NY Sports Club’s Owner Settles AG Lawsuit after COVID Membership Scandal
Attorney General James Delivers for New York Sports Clubs and Lucille Roberts Members.
“The Former Parent Company TSI is to Offer a $250,000 Bond to pay
charging illegal dues and preventing consumers from cancelling Memberships.”
NEW YORK, NY – New York Attorney General Letitia James has announced that she had settled her suit in the case against the parent company of New York Sports Clubs (NYSC) and Lucille Roberts for illegally charging monthly membership fees to members and engaging in various fraud and unlawful practices in relation to consumers’ rights to cancel during the coronavirus infection (COVID-19) (COVID-19) outbreak. If the court grants the request the agreement in place with Town Sports International (TSI) could allow $250,000 in the future for compensation for victims of the COVID-19 pandemic. New York gym members were charged for gym services that weren’t available to the members.
“From the start of the investigation by my office I’ve explained to the New York Sports Clubs and Lucille Roberts that the COVID-19 epidemic does not grant them the right to violate the law and profit of their members,” said Attorney General James. “A public health emergency did not authorize these gyms to boost their financials by imposing illegal charges. The current agreement makes the former parent company responsible for these gyms and takes us one step closer recovering the $250,000 bond that was issued from the parent company in the hopes of distributing it to those who have been harmed by their illegal activities.”
On the 16th of March, 2020 all health facilities were ordered to close in order to prevent the expansion of COVID-19. The majority of health clubs and gyms across New York responded by committing to freezing memberships at no cost until the clubs were reopened and some went even further, promising to credit customers automatically on days that the club was closed. But, NYSC as well as Lucille Roberts have refused to follow through with the same and, instead, they continued to charge members dues, and also did not honour certain cancellation requests, imposing conditions and fees on requests for cancellation or freeze even when all clubs were closed. Then, in April attorney general James wrote to TSI asking for urgent changes in the unconstitutional method that TSI responded to the compulsory closure of health and fitness clubs.
Despite promises to the effect that the company changed its policies but it did not. In September of 2020, Attorney General James filed a lawsuit against TSI and alleged the NYSC, as well as Lucille Roberts clubs, had violated a variety of New York state laws by charging members dues for services that were not provided and failing to provide credits in accordance with the terms of their contracts; imposing unconstitutional fees and advance notification requirements for cancellation requests, misleading customers regarding how they can cancel memberships, and refusing to accept cancellation requests. As part of her suit, Attorney General James wanted to recover the bond of $250,000 that the company was required to post in 2015 in accordance with the New York Health Club Services Law. The law requires gyms to have an insurance bond that will provide the possibility of recovering members in the event that the gym files for bankruptcy or otherwise violates the law. The bond is currently held by a third party bond company.
A few days prior to the date Attorney General James filed her lawsuit, TSI declared bankruptcy. In November of 2020, the bankruptcy court agreed to the transaction which allowed a third party to buy the assets of TSI, without taking responsibility for any of TSI’s activities prior to the purchase. The bankruptcy court’s decision also ordered TSI’s remaining property to be sold, and that the company is close. The deal closed on November 30th, 2020 and since then the gyms that were that are branded New York Sports Club or Lucille Roberts were purchased and run by an entirely different company. TSI is no longer playing any part in owning or running NYSC or Lucille Roberts ‘ gyms.
The agreement between TSI and The Office of the Attorney General (OAG) obliges the company to give up any rights related to the bond amounting to $250,000 and help Attorney General James in getting bonds from the company. Attorney General James plans to utilize the bond of $250,000 to pay some form of restitution to the members affected. NYSC as well as Lucille Roberts customers who are charged improperly during the pandemic, or who were denied requests for cancellation may make complaints if they haven’t previously done so on the site of the OAG. Consumers are encouraged to provide any documents they have with their complaints.
TSI has no longer owned or manages the health club located in New York or across the country, and it is scheduled to be gone.
The agreement today does not include NYSC’s new owners NYSC as well as Lucille Roberts so the company is still subject to the full range of New York laws. Attorney General James suggests anyone New Yorker who belongs to one of these gyms and thinks they remain in violation of the law to make a complaint to OAG.
This issue is being dealt with by Assistant Attorney General Christopher L. McCall, Bureau Chief Deputy Laura J. Levine, and Bureau Chief Jane M. Azia -All from the Consumer Frauds and Protection Bureau. This Consumer Frauds and Protection Bureau is the element of the Division for Economic Justice, which is headed by the Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.