Vitamin and supplement chain GNC escaped a potential class action over the abrupt discontinuation of its Gold Card customer discount program.
U.S. District Judge Nora Barry Fischer of the Western District of Pennsylvania granted GNC’s motion to dismiss five plaintiffs’ class action complaint against the company and upheld a previous ruling sending the case to arbitration.
The plaintiffs alleged breach of contract, unjust enrichment, and breaches of several state business codes. GNC responded, arguing that the terms of the Gold Card contract, which was purchased by paying a $15 annual membership, allowed GNC to alter or terminate the program at any time.
“Despite the existence of a contract in this matter, plaintiffs have not, and cannot, identify a breach of the contract by defendant. Plaintiffs allege that defendant breached the contract by terminating the Gold Card program without providing full membership benefits or refunds of membership fees,” Fischer said in her opinion. “Plaintiffs, however, do not acknowledge the contractual provisions that permit defendant to alter the membership program.”
Given that the language of the contract clearly states GNC’s right to terminate the program, Fischer said, the plaintiffs couldn’t establish that the company breached its obligations.
But the plaintiffs argued that the terms were ambiguous because GNC promised a year’s worth of Gold Card benefits while at the same time reserving its right to alter the contract.
“However, in construing the contractual provisions together, it is clear that the provision granting defendant the discretion to alter the program conditions the one-year membership provision,” Fischer said. “Thus, the contract affords defendant the discretion to alter or terminate the Gold Card program’s benefits, which last for one year in the absence of defendant exercising its discretion.”
Fischer also said the plaintiffs’ argument that GNC was bound to an implied covenant of good faith and fair dealing was meritless. The judge explained that an implied covenant only applies in the absence of an express provision.
“The contractual provisions at issue here are express, clear, and unambiguous,” Fischer said. “Thus, the implied covenant of good faith and fair dealing is inapplicable in this matter.”
GNC’s attorney, Jordan Clark of Davis Wright Tremaine in Seattle, did not respond to a request for comment.
The plaintiffs’ attorney, David A. Borkovic of Jones, Gregg, Creehan & Gerace in Pittsburgh, said he was confident the decision would be overturned.
“I already have the notice of appeal prepared,” he said.