Archives for January 2014

Employee Sues After Employer Hijacks Personal Twitter and Facebook Accounts (the ‘With Friends Like These…’ Post)

The case is dated (2011) but interesting.   The salient issues in Maremont v. Fredman, 2011 WL 6101949 (N.D.Ill. 2011), have enduring relevance in this culture of omnipresent electronic commerce and social media use.  The case is also post-worthy for its discussion of state law privacy and publicity torts in a computerized factual setting.

Plaintiff was director of marketing for the defendant interior design firm where she was in charge of formulating and executing the firm’s social media marketing efforts.  After she was hospitalized in a serious car crash, plaintiff alleged someone from the design firm accessed her personal Facebook and Twitter accounts and sent promotional messages to plaintiff’s Twitter and Facebook followers/friends.  Plaintiff filed suit against the design firm and its principal officer under the Federal Lanham Act (15 U.S.C. § 1125)  and Stored Communication Act (18 U.S.C. § 2701) and also for violating the Illinois Right to Publicity Act (765 ILCS 1075/60) and for common law intrusion on seclusion.  The parties moved for summary judgment on all claims.

Result: The Court denied both parties’ summary judgment motions on plaintiff’s Lanham Act (a false association claim) and Stored Communication Act claims.  The Court granted summary judgment for defendants on plaintiff’s state law publicity and privacy claims.

Rules/Reasoning:

The Court denied both parties’ summary judgment motions on Plaintiff’s false association claim.  Also called  false endorsement, an action for false association lies where a person’s identity (including likeness, voice, or other unique characteristics) is impermissibly connected with defendant’s product or service in such a way that consumers get the impression that plaintiff sponsors or endorses defendant’s products or services.  A false association/endorsement plaintiff must show she has a reasonable interest to be protected and an intent to commercialize her identity.  Otherwise, anonymous persons with no ability to monetize their identity could conceivably sue for false association.  The plaintiff must also prove actual economic damages (e.g. lost sales, profits, good will) resulting from the consumers’ reliance on defendant’s misleading statements or conduct.  Maremont, *4.

Here, the Court did find that plaintiff had a well-known name in the design community and therefore had a protectable commercial interest in her identity.  But because discovery wasn’t complete on the damages issue, it was premature for the Court to enter summary judgment for either party on the false association count.

Update: On March 3, 2014, the Court granted defendants’ summary judgment motion on Plaintiff’s false association claim.  Plaintiff’s Stored Communications Act claim survived summary judgment and the parties are going to trial on that count.

Plaintiff’s Stored Communications Act (SCA) claim also survived summary judgment because of unresolved fact disputes.  A Federal statute aimed at protecting against computer hackers, the SCA creates a private cause of action against a defendant who intentionally accesses (either without authorization or after exceeding authorization) and  alters or obtains plaintiff’s stored electronic communications (e-mail, e.g.).  Maremont, *5, 18 U.S.C. § 2701.

Plaintiff established that her Twitter and Facebook accounts belonged to her even though she signed up for both accounts at defendants’ office and on its computer equipment.  Since defendants clearly were able to access and send promotional tweets and Facebook messages from plaintiff’s personal accounts, there was a triable fact question as to whether defendants exceeded their authority to access those accounts.

In her state law right to publicity count, plaintiff asserted that the design firm  – by sending marketing messages from plaintiff’s social media accounts – used plaintiff’s likeness to promote defendants’ business.  A statutory publicity act claim requires a plaintiff to plead and prove (1) an appropriation of one’s name or likeness; (2) without written consent; (3) for another’s commercial benefit.  765 ILCS 1075/60; Maremont, *6.  Plaintiff’s right of publicity claim failed because she couldn’t establish element (1): that defendants pretended to be plaintiff when they sent messages from plaintiff’s Twitter and Facebook accounts.  Defendants clearly made it known that plaintiff was injured and that defendants, not plaintiff, were sending the promotional electronic missives.  Maremont, *7.  As a result, since defendants weren’t passing themselves off as plaintiff when they sent the messages, the defendants didn’t misappropriate plaintiff’s identity or likeness.

Defendants also defeated plaintiff’s intrusion on seclusion claim.  A species of the right to privacy tort, an actionable intrusion on seclusion claim requires a plaintiff to show (1) an unauthorized intrusion into seclusion; (2) intrusion that is highly offensive to a reasonable person; (3) the matter intruded upon was private; and (4) the intrusion caused the plaintiff anguish and suffering.  The plaintiff must also demonstrate that she attempted to keep private facts private.  And if something is displayed openly, there is no reasonable expectation of privacy under the law.  Maremont, *7.

Here, because plaintiff had so many Twitter (more than 1,200) and Facebook followers and frequently invited her followers to visit the design firm’s website and also linked to the firm’s public site and blog, the Court found that plaintiff didn’t try to keep any facts private.  Since plaintiff couldn’t point to any private information which defendants intruded on, the intrusion on seclusion claim failed.  Maremont, *7.

Afterwords: According to PACER, the Federal court public access portal, the case is still going.  Defendants have now moved five separate times for summary judgment.  Substantively, the case is relevant because it posits that a Twitter account is property of the individual account holder even though it was opened on employer premises and using employer equipment.  Maremont also demonstrates that a party’s commercial interest in her name and reputation and her private electronic communications are legally protectable interests under Federal and state law.

 

Commercial Lessor’s Acceptance of Rent After Lease Termination Notice Doesn’t Waive Termination

 Z&S Corp. v. Fill & Fly, Inc., 2014 IL App (3d) 130253-U examines whether a commercial lessor, who serves a 30-day notice to terminate an oral month-to-month lease, waives the termination  by accepting rents after the notice period expires.  The case also addresses what factual elements a plaintiff must prove to prevail on a specific performance claim under Illinois law.

The defendant operated gas stations on two properties owned by the plaintiff since 2008.  And while they had discussed the defendant’s purchase of the sites at various times – most recently in 2009 – they were operating under a verbal month-to-month tenancy pursuant to which the tenant paid monthly rents and real estate taxes to the plaintiff landlord.  When tenant defaulted under the oral lease, plaintiff served a 30-day notice (on February 28, 2012) to terminate the tenancy (effective March 31, 2012) and eventually filed a forcible suit seeking possession of both properties.  After the 30-day termination period expired, plaintiff accepted some rent payments from the tenant defendant.

The tenant filed a 2-619 motion to dismiss the forcible action on the basis that the landlord waived the 30-day termination notice by accepting rents after March 31, 2012 – the 30 day notice period’s expiration.  735 ILCS 5/9-207 (month-to-month tenancy terminable on 30 days’ notice); See  http://paulporvaznik.com/how-to-terminate-periodic-tenancies/23,

The trial court rejected this argument and denied the tenant’s motion on the basis that the parties were actively engaged in settlement talks and so the landlord’s lease termination notice wasn’t waived when the landlord accepted post-termination rents.  After a bench trial, the trial court found in favor of the plaintiff and awarded it possession of the properties.  The  trial court also entered judgment for plaintiff on the tenant’s specific performance counterclaim – which sought to enforce an earlier purchase contract for the sites – on the basis that the purchase contract lapsed.  The tenant appealed both the denial of its 2-619 motion and the trial result.  Z & S, ¶¶ 21-22.

The Third District affirmed the trial court.  On the termination notice issue, the Court held that a landlord’s acceptance of rent after a termination date usually results in a waiver of the notice.  Z & S, ¶ 30; Bismark Hotel Co. v. Sutherland, 92 Ill.App.3d 167, 173 (1980).  But Illinois case law provides that if the parties are involved in active settlement negotiations at the time the landlord accepts the rent payment, the landlord’s acceptance of the rent won’t waive the lease termination.  Z & S, ¶ 30; Yarc v. American Hospital Supply Corp., 17 Ill.App.3d 667, 671 (1974).  Here, since the record evidence demonstrated that the parties were engaged in settlement talks, the landlord’s acceptance of rent after the 30-day notice period ended didn’t nullify the notice.

The Court also upheld the trial verdict in landlord’s favor on the tenant’s specific performance claim. The tenant was trying to enforce a 2009 purchase contract for the two gas station properties.  A key component of a specific performance claim is whether the claimant (1) has complied with all terms of the contract or (2) was ready, willing and able to complete the contract but was prevented from doing so by the opposing party. Z & S, ¶ 37; Maywood Proviso State Bank v. York State Bank and Trust Co., 252 Ill.App.3d 164, 171 (1993).

The defendant’s failure to establish either element doomed its specific performance claim.  The trial evidence demonstrated that the defendant’s failure to pay real estate taxes on the properties – as required under the lease and aborted purchase contract – was the reason the properties’ mortgage lender wouldn’t permit defendant to assume the existing mortgages on the sites and consummate the purchase.  Also, the Court noted that the defendant’s principal’s trial testimony established that he was unable to complete financing for the purchase of the properties because he didn’t have a green card.  Without a green card, the bank wouldn’t allow the defendant to complete the purchase transaction.  Taken together, the evidence clearly demonstrated that the tenant couldn’t prove either that he complied with the purchase contract or was prevented from doing so by the plaintiff. Z & S, ¶¶ 37-39.

Z & S is useful for its discussion of how to terminate a month-to-month commercial lease and when a landlord can still accept rent payments after a termination notice lapses.  The case also shows that to plead and prove specific performance, a litigant must show that he either complied with the contract terms or stood ready to but was impeded by some act of the other contracting party.

 

Record Company’s Injunction Attempt Against Rock Band Fails


Victory Records’ attempt to prevent the rock band A Day to Remember (ADTR) from releasing an album in the Fall of 2013 failed because it couldn’t establish the elements for injunctive relief under Illinois law.

In Woodard v. Victory Records, 2013 WL 5517926 (N.D.Ill. 2013), the defendant record company (“Victory” or the “Record Company”) sued to prevent the Florida pop-punk quartet from self releasing its Common Courtesy record.

The Court denied the Victory’s request to block the band’s album release.

To get a temporary restraining order, a plaintiff must show:

  • irreparable harm,
  • an inadequate remedy at law,
  • a likelihood of success on the merits;
  • the harm that will result if the injunction isn’t entered will outweigh harm to the opposing side if the injunction is entered.  *2.   

Victory established a likelihood of success on the merits.  “This is not a high burden.”  All the movant must show is a “better than negligible” chance of winning on the merits.

The crux of the dispute was the parties’ differing interpretations of the word “album” as it was used in the contract. 

The Court found the term ambiguous and each side’s interpretation was plausible.  ( *3).  Because each side’s reading of the contract had facial validity, the Record Company demonstrated a better than negligible chance of prevailing on the merits.

Irreparable harm denotes “likely” injury that is “real” and “immediate”, not “conjectural or hypothetical.”

The movant has to show money damages would not adequately remedy the harm suffered without an injunction.  ( *3).

Here, Victory couldn’t establish likely irreparable harm or an inadequate remedy at law because ADTR was a known quantity. 

ADTR had released several successful albums under the Victory label.  Because of this, Victory could gauge any lost profits resulting from ADTR’s independent album release. 

This ability to extrapolate the album’s likely profits from ADTR’s prior sales meant Victory had an adequate legal remedy (e.g. a suit for money damages) for breach of the recording contract. 

The Court also rejected Victory’s reputational harm argument – that if ADTR is allowed to self-release an album and the album is flawed and doesn’t sell, Victory’s reputation will suffer.  The Court held that since ADTR was perennially successful and had a wide fan base, it wasn’t likely that ADTR would intentionally (or not) release an inferior music product. (*4-5).

The balance of harms element also favored ADTR.  The Court applied a “sliding scale” analysis: the more likely a movant is to win, the less the balance of harms must weigh in the movant’s favor (and vice versa). (*2).

 Here, the Record Company had a lost profits breach of contract remedy if the band breached the recording contract.  In contrast, if ADTR was prevented from releasing its album with no end in sight to the underlying litigation, the band’s fan support could likely erode in an ultra-competitive industry (the music business) resulting in definite financial harm to the band.  (*5)

Take-aways:

Victory Records illustrates that injunctive relief is difficult to get where the moving party has a clear legal remedy.

 The Court found that past album sales provided a basis for lost profits and a sufficient legal remedy if the band breached the recording contract.