 2011, i.e., two (2) days after this action was
filed, Phillip S. Robins, on behalf of himself and others similarly
situated, filed a complaint against Global Fitness in the Cuyahoga
County Court of Common Pleas, which was thereafter removed to the
United States District Court for the Northern District of Ohio.
Robins v. Global Fitness Holdings, LLC, No. 1:11-cv-1373 (N.D. Ohio),
Notice of Removal, Doc. No. 1.
The complaint in that action alleged
that, contrary to the express terms of Global's Membership
Contracts and Personal Training Contracts . . . Global has
(1) retained fees paid by members of its health clubs for
the period in which they were disabled, deceased, or
relocated, (2) collected from Plaintiffs’ credit, debit or
bank accounts additional fees not part of the agreed-upon
monthly fees, and (3) drafted form contracts containing
egregious, confusing and misleading cancellation provisions
that guarantee members will be charged for one or more
months beyond the date they cancel their memberships.
Based on these allegations, Plaintiffs assert the following
common-law claims against Global: breach of contract (Count
One), unjust enrichment (Count Two), and fraud (Count
Three).
Plaintiffs have also asserted claims against
Global for violation of the following state and federal
statutes: Ohio’s Consumer Sales Practices Act (Count Four),
Ohio’s Prepaid Entertainment Contracts Act, O.R.C. §§
1345.41 et seq. (Count Five), Ohio’s Deceptive Trade
Practices Act, O.R.C. §§ 4165.01 et seq. (Count Six),
Kentucky’s Consumer Protection Act–Health Spas (Count
Seven), the Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. §§ 1961 et seq. (“RICO”) (Count Eight),
Ohio’s version of RICO, O.R.C. §§ 2923.31 et seq. (Count
Nine), and the Electronic Fund Transfer Act, 15 U.S.C. §§
1693 et seq. (Count Ten).
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Robins v. Global Fitness Holdings, LLC, 838 F. Supp. 2d 631, 637 (N.D.
Ohio 2012).
On January 18, 2012, all claims in that action were
dismissed with prejudice, except for the breach of contract and EFTA
claims of two individual plaintiffs (asserted in Counts One and Ten),
which were dismissed without prejudice.
appeal from that judgment is pending.
Id. at 654.
Plaintiffs’
Robins v. Global Fitness
Holdings, LLC, Case No. 12-3231 (6th Cir.)
This matter is now before the Court for consideration of the
Motion to Intervene, Doc. No. 89, filed on July 19, 2013 by the named
plaintiffs in Robins v. Global Fitness Holdings, LLC, No. 1:11-cv-1373
(N.D. Ohio), including Phillip S. Robins, Maria Christina Bruch, Tanya
Baker, Danette Green, Steve Zadiraka, and Carolyn Odelli (collectively
the “Robins plaintiffs”).
The Robins plaintiffs seek to intervene in
this matter pursuant to Rules 24(a) and 24(b) of the Federal Rules of
Civil Procedure “to promote judicial efficiency[] and participate in
any settlement discussions. . . .”
Motion to Intervene, p. 1.
Attached to the Motion to Intervene is a proposed complaint in
intervention which presents the same claims that were asserted in the
North District of Ohio.
id. at 3.
Exhibit 1 attached to Motion to Intervene;
Plaintiffs and defendant oppose the Motion to Intervene.
Plaintiffs’ Memorandum in Opposition to Robins’s Motion to Intervene
(“Plaintiffs’ Response”), Doc. No. 91; Defendant’s Memorandum in
Opposition to Motion to Intervene, Doc. No. 92.
have filed a reply.
The Robins plaintiffs
Reply in Support of Our Motion to Intervene
(“Robins Plaintiffs’ Reply”), Doc. No. 94.
for consideration.
3
This matter is now ripe
II.
Standard
Rule 24(a) of the Federal Rules of Civil Procedure governs
intervention of right, providing in pertinent part:
On timely motion, the court must permit anyone to intervene
who:
. . .
(2) claims an interest relating to the property or
transaction that is the subject of the action, and is so
situated that disposing of the action may as a practical
matter impair or impede the movant's ability to protect its
interest, unless existing parties adequately represent that
interest.
Fed. R. Civ. P. 24(a)(2).
The United States Court of Appeals for the
Sixth Circuit requires that intervention as of right satisfy four (4)
elements:
(1) the motion to intervene is timely; (2) the proposed
intervenor has a substantial legal interest in the subject
matter of the case; (3) the proposed intervenor’s ability
to protect their interest may be impaired in the absence of
intervention; and (4) the parties already before the court
cannot
adequately
protect
the
proposed
intervenor’s
interest.
Coalition to Defend Affirmative Action v. Granholm, 501 F.3d 775, 779
(6th Cir. 2007) (citing Grutter v. Bollinger, 188 F.3d 394, 397-98
(6th Cir. 1999)).
“‘The proposed intervenor must prove each of the
four factors; failure to meet one of the criteria will require that
the motion to intervene be denied.’”
United States v. Michigan, 424
F.3d 438, 443 (6th Cir. 2005) (quoting Grubbs v. Norris, 870 F.2d 343,
345 (6th Cir. 1989)).
Rule 24(b) governs permissive intervention, providing in
pertinent part: “On timely motion, the court may permit anyone to
intervene who . . . has a claim or defense that shares with the main
4
action a common question of law or fact.”
Fed. R. Civ. P. 24(b).
The
decision to permit intervention under Rule 24(b) falls within the
sound discretion of the trial court.
Coalition to Defend Affirmative
Action, 501 F.3d at 784 (citations omitted); United States v.
Michigan, 424 F.3d at 445.
“In exercising its discretion, the court
must consider whether the intervention will unduly delay or prejudice
the adjudication of the original parties’ rights.”
Fed. R. Civ. P.
24(b)(3).
Regardless of whether a party seeks to intervene under Rule 24(a)
or Rule 24(b), the motion to intervene “must state the grounds for
intervention and be accompanied by a pleading that sets out the claim
or defense for which intervention is sought.”
A motion to intervene must also be timely.
Fed. R. Civ. P. 24(c).
Blount-Hill v. Zelman, 636
F.3d 278, 284 (6th Cir. 2011).
III. Discussion
The Robins plaintiffs seek intervention under Rules 24(a) and
24(b).
The timeliness of the Motion to Intervene is a “threshold
issue” as to both intervention as of right and permissive
intervention; a court must deny an untimely motion to intervene.
United States v. City of Detroit, 712 F.3d 925, 930 (6th Cir. 2012)
(quoting Grubbs, 870 F.2d at 345-46); Blount-Hill, 636 F.3d at 284
(citations omitted); Stotts v. Memphis Fire Dept., 679 F.2d 579, 582
(6th Cir. 1982) (citing NAACP v. New York, 413 U.S. 345, 365 (1973)).
The Court will therefore begin with the threshold inquiry of whether
the Motion to Intervene is timely.
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Courts consider five factors in determining the timeliness of a
motion to intervene:
“1) the point to which the suit has progressed; 2) the
purpose for which intervention is sought; 3) the length of
time preceding the application during which the proposed
intervenors knew or should have known of their interest in
the case; 4) the prejudice to the original parties due to
the proposed intervenors’ failure to promptly intervene
after they knew or reasonably should have known of their
interest in the case; and 5) the existence of unusual
circumstances
militating
against
or
in
favor
of
intervention.”
Blount-Hill, 636 F.3d at 284 (quoting Jansen v. City of Cincinnati,
904 F.2d 336, 340 (6th Cir. 1990)).
“No one factor is dispositive,
but rather the ʽdetermination of whether a motion to intervene is
timely should be evaluated in the context of all relevant
circumstances.’”
Id. (quoting Stupak-Thrall v. Glickman, 226 F.3d
467, 472-73 (6th Cir. 2000)).
Finally, “[t]imeliness is a matter
within the sound discretion of the district court.”
at 582 (citing NAACP, 413 U.S. at 365).
Stotts, 679 F.2d
See also Coalition to Defend
Affirmative Action, 501 F.3d at 779 (“ʽWe review de novo motions to
intervene as of right, except for the timeliness element, which is
reviewed for an abuse of discretion.’”) (quoting Northland Family
Planning Clinic, Inc. v. Cox, 487 F.3d 323, 344 (6th Cir. 2007)).
In the case presently before the Court, the first timeliness
factor weighs against intervention.
This action was filed on April
13, 2011 and was removed to this Court on May 19, 2011.
Removal, Doc. No. 2.
Notice of
The parties have already taken depositions and
engaged in extensive discovery of electronically stored information
related to, inter alia, defendant’s policies and practices.
“[T]he
enormity of that undertaking,” see Order, Doc. No. 75, p. 1, has
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necessitated significant Court involvement into discovery related
matters, as well as extensions of the pretrial schedule.
See, e.g.,
Preliminary Pretrial Order, Doc. No. 19; Order, Doc. No. 56, Order,
Doc. No. 63, Order, Doc. No. 68, Order, Doc. No. 72; Order, Doc. No.
75; Order, Doc. No. 77; Order, Doc. No. 78; Order, Doc. No. 79;
Continued Preliminary Pretrial Order, Doc. No. 80; Order, Doc. No. 87.
The deadlines to amend the Complaint and to produce class-related
expert reports have passed, the looming deadlines to file a motion to
certify a class and to produce merits-related expert reports have been
suspended pending resolution of the Motion to Intervene, see Continued
Preliminary Pretrial Conference, Doc. No. 80; Order, Doc. No. 85;
Order, Doc. No. 87; Order, Doc. No. 90; Order, Doc. No. 93; and the
Court has already ruled on, inter alia, a motion to remand, multiple
motions for judgment on the pleadings, a motion to strike, and a
motion to certify a question to the Ohio Supreme Court.
Although
discovery has not yet closed and plaintiffs have not yet filed a
motion to certify a class, cf. Shy v. Navistar Intern. Corp., No.
3:92-cv-333, 2013 WL 485808, at *3 (S.D. Ohio Feb. 6, 2013) (“[A]n
examination of the timing of the intervenor’s motion in light of ʽthe
point to which the suit has progressed’ is most relevant when the
motion arrives at a point in time that would require reopening
discovery, delaying trial, or some other prejudicial delay to the
parties”) (citing Stupak-Thrall, 226 F.3d at 475), the Court concludes
that, under the circumstances, the litigation has progressed to a
significant degree.
See Johnson v. City of Memphis, 73 F. App’x 123,
7
132 (6th Cir. 2003) (finding that extensive progress in the case
counsels against intervention).
The second timeliness factor, i.e., the purpose for which
intervention is sought, likewise weighs against intervention.
The
Robins plaintiffs seek to intervene “to promote judicial efficiency []
and participate in any settlement discussions that would release all
of their claims against Global Fitness.”
Motion to Intervene, p. 1.
The Robins plaintiffs represent that they want “to insure that any
settlement of their claims is fair, reasonable, and adequate.”
p. 8.
Id. at
Judicial economy would be promoted by the proposed
intervention, the Robins plaintiffs argue, because intervention will
eliminate the need for the Robins plaintiffs to object at a fairness
hearing and would therefore reduce the risk of any settlement being
rejected at a fairness hearing.
Given the progress of this action to date, as noted supra, and in
light of the fact that the Robins plaintiffs propose to assert new
causes of action, see Motion to Intervene, p. 3, Exhibit 1, the Court
concludes that intervention would not serve the interests of judicial
economy.
Although the goal of achieving a “fair, reasonable, and
adequate” settlement is not an improper goal, the Court is not
persuaded by the Robins plaintiffs’ argument that such a settlement
can be obtained only through their intervention.
The Robins
plaintiffs’ interest in this action is similar to that of every other
potential class member, all of whom, presumably, would prefer a “fair,
reasonable, and adequate” settlement.
The joinder of some of those
potential class members as intervening parties would not, in the
8
Court’s view, increase judicial economy to any material degree.
Furthermore, the Robins plaintiffs will have the opportunity to
investigate and evaluate any proposed settlement at a fairness hearing
should the parties agree to terms of settlement of class claims.
See
Bailey v. White, 320 F. App’x 364, 366-67 (6th Cir. 2009) (“The
purpose for intervening - to investigate and evaluate the proposed
settlement - was satisfied by the opportunity to participate in the
fairness hearing . . . .”).
Moreover, there is no judicial economy to be realized by relitigating claims in this Court that were dismissed in the Northern
District of Ohio and which are currently the subject of an appeal in
the United States Court of Appeals for the Sixth Circuit.
Furthermore, although the Robins plaintiffs purport to seek
intervention for the limited purpose of engaging in settlement
discussions, such limited intervention would not be feasible in light
of the posture of this case combined with the additional claims sought
to be asserted by the Robins plaintiffs.
See City of Detroit, 712
F.3d at 931-33 (discussing appropriate situations for “limited-inscope intervention” under Rule 24) (citations omitted).
The third timeliness factor, i.e., the length of time preceding
the application during which the proposed intervenors knew or should
have known of their interest in the case, also militates against
intervention.
The Robins plaintiffs concede that they have known of
this litigation for quite some time.
As discussed supra, the Robins
plaintiffs’ claims were dismissed in January 2012.
In February 2012,
the Robins plaintiffs apparently embarked on mediation of their claims
9
against Global Fitness.
Affidavit, attached to Robins Plaintiffs’
Reply as Doc. No. 94-1, at ¶ 4.
The mediation was initiated by Global
Fitness, who “wanted to explore a comprehensive settlement of all
matters in all pending lawsuits.”
Id. at ¶¶ 5-7.
Settlement
negotiations broke down in May 2013 because “the Gascho plaintiffs
were unwilling to proceed with a settlement that involved counsel for
the Robins plaintiffs.”
Id. at ¶¶ 10-11.
The Robins plaintiffs have known about this action and their
interest in the case since at least June 25, 2012, i.e., the date of
the first regularly scheduled mediation conference intended to address
Global Fitness’s progress toward establishing a “framework” for a
comprehensive, global settlement, Affidavit, ¶ 9, and likely since
February 2012.
See id. at ¶¶ 4-10.
Nevertheless, the Robins
plaintiffs waited until July 19, 2013 to move to intervene in this
action.
The Court concludes that this delay of more than 12 months
militates against intervention, notwithstanding the movants’ perceived
“satisf[action] with conducting parallel settlement negotiations . . .
without intervening in the action.”
Robin Plaintiffs’ Reply, p. 5.
See Blount-Hill, 636 F.3d at 285-86 (finding the proposed intervenors’
failure to act “promptly [i.e., a five month delay] after discovering
their interest in the litigation” despite actual or constructive
knowledge of their interest in the litigation to weigh heavily against
the timeliness of their application to intervene); Johnson, 73 F.
App’x at 132 (“Accordingly, the seven months preceding the proposed
intervenors’ motion to intervene during which they knew or should have
known of their interest renders their motion untimely.”) (citing
10
Stotts, 679 F.2d at 582); United States v. Tennessee, 260 F.3d 587,
594 (6th Cir. 2001) (“An entity that is aware that its interests may
be impaired by the outcome of the litigation is obligated to seek
intervention as soon as it is reasonably apparent that it is entitled
to intervene.”).
The fourth timeliness factor requires a consideration of the
prejudice to the original parties due to the proposed intervenors’
failure to promptly intervene after they knew or reasonably should
have known of their interest in the case.
Blount-Hill, 636 F.3d at
284. Plaintiffs argue that they will be prejudiced if intervention is
permitted because the proceedings will be delayed and all parties will
be forced to address causes of action not asserted by the original
plantiffs in this action and which have already been dismissed in the
Northern District of Ohio.
Plaintiffs’ Response, p. 5.
Intervention by the Robins plaintiffs will undoubtedly delay this
action.
The proposed intervention will, in light of the dismissal of
the Robins plaintiffs’ claims in the Northern District of Ohio, almost
certainly precipitate a motion to dismiss those claims in this Court,
which would delay this action further by requiring a new briefing
schedule and time to consider the motion.
In light of the pendency of
the appeal from the dismissal of those claims in the Northern District
of Ohio, this Court sees no reason to further delay this action by
permitting the assertion of those claims in this action.
Although the
pretrial schedule in this case has been suspended pending resolution
of the Motion to Intervene, see Order, Doc. No. 90, the Court
concludes that the grant of the motion to intervene would
11
significantly impact the current schedule, to the prejudice of the
current parties.
Consideration of this factor weighs against
intervention.
Finally, the Robins plaintiffs have not alleged any facts
demonstrating that unusual circumstances favor intervention.
Based on the foregoing, the Court concludes that the Robins
plaintiffs’ Motion to Intervene is untimely.
Having so concluded, the
Court need not and does not consider the remaining elements of
intervention under either Rule 24(a) or Rule 24(b).
It is therefore RECOMMENDED that the Motion to Intervene, Doc.
No. 89, be DENIED.
If any party seeks review by the District Judge of this Report
and Recommendation, that party may, within fourteen (14) days, file
and serve on all parties objections to the Report and Recommendation,
specifically designating this Report and Recommendation, and the part
thereof in question, as well as the basis for objection thereto.
U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b).
28
Response to objections
must be filed within fourteen (14) days after being served with a copy
thereof.
Fed. R. Civ. P. 72(b).
The parties are specifically advised that failure to object to
the Report and Recommendation will result in a waiver of the right to
de novo review by the District Judge and of the right to appeal the
decision of the District Court adopting the Report and Recommendation.
See Thomas v. Arn, 474 U.S. 140 (1985); Smith v. Detroit Fed’n of
Teachers, Local 231 etc., 829 F.2d 1370 (6th Cir. 1987); United States
v. Walters, 638 F.2d 947 (6th Cir. 1981).
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September 3, 2013
s/Norah McCann King_______
Norah McCann King
United States Magistrate Judge
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