Henry Sanchez v. Fitness Factory Edgewater, LLC (082834)(Morris County & Statewide)
231 A.3d 606
N.J.2020Background:
- In March 2013 Henry Sanchez signed a 24-month Fitness Factory gym membership that offered two payment options: pay in full at signing or monthly Electronic Funds Transfer (EFT).
- Members who chose the monthly EFT option paid a $29.99 initiation fee; Sanchez chose EFT and paid the fee and later terminated membership at the end of the term.
- Sanchez filed a putative class action alleging the initiation fee violated the Retail Installment Sales Act (RISA); he also pleaded related consumer-protection claims.
- The trial court dismissed the complaint (relying on Mellet v. Aquasid), and the Appellate Division affirmed, holding RISA applies only to contracts involving financing.
- The New Jersey Supreme Court granted certification, considered briefing from DOBI and consumer amici, and reversed: it held RISA applies to services contracts and does not require a financing arrangement; the case was remanded for further proceedings at the motion-to-dismiss posture.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RISA applies to contracts for services | RISA's plain text covers agreements to pay for goods or services in installments, so services contracts are included | Memberships are services, not sales of goods; Mellet-style reading excludes services from RISA | RISA's definitions expressly include "services" and retail buyers/sellers of services; RISA applies to services contracts |
| Whether RISA requires a financing/time-price differential to apply | RISA defines retail installment contracts by installment payments, not by presence of financing; initiation fee can be regulated even if no interest charged | RISA targets financing arrangements; membership here lacks a financing arrangement or interest charge, so RISA should not apply | No financing requirement in RISA's definition; statute permits time-price differentials but does not make them prerequisite to coverage |
| Whether Health Club Services Act (HCSA) precludes application of RISA | RISA can separately protect consumers and apply alongside HCSA | HCSA is the specific regulatory scheme for gyms and should be the exclusive regulator | HCSA and RISA can apply cumulatively; they are not in conflict and neither is exclusive |
Key Cases Cited
- Perez v. Rent-A-Center, Inc., 186 N.J. 188 (RISA is remedial; statutes protecting consumers should be broadly construed)
- Mellet v. Aquasid, LLC, 452 N.J. Super. 23 (App. Div.) (held health-club contracts not covered by RISA)
- Spade v. Select Comfort Corp., 232 N.J. 504 (procedural authority cited by parties; affected related claims in this case)