BSC parent Town Sports International was initially named as co-defendant in the lawsuit, but the New York-based company filed for bankruptcy protection in September 2020 and was omitted from the judgment.
Walsh, as CEO and chairman, directed the company to charge its members in Massachusetts their monthly dues for April 2020, despite knowing the gyms would be closed for the whole month due to pandemic shutdown orders, according to court filings.
Walsh claimed that, as the pandemic worsened in late March 2020, he believed the gyms would reopen in two weeks. The court found, however, that by the time Walsh made the decision to charge April dues, BSC had already laid off most of its operational staff. That meant an April reopening would be unlikely even if the state’s closure orders had been reversed.
When the shutdowns were announced, BSC told members they would receive credits to their accounts once clubs reopened. But months later, gym members did not receive any credits unless they personally complained, the court found. And only active members got credits, meaning those who canceled their memberships were never compensated for March and April.
The attorney general’s office said in court filings it received more than 2,000 complaints from BSC members who tried and failed to cancel their contracts during this period. BSC members testified their cancellation requests went unheeded and they continued to be billed until the attorney general’s office ordered the company to stop collecting fees in April 2020.
The court rejected Walsh’s claim that the 30- to 45-day cancellation period in member contracts gave BSC a right to bill for April, ruling that the point of the cancellation period was so members could continue to use the club after giving notice.
Walsh, who was fired as CEO just months after Town Sports International filed for Chapter 11 bankruptcy, was found personally liable. His attorneys did not immediately return a request for comment.
TSI’s successor, New TSI Holdings Inc. — which currently operates BSC locations as New York Sports Clubs — previously paid $200,000 as part of an agreement with the attorney general’s office.
New York Sports Clubs did not return a request for comment Tuesday. The company currently operates just three gyms in Massachusetts — two in Boston and one in Somerville. Before the pandemic, the company counted 30 locations in Massachusetts, as well as one in Rhode Island.
Camilo Fonseca can be reached at camilo.fonseca@globe.com. Follow him on X @fonseca_esq and on Instagram @camilo_fonseca.reports.
About the Author
