court allows company to bring right of publicity claim

Youngevity Int’l, Corp. v. Smith, No. 16-cv-00704, 2016 WL
7626584 (S.D. Cal. Dec. 1, 2016)
Youngevity and Dr. Joel D. Wallach sell various health
supplements using independent direct sellers known as “distributors” to move product.
The individual defendants were former Youngevity distributors and / or
employees. Defendants Wakaya and TNT were companies formed by some of the
individual defendants competing with Youngevity. For about seventeen years, TNT
ran various websites that explicitly used plaintiffs’ likenesses [sadly, the
court believes that both Wallach and Youngevity have separate claims,
even though Youngevity doesn’t have a “likeness”; the court does not address the scope of a ROP claim, however, so there is no specific legal ruling]. Plaintiffs terminated the
parties’ business relationship and demanded cessation of this use, but
defendants didn’t stop.
Under California law, misappropriation of likeness requires
“(1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of
plaintiff’s name or likeness to defendant’s advantage, commercially or
otherwise; (3) lack of consent; and (4) resulting injury.” Until March 2016, defendants
had implied consent to use plaintiffs’ likenesses; defendants argued that the
single publication rule barred plaintiffs from terminating consent so long as
the use was consistent.  “In the context
of websites, republication does not occur so long as the statement is not
substantively altered or directed to a new audience,” and defendants argued
that they hadn’t changed the use in the two years before the complaint, thus
precluding a claim.  The court disagreed,
because not all the elements of the claim had accrued more than two years ago:
there were no grounds for suit when consent existed.  The court was not going to “categorically
deny a plaintiff the right to terminate consent to the continued but unchanged
use of a plaintiff’s likeness after two years.”  Thus, plaintiffs were entitled to preliminary
injunctive relief. It was undisputed that the defendants used the websites to
get contact information for customers who wanted to buy Youngevity products and
advertised a website marketing their own products, falsely suggesting that some
of those products were produced and/or endorsed by plaintiffs. “A competitor’s
access to a company’s confidential customer information can clearly cause very
serious damage to a company’s market share and business goodwill that is
impossible to measure and compensate via money damages.”
The court also rejected some other challenges to plaintiffs’
claims on a motion to dismiss.  For
example, plaintiffs successfully alleged Lanham Act false advertising in
alleging that Wakaya made false statements regarding how much money a Wakaya
distributor could potentially earn: “a year from now, many of us will be
million dollar earners,” even though no Wakaya distributor has ever earned this
amount of money. This statement was allegedly made in a YouTube video;
defendants argued that there was no showing that the video came from a Wakaya
agent, but at the pleading stage, an allegation to this effect was enough to
give sufficient notice.  So too with an
allegedly false claim in a YouTube video that Wakaya was a joint venture with
billionaire David Gilmour, founder of the Fiji Water Company. However, more
conclusory statements that Wakaya falsely advertised that (1) Youngevity was
having financial problems and (2) Wakaya products originate from Fiji, without
any details regarding “where” and “when” Wakaya allegedly made the statements,
were insufficient. So too with allegations that Wakaya was a pyramid scheme and
thus claims that its distributors could earn a lot of money were false.
Plaintiffs also alleged that Wakaya’s advertisements of the
health benefits of its “pure Calcium Bentonite Clay” products was false or
misleading because these products contains high dosages of lead, which is very
dangerous. Defendants argued that there was no falsity because the challenged
Facebook post didn’t specifically disclaim lead related health hazards. However,
read as a whole, the post “tends to suggest that the clay products are overall
good for a person’s health,” which would be false if the products did in fact
contain high lead levels.

The court adopted the majority federal approach to claims brought by
competitors under California’s FAL, which holds that third party/consumer
reliance on false claims doesn’t allow a damaged competitor to sue in the
absence of the competitor’s own reliance and resulting damage.

Defendants were enjoined to cease operation of
1-800-WALLACH, myyoungevity.com, and wallachonline.com.Youngevity Int’l, Corp. v. Smith, No. 16-cv-00704, 2016 WL
7626584 (S.D. Cal. Dec. 1, 2016)
Youngevity and Dr. Joel D. Wallach sell various health
supplements using independent direct sellers known as “distributors” to move product.
The individual defendants were former Youngevity distributors and / or
employees. Defendants Wakaya and TNT were companies formed by some of the
individual defendants competing with Youngevity. For about seventeen years, TNT
ran various websites that explicitly used plaintiffs’ likenesses [sadly, the
court seems to think that both Wallach and Youngevity have separate claims,
even though Youngevity doesn’t have a “likeness”]. Plaintiffs terminated the
parties’ business relationship and demanded cessation of this use, but
defendants didn’t stop.
Under California law, misappropriation of likeness requires
“(1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of
plaintiff’s name or likeness to defendant’s advantage, commercially or
otherwise; (3) lack of consent; and (4) resulting injury.” Until March 2016, defendants
had implied consent to use plaintiffs’ likenesses; defendants argued that the
single publication rule barred plaintiffs from terminating consent so long as
the use was consistent.  “In the context
of websites, republication does not occur so long as the statement is not
substantively altered or directed to a new audience,” and defendants argued
that they hadn’t changed the use in the two years before the complaint, thus
precluding a claim.  The court disagreed,
because not all the elements of the claim had accrued more than two years ago:
there were no grounds for suit when consent existed.  The court was not going to “categorically
deny a plaintiff the right to terminate consent to the continued but unchanged
use of a plaintiff’s likeness after two years.”  Thus, plaintiffs were entitled to preliminary
injunctive relief. It was undisputed that the defendants used the websites to
get contact information for customers who wanted to buy Youngevity products and
advertised a website marketing their own products, falsely suggesting that some
of those products were produced and/or endorsed by plaintiffs. “A competitor’s
access to a company’s confidential customer information can clearly cause very
serious damage to a company’s market share and business goodwill that is
impossible to measure and compensate via money damages.”
The court also rejected some other challenges to plaintiffs’
claims on a motion to dismiss.  For
example, plaintiffs successfully alleged Lanham Act false advertising in
alleging that Wakaya made false statements regarding how much money a Wakaya
distributor could potentially earn: “a year from now, many of us will be
million dollar earners,” even though no Wakaya distributor has ever earned this
amount of money. This statement was allegedly made in a YouTube video;
defendants argued that there was no showing that the video came from a Wakaya
agent, but at the pleading stage, an allegation to this effect was enough to
give sufficient notice.  So too with an
allegedly false claim in a YouTube video that Wakaya was a joint venture with
billionaire David Gilmour, founder of the Fiji Water Company. However, more
conclusory statements that Wakaya falsely advertised that (1) Youngevity was
having financial problems and (2) Wakaya products originate from Fiji, without
any details regarding “where” and “when” Wakaya allegedly made the statements,
were insufficient. So too with allegations that Wakaya was a pyramid scheme and
thus claims that its distributors could earn a lot of money were false.
Plaintiffs also alleged that Wakaya’s advertisements of the
health benefits of its “pure Calcium Bentonite Clay” products was false or
misleading because these products contains high dosages of lead, which is very
dangerous. Defendants argued that there was no falsity because the challenged
Facebook post didn’t specifically disclaim lead related health hazards. However,
read as a whole, the post “tends to suggest that the clay products are overall
good for a person’s health,” which would be false if the products did in fact
contain high lead levels.

The court adopted the majority federal approach to claims brought by
competitors under California’s FAL, which holds that third party/consumer
reliance on false claims doesn’t allow a damaged competitor to sue in the
absence of the competitor’s own reliance and resulting damage.
Defendants were enjoined to cease operation of
1-800-WALLACH, myyoungevity.com, and wallachonline.com.

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