SoulCycle, an indoor cycling company that claims to offer an inspirational, meditative experience, has become a national fitness obsession. SoulCycle boasts a celebrity following, including First Lady Michelle Obama.

SoulCycle's enormous success has resulted in classes that fill up quickly. As a result, some riders have allegedly faced difficultly using class passes before their short expiration dates, prompting a putative class action against SoulCycle. Recently, a federal judge denied in part SoulCycle's motion to dismiss the case, allowing it to proceed and likely leaving SoulCycle sweating in its hot seat (see Civil Mins., Cody v. SoulCycle, Inc., No. 15-cv-6457 (C.D. Cal. Jan. 11, 2016), ECF No. 30).

To reserve a spot in a SoulCycle spin class, consumers must purchase passes at specific values from SoulCycle. The plaintiff in Cody filed a proposed class action complaint in the US District Court for the Central District of California, alleging that SoulCycle's class passes violate various laws, including the federal Credit Card Accountability Responsibility and Disclosure (CARD) Act and state statutes, because the passes have unreasonably short expirations periods and automatically expire without warning to the consumer. Because of SoulCycle's rising popularity, classes fill up quickly, increasing the likelihood that consumers will not be able to redeem the passes before they expire. Further, SoulCycle does not offer refunds for unused passes. The complaint alleges that the expired passes contributed to SoulCycle earning over $25 million in 2014.

SoulCycle moved to dismiss the First Amended Class Action Complaint on various grounds, which the district court denied in part and granted in part. Significantly, the district court found that the class passes constitute gift cards, and are therefore subject to the CARD Act and California's gift certificate law. It also rejected SoulCycle's argument that the plaintiff lacked standing, allowing the case to proceed.

The case against SoulCycle is only one of many recent putative class actions that have survived at the motion to dismiss stage. As the filing of class actions grow increasingly common, defense counsel should be familiar with the key federal rules and statutes governing them, especially given the possible large scope of class action litigation, high stakes, and involvement of absent parties.

Practical Law's Class Action Toolkit has many resources designed to assist attorneys with litigating class actions, including:

As most class actions eventually settle, Practical Law's What's Market Class Action Settlement Agreements Database, which analyzes recent court-approved class action settlement agreements on a variety of claims across jurisdictions, and Standard Document, Class Action Settlement Agreement, can also help practitioners draft class action settlement agreements.