Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-15-10309/USCOURTS-ca5-15-10309-0/pdf.json

Parties Involved:
24 Hour Fitness USA, Incorporated
Appellee
Omar Jasso
Appellant
Russell Wendt
Appellant

Document Text:

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-10309

RUSSELL WENDT, Individually, and on behalf of all others similarly 

situated; OMAR JASSO, Individually, and on behalf of all others similarly 

situated, 

 Plaintiffs - Appellants

v.

24 HOUR FITNESS USA, INCORPORATED, 

 Defendant - Appellee

Appeal from the United States District Court

for the Northern District of Texas

Before DAVIS, SMITH, and HIGGINSON, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Russell Wendt and Omar Jasso (“Plaintiffs”) appeal the district court’s 

order dismissing their suit against 24 Hour Fitness USA, Inc. (“24 Hour”) for 

lack of Article III standing. We affirm.

I.

24 Hour operates a chain of health clubs. Plaintiffs entered into written 

membership contracts with 24 Hour, pursuant to which they paid 24 Hour 

membership dues and fees. In exchange, 24 Hour gave Plaintiffs access to its 

facilities for their entire membership period.

United States Court of Appeals

Fifth Circuit

FILED

April 13, 2016

Lyle W. Cayce

Clerk

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No. 15-10309

2

Plaintiffs now claim that their membership contracts with 24 Hour did

not strictly comply with several technical provisions of the Texas Health Spa 

Act (the “Act”).1 Although Plaintiffs effectively concede that 24 Hour’s alleged 

statutory violations did not adversely impact them in any way,2 they 

nevertheless request a judicial declaration that their membership contracts 

were void ab initio.3 They also seek to recover all membership fees they paid 

to 24 Hour in the past two years, as well as punitive damages, interest, costs, 

and attorney’s fees.4

The district court concluded that Plaintiffs had suffered no injury-in-fact. 

The court reasoned that “[r]egardless of alleged deficiencies in the contractual 

language, Plaintiffs received what they bargained for: use of a health club 

 

1 Specifically, Plaintiffs claim that their membership contracts violate the Act in the 

following respects:

(1) The contractual language deviates slightly from mandatory statutory

language regarding cancellations, refunds, and prepayment that the Act 

requires membership contracts to reproduce verbatim; 

(2) The contracts purport to limit the venue in which members may sue 24 

Hour, in contravention of the Act’s broad venue provision; 

(3) The contracts purport to limit the member’s ability to sue 24 Hour for 

fraudulent inducement, in contravention of the Act’s anti-waiver and antifraudulent inducement provisions; 

(4) The contracts contain a severability clause in contravention of the Act’s 

anti-waiver and voiding sections; and

(5) The contracts purport to limit 24 Hour’s liability to “actual compensatory 

damages,” in violation of the Act’s authorization of punitive damages, fees, and 

costs.

See TEX. OCC. CODE ANN. §§ 702.304, 702.305, 702.401, 702.402(a)(2).

2 As Plaintiffs admit in their appellate brief, they “have never denied that the specific 

violations [of the Act] themselves did not injure them.”

3 See TEX. OCC. CODE ANN. § 702.311(1) (providing that a health club membership 

contract is void if it does not comply with the Act).

4 Plaintiffs also sought to certify a class action against 24 Hour. Because the district 

court dismissed the case for lack of Article III standing, it denied Plaintiffs’ motion for class 

certification as moot.

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3

facility.” The court therefore dismissed the case without prejudice for lack of 

Article III standing.

II.

A plaintiff must have Article III standing to maintain an action in federal 

court.5 To establish Article III standing, the plaintiff must show (among other 

things) that he has suffered an “injury in fact.”6 An injury-in-fact constitutes 

“an invasion of a legally protected interest which is (a) concrete and 

particularized, and (b) actual or imminent, not conjectural or hypothetical.”7

The plaintiff, as the party invoking federal jurisdiction, bears the burden of 

establishing an injury-in-fact.8 “[T]he jurisdictional issue of standing is a legal 

question for which review is de novo.”9

III.

We agree with the district court that Plaintiffs suffered no injury-in-fact.

24 Hour’s alleged violations of the Act did not harm Plaintiffs in any way. To 

the contrary, 24 Hour gave Plaintiffs exactly what they paid for: access to a 

gym.10 Plaintiffs therefore lack Article III standing, and the district court 

properly dismissed the case. 

 

5 E.g., Crane v. Johnson, 783 F.3d 244, 255 (5th Cir. 2015).

6 Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

7 Id. (internal citations and quotation marks omitted).

8 Id. at 561 (citing FW/PBS Inc. v. Dallas, 493 U.S. 215, 231 (1990); Warth v. Seldin, 

422 U.S. 490, 508 (1975)).

9 Crane, 783 F.3d at 250 (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 

102 (1998)).

10 Plaintiffs maintain that the Court may not consider whether they received the 

benefit of their bargain in exchange for their membership dues. 

Generally, “[o]nce injury is shown, no attempt is made to ask whether the injury is 

outweighed by benefits the plaintiff has enjoyed from the relationship with the defendant.”

Texas v. United States, 809 F.3d 134, 155-56 (5th Cir. 2015), cert. granted, 136 S. Ct. 906 

(2016) (quoting 13A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 

3531.4, at 147 (3d ed. 2015)).

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Plaintiffs nonetheless argue that they have suffered an injury-in-fact in 

two respects. They first assert that they have suffered an economic injury 

because the Act and Texas common law entitle them to a full refund of their 

membership dues. Secondly, Plaintiffs argue that 24 Hour’s mere violation of 

the Act constitutes an invasion of their legally protected rights sufficient to 

constitute injury-in-fact for the purposes of Article III standing. As explained 

below, neither of these arguments has merit.

A.

Plaintiffs first argue they have suffered injury by paying funds to 24 

Hour that 24 Hour could not legally collect from them because the Act renders

their membership contracts void ab initio.11 Because the contracts are void, 

Plaintiffs claim that 24 Hour must have provided its facilities to Plaintiffs 

gratuitously and voluntarily. Plaintiffs therefore claim they are entitled to a 

complete refund of all amounts paid under the contracts, even though it is 

undisputed that they received access to 24 Hour’s facilities. According to 

Plaintiffs, their entitlement to a complete refund of all of the fees they paid

under their void membership contracts constitutes an economic injury that 

satisfies Article III standing.

The Act does not support Plaintiffs’ claim to the windfall they seek. The 

text of the Act does not authorize a complete refund for negligible technical 

 

However, when “the costs and benefits ar[i]se out of the same transaction,” the Court 

may consider the benefits the plaintiff received to determine whether the plaintiff has 

“demonstrated injury” for the purposes of Article III standing. Id. (citing Henderson v. 

Stalder, 287 F.3d 374, 379-81 (5th Cir. 2002)).

In this case, all of the costs and benefits arise from a single transaction: Plaintiffs paid 

24 Hour membership fees, and in return 24 Hour gave them access to its facilities. We may 

therefore consider whether those benefits fully offset Plaintiffs’ costs. They do.

11 Like the district court, we assume without deciding that the membership contracts 

are void. We do not reach 24 Hour’s argument that the Act renders noncompliant membership 

contracts voidable rather than void.

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violations that otherwise cause no harm to the customer. Rather, the Act’s civil 

remedy provision authorizes only “(1) actual damages; (2) equitable relief; (3) 

punitive damages; or (4) reasonable attorney’s fees and court costs to the 

prevailing party.”12 Because Plaintiffs have not sustained any actual damages

as a result of 24 Hour’s alleged violations, and because the plain text of the Act 

does not entitle them to disgorgement of their membership dues, Plaintiffs 

have not suffered an economic injury that would give rise to Article III 

standing.

Plaintiffs also maintain that Texas contract law entitles them to recover 

the entirety of their membership dues. That too is incorrect. Texas case law 

permits a plaintiff to recover the purchase price he paid under a void contract 

only if the defendant fails to give the plaintiff all or part of what he paid for,13

or if the statute that renders the contract void explicitly provides that the 

plaintiff is not liable to pay for any past services rendered by the defendant.14

Neither of those predicates for liability applies here. 24 Hour gave Plaintiffs 

exactly what they paid for, and the Act does not provide that a health club 

member is not liable for the payment of any past services rendered under a 

 

12 TEX. OCC. CODE ANN. § 702.503.

13 See In re Tex. Ass’n of Sch. Bds., Inc., 169 S.W.3d 653, 659 (Tex. 2005); Hudson v. 

Belikoff, No. 14-96-01551-CV, 1999 WL 212201, at *1–2 (Tex. App.―Houston [14th Dist.] Apr. 

8, 1999, no pet.) (not designated for publication); Quintanilla v. Almaguer, No. 13-96-455-CV, 

1998 WL 35276214, at *1–3 (Tex. App.―Corpus Christi May 12, 1998, no pet.) (not designated 

for publication); First Sec. Bank & Tr. Co. v. Roach, 493 S.W.2d 612, 617–19 (Tex. Civ. 

App.―Dallas 1973, writ ref’d n.r.e.); Causeway Inv. Co. v. Nass, 111 S.W.2d 703, 705 (Tex. 

1938); Am. Nat’l Ins. Co. v. Smith, 13 S.W.2d 720, 723 (Tex. Civ. App.―El Paso 1929, writ 

ref’d); Rayner Cattle Co. v. Bedford, 44 S.W. 410, 411–13 (Tex. Civ. App.―Fort Worth), writ 

ref’d, 45 S.W. 554 (Tex. 1898). 14 See Reyelts v. Cross, 968 F. Supp. 2d 835, 843-44 (N.D. Tex. 2013), aff’d, 566 F. App’x 

316 (5th Cir. 2014) (citing TEX. INS. CODE ANN. § 4102.207(b), which, unlike the Act,

specifically provides that “[i]f a contract is voided under this section, the insured is not liable 

for the payment of any past services rendered” under the void contract).

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void membership contract.15 Thus, Texas law does not support Plaintiffs’ claim 

of injury.

Because Plaintiffs are not entitled to a full refund of their membership 

dues, and because 24 Hour’s alleged violations of the Act did not cause 

Plaintiffs actual damages or any other form of economic harm, Plaintiffs have 

sustained no economic injury. Consequently, they may maintain this lawsuit 

only if they have suffered some non-economic injury that confers Article III 

standing.

B.

Plaintiffs next argue that a mere violation of the Act constitutes a 

cognizable injury-in-fact even in the absence of economic injury.

It is true that “[t]he actual or threatened injury required by Art. III may 

exist solely by virtue of ‘statutes creating legal rights, the invasion of which 

creates standing.’”16 “Congress17 may create a statutory right or entitlement 

the alleged deprivation of which can confer standing to sue even where the 

 

15 Compare TEX. INS. CODE ANN. § 4102.207(b).

16 Warth, 422 U.S. at 500 (quoting Linda R.S. v. Richard D., 410 U.S. 614, 617 n.3 

(1973); Sierra Club v. Morton, 405 U.S. 727, 732 (1972)).

The Supreme Court recently granted certiorari in Spokeo, Inc. v. Robins, Docket No. 

13-1339, to consider “[w]hether Congress may confer Article III standing upon a plaintiff who 

suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a 

federal court, by authorizing a private right of action based on a bare violation of a federal 

statute.” This case does not implicate that question because, for the reasons explained below, 

the Texas legislature has not authorized a private right of action based on a bare violation of 

the Act.

17 We assume without deciding that the Texas legislature, like Congress, also has the 

power to elevate otherwise trivial inconveniences to legally cognizable injuries-in-fact. See 

Scanlan v. Eisenberg, 669 F.3d 838, 845 (7th Cir. 2012) (citing FMC Corp v. Boesky, 852 F.2d 

981, 993 (7th Cir. 1988)); Katz v. Pershing, LLC, 672 F.3d 64, 75 (1st Cir. 2012). But see 

Finkelman v. Nat’l Football League, 810 F.3d 187, 196 n.65 (3d Cir. 2016) (stating that 

permitting a state legislature to “elevate harms to the status of Article III injuries” would 

“raise serious federalism concerns”).

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plaintiff would have suffered no judicially cognizable injury in the absence of 

statute.”18

“[W]here, as here, a plaintiff’s claim of injury in fact depends on legal 

rights conferred by statute, it is the particular statute and the rights it conveys 

that guide the standing determination.”19 “Essentially, the standing question 

in such cases is whether the . . . statutory provision on which the claim rests 

properly can be understood as granting persons in the plaintiff's position a 

right to judicial relief.”20 “Hence, the ‘injury in fact’ analysis for purposes of 

Article III is directly linked to the question of whether” the plaintiff “has 

suffered a cognizable statutory injury under the” statute in question.21

We conclude that Plaintiffs have suffered no cognizable statutory injury

under the Act. The Act explicitly provides: “A member may file suit against a 

seller if: (1) the seller violates [the Act]; and (2) the seller’s violation causes 

injury to the member.”22 The italicized phrase establishes that a violation of 

the Act, standing alone, does not constitute a freestanding injury that 

authorizes a member to bring suit. Thus, the Act does not authorize members 

to sue health clubs for technical statutory violations which cause the member 

no harm.

Moreover, the Act does not authorize health club members to recover

statutory or nominal damages for mere technical violations.23 To reiterate, the 

 

18 Warth, 422 U.S. at 514 (citing Linda R.S., 410 U.S. at 617 n.3).

19 Donoghue v. Bulldog Inv’rs Gen. P’ship, 696 F.3d 170, 178 (2d Cir. 2012) (citing 

Warth, 422 U.S. at 500).

20 Warth, 422 U.S. at 500.

21 Robey v. Shapiro, Marianos & Cejda, L.L.C., 434 F.3d 1208, 1212 (10th Cir. 2006).

For that reason, we reject Plaintiffs’ argument that the district court erroneously

conflated statutory standing with Article III standing.

22 TEX. OCC. CODE ANN. § 702.501(a) (emphasis added).

23 Whereas the Texas Attorney General may potentially recover civil penalties for a 

health club’s violation of the Act which causes no economic or other harm to its members, 

individual health club members may not. See id. §§ 702.552, 702.553.

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Act instead limits recovery to “(1) actual damages; (2) equitable relief; (3) 

punitive damages; or (4) reasonable attorney’s fees and court costs to the 

prevailing party.”24 This bolsters our conclusion that the Act does not elevate 

standalone statutory violations to cognizable injuries in fact.

Thus, the Act cannot “properly . . . be understood as granting persons in 

[Plaintiffs’] position a right to judicial relief.”25 To the contrary, the Act 

requires a health club member to be injured by a statutory violation before he 

may bring suit. As explained above, 24 Hour’s alleged violations of the Act did 

not injure Plaintiffs in any way. Because Plaintiffs did not suffer an injury 

within the meaning of the Act, they lack Article III standing.26

AFFIRMED.

 

24 Id. § 702.503.

25 See Warth, 422 U.S. at 500.

26 Plaintiffs argue that they have standing to pursue their claim under Texas’s 

Deceptive Trade Practices Act and their claim for “money had and received” even if they lack 

standing to bring a claim under the Act. Plaintiffs have offered no persuasive argument to 

support that contention, so we reject it.

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