JLM Couture, Inc. v. Gutman

Background

JLM Couture, Inc. asked the court to modify an existing preliminary injunction. A preliminary injunction is a temporary court order intended to prevent harm while a case is pending. Earlier orders had restricted Hayley Paige Gutman’s conduct concerning JLM’s social-media accounts, JLM’s trademarks and designs, competition with JLM, and other contract obligations. Several restrictions were scheduled to expire on August 1, 2022, when the stated employment term ended.

Gutman entered a 2011 employment agreement with JLM to work as a designer of bridal, bridesmaids’, evening, and related apparel. The agreement gave JLM rights involving the Designer’s Name, trademarks, and designs created in connection with her employment. It also contained a noncompetition provision during the employment term, a confidentiality provision, and a post-employment provision stating that, if JLM applied to register the relevant trademarks, Gutman could not for five years after her employment ended be identified publicly as the designer of competing goods or have her role as designer used to promote competing goods.

Gutman created Instagram and Pinterest accounts using the handle “@misshayleypaige.” The court found that the accounts promoted JLM’s products, linked to JLM’s websites and other projects, communicated with actual and potential customers, and were managed with the participation of JLM employees. Gutman later changed the accounts’ access credentials and withheld the new login information from JLM. The court had also previously found Gutman in civil contempt for promoting a future bridal brand while the employment-term noncompetition restriction remained in effect.

JLM’s Requests

JLM sought four principal forms of relief:

Court’s Analysis

The court concluded that JLM had clearly shown it was likely to succeed on its claim that it owned the Instagram and Pinterest accounts, or at least had a right to use and control them superior to Gutman’s. The court used several factors, including how the accounts were presented to the public, the accounts’ business purposes, and whether company employees accessed and managed them. It placed particular weight on the accounts’ use of the Hayley Paige brand name, links to JLM platforms, promotion of JLM goods, customer-service activities, and employee involvement.

The court also concluded that JLM was clearly likely to succeed on its conversion claim. Conversion is the unauthorized exercise of control over property that excludes the owner’s rights. The court found that Gutman changed the accounts’ credentials, refused to give JLM the new login information, and blocked JLM from using important marketing platforms. Because the conversion claim supported the requested relief, the court did not separately analyze the related trespass-to-chattels claims.

The court found irreparable harm likely without an injunction because the accounts were important advertising and customer-communication platforms, were linked to the Hayley Paige brand, and carried goodwill that could not readily be measured in money. It also found that the balance of hardships and the public interest favored maintaining JLM’s control.

As to Section 10(e), the court found the provision unambiguous. It interpreted the provision to prohibit Gutman, under any name, from being publicly identified as the designer of competing goods or allowing her designer role to be used to promote competing goods. The court rejected Gutman’s argument that the provision applied only to use of the Hayley Paige name or related trademarks. It found that Gutman’s public plans to return to the bridal industry under a different brand name created a likely risk of breach and irreparable harm to JLM’s goodwill and brand interests.

The court declined to extend the separate noncompetition restriction in paragraph 3(b) beyond August 1, 2022. It reasoned that Gutman’s earlier violation had already resulted in a contempt finding and sanction, and that imposing an additional extension would amount to another sanction for past misconduct. The court also declined to add relief under the confidentiality provision because JLM had exclusive control of the accounts and had not shown that Gutman was likely to disclose confidential information apart from her use of those accounts.

Disposition

The court granted in part and denied in part JLM’s motion to modify the preliminary injunction. Effective immediately and during the pendency of the action, the modified order:

- prohibited Gutman and persons acting with her from changing, transferring, altering, or using the specified Instagram and Pinterest accounts for non-JLM commercial purposes without written permission from JLM’s chief executive officer; - prohibited Gutman from taking steps to gain control over those accounts, except through a properly noticed court application; - continued restrictions on use of the Designer’s Names, trademarks, designs, and confusingly similar marks; - continued the noncompetition restriction only until August 1, 2022, unless changed by a further court order; and - prohibited Gutman, until August 1, 2027, from being identified to the trade or consuming public as the designer of goods competing with JLM’s goods, or from allowing her designer role to be used to promote such goods.

The court also ordered Gutman to take actions necessary for JLM to maintain access to and control of the Instagram and Pinterest accounts. The case remained referred to Magistrate Judge Cave for general pretrial management.