This week, Peloton has gotten closer to putting four different lawsuits behind them.
In one case, a federal judge dismissed the lawsuit against Peloton; which had claimed that Peloton intentionally misled shareholders regarding the demand for Peloton’s inventory following the boom they saw during the COVID-19 pandemic.
That class action lawsuit was filed by Robeco Capital Growth Funds SICAV – Robeco Global Consumer Trends, an investment company based in the Netherlands. The lawsuit was initially filed in 2021 and was dismissed by a federal judge in 2023. However, the investor group amended their complaint and refiled in May 2023.
Because of lockdowns during the COVID-19 pandemic, Peloton saw unprecedented growth and demand in inventory as people moved their workouts from the gym to their homes. Once restrictions were lifted, Peloton saw an understandable decrease in demand for their products. Robeco alleged that Peloton misled investors throughout 2021 regarding the state of their inventory and product demand.
During the first lawsuit dismissal, the assigned U.S. District Judge ruled that Peloton included the necessary language in its warnings to investors about a post-pandemic decrease in demand. In the latest dismissal, the judge called the alleged false statements “entirely consistent” with the company’s actual financial results that were communicated to shareholders. The judge did not address Peloton’s alleged intent to defraud shareholders.
In addition, Bloomberg Law reported this week that a global settlement is being finalized to end three other lawsuits related to insider trading and Peloton’s statements regarding the safety of the Tread+.
The lawsuits were filed in 2021 and 2022 following dozens of injury reports related to Peloton’s Tread+. At the time, there were multiple reports of people, pets, and objects being trapped and dragged under the rear of the treadmill, including one instance that led to the death of a child. The Tread+ was ultimately recalled in 2021 along with a halt on new Tread+ sales due to the safety concerns.
The three lawsuits alleged that Peloton’s top leadership was involved with insider trading, by downplaying the extent of the safety concerns with the Tread+ while simultaneously selling almost $500 million worth of stock with the knowledge that a product recall was likely.
The three cases in question are pending in Delaware’s Chancery Court, the U.S. District Court for the District of Delaware, and the U.S. District Court for the Eastern District of New York. Peloton and the parties came to a settlement (in principle) at the end of August, and are now working to get that settlement & agreement put before a judge for approval.
According to the case file:
“The parties intend to file a stipulation of settlement and anticipate that Plaintiffs will move for preliminary approval of the Settlement by November 15, 2025.”
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