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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Peloton Interactive, Inc.    PTON


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Peloton Interactive : If You Promote Your Class Library As "Ever-Growing," Does It Actually Have To Grow?

11/19/2020 | 11:15am EST

Peloton Interactive, a stationary bike and treadmill company, advertised that its library of on-demand, virtual fitness classes was "ever-growing."  In response to a lawsuit brought by members of the National Music Publishers Association alleging that Peloton included unlicensed music in its classes, however, Peloton removed approximately 5700 classes -- or nearly 57% of the total available classes -- from its library.  Peloton purchasers then sued for false advertising under New York law, alleging that Peloton's marketing of its class library as "ever-growing" was deceptive and misleading, since the size of the library had been dramatically reduced.  

In order to state a claim for false advertising in New York, a plaintiff must prove that the advertiser's acts were consumer-oriented, that the advertising was deceptive or misleading in a material way, and that the plaintiff has been injured.  And, a deceptive act or practice is one that is, "likely to mislead a reasonable consumer acting reasonably under the circumstances." 

Peloton moved to dismiss on a number of grounds, including that:  (1) the Terms of Service permitted Peloton to remove content at any time; (2) the phrase "ever-growing" is just puffery; and (3) Peloton's statement that its library is "ever-growing" is true. 

Petolon argued that it's not liable for claims arising out of its "ever-growing" statement, since users agree to its Terms of Service, which permit Peloton to remove content from its class library at any time.  The United States District Court for the Southern District of New York held, however, that while the Terms of Service may protect the company from a breach of contract claim, they would not insulate Peloton from a deceptive marketing claim.  The court wrote, "A reasonable consumer, having viewed Peloton's advertisements on its website and having decided to purchase a Peloton product based on the understanding that the library would grow should not be expected to discover the truth and that such understanding was false from the Terms of Service."  

Peloton also argued that the phrase "ever-growing" is non-actionable puffery.  In New York "puffery" is defined as, "exaggerated general statements that make no specific claims on which consumers could rely."  In other words, puffery "is a subjective statement or claim that cannot be proven true or false."  The court didn't buy the defendant's argument here either, holding that, "ever growing" is a "measurable claim, promising that the class library in aggregate would continue to grow."  

In addition, Peloton argued that it's "ever-growing" statement is not deceptive or misleading, since "ever-growing" only means that Peloton is consistently adding new content to its content library.  Peloton argued that the statement is not, however, a claim about the aggregate size of its library.  Here, the court held that the plaintiff's allegations were sufficient to survive a motion to dismiss.  The court wrote, "Where a representation is capable of two possible reasonable interpretations, the misleading one should not be rejected simply because there is an alternative, non-misleading interpretation."  

This decision provides some helpful guidance to advertisers on a number of important  advertising law issues.  Here are some key take-aways. 

  • Statements about how your product will be updated in the future are claims that require substantiation too.  If you make forward-looking statements about your product, you'd better make sure that you can back them up.
  • It's also important to remember that your statements are typically judged from the perspective of a reasonable consumer.  That means that if there's more than one reasonable interpretation of a claim you make, you're responsible for substantiating all reasonable take-aways. 
  • Statements are really only "puffery" when they're not provable or disprovable and when they're not the kinds of statements that consumers would rely on when making a purchasing decision.  Even general statements that don't provide specifics, or that are forward-looking, can be claims requiring substantiation, if they're reasonably capable of being proven.
  • Don't rely on your terms of service to correct misimpressions created by your advertising.  While your terms may be your contract with consumers, they are unlikely to protect you from a false advertising claim if you've misled them before they even visit your website.  
  • Fishon v. Peloton Interactive, 19-cv-11711 (S.D.N.Y. Nov. 9, 2020). 


    This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.

    Mr Jeffrey Greenbaum
    Frankfurt Kurnit Klein & Selz
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