Heather McKinney 4/11/21 Heather McKinney 4/11/21

Legal Question: Something Borrowed - The Downside of Trading Your Name for Cash

This week’s question comes from Abby via the form. Abby asks:

“So I'm not sure if you have heard or are following anything happening with the wedding dress designer Hayley Paige. From her account, the company JLM Couture has taken all rights to her name, including her presence on social media. I've tried reading the court doc that JLM posted in their Instagram bio but it's all gibberish to me. Is what they're doing justified? What is their claim to her name anyway?”

Excellent question, Abby!

Here’s a short-ish run-down of the situation going on in the wild world of wedding gowns. For a longer play-by-play, check out this piece from Business Insider.

On July 13, 2011, budding wedding dress designer Hayley Paige Gutman signed an employment agreement with JLM Couture, a bridalwear manufacturer. At just 25 years old, Gutman was offered the opportunity of a lifetime – design bridal gowns for a heavy hitter dress manufacturer and receive their support and compensation in exchange.

In an email at the time of signing, JLM wrote to Gutman, saying, “Attached is a signed contract. Hayley please confirm you have reviewed this with your attorney.”

Gutman responded, “Thank you for sending! I have reviewed with my attorney accordingly.” She’s now saying that email was a lie, and she never hired an attorney to review the agreement. Honestly, that may be the case.

If I had reviewed her employment contract, I would have had a couple notes. First of all, the language in her contract is pretty broad. It gives JLM the exclusive rights to use and trademark the name “Hayley Paige” and variations thereof as well as “the exclusive world-wide right and license to use her name ‘Hayley’, ‘Paige’, ‘Hayley Paige Gutman’, ‘Hayley Gutman’, ‘Hayley Paige’ or any derivative thereof” during the stated term of the employment contract and for two years thereafter.

Even if you’re not a lawyer, you can imagine that “exclusive right” and “exclusive world-wide right and license” are pretty broad and sweeping. That means only JLM can use those names or decide who else can use them.

The rights also last for the entire term of the contract PLUS two years. So, she should have been real sure about what she was giving up – in this case, her name – even though she was being compensated for it.

That compensation came in exchange “for the assignment of the Designer’s Name and the Trademarks” to the Company. She literally traded her name for compensation. This is a big decision. Huge! Not one to undertake without representation.

To really finalize the deal, JLM had Gutman sign a trademark registration acknowledgment, confirming that she had transferred all trademark rights in the name “Hayley Paige” and any derivatives thereof to JLM and that she consented to the registration of the trademark “Hayley Paige.” After that, JLM actually owned her name for use in business.

Over the next few years, Gutman created a brand around herself and her designs, posting them across social media including on Instagram under the handle @misshayleypaige. The Instagram gained over a million followers as fans followed her posts about her dog, her personal life, and especially her bridal gown designs. She became more and more well known and even appeared on the wedding show Say Yes to the Dress on TLC.

In late 2019, after extending her contract through August 2022, Gutman created a TikTok using @misshayleypaige on which she posted mostly personal content. JLM’s CEO Joe Murphy then allegedly asked her to post brand-approved content only.

Instead, she changed the password to the 1.1 million-follower @misshayleypaige Instagram account, locking out JLM’s social media manager who had been assisting with the account. Over the next few months, she removed some posts regarding JLM and her bridal line and took two influencer deals to make money posting about unrelated third-party products on the account. One was a salad dressing company and the other was whey protein. She also removed references to JLM in the account’s bio.

JLM and its CEO Joe Murphy didn’t seem to care for this too much. They requested login credentials to the @misshayleypaige accounts. According to JLM, Gutman allegedly ignored or refused these requests. In response, JLM sued Gutman on December 15, 2020 for a long list of stuff, including trademark infringement and dilution, false designation of origin, unfair competition, conversion, trespass to chattel, breach of fidelity, breach of contract, breach of fiduciary duty, and unjust enrichment.

Since then, a federal court has granted a temporary injunction giving JLM control over all of the @misshayleypaige accounts. JLM also sought the court to order the-designer-formerly-known-as-Hayley-Paige from “publicly disparaging JLM” and from “continuing [her] social media bullying campaign” against JLM. The court denied this part of the request as it would constitute “prior restraint” in violation of Gutman’s First Amendment rights.

On April 9, 2021, JLM announced that a new designer would be creating the gowns under the Hayley Paige line. That person? Not named Hayley Paige. She is Francesca Pitera, a former designer for Monique Lhuillier who had prior experience with JLM on another line.

With that injunction, Gutman has been restrained from using her own name in business and is enjoined from using the @misshayleypaige social media accounts. Now to answer the questions…

Is What They're Doing Justified?

It would appear so. It super sucks that she gave away the rights to her name in that contract. I have no clue in what universe you would negotiate a deal to assign the “exclusive right” and “exclusive world-wide right and license” to your name without a lawyer. I do not live there. I get that she was 25 at the time, but in the eyes of the law she was still grown and able to make that agreement.

When I was 25, I was just starting law school. I don’t think I would have even trusted myself to sign something like that without a lawyer. Bless her heart, as we say in Texas, but the language of that contract is mega-broad and she agreed to it.

In another provision of the contract, she agreed that any other “works” conceived of or developed by her in connection with her employment with the Company are “the sole and exclusive property of the Company.” In the court’s opinion, the term “works” includes the Instagram and TikTok accounts she created after her employment term began.

Because her contract required her to assist with advertising, the creation and use of the accounts to promote the brand fell under “employment” and were “works for hire” belonging to JLM. It appears from the language in the court order that she operated the account as an extension of her duties at JLM. She got input from JLM and its employees on what captions to use and on responding to DMs. Therefore, the court said, the social media pages were created by Hayley Paige the employee for work purposes and therefore belonged to JLM.

Gutman argued that the accounts were created for her personal use rather than business use. However, there was internal communication that indicated she mixed in the personal stuff as a marketing tactic, rather than as a form of personal expression. She stated in an email that she needed a social media director to help with the account to “maintain the balance specifically on the @misshayleypaige account . . . [because] I think it’s important that we do not dilute this Instagram with too much promotion/advertisement so that we can maintain the aesthetic and personality of the brand.”

Were the cute dog and fiancé photos really to express her joy? Or were they posted to avoid “diluting” the page with promotion/advertisements to preserve the aesthetic of the brand? The court decided it was the latter.

In its order on the temporary injunction, the court concluded that she assigned “Hayley”, “Paige”, “Hayley Paige Gutman”, “Hayley Gutman”, “Hayley Paige” and any derivative thereof to JLM. The court also concluded that the language of the contract “unambiguously encompasses” both “misshayleypaige” and “@misshayleypaige,” which are derivatives of “Hayley Paige” because they only add the word “miss” to the beginning.

So yeah, at least according to the federal court and based on the language of the contract, they are justified in claiming use of those accounts.

What is Their Claim to Her Name Anyway?

They paid for it. Not only did she receive a base pay and additional sales volume-related compensation, she is also entitled to receive a further percentage of “net revenues derived from the sale of goods” sold under her name and the other Hayley Paige trademarks for ten years following the termination of her employment with the company.

This means even after her contract ends in August 2022, she is entitled to receive payments based on future sales that use her name for another full decade.

Is that compensation worth it to give up your name? I don’t know. I wouldn’t shake on that deal, but everybody is free to make whatever deals they want to make. Maybe JLM will sell an ass load of Hayley Paige wedding dresses and Gutman will never have to work again so it will all have been worth it. On the other hand, maybe they’ll sell a bajillion dresses, but even then she may not feel like it is enough compensation to warrant losing her name.

The real rub is that, as it stands, she is pretty much bound. Absent the court undoing the contract (which I doubt will happen given the court’s language in the preliminary injunction docs) that’s the deal she made and that’s the deal she’s gotta live with. This is especially true since the contract does not include a provision permitting Gutman to terminate it on her own (“unilaterally”). She’d have to get JLM to agree to releasing her. Otherwise, her actions may be considered repeated breaches of the terms of her agreement, subjecting her to having to pay damages or to further injunctions.

The answer to all this is probably negotiating a settlement. From JLM’s perspective, it looks pretty bad to be doing this, even if they are within their rights under the law. The @misshayleypaige account currently under the control of JLM has turned its comments off, attempting to avoid online backlash. JLM also claimed in its complaint that some bridal boutiques have quit carrying the line due to the legal drama.

For what it’s worth, Gutman has counter-sued JLM, claiming (1) JLM “willfully failed to pay and/or unlawfully deducted Additional Compensation due to” her, (2) she was defamed by JLM in private and in public, and (3) JLM CEO Joe Murphy sexually harassed Gutman and others and created a hostile work environment.

If they don’t settle, then at least Gutman will get her day in court. Until then, she’s known on Instagram as @allthatglittersonthegram where she recently put out a request for suggestions on an all-new name she plans to choose for herself.

I hope that answers your question, Abby! Thanks for sending.

Got a question? Submit it here. They can be legal what-if questions, questions on current events, or questions about the legality of actions in TV shows or movies you’ve seen. I never ever want to answer your personal legal questions, so don't send those. Love you, but I don’t do that.

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This piece first appeared in Sunday Morning Hot Tea. Subscribe so you don’t miss another piece.

Heather McKinney 12/27/20 Heather McKinney 12/27/20

Legal Question: The Case of Snoop and the Stolen Gin & Juice

This question comes from Aaron:

“In the song Gin and Juice, Snoop Dogg claims that ‘I got me some Seagram's Gin, everybody got their cups but they ain’t chipped in.’ What steps would he have to take and what would be his burden of proof in order to recoup his money from them in court?”

Excellent question, Aaron. I think this one is particularly relevant given that we are close to New Year’s Eve, a time for partying and revelry. It’s also a time for fools to roll through parties with empty cups and no funds to chip in.

Your question is really two-fold, so we’ll address each part in turn. First, let’s talk steps Snoop has to take to recoup his money.

When you sue someone, you have to choose the proper venue. We discussed this a little bit in regards to The Santa Clause. Let’s assume that everyone involved in this incident is located in the LBC, or Long Beach, California, where Snoop would likely be hosting the party. Long Beach is located in Los Angeles County, California, so that county is where he would sue.

Next, he has to decide which court is proper. Though Snoop probably throws major blowouts, I'm going to assume that the amount of Seagram’s at issue is worth less than $10,000. California has two venues for individuals to resolve small disputes of less than $10,000: Small Claims Court and Limited Civil Courts. For several reasons, including fewer rules, no lawyers, and all partygoers being located in California, Snoop may want to sue them in Small Claims to make things easier. However, under California law, he would not be able to do that.

Snoop is asking a judge to determine the rights and obligations of the parties - Snoop’s right to recoup money and the gin-drinkers’ obligations to pay for the gin - meaning he would be required to file in Limited Civil Court. Because the Limited Civil Court requires the parties to follow procedural rules and rules of evidence, I would advise Snoop to hire a lawyer to help navigate the system.

Before filing the suit, Snoop should make a written demand the money from those who took the gin then document his demands. This is usually done through letters, sent certified mail, return receipt requested, to prove that the letters were delivered to the intended recipients.

For efficiency’s sake, Snoop would not want to sue each cup-holder individually. He would have his lawyer pursue one lawsuit and join together several defendants. This is permissible under California law since the suit is “arising out of the same transaction, occurrence, or series of transactions or occurrences” and because “question[s] of law or fact common to all these persons will arise in the action.”

He would also be unsure until all the facts were proven at trial as to who drank what and how much. In that case, the California Code of Civil Procedure would also permit him to join defendants together since Snoop “is in doubt as to the person from whom he is entitled to redress.” Since he is unsure, Snoop “may join two or more defendants, with the intent that the question as to which, if any, of the defendants is liable, and to what extent, may be determined between the parties.” This is something he would have to ask the court’s permission to do.

When filing the suit, Snoop’s lawyer could sue on several counts:

(1) breach of an oral contract - he was to provide gin, and they were to provide cash in exchange;

(2) “unjust enrichment” which requires him to prove (a) defendant’s receipt of a benefit, i.e., gin, and (b) unjust retention of the benefit at the expense of another, i.e., they never paid Snoop; and

(3) conversion - the civil action for theft. For conversion, Snoop would need to prove that (1) he owned the gin; (2) the drinkers interfered with his ownership by knowingly or intentionally taking it/destroying it (by drinking it); (3) that Snoop did not consent to their drinking it; (4) that Snoop was harmed by the taking of his gin; and (5) that the drinkers’ conduct was a substantial factor in causing Snoop’s harm.

Before the trial, Snoop and the defendants would then exchange information and answer questions posed by each side in a process called “discovery.” The court will also make them attend a mandatory pre-trial settlement conference, in order to see whether they could work out their problems before trial.

After the pretrial steps, if Snoop and his lawyer still want to sue these avaricious gin guzzlers, he has the burden of proving the elements of the above claims and all the related facts, including who drank what and how much. This brings us to the second part of Aaron's question - Snoop’s burden of proof.

California Civil Jury Instruction Number 200 is particularly helpful for this question. In plain terms, Snoop would have to prove to the jury that the facts of his case are “more likely true than not true.”

This standard of “more likely true than not true” is known as the “preponderance of the evidence.” This is a much lower standard than in criminal cases where the standard is “beyond a reasonable doubt.”

Some lawyers explain “preponderance of the evidence” as having to prove something was 51% probable, as in, if it is 51% more likely that something happened based on the evidence presented at trial, Snoop should win. That's a pretty low standard. Snoop would likely be able to prove his case with plenty of evidence given that, according to the song, “This type of shit happens all the time.”

And if he wins, he can ask the judge to make the other side pay his court costs and attorneys’ fees, making those some pretty costly cups of gin and juice.

I hope that answers the question. Thanks, Aaron!

Got a question? Submit it here. They can be legal what-if questions like the one above, or questions about the legality of actions in TV shows or movies you’ve seen. I never ever want to answer your personal legal questions, so don't send those. Love you, but I don’t do that.

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This piece first appeared in Sunday Morning Hot Tea. Subscribe so you don’t miss another piece.