Youngevity International, Corp. v. Smith et al

Filing 595

ORDER Denying Plaintiffs' And Defendants' Motions For Summary Judgment As To Plaintiffs' Seventh Cause Of Action re 308 Motion for Partial Summary Judgment; 324 Motion for Summary Judgment. Signed by Judge Barry Ted Moskowitz on 10/10/2018. (sjm)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 Youngevity International, et al., Case No.: 16-CV-704-BTM-JLB Plaintiffs, 12 13 v. 14 Todd Smith, et al., 15 16 Defendants. ORDER DENYING PLAINTIFFS’ AND DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT AS TO PLAINTIFFS’ SEVENTH CAUSE OF ACTION [ECF Nos. 308, 324] 17 Presently before the Court are Plaintiffs’ and Defendants’ motions for 18 summary judgment as to Plaintiffs’ seventh cause of action for misappropriation 19 of likeness. (ECF Nos. 308 (“Defs.’ MSJ VII”), 324 (Pls.’ MSJ VII”).) For the 20 21 22 23 24 25 26 27 reasons discussed below, the Court denies both motions. I. STANDARD Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure if the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 28 1 16-CV-704-BTM-JLB 1 1997). A dispute as to a material fact is genuine if there is sufficient evidence for 2 a reasonable jury to return a verdict for the nonmoving party. Anderson, 477 U.S. 3 at 323. 4 On cross motions for summary judgment, a court “evaluate[s] each motion 5 separately, giving the nonmoving party in each instance the benefit of all 6 reasonable inferences.” ACLU v. City of Las Vegas, 466 F.3d 784, 790–91 (9th 7 Cir. 2006) (internal citations omitted). The burdens faced by the opposing parties 8 vary with the burden of proof they will face at trial. When the moving party bears 9 the burden of proof at trial, “‘his showing must be sufficient for the court to hold 10 that no reasonable trier of fact could find other than for the moving party.’” Indep. 11 Cellular Tel., Inc. v. Daniels & Assocs., 863 F. Supp. 1009, 1113 (N.D. Cal. 1994) 12 (quoting Schwarzer, Summary Judgment Under the Federal Rules: Defining 13 Genuine Issues of Material Fact, 99 F.R.D. 465, 487–488 (1984)). By contrast, 14 when the moving party does not bear the burden of proof at trial, “the [moving 15 party] need only point to the insufficiency of the [nonmoving party’s] evidence to 16 shift the burden to the [nonmoving party] to raise genuine issues of fact as to each 17 claim by substantial evidence. Id. If the nonmoving party then fails to raise a 18 genuine issue of fact, the court should grant summary judgment in favor of the 19 moving party. Id. 20 The court must view all inferences drawn from the underlying facts in the 21 light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. 22 Zenith Radio Corp., 475 U.S. 574, 587 (1986). “Credibility determinations, the 23 weighing of evidence, and the drawing of legitimate inferences from the facts are 24 jury functions, not those of a judge, [when] he [or she] is ruling on a motion for 25 summary judgment.” Anderson, 477 U.S. at 255. 26 II. DISCUSSION 27 28 Plaintiffs bring a claim against Defendants Total Nutrition Team (“TNT”) and Blake Graham for misappropriation of likeness in violation of California Civil 2 16-CV-704-BTM-JLB 1 Code section 3344. Plaintiffs seek both monetary damages and a permanent 2 injunction prohibiting Defendants Graham and TNT from making any further 3 commercial use of Dr. Joel Wallach’s name and likeness. On December 1, 2016, 4 Judge Lorenz granted Plaintiffs a preliminary injunction prohibiting Defendants 5 from making further commercial use of Defendants’ assets which include the 6 number 1–800–WALLACH and websites and 7, or a sale of the assets that is noncompliant with the 8 guidance provided by the Court in its December 9, 2016 order. (ECF Nos. 58, 9 63.) The injunction, however, is narrower than Plaintiffs’ claim as it also includes 10 alleged uses of Dr. Wallach’s likeness on, signage outside the 11 TNT office, and in a post-card that was distributed to consumers. 12 There is no dispute that Defendants had Plaintiffs’ consent to use Dr. 13 Wallach’s and Youngevity’s likeness throughout their business relationship. 14 However, Plaintiffs revoked their consent on March 21, 2016 when Plaintiffs 15 terminated their business relationship and demanded cessation of Defendants’ 16 use of Plaintiffs’ likeness. (Pls.’ MSJ VII, Ex. B, 72–74.) Defendants continued 17 to use Dr. Wallach’s likeness until the Court issued the preliminary injunction in 18 December 2016. (Pls.’ MSJ VII, Ex. D, 109:1–110:1.) 19 To succeed on a claim for misappropriation of likeness, a plaintiff must 20 prove: “(1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of 21 plaintiff’s name or likeness to defendant’s advantage, commercially or otherwise; 22 (3) lack of consent; and (4) resulting injury.” Laws v. Sony Music Entm’t, Inc., 23 448 F.3d 1134, 1138 (9th Cir. 2006); Cal Civ. Code § 3344. Additionally, a 24 plaintiff must prove a knowing use by the defendant as well as a direct 25 connection between the alleged use and the commercial purpose. Downing v. 26 Abercrombie & Fitch, 265 F.3d 994, 1001 (9th Cir. 2001). 27 A. Defendants’ MSJ 28 Defendants move for summary judgment as to Plaintiffs’ seventh cause of 3 16-CV-704-BTM-JLB 1 action arguing that Plaintiffs’ claim fails as a matter of law. 2 1. Single Publication Rule 3 First, Defendants renew their argument that Plaintiffs’ claim is barred by 4 California’s single publication rule as codified in Civil Code section 3425.31. “The 5 single-publication rule limits tort claims premised on mass communications to a 6 single cause of action that accrues upon the first publication of the 7 communication, thereby sparing the courts from litigation of stale claims when an 8 offending book or magazine is resold years later.” Yeager v. Bowlin, 693 F.3d 9 1076, 1080–81 (9th Cir. 2012). Within the context of websites, the Ninth Circuit 10 has held that “once a defendant publishes a statement on a website, the 11 defendant does not republish the statement by simply continuing to host the 12 website.” Id. at 1082. “[A] statement on a website is not republished unless the 13 statement itself is substantively altered or added to, or the website is directed to 14 a new audience.” Id. 15 Defendants first raised this argument before Judge Lorenz in their 16 opposition to Plaintiffs’ motion for a preliminary injunction. (ECF No. 51, 16.) 17 Judge Lorenz found the argument unpersuasive because “Defendants’ position 18 would require a plaintiff to bring a claim before having a legal basis to do so.” 19 (ECF No. 58, 4.) The Court agrees with Judge Lorenz’s conclusion, as the cause 20 of action did not accrue until March 21, 2016 when Plaintiffs revoked their 21 consent to Defendants’ use of Dr. Wallach’s likeness. See Howard Jarvis 22 Taxpayers Ass’n v. City of La Habra, 25 Cal. 4th 809, 815 (2001) (“[A] cause of 23 action accrues upon the occurrence of the last element essential to the cause of 24 action.” (internal citations omitted)). Therefore, the Court also rejects 25 26 27 28 California Civil Code section 3425.3 states: “No person shall have more than one cause of action for damages for . . . invasion of privacy . . . founded upon any single publication or exhibition or utterance, such as one issue of a newspaper or book or magazine or any one presentation to an audience or any one broadcast over radio or television or any one exhibition of a motion picture. Recovery in any action shall include damages for any such tort suffered by the plaintiff in all jurisdictions.” 1 4 16-CV-704-BTM-JLB 1 Defendants’ argument and finds that Plaintiffs have satisfied their obligation in 2 demonstrating lack of consent. 3 2. Misappropriation of the 1-800 Number 4 Second, Defendants argue that Plaintiffs cannot claim misappropriation of 5 likeness arising from Defendants’ use of the “1-800-925-5524” number because 6 they have ceased referring to the number as “1-800-WALLACH,” and only 7 advertise the number by its digits. Defendants have not cited to any case holding 8 that a plaintiff cannot premise his/her claim of misappropriation on the alleged 9 use of a business telephone number. The Court’s independent research has 10 also not revealed such a case. Instead, Defendants rely on Los Defensores, Inc. 11 v. Gomez, 223 Cal. App. 4th 377, 396 (2014), to argue that Plaintiffs cannot 12 claim that the use of the number misappropriates Dr. Wallach’s likeness because 13 they have failed to set forth evidence of “secondary meaning.” 14 In Los Defensores, the respondent brought a claim against appellants 15 under the common law for unfair competition for their use of telephone numbers 16 that closely resembled respondent’s toll-free number. Id. at 383. The court 17 concluded that claims of unfair competition may be founded on the use of 18 business telephone numbers, provided that facts sufficient to establish unfair 19 competition are present. Id. at 395. Unfair competition most commonly involves 20 the existence of a secondary meaning, which the court defined as a “mental 21 association in the buyer’s mind between the mark used in connection with the 22 product in a single source of origin—and a deceptive scheme that exploits that 23 secondary meaning.” Id. at 396 (internal citations omitted). The Court noted that 24 the respondent’s claim was not premised on its ownership or control of the phone 25 number, but rather on its attempt to prevent deceptive conduct aimed at 26 consumers by exploiting a numerical number after it had acquired a “secondary 27 meaning.” Id. at 397. The court reasoned that “[t]he gist of such an action is not 28 the appropriation and use of another’s trademark, but the fraudulent injury to and 5 16-CV-704-BTM-JLB 1 2 appropriation of another’s trade.” Id. The Court finds the case instructive. Though Plaintiffs’ claim here is one 3 for misappropriation of likeness, and not unfair competition, the aim is similar— 4 “to prevent others from misappropriating the economic value generated . . . 5 through merchandising of the ‘name, voice, signature, photograph, or likeness of 6 the [publicity holder].” Timed Out, LLC v. Youbian, Inc., 229 Cal. App. 4th 1001, 7 1006 (2014). After all, Defendants originally developed these tools to take 8 advantage of Dr. Wallach’s goodwill while promoting the sale of Youngevity’s 9 products. Plaintiffs have submitted sufficient evidence to at least create a 10 genuine issue of material fact as to whether the 1-800 number has acquired a 11 secondary meaning that is synonymous and inexplicably intertwined with Dr. 12 Wallach’s name and likeness. Notably, Defendants have used the 1-800 number 13 for about seventeen years, building on the goodwill of TNT within the Youngevity 14 network of distributors. (Defs.’ MSJ VII, Ex. A, ¶¶ 8–20.) Thus, Plaintiffs’ claim 15 as to the 1-800 number does not fail as a matter of law. 16 3. Damages 17 Lastly, Defendants argue that Plaintiffs’ claim fails as a matter of law 18 because they cannot demonstrate any injury resulting from the alleged 19 misappropriation of Dr. Wallach’s name and likeness. 20 California Civil Code § 3344 provides that a party in violation of the statute 21 “shall be liable to the injured party or parties in an amount equal to the greater of 22 [$750] or the actual damages suffered by him or her as a result of the 23 unauthorized use,” and shall disgorge “any profits from the unauthorized use that 24 are attributable to the use and are not taken into account in computing the actual 25 damages.” 26 At a minimum, Plaintiffs have demonstrated that Dr. Wallach suffered harm 27 which § 3344(a)’s minimum statutory damages were intended to remedy. See 28 Miller v. Collectors Universe, Inc., 159 Cal. App. 4th 988, 1005 (2008). 6 16-CV-704-BTM-JLB 1 Dr. Wallach testified that he received hundreds of calls asking whether he had 2 purchased Wakaya. (Pls.’ Opp’n to Defs.’ MSJ VII, ECF No. 363–2, Ex. B, 50:4– 3 24.) He further states that the association greatly disturbed him because he has 4 dedicated his career to improving public health, and believes that Wakaya’s 5 products are very unhealthy and would not want consumers to believe he is 6 endorsing those products. (Pls.’ Opp’n to Defs.’ MSJ VII, ECF No. 363–1, ¶ 5.) 7 Additionally, Plaintiffs have submitted enough evidence to create a genuine issue 8 of material fact as to whether Plaintiffs have suffered commercial loss. Plaintiffs 9 cite to Mr. Brian Bergmark’s damages report. (See ECF No. 340–2, Ex. JJ.) 10 Though Mr. Berkmark does not specifically address Plaintiffs’ misappropriation of 11 likeness claim, the report still reveals that Youngevity failed to meet its projected 12 revenue goals precisely during the time in which Defendants continued to make 13 use of Dr. Wallach’s likeness. At this stage, viewing the facts in the light most 14 favorable to Plaintiffs, the Court cannot find as a matter of law that Plaintiffs could 15 not prove actual damages. 16 17 18 Accordingly, Defendants’ motion for summary judgment is denied. B. Plaintiffs’ MSJ Plaintiffs also move for summary judgment on this claim seeking to 19 permanently enjoin TNT from using Dr. Wallach’s name or likeness in commerce 20 and for damages resulting from the misappropriation. Plaintiffs argue that they 21 have provided enough evidence as to each element that no reasonable juror 22 would find for Defendants. 23 1. Use of Dr. Wallach’s Name or Likeness 24 As to the first element, Plaintiffs argue that up until December 2016, 25 Defendants were making commercial use of Dr. Wallach’s name on 26,,, on signage outside the 27 TNT office building, in a post-card, and through the phone number 1-800- 28 WALLACH. (Pls.’ MSJ VII, Ex. B, F, H, 351). However, there are genuine issues 7 16-CV-704-BTM-JLB 1 of fact that exist as to these alleged uses. As noted above, there is a dispute as 2 to whether the 1-800-925-5224 number, without any reference to Dr. Wallach’s 3 name, has acquired “secondary meaning” so as to constitute a “use” of his name 4 or likeness. Thus, at least as to the 1-800 number, the court cannot conclude as 5 a matter of law that a jury would not find for Defendants. 6 2. Lack of Consent 7 With regard to whether Defendants lacked consent to use Dr. Wallach’s 8 likeness, as already discussed by the Court, Defendants’ argument that the 9 single publication rule bars this claim is unpersuasive. Defendants’ flawed 10 argument would permit them to perpetually use Dr. Wallach’s name and likeness 11 even though Plaintiffs have unequivocally revoked their consent. The undisputed 12 facts show that as of March 21, 2016, Defendants lacked consent to use Dr. 13 Wallach’s name or likeness. (Pls.’ MSJ VII, Ex. B, 72–74.) Nevertheless, there 14 is a genuine issue of fact at least as to the post-cards. Particularly because it is 15 unclear when Defendants published those postcards. Defendants argue that 16 those postcards were created during a time when they had consent to use Dr. 17 Wallach’s likeness. (Def.s’ MSJ VII, Ex. A, ¶ 41.) Plaintiffs argue that 18 Defendants distributed the post-card in late March, but do not specify whether 19 this was before or after they revoked their consent. Therefore, genuine issues of 20 fact exist as to whether Defendants lacked consent to use Dr. Wallach’s likeness 21 on the post-cards. 22 3. Damages 23 As discussed above, Defendants challenge Plaintiffs’ proof of commercial 24 damages. Plaintiffs rely on Mr. Bergmark’s report to argue that because 25 Youngevity failed to meet its projected revenue during the time in which 26 Defendants misappropriated Dr. Wallach’s name or likeness, they have met their 27 burden to prove commercial damages. However, at this stage, the Court must 28 view the facts in the light most favorable to Defendants. Therefore, based on Mr. 8 16-CV-704-BTM-JLB 1 Bergmark’s report, the Court cannot find that no reasonable juror would find for 2 Defendants. 3 4 Therefore, given the numerous genuine issues of fact, the Court denies Plaintiffs’ motion for summary judgment, as these issues should be left to a jury. 5 III. CONCLUSION 6 For the reasons discussed above, the Court denies both Defendants’ 7 motion for summary judgment (ECF No. 308) and Plaintiffs’ motion for summary 8 judgment (ECF No. 324). 9 IT IS SO ORDERED. 10 Dated: 10/10/2018 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 16-CV-704-BTM-JLB

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