Last month, Global Fitness Holdings LLC and its four managers were held in civil contempt for failure to comply with a final order approving a class action settlement. Gascho v. Global Fitness Holdings, LLC, S.D. Ohio No. 2:11-cv-436 (Aug. 8, 2017). Global Fitness entered into a class action settlement resolving claims that it had engaged in deceptive billing practices. As part of the settlement, Global Fitness agreed to pay $2.39 million in attorneys’ fees and to cover the administrator’s expenses. Just two days prior to the payment deadline, however, Global Fitness informed the court that it could not make those payments because it no longer had sufficient funds. The plaintiffs then sought and obtained the civil contempt order.
At the heart of the court’s contempt decision is the principle that, when the terms of a settlement agreement are approved and incorporated into a court order, a breach of the agreement is also a violation of the court order. Most settlement agreements are not approved by or incorporated into a court order; thus a breach is typically limited to the parties to the settlement contract. But class action settlements are different; they must be approved by the court under Rule 23(e). And final approval of the settlement agreement had been entered in Gaucho. Continue Reading