WASHINGTON -- Holiday Spas agreed Wednesday to pay $9.5 million to settle a class-action lawsuit in which 1,300 blacks alleged discrimination at the chain's East Coast health and fitness clubs.
In an unusual agreement, presented to U.S. District Judge Joseph Howard, Holiday Spas' owner also said it would offer the plaintiffs a one-year free membership to the clubs, and the opportunity to sit on committees that will monitor the clubs' racial practices.
The chain's owner, Chicago-based Bally Manufacturing Corp., admitting liability, also agreed to hire a civil rights director to oversee racial practices at its approximately 325 clubs nationwide.
The settlement to the lawsuit affects 55 Holiday Spa clubs in Washington, Baltimore, Atlanta, Boston and Philadelphia.
Civil rights lawyer Joe Sellers said he hoped Bally's health clubs would become leaders in the industry in guarding against racial discrimination.
'This problem is fairly widespread,' said Sellers, an attorney for the Washington-based Lawyers Committee for Civil Rights Under Law, which filed the case. 'In the 1950s they were desegregating bus stations and movie theaters and public parks, and in '90s it's health spas. But it is just as grisly.
'They (some health clubs) think whites don't want to exercise with blacks and that blacks smell -- like whites don't -- and it plays to the most venal stereotyping that people engage in,' he said.
Holiday Spas' lawyer, Peter Axelrad, said, 'We're taking every possible step to make sure it doesn't happen again.'
The $9.5 million settlement is believed to be the largest ever reached in a racial discrimination suit involving public accommodations, such as theaters or stores.
Under the plan, Bally is to pay $3.5 million on March 30, and $1.5 million in each of the next four years.
Other blacks who believe they were discriminated against at Holiday Spas, but did not know about the 2-year-old lawsuit, also can seek payment, Sellers said. He said up to 2,000 blacks may have suffered discrimination.
In the lawsuit, blacks charged that they were dissuaded from joining Holiday Spas' clubs with not-so-subtle techniques: rushed tours, quotations of high membership fees, and denial of the opportunity to pay fees in installments.
Frequently, the names of black potential customers were recorded in sales log books with codes such as 'DNWAM,' short for 'Do Not Want As Member.'
Blacks who managed to join the clubs said they, too, were discriminated against.
One black woman was told she could not wear an exercise outfit that left her midriff exposed, even though white women at the club wore such outfits. Another black was told to leave a racquetball court when a white member wanted to play.
Holiday Spas did not deny the charges and admitted legal liability, and also agreed to accept a prohibition against any such activity in the future.
Earlier, the chain accepted a similar consent decree to resolve a Justice Department complaint.
Holiday Spas is owned by U.S. Health Inc. and Holiday Universal Inc., of Towson, Md., but those companies' parent company, Bally, handled the negotiations with Sellers.
Bally acquired new managers several months ago and hired Clifford Alexander, former chairman of the Equal Employment Opportunity Commission, as a management consultant.
Sellers said he hoped this would be 'a very dark, sinister chapter in this company's history that now is over.'
But the civil rights lawyer said he continues to receive complaints about discriminatory practices at other health clubs. This week he is representing plaintiffs at a trial for a similar lawsuit against World Gym of Wheaton, a suburb north of Washington.
