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Law360 (May 20, 2020, 4:26 PM EDT) -- ClubCorp, which bills itself as the largest operator of private clubs in the country, was hit with a proposed class action in Texas federal court by a member who alleges she was still charged monthly fees while the clubs were shut down because of the COVID-19 pandemic.
Linda Hong filed the lawsuit Tuesday on behalf of any members of ClubCorp USA Inc.'s more than 200 private clubs who have been charged fees since the company closed its clubs in March due to the health crisis. Hong, who is a member of ClubCorp's Silicon Valley Capital Club in San Jose, California, is seeking more than $5 million in damages from the Dallas-based company.
"By continuing to charge monthly membership dues while defendant's private clubs remain closed, defendant is unlawfully taking advantage of its customers in the midst of the greatest public health and economic crisis in living memory," Hong alleges.
Another aggrieved ClubCorp member, Jeffrey Cuenco, filed a proposed class action against the company on April 23 in California federal court bringing similar claims. Though Cuenco's attorney told Law360 at that time he would be withdrawing that complaint, the lawsuit remained pending as of Wednesday.
According to the new lawsuit, ClubCorp operates 19 private clubs in California and 39 in Texas; touts itself as the "largest owner and operator" of private clubs across the country; and in December reported it had more than 430,000 members. Members are required to pay monthly fees, ranging from as little as $120 a month for social memberships to more than $800 a month for some golf club memberships.
Those fees are charged to each member automatically, according to the lawsuit, and Hong alleges that despite not having access to any of the club's services after the March closures, she was still charged $194.42 on April 15.
Unlike other clubs that have stopped charging customers while services aren't being offered, Hong alleges that ClubCorp has "refused to stop charging its members" and has similarly refused to offer a refund of any portion of membership fees.
Moreover, that refusal to refund is "central" to ClubCorp's business model, Hong alleges, noting advice that was doled out by ClubCorp Founder Robert H. Dedman Sr. in his 1999 autobiography "King of Clubs: Grow Rich in More Than Money."
In that book, according to the complaint, Dedman tells readers that to be a good entrepreneur "you have to know how to intelligently use what we call OPM, 'Other People's Money.'"
Dedman also purportedly laid out what he called the "developer's creed" in the book. "A dollar borrowed is a dollar earned. A dollar refinanced is a dollar saved. And a dollar paid back is a dollar lost forever," Dedman wrote, according to Hong's lawsuit.
The parties did not immediately return requests for comment Wednesday.
Hong is represented by Yeremey Krivoshey and L. Timothy Fisher of Bursor & Fisher PA and Michael K. Oldham and Brandon T. Allen of Reynolds Frizzell LLP.
Counsel information for ClubCorp was not available Wednesday.
The case is Linda Hong et al. v. ClubCorp USA Inc., case number 3:20-cv-01310, in the U.S. District Court for the Northern District of Texas.
--Additional reporting by Hailey Konnath. Editing by Daniel King.
For a reprint of this article, please contact reprints@law360.com.
