Gascho v. Global Fitness Holdings, LLC, et al., Nos. 17-3577/3578/3579/3804/3805/3821/3822/3825/3826/3827 (THAPAR, Sutton, Donald).

Gascho v. Global Fitness Holdings, LLC, et al., Nos. 17-3577/3578/3579/3804/3805/3821/3822/3825/3826/3827 (THAPAR, Sutton, Donald).

Members of the gym Global Fitness sued the gym as a class, arguing that the gym misrepresented the terms of its membership. The gym settled, and agreed to pay $1.3 million to the class members, class counsel’s fees, and the claims administrator’s fees and costs. The payments owed to the class members had been put into escrow, but the gym funneled $10.4 million of sale proceeds to company managers as “tax distributions,” and declared that it did not have money to pay counsel or the administrator. The district court held the gym and managers in civil contempt and ordered them to pay the full amount owed. The gym and managers appealed. At issue in the appeal was when the district court’s order to pay class counsel and the administrator became “definite and specific” such that a knowing violation of that order would be punishable as contempt.

The Sixth Circuit reversed, holding that the order to pay became definite and specific when the time expired to request a hearing of the Supreme Court’s denial of certiorari on the claims raised by class members who objected to the settlement. The Court came to that conclusion because the district court had ordered the gym to pay “in accordance with the Settlement Agreement,” and the Settlement Agreement provided that the obligation to pay would not become effective until the agreement was “fully and finally affirmed by the highest court.”

The Court rejected the argument that the gym had an implied obligation to conserve its funds during the appeals, because the contempt power only applies to judgments set forth in an unequivocal command. If the plaintiffs wanted to ensure that the gym would be able to pay class counsel and the administrator, they should have insisted that the gym escrow the funds during the appeals, the Court reasoned.