IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

JUAN DORADO, et al., )

)

Plaintiffs, )

)

v. ) No. 12 C 137

)

BALLY TOTAL FITNESS HOLDING )

CORP., et al., )

)

Defendants. )

MEMORANDUM

Within a day after receiving the Judge’s Copy of the

putative Class Action Complaint brought by Juan Dorado (“Dorado”)

and Michael Markzon (“Markzon”), this Court drafted and then

issued a threshold January 13, 2012 opinion that identified

(without any effort to be exhaustive) a group of “problematic

aspects of the Complaint” (a euphemistic understatement). That

memorandum opinion and order (the “Opinion”) was triggered in

large part by plaintiffs’ counsel having noticed up, for

presentment on January 17, a motion to seek class certification.

When the January 17 presentment date arrived, it developed

that plaintiffs’ original counsel had since enlisted the aid of a

much more experienced hand at the representation of plaintiffs in

class actions, so that both a First Amended Complaint (“FAC”) and

an Amended Motion To Certify Case as a Class Action (“Amended

Certification Motion”) had been prepared and filed over the

holiday weekend. Both defendants--Bally Total Fitness Holding

Corp. (“Bally”) and L.A. Fitness International, LLC (“L.A. 

Case: 1:12-cv-00137 Document #: 30 Filed: 01/19/12 Page 1 of 4 PageID #:157
Fitness”)--appeared through counsel (having chosen not to

challenge the flawed notice of motion pointed out in Opinion at 4

n.3), although they had not seen all of the recent documentation.

This Court adjourned the motion hearing briefly to allow

defense counsel the opportunity to read the Opinion (whose

existence had been unknown to them before the hearing) and to

allow this Court to read (more accurately, to scan) the newlyfiled FAC and Amended Certification Motion. That brief look by

this Court disclosed that the FAC had taken heed of a number of

the deficiencies identified in the Opinion (though not all of its

flaws had been cured ). 1

In any event, the extended discussion that ensued among all

counsel and this Court eventuated in the setting of a February 7

date for motions to dismiss, anticipated to be brought under both

Fed. R. Civ. P. (“Rule”) 12(b)(2) and 12(b)(6), followed by a

February 10 status hearing to discuss the course of further

proceedings on the motions. But in the course of that discussion

L.A. Fitness’ counsel stated that contrary to the assertions in

 For example, even that cursory review by this Court 1

revealed that FAC ¶22 continued the original Complaint’s mistaken

reference to “federal laws,” something that plaintiffs’ original

counsel then described as a typographical error rather than his

acknowledging a negligent oversight. More significantly, FAC

¶¶30, 32 and 33 spoke of Bally having “sold” some of its members

to L.A. Fitness, a usage that taken literally would raise the

specter of a violation of the Thirteenth Amendment. But as it

turns out, that notion of “selling” members is the principal

occasion for issuance of this memorandum.

2

Case: 1:12-cv-00137 Document #: 30 Filed: 01/19/12 Page 2 of 4 PageID #:158
the original Complaint and the FAC, the Bally-L.A. Fitness

transaction had not involved the assignment of the contracts that

Bally had with its members.

That statement has led in turn to this Court’s post-hearing

request for the delivery to its chambers of a copy of the

acquisition contract between Bally and L.A. Fitness, a contract

that plaintiffs’ counsel have concededly not seen but that must

of course be provided to them (on a counsel’s-eyes-only basis

under a protective order), as this Court stated during the motion

hearing. Bally’s counsel has responded by the delivery to this

Court’s chambers of the 102-page November 18, 2011 Asset Purchase

Agreement and a brief November 30 Amendment No. 1 to that

Agreement, and this Court has taken a preliminary look at those

documents.

As might be inferred from the sheer bulk of the Asset

Purchase Agreement, the acquisition transaction was highly

complex. That document appears to reflect--despite the statement

by L.A. Fitness’ counsel--that some Bally customer contracts

were, but others were not, assigned to L.A. Fitness. What seems 2

quite likely, although no firm view can be expressed at this

time, is that the prospect of certifying an umbrella class that

 This Court has not seen the Bally customer contracts, so 2

that it cannot tell whether and to what extent they do or do not

permit assignment without consent by the customers. That of

course could add further complexity to the issues in this case.

3

Case: 1:12-cv-00137 Document #: 30 Filed: 01/19/12 Page 3 of 4 PageID #:159
embraces the types of different categories set out in the Amended

Certification Motion is quite problematic--and that the prospect

of plaintiffs obtaining a CAFA certification has been attenuated

a fortiori.

In any case, plaintiffs’ counsel would be wise to obtain

copies of the acquisition documents in advance of the February 7

due date of the motions to dismiss, to facilitate the ability to

discuss the next steps at the ensuing status hearing. It is of

course too early to opine definitively on any aspect of the class

certification issues--hence the caption “Memorandum” rather than

“Memorandum Order” or “Memorandum Opinion and Order.” 

________________________________________

Milton I. Shadur

Senior United States District Judge

Date: January 19, 2012

4

Case: 1:12-cv-00137 Document #: 30 Filed: 01/19/12 Page 4 of 4 PageID #:160