A judge has dismissed a proposed class action lawsuit against Peloton. The suit had alleged that Peloton had intentionally misled investors related to the original Peloton Bike seat post recall.
The original lawsuit, which was filed in the summer of 2023 was centered around how Peloton handled and disclosed a recall over the Peloton Bike seat post which was issued in May of 2023. The recall started due to how the seat post could snap off – which you can see reports from members with that issue here.
A main concern of the lawsuit was that Peloton had initially estimated that the seat post recall would cost the company around $8.4 million. However, the recall ending up costing an additional $40 million. According to the lawsuit, this, along with other statements made at the time, ended up causing the stock price to drop, and impacted Peloton investors.
Based on this, the lawsuit was filed, and had been seeking class action status for anyone who bought Peloton stock between February 11, 2021, and May 11, 2023.
Peloton had filed a motion for the lawsuit to be dismissed – and a judge granted that motion this week. However, the judge is leaving the door open for the investors to file an updated lawsuit. The ruling this week said:
For the foregoing reasons, the Court grants Defendants’ motion to dismiss the Amended Complaint. The Court grants Plaintiffs leave to file a second amended complaint. Any second amended complaint must be filed within thirty days from the filing of this Memorandum and Order. If a second amended complaint is not timely filed, the Court will direct the Clerk of Court to enter judgment and close this case.
In granting Peloton’s motion to dismiss, the judge ruled that many of the statements Peloton had made were protected under the standard caveats and disclosures that accompany quarterly earnings reports. Their disclosures at the time had mentioned that recalls were possible – providing the company some protection against this suit.
The judge also decided in their ruling that “Plaintiffs fail to plead that Defendants made materially misleading statements or omissions.” It went on to note that “Peloton’s risk disclosures are not materially misleading because they explicitly warned investors that their products “may be affected from time to time by design and manufacturing defects” that could “adversely affect our business and result in harm to our reputation.”
There was also debate around whether the recall was considered voluntary or not – but the judge sided with Peloton here, stating “Defendants’ statements that the Bike recall was “voluntary,” and that Defendants worked cooperatively with the CPSC on the recall were not false or misleading.”
This ruling in Peloton’s favor comes after a separate lawsuit related to Tread & Tread+ patents was dismissed last month.
Support the site! Enjoy the news & guides we provide? Help us keep bringing you the news. Pelo Buddy is completely free, but you can help support the site with a one-time or monthly donation that will go to our writers, editors, and more. Find out more details here.
Get Our Newsletter Want to be sure to never miss any Peloton news? Sign up for our newsletter and get all the latest Peloton updates & Peloton rumors sent directly to your inbox.
Leave a Reply