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Avalos v. IAC/Interactivecorp.

United States District Court, S.D. New York

October 30, 2014

YULIANA AVALOS, Plaintiff,
v.
IAC/INTERACTIVECORP. et al., Defendants.

OPINION AND ORDER

JESSE M. FURMAN, District Judge.

Plaintiff Meltech Inc. ("Meltech"), which owns the rights to photographs of a model named Melissa Harrington, brings this action against IAC/Interactivecorp. ("IAC"), Match.com LLC ("Match.com"), People Media, LLC ("People Media"), and Humor Rainbow, Inc. ("Humor Rainbow") (collectively, "Defendants"), claiming violations of several federal and state laws arising out of Defendants' alleged unauthorized use and publication of photographs of Harrington in fraudulent profiles posted on Defendants' dating websites. Defendants now move to dismiss Meltech's Third Amended Complaint ("Complaint") pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, Defendants' motion is GRANTED and the Complaint is dismissed in its entirety.

BACKGROUND

The following facts, taken from the Complaint and the exhibits attached thereto, are assumed to be true for the purposes of this motion. See, e.g., Kalnit v. Eichler, 264 F.3d 131, 135 (2d Cir. 2001).

Meltech is a web design and modeling company, incorporated in Nebraska, which began operations in 2005. (Third Am. Compl. (Docket No. 30) ("TAC") ¶¶ 2, 46, 67). Pursuant to a legal separation agreement with Harrington (who is also known as Melissa Midwest) - a model who was named as a plaintiff in Meltech's Amended Complaint ( see Am. Compl. (Docket No. 3) ¶ 72) but is no longer a party to this lawsuit - Meltech acquired full ownership of all existing photographs of Harrington, along with several websites associated with her, and obtained the right to use Harrington's "images, video and content without restriction for marketing, promotion or any other use." (TAC ¶ 3).

IAC is a publicly traded company incorporated in Delaware and headquartered in New York City. ( Id. ¶ 47). IAC has approximately 150 subsidiary companies, several of which operate online dating websites, including People Media, a California limited liability company that operates approximately twenty-five dating websites tailored to different interest groups ( id. ¶¶ 47-48); Match.com, a Texas limited liability company that operates the dating websites Match.com and Chemistry.com ( id. ¶ 49); and Humor Rainbow, a New York corporation that operates the dating website OkCupid.com. ( Id. ¶ 50; id., Ex. A at 24-25). Meltech's lawsuit against Defendants stems from an unpleasant reality familiar to many who either use online dating services or watch daytime television specials concerning the same Some online dating profiles are fake, and can be used to persuade unsuspecting victims to enter into online relationships with people who do not, in fact, exist. ( Id. ¶ 10-11; id., Ex. M at 2, 4).

Meltech's claim is not that it was duped by such a profile, but rather that many of those fraudulent profiles use photographs of Harrington without its consent. The proliferation of fake profiles using photographs of adult entertainment stars or models such as Harrington, Meltech alleges, benefits Defendants, as a dating website's larger and more attractive member base entices consumers "to join and pay subscription fees who would otherwise not" and generates "inflated advertising revenue." ( Id. ¶ 5). With that motive, Meltech alleges, Defendants have violated several federal and state laws by "developing, approving, and posting [Meltech's] photographs on their web sites in fake profiles" ( id. ¶ 33); collecting membership fees from those who make said fraudulent profiles ( id. ¶ 55); and - in the case of Match.com - creating fake profiles in the first instance ( id. ¶¶ 7, 58). Those actions have caused Meltech to receive "thousands of complaints from American romance scam victims" ( id. ¶ 15); caused Meltech's owner to be "threatened and harassed" ( id. ¶ 16); and led to a reduction in value of Meltech's "intellectual property" itself, as its "photographs have been associated with dating scams' on the internet and in the public eye, turning a multi-million dollar celebrity brand into a notorious and infamous figure with little commercial value" ( id. ¶ 40).

This lawsuit was first filed in November 21, 2013, by Yuliana Avalos. (Docket No. 1). Avalos, alleging that her image had been wrongfully used in "hundreds/thousands of fraudulent profiles" on Defendants' websites (Compl. (Docket No. 1) ¶ 37), brought suit on behalf of a proposed class of "all individuals or entities... whose likenesses and images as depicted in photographs... were approved, posted, published and disseminated by Defendants' web sites without [their] permission or consent" ( id. ¶ 42). On January 27, 2014, Avalos's complaint was amended to substitute Harrington and Meltech as plaintiffs, with Harrington - like Avalos before her - purporting to represent all those whose photographs had been used on Defendants' websites without their consent. (Am. Compl. ¶¶ 72-73, 78). Per an Order of this Court (Docket No. 9), the parties submitted a joint letter on March 27, 2014, in anticipation of their initial pre-trial conference on March 31, 2014. (Joint Ltr. (Docket No. 17) 1). In it, Meltech indicated that it had not received Harrington's explicit consent to include her as a plaintiff in the Amended Complaint; instead, it had included Harrington out of a "good faith belief" that its legal separation agreement with Harrington entitled it to litigate using her name. ( Id. at 1). Harrington had since objected to her inclusion in the suit; thus, Meltech sought leave of Court to amend its complaint. ( Id. at 1-2). After receiving such leave after the initial pre-trial conference (Docket No. 18), Meltech filed its Second Amended Complaint on April 1, 2014, naming only Meltech as a plaintiff. (Docket No. 19). After Defendants filed a motion to dismiss on May 2, 2014, Meltech received another opportunity to amend its complaint, and subsequently filed the operative Third Amended Complaint on May 27, 2014. (Docket No. 30).

Defendants filed this motion to dismiss on June 12, 2014. (Docket No. 31). Defendants concurrently filed a request for judicial notice of documents submitted as part of attorney Tyler Baker's declaration, which all indicated that Meltech did not own any registered copyrights (Defs.' Request Judicial Notice (Docket No. 34) 2; Decl. Tyler E. Baker Supp. Defs.' Mot. To Dismiss & Request Judicial Notice (Docket No. 32) ("Baker Decl."), Exs. A-D). In Meltech's memorandum of law in opposition to Defendants' motion, filed on July 1, 2014 (Docket No. 36), Meltech withdrew the Complaint's second and fifth causes of action (for copyright infringement and for violations of New York Civil Rights Law Sections 50-51) (Pl.'s Mem. Law Supp. Pl.'s Opp'n Defs.' Mot. To Dismiss Third Am. Compl. (Docket No. 36) ("Pl.'s Mem.") 1). In filing the opposition, Meltech's attorney Evan Spencer also filed a declaration with various exhibits. (Decl. Attorney Evan Spencer Supp. Pl.'s Opp'n Defs.' Mot. To Dismiss (Docket No. 37) ("Spencer Decl.")). Defendants objected to Spencer's declaration on the same day they filed their reply (Docket Nos. 40, 41), insisting that it consisted "entirely of counsel's arguments" (Objection Decl. of Pl.'s Counsel (Docket No. 41) ("Decl. Objection") 1); contained "inadmissible hearsay" ( id. at 2); and "impermissibly" sought to "to bolster the [Complaint]" ( id. at 3). In a surreply, which Spencer obtained leave of Court to file (Docket No. 43), Spencer responded that his declaration was needed to, among other things, "refute numerous false statements included in Defendants' motion" and "provide additional evidence of fraudulent activity on their web sites which they deny." (Sur-Reply Attorney Evan Spencer Supp. Pl.'s Opp'n Defs.' Mot. To Dismiss (Docket No. 44) ("Spencer Surreply") 1).

DISCUSSION

As noted, Plaintiff has withdrawn the Complaint's second and fifth causes of action (for copyright infringement and for violations of New York Civil Rights Law Sections 50-51). Defendants move to dismiss the remainder of Plaintiff's claims under Rule 12(b)(6). To survive such a motion, a plaintiff must generally plead sufficient facts "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially 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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). More specifically, the plaintiff must allege sufficient facts to show "more than a sheer possibility that a defendant has acted unlawfully." Id. A complaint that offers only "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Further, if the plaintiff has not "nudged [his or her] claims across the line from conceivable to plausible, [the counterclaim] must be dismissed." Id. at 570.[1]

Applying those standards here, all of Plaintiff's remaining claims must be dismissed. The Court begins with a discussion of Plaintiff's claims under the Lanham Act, then addresses its claims under the civil Racketeer Influenced and Corrupt Organizations ("RICO") Act, and finishes with its various claims under state law.

A. The Lanham Act Claims

Meltech's first cause of action arises under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). In particular, Meltech alleges that Defendants violated Sections 1125(a)(1)(A), which prohibits false endorsement or designation of origin, and 1125(a)(1)(B), which prohibits false advertising. See, e.g., Lipton v. Nature Co., 71 F.3d 464, 473-74 (2d Cir. 1995); ...


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