Mayes et al v. Summit Entertainment Corporation et al
ORDER re 15 REPORT AND RECOMMENDATIONS. For the reasons set forth above, the court ADOPTS IN PART and REJECTS IN PART the R&R (Dkt. 15). Defendants' motion to dismiss (Dkt. 13) is GRANTED IN PART and DENIED IN PART. Plaintiffs' claims und er NYGBL Section 349 are DISMISSED WITHOUT PREJUDICE. Defendants' motion to dismiss Plaintiffs' claims under § 43(a) of the Lanham Act is DENIED. Plaintiffs' request for punitive damages under the Lanham Act is STRICKEN. So Ordered by Judge Nicholas G. Garaufis on 3/5/2018. (Lee, Tiffeny)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
URSULA MAYES,EVA PEPAJ,JAIME
ARCHULETTA,RACHEL KOREN,TIFFANY TOTH,
MEMORANDUM & ORDER
-againstSUMMIT ENTERTAINMENT CORP. d/b/a
GENTLEMEN'S QUARTERS and PHILLIP
NICHOLAS G. GARAUFIS,United States District Judge.
On November 23,2016,Plaintiffs Ursula Mayes,Eva Pepaj, Jaime Edmondson, Jaime
Middleton, Jennifer Archuletta, Rachel Keren, Tiffany Toth, and Vida Guerra initiated this
lawsuit. (Compl.(Dkt. 1).) Plaintiffs are professional models who state that they earn their
livelihood selling their images to companies, magazines, and individuals for advertising
purposes. (Id KK 9-16,19.) Defendants Summit Entertainment Corp.("Summit")and Phillip
Tricolla allegedly own and operate Gentlemen's Quarters, a strip club in Baldwin, New York.
(Id. nil 17-18.) Although the initial complaint filed by Plaintiffs contained eight alleged causes
of action (see id. 1[1[ 71-136), Plaintiffs filed an amended complaint on March 1,2017,limiting
their claims to just two causes of action: false endorsement under § 43 ofthe Lanham Act, 15
U.S.C. § 1125; and deceptive trade practices under New York's Deceptive Trade Practices Act,
N.Y. Gen. Bus. Law("NYGBL")§ 349. (Am. Compl.(Dkt. 10)fl 87-103.)
Defendants moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure
12(b)(6)(Not. of Mot. to Dismiss the Compl.(Dkt. 13)), and Plaintiffs opposed the motion (PI.
Opp'n to Mot ("Pis, Br.")(Dkt. 13-2)). By Order dated April 27,2017,the court referred
Defendants' motion to dismiss (the "Motion")to Magistrate Judge Steven L. Tiscione for a
Report and Recommendation("R&R")pursuant to 28 U.S.C, § 636(b)(1)(B) and Federal Rule of
Civil Procedure 72(b)(1). (Apr. 27, 2017, Order.)
On January 18,2018, Judge Tiscione issued an R&R recommending that the court grant
the Motion in part and deny it in part. (R&R(Dkt. 15)at 1.) The R&R recommended that the
court dismiss Plaintiffs' prayer for punitive damages under the Lanham Act as punitive damages
are unavailable xmder that law, and that the court dismiss the Section 349 claims brought by
plaintiffs Guerra, Koren, and Toth as time-barred. (Id.) Otherwise, the R&R recommended that
the court deny the Motion: The R&R concluded that all plaintiffs had stated a claim offalse
endorsement under the Lanham Act(id at 5-13) and that the plaintiffs whose claims were not
time-barred had stated a claim of deceptive practices under NYGBL Section 349(id at 13-29).
Crucially,the R&R found that the complaint's allegation of consumer confusion was sufficient
to state a claim under Section 349, endorsing the "minority" view on this question. (See id.
at 21.) The R&R also recommended the denial ofthe motion to dismiss the punitive damages
request under Section 349 and the denial ofthe motion to dismiss the Lanham Act claim against
defendant Tricolla in his individual capacity. (Id at 30-32.)
Defendants subsequently filed an objection to the R&R. (Defs. Obj. to R&R("Defs.
Obj.")(Dkt. 16).) Defendants do not object to the R&R's recommendation that the court dismiss
the state-law claims of plaintiffs Guerra, Koren, and Toth, nor do they object to the
recommendation that the court dismiss Plaintiffs' punitive damages claims imder the Lanham
Act. (Id at 1.) They also do not object to the R&R's recommendation that the court deny their
motion to dismiss Plaintiffs' claims against Summit under the Lanham Act. (Id at 1-2.) They
do, however, object to the R&R's recommendation that the court deny their motion to dismiss
the timely Section 349 claims, as well as the R&R's recommendation that the court deny their
motion to dismiss the Lanham Act claim based on personal liability against Tncolla. (Id at 2.)
Plaintiffs did not file an objection to the R&R,but they did respond to Defendants' objections.
(See Pis. Resp.& Opp'n to Defs. Obj.("Pis. Resp.& Opp'n")(Dkt. 19).) For the reasons
discussed below. Defendants' objections are SUSTAINED IN PART and OVERRULED IN
PART and Judge Tiscione's R&R is ADOPTED IN PART and REJECTED IN PART.
The court assumes familiarity with the facts ofthe case, and adopts the summary ofthe
relevant factual allegations included in the R&R.(^R&R at 2-3.) In brief. Plaintiffs allege
that Defendants appropriated Plaintiffs' likenesses by altering photographs ofPlaintiffs and
using them in social media advertisements for Defendants' strip club. (Am. Corhpl. 19-86.)
Plaintiffs claim that they did not consent to and were not paid for the use oftheir images. (Id.
24-63.) Plaintiffs further claim that Defendants left some ofthese advertisements on their
social media pages for months after Defendants were put on notice ofthe misappropriations by
the filing ofthis lawsuit. (Id K 3.) Plaintiffs seek injunctive relief requiririg Defendants to cease
using Plaintiffs' images to promote the club, as well as compensatory damages, punitive
damages,and costs and attorneys' fees. (Id at 20.)
STANDARDS OF REVIEW
In reviewing an R&R from a magistrate judge regarding a dispositive motion,the distnct
court"may adopt those portions ofthe Report to which no objections have been made and which
are not facially erroneous." Pnmero v. Bestcare Inc.. No. 15-CV-7397(JS), 2017 WL 1180518,
at *2(E.D.N.Y. Mar.29,2017)(internal citation omitted);^Impala v. U.S.Pep t of Justice,
670 F. App'x 32,32(2d Cir. 2016)(summary order)("[F]ailure to object timely to a magistrate s
report operates asawaiver of any further judicial review ofthe magistrate'sdecision...
(internal citation omitted)); aesualdi v. Mack Excavation & Trailer Serv.,Inc., No.09-CV-2502
(KAM),2010 WL 985294, at *1 (E.D.N.Y. Mar. 15,2010)("Where no objection to the[R&R]
has been filed, the district court need only satisfy itselfthat there is no clear error on the face of
the record."(intemal quotation marks and citation omitted)). "A decision is 'clearly erroneous'
when the Court is,'upon review ofthe entire record,left with the definite and firm conviction
that a mistake has been committed.'" DiPilato v. 7-Elevem Inc., 662 F. Supp. 2d 333,339-40
(S.D.N.Y. 2009)(quoting United States v. Snow,462 F.3d 55,72(2d Cir. 2006)).
The district court must review de novo "those portions ofthe report...to which
objection is made." 28 U.S.C. § 636(b)(1);s^ Fed. R. Civ. P. 72(b)(3). To obtain this denoyo
review,an objecting party "must point out the specific portions ofthe[R&R]that they are
objecting to." Sleenv's LLC v. Select Comfort Wholesale Corp.,222 F. Supp. 3d 169,174
(E.D.N.Y. 2016); see also Fed. R. Civ. P.72(b)(2)("[A] party may serve and file specific written
objections to the [R&R]."). If aparty "makes only conclusory or general objections, or simply
reiterates his original arguments,the Court reviews the[R&R]only for clear error. Pall Corp.
V. Entegris. Inc., 249 F.R.D. 48,51 (E.D.N.Y. 2008)(citations omitted); seejlso Mario v. P & C
Food Mkts.. Inc., 313 F.3d 758,766(2d Cir. 2002)(holding that plaintiffs objection to an R&R
was "not specific enough"to "constitute an adequate objection under... Fed. R. Civ.P. 72(b)").
Motion to Dismiss
The purpose of a motion to dismiss for failure to state a claim under Rule 12(b)(6)is to
test the legal sufficiency of a plaintiffs claims for relief. Patane v. Clark,508 F.3d 106,112-13
(2d Cir. 2007). A complaint will survive a motion to dismiss ifit contains "sufficient factual
matter, accepted as true, to 'state a claim to relief that is plausible on its face,"' Ashcroft v.
labal. 556 U.S. 662,678(2009)(quoting Bell Atl. Corn, v. Twomblv.550 U.S. 544, 570(2007)).
"Threadbare recitals ofthe elements of a cause of action, supported by mere conclusory
statements, do not suffice." Id. at 678.
In reviewing a complaint on a motion to dismiss for failure to state a claim, the court
must accept as true all allegations offact in the complaint and draw all reasonable inferences in
favor ofthe plaintiff. ATSI Commc'ns.Inc. v. Shaar Fund. Ltd.. 493 F.3d 87, 98(2d Cir. 2007).
"In determining the adequacy ofthe complaint, the court may consider any written instrument
attached to the complaint as an exhibit or incorporated in the complaint by reference, as well as
documents upon which the complaint relies and which are integral to the complaint." Subaru
Distribs. Corp. v. Subaru of Am..Inc.. 425 F.3d 119,122(2d Cir. 2005). "[WJhatever
documents may properly be considered in connection with the Rule 12(b)(6) motion,the bottomline principle is that once a claim has been stated adequately, it may be supported by shovmig
any set offacts consistent with the allegations in the complaint." Roth v. Jennings, 489 F.3d
499, 510(2d Cir. 2007)(internal quotation marks and citation omitted),
PLAINTIFFS' CLAIMS UNDER THE LANHAM ACT
The R&R recommended that the court deny Defendants' motion to dismiss Plaintiffs'
claims for false endorsement under the Lanham Act for failure to state a claim. (R&R at 5-13.)
Defendants admit that they do not agree with this part ofthe R&R,but they declined to challenge
it at this stage in the proceedings. (Defs. Obj. at 1-2.) The court reviews this portion ofthe R&R
for clear error. The court believes it was not clear error for the R&R to allow Plaintiffs' claims
under the Lanham Act to proceed, and the court accordingly DENIES Defendants' motion to
dismiss these claims. The court separately addresses the question of Defendant Tricolla's
individual liability under the Lanham Act below.
The R&R also recommended that the court strike Plaintiffs' prayer for punitive damages
under the Lanham Act on the grounds that such a remedy is not available under this law. (R&R
at 31-33.) Plaintiffs did not file an objection to this recommendation. The court reviews this
portion ofthe R&R for clear error. The court believes this recommendation was not clear error,
and the court accordingly STRIKES Plaintiffs' prayer for punitive damages under the Lanham
PLAINTIFFS' CLAIMS UNDER NYGBL SECTION 349
Defendants object to the R&R's recommendation that the court allow Plaintiffs' nontime-barred claims under Section 349 to proceed. (Defs. Obj. at 3 (citing R&R at 21-28).)
Following de novo review,the court REJECTS this portion ofthe R&R and DISMISSES
Plaintiffs' claims under Section 349.
As Judge Tiscione states, a plaintiff bringing a claim under Section 349 needs to 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." (R&R at 14(quoting Snaenola v.
Chubb Corp.. 574 F.3d 64,74(2d Cir. 2009)).) A non-consumer plaintiff bringing a claim under
Section 349 must allege that the defendant's actions "harmed consumers or the public interest in
[a] material respect." S^ Stadt v. Fox News Network LLC. 719 F. Supp. 2d 312,323(S.D.N.Y.
2010)(Scheindlin, J.). Defendants argue that, pursuant to this rule, Plaintiffs' Section 349 claim
must be dismissed because courts do not recognize "consumer confusion" as a cognizable injury
under Section 349. (Defs. Obj. at 3.) The R&R rejects this so-called "majority rule," instead
stating that a non-consumer plaintiff bringing a trademark-infringement claim under Section 349
need not allege a specific and substantial injury to the public interest, thus espousing a more
lenient requirement that would allow Plaintiffs' claims to proceed. fSee R&R at 13,21-28.)
While the court appreciates Judge Tiscione's exhaustive and illuminating look at the text,
history, and theory of Section 349(s^ id. at 16-21), the R&R goes too far in writing offthe socalled "majority rule." The R&R departs from the majority ofcourts by stating that "consumer
confusion...is a sufficiently consumer-directed harm under [Section 349]." (Id. at 13.) This
conclusion is in error for two reasons: First, the R&R should not have ignored state-law
precedent on Section 349 and wrongly attempted to divine how the New York Court of Appeals
would rule on this matter. Second, even setting aside controlling state-law precedent on this
question, the R&R gave too little weight to the large majority offederal courts that have
interpreted Section 349 as requiring plaintiffs to allege more than consumer confusion.
The Maioritv Rule in State Court
The primary reason the court must reject the part of Judge Tiscione's R&R dealing with
liability under Section 349 is that the R&R writes off controlling state-law precedent and inserts
its own view ofthe law instead. The R&R would not have erred in doing so were the
departments ofthe New York Supreme Court, Appellate Division, in conflict about the issue, or
ifthe decision by the Appellate Division were not on point. But that is not the case here, so the
R&R erred by not adhering to a clear statement ofthe law on this matter by the First Department.
In 1995,the First Department ofthe Appellate Division upheld the dismissal of a
Section 349 claim oftrademark infringement and unfair competition because the plaintiffs did
not allege "a significant risk of harm to the public health or interest." DePinto v. Ashlev Scott,
Inc., 635 N.Y.S.2d 215,217(App. Div. 1995). DePinto has been cited by numerous federal and
state courts as standing for the proposition that routine Section 349 claims supported by
allegations ofconsumer confusion "fall short ofthe standards for maintaining trademark actions
under p>JYGBL Section] 349." See RCA Trademark Mgmt. S.A.S. v. VOXX Int'l Corp.. No.
14-CV-6294(LTS),2015 WL 5008762, at *4 n.5 (S.D.N.Y. Aug. 24,2015).^ The R&R,
however, dismisses DePinto as not "persuasive" and resting on "flawed foimdations." (R&R
at 26-27.) Nowhere does the R&R say that the case is not on point; indeed,the R&R says that
the statement ofthe law in DePinto is a decision that supports the "majority" position. fSee id.
at 26.) The court agrees with that reading of DePinto. and because there is nothing in state law
to suggest otherwise on this point the court must follow this interpretation of Section 349: In
order to bring a claim of deceptive business practices under Section 349, a plaintiff must allege
harm by the defendants that poses a significant risk of harm to the public health or interest, and
consumer confusion is insufficient to meet that requirement.
Even though the R&R is correct that the Court of Appeals has not ruled on the matter, it
errs in its beliefthat this court does not have to follow what the Appellate Division says. (See id.
at 16.) To support its decision to "predict how the New York Court of Appeals would rule,"
rather than follow the First Department's controlling thoughts on the matter, the R&R cites
DiBella v. Hopkins.403 F.3d 102(2d Cir. 2005), in which the Second Circuit stated that, when
interpreting questions of state law, it is bound only by "authoritative law from the state's highest
court." (R&R at 16(quoting DiBella. 403 F.3d at 111).) First, that statement oflaw pertains
only to the Second Circuit, not the district court, a distinction made clear by DiBella's alternative
suggestion that the court could "certify the question to the New York Court of Appeals for a
1 See also, e.g.. Heritage ofPride. Inc. v. Matinee NYC.Inc.. No. 14-CV-4165(CM),2014 WL 12783866, at *6 n.l
(S.D.N.Y. June 20,2014); Nomination Di Antonio E Paolo Gensini S.N.C. v. H.E.R. Accessories Ltd.. No. 07-CV6959(DAB),2009 WL 4857605, at *8(S.D.N.Y. Dec. 14, 2009).
definitive resolution," something this court cannot do. (Id (quoting DiBella. 403 F.3d at 111).)
See N.Y. Comp. Codes R.& Regs. tit. 22,§ 500.27(a)(stating that only the United States
Supreme Court, any federal Court of Appeals, or "a court oflast resort" may certify a question to
the New York Court of Appeals). Second,the Second Circuit's opinion in DiBella did consider
the views ofthe Appellate Division on the issue at hand, stating that "the Appellate Division's
statements concerning [state law... are] persuasive evidence ofthe views ofNew York's
intermediate appellate courts on the matter," and that courts cannot ignore decisions by the
Appellate Division whether or not such decisions have "articulated a reasoned basis." DiBella.
403 F.3d at 113. Third, and most importantly, this court is "bound to apply the law as interpreted
by a state's intermediate appellate courts unless there is persuasive evidence that the state's
highest court would reach a different conclusion." Deutsche BankNat'l Tr. Co. v. Morgan
Stanlev Mortg. Capital Holdings LLC. No. 14-CV-3020(KBF),2018 WL 357315, at *3
(S.D.N.Y. Jan. 10,2018)rauotine V.S. v. Muhammad.595 F.3d 426,432(2d Cir. 2010)).^ A
federal court may not choose to ignore substantive state law if there is no indication that state
courts have abandoned their precedent on the matter. Accord Brie R.R. Co. v. Tomokins. 304
U.S. 64, 91 (1938).
The R&R tries to create ambiguity where none exists by pointing to North State
Autobahn. Inc. v. Progressive Insurance Group Co.. 953 N.Y.S.2d 96(App. Div. 2012), in
support ofthe claim that New York law does not support"a heightened standing requirement on
2 See also, e.g.. Norcutt v. Miller. 15-CV-221, 2016 WL 7429440, at *3(N.D.N.Y Dec. 23,2016)(citing Hicks v.
Feiock.485 U.S. 624,629-30(1988)); Hasemann v. Gerber Prods. Co.. No. 15-CV-2995(MKB),2016 WL
5477595, at *10(E.D.N.Y. Sept. 28,2016)(citing YS,,595 F.3d at 432); Sanchez v. Burse. No.04-CV-2622
(NRB),2005 WL 659195, at *8(S.D.N.Y Mar. 22,2005)(citing Mullanev v. Wilbur. 421 U.S. 684,691 (1975));
cf. TMT Asia Ltd. v. Agrenco Madeira Comercio Intemacional LDA.No.08-CV-8176(PKL),2010 WL 1685962,
at *2(S.D.N.Y. Apr.22 2010)("[The district court] is not bound by an intermediate appellate state court's
interpretation ofstate law that clearly is in conflict with a decision ofthe Second Circuit."(emphasis added)).
non-consumer actions." (R&R at 27-28 (citing N. State Autobahn. 953 N.Y.S,2d at 102).) In
that case, the Second Department held that plaintiffs bringing a Section 349 claim did not have to
identify specific consumers v^ho suffered pecuniary harm as a result ofthe allegedly deceptive
conduct" or "show specific quantifiable harm to the public at large." N. State Autobahn,953
N.Y.S.2d at 103. But the court still said that a plaintiff in such an action must show "allegedly
deceptive conduct"that had "a broad impact on consumers." Id. North State Autobahn is thus in
accord with the majority view in that it requires a plaintiffto plead harm to consumers,
something which the plaintiffs in that case could do with specificity because it was their
customers who were being misled into abandoning the plaintiffs' businesses. S^ id North
State Autobahn does not suggest that consumer confusion is sufficient to make such a showing,
nor does it come close to standing for the proposition that a claim under Section 349 does not
have to allege harm to the public interest. S^ JP Morgan Chase Bank. N.A. v. Hall. 996
N.Y.S.2d 309, 315(App. Div. 2014)(citing North State Autobahn but rejecting a Section 349
claim because the plaintiffs "factual allegations [did] not amount to conduct that has an impact
on the public at large").
The court is thus bound by DePinto's interpretation if Section 349 unless the Court of
Appeals or Second Circuit declare otherwise. Because neither court has upset DePinto's
requirement of harm beyond consumer confusion as being necessary for a Section 349 claim, this
court must adhere to the majority rule.
The Maioritv Rule in Federal Court
Even ifthe First Department's decision in DePinto did not definitively resolve the
question of whether a plaintiff must allege harms beyond consumer confusion to state a claim
under Section 349, and the court were thus required to predict how the New York Court of
Appeals would rule on this matter, there is no reason to believe that the Court of Appeals would
forego the majority rule. See, e.g. Katt v. Citv ofNew York. 151 F. Supp. 2d 313,331
(S.D.N.Y. 2001)(Lynch, J.)("[FJederal courts construing state and local statutes as a matter of
first impression must carefully review governing principles of state law and make their own
independent prediction of how the state's highest court would resolve the particular issue before
it."). The court's conclusion on this point is based on the large majority offederal courts that
have endorsed the majority rule, as well as the fact that the courts that have supposedly endorsed
the minority rule have done so in ways not applicable to the instant case.
For nearly three decades, the overwhelming majority of—ifnot all—^federal courts to
address the question at issue in this case have recognized that "the injury to consumers or the
public interest [in a Section 349 case] must be more than the general variety of consumer
confusion that is the gravamen ofsuch a claim." See, e.g.. Iw Mar Co. v. C.R. Seasons Ltd..
No. 95-CV-508(FB), 1998 WL 704112, at *7(E.D.N.Y. Oct. 7,1998)(internal quotation marks
omitted). [See also Defs. Obj. at 3-5 (collecting cases).) Plaintiffs do not deny the existence of
this long line ofprecedent. Instead, Plaintiffs say that these past interpretations of Section 349
are "immaterial" because Plaintiffs have "not asserted an 'ordinary trademark dispute' but rather
have alleged false endorsement." (Pis. Br. at 12.) This is beside the point.^ Regardless ofon
what basis a Section 349 claim is brought,"the gravamen ofthe complaint must be consumer
^ Plaintiffs claim that their view of Section 349 is supported by a recent case in which a court in this circuit found
that "there is more to [a case of misappropriation of models' images by a strip club]than trademark infringement."
(See Pis. Resp.& Opp'n at 3(quoting Voronina v. Scores Holding Co.. No. 16-CV-2477(LAK),2017 WL 74731,
at *4(S.D.N.Y. Jan. 5,2017)).) The court does not disagree—^but that is immaterial, since the "more than consumer
confusion" requirement does not only apply to czises sounding in trademark. See, e.g.. Stadt. 719 F. Supp. 2d at
323-24. (See also R&R at 16 n.8 ("Plaintiffs attempt to evade [the question of whether mere confusion is sufficient
under Section 349 to grant a non-consumer a viable cause of action] by arguing that they have not brought an
ordinaiy trademark dispute but rather a claim for false endorsement. Even ifthat were a legally meaningful
distinction, the simple fact is that the only consumer-oriented harm they allege is consumer confusion."(internal
injury or harm to the public interest." Nomination Di Antonio E Paolo Gensini S.N.C. v. H.E.R.
Accessories Ltd.. No. 07-CV-6959(DAB),2009 WL 4857605, at *7(S.D.N.Y. Dec. 14,2009)
(quoting City of New York v. Cvco.Net Inc., 383 F. Supp. 2d 526,563(S.D.N.Y. 2005)); cf. 5 J.
Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27:116(5th ed. 2017)
("An allegation of a routine case oftrademark infringement or false representations concerning
commercial matters does not state a claim under pMYGBL]§ 349...."(internal citations
omitted))."^ For example, in Stadt, Judge Scheindlin dismissed a claim under Section 349 by a
plaintiff who alleged that Fox News Network had used a yideo that he proyided to them pursuant
to a licensing agreement after the agreement had expired, and that Fox News Network continued
to show the yideo with a"Fox Business Bxclusiye" credit. 719 F. Supp. 2d at 315-16. While the
plaintiffs overall suit was based on the defendant's alleged copyright infringement, his claim
under Section 349 alleged that "Fox fraudulently and falsely represented to and [misled]the
public and others that the Video was a 'Fox Business Exclusive.'" Id at 324. Judge Scheindlin
foimd that the allegation that consumers were harmed by Fox's "misleading" behavior, which
she classified as an "allegation of consumer confusion," was not enough to support the
plaintiffs Section 349 claim. Id The case is the same here: No matter how Plaintiffs portray
^ The R&R takes issue with the fact that this conclusion is based on part on Richard Givens's official practice
commentary on Section 349(the "Commentary"). (R&R at 22-24.) See, e.g.. Jaret Int'l. Inc. v. Promotion in
Motion. Inc.. 826 F. Supp. 69,78(E.D.N.Y. 1993)("Most federal trademark and trade dress infringement claims are
deemed to 'fall outside the original intent of§§ 349 and 350."'(quoting Richard A. Givens, Practice Commentary,
NYGBL § 349(McKinney 1988))). It bears noting, as Defendants point out, that the New York Court of Appeals'
continued approval ofthe Commentary means that "the[Cjommentary should be viewed as a persuasive authority
when considering how the Court of Appeals would interpret Section 349." (Defs. Obj. at 9(collecting cases).)
Citing the line in the Commentary that it would be "contrary to the history ofthe statutes" to allow pendent federal
jurisdiction over Section 349 claims where Lanham Act claims are already present, the R&R says that the
Commentary is wrong to suggest that trademark disputes should not be allowed to arise under Section 349. (R&R at
22(quoting Givens, Practice Commentary).) But that is not what the commentary suggests, and besides, many
courts have allowed trademark disputes brought under Section 349 to proceed. Cf Eric E. Bensen, New York
Intellectual Property Law § 3, at 415 & n.31 (2018 ed. 2017)(collecting cases). In any case, the R&R's issues
with the Commentary are not enough to upset the common rmderstanding of Section 349.
their Section 349 claim, whether based on trademark infringement or "false endorsement," in
order to survive a motion to dismiss they need to allege harm to consumers beyond mere
The R&R cites to a number of cases in support of its view that the Court of Appeals
would adopt the minority view, but in addition to the numerical disadvantage at which these
cases find themselves,the court is not convinced that these cases actually endorse the view that
plaintiffs can bring a claim under Section 349 based on nothing more than consumer confusion.
For example, in Casper Sleep. Inc. v. Mitcham,204 F. Supp. 3d 632(S.D.N.Y. 2016)(Rakoff,
J.), recons. denied. 2016 WL 7188788(S.D.N.Y. Nov. 17, 2016), Judge Rakoff ascribed to
Section 349 a broader scope than most district court decisions, while still acknowledging that a
Section 349 plaintiff must "plausibly plead that the challenged 'acts or practices have a broader
impact on consumers at large.'" Id at 642(quoting Oswego Laborers' Local 214 Pension Fund
V. Marine Midland Bank. N.A..647 N.E.2d 741,744(N.Y. 1995)). Casper Sleep does, however,
cite approvingly to a Second Circuit case which says that "the gravamen of[a Section 349]
complaint must be consumer injury or harm to the public interest." S^id (citing Securitron
Magnalock Corp. v. Schnabolk.65 F.3d 256,264(2d Cir. 1995)). Additionally, Judge Rakoff
recently "endorsed the majority rule in dicta"(Defs. Obj. at 8)by saying that a practice
actionable under Section 349"must threaten an injury to the public interest over and above
ordinary trademark infringement or dilution." Can't Live Without It LLC v. ETS Express. Inc..
No. 17-CV-3506(JSR),2018 WL 401778, at *8(S.D.N.Y. Jan. 15, 2018)(internal quotation
marks omitted). Judge RakofFs statement in Casper Sleep that Section 349 claims need not
"implicate the public health or safety." 204 F. Supp. 3d at 643(emphasis added), thus hardly
shows that"New York law... strongly favors the minority view." (R&R at 27(citing Casper
Sleep. 204 F. Supp. 3d at 643-44).) The R&R also briefly points to Burberry Ltd. v. Euro Moda.
Inc.. No. 08-CV-5781 (CM),2009 WL 1675080(S.D.N.Y. June 10,2009),in which the district
court stated that the defendant"placed into the stream ofcommerce goods likely to confuse
consumers as to their true source of origin," and found that injury sufficient under Section 349.
Id at *16. But cases in which a defendant uses a trademark to "cause consumers conhision as to
the origin or sponsorship ofthe defendant's goods" are treated differently from other trademark
cases under the Lanham Act,
^Virgin Enters. Ltd. v. Nawab. 335 F.3d 141, 146(2d Cir. 2003),
and it makes sense that the question ofthe sufficiency ofthe harm in these case might also be
treated differently under Section 349. It bears further note that(1)Burberry stands alone in
finding confusion as to the origin of a product actionable under Section 349,cf Gross y. Bare
Escentuals Beauty. Inc.. 632 F. Supp. 2d 293,299(S.D.N.Y. 2008)("Consumer confusion as to
the source ofthe product does not create a cause of action under [Section 349].");(2)Judge
McMahon,the author of Burberry, has separately stated that Section 349 claims based on "a
general likelihood ofconsumer confusion sounding entirely in trademark" haye "absolutely no
possibility of succeeding," Heritage ofPride. Inc. y. Matinee NYC.Inc.. No. 14-CV-4165(CM),
2014 WL 12783866, at *6 n.l (S.D.N.Y. June 20,2014); and(3)Burberry "inyolyed
counterfeiting, which is distinct from,and arguably more harmful than, garden-yariety trademark
infringement," LVL XIII Brands. Inc. y. Louis Vuitton Malletier S.A.. 209 F. Supp. 3d 612,
678 n.l 11 (S.D.N.Y. 2016). The court is thus unconyinced that either Casper Sleep or Burberry
upended settled New York law in fayor ofthe minority yiew.
Edmondson y. RCI Hospitality Holdings. Inc.. No. 16-CV-2242(VEC)
Mar. 26,2016),to which Plaintiffs also point, does not call the court's understanding ofthe law
into question. (Pis. Resp. & Opp'n at 2-7.) Plaintiffs appear to be reading Judge Caproni's
statement from the bench that the plaintiffs' success in that case "depends on whether plaintiffs
can prove that the misrepresentations were actually materially misleading and that plaintiffs were
actually injured" as obviating the requirement ofshowing harm to the public interest beyond
consumer confusion. fSee id. at 3-4(quoting Transcript of Oral Argument at 34,Edmondson,
No. 16-CV-2242(VEC)(S.D.N.Y. Mar. 17,2017)).) The court is unconvinced that Judge
Caproni's statement was intended to categorically restrict the harm requirement to cases alleging
actual trademark infringement. But even ifit was,the court simply disagrees with that reading of
the law, as stated throughout this opinion: In cases brought under Section 349, plaintiffs must
allege harm to the public interest beyond consumer confusion.^ One district court opinion does
not suffice to overrule a long-standing and persuasive body oflaw establishing that, in order for
Plaintiffs to succeed on their claim,they must allege harm to the public beyond mere confusion.
Since they do not, the court must dismiss their claim.
All told, neither the R&R nor Plaintiffs' briefing contains persuasive evidence that that
the Court of Appeals would choose to upset the majority rule were it to rule on the matter.
Instead, the court today predicts that the Court of Appeals would continue to follow the common
understanding of Section 349 and find that consumer confusion is not a harm to the public
interest sufficient to support a claim under this law.
Plaintiffs'Allegations of Harm
Plaintiffs bring claims under Section 349 on the grounds that"a reasonable consumer
would be misle[d] concerning each Plaintiffs employment as a stripper at Gentlemen's Quarters,
and that, in misappropriating Plaintiffs' Images, this was Defendants' aim." (Pis. Br. at 12.;
^ The broad sweep ofthis conclusion is due in part to the fact that coiuts do not distinguish among causes of action
stating claims imder Section 349. See supra note 3.
96-103.) "[T]he only consumer-oriented harm [Plaintiffs] allege is consumer
confusion." (R&R at 16 n.8.)
Applying New York law as stated above. Plaintiffs' allegations are plainly insufficient to
support a claim under Section 349. Plaintiffs allege that the publication oftheir images "was
misleading in a material respect because it created the impression that Plaintiffs were strippers
working at the Clubs, or endorsed the Clubs." (Am. Compl. H 101.) This allegation, they claim,
meets the requirement that a disputed practice have a "broader impact on consumers at large,"
giving them a cause of action under Section 349. (Defs. Obj. at 12(citing Gaidon v. Guardian
Life Ins. Co. of Am..725 N.E.2d 598,603(N.Y. 1999)).) But Plaintiffs point to no consumers
who have been injured by the alleged misrepresentation, and to no material harm that came about
as a result thereof. This is fatal to their Section 349 claim. ^Stadt 719 F. Supp. 2d at 323-24
(dismissing a Section 349 claim when the plaintiff did not allege harm to the public beyond
consumer confusion); Philip Morris USA Inc. v. Felizardo. No. 03-CV-5891 (HB),2004 WL
1375277, at *6(S.D.N.Y. June 18, 2004)(requiring the showing of"actual consumer harm,"
rather than "injury,for example,to goodwill"); GTFM.Inc. v. Solid Clothing, Inc., 215 F. Supp.
2d 273,302(S.D.N.Y. 2002)(allowing a Section 349 claim based on "actual confusion" caused
by misleading use of a trademark, but where the plaintiff had produced evidence of actual
confusion in support of its Lanham Act claim).
Incidentally, the court can find no case in which a claim offalse endorsement has been
allowed to proceed under Section 349. Instead, such claims are proper under § 43(a)ofthe
Lanham Act. See, e.g.. Pfizer Inc. v. Sachs.652 F. Supp. 2d 512, 520,526(S.D.N.Y. 2009)
(dealing with false endorsement claim imder § 43(a) ofthe Lanham Act, and unrelated deceptive
acts and practices claims under NYGBL Section 349); see also Naked Cowbov v. CBS.844 F.
Supp.2d 510,516 n.l (S.D.N.Y. 2012)(construing a claim of"false endorsement" as a claim of
unfair competition under § 43(a)ofthe Lanham Act). In this case. Plaintiffs have also raised the
issue offalse endorsement under the Lanham Act and Judge Tiscione properly denied
Defendants' motion to dismiss that claim. CSee R&R at 5-6.) The Lanham Act,rather than
Section 349,is the proper avenue for resolution ofPlaintiffs' allegations offalse endorsement.
In sum.Plaintiffs have failed to allege a consumer-oriented harm greater than consumer
confusion,a harm which is insufficient to support a claim under Section 349. Accordingly,
Defendants' motion to dismiss Plaintiffs' claims brought under Section 349 is granted. The
court recognizes as moot the R&R's recommendations that the court deny Defendants' motion to
dismiss Plaintiffs' Section 349 claims against Defendant Tricollo in his individual capacity and
that the court deny Defendants' motion to strike Plaintiffs' punitive damages request under
Section 349. (See R&R at 33.)
Defendants additionally object to the R&R's recommendation that the court allow
Plaintiffs' Lanham Act claims to proceed against Defendant Tricolla in his individual capacity.
(Defs. Obj. at 13 (citing R&R at 30-31).) Following de novo review, the court DENIES
Defendants' motion to dismiss the Lanham Act claim against Defendant Tricolla in his
Under the Lanham Act,"personal liability for trademark infringement and unfair
competition is established ifthe officer is a moving, active conscious force behind [the defendant
corporation's] infringement." Johnson & Johnson Consumer Cos. v. Aini. 540 F. Supp. 2d 374,
393(E.D.N.Y.2008)(quoting Bambu Sales. Inc. v. Sultana Crackers. Inc.. 683 F. Supp. 899,
913 (E.D.N.Y. 1988)). "A corporate officer is considered a 'moving, active, conscious force'
behind a company's infnngement when the officer 'was either the sole shareholder and
employee, and therefore must have approved ofthe infringing act, or a direct participant in the
infringing activity.'" Innovation Ventures. LLC v. Ultimate One Distrib. Corp.. 176 F. Supp. 3d
137,155(E.D.N,Y. 2016)(quoting Chloe v. Queen Bee of Beverlv Hills. LLC.No. 06-CV-3140
(RJH),2011 WL 3678802, at *4(S.D.N.Y. Aug. 19,2011)).
In the Amended Complaint, Plaintiffs identify Tricolla as the principal ofSummit and
allege that he "maintains operational control over Gentlemen's Quarters, including all
advertising relating thereto." (Am. Compl.^ 18.) Defendants claim that this pleading is
insufficient. They state that Plaintiffs need "some factual basis" for the claim that Tricolla
maintains operational control over the club, and that Plaintiffs "fall woefully short of setting
forth a plausible allegation that Tricolla was a moving, active, and conscious force behind any
alleged violation." (Defs. Obj. at 13.) Defendants contend that, without "t[ying] Tricolla to the
wrongful acts allegedly committed by GQ,"Plaintiffs cannot state a claim on which relief can be
granted. (Id. at 14.)
While Plaintiffs do not allege specific actions that Tricolla took in furtherance ofthe
claimed illegal activity. Plaintiffs do create a plausible inference that he controlled the
corporation's advertising and thus had a role in creating and disseminatiug Plaintiffs' images,
something which rests at the heart ofthis action. fSee Am. Compl.118.) Even ifDefendants
are correct that Plaintiffs' pleadings are not as extensive as those in International Diamond
Importers. Inc. v. Oriental Gemco(N.Y.V Inc.. 64 F. Supp. 3d 494(S.D.N.Y. 2014),that case did
not set a floor for Lanham Act pleadings. fSee Defs. Obj. at 13-14 (citing Int'l Diamond.64 F.
Supp. 3d at 525-26).) Accepting as true the Amended Complamt's allegations that Tricolla
maintains operational control over the club and that he participated in the wrongful conduct
complained of. Plaintiffs' case should be allowed to proceed against him in his individual
Microsoft Corp. v. Computer Care Ctr.. Inc.. No. 06-CV-1429(SLT),2008 WL
4179653, at *7. The allegations that TricoUa controlled Summit and participated in the alleged
infringement are sufficient to survive the motion to dismiss.
JMC Rest. Holdings. LLC v.
Pevida. No. 14-CV-6157(WFK),2015 WL 9450597,at *4(E.D.N.Y. Dec. 22,2015); KatiRoll
Co. V. Kati Junction. Inc.. 33 F. Supp. 3d 359,370(S.D.N.Y. 2014).
For the reasons set forth above, the court ADOPTS IN PART and REJECTS IN PART
the R&R(Dkt. 15). Defendants' motion to dismiss(Dkt. 13)is GRANTED IN PART and
DENIED IN PART. Plaintiffs' claims under NYGBL Section 349 are DISMISSED WITHOUT
PREJUDICE. Defendants' motion to dismiss Plaintiffs' claims under § 43(a)ofthe Lanham Act
is DENIED. Plaintiffs' request for punitive damages under the Lanham Act is STRICKEN.
s/Nicholas G. Garaufis
Dated: Brooklyn,New York
NICHOLAS G. GAR
United States District Judge
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