91 F.4th 91
2d Cir.2024Background
- Hayley Paige Gutman, a fashion designer, worked for JLM Couture, Inc. pursuant to an employment contract that included provisions on intellectual property, use of her name, noncompete, and control of social media accounts.
- Disputes arose after Gutman, nearing the end of her contract, changed passwords and denied JLM access to two prominent social media accounts (@misshayleypaige Instagram and Pinterest accounts), which had been utilized for both business promotion and personal content.
- JLM sued, alleging breach of contract and sought injunctive relief to gain control of the accounts and to enforce restrictive covenants on Gutman post-employment.
- The district court awarded JLM provisional sole control over the social media accounts and enforced a five-year noncompete based on the employment agreement, also holding Gutman in contempt for violating the injunction via social media posts.
- Gutman appealed, challenging the injunction, the contempt order, and the court's findings regarding account ownership and the reasonableness of the post-employment restrictions.
Issues
| Issue | Gutman's Argument | JLM Couture's Argument | Held |
|---|---|---|---|
| Appellate Jurisdiction Over Contempt Order | Order modified the injunction, making it appealable | Order was just a clarification, not a modification | Court dismissed appeal for lack of jurisdiction; order was not a modification |
| Dissolution of Preliminary Injunction for Alleged JLM Breach | JLM failed to pay, so can't enforce the contract terms | Gutman stopped working, excusing JLM from payment | Affirmed lower court; no grounds to dissolve the injunction |
| Ownership of Social Media Accounts | Accounts were personal; JLM not the original owner | Accounts were business property under contract | Vacated and remanded; ownership must start with original owner and proper legal framework, not a new multi-factor test |
| Enforceability of Five-Year Restrictive Covenant | Overbroad, unreasonable, and contrary to NY law | Reasonable and enforceable to protect legitimate interests | Vacated and remanded; court must assess reasonableness, scope, and necessity of the covenant under NY law |
Key Cases Cited
- Kyllo v. United States, 533 U.S. 27 (guides adaptation of existing law to new technologies)
- Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283 (electronic records as property for conversion claims)
- BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (reiterates standards for enforceability of restrictive covenants under New York law)
- Columbia Ribbon & Carbon Mfg. Co. v. A-1-A Corp., 42 N.Y.2d 496 (restrictive covenants are disfavored and subject to strict scrutiny in NY)
- Pierson v. Post, 3 Cai. 175 (original ownership principles for property)
- Lightfoot v. Davis, 198 N.Y. 261 (title by first possession)