Spinelli et al v. National Footbal League et al

Filing 166

MEMORANDUM AND OPINION re: 126 MOTION to Dismiss the Second Amended Complaint filed by NFL Productions, L.L.C., JacksonvilleJaguars LTD., Baltimore Ravens Limited Partnership, Chicago Bears Football Club, Inc., San Diego Char gers Football Co., Detroit Lions, Inc., NFL Ventures, L.P., Panthers Football, Inc., National Footbal League, NFL Properties, LLC, Kansas City Chiefs Football Club, Inc., Dallas Cowboys Football Club, Ltd., NFL Enterprises, L.L.C., Miami Dolphins, Ltd., Washington Football Inc., New York Jets Football Club, Inc., The Rams Football Co. LLC, Houston NFL Holdings LP, San Francisco Forty Niners LTD., Buffalo Bills, Inc., Denver Broncos Football Club, Oakland Raiders LP, Minnesota Vikings Football Club LLC, Atlanta Falcons Football Club LLC, Cincinnati Bengals, Inc., Tennessee Football, Inc., Green Bay Packers, Inc., Philadelphia Eagles Football Club, Inc., Arizona Cardinals Holdings, Inc., New Y ork Football Giants, Inc., Buccaneers Limited Partnership, New England Patriots, LP, Football Northwest LLC, New Orleans Louisiana Saints, LLC, Indianapolis Colts, Inc., Cleveland Browns LLC, Pittsburgh Steelers Sports, Inc., 122 M OTION to Dismiss the Second Amended Complaint and Compel Arbitration. filed by Getty Images (US), Inc., 131 MOTION to Dismiss The Second Amended Complaint filed by Associated Press, 129 MOTION to Dismiss Second Amend ed Complaint. filed by Replay Photos, L.L.C. For the reasons set forth above, Getty's motion to compel arbitration is granted and the case against Getty is dismissed with leave to renew after the completion of the arbitration. The motions to dismiss brought by the NFL Defendants, the AP, and Replay are granted in part and denied in part as set forth above. IT IS SO ORDERED. (Signed by Judge Robert W. Sweet on 7/15/2016) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

----------------------------------------x
PAUL SPINELLI, SCOTT BOEHM, PAUL
JASIENSKI, GEORGE NEWMAN LOWRANCE, DAVID
STLUKA, DAVID DRAPKIN, and THOMAS E.
WITTE,
Plaintiffs,
13 Civ: 7398

(RWS)

- against OPINION
NATIONAL FOOTBALL LEAGUE, NFL PROPERTIES,
LLC, NFL VENTURES, L.P., NFL PRODUCTIONS,
LLC, NFL ENTERPRISES, LLC, REPLAY PHOTOS,
LLC, GETTY IMAGES (US), INC., ASSOCIATED
PRESS, ARIZONA CARDINALS HOLDINGS, INC.,
ATLANTA FALCONS FOOTBALL CLUB LLC,
BALTIMORE RAVENS LIMITED PARTNERSHIP,
BUFFALO BILLS, INC., PANTHERS FOOTBALL
LLC, CHICAGO BEARS FOOTBALL CLUB, INC.,
CINCINNATI BENGALS, INC., CLEVELAND
BROWNS LLC, DALLAS COWBOYS FOOTBALL CLUB,
DENVER BRONCOS FOOTBALL CLUB, DETROIT
LIONS, INC., GREEN BAY PACKERS, INC.,
HOUSTON NFL HOLDINGS LP, INDIANAPOLIS
COLTS, INC., JACKSONVILLE JAGUARS LTD.,
KANSAS CITY CHIEFS FOOTBALL CLUB, INC.,
MIAMI DOLPHINS, LTD., MINNESOTA VIKINGS
FOOTBALL CLUB LLC, NEW ENGLAND PATRIOTS,
LP, NEW ORLEANS LOUISIANA SAINTS, LLC,
NEW YORK FOOTBALL GIANTS, INC., NEW YORK
JETS FOOTBALL CLUB, INC., OAKLAND RAIDERS
LP, PHILADELPHIA EAGLES FOOTBALL CLUB,
INC., PITTBURGH STEELERS SPORTS, INC.,
SAN DIEGO CHARGERS FOOTBALL CO., SAN
FRANCISCO FORTY NINERS LTD., FOOTBALL
NORTHWEST LLC, THE RAMS FOOTBALL CO. LLC,
BUCCANEERS LIMITED PARTNERSHIP, TENNESSEE
FOOTBALL, INC., and WASHINGTON FOOTBALL
INC.,
Defendants.

----------------------------------------x

USDCSDNY
DOCUMENT
ELECTRONICALI~Y FILED
DOC#:
DATE FJ;-L-;:, -D:--.::::±-=J.-r-c_ :;-: : :
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A P P E A R A N C E S:

Attorneys for the Plaintiffs
NELSON & MCCULLOCH LLP
155 East 56lli Street
New York, NY 10022
By:
Kevin Patrick McCulloch, Esq.

Attorneys for the Defendants
SKADDEN, ARPS, SLATE , MEAGHER & FLOM LLP
Four Times Square
42°d Floor
New York , NY 10036
By :
Jeffrey A. Mishkin, Esq.
Anthony Joseph Dreyer, Esq.
Jordan Adam Feirman, Esq.
Karen Hoffman Lent, Esq.
WILSON ELSER MOSKOWITZ EDELMAN & DICKER LLP
11 33 Westchester Avenue
White Plains, NY 10604
By :
Jura Christine Zibas, Esq.
Jana A. Slavina, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Ave nue
2 5th Floor
New York, NY 10153
By:
Bruce S. Meye r, Esq.
DLA PIPER US LLP
1251 Avenue of the Americas
New York , NY 10020
By: Andrew Lawrence Deutsch, Esq.
Marc Evan Miller, Esq.
Paolo Morante, Esq.
Tamar Y. Duvdevani, Esq.

Sweet, D.J.

There are four motions to dismiss current l y pending in
this action between pla in tiffs Paul Spinelli , Scott Boehm, Paul
Jasiensk i, George Newman Lowrance, David Stluka , David Drapkin ,
and Thomas E. W tte ("Pl a in tiffs") and defendants National
i
Footba ll League ("N FL"), NFL Propert i es , LL C,

("NFLP"), NFL

Ventures , L.P., NFL Productions , LLC, NFL Enterprises , LL C
(together with NFL , NFLP , NFL Ventures , L.P, and NFL
Productions, "NFL Entities " ) , Ar i zona Cardina l s Holdings, Inc .,
Atlanta Falcons Football Club LLC, Baltimore Ravens Limited
Partnership, Buffalo Bills , In c., Panthers Football LLC, Chicago
Bears Football Club , Inc. , Cincinnati Bengals, Inc., Cleveland
Browns LLC, Dallas Cowboys Football Club , Denver Broncos
Football Club, Detroit Lions, Inc., Green Bay Packers , Inc .,
Houston NFL Holdings LP , Indianapolis Colts , Inc., Jacksonvi ll e
Jaguars Ltd., Kansas City Ch i efs Footba ll Cl ub , Inc ., Miami
Dolphins, Ltd., Minnesota Vikings Football Club LLC , New England
Patriots, LP, New Orleans Lou isi ana Saints , LLC, New York
Football Giants , Inc., New York Jets Football Club, Inc .,
Oakland Raiders LP , Philadelph i a Eagles Football Club , Inc.,
Pittsburgh Steelers Sports , Inc., San Diego Chargers Football
Co ., San Francisco Forty Niners Ltd., Footbal l Northwest LLC ,
The Rams Football Co . LLC, Buccaneers Limited Partnership ,

1

Tennessee Football , Inc. , and Washington Football Inc .

(Ar i zona

Card i na l Ho l dings , Inc . through Wash i ngton Football Inc ., " NFL
Clubs ," and together with NFL Enti t ies , " NFL Defendan t s " ) ,
Rep l ay Photos , LLC ("Replay") , Getty Images (US) , Inc .
(" Getty " ) , and Associated Press ("AP ," together wi th NFL
Defendants , Replay , and Getty , " De f endants " ) .

NFL Defendants , Rep l ay and AP have moved to dismiss
t h e second amended complaint (the " SAC " ) .

Getty has moved to

dismiss the SAC and compel arbitration , or stay the action as to
Getty.

For the reasons set forth be l ow , the NFL Defendants ',
Replays ', and AP ' s motions to dismi ss are granted in part and
denied in part , and Getty ' s motion to compe l arbitrat i on is
granted.

Therefore , the case against Getty is dismissed with

leave to renew after the completion of the arbitrat i on .

Prior Proceedings

Plaintiffs filed their initial complaint (" Complaint")
against the NFL Entities , Replay , Getty , and AP on October 21 ,
2013.

On March 27 , 2015, the Co u rt granted Defendants ' motions

to dismiss and Getty ' s motion to compel arbitration .
2

On August

17, 2015, the Plaintiffs filed the SAC.

Defendants filed these

four motions to dismiss (and Getty ' s motion to compel
arbitration) on October 1, 2015 .

The instant motions were heard and marked fully
submitted on February 11, 2016 .

While the motions to dismiss

were pending , motions to stay discovery were filed by Defendants
and granted by the Court .

(See Dkt. Nos . 135, 136, 145.)

Facts

The Court assumes familiarity with facts as
articulated in the Court's March 27, 2015 opinion .
al v . National Football League et al.,

Spinelli et.

96 F.Supp.3d 81 , 91-98

(S . D.N . Y. 2015) .

Applicable Standard

On a motion to dismiss pursuant to Rule 12(b) (6) , all
factual allegations in the complaint are accepted as true, and
all inferences are drawn in favor of the pleader.
Polar Molecular Corp., 12 F.3d 1170, 1174

Mills v .

(2d Cir . 1993) .

However, a complaint must contain "sufficient factual matter ,
accepted as true , to 'state a claim to relief that is plausible
3

on its face .' "

Ashcroft v . Iqbal , 556 U. S . 662,

663 (2009)

(quoting Bell Atl . Corp . v. Twomb l y , 550 U. S. 544 , 570

(2007)) .

A c l aim is facially plausible when " the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is li able for the
misconduct alleged. "
550 U. S . at 556) .

Iqba l, 556 U.S. at 663 (quoting Twombly ,

In other words , the factual a l legations must

"possess enough heft to show that the p l eader is entit l ed to
relief ."

Twomb l y , 550 U. S . at 557

(internal quotation marks

omitted) .

While "a plaintiff may plead facts a l leged upon
information and belief ' wh e r e the belief is based on factua l
informat i on t hat makes the infe r e n ce of cu l pab i lity p l ausible ,'
such a ll egations must be ' accompanied by a statement of the
facts upon which the belief i s founded .'"
Inc ., No . 12 - 1312 , 2013 W 1 809772 , *3
L

Munoz - Nage l

v . Guess ,

(S . D. N. Y. Apr . 30 , 2013)

(quoting Arista Records , LLC v . Doe 3 , 604 F . 3d 110 , 120 (2d
Cir. 2010)) ; Prince v . Madison Square Garden , 427 F . Su pp . 2d
372 , 384

(S . D. N. Y. 2006) ; Williams v . Calderoni , No . 1 1- 3020 ,

2012 WL 691832 , *7

(S . D. N. Y. Mar . 1 , 2012)) .

however , " must contain something more than

The p l eadings ,
. a statement of

facts that merely creates a suspicion [of ] a legally cogn izable
4

right of action."

Twombly, 550 U.S. at 555 (citation and

internal quotation omitted) .

"The law of the case ordinarily forecloses
relitigation of issues expressly or impliedly decided by the
appellate court. "

Starbucks Corp . v . Wolfe ' s Borough Coffee ,

Inc., 736 F.3d 198, 208

(2d Cir . 2013)

(citing Un i ted States v .

Quintieri , 306 F.3d 1217, 1229 (2d Cir . 2002)
quotati o n marks omitted) .

(in ternal

Importantly, the doctrine is not

binding , though the law of the case "counsels a court against
revisiting its prior rulings in subsequent stages of the same
case a bsent ' cogent ' and 'compelling' reasons such as 'an
intervening change of controlling law, the avai l ability of new
evidence, or the need to correct a clear error or prevent
manifest injustice. '"
Cir . 2008)

Ali v . Mukasey , 529 F.3d 478, 490 (2d

(quoting United States v. Tenzer , 213 F.3d 34 , 39 (2d

Cir . 2000)) .

I.

The Motion To Dismiss is Granted in Part for the Reasons
Stated in the Court's Previous Opinion with the Exception
of New Allegations Regarding the Breach of Contract Claims

Defendants argue that the SAC should be dismissed
because it is precluded by the law of the case doctrine .

While

there are policy and efficiency arguments in favor of the law of
5

the case doctrine , it is "admittedly discretionary and does not
limit a court ' s power to reconsider its own decisions prior to
final judgment ."

Virgin Atl. Airways, Ltd. v . Nat ' l Mediation

Bd. , 956 F.2d 1245 , 1255 (2d Cir. 1992) .

Taking into consideration the discretionary nature of
this doctrine, the Court need not address whether the law of the
case doctrine precludes review of the issues in this Court's
previous decision .

Instead , the Court has considered the

arguments presented by both parties and adopts the reasoning and
conclusions of the Court ' s March 27, 2015 opinion , with the
exception of the conclusions with respect to unconscionability
and duress.

II .

The Motion To Dismiss Plaintiffs' Contract Claims for
Unconscionability Is Denied

The Court denied the Plaintiffs '

claims for

unconscionabi l ity in the March 27 , 2015 opinion because those
claims were not pled in the First Amended Complaint ("FAC") and
were instead presented for the f i rst time in Pl aintiffs' motion
to dismiss opposition brief .

96 F . Supp . 3d at 132 - 133 .

However ,

the Court cautioned that " the facts as alleged by Plaintiffs
tend to show that the precedents relating to broad licensing ,

6

combined with the power and capacity of the Defendants, and , by
contrast , apparent relative lack of market power of Plaintiffs,
lead to a difficult result, approaching unfairness, in this
case."

Id. at 133.

Th e SAC corrects the deficiencies the Court noted from
the FAC and does allege these breach of contract theories in the
SAC .

The remaining issue is whether these allegations are

sufficient to survive a motion to dismiss .

Unconscionability is

adequately pled in the SAC and therefore the motions to dismiss
are denied with respect to that breach of contract theory.

a . Unconscionability Claims Against the Defendants

The purpose of unconscionability is to protect against
a contract that is " so grossly unreasonable or unconscionable in
the light of the mores and business practices of the time and
place as to be unenforcible [sic] according to i ts literal
terms."

Gillman v . Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 10,

534 N.E.2d 824

(1988)

(internal citations omitted) .

A contract

is unconscionable when there is '" an absence of meaningful
choice on the part of one of the parties together with contract
terms which are unreasonably favorable to the other party. "'
Brennan v . Bally Total Fitness, 198 F.Supp.2d 377 , 382

7

(S.D.N . Y.

2002)

(quoting Gillman , 73 N.Y . 2d at 10).

Unconscionability in

New York is a "flexible" doctrine "intended to be sensitive to
the realities and nuances of the bargaining process . " Gillman,
73 N.Y. 2 d at 10 (quoting Matter of State of New York v . Avco
Fin. Serv. , 50 N. Y.2d 383 , 389-390, 406 N. E . 2d 1075) .

b . Procedural Unconscionability

Under New York law, unconscionability requires "a
showing that the contract was both procedurally and
substantively unconscionable. "

Gillman , 73 N.Y.2d at 10.

Procedural unconscionability is "whether the party seeking to
enforce the contract has used high pressure tactics .

. and

whether there is inequality of bargaining power between the
parties. "

Sablosky v . Edward S . Gordon Co. , Inc., 73 N.Y.2d

133, 139 , 535 N.E.2d 643 (1989).

Further, procedural

unconscionability "requires an examination of the contract
formation process and the alleged lack of meaningful choice . "
Gillman, 73 N.Y.2d at 10 - 11.

Plaintiffs argue that there was an "inequality of
bargaining power" between the photographers and the AP .
Sablosky , 73 N.Y.2d at 139 .

This inequality included that when

the negotiations begun , there were only a few weeks until the
8

2009 NFL season began.

The AP had already secured an exclusive

agreement with the NFL in 2009 .

(SAC

at~

91 . )

Once AP had the

exclusive license with the NFL for all game photos, it increased
AP's leverage over the individual photographers.

Plaintiffs

allege that the AP refused to allow them to directly negotiate
and discuss their concerns with AP ' s l egal team or the lawyers
drafting their individual contracts.

Further,

(SAC

at~

94.)

Plaintiffs allege that they proposed several

changes to the contracts during a July 2009 call and that their
proposed changes were rejected.

(SAC

at~

105.)

When those

changes were rejected , the AP allegedly told Plaintiffs the
terms were "take-it-or-leave-it."

Id .

Parties in New York are

permitted to offer contracts on a take it or leave it basis
during negotiations.

Ragone v . Atlantic Video at Manhattan

Center , 595 F.3d 115 , 122
A . G. Becker Paribas ,
1 985) .

(2d Cir . 20 10 ) ; Finkle and Ross v .

Inc. , 622 F. Supp . 1505, 1511-12

Take it or leave it tactics

negotiate)

(S.D.N.Y.

(and a general refusal to

are permitted when the party in an inferior

bargaining position can simply contract with a suitable
replacement.

Nayal v. HIP Network Services IPA,

F.Supp.2d 566 , 572

(S.D.N.Y . 2009)

Inc.,

620

(finding an arbitration

clause was not unconscionable because other HMO health care
policies were available); Anonymous v . JP Morgan Chase & Co. ,
9

No. 05 Civ. 2442, 2005 WL 2861589, at *6 (S .D. N.Y. Oct . 31,
2005)

(the arbitration agreement for a credit card was not

unconscionable because "the plaintiff had the ability to go to
other sources of credit"); Bar-Ayal v. Time Warner Cable Inc.,
No . 03 Civ . 9905, 2006 WL 2990032, at *16 (S.D.N.Y. Oct. 16,
2006)

(arbitration provision was not unconscionable because

plaintiff "has not provided any evidence that he could not
obtain high-speed Internet service from another provider").

However , this case differs from mandatory arbitration
clauses in consumer agreements for widely available services
like credit cards and health care plans .

Here, there were no

other opp o rtunities for Plaintiffs to engage in their livelihood
of photographing NFL football games other than to accept the
Contributor Agreements with the AP, which was their primary
source of income.

(SAC

at~

108.)

Further, not signing with AP

would have meant losing access to all of the NFL photos they had
already taken since AP had a retroactive exclusive license over
all NFL photographs .

(Id.

at~

111.)

This is why Plaintiffs

could not simply switch from photographing the NFL to another
sport.

Plaintiffs faced the difficult position of choosing

between losing the rights to their vast collections of NFL
photographs if they stayed with Getty or losing "the ability to

10

obtain credentials for any sporting events, including NCAA, MLB,
and NBA games" if they joined AP.

(Id. at 110.)

While retroactive licenses are not alone
unconscionable, when combined with the exclusivity of their
ability to issu e credentials to photographers and the AP's
refusal to negotiate -- Plaintiffs have adequately alleged an
inequality in bargaining power.

Plaintiffs also alleged that the contributor
agreements are void f or procedural unconscionability because
there were "de ceptive or high-pressured tactics [] employed."
Gillman, 73 N.Y.2d at 11.

For example, Plaintiffs allege that

AP made material misrepresentations to them during the
negotiations for their contributor agreements about the AP's
agreement with the NFL.

(SAC

at~~

96-99.)

These kinds of

misrepresentations are sufficient f o r procedural
unconscionability when ambiguous terms of the cont ract "may not
accurate ly represent the intentions of the parties".

McMahon v.

Eke-Nweke, 503 F. Supp. 2d 598, 606 (E.D.N.Y. 200 7).

While the

terms in this case were not ambiguous, the same principle
applies.

11

Here,

Plaintiffs allege that the terms do not reflect

the parties' intent.

Specifically, Plaintiffs allege that AP

told them during negotiations that AP did not grant "the NFL a
license to use contributor photos" and "did not intend to permit
the NFL complimentary use of contributor photos,
Plaintiffs' collections."

(SAC

at~

96.)

including

Yet Plaintiffs allege

that at the time of these statements, AP already had a contract
with NFL providing for complimentary use of the photographs.
(SAC

at~~

96-99.)

This is the kind of deception that the

doctrine of unconscionability as applied in McMahon sought to
avoid.

(SAC

at~~

96-104.)

Plaintiffs will have to prove that

the AP made these statements, but Plaintiffs have alleged that
AP used deceptive tactics to persuade Plaintiffs to sign the
contributor agreements.

Plaintiffs also allege that high-pressured tactics
were employed.

Gillman,

73 N.Y.2d at 11.

just weeks before the NFL season started,

During negotiations
Plaintiffs allege they

were threatened that if they did not sign the Contributor
Agreements before the season started, they would not gain access
to NFL games for the entire upcoming season.

(SAC

at~

107.)

Plaintiffs allege that photographing NFL events was the "primary
basis of Plaintiffs' livelihoods."

(Id.

at~

108.)

Potentially

this left Plaintiffs with the choice of sacrificing the primary
12

basis of their livelihoods or signing a contract for which the
AP refused to negotiate key terms, which is why Plaintiffs
adequately have pled procedural unconscionability.

(Id. at

<JI

94 , 104-106.)

Defendants' reliance on Don King Prods., Inc. v.
Douglas for the proposition that the conduct at issue in the
instant case cannot be characterized as "deceptive or highpressure tactics " is unavailing.
1990) .

742 F. Supp . 77 8 (S.D.N.Y.

Douglas signed a contract with famous boxing promoter

Don King under which King would have the exclusive right to
arrange Douglas' fights.

Id. at 781 .

There were a series of

disputes, and Douglas sought to invalidate the contract and
claimed that " King so dominates promotion of heavyweight fights
that the Douglas-King contracts are inherently procedurally
unconscionable."

Id. at 780.

The Court found that this was

more o f a quasi-antitrust claim and that the deficiency in the
unconscionability argument was insufficient pleadings.

Among

other reas ons , the Court held, "Douglas/Johnson make no
allegation here that deceptive or high-pressure tactics were
employed in concluding the contracts."

Id. at 780.

However, there are more substantial allegations of
unconsc i onability in this case than in Douglas.
13

Here, the

timing of negotiations merely weeks before the beginning of the
NFL season, an unwillingness to engage in negotiations about key
terms, and fundamental misrepresentations about potential
revenue from licenses with the NFL together amount to
allegat i ons of "de ception and high-pressure" in this case.
Plaintiffs have adequately pled procedural unconscionability
because they sufficiently alleged that there was an unfair
imbalance in negotiating power and that Defendants used
deception and high -pressure tactics.

c. Substantive Unconscionability

Substantive unconscionability asks the Court to
examine "the substance of the bargain" to determine if "the
terms were unreasonably favorable to the party against whom
unconscionability is urged."

Gillman, 73 N.Y.2d at 12.

Procedural and s ubst antive unconscionability are eval uat ed on a
"sliding scale," such that "the more questionable the
meaningfulness of choice, the l ess imbalance in a contract's
terms should be tolerated and vice versa." State v . Wolowitz,
A.D.2d 47, 68, 468 N.Y.S.2d 131, 145 (2d Dep't 1983).

Here, Plaintiffs argue that in addition to the
negotiating tactics that were procedurally unconscionable that
14

96

the deal was fundamentally unreasonable.

Plaintiffs were told

and believed that they were providing AP with a li cense to their
photographs in exchange for royalties for all licenses AP
granted to third parties .

(SAC

at~

120 . )

Plaintiffs allege

that Section 5 .1 of the Contributor Agreements provided a list
of al l exceptions to AP ' s obligations to pay royalties for
licensing Plaintiffs ' photographs to third parties .
NFL was not listed as one of these exceptions .

Id.

The

This contractual

language matched the AP ' s representations to Plaintiffs that the
AP wou l d charge the NFL for licenses to u se Plaintiffs'
photographs .

(Id .

at~

1 2 1.)

Defendants argue that the Contributor Agreements are
not contracts that only a "delusion[al]" photographer would
accept .

(Citing Doctor ' s Associates , In c. v . Jabush,

109 , 113 (2d Cir. 1996) . )

89 F. 3d

They argue that Plaintiffs received

considerat i on for this bargain in the form of credentials to
take photographs and royalties for reven u e-bearing sa l es, and
the ability to seek out other licenses for their work .
Br . at 2 6 . )

(Def .

However , this depiction does not state what

Plaintiffs allege:

the NFL was the single largest licensee of

Plaintiffs photographs .

(Pl . Oppn . Br . at 26 . )

Plaintiffs

wanted assurances that the NFL would be a revenue - bearing
licensee because that was how the Contributor Agreements would
15

be profitable for Plaintiffs since the NFL would utilize
thousands of Plaintiffs' photographs on their websites and other
mediums.

(SAC

at~ ~

95 - 96 . )

Giving these li censes away for

free to the NFL without telling Plaintiffs was a key component
of the bargain that is "s o grossly unreasonable" as to be
unenforceable.

Gillman , 73 N.Y.2d at 10.

d. Unconscionability Can Be Properly Considered at the Motion
to Dismiss Stage and this Claim Sufficiently Alleges
Unconscionability

The parties dispute whether unconscionability can be
properly considered at the motion to dismiss stage .

Defendants

cite several cases dismissing unconscionability claims at the
12(b) (6) stage .

However, these cases do not stand for the

princ ipl e that no case could show unconscionability -- just that
the parties in those cases had not sufficiently pled
unconscionability.

Grand Income Tax,

Inc. v . HSBC Taxpayer

Financial Services , Inc., No. 08-CV-346, 2008 WL 5113646, at *7
(E.D.N.Y. Nov. 25 , 2008)

(finding that "the plaintiff must prove

that the party with superior bargaining power used it to take
unfair advantage of its weaker counterpart") ; Pacs Indu stries ,
Inc. v. Cutler -H ammer , In c ., 103 F . Supp.2d 570 , 573 (E.D.N.Y.
2000)

(" o ffer[ed] no facts or allegat i ons to support that

assertion [o f unconscionabi lit y] " ) .

16

On the other hand,

Plaintiffs argue that a court could never dismiss a case with
unconscionability claims because a hearing is required to test
the veracity of the claims.
Co., No.

09-Civ-3848

June 16, 2010)

Schwartzbaum v. Emigrant Mortg.

(SCR), 2010 WL 2484 116, at *5

(S.D.N.Y.

("Since a determination of unconscionability

requires a fact-specific inquiry,
to a Rule 12(b) (6)

it docs

[sic] not lend itself

ruling that addresses the sufficiency of the

pleadings").

The cases do not establish a bright-line rule in favor
of either party ' s position.

Here, this unconscionability claim

does survive a motion to dismiss because Plaintiffs' allegations
as discussed above sufficiently pled both procedural and
substantive unconscionability.

e. Plaintiffs' Unconscionability Claim Is Not Waived

Defendants argue that the unconscionability claims
fail because "Plaintiffs failed to act promptly in repudiating
the contract as unconscionable and therefore waived the
defense."

(AP Br. at 22.)

However, while Defendants cite many

cases about repudiation and waiver for duress and fraudulent
inducement, they do not cite any cases that this concept applies
to unconscionability claims.

Mandavia v . Columbia University,
17

•

912 F . Supp . 2d 119 , 128 (S . D. N. Y. 2012)

(when a contract is

signed under duress , it is voidable , not void) ; DiRose v. PK
Management Corp ., 691 F .2d 628 , 633 - 34

(2d Cir . 1 982)

(" A

contract or release , the execut i on of wh i ch is induced by
duress , is voidable , not void , and the person claiming duress
must act promptly to repud i ate the contract or re l ease or he
wi l l be deemed to have wa i ved h i s right to do so . ") ; Lawrence v .
Kennedy , 1 13 A.D.3d 731 , 732 , 979 N. Y. S . 2d 347 , 349 (2d Dep ' t
2014)

(party waived fraudulent inducement claim for accep t ing

benefits under the contract and not promptly repudiating) .

No authority has been cited applying this doctrine to
unconscionability and i t wi l l not be applied in this case .

III.

The Motion To Dismiss Plaintiffs' Contract Claims for
Duress Is Granted

The Court also denied the Plaintiffs '

claims for

duress in the March 27 , 2015 opinion because the claims were not
p l ed in the FAC and were presented for the first time in
Plaintiffs ' motion to d i smiss opposit i on brief.
132-133 .

96 F . Supp.3d at

While Plaintiffs have pled claims for duress in the

SAC , those cla i ms are d i smissed again here .

As noted above ,

even if Pl aintiffs adequate l y pled a claim for duress , in New
York when a party is under duress it must promptly act to
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repudiate the contract .
628, 633-34

DiRose v. PK Management Corp ., 69 1 F.2d

(2d Cir. 1982).

Here, Plaintiffs have continued to

perform under the contract and have accepted the benefit of
credentials from the AP to photograph NFL games .

The duress

argument is therefore waived and the Court does not need to
reach the merits of duress .

Therefore, the motion to dismiss

with respect to duress is granted .

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•

Conclusion

For the reasons set forth above, Getty's motion to
compel arbitration is granted and the case against Getty is
dismissed with leave to renew after the completion of the
arbitration.

The motions to dismiss brought by the NFL

Defendants , the AP , and Replay are granted in part and denied in
part as set forth above.

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It is so ordered.

New York, NY
July 15, 2016
BERT W. SWEET
U.S.D.J.

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