Electra v. 59 Murray Enters., Inc.

• Decision Date: 09 February 2021
• Docket Number: Docket No. 19-235,August Term, 2019
• Citation: 987 F.3d 233
• Parties: Carmen ELECTRA, Tiffany Toth, Gemma Lee, Jessa Hinton, Jesse Golden, Lina Posada, Sheena Lee Weber, Heather Rae Young, Rachel Koren, Sabella Shake, Ursula Mayes, Plaintiffs-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.
• Court: U.S. Court of Appeals — Second Circuit

987 F.3d 233

Carmen ELECTRA, Tiffany Toth, Gemma Lee, Jessa Hinton, Jesse Golden, Lina Posada, Sheena Lee Weber, Heather Rae Young, Rachel Koren, Sabella Shake, Ursula Mayes, Plaintiffs-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.¹

Docket No. 19-235

August Term, 2019

United States Court of Appeals, Second Circuit.

Argued: January 8, 2020

Decided: February 9, 2021

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.

Before: KEARSE, CALABRESI, and POOLER, Circuit Judges.

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 of Appellants without their consent to advertise Appellees’ strip clubs. Appellants principally challenge the district court's July 26, 2017 order rejecting their attempt to have judgment entered in their favor pursuant to Federal Rule of Civil Procedure 68 for $660,000, and its January 3, 2019 order granting summary judgment to Appellees.

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.

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 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 Clubs. A photograph of Hinton, with text stating "Welcome to the New Flashdancers," App'x at 123-27, appeared on the Flashdancers website, and its Twitter, Facebook, and Instagram accounts. Similarly, a photograph of Golden appeared in an advertisement for a Halloween party at Private Eyes Gentlemen's Club, and a photograph of Mayes appeared in an advertisement offering a free-admission "VIP pass" to the "Newly Remodeled" New York Dolls club. App'x at 120. The advertisements did not name the models.

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 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 for the image, but the content of that release agreement is not in the record.

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...