On Thursday, a shareholder filed a class-action complaint in the Eastern District of New York against Peloton Interactive Inc., CEO John Foley, and CFO Jill Woodworth for providing purportedly misleading information or failing to disclose various information relating to a recall of pedals for Peloton’s bikes and injuries related to the Tread+ treadmill, which caused share prices to decline.
According to the complaint, the plaintiff is bringing the suit “on behalf of all persons and entities who purchased or otherwise acquired the publicly traded securities of Peloton between September 11, 2020 and April 16, 2021, inclusive (the ‘Class Period’).”
The plaintiff noted that, in 2018, Peloton launched the Tread treadmill, which was renamed in September 2020 to the Tread+. The plaintiff stated that, in September 2020, November 2020, and February 2021, Peloton filed various reports and documents with the Securities and Exchange Commission (SEC). The plaintiff noted that the forms discussed Peloton’s products, regulatory disputes, and other proceedings, pointing out that in mid-October there were numerous articles published about Peloton’s pedal recall. Reportedly, Peloton “recalled clip-in pedals for certain of the Company’s bikes after Peloton received 120 reports of breakage and 16 reports of injury.” According to the complaint, the company recalled the PR70P pedals, which were “fitted on bikes sold between July 2013 and May 2016,” which affected approximately 27,000 bikes. The plaintiff noted that, in March 2021, defendant Foley “wrote a letter that was emailed to Tread+ owners and also published on Peloton’s website revealing a tragic situation involving the death of a child from a Tread+.”
The plaintiff alleged that the various SEC filings and information “were materially false and/or misleading because they misrepresented and failed to disclose the following adverse facts pertaining to the Company’s business, operational and financial results, which were known to Defendants or recklessly disregarded by them.” In particular, the defendants allegedly made false and/or misleading statements or omissions that: “(1) in addition to the tragic death of a child, Peloton’s Tread+ had caused a serious safety threat to children and pets as there were multiple incidents of injury to both; (2) safety was not a priority to Peloton as Defendants were aware of serious injuries and death resulting from the Tread+ yet did not recall or suggest a halt of the use of the Tread+; (3) as a result of the safety concerns, the U.S. Consumer Product Safety Commission (‘CPSC’) declared the Tread+ posed a serious risk to public health and safety resulting in its urgent recommendation for consumers with small children to cease using the Tread+; (4) the CPSC also found a safety threat to Tread+ users if they lost their balance; and (5) as a result of the foregoing, Defendants’ statements about Peloton’s business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.”
However, on April 17, the CPSC issued a warning to consumers about the potential dangers and to stop using the Tread+. On April 18, a day after the market closed, defendant Foley sent a letter that Peloton “had ‘no intention’ to stop selling or to recall the Tread+.” The plaintiff proffered that, after this news, “Peloton’s stock price fell $16.28 per share, or more than 14%, over the next three trading days to close at $99.93 per share on April 21, 2021, damaging investors.” As a result of the defendants’ wrongful conduct and purported omissions and the decline in the share value, the plaintiff and putative class have suffered losses and damages, according to the plaintiff.
The counts against the defendants are violations of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The plaintiff seeks for this to be maintained as a class action and for the plaintiff and her counsel to represent the class; an award for damages, costs, and fees; pre- and post-judgment interest; and other relief.
The plaintiff is represented by The Rosen Law Firm P.A.