Electra v. 59 Murray Enterprs., Inc., 19-235

Background

Models/celebrities (including Carmen Electra and others) sued three strip-club companies for using their photographs in club advertising without their written consent under N.Y. Civ. Rights Law §§ 50–51 and other statutes.
Clubs published varied advertisements (web/social media) combining prurient model photos, club logos, and promotional copy; plaintiffs were not asked, paid, or employed by the clubs.
Many plaintiffs had previously signed releases assigning or licensing photographic rights to third-party photographers/companies; for several photos (Lee, Koren, Mayes, Golden) releases in the record appeared broad, while releases for Shake and Hinton were missing or disputed.
The clubs used third-party contractors (web/social vendors) to create and post ads; the contractors and the clubs conceded they did not obtain licenses/assignments from the photographers that lawfully authorized the clubs’ use.
Defendant served a Rule 68 offer that ambiguously described the monetary term ("$82,500 . . . on each of the Causes of Action" vs. "collectively"), plaintiffs returned an acceptance asserting a $660,000 total; the district court refused to enter judgment under Rule 68 due to ambiguity.
The district court excluded plaintiffs’ damages expert and granted summary judgment to defendants on all claims; the Second Circuit affirmed the Rule 68 ruling, vacated dismissal of the §51 claims for six timely plaintiffs (Lee, Mayes, Koren, Shake, Hinton, Golden), and remanded limited to those claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiffs validly accepted Rule 68 offer	Plaintiffs say acceptance created judgment for $660,000 (aggregate), construing offer in their favor	Defendants say offer meant $82,500 total (or $82,500 per cause was contradicted by “collectively”); ambiguity prevents acceptance	Offer ambiguous as to amount; no meeting of minds — district court rightly declined to enter judgment; affirmed
Whether prior releases bar §51 claims	Plaintiffs say releases to photographers do not constitute written consent to the clubs because clubs never obtained lawful rights; releases don’t waive statutory privacy/publicity rights against non-releasees	Defendants say comprehensive releases transferred rights and therefore bar claims	Releases in record for some plaintiffs do not give clubs lawful rights; releases are not written consent for third parties; summary judgment for defendants vacated as to six plaintiffs (disputed releases for Shake/Hinton)
Admissibility of damages expert & availability of damages under §51	Plaintiffs say expert shows fair-market-value damages and may be proven at trial with or without expert	Defendants say expert methodology unreliable and damages speculative; awarding fair-market value would be windfall where rights already were sold	District court did not abuse discretion excluding the expert; but plaintiffs still may pursue injunctive relief and nominal or other statutory damages; fair-market-value is a viable theory because defendants had no lawful rights
Lanham Act, NY GBL §349, and libel claims	Plaintiffs claim false endorsement, deceptive trade practices, and defamatory meaning from ads implying employment/endorsement	Defendants say images are not sufficiently distinctive to cause endorsement confusion; conduct not consumer-oriented; ads not defamatory as a matter of law and no clear-and-convincing actual malice	Second Circuit affirmed dismissal: Lanham Act, §349, and libel claims properly dismissed (no likelihood of confusion/consumer-oriented injury/actual malice)

Key Cases Cited

Steiner v. Lewmar, Inc., 816 F.3d 26 (2d Cir. 2016) (Rule 68 offers interpreted as contracts under ordinary contract principles)
Goodheart Clothing Co., Inc. v. Laura Goodman Enters., Inc., 962 F.2d 268 (2d Cir. 1992) (test for contractual ambiguity: four-corners rule and reasonable susceptibility)
Marek v. Chesny, 473 U.S. 1 (U.S. 1985) (purpose of Rule 68 is to encourage settlement; plaintiffs must be able to compare offer to likely recovery)
Basha v. Mitsubishi Motor Credit of Am., Inc., 336 F.3d 451 (5th Cir. 2003) (Rule 68 offer that fails to quantify damages is ineffective)
Spiegel v. Schulmann, 604 F.3d 72 (2d Cir. 2010) (a defendant’s immunity under a release is no broader than the consent conveyed in the release)
Arrington v. New York Times Co., 55 N.Y.2d 433 (N.Y. 1982) (sale/distribution of an image without consent can state a §51 claim)
Gautier v. Pro–Football, Inc., 304 N.Y. 354 (N.Y. 1952) (Section 51 protects the person; damages focus on injury to the person, not merely property)
Rhodes v. Sperry & Hutchinson Co., 193 N.Y. 223 (N.Y. 1908) (transfer/ownership of a picture does not, by itself, convey the right to use it for advertising without written consent)