Planet Fitness Ordered to Pay Total of $4 Million

As Planet Fitness, Newington, NH, considers an initial public offering, the company has been ordered to pay nearly $4 million in two recent court cases.

In the larger case, the fitness franchisor has been ordered to pay its investment advisers $3.2 million for its help in brokering the $505 million sale of Planet Fitness to a private equity firm in 2013. The other payout—$750,000—was to settle a liability lawsuit brought by a 62-year-old woman who said she was injured at one of the company’s franchised clubs because of the club’s negligence in training its personal trainers.

In the first case, a Massachusetts federal judge ruled that Planet Fitness corporate had a fiduciary duty to pay investment advisers America’s Growth Capital (AGC) for AGC’s advising role in the 2013 sale of the company, even though the eventual purchaser of the chain—TSG Consumer Partners LLC—was not specified as a target buyer in the contract Planet Fitness had signed with AGC. The judge in this case relied on documentation and testimony that Planet Fitness had encouraged AGC to pursue TSG, whether or not the company was listed as an early suitor, and that in the eventual sale of Planet Fitness to TSG, AGC would be entitled to compensation.

The court, though, awarded only half the amount of damages AGC had requested. AGC argued that it was due $6.4 million in damages, calculated as 1.33 percent of a claimed sale price of $525.8 million. Court documents set the proper damages at 0.5 percent of an actual sale price of $505 million, and awarded AGC $2.525 million plus $702,960 for prejudgment interest.

Planet Fitness is reportedly considering an IPO and declined to comment on the judge’s order in this case.

On the heels of the AGC decision, Planet Fitness also settled a $750,000 lawsuit brought by Susan Butler, a 62-year-old fitness club patron. Butler contended that during a 2009 personal training session using a Bosu ball she was “catapulted” into the air, landing on her hip and wrist and breaking both. Butler’s lawyers argued that both the gym and its personal trainer were responsible for the accident, and were not sufficiently aware of the dangers of working with the equipment.

A key issue in this case was whether Butler’s signing of a waiver against personal injury during a club workout would be considered valid. Last week a Connecticut judge ruled that it would not, and so Planet Fitness moved to settle through mediation.

Regarding the Butler case, a Planet Fitness spokesperson would say only that the company is “fully indemnified” by the franchisee at whose location the incident took place.

These two suits have been followed by another one filed yesterday by a woman who asserts the company violated her civil rights by allowing a transgender woman in the women’s locker room and breached her contract by not telling her that the company’s policy allows transgender people to use the locker room of their choice.

Planet Fitness Ordered to Pay Total of $4 Million in Two Court Cases.