Edmondson et al v. RCI Hospitality Holdings, Inc. et al
Filing
79
MEMORANDUM OPINION AND ORDER: For all the foregoing reasons, Defendants' motion to quash Plaintiffs' request for the production of Defendants' customer lists (Dkt. 77) is DENIED. Defendants must promptly produce the requested customer lists. (Signed by Judge Valerie E. Caproni on 6/8/2018) (tro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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JAIME EDMONDSON et al.,
:
:
:
Plaintiffs,
:
:
-against:
:
RCI HOSPITALITY HOLDINGS, INC.,
:
PEREGRINE ENTERPRISES, INC., RCI
DINING SERVICES (37TH STREET), INC., and :
:
ERIC LANGAN,
:
Defendants. :
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VALERIE CAPRONI, United States District Judge:
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 6/8/2018
16-CV-2242 (VEC)
MEMORANDUM
OPINION AND ORDER
Plaintiffs, 52 professional models, bring this action against a number of what are
euphemistically referred to as “gentlemen’s clubs”, the clubs’ owners, and the clubs’ officers
(“Defendants”), alleging that Defendants used photos of Plaintiffs in advertisements without
Plaintiffs’ permission. Plaintiffs bring claims for false endorsement under the Lanham Act, 15
U.S.C. § 1125 et seq.; violations of their rights to privacy under the New York Civil Rights Law,
N.Y. Civ. Rights Law §§ 50–51; violations of the New York Deceptive Trade Practices Act,
N.Y. Gen. Bus. Law § 349; and defamation under New York common law. See Second Am.
Compl. (“SAC”), Dkt. 44. As part of the parties’ fact discovery, Plaintiffs requested the
production of lists of Defendants’ customers. Defendants move to quash Plaintiffs’ request.
See Defs.’ Ltr., Dkt. 77; Pls.’ Ltr., Dkt. 78. For the following reasons, Defendants’ motion is
DENIED.
BACKGROUND
As professional models, Plaintiffs claim that they “place a very high degree of value on
their good will and reputation” and, accordingly, are “necessarily selective” in deciding the
brands for which they model. SAC ¶ 76. Plaintiffs claim that Defendants used images of
Plaintiffs in advertisements for Defendants’ clubs, without Plaintiffs’ knowledge or permission,
allegedly creating the false impression that Plaintiffs performed at the clubs or endorsed the
clubs. Id. ¶¶ 77–80, 237–238, 247–248. Plaintiffs claim that they never performed at, endorsed,
received compensation from, or were otherwise affiliated with Defendants’ clubs. Id. ¶¶ 239–
241, 249–250.
Fact discovery began on January 26, 2017 and is scheduled to close on June 29, 2018.
See Case Management Plan, Dkt. 45; Order, Dkt. 68. On March 19, 2018, Plaintiffs served
Defendants with a request for the production of “[a]ll customer lists” of the clubs that are
“implicated in the Complaint—i.e., those clubs for which any Plaintiff’s image was used in
online advertising—from 2014 to date, including, without limitation, all email lists and/or VIP
lists” used by those clubs. Second Request for Production, Dkt. 77, Exhibit A, at 6. After a
teleconference with this Court, Defendants filed a letter-motion to quash the request. See Defs.’
Ltr.
DISCUSSION
I.
Defendants’ Customer Lists Are Relevant
Federal Rule of Civil Procedure 26(b)(1) allows discovery “regarding any nonprivileged
matter that is relevant to any party’s claim or defense and proportional to the needs of the case.”
Fed. R. Civ. P. 26(b)(1). “Although not unlimited, relevance, for purposes of discovery, is an
extremely broad concept.” Condit v. Dunne, 225 F.R.D. 100, 105 (S.D.N.Y. 2004); see also
Nunez v. City of New York, No. 11-CV-5845, 2013 WL 2149869, at *2 (S.D.N.Y. May 17,
2013). Information “need not be admissible in evidence to be discoverable.” Fed. R. Civ. P.
26(b)(1).
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Here, Defendants’ customer lists are relevant to Plaintiffs’ false endorsement claims
under the Lanham Act. Those claims require Plaintiffs to show, among other things, a
misrepresentation “that is likely to cause consumer confusion as to the origin, sponsorship, or
approval of the goods or services.” Beastie Boys v. Monster Energy Co., 66 F. Supp. 3d 424,
448 (S.D.N.Y. 2014). While the statute requires only a likelihood of confusion, and not actual
confusion, actual confusion can be persuasive evidence of that likelihood. See Fischer v.
Forrest, 286 F. Supp. 3d 590, 613 (S.D.N.Y. 2018); Estate of Smith v. Cash Money Records,
Inc., No. 14-CV-2703, 2018 WL 2224993, at *6 (S.D.N.Y. May 15, 2018). Surveys of
customers who were exposed to false endorsements are one way to demonstrate actual consumer
confusion and, thus, are relevant and discoverable. See, e.g., ABC Rug & Carpet Cleaning Serv.
Inc. v. ABC Rug Cleaners, Inc., No. 08-CV-5737, 2009 WL 105503, at *2 (S.D.N.Y. Jan. 14,
2009); Asch/Grossbardt Inc. v. Asher Jewelry Co., No. 02-CV-5914, 2003 WL 660833, at *2
(S.D.N.Y. Feb. 28, 2003).
II.
Defendants’ Objections to Disclosure Are Overruled
Defendants raise two objections to disclosure of the customer lists, neither of which has
any merit.
A.
Defendants’ Customer Lists Raise No Associational Privilege
First, Defendants argue that their customer lists are protected by a First Amendment
privilege. Because “disclosure compelled under court order may constitute a restraint on
freedom of association” under the First Amendment, parties may in some circumstances object to
discovery on grounds of an “associational privilege.” N.Y. State Nat. Org. for Women v. Terry,
886 F.2d 1339, 1354 (2d Cir. 1989) (quoting NAACP v. Alabama ex rel. Patterson, 357 U.S.
449, 462 (1958)). A party raising such an objection must make out a prima facie case of how
“discovery requests would interfere with [its] First Amendment activities,” that is, the party must
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“articulate some resulting encroachment on [its] liberties” or the liberties of its members. Id. at
1355; see also Schiller v. City of New York, No. 04-CV-7921, 2006 WL 3592547, at *4
(S.D.N.Y. Dec. 7, 2006). “This encroachment cannot be merely speculative, and courts have
required parties resisting disclosure to produce specific evidence of past or present harassment of
members due to their associational ties, . . . harassment directed against the organization itself,
[or a] pattern of threats or specific manifestations of public hostility.” Schiller, 2006 WL
3592547, at *4 (alterations in original) (citation omitted) (quoting Buckley v. Valeo, 424 U.S. 1,
74 (1976)).
Here, Defendants articulate no reason why disclosing their customers’ identities would
encroach on the First Amendment rights of either Defendants or their customers. Defendants
claim that disclosure of their customers’ identities would damage their “familial, work, and
community relationships,” in turn causing “irreparable” economic harm to Defendants’ business.
Defs.’ Ltr. at 3. But the discovery in this case is covered by a Protective Order, which prohibits
the parties from disclosing discoverable information (if that information is properly designated
“confidential”) beyond a limited group of individuals. See Order (May 5, 2017), Dkt. 52. And
Plaintiffs have represented that they will share the lists with “Plaintiffs’ counsel, expert, and no
one else.” Pls.’ Ltr. at 5. Thus, the Court has no reason to believe that Defendants’ customer
lists will become public or expose the customers to reputational harm.1
B.
No Limitation on Disclosure Is Warranted on the Ground that the Customer
Lists Are Trade Secrets
Next, Defendants argue that their customer lists are a trade secret and that, accordingly,
the Court should bar their disclosure. Under Rule 26, a court may, “for good cause,” enter an
1
The Court is also skeptical that visiting a “gentlemen’s club” implicates a First Amendment right of
association. See City of Dallas v. Stanglin, 490 U.S. 19, 20–21 (1989) (finding no right to association among
customers who visit a dance hall).
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order “requiring that a trade secret or other confidential . . . commercial information not be
revealed or be revealed only in a specified way.” Fed. R. Civ. P. 26(c)(1)(G). Courts, however,
have ordered disclosure of parties’ customer lists during discovery relating to Lanham Act
claims, even when the disclosure was made to the parties’ direct competitors. See, e.g., ABC Rug
& Carpet Cleaning Serv. Inc., 2009 WL 105503, at *2; Asch/Grossbardt Inc., 2003 WL 660833,
at *1. Those courts found that protective orders limiting to whom the lists could be shown were
sufficient to protect any trade secrets.
Here, Plaintiffs are not competitors who could poach Defendants’ customers or otherwise
cause damage to the value inherent in Defendants’ customer lists. And, assuming, without
deciding, that the customer lists constitute trade secrets, Defendants provide no reason to believe
that the protective order in place would not protect the value attached to the trade secrets.
For all these reasons, Defendants’ objections are overruled, and the customer lists are
subject to discovery.
III.
Limitations on Contact with Defendants’ Customers
Although the customer lists are discoverable, the Court will take steps to protect
Defendants’ customers from undue harassment and to protect the goodwill of Defendants’
business. Accordingly, the parties are hereby ORDERED to confer on an appropriate way for
Plaintiffs’ attorneys and experts to conduct the desired surveys of the customers. Appropriate
approaches might include, for example, (a) not disclosing that the customers’ identities were
obtained from Defendants or their clubs; (b) not disclosing that the surveys relate to ongoing
litigation involving Defendants; and (c) taking steps to ensure that customers who refuse to
participate in the surveys are not repeatedly contacted. If the parties are unable to reach
agreement on the procedures to be used, they should promptly contact the Court in accordance
with the Court’s Individual Practices in Civil Cases, Rule 2(B).
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CONCLUSION
For all the foregoing reasons, Defendants’ motion to quash Plaintiffs’ request for the
production of Defendants’ customer lists (Dkt. 77) is DENIED. Defendants must promptly
produce the requested customer lists.
SO ORDERED.
____________________________
_
_________________________________
ALERIE
VALERIE CAPRONI
United States District Judge
Date: June 8, 2018
New York, New York
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