POOLER, Circuit Judge.
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 New York Civil Rights Law Sections 50 and 51, the Lanham Act, 15 U.S.C. § 1125(a), New York General Business Law Section 349, and New York libel law, alleging that Defendants-Appellees 59 Murray Enterprises, Inc., AAM Holding Corp., and Jay-Jay Cabaret, Inc. unlawfully used photographs
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 Federal Rule of Civil Procedure 68 because the offer's settlement amount term was ambiguous, the parties disagreed over how to interpret the term, and there was accordingly no meeting of the minds. We further hold that the district court did not err in its grant of summary judgment to Appellees as to Appellants' Lanham Act, 15 U.S.C. § 1125(a), New York General Business Law Section 349, and libel claims.
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 and 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 advertising 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 Section 51 of New York's Civil Rights Law barred the claims of all but six of Appellants. We accordingly focus on the record of releases to the photographs of Appellants with timely claims: Lee, Mayes, Koren, Shake, Hinton, and Golden.
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 non-commercial 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.
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 Forplay 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' Rule 56.1 statement that Hinton signed this release in connection with photographs contained at Exhibits E and F in the SAC, these exhibits are labeled as advertisements featuring the images of Koren and Shake.
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.
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 New York Civil Rights Law §§ 50-51, constituted false endorsement under Section 43 of the Lanham Act, 15 U.S.C. § 1125(a)(1), was a deceptive trade practice under New York General Business Law Section 349(h), and constituted libel under New York law.
On June 15, 2017, Appellees served a "Rule 68 Offer of Judgment" (the "Offer of Judgment") on Appellants pursuant to Federal Rule of Civil Procedure 68. The Offer of Judgment stated in relevant part as follows:
App'x at 27-28.
Although the Rules provide that if the Rule 68 offer has been accepted "either party may then file the offer and notice of acceptance, plus proof of service," and that the "clerk must then enter judgment," Fed. R. Civ. P. 68(a), no such judgment was actually entered in the present case. Following receipt of Appellants' Reply, Appellees filed in the district court on July 5 a letter urging that no judgment be entered in accordance with the Reply because in Appellees' Rule 68 Offer "[t]he figure of $660,000 was not mentioned ... and was clearly not contemplated; rather, $82,500 was intended to dispose of the entire case," and Appellants' counsel was "well aware of Defendants' stated intent based on written communications among counsel that directly preceded the offer." App'x at 30. Appellees' counsel stated that prior to the Rule 68 Offer, when "counsel discussed settlement[,] Defendants offered $82,500 to dispose of the entire case." App'x at 31. After "Plaintiffs[ ] countered by demanding $800,000," defense counsel "advised that the amount demanded was too high to counter," and "[b]y a June 15th email, a copy of which is annexed hereto,... advised that rather than countering the demand [they] would be filing an offer of judgment for the same amount previously offered; i.e., $82,500." App'x at 31. Appellees attached to their letter the June 15 email referred to, which stated, "We are going to file an offer of judgment for the amount previously offered." App'x at 33.
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 Rule 68 Offer expressly applied to "
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.
As to Appellants' claims under New York Civil Rights Law §§ 50-51, the district court concluded that Lee, Koren, Shake, Mayes, Hinton, and Golden had brought suit within one year of the publication of the challenged advertisements, but that the claims of the other Appellants were time-barred under the applicable one-year statute of limitations. See N.Y. C.P.L.R. § 215(3). As to the six Appellants whose claims were not time-barred, the district court held that they could not sue under Section 51 because they signed full releases of their rights to the images. Accordingly, the district court dismissed the complaint and entered judgment for Appellees. Appellants timely appealed.
I. Rule 68 Offer of Settlement
Federal Rule of Civil Procedure 68 provides:
Fed. R. Civ. P. 68(a).
"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 Rule 68(d) if it does not obtain a more favorable judgment," id., and that under the doctrine of contra proferentem, "ambiguities in the language of a Rule 68 offer of judgment are to be construed against the party making the offer," Lilly v. City of New York, 934 F.3d 222, 236 (2d Cir. 2019) (internal quotation marks and citation omitted).
"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.
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:
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, 105 S.Ct. 3012, 87 L.Ed.2d 1 (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, 105 S.Ct. 3012. "Thus, Rule 68 offers must provide `a clear baseline from which plaintiffs may evaluate 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:
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 to 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 Appellees 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 counteroffer 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 only 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." Fed. R. Civ. P. 56(a). "Material facts are those which might affect the outcome of the suit under the governing law, and a dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Coppola v. Bear Stearns & Co., 499 F.3d 144, 148 (2d Cir. 2007) (internal quotation marks and citation omitted). "In reviewing the district court's grant of summary judgment, we must construe the facts in the light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the movant." Brandon, 938 F.3d at 31 (internal quotation marks and citation omitted).
A. New York Civil Rights Law §§ 50-51
Though New York courts do not recognize a common law action for invasion of privacy, Sections 50 and 51 of the New York Civil Rights Law provide for a limited statutory right of privacy. Messenger v. Gruner + Jahr Printing & Publ'g, 208 F.3d 122, 125 (2d Cir. 2000). Under Section 50, it is a misdemeanor to "use[ ] for advertising purposes, or for the purposes of trade, the name, portrait or picture of any living person without having first obtained the written consent of such person...." N.Y. Civ. Rights Law § 50. Section 51 authorizes a private right of action for damages and injunctive relief for those injured by a violation of Section 50, providing in relevant part as follows:
N.Y. Civ. Rights Law § 51. To establish liability under Section 51, a plaintiff "must demonstrate each of four elements: (i) usage of plaintiff's name, portrait, picture, or voice, (ii) within the state of New York, (iii) for purposes of advertising or trade, (iv) without plaintiff's written consent." Molina v. Phx. Sound Inc., 297 A.D.2d 595, 747 N.Y.S.2d 227, 230 (1st Dep't 2002) (citation omitted). "A name, portrait or picture is used `for advertising purposes' if it appears in a publication which, taken in its entirety, was distributed for use in, or as part of, an advertisement or solicitation for patronage of a particular product or service," Beverley v. Choices Women's Med. Ctr., Inc., 78 N.Y.2d 745, 751, 579 N.Y.S.2d 637, 587 N.E.2d 275 (1991) (citation omitted), and is used for purposes of trade if it "involves use which would draw trade to the firm." Kane v. Orange Cty. Publ'ns., 232 A.D.2d 526, 649 N.Y.S.2d 23, 25 (2d Dep't 1996). Because the statute was "drafted narrowly to encompass only the commercial use of an individual's name or likeness and no more," Finger v. Omni Publ'ns. Int'l, Ltd., 77 N.Y.2d 138, 141, 564 N.Y.S.2d 1014, 566 N.E.2d 141 (1990) (internal quotation marks and citation omitted), the statute's terms are "to be narrowly construed and strictly limited to nonconsensual commercial appropriations of the name, portrait or picture of a living person." Messenger, 208 F.3d at 125 (internal quotation marks and citation omitted).
New York courts hold that Section 51 also protects a statutory right of publicity. See Brinkley v. Casablancas, 80 A.D.2d 428, 438 N.Y.S.2d 1004, 1012 (1st Dep't 1981); see also Gautier v. Pro-Football, Inc., 304 N.Y. 354, 359, 107 N.E.2d 485 (1952). Section 51 "has been applied in cases ... where the picture of a person who has apparently never sought publicity has been used without his or her consent for trade or advertising purposes. In such cases it has been noted that the statute serves to protect the sentiments, thoughts and feelings of an individual." Stephano v. News Grp. Publ'ns., Inc., 64 N.Y.2d 174, 182, 485 N.Y.S.2d 220, 474 N.E.2d 580 (1984) (internal quotation marks and citations omitted). Yet, Section 51 "is not limited to situations where the defendant's conduct has caused distress to a person who wishes to lead a private life free of all commercial publicity." Id. at 183, 485 N.Y.S.2d 220, 474 N.E.2d 580. Because Section 51 "applies to any use of a person's picture or portrait for advertising or trade purposes whenever the defendant has not obtained the person's written consent to do so," the statute also applies in cases seeking to vindicate the statutory right of publicity—those in which "the plaintiff generally seeks publicity, or uses his name, portrait, or picture, for commercial purposes but has not given written consent for a particular use." Id.
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, 449 N.Y.S.2d 941, 434 N.E.2d 1319 (1982). Soon thereafter, the New York legislature amended Section 51
N.Y. Civ. Rights Law § 51.
Accordingly, in actions under Section 51 challenging the sale or transfer of an image from an image distributor to a third party, or a third party's use of an image, courts generally assess whether such use or transfer is lawful by looking to the text of the relevant written release agreement. See, e.g., Delaney v. Newsday, Inc., No. 90-6007, 1991 WL 95125, at *1-2 (N.Y. Sup. Ct. Jan. 28, 1991); see also Spiegel v. Schulmann, 604 F.3d 72, 78 (2d Cir. 2010); Krupnik v. NBC Universal, Inc., No. 103249-10, 2010 WL 9013658, *3-5 (N.Y. Sup. Ct. June 29, 2010). "Under New York law, a defendant's immunity from a claim for invasion of privacy is no broader than the consent executed to him." Spiegel, 604 F.3d at 77 (internal quotation marks and citation omitted). "Where the plaintiff's consent is limited 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, 461 N.Y.S.2d 254, 448 N.E.2d 108 (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, 144 A.D.3d 672, 40 N.Y.S.3d 499, 500 (2d Dep't 2016) (internal quotation marks and citation omitted). Whether a Section 51 plaintiff entered into a release agreement and the terms of such an agreement, however, are factual questions. See, e.g., Taggart v. Wadleigh-Maurice, Ltd., 489 F.2d 434, 438 (3d Cir. 1973); Alvidrez v. Roberto Coin, Inc., 6 Misc.3d 742, 791 N.Y.S.2d 344, 347 (N.Y.Sup. Ct. 2005).
The district court granted Appellees summary judgment after finding that each Appellant with a timely Section 51 claim—Lee, Koren, Shake, Mayes, Hinton, and Golden—had entered into a "comprehensive" release that "grant[ed] the releasee unlimited rights to the use of the images at issue." Toth v. 59 Murray Enters., Inc., No. 15-cv-8028, 2019 WL 95564, at *3, *11 (S.D.N.Y. Jan. 3, 2019). Appellants argue that the district court erred in so finding because the record did not contain releases for the images at issue. We agree.
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 Rule 56.1 filing that "Hinton signed a release in connection with the photographs depicted in Exhibits E and F," App'x at 2214, these exhibits are labeled as advertisements featuring the images of Koren and Shake, not Hinton. Hinton testified that she did not always sign releases for photographs with Forplay, and she did not recall whether she signed a release for the photograph used in the advertisements at issue. Appellants contend on appeal that the record does not include the release that Hinton signed for the photograph, and Appellees concede this point, arguing only that Hinton testified that she did not know if the release in the record pertained to the images at issue in the case.
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' Section 51 claims. In a footnote, the district court suggested that though it did not need to address the question of whether the releases constituted "written consent" for purposes of Section 51, it was "inconsistent" with the statute "for plaintiffs that have signed unlimited releases to rely on the absence of written consent in pursuing damages under that statute." Toth, 2019 WL 95564 at *11 n.14.
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 beneficiaries of the release agreements; and that the release agreements did not constitute written consent for purposes of Section 51. We agree.
We further conclude that the releases are not written consent for purposes of Section 51. The text of the statute requires a party to have "written consent" to use the image, though it allows "sale or transfer" of the image "for use in a manner lawful under" Section 51. N.Y. Civ. Rights Law § 51. As case law demonstrates, written consent in favor of one party does not allow others to use an image for trade or advertising. See, e.g., Chambers v. Time Warner, No. 00-cv-2839, 2003 WL 749422, at *4 (S.D.N.Y. Mar. 5, 2003). This is true no matter how broadly an agreement releases proprietary rights to the releasee. In Rosemont Enterprises, Inc. v. Urban Systems, Inc., for example, the New York Supreme Court held—in an action under Section 51 brought by Howard Hughes against the maker of "The Howard Hughes Game" — that Hughes's "exclusive assignment of the right to exploit the Hughes name and personality" to another party did not defeat the claim. 72 Misc.2d 788, 340 N.Y.S.2d 144, 144, 147 (N.Y.Sup. Ct. 1973), aff'd as modified, 42 A.D.2d 544, 345 N.Y.S.2d 17 (1st Dep't 1973). The court explained that Hughes was "free to protect himself from the exploitation of his name and likeness against all the world except [the assignee]. It is only between them will that assignment constitute a defense to a similar law suit." Id. at 147.
A cause of action under Section 51 does not depend on the proprietary rights a plaintiff has in a particular image. In Gautier v. Pro-Football, Inc., the Appellate Division explained that Section 51 provides "primarily a recovery for injury to the person, not to his property or business." 278 A.D. 431, 106 N.Y.S.2d 553, 560 (1st Dep't 1951), aff'd, 304 N.Y. 354, 107 N.E.2d 485. Gautier continued,
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 Section 51 is based on their statutory rights, not their proprietary rights in the photographs. And while the releases could provide a defense in an action against the releasees or those who could assert lawful use by reason of assignment or license, Appellees concede that they had no legal rights to the images. Appellants therefore have established that Appellees used their images without written consent, and they are entitled to summary judgment as to Appellees' liability under Section 51.
D. Section 51 Remedies
Section 51 authorizes private parties to seek injunctive relief, compensatory damages "for any injuries sustained" because of the unconsented use of their picture, and exemplary damages if the defendant knowingly used the picture "in such manner as is forbidden or declared to be unlawful" by Section 50. N.Y. Civ. Rights Law § 51.
The district court held that even if the comprehensive releases for the photographs at issue did not defeat Appellants' Section 51 claims, their claims should nevertheless be dismissed because Appellants failed to establish entitlement to damages. Having found Lee, Koren, Shake, Mayes, Hinton, and Golden entitled to summary judgment on liability under Section 51, we turn to the district court's alternative basis for dismissal.
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' Section 51 claims fail because they failed to adduce any evidence of damages. Though we conclude that the district court correctly excluded Chamberlin's damages report, we also conclude that this is not fatal to Appellants' Section 51 claims.
Fed. R. Evid. 702. To decide "whether a step in an expert's analysis is unreliable, the district court should undertake a rigorous examination of the facts on which the expert relies, the method by which the expert draws an opinion from those facts, and how the expert applies the facts and methods to the case at hand." Amorgianos v. Nat'l R.R. Passenger Corp., 303 F.3d 256, 267 (2d Cir. 2002). "A district court has discretion under Federal Rule of Evidence 703 to determine whether the expert acted reasonably in making assumptions of fact upon which he would base his testimony." Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21 (2d Cir. 1996) (internal quotation marks and citations omitted). "Although expert testimony should be excluded if it is speculative or conjectural, or if it is based on assumptions that are so unrealistic and contradictory as to suggest bad faith or to be in essence an apples and oranges comparison, other contentions that the assumptions are unfounded go to the weight, not the admissibility, of the testimony." Id. (internal quotation marks and citations omitted).
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 each 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 photographs
We nevertheless conclude that the exclusion of the Chamberlin Report is not fatal to Appellants' claims. The SAC alleges that Appellees "violated N.Y. Civil Rights Law §§ 50-51 by invading Plaintiffs' privacy, misappropriating their likeness, and publishing altered Images of Plaintiffs which made it appear as though Plaintiffs were employed at one or more of the Clubs, or endorsed one or more of the Clubs." App'x at 90. As to relief, the SAC states as follows:
App'x at 91. Appellants thus brought suit under Section 51 seeking not just compensatory damages, but also injunctive relief. Appellants reiterated that they sought equitable relief during oral argument before the district court on their summary judgment motion, as well as in their motion papers. Thus, Appellants can proceed at a minimum with their action to seek a permanent injunction. Cf. Onassis v. Christian Dior-New York, Inc., 122 Misc.2d 603, 472 N.Y.S.2d 254, 263 (Sup. Ct. 1984), aff'd, 110 A.D.2d 1095, 488 N.Y.S.2d 943 (1st Dep't 1985) (granting a preliminary injunction under Section 51 while noting that the plaintiff could pursue claims for damages at trial).
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., 58 A.D.2d 620, 396 N.Y.S.2d 661, 664 (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., 194 A.D. 688, 185 N.Y.S. 861, 863 (1st Dep't 1921) (affirming the award of six cents in recompense for the injured feelings of a Section 51 plaintiff, a well-known actress).
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 Section 51 claim is not a breach of contract action, but rather an action for infringement of a person's statutory right of privacy or publicity. The district court's reasoning could be persuasive if Appellees had secured legal rights to use the photographs through assignment, license, or other means authorized in the release agreements. In such a case, written consent sufficient to make their use of Appellants' image lawful would run from the release to Appellees. But it is conceded that Appellees did not secure legal rights to the images, and so damages would not constitute a windfall: Appellants have not yet been compensated for the Clubs' use of their images. We thus conclude that recovery of the fair market value of the images is a viable damages theory in this case. See Brinkley, 438 N.Y.S.2d at 1012-13.
We are not aware of any precedent holding that an expert opinion is required to prove compensatory damages in an action under Section 51, though this Court has endorsed the use of experts to prove fair market value in other contexts. See Schonfeld v. Hilliard, 218 F.3d 164, 178 (2d Cir. 2000). Furthermore, our case law does not suggest that Section 51 is "one of the rare causes of action in which the law predicates recovery upon expert testimony." See Salem v. U.S. Lines Co., 370 U.S. 31, 35, 82 S.Ct. 1119, 8 L.Ed.2d 313 (1962). Awarding damages under Section 51 "is a difficult question at best. Objective standards for measuring injury resulting from an invasion of privacy or an appropriation of one's name, likeness, or reputation are unlikely to be available, so that a considerable degree of discretion must rest with the finder of fact." Big Seven Music Corp. v. Lennon, 554 F.2d 504, 512 (2d Cir. 1977). Nevertheless, the "fact that in cases involving infringements of the right of privacy the damages may be difficult of ascertainment or cannot be measured by a pecuniary standard is not a good ground for denying recovery at all. Of necessity, the question of the measure of these damages is a matter that should be left to the sound discretion of the jury." Manger v. Kree Inst. of Electrolysis, 233 F.2d 5, 9 n.5 (2d Cir. 1956) (internal quotation marks and citations omitted); see also Myers v. U.S. Camera Pub. Corp., 9 Misc.2d 765, 167 N.Y.S.2d 771, 774 (City Ct. 1957).
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, 15 U.S.C. § 1125(a), New York General Business Law Section 349, and New York libel law.
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." 15 U.S.C. § 1125(a)(1)(A). To succeed on a false endorsement claim under the Lanham Act, "a plaintiff must prove (1) that the mark ... is distinctive as to the source of the good or service at issue, and (2) that there is the likelihood of confusion between the plaintiff's good or service and that of the defendant." ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 154 (2d Cir. 2007). To determine the likelihood of consumer confusion, we apply the eight-factor test of Polaroid Corporation v. Polarad Electronics Corporation. 287 F.2d 492, 495 (2d Cir. 1961). See Kelly-Brown v. Winfrey, 717 F.3d 295, 307 (2d Cir. 2013). As is relevant here, these factors include, inter alia, the strength of the mark, evidence of actual consumer confusion, and evidence that the mark was adopted in bad faith. Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97, 115 (2d Cir. 2009).
"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 New York General Business Law Section 349, which prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state." N.Y. Gen. Bus. Law § 349(a). "To state a claim under § 349, a plaintiff must allege: (1) the act or practice was consumer-oriented; (2) the act or practice was misleading in a material respect; and (3) the plaintiff was injured as a result." Spagnola v. Chubb Corp., 574 F.3d 64, 74 (2d Cir. 2009). Section 349 authorizes suit by "any person who has been injured by reason of any violation of this section," N.Y. Gen. Bus. Law § 349(h), and we have held that Section 349 allows recovery by non-consumers if there is "some harm to the public at large," Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264 (2d Cir. 1995) (internal quotation marks and citation omitted). Nevertheless, to successfully state a claim under Section 349 "the gravamen of the complaint must be consumer injury or harm to the public interest." Id. (internal quotation marks omitted).
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 strip 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 Appellants' libel claims.
Accordingly, the order of the district court hereby is affirmed as to Appellants' claims under the Lanham Act, New York General Business Law Section 349, and New York libel law.
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.
APPENDIX TO THE OPINION OF THE COURT
193 N.Y. 223, 230-31, 85 N.E. 1097 (1908), aff'd, 220 U.S. 502, 31 S.Ct. 490, 55 L.Ed. 561 (1911).