Mark Golob, founder & former CEO of the failed franchise fitness chain Butterfly Life, is suing Sean Kelly, the founder of UnhappyFranchisee.com for $35,000,000.
Mr. Golob’s lawsuit, filed by San Francisco personal injury lawyer Nikolaus W. Reed, states:
Sean Kelly and Does 1 to 10 posted defamatory statements on his website “unhappyfranchisee.com” which alleged that Plaintiff Mark Golob had a “checkered” past and a “history of litigation in the health club industry.”
…The statements tended to injure Plaintiff Mark Golob in his occupation and to expose him to hatred, contempt, ridicule, or shame and to discourage others from associating or dealing with him.
The statements are false…
According to the Electronic Frontier Foundation, “Truth is an absolute defense to a defamation claim.”
Let’s first take a look at whether Mark Golob has a history of litigation in the health club industry.
Does Mark Golob Have a History of Litigation in the Health Club Industry?
What do you think? Share a comment below.
1) Wulf v. Women’s Workout World, et al February 1991
Back in 1991, Mark Golob was named in a job discrimination lawsuit filed in Chicago. This appears to be litigation against Mark Golob, and it’s in the health club industry.
1:91-cv-00924 Wulf v. Women’s Workout World, et al
Date filed: 02/12/1991
Cause: 42:2000e Job Discrimination (Employment)
Plaintiff: Lisa Dewey Wulf
Defendants: Women’s Workout World, Inc., Audrey Sedita, Mark Golob
Source: Pacer database
2) Mark Golob’s Litigation With Actress Linda Evans (1998 – 1999)
Remember Linda Evans, who played Audra Barkley on The Big Valley and Krystle Carrington on Dynasty?
According to a July 29, 1999 story on SFGate, Golob was entangled in bitter “health club industry” litigation with the actress:
The former “Dynasty” star was the first to go to court last year, accusing two executives who run a string of women’s health clubs in the Bay Area bearing Evans’ name of breach of contract, among other allegations.
The executives, Mark Golob and Thomas Gergley, fired back with a $5 million lawsuit of their own this week that targets Evans and two companies that sell facial products in cable television infomercials.
The two men — who run 11 Linda Evans Fitness Clubs in the Bay Area — also accuse Evans of initiating litigation in an attempt to break a contract she signed in 1994 guaranteeing exclusive rights to her name…
Evans has made a host of accusations against the two men, claiming they improperly put their two wives on the company payroll while failing to pay her share of the business… a judge ordered Evans’ lawsuit transferred from Los Angeles to Contra Costa County. Any court action in both cases will be played out here.
In 2004, the Orange County District Attorney’s office investigated Mark Golob’s refusal to pay refunds to members of several Linda Evans Health Clubs that he closed. Members were outraged when Golob said that his providing them with access to the coed 24 Hour Fitness club satisfied his obligation to provide membership to a comparable club. Despite the positioning of Linda Evan’s as a women’s fitness club, Golob was quoted as saying “There’s no such thing as a women-only club.”
According to a July 23, 2004 Los Angeles Times story, the District Attorney threatened a civil lawsuit if the Mark Golob didn’t settle:
The Linda Evans chain’s actions violate the women’s contracts because female-only clubs aren’t comparable to clubs for men and women, the members say — and at a meeting Monday night, Dist. Atty. Tony Rackauckas agreed…
Senior Deputy Dist. Atty. Joe D’Agostino said that after gathering as much information from as many gym members as possible, his office will contact the chain’s attorney. If the chain doesn’t settle, he said, the district attorney’s office will file a civil lawsuit.
4) Butterfly Life. Inc. v Susan Kruse and Linda Coogan (September, 2005)
On September 9, 2005, when Mark Golob was CEO and President, Butterfly Fitness. Inc., filed an amended claim for arbitration against the named franchisees for breach of contract pursuant to a November 5, 2003 Franchise Agreement; breach of the implied covenant of good faith and fair dealing; misappropriation of trade secrets; and interference with economic relationship. The franchisees filed a counter claim for fraud, intentional misrepresentation, violation of the California Franchise Act, breach of contract and breach of the duties of good faith and fair dealing. On October 6, 2005, the parties entered into a Settlement Agreement. (American Arbitration Association, Western Case Management Center, Case No.: 74 114 00618 05).
Source: Butterfly Life UFOC 2006
5) Beth J. Shaw vs. Butterfly Fitness. Inc., (March, 2005)
On March 1, 2005, when Mark Golob was CEO and President, Ms. Shaw filed suit against Butterfly Fitness. Inc., alleging improper use of a person’s name or image in advertising or soliciting under California Civil Code Section 3344; appropriation of likeness; quasi contract and breach of contract. The parties entered into a Settlement Agreement on November 1, 2005. (Superior Court of the State of California, County of Los Angeles, Case No.: BC329592).
Source: Butterfly Life UFOC 2006
6) Beth J. Shaw et al v. Butterfly Life, Inc. class-action arbitration
According to Financial Trouble Plagues Some Health Club Franchisees in Health Club industry publication Club Industry, February 1, 2008:
Butterfly Life filed an arbitration last fall against one of its franchisees, Beth Tomei of Walnut Creek, CA, for terminating the franchise agreement in the company’s UFOC and changing the name of her club. Tomei and nine other franchisees then filed a class-action counterclaim against Butterfly Life on Jan. 10 in California through the American Arbitration Association.
Mario L. Herman, a Washington, DC-based class arbitration attorney who is representing Butterfly Life franchisees, says 250 franchisees are potential members in the counterclaim. Herman says Butterfly Life misrepresented itself by orally providing illegal earnings claims, such as stating that the break-even point for franchisees was 200 members and that franchisees would make a profit within their first six months of operation. None of the franchisees have made a profit in that time frame, Herman says.
“We believe that there was a standardized pitch that was provided to everyone before they purchased,” Herman says. “It’s fraud in the inducement of the agreement as opposed to any breach-of-contract, post-signature, post-execution agreement.”
According to Mark Golob’s attorney Scott Hammel, quoted in our March 15, 2009 post BUTTERFLY LIFE: Franchisees Lose Arbitration?, “The franchisees’ claims are being terminated and dismissed because they failed to pay their allocated share of the arbitration fees.”
7) Eric Rosner and Susan Rosner v. Mark Golob, Thomas Gergeley, Lisa Bellini, Suzan Zager, Taylor Golob and Jane Doe Golob July 27, 2009
Case Number: 1:2009cv03730 Filed: July 27, 2009 Court: New Jersey District Court
8) DONNA and MIKE BARNHART, et al v. MARK GOLOB and SUSAN ZAGER, TAYLOR GOLOB, CARLY GOLOB, et al January 22, 2009
CASE NO. C 09-00120 THIRD AMENDED COMPLAINT Complaint filed: January 22, 2009
SUPERIOR COURT OF CALIFORNIA COUNTY OF CONTRA COSTA
DONNA BARNHART and MIKE BARNHART, individually and as wife and husband, and WOMEN’S HEALTH DEVELOPERS, INC., an Arkansas corporation; CHICFIT, INC., a Missouri company, MARY BAUER and JAMES BAUER JR., individually and as wife and husband; FITNESS CENTERS NW, INC., a Washington corporation, NW FITNESS CENTER NO. 1 Inc., DARWIN CHEVALIER and KEN UPTAIN, individually; TERRY CICHOCKI, an individual, and LIVIBETH, INC., a North Carolina corporation; KELLY DAVIDSON and ALI DAVIDSON, individually and as husband and wife, and KHRYSALIS ENTERPRISES, INC., an Oregon corporation, and BFL, INCORPORATED, an Oregon corporation; THE DRISCOLL COMPANY, a North Carolina company, KAREN DRISCOLL and KEVIN DRISCOLL, individually and as wife and husband; JANEENE FITZGERALD, an individual, and the MONARCH GROUP LLC, a Colorado limited liability company; SETH GOODMAN, an individual, and FIRST FITNESS ONE, LLC, a limited liability company; LEE HARRELL, an individual; DEBBIE HARRELL, an individual; TODD HARRELL, an individual; SCOTT HARRELL, an individual, and EMERALD COAST WOMEN’S FITNESS, LLC, a Florida limited liability company: HENDERSON CONSULTING, LLC, a Colorado limited liability company. SUSIE HENDERSON and GEOFF HENDERSON, individually and as wife and husband; HAESOOK KIM, an individual. and LIVING SOLUTIONS, INC., a California corporation; CHERYL MERSCHEN, an individual; MARION NAPURANO and JOHN NAPURANO, individually and as wife and husband, and NAPURANO HEALTHY SOLUTIONS, INC., a Texas corporation; HUBERT WASHINGTON and ROBIN WASHINGTON, individually and as husband and wife, and STRETCH FORTH, L P. a Florida limited partnership,
THOMAS GERGLEY and LISA BELLINI,individually and as husband and wife; MARK GOLOB and SUSAN ZAGER, individually and as husband and wife; MARK MASTROV and MINDEE MASTROV. individually and as husband and wife; TAYLOR GOLOB and JANE DOE GOLOB, individually and as husband and wife; FLORA AUBE and JOHN DOE AUBE, individually and as husband and wife; JANET LOSSICK and JOHN DOE LOSSICK, individually and as wife and husband; RON RANELLONE and JANE DOE RANELLONE, individually and as husband and wife; CHERYL HOKE and JOHN DOE HOKE, individually and as wife and husband; YOLANDA FAGEN and JOHN DOE FAGEN, individually and as husband and wife; PENNY CROOK and JOHN DOE CROOK, individually and as husband and wife; CATHY GALLI and JOHN DOE GALLI individually and as wife and husband; CALLIE MILLER and JOHN DOE MILLER, individually and as wife and husband; DENNY MARSICO and JOHN DOE MARSICO, individually and as husband and wife: CARLY GOLOB and JOHN DOE GOLOB, individually and as husband and wife, and DOES 1 through 50.
9) California Department of Corporations Desist & Refrain Order (March 24, 2009)
California issued Mark Golob and Butterfly Fitness, Inc. a Desist & Refrain Order, stating that the company had violated a condition of its franchise regulations, and had willfully made an untrue statement of material fact in its franchise registration. While the California Department of Corporations rescinded the order due to a jurisdictional issue related to the complainant, the DOC never cleared Butterfly Fitness of the violations.
UPDATE: Regarding Sean Kelly’s statement that Mark Golob has a “history of litigation,” California Superior Court Judge Henderson stated:
.. the allegation that Golob had a “history of litigation in the health club industry” is accurate. Truth of the statements made is a complete defense against liability for defamation…
Read the ruling here: $35,000,000 Lawsuit Backfires on Health Club Franchisor
WHAT DO YOU THINK? IS ATTORNEY NIKOLAUS REED CORRECT THAT MARK GOLOB DOES NOT HAVE A HISTORY OF LITIGATION IN THE HEALTH CLUB INDUSTRY? PLEASE SHARE A COMMENT BELOW.
TAGS: Mark Golob, Mark Golub lawsuit, Butterfly Life lawsuit, Unhappy Franchisee lawsuit, Nikolaus W. Reed, Nikolaus Reed, Susan Zager, Taylor Golub, Carly Golob, Sean Kelly, Tom Gergeley, Lisa Bellini, SLAPP lawsuit, frivolous lawsuit, franchise lawsuit