Upon consideration of the Suggestion of Death of one of the original named plaintiffs,

1

Estelle Robinson (Docket No. 47), and the unopposed Motion to Substitute Plaintiff (Docket No.

53), by Order of February 28, 2007, the Court granted the Motion and ordered the substitution of

Anthony P. Allen in the place of Ms. Robinson. Mr. Allen (the “Administrator”) is Ms.

Robinson’s husband and the administrator of her estate.

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ANTHONY ALLEN AND : CIVIL ACTION

GENE SWINDELL, :

Plaintiffs, :

:

v. :

:

HOLIDAY UNIVERSAL, ET AL., :

Defendants : NO. 05-5726

AMENDED MEMORANDUM AND ORDER

PRATTER, J. MARCH 17, 2008

Anthony Allen and Gene Swindell, on behalf of themselves and all others similarly

1

situated, seek to pursue a class action attack upon the initiation fees charged by Holiday

Universal, Inc., Scandinavian Health Spa, Inc., and Bally Total Fitness Holding Corporation

(jointly, “Health Clubs”). The Complaint alleges that the Health Clubs violated Pennsylvania’s

Health Club Act, 73 PA. CONS. STAT. ANN. §§ 2161, et seq. (“HCA”), which regulates health

clubs operating within the Commonwealth, and the Pennsylvania Unfair Trade Practices and

Consumer Protection Law, 73 PA. CONS. STAT. ANN. §§ 201-1, et seq. (“UTPCPL”), which

prohibits unfair or deceptive acts or practices in any trade or commercial endeavor. Plaintiffs

also present claims for unjust enrichment (Count II) and for declaratory relief (Count III).

The Plaintiffs moved for class certification and the Health Clubs opposed the Motion. 

For the reasons discussed more fully below, the Court will grant the Motion and the certify the

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 1 of 63
2

class as specified in the accompanying Order.

PROCEDURAL HISTORY

Plaintiffs originally filed their claims in state court and the Health Clubs timely removed

the case to federal court. By Memorandum and Order of February 27, 2006, the Court denied the

Plaintiffs’ Motion for Remand.

The Health Clubs then moved pursuant to Rule 12(b) of the Federal Rules of Civil

Procedure to dismiss the Complaint on the grounds that (1) the HCA is inapplicable, (2)

Plaintiffs do not state a cognizable claim under the HCA, (3) the HCA is void because it is

unconstitutionally vague, (4) Count I fails to state a claim for equitable relief because the

UTPCPL does not authorize a private plaintiff to seek such relief, (5) inasmuch as there are valid

contracts between Plaintiffs and a defendant, Count II fails to state a claim for unjust enrichment

and/or restitution, and (6) Count III fails to state a claim for declaratory judgment because

Plaintiffs have not rescinded their respective contracts. By Memorandum and Order of

September 11, 2006, the Court denied the Motion to Dismiss in its entirety.

The progress of this case has been delayed in part due to the unfortunate passing of

Estelle Robinson, one of the original named plaintiffs, and later by the Notice of Chapter 11

Bankruptcy filed by the Health Clubs. On October 15, 2007, upon receipt of confirmation by the

parties that the automatic stay due to bankruptcy had been lifted, the Court vacated the stay and

removed the case from suspense status. 

The Plaintiffs’ Motion for Class Certification, which was filed prior to the bankruptcy

proceedings, is currently pending.

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 2 of 63
3

FACTUAL BACKGROUND

In February 2002, Ms. Robinson visited the Bally Total Fitness Club located at 3400

Aramingo Avenue, Philadelphia, Pennsylvania, and entered into a Retail Installment Contract

prepared by the Health Clubs for a “Premier” family membersip for herself and her minor son. 

The terms of Ms. Robinson’s contract allegedly required her to pay a “Membership Fee” of

$632.00, of which Ms. Robinson paid $100.00 down and financed the balance at an annual

percentage rate of 17.50%, with monthly payments of $19.10 for 36 months. Ms. Robinson was

further obligated to pay “Monthly Dues” of $2.60 for a total monthly payment of $21.70. The

membership renewed automatically.

In October 2002, Mr. Swindell visited the Bally Total Fitness Club located at 3000

Oxford Drive, Bethel Park, Pennsylvania and entered into a Retail Installment Contract prepared

by the Health Clubs with Scandinavian for a fitness club membership. Mr. Swindell allegedly

was charged a membership fee of $1,275.00. Mr. Swindell made a down payment of $100.00

and financed the balance of $1,175 at an annual percentage rate of 13%, with monthly payments

of $39.75 for 36 months, including “Monthly Dues” of $3.00 per month. Both Ms. Robinson and

Mr. Swindell entered into the contracts for health club services for personal, family or household

purposes.

The upshot of the Complaint is that the Health Clubs violated Section 2165 of the HCA

by charging grossly excessive initiation fees. Section 2165 provides, in relevant part, that

the amount of any initiation fees imposed by a health club shall be

reasonably related to the club’s costs for establishing the initial

membership[, and] shall not be imposed for the purpose of

circumventing the requirements of this act.

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 3 of 63
4

73 PA. STAT. ANN. § 2165 (West 2007). 

LEGAL STANDARD

The class action device is appropriate in cases where it “saves the resources of both the

courts and the parties by permitting an issue potentially affecting every [class member] to be

litigated in an economical fashion under Rule 23.” General Tel. Co. of the Sw. v. Falcon, 457

U.S. 147, 155 (1982) (quoting Califano v. Yamasaki, 442 U.S. 682, 701 (1979)). A party

seeking class certification bears the burden of proving that the proposed class action satisfies the

requirements of Federal Rule of Civil Procedure 23. Johnston v. HBO Film Mgmt., Inc., 265

F.3d 178, 183-84 (3d Cir. 2001). To meet this burden, the Plaintiffs must satisfy the four

prerequisites of Rule 23(a), and demonstrate that the action can be maintained under at least one

of the subsections of Rule 23(b). Id. (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613-

14 (1997)); Fed. R. Civ. P. 23.

Rule 23(a) requires that the movant demonstrate the following for certification:

(1) the class is so numerous that joinder of all members is

impracticable, (2) there are questions of law or fact common to the

class, (3) the claims or defenses of the representative parties are

typical of the claims or defenses of the class, and (4) the

representative parties will fairly and adequately protect the interests

of the class.

Fed. R. Civ. P. 23(a). Rule 23(b) sets forth the circumstances under which an action may be

maintained as a class action. Rule 23(b)(1) provides that class treatment is appropriate where

the prosecution ofseparate actions by or against individual members

of the class would create a risk of (A) inconsistent or varying

adjudications with respect to individual members of the class which

would establish incompatible standards of conduct for the party

opposing the class, or (B) adjudications with respect to individual

members of the class which would as a practical matter be dispositive

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 4 of 63
5

of the interests of the other members not parties to the adjudications

or substantially impair or impede their ability to protect their

interests.

Fed. R. Civ. P. 23(b)(1). Rule 23(b)(2) permits certification where “the party opposing the class

has acted or refused to act on grounds generally applicable to the class, thereby making

appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a

whole.” Fed. R. Civ. P. 23(b)(2). Rule 23(b)(3) permits class actions where the court finds that

“the questions of law or fact common to the members of the class predominate over any

questions affecting only individual members, and that a class action is superior to other available

methods for the fair and efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3).

The Court of Appeals for the Third Circuit has recognized the utility, and sometimes

necessity, of looking beyond the pleadings at the class certification stage of the litigation. See

Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 168-69 (3d Cir. 2001) (“In

reviewing a motion for class certification, a preliminary inquiry into the merits is sometimes

necessary to determine whether the alleged claims can be properly resolved as a class action.”).

However, “it is not necessary for the plaintiffs to establish the merits of their case at the class

certification stage.” Chiang v. Veneman, 385 F.3d 256, 262 (3d Cir. 2004). Moreover, “‘the

interests of justice require that in a doubtful case . . . any error, if there is to be one, should be

committed in favor of allowing a class action.” Behrend v. Comcast Corp., 2007 WL 2972601,

at *1-2 (E.D. Pa. May 2, 2007) (citing Eisenberg v. Gagnon, 766 F.2d 770, 785 (3d Cir.1985)).

DISCUSSION

I. The Class Definition

The Plaintiffs seek certification of a class of “all persons who, on or after December 7,

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 5 of 63
 This definition of the Class is slightly modified from the definition set forth in the 2

Complaint. Modifying a class definition is contemplated by the Federal Rules of Civil

Procedure, see Fed. R. Civ. P. 23(c)(1), and a court “is not bound by the class definition proposed

in the complaint,” Robidoux v. Celani, 987 F.2d 931, 937 (2d Cir. 1993).

6

1998, entered into a contract for health club services with health clubs located in Pennsylvania

and owned by The Health Clubs that required the payment of a membership fee in excess of

$100.00” (the “Class”). All officers and directors of the Health Clubs are excluded from the 2

Class. The Health Clubs assert that the Plaintiffs’ Class definition is defective because it is

overly broad and includes a “fail/safe” class.

A. Whether the Class Definition is Overly Broad

First, the Health Clubs assert that the Class definition is overly broad because it contains

persons who have not been injured and who cannot maintain an action against the Health Clubs. 

The Health Clubs contend that, as currently defined, the Class includes health club members who

not only accepted the benefits of their contracts, but wanted such benefits and thus would not be

able to establish liability, as well as current members who do not wish to void their contracts. In

addition, the Health Clubs argue that because some part of the proposed Class likely would seek

to continue to use their membership privileges under their contracts, the Plaintiffs effectively are

seeking an advisory opinion with respect to those class members, which is prohibited by the

“case or controversy” requirement of Article III, Section 2 of the federal Constitution. Travelers

Ins. Co. v. Obusek, 72 F.3d 1148, 1153 (3d Cir. 1995).

Courts have denied certification where the putative class “contains members lacking

Article III standing,” thus requiring any putative class to be “defined in such a way that anyone

within it would have standing.” Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006)

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 6 of 63
7

(affirming the denial of a plaintiff class because the definition of the class was “so amorphous

and diverse” that it was not “reasonably clear that the proposed class members have all suffered a

constitutional or statutory violation warranting some relief”) (citing Adashunas v. Negley, 626

F.2d 600, 604 (7th Cir. 1980)); Presbyterian Church of Sudan v. Talisman Energy, Inc., 244 F.

Supp. 2d 289, 334 (S.D.N.Y. 2003) (noting that “each member of the class must have standing

with respect to injuries suffered as a result of defendants’ actions”).

Courts likewise have held that a class definition is overly broad where the class

encompassed persons who had not suffered any injury. See also Owen v. Regence Bluecross

Blueshield, 388 F. Supp. 2d 1318, 1334 (D. Utah 2005) (“[T]he proposed definition of the class

is overbroad because many of the proposed class members have suffered no damages.”); Zapka

v. Coca-Cola Co., 2000 WL 1644539, at *3 (N.D. Ill. Oct. 27, 2000) (holding class definition

improper where it included individuals who were not harmed); Canady v. Allstate Ins. Co., 1997

WL 33384270 (W.D. Mo. June 19, 1997) (“Because the court cannot accept plaintiffs’ blanket

contention that every member of the proposed broad class has allegedly suffered harm as a result

of the defendants’ wrongdoing, the court must find that the class definition is overbroad.”).

Even where all class members have been injured, a class definition may be overly broad if

the question of liability is specific to each class member. For example, in Holmes v. Pension

Plan of Bethlehem Steel Corp., 213 F.3d 124 (3d Cir. 2000), the Court of Appeals affirmed the

district court’s finding that the class definition was overly broad because the determination of

actual liability with respect to any class member would require an individualized inquiry into the

equities of each claim. Id. at 137-38. Here, the Health Clubs contend that the Class definition is

overly broad because liability depends upon the application of the affirmative defense of

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 7 of 63
 Indeed, in many class actions, class members do not know that they have been injured, 3

or do not consider themselves to have suffered an injury, because they do not know that the

defendant’s action is illegal.

8

ratification, which, in turn, depends upon the circumstances and actions of each individual

member. Thus, according to the Health Clubs, the question of liability is specific to each class

member because it is entirely dependent upon the extent to which each class member used the

Health Clubs’ services and accepted the benefits of the contract, thereby ratifying it and waiving

the right to rescind.

The Health Clubs’ arguments are not persuasive. First, the Class definition does not

include persons who have not suffered an injury. If the initiation fees charged by the Health

Clubs violate the HCA, then all persons who paid those fees have been injured, regardless of

whether they personally view the fees as excessive or wish to void their contracts. Moreover, 3

Count III of the Complaint, which relates to the HCA, does not seek to definitively void all

contracts; rather, it seeks a declaration that “the contracts between Defendants and the Class

members are voidable at the option of the respective Class members.” (Compl. ¶ 11.) This

remedy is derived directly from the HCA, which provides that “[a] health club contract which

does not comply with this act shall be voidable at the option of the buyer.” 73 PA. STAT. ANN. §

2167. Thus, a determination of liability (i.e., that the Health Clubs’ initiation fees are excessive)

would entitle class members to the option of voiding their contracts, as well as money damages,

or a determination that they do not owe the amount of any overcharge. See 73 PA. STAT. ANN. §

201-9.2 (West 2008) (providing a “private action to recover actual damages”).

Second, the Health Clubs’ ratification argument does not preclude class certification

because ratification is relevant to damages, not liability. As an initial matter, however, the Court

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 8 of 63
 See also Wamsley v. Champlin Refining & Chemicals, Inc., 11 F.3d 534, 538-39 (5th 4

Cir. 1993) (citing Restatement (Second) of Contracts §§ 7 cmt. a, 8 and 85 cmt. a) (“To say that a

contract is voidable is to say that an antecedent promise created a legal duty on the promisor’s

part and that the promisor has the power either to avoid performance, based on any one of the

several grounds of avoidance, or to ratify the promise by making a new one. . . . Promises that are

void cannot be ratified. The reason for this is simple: Void promises are not legally binding and

thus, are not contracts. Without an antecedent contract to ratify, there can be no ratification. To

say that a promise is void is to say that it created no legal obligation and that the promisor is

without the power to bind himself under a new promise to perform the antecedent promise.”)

9

agrees with the Health Clubs that the HCA allows for ratification of a contract that does not

comply with the HCA. The Health Clubs’ interpretation of the HCA suggests that a health club

member, having discovered that he was overcharged with respect to the initiation fee, could, by

choosing to continue to make payments under the contract and accept the benefits, ratify the

contract and thereby waive the right to rescind it. By expressly providing that noncompliant

contracts are voidable, instead of void, the HCA implicitly contemplates and provides for

ratification, given the conventional and familiar meanings of those terms. See 73 PA. STAT.

ANN. § 2167. It is indisputable that a voidable contract may be ratified, while a void contract

may not. See, e.g., Yannuzzi v. Commonwealth, 390 A.2d 331, 332 (Pa. Commw. 1978) (“It is

true that there is an important technical distinction between ‘void’ and ‘voidable’: The term

‘void’ is properly applied to those contracts that are of no effect whatsoever, whereas a

‘voidable’ contract can be cured by the act or confirmation of one of the parties.”). 

4

However, the HCA also explicitly provides that any attempted waiver of its provisions is

“void and unenforceable.” 73 PA. STAT. ANN. § 2170. Thus, because ratification is a species of

waiver, and because ratification of a noncompliant contract effectively waives the HCA

provision at issue, Section 2170 appears to be at odds with Section 2167. The waiver of the right

to rescind becomes synonymous with waiver of the excessive initiation fee, an outcome that

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 9 of 63
 The Plaintiffs’ proposed interpretation is problematic because the hypothetical 5

inapplicability of ratification creates a situation where the parties to the contract are left with a

contract that is permanently voidable, but that can never be ratified. A “voidable” contract, if

neither voided nor ratified, occupies a sort of contract purgatory; the corresponding incertitude is

undesirable for all parties to the contract.

10

appears to be expressly prohibited by Section 2170.

The Plaintiffs urge the Court to interpret Section 2170 as modifying the standard meaning

of “voidable.” As the Plaintiffs would have it, contrary to the general rule that voidable contracts

may be ratified, the statutory right to void a contract that does not comply with the HCA cannot

be waived by ratification or any other means. This interpretation would leave the “buyer” of a

health club contract free to void the contract at any time in perpetuity, regardless of whether he or

she has accepted the benefits of the contract or for how long. 

Beyond the troublesome implications of this result, there is no evidence that 5

Pennsylvania’s General Assembly was unaware of the standard definition of “voidable,” or that

the General Assembly intended any meaning of the term “voidable” other than the standard

meaning. If the General Assembly intended to preclude ratification of a noncompliant contract, it

could have used the term “void” in Section 2167 rather than the term “voidable.” Cf. Cal. Civ.

Code § 1812.91 (“Any contract for health studio services which does not comply with the

applicable provisions of this title shall be void and unenforceable as contrary to public policy.”). 

By providing the buyer the option of rescission, the General Assembly implicitly also provided

the buyer the option of ratification – i.e., waiver of the right to rescind. While potentially

contradictory, Section 2170 does not change this straightforward interpretation of the

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 10 of 63
 The Pennsylvania statute on statutory construction provides: 6

(a) The object of all interpretation and construction of statutes is to

ascertain and effectuate the intention ofthe General Assembly. Every

statute shall be construed, if possible, to given effect to all its

provisions.

(b) When the words of a statute are clear and free from all ambiguity,

the letter of it is not to be disregarded under the pretext of pursuing

its spirit.

1 PA. CONS. STAT. ANN. § 1921 (emphasis added).

11

unambiguous language in Section 2167. See Long v. Sears Roebuck & Co., 105 F.3d 1529, 6

1536 (3d Cir. 1997) (“When the plain text of a statute is clear then “courts must presume that a

legislature says in a statute what it means and means in a statute what it says.”) (citing

Connecticut Nat. Bank. v. Germain, 503 U.S. 249, 253-54 (1992)).

The two potentially contradictory sections are easily reconciled by reference to the

specific language used in Section 2170. See 1 PA. CONS. STAT. ANN. § 1933 (“Whenever a

general provision in a statute shall be in conflict with a special provision in the same or another

statute, the two shall be construed, if possible, so that effect may be given to both.”). Section

2170 provides that any “attempted waiver by the buyer of the provisions of this act shall be

deemed contrary to public policy and shall be void and unenforceable.” 73 PA. CONS. STAT.

ANN. § 2170. Ratification of, or waiver of the right to rescind, a noncompliant contract

technically is not a waiver of any provision in the HCA. Thus, while ratification might

effectively result in the waiver of a provision of the HCA, it falls outside the literal confines of

Section 2170's plain language. Taken together, the two provisions provide that consumers have

(1) the option to void or ratify noncompliant contracts, and (2) the inability to expressly waive

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 11 of 63
12

any of the provisions of the HCA. Read thusly, these two propositions are not incompatible. 

Approaching the issue from another angle, the Plaintiffs also assert that where the

circumstance giving rise to a contract’s voidability is the violation of a remedial statute, the

doctrine of ratification does not apply. However, with few exceptions, federal courts have

applied this construct only to federal remedial statutes. See, e.g., Hogue v. Southern R. Co., 390

U.S. 516, 517 (1968) (rejecting applicability of tender back defense to Federal Employees

Liability Act because the requirement of a “refund” would be “wholly incongruous with the

general policy of the Act to give railroad employees a right to recover”); Jakimas v. Hoffman-La

Roche, Inc., 485 F.3d 770, 782-83 (3d Cir. 2007) (rejecting the applicability of the defenses of

ratification and tender back to claims brought under ERISA to avoid deterring suits and

undermining the general policy of the remedial statute in question); Long, 105 F.3d at 1540-41

(rejecting applicability of tender back defense to ADEA claims because that approach “would

best serve the purpose of the ADEA,” which “was clearly a federal remedial statute”). Research

has revealed no instance where a court has applied this rule to a Pennsylvania consumer

protection statute, and the Court declines to extend the rule to apply under the specific

circumstances presented here, where the state statute in question expressly uses the term

“voidable” instead of “void.”

Thus, the Court concludes that the health club contracts at issue here, if determined to be

voidable pursuant to Section 2167, potentially could be ratified. However, this conclusion does

not preclude class certification. Indeed, under the specific factual circumstances presented here,

the ratification defense is irrelevant to liability. Rather, the ratification defense is only relevant if

liability is proved, and then only with respect to damages.

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 12 of 63
13

Even then, contrary to the Health Clubs’ assertions, the question is not whether class

members have already ratified their contracts, but rather whether class members will ratify their

contracts. The common law doctrine of ratification results in “the enforcement of a promise to

perform all or part of an antecedent contract of the promisor, previously voidable by him, but not

avoided prior to the making of the promise.” Long, 105 F.3d at 1536 n.10 (citing Restatement

(Second) of Contracts § 85 (1981)). Ratification operates to allow a party having the power to

rescind his contractual duty to make, or be deemed to have made, a new promise to perform his

previously voidable duty and thereby extinguish his power of avoidance. Restatement (Second)

of Contracts § 85 cmt. a.

Ratification, however, “cannot occur until the impediment to the conclusion of the

agreement is eliminated.” Williston on Contracts § 19:56. See also Sixsmith v. Martsolf, 196

A.2d 662, 663 (Pa. 1964) (“A contract secured by fraud is voidable only at the option of the

injured party, who must act promptly on the discovery of the fraud or the right to rescind is

waived.”) (citations omitted) (emphasis added). A party is estopped from rescinding an

agreement where the party has become aware that an agreement is potentially unlawful, but does

not rescind the agreement at that time and instead continues with the relationship established by

the agreement. In re Estate of Long, 615 A.2d 421, 422 (Pa. Super. 1992). In other words, the

party charged with ratification must have acted voluntarily, intentionally and with full knowledge

of all material facts; ratification may not be based upon mere negligence. Schwartz v. Mahoning

Valley Country Club, 114 A.2d 78, 80 (Pa. 1955); Fed. Pac. Elec. Co. v. First Pennsylvania

Bank, 405 A.2d 530, 478-79 (Pa. Super. 1979).

Under the circumstances presented here, no legally cognizable ratification can have

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 13 of 63
 Ratification may be found under a variety of circumstances, such as intentionally 7

accepting benefits under the contract after discovery of facts that would warrant rescission,

remaining silent or acquiescing in the contract for a period of time after having the opportunity to

avoid it, or recognizing the validity of the contract by acting upon it, performing under it, or

affirmatively acknowledging it. Sams v. Sams, 808 A.2d 206, 212 (Pa. Super. 2002) (citing

Nat’l Auto Brokers Corp. v. Aleeda Dev. Corp., 364 A.2d 470, 476 (Pa. Super. 1976)); Seal v.

Riverside Fed. Sav. Bank, 825 F. Supp. 686, 696 (E.D. Pa. 1993) (citing Nat’l Auto Brokers

Corp., 364 A.2d at 476).

 Moreover, according to the Restatement (Second) of Contracts, if the same grounds for 8

avoidance exist when the contract is ratified, the party again enjoys the power to avoid

performance under the ratified contract. Id. § 85 cmt. b. This suggests that continuing noncompliance with the HCA following ratification would renew the power to avoid performance

and again give health club members who may have previously ratified their noncompliant

contracts the option to rescind. Where, however, such grounds no longer exist, ratification

mandates performance of the ratified contract. 

14

occurred because at this time the health club members remain unaware of any facts rendering

their contracts voidable. Indeed, at this time it has yet to be determined whether the health club

contracts are voidable at all, that is, whether the contracts fail to comply with the HCA. Only if

liability is proved, will the class members then have the option to rescind – and thus the corollary

opportunity to ratify – their contracts. Prior to any such determination on liability, the class 7

members do not have “full knowledge of all material facts,” as required to ratify a contract. See

In re Allegheny Intern, Inc., 954 F.2d 167, 179 (3d Cir. 1992) (explaining that contract based on

misrepresentation is voidable so long as the party with voiding power remained unaware of the

true facts); Retail Brand Alliance, Inc. v. Rockvale Outlet Center, 2007 WL 403885, at *6 (E.D.

Pa. Jan. 31, 2007) (“The defrauded party can ratify the contract if ‘it accepts the benefits flowing

from it, or remains silent, or acquiesces in the contract for any considerable length of time after

the party has the opportunity to annul or avoid the contract.’”) (citation omitted) (emphasis

added). Thus, the potential applicability of the ratification defense does not preclude class 8

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 14 of 63
15

certification. This analysis and its conclusion apply with equal force to the defenses of waiver

and, as discussed more fully below, voluntary payment.

In contrast, the Health Clubs’ remaining defenses, namely, laches and estoppel, are

potentially relevant to liability. These defenses, however, also fail to preclude class certification

because they are generally applicable to the Class as a whole and do not depend upon any

individualized factual determinations. In this Memorandum, the Court will focus primarily on

the doctrines of ratification and voluntary payment, as that is where the parties have focused their

own efforts in the context of the certification dispute.

B. Whether the Class Definition Includes a “Fail/Safe” Class

The Health Clubs also assert that the Class definition creates an improper “fail/safe”

class, that is, membership in a portion of the Class depends upon a finding for Plaintiffs’ on the

merits. See, e.g., Dafforn v. Rousseau Assoc., Inc., 1976 WL 1358, at *1 (S.D. Ind. Jul. 27,

1976) (class definition of those homeowners charged illegal fees created impermissible

“fail/safe” class because a jury finding that fees were not illegal would at the same time

determine that there was no class). Here, according to the Health Clubs, the Plaintiffs’ “fail/safe”

class involves Bally Holding. The Plaintiffs’ Class definition depends upon which health clubs

are “owned by Defendants,” but Bally Holding’s ownership of Physical Fitness Centers of

Philadelphia (“PFCP”), which is not a named defendant, is disputed.

The Plaintiffs respond that the “fail/safe” class prohibition seeks to preclude classes

where “defining the purported class . . . requires addressing the central issue of liability to be

decided in the case.” Forman v. Data Transfer, Inc., 164 F.R.D. 400, 403 (E.D. Pa. 1995). Here,

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 15 of 63
 At oral argument, Plaintiffs’ counsel stated that the Plaintiffs have “no view” as to 9

which clubs in Pennsylvania are owned by Bally Total Fitness Holding Company. (Tr. 1/9/08 at

10-11.)

16

argue the Plaintiffs, because the question of which Pennsylvania health clubs are owned by the

Defendants is not the “central issue of liability to be decided,” there is no “fail/safe” class. Thus,

the rule against one-way intervention – where a class is bound only by a favorable judgment – is

not violated. The Plaintiffs maintain that they do not intend to challenge the Defendants’

representations regarding ownership of PFCP.9

The Court concludes that under these circumstances, the question of whether any

particular health club in Pennsylvania is owned by the Health Clubs is a question of fact not

central to the question of liability and easily answered through further discovery. The Court

expects the parties to promptly clarify any remaining confusion as to this issue.

II. Rule 23(a)

A. Numerosity

Numerosity requires a finding that the putative class is “so numerous that joinder of all

members is impracticable.” Newton, 259 F.3d at 182; Fed. R. Civ. P. 23(a)(1). “No single

magic number exists satisfying the numerosity requirement.” Behrend v. Comcast Corp., 245

F.R.D. 195, 202 (E.D. Pa. 2007) (citation omitted). However, our Court of Appeals typically has

approved classes numbering 40 or more. See Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir.

2001).

Here, the Plaintiffs assert that the number of individuals in the proposed Class

corresponds to the number of health club contracts executed during the Class Period, which

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 16 of 63
17

extends from December 1998 to the present. Relying on the Health Clubs’ responses to

interrogatories, the Plaintiffs estimate that approximately 142,118 contracts for health club

services were executed between 1999 and 2004, in addition to any contracts executed from 2004

to the present.

While the Health Clubs do not dispute the number of contracts cited by the Plaintiffs,

they assert that the Plaintiffs have failed to offer any facts as to how many persons were allegedly

injured or how many persons could still void their contracts. See Sandlin v. Shapiro & Fishman,

168 F.R.D. 662, 666 (M.D. Fla. 1996) (holding that numerosity not shown where, despite large

number of possible class members, plaintiff failed to allege specific facts as to the number of

class members who suffered actual injury so as to have standing to sue). In addition, although

the remedy provided by the HCA is the buyer’s option to rescind the contract, 73 PA. CONS.

STAT. ANN. § 2167, the Health Clubs emphasize that the Plaintiffs have not proffered any facts

as to which persons, if any, other than the named plaintiffs, wish to exercise this option.

These arguments parallel the Health Clubs’ arguments concerning the Class definition. 

For the reasons previously discussed, the Court concludes that the Class definition encompasses

only persons who, if liability is proven, have suffered a harm. That is, every person who

executed a contract requiring payment of initiation fees in excess of $100 is properly a member

of the Class. Here, the Health Clubs do not dispute that the approximately 140,000 persons who

executed contracts between 1999 and 2004 paid initiation or “Membership” fees. Thus, the

Court concludes that the proposed Class is sufficiently numerous to make joinder impracticable

and the numerosity requirement is satisfied.

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18

B. Commonality

To satisfy the commonality requirement, plaintiffs must show the existence of at least one

question of law or fact common to the class. Fed. R. Civ. P. 23(a)(2); Johnston, 265 F.3d at 184. 

The commonality threshold is low, Powers v. Lycoming Engines, 245 F.R.D. 226, 236 (E.D. Pa.

2007), and does not require “an identity of claims or facts among class members,” Behrend, 245

F.R.D. at 202. The commonality requirement will be satisfied if the named plaintiffs share at

least one question of fact or law with the grievances of the prospective class. Johnston, 265 F.3d

at 184.

The existence of individual facts and circumstances will not defeat commonality so long

as the plaintiffs allege harm under the same legal theory. Baby Neal, 43 F.3d at 56-58. 

Nevertheless, “[c]ommonality will not be found where the alleged common issues can only be

resolved by making factual determinations that will be different for each class member.” 

Holmes, 1999 WL 554591, at *6 (citing Reilly v. Gould, Inc., 965 F. Supp. 588, 598 (M.D. Pa.

1997)). Courts have held that the commonality requirement cannot be met “where Plaintiffs’

proposed common questions are inherently individualized, requiring inquiry into the particular

circumstances of each [Plaintiff] . . . .” Forman, 164 F.R.D. at 403. In other words, “[t]he

common issue must significantly advance the litigation.” Kane v. United Independent Union

Welfare Fund, 1998 WL 78985, at *4 (E.D. Pa. Feb. 24, 1998).

Here, the Plaintiffs assert that the principal question common to all putative class

members is “whether Defendants violated the HCA, and thus the [UTP]CPL, by imposing

initiation fees not reasonably related to the costs for establishing an initial health club

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 18 of 63
19

membership.” (Pl. Mot. 10.) The Plaintiffs allege that “each member of the proposed Class is a

victim of the Health Clubs’ noncompliance and was victimized by the same or substantially

similar unfair and deceptive conduct.” (Id.)

The Health Clubs’ argument against the existence of commonality is two-fold. They

contend that the proposed common question of liability is “inherently individualized” and

requires an inquiry into the particular circumstances of each class member because of (1) the

application of the doctrine of ratification, and (2) the many different types of memberships with

disparate fees and benefits. 

First, the Health Clubs contend that the common question asserted by the Plaintiffs will

not “significantly advance” the litigation because the answer to the question of whether the

Health Clubs violated the HCA determines only whether a member theoretically has or had the

option to rescind the contract. According to the Health Clubs, the answer to the Plaintiffs’

proffered common question does not address the question of whether any member actually

currently has the option to void the contract because each member’s current options depend upon

his or her individual circumstances. The Health Clubs contend, for example, that members who

ratified their contracts can no longer rescind them. In order to determine liability, argue the

Health Clubs, the Court must determine exactly what benefits each member accepted under his or

her contract, as well as the length of time the member acquiesced in the contract or remained

silent. Thus, according to the Health Clubs, the alleged common issues can only be resolved by

individualized factual determinations for each class member, and this inherently individualized

inquiry precludes a finding of commonality.

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 19 of 63
20

As previously discussed, the doctrine of ratification becomes relevant only at the damages

stage of this case; it is irrelevant to the question of whether the Health Clubs violated the HCA. 

In other words, the question of whether the initiation fees exceeded the reasonable cost of

establishing a membership is entirely separate and distinct from the question of whether any

given class member can be deemed to have ratified his or her contract. The issue of ratification,

if applicable, is relevant in the event liability is proven to determine whether a particular class

member may rescind his or her contract and/or recover any damages. Thus, the potential

applicability of the doctrine of ratification does not preclude a finding of commonality. 

Second, the Health Clubs assert that the numerous different types of memberships offered

by Holiday and Scandinavian, each with differing membership fees, terms and benefits, raise

individualized factual issues that defeat commonality. According to Julie Adams, the Senior

Vice President of Membership Services for Bally, Holiday and Scandinavian, the “Membership

Fee” charged under any given contract varies according to the type of membership purchased.

(Adams Affidavit ¶ 15, Def. Response Ex. A.) Thus, argue the Health Clubs, the “Membership

Fee” in any given case cannot always be equated with an “initiation fee,” and an individualized

inquiry is required in every case to determine what was included.

For example, both Scandinavian and Holiday offer non-renewable contracts with a fixed

term. The “Membership Fee” under these contracts covers the entire membership term. 

Consequently, the “Membership Fee” for this type of membership program might exceed the

alleged reasonable limit because it covers much more than simply the costs of the paperwork to

complete the contract. Similarly, the “Membership Fee” charged for renewable contracts also

cannot be considered simply an “initiation fee” because it purportedly covers the first month of

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 20 of 63
21

the contract and other goods, services and privileges agreed to by the parties, as well as the right

to renew the membership indefinitely. The Plaintiffs’ Class definition would include health club

members with both renewable and non-renewable memberships, in addition to other specific

membership programs.

According to the Health Clubs, the various specific membership programs likewise raise

individual factual questions as to the definition and composition of the “Membership” and/or

“initiation” fees. For example, both Holiday and Scandinavian at one time offered a “Rapid

Results System” membership. The “Membership Fee” for this type of membership included a

package of weight loss goods, an initial evaluation consultation session, three personal training

sessions, a final evaluation consultation, nationwide use of Bally clubs, free racquetball and child

care services, and free exercise classes, as well as the first month’s membership and the right to

renew the membership indefinitely. (Adams Aff. ¶ 17.) Thus, argue the Health Clubs, the

“Membership Fee” for this type of membership covered far more than the paperwork involved in

establishing a new membership and necessarily exceeded the alleged reasonable limit.

Finally, the Health Clubs also point to the “family” memberships offered by Scandinavian

and Holiday in conjunction with each different type of membership program. (Adams Aff. ¶ 18.) 

Under these “family” memberships, multiple family members can join under the same contract. 

The Health Clubs argue that the cost of the paperwork for such memberships exceeds the cost for

a single individual and, therefore, buyers of these memberships should not be included in the

Class. The Health Clubs assert that if buyers of such “Rapids Rewards System” and family

memberships were included in the Class, the Court would have to determine the value of the

goods and services that such members received, the number of persons included under the single

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 21 of 63
22

“Membership Fee,” and the time period for which the member(s) had access to membership

privileges.

Notwithstanding the likely complexity of determining liability with respect to different

membership classes, the central issue in this case remains the same regardless of the specific type

of membership, namely, whether the “Membership Fee” for any given membership program

exceeded the reasonable cost of establishing the initial membership, and thus violated the HCA. 

The existence of different types of memberships simply means that, with respect to each type of

membership, there will be a need to determine what portion of the “Membership Fee” was

specifically allocated for the costs of “establishing” a health club membership – i.e., what portion

constitutes an “initiation fee” charged in exchange for nothing other than the establishment of a

membership. The discrete costs of additional goods and services for which a member would

have to pay extra anyway can be easily discounted because the Health Clubs price each element

of their membership fees separately. (See “Bally Total Fitness Corporation: National Pricing

Summary,” Pl. Reply Ex. B.)

Moreover, even if the Health Clubs blended legitimate initiation fees with charges for

other health club goods and services such that the charges could not be separated, the entire

“Membership Fee” would have to be considered an initiation fee subject to the limits of the

HCA. As the Plaintiffs correctly contend, any other result would allow the Health Clubs to

escape the constraints of the consumer protection statute by charging consumers even more than

they otherwise would have.

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 22 of 63
 According to the Supreme Court, the typicality and adequacy inquiries often “tend[ ] to 10

merge” because both look to potential conflicts and to “whether the named plaintiff’s claim and

the class claims are so interrelated that the interests of the class members will be fairly and

adequately protected in their absence.” Beck, 457 F.3d at 296 (quoting Amchem Products, Inc.

v. Windsor, 521 U.S. 591, 626 n.20 (1997)). Because of the similarity of these two inquiries,

certain questions – such as whether a unique defense should defeat class certification – are

relevant under both. Nevertheless, our Court of Appeals has emphasized that a court should

address each Rule 23(a) factor in a certification decision. “Despite areas of overlap, each factor

involves distinct considerations. The adequacy inquiry, for example, factors in competency and

conflicts of class counsel, which the typicality requirement does not.” Beck, 457 F.3d at 296 n.2

23

C. Typicality

To evaluate typicality, the Court must inquire “whether the named plaintiffs’ claims are

typical, in common-sense terms, of the class, thus suggesting that the incentives of the plaintiffs

are aligned with those of the class.” Beck v. Maximus, Inc., 457 F.3d 291, 295-296 (3d Cir.

2006) (quoting Baby Neal, 43 F.3d at 55). “Typicality requires a strong similarity of legal

theories to ensure that the class representatives’ pursuit of their own goals will work to benefit

the entire class.” Powers, 245 F.R.D. at 236 (citing Barnes v. Am. Tobacco Co., 161 F.3d 127,

141 (3d Cir. 1998)); Jones v. GPU, Inc., 234 F.R.D. 82, 97 (E.D. Pa. 2005)). The typicality

requirement entails an inquiry as to whether “the named plaintiff’s individual circumstances are

markedly different or . . . the legal theory upon which the claims are based differs from that upon

which the claims of other class members will perforce be based.” Behrend, 245 F.R.D. at 203

(quoting Hassine v. Jeffes, 846 F.2d 169, 177 (3d Cir. 1988)).

“‘[F]actual differences will not render a claim atypical if the claim arises from the same

event or practice or course of conduct that gives rise to the claims of the class members, and if it

is based on the same legal theory.’” Beck, 457 F.3d at 295-296 (quoting Baby Neal, 43 F.3d at

58). However, “[w]here the defendant can raise unique defenses to each plaintiff’s claim, 10

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 23 of 63
(citation omitted). 

24

typicality may not exist if the defenses could threaten to become the focus of the litigation.” 

Powers, 245 F.R.D. at 236 (quoting Jones, 234 F.R.D. at 98). A court may sever claims or use

subclasses to treat individual issues separately. Eisenberg v. Gagnon, 766 F.2d 770, 786 (3d Cir.

1985).

Here, the Plaintiffs contend that they have alleged “a common pattern of wrongdoing, and

will present the same evidence (based on the same legal theories) to support both their own

claims and the claims of the Class members.” (Pl. Mem. 11.) The Health Clubs respond that the

Plaintiffs cannot demonstrate typicality because (1) there are factual circumstances unique to the

named plaintiffs; (2) the HCA as applied with respect to the named plaintiffs violates the

dormant commerce clause; (3) the named plaintiffs’ claims are precluded by the “voluntary

payment” doctrine; and (4) the named plaintiffs are former members whose claims are not typical

of those of current members. The Court will address these arguments seriatim.

First, the Health Clubs contend that, through their prior conduct, Ms. Robinson and Mr.

Swindell ratified their contracts and, therefore, their claims are not typical of the claims of other

class members. According to the Health Clubs, both Ms. Robinson and Mr. Swindell enjoyed

their health club privileges for years, belying any allegation of actual harm. Specifically, Ms.

Robinson’s son used his privileges under the contract for over three years, and continued to use

his privileges even after the Membership Fee was paid off. Mr. Swindell used his privileges for

21 months. Moreover, both Ms. Robinson and Mr. Swindell purchased a second contract with

full knowledge of the benefits and privileges they would receive in exchange for the Membership

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 24 of 63
 Moreover, the Court fails to see how the named plaintiffs’ factual circumstances are 11

atypical, as many health club users likely continued to avail of themselves of the health club

facilities, and thus accepted the benefits of their contracts.

25

Fee. The continued use of membership privileges, argue the Health Clubs, demonstrates that the

named plaintiffs accepted the benefits of their contracts and ratified them.

For the reasons previously discussed at length, the “ratification” argument does not render

the named plaintiffs’ claims atypical because it is irrelevant to the determination of liability.11

Thus, any ratification defense the Health Clubs may assert against the named plaintiffs does not

preclude a finding of typicality. 

Second, the Health Clubs assert that application of the HCA with respect to the named

plaintiffs implicates the dormant commerce clause. Because under their contracts both Ms.

Robinson and Mr. Swindell received nationwide privileges for the use of out-of-state clubs, the

Health Clubs contend that regulation of their contract fees unlawfully permits the Pennsylvania

General Assembly to dictate what the Health Clubs can charge for the use of health clubs in

states other than Pennsylvania. See Healy v. Beer Institute, Inc., 491 U.S. 324 (1989) (A state

may not adopt legislation that has the practical effect of establishing a scale of prices for use in

other states.)

The Court concludes that the dormant commerce clause is not implicated here. Class

members are limited to those persons who purchased health club memberships in Pennsylvania. 

Thus, as far as this case is concerned, the Health Clubs are not alleged to have sold services in

states other than Pennsylvania. Even though a membership package may include the right to use

out-of-state clubs, that service is still being sold in Pennsylvania by health clubs located in

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 25 of 63
 As stated by the Supreme Court,

12

Where a party pays an illegal demand with a full knowledge of all the

facts which render such demand illegal, without an immediate and

urgent necessity therefore, or unless to release his person or property

from detention, or to prevent an immediate seizure of his person or

property, such payment must be deemed voluntary and cannot be

recovered back. And the fact that the party at the time of making the

payment files a written protest does not make the payment

involuntary.

Union Pac. RR Co. v. Dodge County Comm’r, 98 U.S. 541, 543 (1878). 

26

Pennsylvania. The dormant commerce clause does not apply under these circumstances. See

Cloverland-Green Spring Dairies, Inc. v. Pennsylvania Milk Marketing Bd., 298 F.3d 201-211

(3d Cir. 2002) (“[I]f the state regulation does not discriminate against interstate commerce, but

‘regulates even-handedly’ and merely ‘incidentally’ burdens it, the regulation will be upheld

unless the burden is ‘clearly excessive in relation to the putative local benefits.”) (citation

omitted).

Third, taking an approach similar to their “ratification” argument, the Health Clubs

contend that any voluntary payments made under the contract preclude recovery of those

payments. Because Ms. Robinson and Mr. Swindell made voluntary payments under their

respective contracts, the Health Clubs assert that their claims are precluded pursuant to the

“voluntary payment” doctrine. The “voluntary payment doctrine” provides that money paid

under a claim of right by one who has knowledge of the relevant facts cannot be recovered on the

ground that the claim was illegal unless the payment was made under compulsion. Wilson v.

School District of Phila, 195 A. 90, 100 (Pa. 1937); Acme Markets, Inc. v. Valley View

Shopping Center, Inc., 493 A.2d 736, 737 (Pa. Super. 1985). Even though other class members 12

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 26 of 63
 There do not appear to be any cases applying the voluntary payment doctrine to 13

transactions allegedly in violation of a Pennsylvania consumer protection statute.

27

also may be subject to the voluntary payment doctrine, the Health Clubs contend these factual

particulars and defenses render the named plaintiffs’ claims atypical.

Even if applicable, the voluntary payment doctrine does not destroy typicality because

13

the class representatives are hardly “unique” in having made “voluntary” payments on their

contracts. Indeed, it is likely that most, if not all, health club members will have made voluntary

payments, and thus the positions of Ms. Robinson and Mr. Swindell are typical of the Class as a

whole. Moreover, as previously discussed, the voluntary payment doctrine is potentially

applicable only to the issue of damages, not liability. The fact that the named plaintiffs and/or

class members made and continue to make voluntary payments under their contracts says nothing

about whether the amount charged is unlawful.

Lastly, the Health Clubs assert that the named plaintiffs are former members whose

claims are not typical of the claims of current members, who may wish to continue to use their

membership privileges. Indeed, Mr. Allen, the administrator of Ms. Robinson’s estate, never had

a contract.

This asserted factual difference is immaterial to the central question of whether the

initiation fees charged by the Health Clubs violate the HCA. Even if some putative class

members wish to continue using their membership privleges, they nonetheless have an interest in

recovering an unlawful initiation fee and/or having the option to rescind their contract. At a

fundamental level, the claims of the named plaintiffs and putative class members are based on

the same alleged course of misconduct (the charging of unreasonable initiation fees) and the

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 27 of 63
28

same legal theories, notwithstanding any individual factual differences. This fundamental

underlying similarity is sufficient to ensure that the named plaintiffs will advance the interests of

the Class.

In sum, the Court concludes that the potential factual differences between the named

plaintiffs and other class members do not defeat typicality, and that requirement is met here.

D. Adequacy of Representation

 Class representatives must “fairly and adequately protect the interests of the class.” Fed.

R. Civ. P. 23(a)(4). The adequacy inquiry “serves to uncover conflicts of interest between named

parties and the class they seek to represent.” Beck, 457 F.3d at 296 (quoting Amchem, 521 U.S.

at 625). It “assures that the named plaintiffs’ claims are not antagonistic to the class and that the

attorneys for the class representatives are experienced and qualified to prosecute the claims on

behalf of the entire class.” Id. (quoting Baby Neal, 43 F.3d at 55). Thus, the Court must

determine “whether the representatives’ interests conflict with those of the class and whether the

class attorney is capable of representing the class.” Johnston, 265 F.3d at 185. “Adequacy of

representation depends on the circumstances surrounding each case.” Behrend, 245 F.R.D. at

204 (citing Wetzel v. Liberty Mutual Ins. Co., 508 F.2d 239, 247 (3d Cir. 1977)). The burden is

on the defendant to prove that the representative plaintiffs will not adequately represent the class.

Lewis v. Curtis, 671 F.2d 779, 788-89 (3d Cir. 1982).

 1. Adequacy of the Named Plaintiffs as Class Representatives

The Health Clubs assert that the adequacy requirement is not met in the present case

because (a) there is a conflict between current and former health club members; (b) there is a

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 28 of 63
29

conflict between one-month members and those whose memberships are longer; (c) there is a

conflict between default members and non-default members; (d) Mr. Swindell is not an adequate

representative; and (e) the Administrator is not an adequate representative.

a. Conflict Between Current and Former Members

The Health Clubs contend that there is a conflict between current and former health club

members because these two groups have disparate goals and incentives in the litigation. 

Specifically, the Health Clubs posit that former members have only one goal, the recovery of

money, while current members, on the other hand, potentially have an interest in maintaining

their memberships. Current members, who might have the opportunity to continue to use their

memberships for life, may be opposed to the imposition of treble or punitive damages that may

undercut or jeopardize the Health Clubs’ ability to maintain the level and quality of services

current members are now receiving.

Intraclass conflicts “may negate adequacy under Rule 23(a)(4).” Langbecker v. Elec.

Data Sys. Corp., 476 F.3d 279, 315 n.28 (5th Cir. 2007) (holding that trial court erred in

certifying class without evaluating intraclass conflicts). See also Valley Drug Co. v. Geneva

Pharmaceuticals, Inc., 350 F.3d 1181, 1189-92 (11th Cir. 2007) (finding class representatives

inadequate where their economic interests and objectives conflicted substantially with those of

absent class members); Pickett v. Iowa Beef Processors, 209 F.d 1276, 1280 (11th Cir. 2000)

(representation inadequate where class includes those “who claim harm from the very acts from

which other class members benefitted”); Broussard v. Meineke Discount Muffler Shops, Inc.,

155 F.3d 331 (4th Cir. 1998) (holding that current franchisees who had an interest in the

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 29 of 63
30

continued viability of the franchisor had an inherent conflict with former franchisees whose only

interest was in the maximization of damages); Slader v. Pearle Vision, Inc., 2000 WL 1702026,

at *1 (S.D.N.Y. Nov. 14, 2000) (holding that an employment discrimination class consisting of

current and former employees could not be certified because a former employee’s primary

interest necessarily centered on recovering back pay, while a current employee might well be far

more interested in obtaining injunctive relief); Alston v. Virginia High Sch. League, Inc., 184

F.R.D. 574, 579 (W.D. Va. 1999) (holding that a class of all high school female athletes could

not be certified – even if the alleged conduct of the defendant school system was discriminatory –

when some female athletes did not share the same goals or interests as the named female

plaintiffs because those unnamed female athletes were satisfied with and/or benefitted from the

alleged discriminatory treatment).

However, such conflicts must not be speculative, see, e.g., Cullen v. Whitman Medical

Corp., 188 F.R.D. 226, 231 (E.D. Pa. 1999) (rejecting inadequacy argument based on conflict

because the claimed “named plaintiffs’ potential conflicts with different types of former and

current students are speculative indeed”), and “[p]otential conflicts relating to relief issues which

would arise only if the plaintiffs succeed on common claims of liability on behalf of the class

will not bar a finding of adequacy,” Hanrahan v. Britt, 174 F.R.D. 356, 364 (E.D. Pa. 1997)

(rejecting claim of conflict between current and former distributors of defendant). See also

Bartelson v. Dean Witter & Co., 86 F.R.D. 657, 661 (D.C. Pa. 1980) (“[W]e do not believe that

hypothetical conflicts, which have no basis whatsoever in the record, should influence our

consideration of plaintiff’s adequacy as representative.”). 

The Health Clubs’ hypothesized conflict between current and former health club

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 30 of 63
31

members is exactly that: hypothetical. As the Court has previously stated, if the initiation fees

charged by the Health Clubs violate the HCA, then all persons who paid those fees have been

injured. If, in every putative class action, courts were to speculate as to whether each individual

class member wished to pursue the lawsuit, and if such speculation sufficed to negate the

adequacy of the named representatives, the class active device would rapidly become extinct.

Conflicts between class members based on their respective relationships to the defendant

are relevant only when the class representatives’ economic interests and objectives substantially

conflict with those of absent class members. In the cases cited above, courts found that a conflict

precluded adequacy where the class members are employees and franchisees of the defendants,

and students in the defendants’ schools. These types of relationships involve much closer ties

between the parties than the relationship between businesses and consumers. The closer ties

render any conflict more significant. Moreover, there is no evidence to support the premises

underlying the Health Clubs’ argument that (1) Plaintiffs’ success in the present litigation would

result in a deterioration of the clubs’ services, and (2) even if (1) were true, that current members

would prefer to forgo recovery of cash to prevent such a deterioration. 

The Court concludes that any potential conflict between current and former health club

members is not substantial and is overly speculative and, thus, will not preclude a finding of the

Plaintiffs’ adequacy to represent the class.

b. Conflict Between Short-Term and Long-Term Members

The Health Clubs assert that the “cost of establishing a membership” includes the pro

rata cost of the land (whether rented or purchased); the construction cost of the building,

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 31 of 63
32

including all light, heating and air conditioning, electrical, plumbing and build-out necessary for

a health club; the cost of facilities (lockers, showers, saunas, steam rooms, rest rooms, etc.); and

the cost of equipment (weights, weight machines, treadmills, exercise bicycles, etc.). It is the

Health Clubs’ position that each health club member must contribute equally to defraying these

costs, regardless of whether a member uses the club for one month or a lifetime.

The Plaintiffs, however, assert that these costs cannot be included the Membership Fee

charged for the first month because the Health Clubs’ practice of “frontloading” the costs of

membership violates the HCA’s prohibition of excessive “initiation fees.”

According to the Health Clubs, the logical consequence of the Plaintiffs’ position is a

conflict between short-term and long-term members because, in the absence of such

“frontloading,” the fixed costs of establishing and maintaining the health club are effectively

shifted onto one group (those who maintain their privileges for a longer period of time), while

allowing those who remain members for only one month to avoid paying their pro rata share of

these costs.

As a preliminary matter, because both named plaintiffs are no longer members, the

potential conflict between short- and long-term members does not implicate the adequacy of the

named plaintiffs as class representatives. In addition, the apparent goal of the present litigation is

prevent the overcharging of both long- and short-term members. Challenging the practice of

“frontloading” membership costs does not necessarily result in a shift of those costs to long-term

members. Rather, it potentially could result in a shift of costs from up-front “membership fees”

to monthly payments, in which case the amount each member pays would directly correlate with

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 32 of 63
 The Health Clubs posit that most members of the “Class” who defaulted on their 14

contract were never sued and, but for certification, would likely never be sued for default. For

example, Mr. Swindell defaulted on the balance due on his contract on September 20, 2004, but

was not sued for that balance. 

33

the number of months the member used the gym. While long-term members inevitably would

pay more than short-term members, they would not pay disproportionately or irrationally more. 

Thus, this potential conflict between class members, which is speculative at best, is insufficient

to preclude class certification on the basis of adequacy.

c. Conflict Between Default and Non-Default Members

The Health Clubs also assert that there is a conflict between health club members who

defaulted on their contracts and members who did not. According to the Health Clubs,

certification of the proposed Class will expose members who defaulted on their contracts to

counterclaims for the unpaid balances. Thus, argue the Health Clubs, defaulted members’

interests will not be served by certification and the class representatives will have subjected

absent class members to counterclaims which otherwise might not have been brought. In this 14

way, the named plaintiffs’ interests may not be aligned with those of the Class.

The Court acknowledges that under certain circumstances counterclaims against absent

class members can be problematic. See Heaven v. Trust Co. Bank, 118 F.3d 735, 737-38 (11th

Cir. 1997) (debt counterclaims against absent class members raised conflict and rendered class

action unmanageable); Stewart v. Avon Prods., Inc. 1999 WL 1038338, at *4 (E.D. Pa. Nov. 15,

1999) (same); George v. Beneficial Finance Co., 81 F.R.D. 4, 7 (N.D. Tex. 1977) (court denied

certification noting that certification would result in counterclaims which not only might not have

been brought in federal forum, “but more importantly might never have been filed at all”). 

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 33 of 63
 The parties dispute whether counterclaims against absent class members are

15

compulsory under Rule 13. The Court states no conclusion as to that issue at this time.

 Excluded from the Class are any putative Class members who have already adjudicated

16

their rights under their contracts and received a final judgment or discharge in bankruptcy such

that any claims raised in the present suit were actually decided or could have been asserted in the

earlier action. Any such claims are barred by the doctrine of res judicata.

34

However, hypothetical counterclaims do not impact class certification, particularly where

the record provides no basis for finding that such counterclaims would create difficulties that

outbalance the advantages of class treatment. For example, in Heaven, the court pointed to the

manageability problems caused by counterclaims that had already been filed. 118 F.3d 735

Likewise, other courts have noted that class certification would not be barred by “the mere

possibility that the defendant would assert counterclaims” where “the district court could not

have known the nature of such counterclaims because none had been filed.” Roper v. Consurve,

Inc., 578 F.2d 1106 (5th Cir. 1978).15

In addition, the Court is not persuaded by the defensive “sabre-rattling” that such

counterclaims, even if they in fact exist, cause a conflict between class members. In some ways,

defaulted class members have an even greater interest in the lawsuit than non-defaulted members

because they have more to gain. A person who is in default may well want to void his or her

contract or, if appropriate, cure the default by off-setting any monetary damages. Moreover, Mr.

Swindell is one of those purportedly in default on his contract (Tr. 1/9/08 at 44), and thus

reasonably can be expected to protect the interests of similarly situated class members. In sum,

at this time, it appears that all class members have an interest in ascertaining whether the fees

they were charged violate the HCA, which is the central question in this suit.16

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35

d. Adequacy of Mr. Swindell as a Class Representative

The Health Clubs contend that Mr. Swindell is not an adequate class representative

because his unique factual circumstances raise a variety of specific defenses, including

ratification, estoppel, voluntary payment and an offset for use of his membership privileges. 

According to the Health Clubs, Mr. Swindell used his membership privileges repeatedly and

consistently over a 21-month period, and then purchased a second contract with full knowledge

of the costs and benefits available under the contract. Consequently, argue the Health Clubs, Mr.

Swindell can no longer void either contract.

Defenses specific to a proposed class representative or a subset of class members can

destroy both typicality and adequacy. As the Court of Appeals for the Third Circuit explained, 

[c]ourts of appeals have held that unique defenses bear on both the

typicality and adequacy of a class representative. See, e.g., Gary

Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 903 F.2d 176, 180 (2d Cir. 1990) (“Regardless of whether the

issue is framed in terms of the typicality of the representative’s claims

. . . or the adequacy of its representation . . . there is a danger that

absent class members will suffer if their representative is preoccupied

with defenses unique to it.”); J.H. Cohn & Co. v. Am. Appraisal

Assocs., 628 F.2d 994, 999 (7th Cir. 1980) (“[T]he presence of even

an arguable defense peculiar to the named plaintiff or a small subset

of the plaintiff class may destroy the required typicality of the class

as well as bring into question the adequacy of the named plaintiff’s

representative.”). Commentators agree.

Beck, 457 F.3d at 296. The danger is that the “representative’s interests might not be aligned

with those of the class, and the representative might devote time and effort to the defense at the

expense of issues that are common and controlling for the class.” Id. 

Here, however, the asserted defenses are largely irrelevant to the question of liability. 

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 35 of 63
36

And even if the defenses do apply, Mr. Swindell’s circumstances are typical of those of other

class members because most, if not all, class members knew what they were buying and accepted

the benefits under their contracts. The fact that Mr. Swindell purchased two contracts is legally

immaterial because that factual difference does not raise any defenses that are likely to become

“a major focus of the litigation.” See Beck, 457 F.3d at 301 (“A proposed class representative is

neither typical nor adequate if the representative is subject to a unique defense that is likely to

become a major focus of the litigation.”) (emphasis added). 

In addition, the Health Clubs contend that Mr. Swindell is not an adequate representative

because he has no real knowledge of the case and has not participated in it thus far. In particular,

the Health Clubs point to Mr. Swindell’s deposition testimony indicating that he did not know

why his attorneys dismissed Bally Fitness as a defendant, or that the case was originally filed in

state court and removed to federal court, or whether he reviewed any pleading (other than

answers to interrogatories) before the pleading was filed. Mr. Swindell likewise testified that he

has never been to court for this case, does not know why there are four law firms representing

him, does not know the status of discovery, does not know who the judge is or the next hearing

date, does not know the Administrator’s qualifications to be a class representative, has never

spoken to Ms. Robinson, does not know what is required for class certification, does not intend

to pay anything or assume any financial responsibility for the case, and does not know the

qualifications of his attorneys. (See Swindell Dep. 25-29, 126-45, Def. Ex. C.) Moreover, argue

the Health Clubs, because Mr. Swindell has joined another health club and has no intention of

ever joining a Bally club again (Id. at 104-05, 139), Mr. Swindell has no personal interest in the

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 The Health Clubs also assert that Mr. Swindell is not an adequate class representative 17

against Bally Holding, Holiday or PFCP because his claim against Scandinavian does not depend

upon the ability to pierce the corporate veil. Consequently, his recovery will not be affected by

whether the corporate veil against Bally Holding, Holiday or PFCP is pierced, a legal issue upon

which recovery by many of the putative class members depends. As previously discussed, the

Plaintiffs maintain that they do not intend to pierce any corporate veil, and that if PFCP clubs are

not owned by the Health Clubs, its members are not within the proposed class.

37

injunctive or declaratory relief sought in the Complaint.

17

A class representative must have some minimal knowledge about the case and be able to

make the requisite decisions required of a plaintiff. See Kaplan v. Pomerantz, 131 F.R.D. 118,

121 (N.D. Ill. 1990) (“A plaintiff whose knowledge is so wanting that [he] appears to be no more

than a pawn of attorneys who seek a large fee award may be an inadequate class

representative.”); Rand v. Monsanto Corp., 926 F.2d 596, 599 (7th Cir. 1991) (“Although a

representative plaintiff need not immerse [herself] in the case, the named plaintiff must have

some commitment to the case, so that the ‘representative’ in a class action is not a fictive

concept.”); Smyth v. Carter, 169 F.R.D. 28, 33 (W.D. Va. 1996) (A class representative “must be

able, at a minimum, to make important nondelegable decisions about the course of the litigation 

. . . .”).

In other words, “the class’s attorney may not become the de facto plaintiff.” Kelley v.

Mid-American Racing Stables, Inc., 139 F.R.D. 405, 409 (W.D. Okla. 1990). For example,

courts have denied certification where the representative appeared unaware of even the most

material aspects of his case, not knowing why particular defendants are being sued, and having

no conception of the class of persons that he purportedly represents. See, e.g., Burkhalter Travel

Agency v. MacFarms Int’l, Inc., 141 F.R.D. 144, 153-54 (N.D. Cal. 1991); see also Griffin v. GK

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 37 of 63
38

Intelligent Sys., Inc., 196 F.R.D. 298, 302 (S.D. Tex. 2000) (holding that representatives who did

not participate in litigation decisions, did not receive expense information, and learned of the

activity in the case only when copied on matters already completed were merely lending their

name to class counsel and were not adequate representatives). 

Nonetheless, the Supreme Court has held that a class representative’s lack of knowledge

about his case does not make him an inadequate representative. Surowitz v. Hilton Hotels Corp.,

383 U.S. 363 (1968). In Surowitz, the answers the plaintiff gave when she was deposed

indicated that she did not understand the complaint, could not explain statements contained in it,

and knew little about either the lawsuit or the alleged misconduct on the part of the defendant. 

Id. at 366. The Court held that neither the plaintiff’s ignorance about the case, nor her reliance

on the advice of her son-in-law and her lawyer rendered her an inadequate representative. Id. at

371. See also Lewis v. Curtis, 671 F.2d 779, 789 (3d Cir. 1982) (a representative need not have

“personally derived the information pleaded in the complaint or . . . be able to assist his

counsel”); Mueller v. CBS, Inc., 200 F.R.D. 227, 238 (W.D. Pa. 2001) (the adequacy of putative

class representatives does not depend on their legal knowledge, nor are they required to know all

the facts about the class as a whole).

Here, Mr. Swindell appears to be sufficiently interested and engaged in the case to serve

as an adequate class representative. Mr. Swindell reviewed and verified the original Complaint

(Swindell Dep. 21), and participated in responses to interrogatories, document requests, and

requests for admission (id. at 16-19, 150-51). He also is aware of the theory of the lawsuit (id. at

33, 38), and participated at his deposition, for which he had to travel from his home in Pittsburgh

to Philadelphia.

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39

The Court concludes that Mr. Swindell will fairly and adequately represent the interests

of the Class despite his decidedly minimal knowledge of the case at this time and certain factual

disparities.

e. Adequacy of the Administrator as a Class Representative

The Health Clubs assert that the Administrator of Ms. Robinson’s estate also is not an

adequate class representative because of Ms. Robinson’s unique factual circumstances and the

Administrator’s lack of knowledge or participation in the case.

First, according to the Health Clubs, Ms. Robinson’s unique factual circumstances

preclude the Administrator of her estate from being an adequate representative. Specifically,

argue the Health Clubs, Ms. Robinson used her health club privileges for years, thereby

eliminating any right she may have had to void her contract. Like Mr. Swindell, she also signed

up for a second contract with full knowledge of the costs and benefits of her first contract, and

made voluntary payments under both contracts. The Health Clubs contend that these factual

circumstances raise unique defenses that may not apply to other class members.

Second, the Health Clubs assert that the Administrator “lacks any knowledge whatsoever

of this lawsuit and has not participated at all, other than signing interrogatories and sitting for his

deposition.” (Def. Response 35.) At his deposition, the Administrator testified that he never

read the document request directed to him; that he “went through” the Complaint, but “didn’t

read it”; that he has no knowledge of any of the claims made in the Complaint; that he does not

have any knowledge of the facts or claims set forth in the Joinder Complaint; that he had no

knowledge of the lawsuit before attorney David Searles contacted him; that he is not familiar

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40

with the claims made by Ms. Robinson in the lawsuit and does not know what damages she

suffered; that he knows only that the case is about “overcharging” Ms. Robinson, but knows no

facts as to why she claimed to be overcharged; that he does not know what a class action

representative is; that he does not know what his duties and responsibilities in the lawsuit are;

that he does not know the definition of the class of persons he seeks to represent; that he does not

remember having any participation in preparing the “Plaintiff Administrator of the Estate of

Estelle Robinson’s Objections and Answers to Defendants’ First Set of Interrogatories,” although

he signed those answers; that he never saw “Defendants’ First Request for Production of

Documents”; that he does not know whether he has any financial responsibility for this lawsuit;

that he does not know any of the other attorneys representing him other than Mr. Searles; and that

he never saw Ms. Robinson’s second contract. (Administrator Dep. 22-29, 36-54.)

In addition, the Administrator testified that he has no knowledge of the facts regarding

Ms. Robinson’s signing of the first health club contract and has no knowledge of her use of the

club; that he does not know how much it cost for her to join the health club or how much she had

to pay each month; that he does not know if Ms. Robinson ever tried to cancel her membership;

that he does not know if she ever stopped using the club before she died; and that he does not

know what payments she made under the contract. (Administrator Dep. 30-35.)

The Health Clubs contend that the Administrator’s lack of involvement in and knowledge

about the case precludes him from satisfying the adequacy requirement because he has not and

cannot make important decisions about the course of the litigation, or protect the Class from the

divergent interests of the attorneys seeking to represent the Class. See Gorsey v. I.M. Simon &

Co., 1990 WL 113606, at *1 (D. Mass. Aug. 1, 1990) (executrix of an estate could not satisfy the

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41

adequacy requirement because she presented no evidence that she had any knowledge of the facts

surrounding her husband’s purchase of the securities in question and of her financial obligations

as class representative, nor is there any evidence that she has the capacity to make class

decisions).

Moreover, the Health Clubs contend that the Estate’s only interest is in the recovery of

money, and a declaratory judgment that Ms. Robinson’s contracts are voidable would be

meaningless without a recovery of damages. Likewise, argue the Health Clubs, the Estate has no

standing to seek injunctive relief. These factors also weigh against a finding that the

Administrator will be an adequate representative of the Class. See, e.g., Kilgo v. Bownman

Transportation, Inc., 87 F.R.D. 26, 28-29 (N.D. Ga. 1980) (representative of deceased plaintiff’s

estate was not an adequate class representative where although he had an interest in back pay, he

did not have the same interest in declaratory and injunctive relief as other members of the

proposed class); Mixon v. Gray Drug Stores, Inc., 81 F.R.D. 413, 414 (N.D. Ohio 1978) (where a

significant part of the relief prayed for in the complaint was injunctive relief, the estate of a

deceased plaintiff, which only had an interest in damages, could not represent a class).

Lastly, the Health Clubs contend that their ability to assert their affirmative defenses

against Ms. Robinson’s claims is undermined by the Administrator’s lack of knowledge with

respect to the relevant facts.

There is no per se rule that an estate administrator cannot be a class representative, and

courts have found estate administrators to be adequate class representatives notwithstanding the

possible evidentiary and discovery challenges this might cause. See, e.g., Shamberg v. Ahlstrom,

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 41 of 63
42

111 F.R.D. 689, 695 (D.N.J. 1986) (executors of deceased shareholder’s estate satisfied adequacy

requirement and were entitled to certification of shareholder class of plaintiffs); Georgine v.

Amchem Prods, Inc., 83 F.3d 610, 630-31 (3d Cir. 1996) (discussing adequacy of named

plaintiffs as class representatives without mentioning fact that many of the named plaintiffs were

executors of estates of those allegedly injured), rev’d in part on other grounds, Amchem Prods.,

Inc. v. Windsor, 521 U.S. 591 (1997).

In the present case, as previously discussed, individual factual differences are not relevant

to whether the fee charged was excessive – such individual considerations are relevant only to

the amount of damages each class member might recover. In addition, the Plaintiffs have

conceded that monetary damages are the primary relief sought here and, therefore, the

Administrator’s sole interest in the recovery of money is consistent with the primary purpose of

the litigation and serves the interests of the Class. The Administrator’s knowledge of the case,

however, is bearly minimal. Nonetheless, he is aware of the theory of the lawsuit (Allen Dep. 14,

35-36, Pl. Reply Ex. C), and has reviewed several documents in the case, including Ms.

Robinson’s contract and answers to interrogatories (id. at 18-19, 59-61). He has also

demonstrated an understanding of his role as a substitute plaintiff and putative class

representative. (Id. at 37, 53.) While surely not an ideal class representative, Mr. Allen is at least

minimally qualified to fairly and adequately represent the interests of the class.

2. Adequacy of Plaintiffs’ Counsel

 The Health Clubs also assert that Plaintiffs’ attorneys are not adequate class counsel

under Rule 23(g). In particular, the Health Clubs point to Plaintiffs’ counsel’s failure to

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43

recognize conflicts between current and former health club members and failure to address the

potential counterclaims to which defaulted Class members may be exposed in the event of

certification. In addition, the Health Clubs cite the performance of Plaintiffs’ counsel in the case

thus far as evidence that counsel’s representation of the Class will be inadequate. For example,

Plaintiff’s counsel added Bally Total Fitness Corporation (“Bally Fitness”) as a defendant on

September 30, 2005, but then on November 4, 2005, after the Health Clubs removed the case to

federal court, dismissed the claims against Bally Fitness in conjunction with an effort to remand

the case. The Health Clubs suggest that the failure to pursue claims on November 4, 2005 that

were apparently asserted in good faith one month earlier on September 30, 2005 demonstrates

counsel’s inadequacy. The Health Clubs also point to Plaintiffs’ counsel’s failure to meet the

deadline for filing a class certification motion under the local rules of this District.

Not surprisingly, Plaintiffs’ counsel vigorously defend their adequacy to represent the

class, citing their experience and past appointments as class counsel. See, e.g., Perry v.

FleetBoston Fin. Corp., 229 F.R.D. 105, 112-13 (E.D. Pa. 2005) (“I and a number of my

colleagues have previously found that class counsel, . . . Donovan Searles, LLC, possess the skill,

experience and qualifications necessary to conduct litigation similar to the present lawsuit.”); Pl.

Mot. Ex. B. 

Given Plaintiffs’ counsel’s prior experience representing consumer classes in this District

and in others, the Court concludes that counsel is adequate and qualified to represent the Class.

In this Circuit, the named plaintiff’s choice of counsel “should negatively impact our

determination of adequacy at this early stage only if the proposed lead counsel is ‘so deficient as

to demonstrate that it will not fairly and adequately represent the interests of the class.’” In re

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 43 of 63
 Rule 23(b) provides: 18

(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is

satisfied and if:

(1) prosecuting separate actions by or against individual class members would create

a risk of:

(A) inconsistent or varying adjudications with respect to individual class

members that would establish incompatible standards of conduct for the party

opposing the class; or

(B) adjudications with respect to individual class members that, as a practical

matter, would be dispositive of the interests of the other members not parties to the

individual adjudications or would substantially impair or impede their ability to

protect their interests;

(2) the party opposing the class has acted or refused to act on grounds that apply

generally to the class, so that final injunctive relief or corresponding declaratory relief

is appropriate respecting the class as a whole; or

(3) the court finds that the questions of law or fact common to class members

predominate over any questions affecting only individual members, and that a class

action is superior to other availablemethods for fairlyand efficientlyadjudicating the

controversy. The matters pertinent to these findings include:

(A) the class members' interests in individually controlling the prosecution

or defense of separate actions;

44

Vicuron Pharmaceuticals, Inc. Sec. Litig., 225 F.R.D. 508, 511-512 (E.D. Pa. 2004) (quoting In

re Cendant Corp. Litig., 264 F.3d 201, 266 (3d Cir. 2001)). Here, there is nothing to indicate that

Plaintiffs’ counsel is so deficient as to jeopardize the interests of the class. Cf. Davis v. Kraft

Foods N. Am., 2006 WL 237512, at *9 (E.D. Pa. Jan. 31, 2006) (finding class counsel

inadequate with respect to disparate discipline claim where in a separate suit plaintiffs’ counsel

also represented the defendant’s former employee relations manager who was involved in

disciplinary decisions). 

III. Rule 23(b)

In addition to meeting the requirements of Rule 23(a), the Plaintiffs also must

demonstrate that at least one of the requirements set forth in Rule 23(b) is met. Here, the 18

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(B) the extent and nature of any litigation concerning the controversy already

begun by or against class members;

(C) the desirability or undesirability of concentrating the litigation of the

claims in the particular forum; and

(D) the likely difficulties in managing a class action.

Fed. R. Civ. P. 23(b).

45

Plaintiffs assert that this action is appropriate for certification under all three subsections of Rule

23(b). The Health Clubs object to certification under any subsection of Rule 23(b).

A. Certification Under Rule 23(b)(1) or (b)(2)

The Plaintiffs contend that the alleged uniform practice and policy conducted by the

Health Clubs in violation of the HCA raises issues common to all class members. Consequently,

argue the Plaintiffs, the outcome of individual lawsuits could produce incompatible results and

prejudice the rights of other putative class members, making certification under Rule 23(b)(1)(A)

is appropriate. Specifically, the Plaintiffs maintain that the crux of the case is what standard the

Health Clubs must follow in charging consumers for the initiation of health club memberships,

that is, whether the initiation charges must be reasonably related to the actual cost of setting up

the new membership, or whether the Health Clubs may pro rate all expenses incurred in

acquiring and running their clubs and include such expenses in the initial “Membership Fee.”

The Plaintiffs also seek certification under Rule 23(b)(2) on the grounds that the

Complaint seeks declaratory and injunctive relief, and the Health Clubs’ alleged conduct is

generally applicable to the Class.

The Health Clubs respond that certification under Rule 23(b)(1) or (b)(2) is improper

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 45 of 63
46

because certification under those subsections constitutes a mandatory class. Bunnion v.

Consolidated Rail Corp., 1998 WL 372644, at *13 (E.D. Pa. May 14, 1998). “That is, the class

members may not opt out of the action and ‘pursue separate litigation that might prejudice other

class members or the defendant.’” Id. at *13 (quoting 5 Moore’s Federal Practice § 23.40[2] (3d

ed. 1998)). According to the Health Clubs, the potential conflicts between various subsets of the

proposed Class render a mandatory class improper. Moreover, argue the Health Clubs, to

properly proceed under Rule 23(b)(2), the Complaint must seek relief which is predominantly

injunctive or declaratory, and here the Plaintiffs are seeking primarily monetary relief. 

Certification pursuant to Rule 23(b)(1)(A) generally is not appropriate in cases in which

the primary relief sought is monetary damages. 3D Moore’s Federal Practice 23.41[6][a]. 

“Normally, the mere possibility that a defendant might be liable for payments to some potential

class members but not to others does not constitute the ‘incompatible standards of conduct’ of

concern in Rule 23(b)(1)(A).” Vaughter v. Eastern Air Lines, Inc., 817 F.2d 685, 690 (11th Cir.

1987); see also Contawe v. Crescent Heights of America, Inc., 2004 WL 296631, at *4 (E.D. Pa.

Dec. 21, 2004) (“Rule 23(b)(1)(A), which seeks to prevent ‘incompatible standards of conduct,’

is not meant to apply where the risk of inconsistent results in individual actions is merely the

possibility that the defendants will pay damages to some claimants but not to others . . . .”). 

However, “[a] class may be certified under Rule 23(b)(1)(A) if monetary damages are sought,

along with injunctive relief, but the monetary relief must not predominate.” Panetta v. SAP

America, Inc., 2006 WL 924996, at *2 (E.D. Pa. Apr. 6, 2006) (citing Bunnion, 1998 WL

372644, at *13).

Similarly, certification under Rule 23(b)(2) also is inappropriate where the primary relief

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47

sought is not injunctive or declaratory relief. Contawe, 2004 WL 2966931, at *4; 3D Moore’s

Federal Practice 23.43[3][b]. As the Court of Appeals for the Third Circuit has explained,

Subsection (b)(2) class actions are “limited to those class actions

seeking primarily injunctive or corresponding declaratory relief.” 1

Newberg on Class Actions § 4.11, at 4-39. The (b)(2) class “serves

most frequently as the vehicle for civil rights actions and other

institutional reform cases that receive class action treatment.” Baby

Neal v. Casey, 43 F.3d 48, 58-59 (3d Cir. 1994). Indeed, (b)(2) was

“designed specifically for civil rights cases seeking broad declaratory

or injunctive relief for a numerous and often unascertainable or

amorphous class of persons.” 1 Newberg on Class Actions § 4.11, at

4-39.

Barnes v. American Tobacco Co., 161 F.3d 127, 142 (3d Cir. 1998). Certification under Rule

23(b)(2) is also inappropriate where many putative class members “have nothing to gain from an

injunction, and the declaratory relief they seek serves only to facilitate the award of damages.” 

Langbecker, 476 F.3d at 317; see also Miller v. Hygrade Food Prods. Corp., 198 F.R.D. 638, 641

(E.D. Pa. 2001) (“Where a class seeks monetary relief, the class becomes less cohesive because

assessing these damages often necessitates an examination into individual claims.”).

Here, where the Complaint seeks both injunctive and declaratory relief and damages, the

applicability of Rule 23(b)(1) and (b)(2) depends upon whether the primary relief sought is

money damages. To determine whether a suit seeks predominantly equitable or monetary relief,

a court must examine the “realities of the litigation.” Yeager’s Fuel, Inc. v. Pennsylvania Power

& Light Co., 162 F.R.D. 471, 480 (E.D. Pa. 1995). “[M]onetary relief predominates in (b)(2)

class actions unless it is incidental to requested injunctive or declaratory relief.” Barabin v.

Aramark Corp., 210 F.R.D. 152, 160-161 (E.D. Pa. 2002) (quoting Allison v. Citgo Petroleum

Corp., 151 F.3d 402 (5th Cir. 1998)) (emphasis added).

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48

“Incidental damages, in turn, are those ‘that flow directly from liability to the class as a

whole on the claims forming the basis of the injunctive or declaratory relief.’” Id. at 161

(quoting Allison, 151 F.3d at 415; Miller, 198 F.R.D. at 641). In determining whether damages

are “incidental” for purposes of this test, the Court should consider: “(1) whether such damages

are of a kind to which class members would be automatically entitled; (2) whether such damages

can be computed by ‘objective standards,’ and not standards reliant upon ‘the intangible,

subjective differences of each class member’s circumstances’; and (3) whether such damages

would require additional hearings.’” Id. 

Here, assert the Health Clubs, the Plaintiffs’ claims for monetary relief are not merely

“incidental” to their claims for equitable relief because (1) putative class members would not

automatically be entitled to damages, (2) any damages will depend upon each member’s

individual circumstances, and (3) additional hearings will be necessary to determine each

person’s alleged damages. In addition, Plaintiffs concede in their Reply brief that “the primary

relief sought in the litigation” is “the recovery of money.” (Pl. Reply 22; see also Pl. Reply 20

(“Here, Plaintiffs primarily seek money damages for the overcharging of membership fees by the

Defendants.”).) Thus, argue the Health Clubs, monetary damages are the predominant form of

relief sought.

The Court agrees. Under the circumstances presented here, the Court cannot find that the

primary relief sought is injunctive and/or declaratory in nature. Rather, it is fair to say that the

primary relief sought by the Plaintiffs is monetary in nature. Here, there is no limited, statutory

pool of damages to which class members are automatically entitled. Cf. Fair Debt Collection

Practices Act, 15 U.S.C. § 1692k(a)(2)(B) (expressly providing for class actions and capping

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 In addition,“[w]hile 23(b)(2) class actions have no predominance or superiority 19

requirements, it is well established that the class claims must be cohesive.” Barnes, 161 F.3d at

143. Because the Court finds that the primary relief sought here is monetary damages, thus

precluding certification under Rule 23(b)(2), the Court need not address the “cohesion”

requirement. 

49

damages at the lesser of $500,000 or 1% of the net worth of the defendant); Woodard v. Online

Information Servs., 191 F.R.D. 502, 507 (E.D.N.C. 2000) (holding that statutory damages under

the FDCPA are incidental to declaratory relief because the statutory damages are de minimus per

class member); Borcherding-Dittloff v. Transworld Sys., Inc., 185 F.R.D 558, 566 (W.D. Wis.

1999) (same); Young v. Meyer & Njus, 183 F.R.D. 231, 234-35 (N.D. Ill. 1998) (same);

Gammon v. GC Servs., 162 F.R.D. 313, 321-22 (N.D. Ill. 1995).

In addition, assuming liability is proved, any damages awarded to class members here

cannot be “computed by objective standards.” Rather, damages will depend upon the

particulars of each class member’s membership program and circumstances, and additional

hearings on damages likely will be necessary. Under the UTPCPL, in order to recover each class

member will have to demonstrate an ascertainable loss as a result of a prohibited action by the

Health Clubs. Thus, the Court concludes that the primary relief sought is monetary damages and,

therefore, the Plaintiffs do not meet the criteria for class action certification under Rule

23(b)(1)(A) or (b)(2).19

B. Certification Under Rule 23(b)(3)

Rule 23(b)(3) permits class actions where the Court finds that “the questions of law or

fact common to the members of the class predominate over any questions affecting only

individual members, and that a class action is superior to other available methods for the fair and

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50

efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3).

1. Predominance

The Plaintiffs contend that the alleged uniform practice of charging excessive initiation

fees in violation of the HCA raises issues common to all class members. Consequently, argue

the Plaintiffs, because the alleged violation is the same for each class member, common

questions of law and fact predominate. See In re Prudential Ins. Co., 148 F.3d 283, 314-15 (3d

Cir. 1998) (common issues predominate over individual issues where plaintiffs have alleged a

common course of conduct on the part of a defendant). In response, the Health Clubs again point

to the individual issues raised by the different membership programs and the defenses of

ratification, waiver, estoppel, laches and voluntary payment, which, they argue, predominate over

any common issues.

“The Rule 23(b)(3) predominance inquiry tests whether the class is sufficiently cohesive

to warrant adjudication by representation, and mandates that it is far more demanding than the

Rule 23(a)(2) commonality requirement.” In re LifeUSA Holding Inc., 242 F.3d 136, 144 (3d

Cir. 2001). “[T]he presence of individual questions does not per se rule out a finding of

predominance.” In re Prudential, 148 F.3d at 315. In determining whether common problems

predominate, the court’s inquiry is directed primarily toward the issue of liability, as the necessity

of calculating individual damages does not preclude class certification. Barabin, 210 F.R.D. at

161-162; see also In re Community Bank, 418 F.3d 277, 305-06 (3d Cir. 2005) (“Although the

calculation of individual damages is necessarily an individual inquiry, courts have consistently

held that the necessity of this inquiry does not preclude class action treatment where class issues

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 50 of 63
51

predominate.”); Chiang v. Veneman 385 F.3d 256, 273 (3d Cir. 2004) (“[I]t has been commonly

recognized that the necessity for calculation of damages on an individual basis should not

preclude class determination when the common issues which determine liability predominate.”)

(citations omitted).

Likewise, “[a]lthough the ‘mere fact’ of an affirmative defense ‘does not compel a

finding that individual issues predominate over common ones,’ class certification is inappropriate

if individual defenses will be widespread through the class and vary significantly among class

members.” Ritti v. U-Haul Int’l, Inc., 2006 WL 1117878, at *11 (E.D. Pa. Apr. 26, 2006); see

also Sanneman v. Chrysler Corp., 191 F.R.D. 441, 444 (E.D. Pa. 2000) (defendants’ affirmative

defenses presented individual issues precluding class certification).

Here, both the individual factual differences between class members and the Health

Clubs’ affirmative defenses become relevant only at the damages phase of the litigation. As

previously discussed, the central issue of the liability phase is whether the Health Clubs charged

members excessive initiation fees in violation of the HCA. The legal and factual questions

related to this central issue – i.e., what constitutes an “initiation fee” within the meaning of the

HCA and whether the Health Clubs’ membership fees were “reasonably related to the Club’s cost

of establishing the initial health club membership” – may be asked without variation of each

membership program and are independent of whether or for long how members used their

memberships or otherwise accepted and/or paid for the benefits under their contracts. Because

the individual differences between class members are relatively minor and primarily related to

damages, the Court concludes that the proposed Class is “sufficiently cohesive to warrant

adjudication by representation.” Thus, the predominance requirement is satisfied.

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2. Superiority

Under Rule 23(b)(3), the Court must also determine that “a class action is superior to

other available methods for the fair and efficient adjudication of the controversy.” Fed. R. Civ.

P. 23(b)(3). The Rule sets forth several factors relevant to the superiority inquiry: “(A) the class

members’ interests in individually controlling the prosecution or defense of separate actions; (B)

the extent and nature of any litigation concerning the controversy already begun by or against

class members; (C) the desirability or undesirability of concentrating the litigation of the claims

in the particular forum; and (D) the likely difficulties in managing a class action.” Fed. R. Civ.

P. 23(b)(3). In effect, “[t]he superiority requirement asks the court to balance, in terms of

fairness and efficiency, the merits of a class action against those of ‘alternative available

methods’ of adjudication.” In re Prudential, 148 F.3d at 316 (citation omitted).

The Plaintiffs contend that because the Health Clubs “have violated the rights of a large

number of geographically dispersed persons to such an extent that the cost of pursuing individual

litigation to seek recovery against a well-financed adversary is not feasible,” a class action is not

only efficient, but also fair. (Pl. Mem. 15.) According to the Plaintiffs, the alternatives to a class

action offer either no recourse for many injured consumers, or a multiplicity of scattered suits

litigating essentially the same issue. (Id.) Thus, argue the Plaintiffs, a class action is superior to

other available alternatives.

The Health Clubs respond that Rule 23(b)(3)’s superiority requirement is not met here

because the impracticality of separate suits “by itself is insufficient to overcome the hurdles of

predominance and superiority and efficient and fair management of a trial, which Rule 23(b)

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 52 of 63
53

requires.” In re Life USA, 242 F.3d at 148 n.13. Here, argue the Health Clubs, because

resolution of both liability and damages will require an individualized inquiry into each class

member’s agreement, payment and club usage, manageability problems outweigh the underlying

policy of saving time and resources.

As previously discussed at length, contrary to the Health Clubs’ assertions, the Court

determines that individualized inquiries will not be relevant with respect to the central question

of liability. Despite the potential necessity of individualized inquiries as to damages, the Court

concludes that a class action is preferable to numerous individual suits litigating virtually

identical issues. Moreover, the class action device is particularly appropriate where, as here,

individual class members would be financially unable or unwilling to bring individual suits. 

Under the circumstances presented here, the class action device “saves the resources of both the

courts and the parties by permitting an issue potentially affecting every [class member] to be

litigated in an economical fashion under Rule 23.” General Tel. Co. v. Falcon, 457 U.S. 147,

155 (1982) (quoting Califano v. Yamasaki, 442 U.S. 682, 701 (1979)).

Moreover, when evaluating a motion for class certification, the Third Circuit Court of

Appeals has advised courts to resolve doubts in favor of approving certification. Eisenberg v.

Gagnon, 766 F.2d 770, 785 (3d Cir. 1985); see also Williams v. Empire Funding Corp., 227

F.R.D. 362, 372 (E.D. Pa. 2005) (“When doubt exists concerning certification of the class, the

court should err in favor of allowing the case to proceed as a class action.”) (citation omitted).

With respect to the Plaintiffs’ UTPCPL claim in particular, the Health Clubs also assert

that class treatment is inappropriate because of the UTPCPL’s ascertainable loss requirement. 

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 53 of 63
 Section 201-9.2 provides in relevant part:

20

(a) Any person who purchases or leases goods or services primarily

for personal, family or household purposes and thereby suffers any

ascertainable loss of money or property, real or personal, as a result

of the use or employment by any person of a method, act or practice

declared unlawful by section 3 of this act, may bring a private action

to recover actual damages or one hundred dollars ($100), whichever

is greater. The court may, in its discretion, award up to three times the

actual damages sustained, but not less than one hundred dollars

($100), and may provide such additional relief as it deems necessary

or proper. The court may award to the plaintiff, in addition to other

relief provided in this section, costs and reasonable attorney fees.

73 P.S. § 201-9.2. The HCA specifically provides that a violation of the HCA also constitutes a

violation of the UTPCPL:

A violation of this act shall constitute a violation of the act of

December 17, 1968 (P.L. 1224, No. 387), known as the Unfair Trade

Practices and Consumer Protection Law, and shall be subject to the

enforcement provisions and private rights of action contained in that

act.

73 P.S. § 2175(a).

54

The UTPCPL provides for a private right of action for any person who “suffers any ascertainable

loss of money of property, real or personal as a result of the use or employment by any person of

a method, act or practice declared unlawful by section 3 of this act . . . .” 73 PA. CONS. STAT.

ANN. § 201-9.2 (emphasis added). Thus, a class member cannot maintain an action under the 20

UTPCPL unless he or she can establish an ascertainable loss as a result of the alleged violation. 

Weinberg v. Sun Co., Inc., 777 A.2d 442, 442 (Pa. 2001). Simply alleging a violation of a

consumer protection statute “does not automatically entitle an individual to bring a private action

under the UTPCPL.” Williams, 227 F.R.D. at 370. 

Under certain circumstances, this causation requirement may preclude class treatment of

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 54 of 63
55

some claims. For example, in Weinberg, gasoline consumers brought an action against an oil

company alleging deceptive advertising concerning the benefits of using higher octane gasoline

and asserting claims under the UTPCPL. 777 A.2d at 443-44. The Pennsylvania Supreme Court

held that the “ascertainable loss” language “clearly requires, in a private action, that a plaintiff

suffer an ascertainable loss as a result of the defendant’s prohibited action.” Id. at 446 (emphasis

in original). In that case, where the alleged statutory violation was false advertising, the

“ascertainable loss” requirement translated into “numerous and extensive” questions of fact

“applicable to each individual private plaintiff,” rendering a class action unmanageable. Id. 

Similarly, in Williams, the court declined to certify a class of homeowners seeking relief

for alleged debt-collection practices under the UTPCPL due to the plaintiff’s failure to

demonstrate an ascertainable loss as a result of the alleged violation. 227 F.R.D. at 370. 

Specifically, even though the plaintiff contended that she suffered an ascertainable loss of money

as a result of the defendant’s improper telephone calls, the plaintiff failed “to show whether she

or any proposed class member suffered an ascertainable loss of money or property as a result of

defendant’s debt-collection form letters.” Id. Because the plaintiff did not claim the defendant’s

mailing of form letters caused her injury, but rather asserted that it was the telephone calls, which

were not the alleged unlawful conduct common to all class members, that caused her to suffer a

monetary loss, the court determined that the UPTCPL’s causation requirement had not been

satisfied. The court held that “[w]ithout a showing of an ascertainable loss of money or property

to plaintiff and the class members resulting from defendant’s alleged mailings, plaintiff cannot

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 55 of 63
 In Piper v. Portnoff Law Associates, 215 F.R.D. 495 (E.D. Pa. 2003) (“Piper I”), 21

another case cited by the parties, the court initially certified the class on the basis of the federal

claims, but expressly denied certification of the UTPCPL claims because the plaintiff was

“unable to show that any members of the proposed class, aside from the named plaintiff,

suffered an ascertainable loss as required under the [UTPCPL].” Id. at 501. While

acknowledging that “questions of fact as to the exact amount of individual damages may not

foreclose a class action,” the court found it “impossible to ascertain how many of the defendants’

letters included assessments for attorney’s fees.” Id. However, upon a showing that 148 class

members had suffered an “ascertainable loss,” the court subsequently certified the class with

respect to the UTPCPL claims. Piper v. Portnoff Law Associates, 216 F.R.D. 325, 329 (E.D. Pa.

2003) (“Piper II”). 

56

meet all the requirements for class certification.” Id. at 371. 

21

In contrast, in Cohen v. Chicago Title Insurance co., – F.R.D. – , 2007 WL 1067034 (E.D.

Pa. Apr. 5, 2007), the plaintiff sought to certify a class of all those mortgagors in Pennsylvania

who refinanced and bought a lender’s policy from the defendant title insurer and paid more than

the defendant’s filed rate structure provided. The court certified a class based on unjust

enrichment and UTPCPL claims. As the Health Clubs acknowledge, in that case, there was no

real issue as to “ascertainable loss” because the entire class allegedly was charged in excess of

the filed rate. (See Def. Sur-Response 3 n.4.)

The factual circumstances presented here are closely analogous to those in Cohen, and

significantly different from those in Weinberg, Williams and Piper I. Here, the Plaintiffs allege

that the Health Clubs charged excessive initiation fees in violation of the HCA and the UTPCPL.

The HCA prohibits initiation fees in excess of the reasonable cost of establishing a membership. 

73 P.S. § 2165. Based on the assumption that any such costs should not exceed $100, the

Plaintiffs seek to certify a class of all health club members who paid an initiation fee in excess of

$100. Thus, as in Cohen, all class members allegedly were charged excessive fees and, therefore,

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 56 of 63
57

suffered an ascertainable loss. The alleged monetary loss is a direct result of the Health Clubs’

alleged violation of the HCA, and the specific cause of the alleged loss – excess initiation fees –

is the same for each and every class member.

As opposed to the factual questions at issue in Piper I and Williams, where it was unclear

which, if any, class members were exposed to the alleged misconduct, here the proposed Class

includes only those persons who purchased health club memberships and who paid in excess of

the alleged “reasonable” amount. By definition, the proposed class excludes persons who did not

pay an allegedly excessive initiation fee and thus did not suffer an ascertainable loss. Likewise,

there is no question here as to whether, if proven, the alleged misconduct resulted in a monetary

loss for each person who purchased a health club membership. Unlike unfair debt collection

practices that may unlawfully harass the debtor without causing any monetary damage, an

excessive initiation fee that is paid by a consumer necessarily causes an ascertainable monetary

loss.

Moreover, where the alleged violation is a uniform policy and practice of charging

excessive fees, there is no doubt as to the cause of the ascertainable monetary loss. The fact that

individual class members may have paid differing amounts in excess of $100 is irrelevant. See 

Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 1880 (3d Cir. 2001)

(“Proof of injury (whether or not an injury occurred at all) must be distinguished from calculation

of damages (which determines the actual value of the injury).”). Thus, the Court concludes that

the Plaintiffs have adequately demonstrated that most, if not all, class members have suffered an

ascertainable loss as a result of the Health Clubs’ alleged practice of charging excessive initiation

fees. This causation requirement does not preclude class certification under the circumstances

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 57 of 63
 According to Plaintiffs, Count II was pleaded as an alternative to Count I’s claim for 22

statutory violations “in the event that the class members’ contracts were found to have been

already voided by Defendants’ illegal conduct.” (Pl. Reply 5 n.5.)

58

presented here.

However, the same does not hold true with respect to the unjust enrichment claims,

22

which the Court concludes cannot be tried on a class basis because the application of equitable

relief “depends on the unique factual circumstances of each case.” Styler v. Hugo, 619 A.2d 347,

350 (Pa. Super. 1993). Specifically, the elements of unjust enrichment include the benefits

conferred on a defendant by the plaintiff, appreciation of such benefits by the defendant, and

acceptance and retention of such benefits under such circumstances that it would be inequitable

for the defendant to retain the benefit without payment of value. Id. Here, whether the Health

Clubs have been “unjustly enriched” by any Class member will depend upon each Class

member’s contract terms, payments, length of membership, and usage of membership privileges.

Thus, the question of liability as to the unjust enrichment claims is notably and significantly more

complex and individualized than the question of liability under the HCA and the UTPCPL. 

Therefore, class certification is inappropriate as to the unjust enrichment claims.

CONCLUSION

Overall, the central issue in this case is the same for each and every member of the

proposed Class, and the class action device appears to be the most efficient and fair way to

resolve class members’ claims. Thus, having determined that the requirements of Rule 23(a) and

(b)(3) have been met, the Court concludes that the Motion for Class Certification will be granted

as to Count I, Plaintiffs’ claim for injunctive relief and damages pursuant to the UTPCPL, and

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 58 of 63
59

Count III, Plaintiffs’ claim for declaratory judgment. The Motion is specifically denied,

however, with respect to Count II, Plaintiffs’ claims for unjust enrichment, accounting,

disgorgement and restitution, because of the individual nature of those claims with respect to

both damages and liability. At this time, the Court also concludes that class action treatment of

the Defendants’ various defenses, including ratification, voluntary payment and waiver, is

appropriate, even though these defenses may necessitate individualized inquiries and/or hearings

at the damages phase of the litigation. Class treatment of the defenses of laches and estoppel is

appropriate in both the litigation and damages phases of the litigation.

An Order consistent with this Memorandum and outlining the specific issues of law and

fact common to the class and appropriate for class treatment follows.

BY THE COURT:

S/Gene E.K. Pratter

GENE E.K. PRATTER

United States District Judge

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 59 of 63
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ANTHONY ALLEN AND : CIVIL ACTION

GENE SWINDELL, :

Plaintiffs, :

:

v. :

:

HOLIDAY UNIVERSAL, ET AL., :

Defendants : NO. 05-5726

ORDER

AND NOW, this 17th day of March, 2008, upon consideration of the Plaintiffs’ Motion

for Class Certification (Docket No. 46), the Defendants’ response thereto (Docket No. 58), the

Plaintiffs’ reply (Docket No. 63), the Defendants’ sur-response (Docket No. 69) and the

Plaintiffs’ sur-reply (Docket No. 70), it is hereby ORDERED that the Motion is GRANTED

consistent with the accompanying Memorandum and as outlined in this Order.

IT IS FURTHER ORDERED that this action shall be maintained as a class action in

accordance with Rule 23(b)(3) of the Federal Rules of Civil Procedure pursuant to the following

findings:

1. The Class is defined as “all persons who, on or after December 7, 1998, entered

into a contract for health club services with health clubs located in Pennsylvania

and owned by Defendants that required the payment of a membership fee in

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 60 of 63
 Within 30 days of the date of this Order, the parties shall conclusively determine and 23

jointly report to the Court whether Physical Fitness Centers of Philadelphia is “owned” by the

Defendants within the meaning of the Class definition in paragraph 1 above.

2

excess of $100.00.”23

2. The Class, as defined is paragraph 1 of this Order, is so numerous that joinder of

all members is impractical.

3. There are questions of law and fact common to the Class, namely:

a. Whether Defendants have charged members of the Class for amounts not

reasonably related to the Defendants’ costs in establishing the initial health

club membership in violation of Section 2165 of the Health Clubs Act

(“HCA”), 73 PA. CONS. STAT. ANN. §§ 2161, et seq.;

b. Whether Plaintiffs are entitled to injunctive relief under the Pennsylvania

Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73

PA. CONS. STAT. ANN. §§ 201-1, et seq., in the form of a permanent

injunction against Defendants from violating the UTPCPL and the HCA in

the future; 

c. Whether Plaintiffs are entitled to monetary damages under the UTPCPL; 

d. Whether Plaintiffs are entitled to a declaratory judgment that each Class

member’s contract with Defendants is voidable at the option of each

respective Class member pursuant to Section 2167 of the HCA;

e. Whether Plaintiffs’ claimed are barred by the doctrines of laches and/or

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 61 of 63
3

estoppel;

f. If liability is proven, whether continued usage of the club and/or continued

payment under contract waives any respective class member’s right to void

the contract; and

g. If liability is proven, whether continued usage of the club and/or continued

payment under contract off-sets any respective class member’s right to

collect any monetary damages.

4. The claims of Plaintiffs Anthony P. Allen, as the Administrator of the Estate of

Estelle Robinson, and Gene M. Swindell are typical of the claims of the Class.

5. Plaintiffs will fairly and adequately protect the interests of the Class.

6. The questions of law and fact common to the members of the Class predominate

over any questions affecting only individual members.

7. A class action is superior to other available methods for the fair and efficient

adjudication of this controversy.

8. Plaintiff has presented a trial plan that describes the issues likely to be presented

at trial and demonstrates that those issues are susceptible of class-wide proof.

ACCORDINGLY, IT IS HEREBY FURTHER 

ORDERED that the Class as defined in paragraph 1 of this Order is hereby CERTIFIED;

and it is further

ORDERED that Plaintiffs Anthony P. Allen, as the Administrator of the Estate of Estelle

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 62 of 63
4

Robinson, and Gene M. Swindell are certified as Class Representatives; and it is further

ORDERED that excluded from the Class are all officers and directors of the Defendants;

and it is further

ORDERED that excluded from the Class are any putative Class members who have

already adjudicated their rights under their contracts and received a final judgment or discharge

in bankruptcy such that any claims raised in the present suit were actually decided or could have

been asserted in the earlier action; and it is further

ORDERED that David A. Searles, Esq. of the firm of Donovan Searles, LLC; Joseph K.

Goldberg, Esq.; John Blim, Esq. of the firm of Blim & Edelson, LCC; and David S. Blinn, Esq.

of the Consumer Law Group, LLC shall serve as Class Counsel; and it is further

ORDERED that Plaintiffs shall submit a detailed revised trial plan consistent with this

Order and Rule 23(c)(1)(B) within 30 days of the date of this Order; and it is further

ORDERED that Plaintiffs shall submit a proposed form of notice to the Class within 30

days of the date of this Order.

BY THE COURT:

S/Gene E.K. Pratter 

GENE E.K. PRATTER

United States District Judge

Case 2:05-cv-05726-TR Document 76 Filed 03/18/08 Page 63 of 63