Youngevity International, Corp. v. Smith

224 F. Supp. 3d 1022, 2016 U.S. Dist. LEXIS 186546, 2016 WL 7626584
CourtDistrict Court, S.D. California
DecidedDecember 1, 2016
DocketCase No.: 3:16-cv-00704-L-JLB
StatusPublished
Cited by2 cases

This text of 224 F. Supp. 3d 1022 (Youngevity International, Corp. v. Smith) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Youngevity International, Corp. v. Smith, 224 F. Supp. 3d 1022, 2016 U.S. Dist. LEXIS 186546, 2016 WL 7626584 (S.D. Cal. 2016).

Opinion

ORDER GRANTING PLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION [Doc. 48] AND GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS [Doc. 50]

Hon. M. James Lorenz, United States District Judge

Pending before the Court is Plaintiffs’ Motion for a preliminary injunction and [1026]*1026Defendants’ Motion to dismiss. The Court decides the matter on the papers submitted and without oral argument. See Civ. L. R. 7.1 (d)(1). For the reasons stated below, the Court GRANTS Plaintiffs’ Motion for a preliminary injunction and GRANTS IN PART and DENIES IN PART Defendants’ Motion to dismiss.

I. Background

This dispute arises out of a broken business relationship between Plaintiffs and several individuals and corporations who used to do business with them. Plaintiffs are Youngevity International Corporation (‘Youngevity”) and Dr. Joel D. Wallach (“Wallach”). Youngevity is a publically traded company founded by Wallach that engages in the business of selling various health supplements. Youngevity uses independent, direct sellers known as “distributors” to move its product. The individual defendants in this action are former Youn-gevity distributors and / or employees. Defendants Wakaya Perfection Inc. (“Waka-ya”) and Total Nutrition Inc. (“TNT”) are companies, formed by some of the individual defendants, which are now in competition with Youngevity. For about seventeen years, Defendant TNT has run various Websites1 as well as a 1-800 Number2 that explicitly use Plaintiffs’ likenesses. Plaintiffs sent Defendants a letter dated March 21, 2016 that terminated the parties’ business relationship and demanded cessation of Plaintiffs’ use of Defendants’ likenesses. However, Defendants’ uses of Plaintiffs’ likenesses continues.

On July 13, 2016, Plaintiffs filed a Second Amended Complaint against Defendants’. (SAC [Doc. 47].) It alleges (1) false or misleading advertising in violation of the Lanham Act, 16 U.S.C. § 1125; (2) false advertising in violation of California Business and Professions Code §§ 17500 et seq.; (3) unfair completion in violation of California Business and Professions Code § 17200 (“the UCL”); (4) intentional interference with prospective economic advantage; (6) breach of contract; (6) intentional interference with contract; (7) misappropriation of trade secrets in violation of California Civil Code § 3426; (8) misappropriation of likeness in violation of California Civil Code § 3344; (9) trademark infringement in violation of the Lanham Act, 16 U.S.C. § 1114; and (10) breach of fiduciary duty, (See SAC.) Plaintiffs now move for a preliminary injunction enjoining Defendants’ continued use of their likenesses. (See MPI [Doc. 48].) Defendants now move to dismiss various of the claims against it. (See MTD [Doc. 50].) Each side opposes the other’s motion. (See Opp’ns [Docs. 51, 56].)

II. Motion for Preliminary Injunction

Plaintiffs seek a preliminary injunction requiring Defendants to cease using the 1-800 Number and to take down the Websites. “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L,Ed.2d 249 (2008). This analysis involves a sliding scale such that “a stronger showing on one element may offset a weaker showing of another.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). The most important variable however is the likelihood of success on the merits. Garcia v. Google, Inc., [1027]*1027786 F.3d 733, 740 (9th Cir. 2016). Further, where, as here3, the injunctive relief sought is mandatory in nature, a court should decline the request unless the party seeking the relief demonstrates that the law and facts “clearly favor” their position. Id.

To recover on a misappropriation of likeness claim, a plaintiff must prove “(1) the defendant’s use of the plaintiffs identity; (2) the appropriation of plaintiffs name or likeness to defendant’s advantage, commercially or otherwise; (3) lack of eon-sent; and (4) resulting injury.” Laws v. Sony Music Entm’t, Inc., 448 F.3d 1134, 1138 (9th Cir. 2006); Cal. Civ. Code § 3344. The present dispute turns in main part on the consent element. Consent can be express or implied. See Newton v. Thomason, 22 F.3d 1455, 1461 (9th Cir. 1994). Up until March of 2016, Defendants had implied consent to use Plaintiffs’ likenesses. (See SAC ¶ 290; Graham Decl. [Doc. 51-1] ¶¶ 19, 20; [Doc. 53] 3:24-27.) Via a letter dated March 21, 2016, Plaintiffs claim they, terminated consent to Defendants’ use of Plaintiffs’ likenesses. (Termination Letter [Doc. 47-1 Ex. C Attach. 4].). Defendants claim that the single publication rule, Cal. Civ. Code § 3425.3, prohibits Plaintiffs from terminating consent to Defendants’ use of their likeness so long as Defendants’ use remains consistent.

A claim for misappropriation of likeness is subject to a two year statute of limitations period. Yeager v. Bowlin, 693 F.3d 1076, 1081 (9th Cir. 2012). Defendants’ uses of Plaintiffs likeness began more than two years ago. Under the single publication rule, a statement is generally considered published, and therefore the statute of limitations period generally begins to run, upon the first publication of the communication. Id. at 1082. The statute of limitations, however, resets with any republications. Id. In the context of websites, republication does not occur so long as the statement is not substantively altered or directed to a new audience. Id. Defendants contend that there has been no republication of its use of .Plaintiffs’ likenesses in the two years preceding Plaintiffs’ Complaint. Defendants therefore assert that the statute of limitations has ran upon the misappropriation of likeness claim.

The Court disagrees. The main problem with Defendants’ position is that it would start the statute of limitations clock before all the elements of a claim accrue. This is improper. Howard Jarvis Taxpayers Ass’n v. City of La Habra, 25 Cal.4th 809, 815, 107 Cal.Rptr.2d 369, 23 P.3d 601 (a cause of action accrues “upon the occurrence of the last element essential to the cause of action.”). Indeed, Defendants’ position would require a plaintiff to bring a claim before having a legal basis to do so.

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224 F. Supp. 3d 1022, 2016 U.S. Dist. LEXIS 186546, 2016 WL 7626584, Counsel Stack Legal Research, https://law.counselstack.com/opinion/youngevity-international-corp-v-smith-casd-2016.