CARMEN ELECTRA, TIFFANY TOTH, GEMMA LEE, JESSA HINTON, JESSE GOLDEN, LINA POSADA, SHEENA LEE WEBER, HEATHER RAE YOUNG, RACHEL KOREN, SABELLA SHAKE, URSULA MAYES, Plаintiffs-Appellants, v. 59 MURRAY ENTERPRISES, INC., DBA NEW YORK DOLLS GENTLEMEN‘S CLUB, JAY-JAY CABARET, INC., AAM HOLDING CORPORATION, DBA PRIVATE EYES GENTLEMEN‘S CLUB, Defendants-Appellees.
Docket No. 19-235
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term, 2019 (Argued: January 8, 2020 Decided: February 9, 2021)
19-235-cv
Before: KEARSE, CALABRESI, and POOLER, Circuit Judges.1
Appeal from grant of summary judgment of the United States District Court for the Southern District of New York (Naomi R. Buchwald, J.) to Defendants-Appellees 59 Murray Enterprises, Inc., AAM Holding Corp., and Jay-Jay Cabaret, Inc. Plaintiffs-Appellants Carmen Electra, Tiffany Toth, Gemma Lee, Jessa Hinton, Jesse Golden, Lina Posada, Sheena Lee Weber, Heather Rae Young, Rachel Koren, Sabella Shake, and Ursula Mayes allege that Appellees unlawfully used photographs of them to advertise strip clubs owned by Appellees in violation of
Appellants also appeal from the district court‘s order concluding that Appellants had not accepted an offer of judgment pursuant to
Appellants further appeal from the district court‘s grant of summary judgment to Appellees as to their Lanham Act,
Affirmed in part, vacated in part, and remanded.
JOHN V. GOLASZEWSKI, Casas Law Firm, P.C., New York, NY, for Plaintiffs-Appellants.
PETER T. SHAPIRO, Lewis Brisbois Bisgaard & Smith LLP, New York, NY, for Defendants-Appellees.
Plaintiffs-Appellants Carmen Electra, Tiffany Toth, Gemma Lee, Jessa Hinton, Jesse Golden, Lina Posada, Sheena Lee Weber, Heather Rae Young, Rachel Koren, Sabella Shake, and Ursula Mayes (collectively, “Appellants“) appeal from so much of a final judgment of the United States District Court for the Southern District of New York (Naomi R. Buchwald, J.) as dismissed their claims under
The district court held that Appellants’ signing of full releases of their rights to the photographs defeated their claims. We conclude that the terms of Shake and Hinton‘s release agreements are disputed material facts, and Appellees concede that neither they nor the third-party contractors that created and published the advertisements secured legal rights to use any of the photographs at issue. We hold that the district court erred in granting summary judgment to Appellees and in denying summary judgment to Appellants on liability. We thus vacate the judgment in part and remand for further proceedings.
We also hold that the district court correctly rejected Appellants’ purported acceptance of the offer of judgment pursuant to
BACKGROUND
I. Factual Background
Appellants are professional models, actresses, and businesswomen who commercially promote their image and likeness to various clients, brands, and media outlets, or have done so previously. Their images have appeared in a variety of magazines, advertising campaigns, and other publications. Several Appellants have appeared in film and television programs, and many of them have a large social media following.
59 Murray Enterprises, Inc., AAM Holding Corp., and Jay-Jay Cabaret, Inc. (collectively, “the Club Companies” or “Appellees“) individually own аnd operate various strip clubs in New York City, including New York Dolls Gentlemen‘s Club, Private Eyes Gentlemen‘s Club, and Flashdancers Gentlemen‘s Club (collectively, “the Clubs“). Barry Lipsitz is the sole owner of 59 Murray Enterprises and a partial owner of AAM Holding and Jay-Jay Cabaret. Lipsitz‘s son, Barry Albert Lipsitz (“Albert“), was the manager of the Clubs during the relevant time period. The gravamen of Appellants’ complaint is that, between 2013 and 2015, the Club Companies used Appellants’ “[i]mages for commercial purposes in order to promote their Clubs by and through various marketing and promotional mediums,” including the Clubs’ website and social media accounts, “without the prior consent of any” of the Appellants. App‘x at 87.
Appellants attached the challenged advertisements to their second amended complaint (“SAC“), and a selection of the advertisements is appended to this opinion. The advertisements were varied in form, purpose, and content, but each combined a prurient photograph of one or more of the Appellants, the logo or name of one of the Clubs, and promotional text. For instance, a photograph of Koren and Shake appeared on the website for New York Dolls Gentlemen‘s Club with text advertising an “exclusive Black & White Party experience reserved for NYC‘s elite party goers, athletes, celebrities & business moguls,” App‘x at 115. A photograph of Lee appeared on webpages advеrtising employment opportunities for two of the
Appellants were never asked to authorize the use of their images in the Clubs’ advertisements, and they never entered into release agreements with the Club Companies authorizing such use. They never received nor were offered compensation for the use of their images in the advertisements. No Appellant ever performed, or agreed to perform, services for the Clubs. Indeed, Appellants contend that they do not endorse the Clubs or strip clubs generally and would never agree to appear at the kinds of events or perform the activities promoted in the advertisements.
Each Appellant previously entered into agreements releasing their rights to photographs in which they appear as models, and the record includes release agreements relating to at least some of the photographs at issue in this litigation. As explained in further detail below, the district court correctly held that the one-year statute of limitations applicable in actions under
The advertisements using Lee‘s image used a photograph taken by J Squared Photography for Dreamgirl Lingerie (“Dreamgirl“). Lee signed a release granting Dreamgirl, as well as “its legal representatives and assigns, the exclusive and absolute right and permission . . . to purchase, own, assign, license, transfer, sell, distribute, copyright, use, reuse, publish, republish, exhibit, display, produce and reproduce, print and reprint” the photograph, “or to authorize others to do any of the foregoing, in any and all media now existing or hereafter developed, and in any and all forms or formats of distribution.” App‘x at 2199. The release explicitly authorized use “for any commercial or noncommercial purpose whatsoever,” App‘x at 2199, and “waive[d] any claim that [Lee] may at any time have to the eventual use to which such Images may be applied,” App‘x at 2200.
The advertisement using Mayes‘s image also used a photograph originally shot for Dreamgirl. Mayes entered into a release for the photograph with Dreamgirl that mirrors, in relevant part, Dreamgirl‘s release agreement with Lee.2
The advertisement using Koren‘s and Shake‘s images used a photograph taken for Fastdates.com in which they are both featured. Koren entered into a release for the photograph with Gianatsis Design Associates that “authorize[d] the use and reproduction, by Gianatsis Design Associates or Jim Gianatsis or anyone authorized by Gianatsis Design Associates, of any and all photographs” taken of her at the photoshoot for “any purpose whatsoever, without further compensation,” and provided that the photographs would be the property of Gianatsis Design Associates “solely and completely.” App‘x at 2204. The parties agree that Shake entered into a release
The advertisements featuring Hinton‘s image used photographs originally shot for Forplay, a costume and lingerie company. Hinton testified that while she had previously signed a release in connection with a photoshoot with Forplay, she did not always do so, and she did not recall whether she signed a release for the photograph used in the advertisements at issue. The record includes a release agreement that Hinton signed with Forplay. This release agreement provides that Hinton gives “for all time to Forplay Catalog, Inc. its heirs, legal representatives and assigns, for those whom Fоrplay Catalog, Inc. is acting, and those acting with its authority and permission the unrestricted right and permission to copyright and/or exploit in any way” the photographs “for illustration, art, promotion, sale, advertising, trade, or any other purpose whatsoever,” and further, that “all rights to the Images belong to Forplay Catalog, Inc.” App‘x at 2214. Though Appellants did not dispute in Appellees’
Lastly, the advertisements featuring Golden‘s image used photographs originally shot for Leg Avenue. The parties agreed before the district court that Golden entered into a modeling contract with Leg Avenue that included a release agreement that applied to the photographs at issue. This release provides that Golden “irrevocably assign[s] to Leg Avenue, Inc. and its legal representatives, successors, agents, assigns, and all persons or corporations acting with its permission . . ., without restriction, without further compensation to [her], and for any purpose whatsoever, the unrestricted rights to copyright, use, publish, sell, or distribute” the photographs. App‘x at 1630.
The Club Companies used third-party contractors to create the advertisements and publish them on the Clubs’ websites and social media, including Paul Brown and his company, Internet Management Corporation (“IMC“), which designed the Clubs’ websites and provided advertising services to the Clubs, and Melange Media Group LLC (“Melange“), which created and ran the Clubs’ social media accounts. Albert, Lipsitz‘s son, served as the contact person between the contractors and the Clubs.3 Brown and Lipsitz testified that they believed IMC was responsible for the publication of all the advertisements at issue, except for the advertisement using the photograph of Carmen Electra, which was published by Melange. Brown admitted that he “couldn‘t put a lot of weight in that though because some of these images I don‘t recognize. I would have no idea.” App‘x at 271, 503. Appellants dispute that IMC was responsible for nearly all the images, as many of the images were posted on the Clubs’ social media accounts, which were Melange‘s responsibility. The parties nevertheless agree that the Clubs never asked Melange or IMC to use a photograph of a
specific person, instead requesting photographs that would complement the advertised event or the purpose of a particular webpage.
Though the photographs at issue were taken for a number of different companies, Brown averred that he thought that all the
Brown averred that he believed he had a legal right to use each image and that he would never intentionally post an image without the legal right to do so. The same affidavit states that Brown told Lipsitz and Albert that he had releases from Forplay for the photographs that IMC used in the advertisements. Both Lipsitz and Albert declared that they believed IMC had a legal right to use the photographs. However, Brown was unable to find any release from Forplay granting him or IMC the right to use Forplay images, and Appellees never asked Brown for written confirmation that IMC had the rights to use the photographs. Though Lipsitz testified that he believed IMC had an agreement allowing IMC to use Forplay‘s images, he did not actually see this agreement. At oral argument on appeal, Appellees conceded that the third-party contractors failed to secure the legal rights to use the images by license, assignment, or any other means.
Appellants’ tax returns show that their income either increased or remained approximately the same from 2009 to 2016. Appellees did not gain any additional profits from the use of the images, and there is no evidence of an increase in the Clubs’ revenue attributable to the special events promoted by some of the advertisements.
II. Procedural History
On October 15, 2015, Appellants filed a complaint alleging, inter alia, that Appellees’ use of the photographs in advertisements without written consent violated their statutory right of privacy and publicity under
On June 15, 2017, Appellees served a ”
Pursuant to
Rule 68 of the Federal Rules of Civil Procedure , Defendants hereby offer to Plaintiffs collectively to take a judgment against Defendants in the amount of $82,500.00, inclusive of interest, costs and attorneys’ fees, and without any admission of liability, on each of the Causes of Action contained in the Complaint, based upon facts existing as of the date of acceptance of the offer. . . . If Plaintiffs do not accept this offer, in writing, within 14 days after service of this offer upon him, this offer will be deemed rejected.
PLEASE TAKE NOTICE that, pursuant to
Rule 68 of the Federal Rules of Civil Procedure , Plaintiffs hereby accept Defendants [sic] June 15, 2017 offer to allow judgment to be taken against Defendants “in the amount of $82,500, inclusive of interest, costs and attorneys’ fees, and without admission of liability, on each of the Causes of Action contained in the Complaint based upon facts existing as of the date of acceptance of the offer.” (Exhibit A).PLEASE TAKE FURTHER NOTICE that, as set forth in Plaintiffs’ January 31, 2016 Second Amended Complaint (Dkt. 18; Exhibit B, ¶¶ 118-183), as of the date of Defendants’ Offer of Judgment, Plaintiffs had eight (8) Causes of Action against Defendants.
PLEASE TAKE FURTHER NOTICE that Plaintiffs hereby accept a total of six hundred and sixty thousand dollars ($660,000.00), inclusive of interest, costs and attorneys’ fees, for full and final settlement of all eight (8) Causes of Action contained in the Complaint based upon facts existing as of the date of acceptance of the offer.
App‘x at 27-28.
Although the Rules provide that if the
On July 7, 2017, Appellants filed with the district court a letter opposing Appellees’ July 5 request to decline filing the judgment proposed by Appellants. Appellants argued that the $82,500 referred to in the
On July 26, 2017, the district court declined to enter Appellants’ proposed judgment, reasoning that the offer was ambiguous and citing the district court‘s supervisory authority over the case.5
Appellees cross-moved for summary judgment and moved to strike the report and testimony of Appellants’ proposed damages expert, Stephen Chamberlin.
On January 3, 2019, the district court struck Chamberlin‘s report and testimony as speculative and based on unreliable methodology, and it granted summary judgment to Appellees on all of Appellants’ claims.
As to Appellants’ claims under
Accordingly, the district court dismissed the complaint and entered judgment for Appellees. Appellants timely appealed.
DISCUSSION
I. Rule 68 Offer of Settlement
[A] party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, eithеr party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.
“Rule 68 offers of judgment and acceptances thereof are contracts to be interpreted according to ordinary contract principles.” Steiner, 816 F.3d at 31.
Appellants argue, however, that we have stated that “Rule 68 offers of judgment . . . are different from other contract offers in that they carry legal consequences: a party that rejects a Rule 68 offer may be subject to the cost-shifting provision of
“The primary goal of contract interpretation is to effectuate the intent of the parties as manifested by the language used in the contract.” Steiner, 816 F.3d at 34 (internal quotation marks and citation omitted). This Court‘s exposition of ambiguity under contract law in the Rule 68 context in Goodheart Clothing Co., Inc. v. Laura Goodman Enterprises, Inc. is instructive:
If a writing, or the term in question, appears to be plain and unambiguous on its face, its meaning must be determined from the four corners of the instrument without resort to extrinsic evidence of any nature. On the other hand, if the term in question does not have a plain meaning it follows that the term is ambiguous. Contract language is ambiguous if it is reasonably susceptible of more than one interpretаtion, and a court makes this determination by reference to the contract alone. Conversely, contractual language is unambiguous if it has a definite and precise meaning, unattended by danger of misconception in the purport of the contract itself, and concerning which there is no reasonable basis for a difference of opinion.
962 F.2d 268, 272 (2d Cir. 1992) (internal quotation marks, brackets, and citations omitted and alterations incorporated). “In determining whether the contract is ambiguous, a court looks at the contract as a whole in light of the circumstances present when the contract was entered.” Steiner, 816 F.3d at 33 (internal quotation marks and citation omitted).
Appellants argue that the district court erred in concluding that Appellants had not accepted Appellees’ Offer of Judgment, arguing that (1) the contract unambiguously offered $660,000; and (2) even if the offer was ambiguous, our case law requires that the offer must be construed against the offeror, without looking to extrinsic evidence. In response, Appellees argue that the offer was ambiguous, and this ambiguity rendered the offer inoperative. “We review de novo a district court‘s interpretation of a Rule 68 offer.” Steiner, 816 F.3d at 31; see also Goodheart, 962 F.2d at 273 (“[I]nterpretation of a contract generally is a question of law, subject to de novo review.“).
Preliminarily, we note that it is inapt to apply the doctrine of contra proferentem to this case because that doctrine assumes the existence of a contract about which there is some dispute as to one or more terms. Contra proferentem is intended to be an interpretive methodology of last resort:
[I]f, after all of the other guides to interpretation have been exhausted and the court concludes that there remain two reasonable interpretations of the contract, with each party knowing or having reason to know of the other party‘s understanding of the term, the court should as a policy matter, assuming it is clear that the parties have indeed attempted to enter into a contract, choose the interpretation that is adverse to the party that drafted the contract.
U.S. Naval Inst. v. Charter Commc‘ns, Inc., 875 F.2d 1044, 1050 (2d Cir. 1989) (quoted in 5 Corbin on Contracts § 24.27 (2020)). To apply contra proferentem to the threshold question of whether an enforceable contract existed—i.e., to whether there was mutual assent to be bound—would be the antithesis of its generally accepted purpose as an interpretive tiebreaker of last resort.
Here, for the reasons discussed below, there simply was no meeting of the minds: plaintiffs’ purported acceptance of the Offer of Judgment is more properly construed as a counteroffer because it changed the most essential term of the Offer of Judgment—the dollar amount offered. Without a valid acceptance, there is no contract; without a contract, there is no need to interpret its purported terms; without the need for interpretation, there is no need to apply an interpretive methodology of last resort. While our cases have
For a valid Rule 68 agreement to have been formed, there must have been a “meeting of the minds” under elementary principles of contract law. See, e.g., Mallory v. Eyrich, 922 F.2d 1273, 1279-80 (6th Cir. 1991); Johnson v. Univ. Coll. of Univ. of Ala. in Birmingham, 706 F.2d 1205, 1209 (11th Cir. 1983); Radecki v. Amoco Oil Co., 858 F.2d 397, 400 (8th Cir. 1988) (“To decide whether there has been a valid offer and acceptance for purposes of Rule 68, courts apply the principles of contract law.“); Steiner, 816 F.3d at 31 (“Rule 68 offers of judgment and acceptances thereof are contracts to be interpreted according to ordinary contract principles“).
“The plain purpose of Rule 68 is to encourage settlement and avoid litigation. . . . The Rule prompts both parties to a suit to evaluate the risks and costs of litigation, and to balance them against the likelihood of success upon trial on the merits.” Marek v. Chesny, 473 U.S. 1, 5 (1985). With respect to a suit seeking money damages, the process requires that the plaintiff, who can total his damages and the costs already incurred, be able to “compar[e] th[at] sum to the amount offered.” Id. at 7. “Thus, Rule 68 offers must provide ‘a clear baseline from which plaintiffs may evаluate the merits of their case relative to the value of the offer.‘” Basha v. Mitsubishi Motor Credit of Am., Inc., 336 F.3d 451, 455 (5th Cir. 2003) (quoting Thomas v. Nat‘l Football League Players Ass‘n, 273 F.3d 1124, 1130 (D.C. Cir. 2001); see also, e.g., Stanczyk v. City of New York, 752 F.3d 273, 283 (2d Cir. 2014) (“Rule 68 offers . . . must be capable of comparison to the judgment ultimately obtained[.]” (citation omitted)).
The Rule 68 process does not work if the dollar amount offered is not clear. For example, where a Rule 68 offer included a monetary component for the plaintiff‘s claimed “actual damages” that would be an amount that “the attorneys for the parties [were to] agree[] upon [as] reasonable,” rather than specifying that amount in the offer, Basha, 336 F.3d at 454 (internal quotation marks and alterations omitted), the offer did not comport with the Rule, and entry of a Rule 68 judgment was properly denied:
Because the offer purported to settle all claims, yet failed to quantify damages, . . . mutual assent did not exist between the parties. Moreover, such a vague offer of judgment did not provide Basha with a clear baseline to evaluate the risks of continued litigation. To hold otherwise would be to strip Rule 68 of its purpose.
Id. at 455 (emphasis added); see also Thomas, 273 F.3d at 1130 (explaining that “an unallocated offer of judgment to multiple plaintiffs is not effective under Rule 68” because no plaintiff would have been presented with a number against which to compare his or her likely recovery).
We conclude that Appellees’ Rule 68 Offer of Judgment was, indeed, ambiguous. As the district court noted, the sentence in the Rule 68 offer reading, “Defendants hereby offer to Plaintiffs collectively tо take a judgment against Defendants in the amount of $82,500.00 . . . on each of the Causes of Action contained in the Complaint,” App‘x at 24, is reasonably susceptible to more than one interpretation because the word “collectively” contradicts the use of the word “each.” The Rule 68 offer therefore was ambiguous in its most crucial term: the amount of settlement.
An offer that states a dollar amount to be specified in the judgment but does so using language that would permit the defendant to argue later that the offer was for a different amount has no Rule 68 validity. Appellants here point out that if they had simply stated that they accepted Appellees’ Offer of Judgment without attempting an explanation or elaboration, Appellees would have been free to point to the offer‘s reference to each cause of action, and to contend that they were entitled to have Appellants pay post-offer costs if after trial Appellants recovered any sum less than $660,000. Appellants’ Br. at 70. Plainly the Rule was not intended to provide a defendant with such a double-edged sword—enabling him to argue that plaintiffs could not receive more than $82,500 if they accepted the Rule 68 offer, but could be held liable for post-offer costs if they won any amount less than $660,000. Neither was the Rule intended to allow a plaintiff, who knows that the specified sum in the offer is the defendant‘s intended ceiling, to insist that the Rule 68 judgment be entered for a higher amount than the one specified in the offer.
In sum, because the Rule 68 offer was ambiguous as to what dollar amount the Appellees were offering—i.e., as to the most fundamental aspect of the proposed contract, the amount to be specified in the judgment—the Offer of Judgment was not a proper Rule 68 offer. There was here no mutual assent; Appellees’ Offer of Judgment was of no effect under Rule 68; the district court properly refused to enter the judgment proposed by Appellants; and Appellants are not subject to the costs-shifting consequences that would have occurred if Appellees’ Offer of Judgment had been a proper Rule 68 offer.
Because the parties never reached agreement on a settlement amount, the district court correctly refused to resolve ambiguities in Appellants’ favor and enter judgment for Appellants pursuant to their purported acceptance of the Rule 68 offer. We therefore affirm the July 26, 2017 order of the district court.
Finally, even if we were to conclude that, notwithstanding the fundamental ambiguity in the Offer of Judgment, a Rule 68 contract had somehow been formed calling for a Rule 68 judgment in the amount of $660,000, we would uphold the district court‘s refusal to enter such a judgment on the ground that Aрpellees should be allowed to avoid the contract on the basis of mistake. Although unilateral mistake is generally not an impediment to the formation of a contract, it may in some circumstances allow the party that made the mistake to avoid the contract. “Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect . . . that is adverse to him,” and “the other party had reason to know of the mistake,” “the contract is“—except in circumstances not existing here—“voidable by him.” Restatement (Second) of Contracts § 153(b) (1981); see also 5 Corbin on Contracts § 24.27 (2020) (“When the terms of a written contract have been authored by one of the parties and merely assented to by the other, this fact will in some cases influence the interpretation that the court will give to these terms. After the court has examined all of the other factors that affect the search for the parties’ intended meaning, . . . there may yet remain a question as to what meaning was intended and should be given effect. This uncertainty may be so great that the court should hold that no contract exists.” (emphasis added)).
The circumstances surrounding Appellees’ Rule 68 offer here support the district court‘s refusal to enter a Rule 68 judgment. Appellees made their formal Rule 68 offer of $82,500 only after making an informal offer to settle the entire case for that amount. Appellants rejected the informal offer and made a counter-offer to settle for $800,000. Appellees then rejected that counter-offer in a June 15, 2017 email to Appellants’ counsel, and in that email stated, “We are going to file an offer of judgment for the amount previously offered.” App‘x at 33. On that same day, Appellants made the Offer of Judgment at issue here. Appellants have not disputed, either in the district court or here, that this was the sequence of events, or that they received and understood the June 15 email. This undisputed record reveals that Appellants knew Appellees intended to have a Rule 68 judgment entered that required them to pay Appellants collectively a total of $82,500. As Appellants attempted to have such a judgment entered оnly in the amount of $660,000, the parties never reached agreement on a specific amount.
II. Claims Under New York Civil Rights Law § 51
“We review a district court‘s grant of summary judgment de novo.” Brandon v. Kinter, 938 F.3d 21, 31 (2d Cir. 2019). For summary judgment to be warranted, the movant must “show[] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
A. New York Civil Rights Law §§ 50-51
Though New York courts do not recognize a common law action for invasion of privacy,
Any person whose name, portrait, picture or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained as above provided [in Section 50] may maintain an equitable action in the supreme court of this state against the person, firm or corporation so using his name, portrait, picture or voice, to prevent and restrain the use thereof; and may also sue and recover damages for any injuries sustained by reason of such use . . . .
New York courts hold that
In Arrington v. New York Times Co., the Court of Appeals held that allegations that a photograph distributor sold the plaintiff‘s image to a newspaper without the plaintiff‘s consent sufficed to state a claim for nonconsensual commercialization of an image for purposes of trade. 55 N.Y.2d 433, 443 (1982). Soon thereafter, the New York legislature amended
[N]othing contained in this article shall be so construed as to prevent any person, firm or corporation from selling or otherwise transferring any material containing such name, portrait, picture or voice in whatever medium to any user of such name, portrait, picture or voice, or to any third party for sale or transfer directly or indirectly to such a user, for use in a manner lawful under this article . . . .
Accordingly, in actions under
with respect to form or forum, the use of the plaintiff‘s photograph is without consent if it exceeds the limitation.” Id.; see also Shields v. Gross, 58 N.Y.2d 338, 344 (1983) (“The statute acts to restrict an advertiser‘s prior unrestrained common-law right to use another‘s photograph until written consent is obtained. Once written consent is obtained, however, the photograph may be published as permitted by its terms.” (citation omitted)).
B. The Terms of the Release Agreements for Shake‘s and Hinton‘s Photographs Are Disputed
It is conceded that the Club Companies used Appellants’ pictures within the state of New York for the purposes of advertising or trade, see Molina, 747 N.Y.S.2d at 230, and Appellees do not argue that any exceptions apply. Further, it is undisputed that the Club Companies lacked written consent from Appellants to use their images in Club advertisements. For use of the photographs in the Club Companies’ advertisements to be lawful, then, we look to the terms of the releases for each photograph. “A release is a contract, and its construction is governed by contract law.” Warmhold v. Zagarino, 40 N.Y.S.3d 499, 500 (App. Div. 2d Dep‘t 2016) (internal quotation marks and citation omitted).
Whether a
The district court granted Appellees summary judgment after finding that each Appellant with a timely
It is undisputed that Lee, Koren, and Mayes entered into agreements releasing
While the parties agree that Shake entered into a release for the photograph at issue, this release is not in the record. The parties dispute the terms of the release, including whether the releasee would receive all proprietary rights to the image or be able to use the image for any purpose. Shake testified that she understood that the photographs covered by the release were to be used only for a calendar that Fastdates created.
Further, while Appellants did not dispute Appellees’ statement in their
In summary, though there was no dispute of material fact raised relating to the releases for the photographs of Lee, Koren, Mayes, and Golden, the terms of the releases for the photographs of Shake and Hinton present disputed questions of material facts. We thus vacate the district court‘s grant of summary judgment to Appellees on the claims of Shake and Hinton.
C. Whether the Releases Bar Appellants’ Section 51 Claims
Relying on the release agreements in the record, the district court concluded that Appellants had executed agreements releasing all their proprietary rights to the photographs and authorizing releasees to allow third parties to use the photographs for any purpose. The district court held that the release agreements disclaimed Appellants’ rights to challenge the use of the photographs, barring Appellants’
Appellants contend that this was an error of law, arguing that Appellees lacked written consent from Appellants, the releasees, or anyone else to use the images; that Appellees were not third-party beneficiariеs of the release agreements; and that the release agreements did not constitute written consent for purposes of
We further conclude that the releases are not written consent for purposes of
A cause of action under
True, where an individual‘s right of privacy has been invaded there are certain other elements which may be taken into consideration in assessing the damages. Thus, where a cause of action under the Civil Rights statute has been established, damages may include recovery for a so-called ‘property’ interest inherent and inextricably interwoven in the individual‘s personality, but it is the injury to the person not to the property which establishes the cause of action. That is the focal point of the statute.
Id. (citation omitted).6 The district court‘s conclusion that the release agreements defeated Appellants’ claims would construe
Thus, Lee‘s and Mayes’ releases in favor of Dreamgirl, Koren‘s release in favor of Gianatsis Design Associates, and Golden‘s release in favor of Leg Avenue do not constitute written consent for all others to use their images for purposes of advertising or trade. That their releases conveyed their proprietary rights to the photographs does not defeat their claims, because their cause of action under
D. Section 51 Remedies
The district court held that even if the comprehensive releases for the photographs at issue did not defeat Appellants’
Appellants argue that the district court erred in striking the report of their damages expert, Stephen Chamberlin, and that Appellants were entitled to prove damages at trial. Appellees respond that that (1) the district court correctly struck Chamberlin‘s report, and (2) Appellants’
- the expert‘s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
- the testimony is based on sufficient facts or data;
- the testimony is the product of reliable principles and methods; and
- the expert has reliably applied the principles and methods to the facts of the case.
In light of these principles, we conclude that the district court did not abuse its discretion in excluding the Chamberlin Report as speculative and methodologically unreliable. The Chamberlin Report states that it “established a fair market fee for the use of each Model‘s image, taking into account еach Plaintiff‘s payment history over the course of her or his career, as well as the Model‘s work quality, experience, exposure, and duration of career.” App‘x at 430. Relying on this fair market fee, the Chamberlin Report generated damages assessments for Lee ($175,000), Koren ($40,000), Mayes ($100,000), Shake ($30,000), Hinton ($270,000), and Golden ($85,000), and for the other appellants (in varying amounts). But the “payment history” the Chamberlin Report relies on is derived in part from contractual agreements that paid Appellants for substantially more than what Appellants seek compensation for here—namely, the fair market value of a single photoshoot. For example, the Chamberlin Report extrapolated from Lee‘s agreement to conduct multiple film and photoshoots and up to 20 days of promotional appearances for $25,000 that her “working day rate“—the fee a model would receive for eight hours of work—would be at least $25,000. App‘x at 436, 2277-78. Similarly, the Chamberlin Report derived Koren‘s daily fee based on her contract to serve as a company ambassador, a role that included a photoshoot, video interview, and public relations obligations. In addition, though Chamberlin admitted that there is typically “one license and one payment” for each photoshoot, App‘x at 2259, the Chamberlin Report made its damages calculation by multiplying the working day rate by the number of ways in which the photogrаphs
We nevertheless conclude that the exclusion of the Chamberlin Report is not fatal to Appellants’ claims. The SAC alleges that Appellees “violated
Due to Defendants’ violation of Plaintiffs’ rights of privacy and publicity under
sections 50 and51 of the N.Y. Civil Rights Act , Plaintiffs [have] been damaged in an amount to be determined at trial, but in all events not less than seventy-five thousand dollars ($75,000.00), exclusive of punitive and exemplary damages.In addition, and pursuant to
section 51 of the N.Y. Civil Rights Act , Plaintiffs hereby request[] an Order permanently enjoining Defendants from violating Plaintiffs’ right to privacy and publicity.In addition, and likewise pursuant to
section 51 of the N.Y. Civil Rights Act , Plaintiffs hereby request an award of punitive damages, in an amount to be determined at trial, due to Defendants knowing and intentional violation of their statutory rights to privacy and publicity.
App‘x at 91. Appellants thus brought suit under
We also conclude that the striking of the Chamberlin Report does not necessarily preclude Appellants from seeking damages. The SAC plainly asserts as a basis for compensatory damages the violation of Appellants’ statutory rights of both privacy and publicity. New York‘s statutory right of privacy “is based upon the classic right of privacy‘s theoretical basis, which is to prevent injury to feelings.” Lombardo v. Doyle, Dane & Bernbach, Inc., 396 N.Y.S.2d 661, 664 (App. Div. 2d Dep‘t 1977). Consequently, damages for the violation of New York‘s statutory right of privacy “often are only nominal since they are designed primarily to compensate for injury to feelings.” Lerman v. Flynt Distrib. Co., Inc., 745 F.2d 123, 141 (2d Cir. 1984); see, e.g., Grant v. Esquire, Inc., 367 F. Supp. 876, 881 (S.D.N.Y. 1973) (explaining that the plaintiff will “be entitled to recover for any lacerations to his feelings that he may be able to establish” if the jury decides in his favor); Harris v. H.W. Gossard Co., 185 N.Y.S. 861, 863 (App. Div. 1st Dep‘t 1921) (affirming the award of six cents in recompense for the injured feelings of a
Nominal damages are damages nonetheless. Appellants at least initially sought recovery of damages before the district
As to whether Appellants can seek to recover the fair market value of the images as compensation, Appellees argue that (1) Appellants did not establish that they were entitled to recover the fair market value of their images, and (2) even if fair market value were the proper measure of damages, Appellants cannot establish the fair market value of their images in the absence of the Chamberlin Report. Appellants contend that fair market value is a proper measure of their damages, and Appellants could proceed to prove fair market value even in the absence of the Chamberlin Report because an expert opinion is not required to support a damages assessment.
In striking the Chamberlin Report, the district court relied in part on its reasoning that Appellants’ fair market value damages theory was “fundamentally suspect” because, as they “negotiated with a willing buyer and were paid the fair market value for any and all rights to the images” already, allowing them “to be compensated a second time would be a clear windfall.” Toth, 2019 WL 95564, at *12. As we have explained, however, a
We are not aware of any precedent holding that an expert opinion is required to prove compensatory damages in an action under
III. Other Claims
Appellants also challenge the district court‘s grant of summary judgment to Appellees alleging that Appellees unlawfully used photographs of them without their consent to advertise strip clubs that Appellees owned, in violation of the Lanham Act,
We turn first to Appellants’ appeal from the dismissal of their Lanham Act claim. The Lanham Act prohibits, in relevant part, the “use[] in commerce [of] any word, term, name, symbol, or device, or any combination thereof . . . likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.”
“On appeal from a grant of summary judgment, the findings with respect to predicate facts underlying each Polaroid factor are reviewed with considerable deference to the district court.” Playtex Prods., Inc. v. Ga.-Pac. Corp., 390 F.3d 158, 162 (2d Cir. 2004) (internal quotation marks and footnote citation omitted), superseded on other grounds as recognized in Starbucks Corp., 588 F.3d at 107-08. In addition, this Court “review[s] the district court‘s decision to admit or
We conclude that the district court correctly dismissed Appellants’ Lanham Act claim. The district court properly analyzed the record of each Appellant‘s public prominence to determine the strength of their marks, because among other reasons, the advertisements at issue provided no information identifying Appellants other than their pictures. See Bondar v. LASplash Cosmetics, No. 12-cv-1417, 2012 WL 6150859, at *7 (S.D.N.Y. Dec. 11, 2012) (“[T]he misappropriation of a completely anonymous face could not form the basis for a false endorsement claim, because consumers would not infer that an unknown model was ‘endorsing’ a product, as opposed to lending her image to a company for a fee.” (footnote omitted)). Further, because the ultimate question under Polaroid Corporation is the likelihood of consumer confusion, the district court properly analyzed Appellants’ recognizability. See id.
For substantially the same reasons as those set out in the district court‘s opinion, we also conclude that the district court did not abuse its discretion in striking Appellants’ expert report (the “Buncher Report“) about a survey conducted of individuals who frequented strip clubs on their perceptions of the advertisements. Among other defects, the survey on which the Buncher Report was based asked respondents about only a small fraction of the images at issue, and it failed to provide respondents with an opportunity to indicate lack of knowledge about how to interpret the use of Appellants’ images in the advertisements. Appellants’ arguments on appeal—that asking about more images would have been more expensive, and that the Buncher Report was based on “a communications study, not a consumer confusion study,” Appellants’ Br. at 55-56—are insufficient to set aside the district court‘s conclusion that the Buncher Report was fatally flawed. Lastly, we agree that Appellants failed to establish any actual consumer confusion or bad faith.
Appellants point to no evidence of actual consumer confusion. And while Appellants urge this Court to conclude that Appellees acted in bad faith, the record merely shows that Appellees failed to investigate whether the third-party contractor responsible for the advertisements secured legal rights to use Appellants’ pictures in the promotional images—not that Appellees intended to use the pictures without legal right to do so.
We next turn to Appellants’ appeal from the dismissal of their claim under
Lastly, we consider Appellants’ libel claim. “Under New York law, a plaintiff must establish five elements to recover in libel: 1) a written defamatory statement of fact concerning the plaintiff; 2) publication to a third party; 3) fault (either negligence or actual malice depending on the status of the libeled party); 4) falsity of the defamatory statement; and 5) special damages or per se actionability (defamatory on its face).” Celle v. Filipino Rep. Enters. Inc., 209 F.3d 163, 176 (2d Cir. 2000). Actual malice “must be supported by clear and convincing proof” that the publisher of the statements “had a subjective awareness of either falsity or probable falsity of the defamatory statement, or acted with reckless disregard of . . . its truth or falsity.” Id. at 182-83. Appellants primarily argue that the advertisements were false defamatory statements because their “most obvious interpretation” was that Appellants would be “stripping at the striр clubs,” Appellants’ Br. at 50, and that Appellants established that Appellees acted with actual malice.
These arguments are without merit. First, we agree with the district court that it was a reasonable interpretation of the use of Appellants’ images in the advertisements that Appellants were not employed in Appellees’ clubs, but merely modeled in the clubs’ advertisements. Insofar as the advertisements were therefore “reasonably susceptible of multiple meanings, some of which [were] not defamatory, it [was] then for the trier of fact, not for the court acting on the issue solely as a matter of law, to determine in what sense the words were used and understood.” Celle, 209 F.3d at 178 (internal quotation marks omitted). Accordingly, the district court correctly denied Appellants’ motion for summary judgment. Second, we agree with the district court that Appellants failed to adduce clear and convincing proof of actual malice. As previously discussed, Appellants at most have shown that Appellees failed to investigate whether the third-party contractor responsible for the advertisements secured legal rights to use Appellants’ pictures in the promotional images. As this Court has explained, however, “mere failure to investigate, while relevant, is also not itself sufficient to show actual malice.” Lerman v. Flynt Distrib. Co., 745 F.2d 123, 141 (2d Cir. 1984). We conclude that the district court correctly granted Appellees’ cross-motion for summary judgment dismissing Aрpellants’ libel claims.
Accordingly, the order of the district court hereby is affirmed as to Appellants’ claims under the Lanham Act,
CONCLUSION
For the foregoing reasons, we affirm the July 26, 2017 order of the district court, vacate so much of the January 3, 2019 judgment of the district court as applies to the Section 51 claims of Lee, Mayes, Koren, Shake, Hinton, and Golden, affirm the remainder of the January 3, 2019 judgment, and remand for further proceedings consistent with this opinion.
App‘x at 115 (Exhibit E to the SAC)
App‘x at 123 (Exhibit H to the SAC)
Notes
193 N.Y. 223, 230-31 (1908), aff‘d, 220 U.S. 502 (1911).[A]s to pictures whose ownership remained in the person represented at the time when the act took effect, or portraits subsequently made, a transfer of ownership no longer conveys the right to use the picture for advertising purposes, unless the written consent of the person portrayed shall have been given. The acquisition of such pictures by itself does not carry with it the right to use them for advertising or trade purposes, except with the written consent of the person represented; but the statute in no wise forbids the transfer of the right so to use them, provided that right is conferred by a written consent to that effect.