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Law360 (March 2, 2021, 10:05 PM EST ) A California federal judge on Tuesday refused to toss or send to arbitration a suit claiming that ClubCorp USA Inc. wrongly forced thousands of private club members to continue paying membership fees during the pandemic, saying there was a factual dispute over whether the members were notified about any arbitration agreements.
California residents Jeffrey Cuenco and Linda Hong alleged in their proposed class action that the club operator closed all its clubs last year in the midst of COVID-19. But ClubCorp still charged its monthly membership fees at full price during that time, they said.
ClubCorp had argued that the case should be arbitrated, paused or thrown out. The company argued that the bylaws of its individual clubs — bylaws that include arbitration clauses — were incorporated by reference in Cuenco's and Hong's membership applications.
But U.S. District Judge Dana M. Sabraw said there was a factual dispute about whether the bylaws were readily available to Cuenco and Hong and, therefore, whether the bylaws were incorporated by reference into the applications. The plaintiffs have argued that the bylaws were neither known nor easily available to them when they applied for membership at the clubs, according to the decision.
"If the bylaws were incorporated by reference, then there was an agreement to arbitrate, but if they were not, then there was no such agreement," Judge Sabraw said. "In light of this dispute, the court must try the order."
The judge denied both motions, giving the parties 10 days to discuss how they want the case to proceed.
ClubCorp, which is based in Dallas, operates about 200 private clubs, including country clubs, throughout the U.S. Its monthly membership fees range from $120 for social memberships to $800 for some golf club memberships, according to the suit.
Cuenco said he was a member of the University Club in San Diego and pays $184 a month. Hong was a member of the Silicon Valley Capital Club, where she paid nearly $200 a month in fees.
The suit was filed in April 2020, at which time the plaintiffs' attorney told Law360 that it had been filed in error. Ronald Marron said the complaint would be withdrawn because ClubCorp was filing for bankruptcy. However, a ClubCorp spokesperson said the company was not in fact filing for bankruptcy. The suit was not withdrawn.
ClubCorp filed its motions to dismiss and compel arbitration in June 2020, according to the case docket.
Counsel for the parties did not immediately return requests for comment late Tuesday.
Cuenco and Hong are represented by Ronald A. Marron, Michael T. Houchin and Lilach Halperin of the Law Offices of Ronald A. Marron APLC; and L. Timothy Fisher and Yeremey Krivoshey of Bursor & Fisher PA.
ClubCorp is represented by Ana Tagvoryan and Julianna Simon of Blank Rome LLP.
The case is Jeffrey Cuenco v. ClubCorp USA Inc., case number 3:20-cv-00774, in the U.S. District Court for the Southern District of California.
--Editing by Peter Rozovsky.
For a reprint of this article, please contact reprints@law360.com.
