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Bondar v. LASplash Cosmetics

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


December 11, 2012

IULIANA BONDAR P.K.A. YULIANA BONDAR, PLAINTIFF,
v.
LASPLASH COSMETICS A.K.A SPLASH COSMETICS, JON DAVLER, INC., DAVID BYUN, AND DAVID BYUN CREATIVE, INC. DEFENDANTS.

The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.

OPINION AND ORDER

I. INTRODUCTION

Plaintiff Iuliana Bondar brings this action against LASplash Cosmetics ("LASplash"), Jon Davler, Inc. ("Davler"), David Byun ("Byun"), and David Byun Creative, Inc. ("Byun Creative").*fn1 Bondar asserts five cauees of action: (1) unfair competition and false designation of origin under the Lanham Act; (2) unfair competition under New York law; (3) unjust enrichment under New York law; (4) violation of the New York Civil Rights Law ("NYCRL") Sections 50 and 51; and (5) fraudulent misrepresentation (against Byun only). Defendants move for judgment on the pleadings on all claims under Federal Rule of Civil Procedure 12(c). Additionally, Defendants move to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) in the event that Bondar's Lanham Act claims are dismissed. For the reasons that follow, Defendants' judgment on the pleadings is granted in part and denied in part, and defendants' motion to dismiss for lack of subject matter jurisdiction is denied.

II. BACKGROUND*fn2

A. Facts

Bondar is a fashion model residing in New York City.*fn3 She has appeared in fashion magazines, advertising campaigns, and runways across the world, walking for luminaries such as Donna Karan, Marc Jacobs, and Vera Wang, and appearing in publications such as Italian Vogue.*fn4 The Complaint alleges that she is "well known."*fn5

Defendant LASplash is a division of Davler, a California corporation with its principal place of business in California.*fn6 Collectively, Davler and LASplash are engaged in the business of designing and manufacturing cosmetics, which are sold domestically and internationally.*fn7 In the United States, LASplash's cosmetics are sold primarily in drug stores.*fn8 Byun is a fashion photographer based in New York, and Byun Creative is a New York corporation that allegedly acts as his alter-ego.*fn9

On or around January 4, 2010, Byun, on behalf of Byun Creative, contacted David Kim, of Bondar's management agency Major Models, to arrange a photo shoot.*fn10 Byun stated that the shoot was a "really small make up job for a friend of mine" consisting solely of a test for a product.*fn11 Byun's Answer alleges that Byun contacted Kim via e-mail on January 4, 2010, and that they had the following exchange:

[Byun to Kim]: I would need to do a really small make up job for a friend of mine. I don't think I can hire a model that belongs to an agency. [S]ince it's international usage for [one] year for only $1500 do you know any models that[] [are] good but [don't] really have [] representation? [S]ince it's beauty I just need a good face.

[L]ooking forward to hearing back from you. [Kim's response to Byun]: No worries. Of course I can help. Is it full usage for [one] year? Can I ask what the brand is? [M]aybe one of the girls we have really needs money and would do it. [Byun response to Kim]: yes it's http://www.lasplashcosmetics.com/ [Kim's 01/05/10 Response to Byun]

I have good news. She will do it because its you and because I said it would be a great thing for her and you to work together again.*fn12

On January 11, 2010, Bondar did the photo shoot with Byun at George Brown Studio, in Manhattan (the "Photo Shoot").*fn13 Per the call sheet, Bondar was paid fifteen-hundred dollars for the Photo Shoot.*fn14 She never signed a release in connection with the Photo Shoot, and she alleges that she would not have agreed to be "the face" of LASplash.*fn15 Subsequently, images from the Photo Shoot were used by LASplash and Davler in an advertising campaign for LASplash cosmetics.

The Complaint alleges that Byun and Byun Creative sold Bondar's images to LASplash and Davler for commercial advertising use, without release or authorization, in order to avoid paying the customary rate for a high-fashion model of Bondar's caliber.*fn16 The Complaint further alleges that Bondar's career has been damaged because she cannot pursue modeling contracts that require exclusivity, and because her brand has been tarnished.*fn17

LASplash's Answer alleges that LASplash used Bondar's image in four nationwide advertisements for three different types of products, namely lip gloss, eyeliner, and eye shadow. *fn18 These products were offered for sale in New York at least as early as 2010, and continued to be offered for sale afterwards.*fn19

Beginning in 2010, LASplash also used Bondar's on in-store displays promoting its lip gloss and eyeliners in various ULTA Beauty stores in New York.*fn20

However, the Complaint alleges that "[Within the year of Bondar filing her complaint] [d]efendants . . . have featured Bondar's image for the first time to promote new products and merchandise at trade shows, promotional events and at retail outlets in the State of New York . . . ."*fn21

Affixed to the Complaint are images purportedly showing that Bondar's face was used in connection with a New York promotion for LASplash's new product "Enlightened Cream Shadow Base" on March 28, 2011.*fn22

As to the Lanham Act and unfair competition claims, the Complaint alleges that defendants' conduct was willful, knowing, and/or reckless, and that LASplash's use of Bondar's images in its advertising campaign misrepresents to the general public that Bondar endorses LASplash, creating a likelihood of confusion by consumers.*fn23 As to the unjust enrichment claim, the Complaint alleges that defendants obtained a pecuniary benefit from Bondar's likeness without her knowledge or consent.*fn24 As to the NYCRL claim, the Complaint alleges that defendants, without Bondar's consent, misappropriated her likeness for commercial purposes, and "within [a] year of Bondar filing her complaint, have featured Bondar's image for the first time to promote new products . . . ."*fn25

Finally, as to the fraudulent misrepresentation claim (directed solely at Byun), the Complaint alleges that Byun's alleged statement that the Photo Shoot was a "'really small make up job for a friend of mine' consisting solely of testing for a product" was false when made, and that Byun knew it was false when it was made.*fn26

III. LEGAL STANDARD

A. Judgment on the Pleadings Standard

Federal Rule of Civil Procedure 12(c) provides that "[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings." "On a 12(c) motion, the court considers 'the complaint, the answer, any written documents attached to them, and any matter of which the court can take judicial notice for the factual background of the case.'"*fn27

"The standard for addressing a Rule 12(c) motion for judgment on the pleadings is the same as that for a Rule 12(b)(6) motion to dismiss for failure to state a claim."*fn28 In deciding a motion to dismiss pursuant to Rule 12(b)(6), the court "must accept all non-conclusory factual allegations [in the complaint] as true and draw all reasonable inferences in the plaintiff's favor."*fn29

The court evaluates the sufficiency of the complaint under the "two-pronged approach" suggested by the Supreme Court in Ashcroft v. Iqbal.*fn30 Under the first prong, a court "'can . . . identify[] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.'"*fn31 Thus, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to withstand a motion to dismiss.*fn32 Under the second prong of Iqbal, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief."*fn33 A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."*fn34

Plausibility "is not akin to a probability requirement;" rather, plausibility requires "more than a sheer possibility that a defendant has acted unlawfully."*fn35

The Federal Rules of Civil Procedure create a heightened pleading standard for fraud. Rule 9(b) requires that the circumstances constituting fraud be alleged with particularity, although "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally.""To satisfy this heightened pleading standard when asserting a claim of fraudulent misrepresentation, a plaintiff must identify: (1) specific statements that plaintiff contends were fraudulent; (2) the speaker; (3) where and when the statements were made; and (4) why the statements were fraudulent."*fn36

B. Motion to Dismiss for Lack of Subject Matter Jurisdiction

1. Bases for Jurisdiction

A federal district court may exercise jurisdiction only if so authorized by the Constitution and by statute.*fn37 The Constitution extends the federal judicial power to, inter alia, all cases arising under the Constitution, laws, and treaties of the United States, and to cases between citizens of different states.*fn38 28 U.S.C. §§ 1331 and 1332 extend this grant to the federal district courts, with some limitations (viz., establishing an amount in controversy and complete diversity requirement in diversity cases).*fn39

28 U.S.C. § 1338(a) ("Section 1338") provides federal district courts with "original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks[,]" and exclusive jurisdiction with respect to "patents, plant variety protection, or copyrights."Section 1338(b) grants federal district courts original jurisdiction over "any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the copyright, patent, plant variety protection or trademark laws."Finally, 28 U.S.C. § 1367(a) permits district courts to exercise supplemental jurisdiction over "claims that are so related to claims in the action within [the court's] original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." A district court may decline to exercise such jurisdiction when it has dismissed all claims over which it has original jurisdiction.*fn40

2. Standard for Evaluating a 12(b)(1) Motion to Dismiss for Lack of Subject Matter Jurisdiction Federal Rule of Civil Procedure 12(b)(1) provides for the dismissal of a claim when a federal court lacks subject matter jurisdiction, "the statutory or constitutional power to adjudicate [a claim]."*fn41 The proponent of jurisdiction (normally the plaintiff) bears the burden of establishing subject matter jurisdiction by a preponderance of the evidence.*fn42 A federal court may only exercise jurisdiction over live cases and controversies.*fn43

In considering a motion to dismiss for lack of subject matter jurisdiction, "'the court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff.'"*fn44 However, "'jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it.'"*fn45 In fact, "where jurisdictional facts are placed in dispute, the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits."*fn46 "In deciding the motion, the court 'may consider affidavits and other materials beyond the pleadings to resolve the jurisdictional issue, but [it] may not rely on conclusory or hearsay statements contained in the affidavits.'"*fn47

C. Leave to Amend

Whether to permit a plaintiff to amend its complaint is a matter committed to a court's "sound discretion."*fn48 Rule 15(a) provides that leave to amend a complaint "shall be freely given when justice so requires." "When a motion to dismiss is granted, the usual practice is to grant leave to amend the complaint."*fn49 In particular, it is the usual practice to grant at least one chance to plead fraud with greater specificity when a complaint is dismissed under Rule 9(b).*fn50 Leave to amend should be denied, however, where the proposed amendment would be futile.*fn51

IV. APPLICABLE LAW

A. False Endorsement Under Lanham Act § 43(a) (15 U.S.C. § 1125(a))

The Lanham Act provides:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which--(A) is 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, . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.*fn52

"The elements of a false endorsement claim under the Lanham Act are that the defendant, (1) in commerce, (2) made a false or misleading representation of fact (3) in connection with goods or services (4) that is likely to cause consumer confusion as to the origin, sponsorship, or approval of the goods or services."*fn53

Courts in this Circuit have recognized that celebrities have a trademark-like interest in their name, likeness, and persona that may be vindicated through a false endorsement claim under the Lanham Act.*fn54

The likelihood of confusion inquiry turns on whether "there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question."*fn55

"A consumer need not believe that the owner of the mark actually produced the item and placed it on the market in order to satisfy § 43(a)'s confusion requirement. The public's belief that the mark's owner sponsored or otherwise approved the use of the trademark satisfies the confusion requirement."*fn56 Although consumer confusion is normally a question of fact, claims "may be dismissed as a matter of law where the court is satisfied that the products or marks are so dissimilar that no question of fact is presented."*fn57

Generally speaking, establishing a likelihood of confusion is the plaintiff's burden;*fn58 the defendant need not disprove it.*fn59 In determining whether there is a likelihood of confusion, courts in this Circuit apply an eight-factor test derived from Polaroid Corp. v. Polarad Elec. Corp.*fn60

This test has been used, with modifications, to examine claims of celebrity false endorsement.*fn61

B. Unfair Competition Under New York Law

The elements of an unfair competition claim under New York law are identical to the elements of an unfair competition claim under the Lanham Act (which in turn mirror the elements of a false endorsement claim), with two exceptions. First, the plaintiff must show "either actual confusion or a likelihood of confusion . . . ."*fn62 Second, the plaintiff must demonstrate "'some showing of bad faith' on the part of the defendants."*fn63 "The inquiry into willfulness or bad faith considers whether the defendant adopted its mark with the intention of capitalizing on the plaintiff's reputation and goodwill and on any confusion between [its] and the senior user's product."*fn64

C. Unjust Enrichment Under New York Law

Under New York law, the elements of an unjust enrichment claim are that: "(1) the defendant benefitted; (2) at the plaintiff's expense; and (3) equity and good conscience require restitution."*fn65 The NYCRL provides the exclusive remedy for "all common law claims [right to privacy claims] based on unauthorized use of name, image, or personality, including unjust enrichment claims."*fn66 Stated differently, unjust enrichment claims based on the unauthorized use of a person's image are preempted by the NYCRL.

D. Right to Privacy Under NYCRL §§ 50-51

NYCRL § 51 provides that: Any person whose . . . picture . . . is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained as above provided may maintain an equitable action in the supreme court of this state against the person, firm or corporation so using his . . . picture . . . to prevent and restrain the use thereof; and may also sue and recover damages for any injuries sustained by reason of such use and if the defendant shall have knowingly used such person's . . . picture . . . in such manner as is forbidden or declared to be unlawful by section fifty of this article . . . .

NYCRL § 50 forbids the "use[] for advertising purposes, or for the purposes of trade, . . . the [use of the] . . . picture of any living person without having first obtained the written consent of such person . . . ."

Together, these sections create a private right of action (a "Section 51 claim") for the use of a living person's picture for advertising or trade purposes without that person's written consent. The elements of such action are: "(i) usage of plaintiff's . . . picture . . . (ii) within the State of New York, (iii) for purposes of advertising or trade, (iv) without plaintiff's written consent."*fn67

Under New York law, the statute of limitations begins to run upon the accrual of a claim,*fn68 and a tort claim "accrues upon the occurrence of the last event necessary to give rise to [such] claim, generally at the time of injury . . . ."*fn69

"The single publication rule, which holds that distribution of the offending publication gives rise to only one cause of action, applies to section 51 claims . . . . "*fn70 Further, "the statute of limitations [for Section 51 claims] begins to run the first time an offending item is published or distributed, but the limitations period is refreshed if an item is republished . . . [i.e.,] when a subsequent publication: (1) is intended for and reaches a new audience, or (2) materially changes or modifies the original."*fn71

Pursuant to New York Civil Practice Law and Rules § 215(3), an action for a violation of the right of privacy under Section 51 must be brought within one year of the claim's accrual.

E. Fraudulent Misrepresentation Under New York Law

The elements of a fraudulent misrepresentation claim under New York law are: "'(1) [that the] defendant made a material misrepresentation of fact; (2) that the misrepresentation was made intentionally in order to defraud or mislead the plaintiff; (3) that the plaintiff reasonably relied on the misrepresentation; [and]

(4) that the plaintiff suffered damage as a result of its reliance on the defendant's misrepresentation.'"*fn72

V. DISCUSSION

A. The Lanham Act Claim

Defendants argue that dismissal of this claim is warranted on the basis that Bondar is not a celebrity, and celebrity is needed to state a false endorsement claim under the Lanham Act.*fn73 More precisely, defendants urge that the strength of Bondar's "mark" is too weak, as a matter of law, to cause consumer confusion, and so her Lanham Act claim must be dismissed.*fn74

Bondar's reply is that only a likelihood of consumer confusion, not high-wattage celebrity, is required to state a false endorsement claim, and that she has sufficiently alleged a likelihood of consumer confusion.*fn75

Bondar has the better of the argument. Section 43(a) prohibits any person from making a misrepresentation, in connection with an item in commerce, which is "likely to cause confusion . . . as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person . . . ."*fn76 It does not require celebrity, only a likelihood of consumer confusion. Of course, the 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.*fn77 However, there is a level of consumer recognition short of celebrity -- as the term is usually understood -- capable of causing consumer confusion.*fn78

The strength of a mark is normally a question of fact,*fn79 and there is no reason to depart from this practice here. Bondar has alleged that she is "well known" fashion model, who has appeared on catwalks for prestigious designers and been featured in a number of popular fashion magazines.*fn80 It is unlikely that the public at large is familiar with Bondar. However, it is possible that discovery will indicate that her mark is strong enough to cause a likelihood of consumer confusion. For example, a survey could prove that the public is familiar with Bondar's face and believes that LASplash's ads imply her endorsement. In short, the Complaint sufficiently alleges the strength of Bondar's mark to survive dismissal on the pleadings.*fn81

B. Unfair Competition Under New York Law

The unfair competition claim is subject to the same analysis as the Lanham Act claim, except for the additional requirement of bad faith. If true, the allegation in the complaint that "[LASplash] engaged in the unauthorized use of Bondar's images worldwide" in an attempt to trade on Bondar's mark would show bad faith on the part of defendants.*fn82 Therefore, the unfair competition claim survives this motion.

C. Unjust Enrichment Under New York Law

Common law right to privacy claims based on unauthorized use of a person's image, including unjust enrichment, are preempted by the NYCRL.*fn83

Therefore, Bondar's unjust enrichment claim is dismissed.

D. Right to Privacy Under NYCRL §§ 50-51

Defendants argue that Bondar's Section 51 claim is barred by the statute of limitations because the advertisements attached to LASplash's Answer were first published more than a year prior to the commencement of this action.*fn84

Bondar does not dispute that: (1) a one year statute of limitations applies to Section 51 claims; (2) such actions accrue upon the offending first publication; and (3) LASplash used her image in nationwide advertisements for lip gloss, eyeliner, and eye shadow more than one year prior to the commencement of this action. However, Bondar maintains that a separate claim accrued when LASplash used Bondar's image to advertise its product Enlightened Cream Shadow Base (a type of eye shadow base).*fn85 Defendants' reply is that eye cream shadow is the same type as merchandise as eye shadow, meaning that any claim relating to eye shadow base is subsumed within the claim relating to eye shadow, and barred.*fn86

In short, the question presented by the parties is whether eye shadow base is a separate type of product from eye shadow, giving rise to a new claim. If this were in fact the question at issue, it would be obvious that the dispute concerns a fact issue inappropriate for resolution through a judgment on the pleadings.*fn87

However, the attorneys for both sides misunderstand the law. A Section 51 claim accrues when all of its elements have been met, namely the usage of the plaintiff's picture, without consent, for the purposes of advertising or trade within the state of New York. Restated, if the circumstance elements are met, the claim accrues upon the use of the plaintiff's picture for the purposes of advertising or trade. The single publication rule applies, so the statute of limitation runs only once for each publication.

Rostropovich v. Koch Intern. Corp.,*fn88 a case relied upon by both parties to show that each new product constitutes a republication,*fn89 is inapposite. In Rostropovich, the offending product and the alleged misappropriation of the musician Rostropovich's voice, name, and likeness were combined in one package, namely compact discs containing Rostropovich's performances.*fn90 Furthermore, each disc contained a different performance by Rostropovich, raising the colorable inference that the first publication of each disc created a separate claim. In consequence, an independent claim accrued upon the first publication of each disc. By contrast, the advertisements bearing Bondar's images are not combined with (or identical to) the offending products. Bondar has not alleged, for example, that LASplash sold commemorative plates bearing her likeness.

In other words, Bondar's Section 51 claim, unlike the claim in Rostropovich, is that her image was misappropriated for use in advertising, not for use in trade. The relevant inquiry is therefore whether LASplash's March 2011 use of Bondar's image in its advertising -- fourteen months after their original use of her image -- was a republication, not whether LASplash's new product was a republication. The republication exception applies when the subsequent publication: "(1) is intended for and reaches a new audience, or (2) materially changes or modifies the original."*fn91 The question of whether the eye shadow base was a new product, then, is relevant only to the extent that it indicates that Bondar's photo was used to reach a new audience.*fn92

For all intents and purposes, it appears that the target audiences of all of LASplash's advertisements were the same: consumers of cosmetics. Moreover, the exhibits annexed to the Fourth Amended Complaint and LASplash's Verified Answer reveal that the same images of Bondar were used in March 2011 as had been used fourteen months earlier, with only minor alterations.*fn93 Therefore, the March 2011 promotion did not constitute republication of Bondar's images, and judgment on the pleadings is granted as to this claim.

E. Fraudulent Misrepresentation Under New York Law

The only allegations in the complaint relating to the allegedly fraudulent statement are that: "Byun stated to David Kim [that] the Photo [S]hoot was[] 'a really small make up job for a friend of mine' consisting solely of testing for a product."*fn94 The Complaint does not allege where this exchange took place, leading to the inference that it is a statement culled from the e-mail exchange attached to Byun's Answer.*fn95 Furthermore, the assertion that the Photo Shoot was to consist solely of testing for a product is conclusory, and belied by the full context provided by the emails.*fn96 Therefore, Bondar's fraudulent misrepresentation claim against Byun is dismissed for failure to allege with particularity the circumstances of the fraud.*fn97

F. Leave to Amend

Bondar has already amended her complaint three times, and there is nothing to suggest that further amendment would be anything but futile.*fn98 Bondar surely realizes this, for she has not petitioned the Court for further leave to amend. Accordingly, leave to amend is denied as to all claims.

VI. CONCLUSION

For the foregoing reasons, defendants' motion for judgment on the pleadings is: (1) granted as to Bondar's unjust enrichment, Section 51, and fraudulent misrepresentation claims; and (2) denied as to Bondar's Lanham Act and unfair competition claims. Leave to amend is denied as to all claims. Defendants' motion to dismiss for lack of subject matter jurisdiction is denied. The Clerk of Court is directed to close these motions (Docket Nos. 41 and 44). A conference is scheduled for December 19, 2012 at 11:00 a.m.

SO ORDERED.


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