I listened to a podcast featuring John Foley recently. John is the CEO and founder of Peloton, the "at home" gym. It was very inspiring. He and his wife were former regulars at spin classes, but grew tired of the cost, and travel time to and from class. Naturally, an idea was born to attend a spin class at home. It took a few years to get off the ground, and was initially just the hardware i.e. the kit, but soon included the software, i.e. the instructor on screen yelling at you, at 7am, to pedal faster. I have to confess to owning a Peloton, albeit it was second hand...

Peloton have been through a number of legal issues in the past (remember the dodgy Xmas advert with the "peloton present") but the latest perhaps tops the lot. Amid a rising share price following worldwide lockdowns and "home workouts", Peloton have had to issue a product recall for their Tread and + models. Why? Because, in simple legal terms, the product is not fit for purpose and poses a risk to the user. The treadmill "belt" is deemed dangerous and continues to run when the user stops. It is no surprise then, share price has nose dived.

Some big obstacles now face the NYSE listed company, like brand management/trust, PR, regulatory, share price etc., but legally there will be something to address in the supply chain. Where did it go wrong? It will unravel but likely go back to the legal principle of "causation" as who, in the supply chain, made an error?

There will be a law suit, no doubt. My initial thoughts are,

  • Was it, Peloton, in their design of the treadmill, seeking to make it user friendly, aesthetically attractive, and/or more financially viable, perhaps not paying closer attention to the safety requirements?
  • Or, was the design sound, and when passed to a manufacturer down the supply chain, the manufacturer at fault for the way the hardware was assembled?
  • Or, when the manufacturer ordered the materials, was it the quality of the materials then supplied to the manufacturer which caused the issue?
  • Or, will Peloton point to the user manual and state that the kit, its quality, and materials, are all perfect and fit for purpose, but the issues experienced were due to incorrect set up or use of the product?
  • Or, when all was said and done and the product with Peloton fully assembled, safety tests and measures breezed through in order to keep up with the demand from those users in lockdowns. I have heard of a six month wait list... 

The key issue I suspect will be causation (a legal principle) which is simply: where was the issue caused? A lawyer (or number of them) somewhere will be trawling through supply contracts and reviewing warranties and indemnities etc., to try and point a finger. But if you, like many others, are awaiting a Peloton delivery, I suspect you may be waiting just that little bit longer... however from 17 May the spin studios will be open again.