The ugly legal battle that erupted between JLM Couture and designer Hayley Paige Gutman late last year over the Hayley Paige brand and its various social media accounts is only heating up, with a New York federal court recently finding that Gutman violated a preliminary injunction that bars her from making, marketing, and selling various bridal products until August 1, 2022. According to a September 8 opinion and order, Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York determined that Gutman had acted in contempt of the court’s March 2021 preliminary injunction order (“PI Order”) by promoting the impending launch of a new bridal brand on Instagram and in an Business Insider interview.
The court’s finding follows from a motion that JLM filed in August, in which it argued that Hayley Paige Gutman violated part of the court’s March order, which explicitly prohibited her – and “any other persons who are in active concert or participation with her” – from “engag[ing] in the design, manufacture, marketing or sale of bridal apparel, accessories and related items, evening wear and related items; and/or any other category of goods designed, manufactured, marketed, licensed or sold by JLM.”
According to JLM, which owns the Hayley Paige brand and corresponding trademarks, Ms. Gutman violated the terms of the PI Order by actively “engaging in the marketing” of a future bridal brand on Instagram, and should be held in civil contempt by the court and subject to sanctions. Specifically, JLM asserted that on June 7, 2021, “a few days after the court issued its order denying Ms. Gutman’s motions for dissolution and reconsideration of the preliminary injunction, Ms. Gutman posted a video on her Instagram @allthatglittersonthegram account captioned ‘SAVE THE DATE.’” In that video, Gutman asserted, “The judge clarified in her order that I will be allowed to reenter the bridal industry and start designing again under a different brand name in August of 2022 … I have 14 months to plan a gorgeous return to the work I love. And I hope you are as ready as I am.”
On the heels of posting that video, Gutman published additional Instagram videos of herself “sketching designs of dresses on June 21, July 1, and July 15, 2021.” In doing so, JLM claimed that Gutman “not only violated [the PI Order’s] directive that she refrain from ‘engaging in the marketing’ of ‘goods designed, manufactured, marketed, licensed or sold by JLM,’ but also [the] prohibition on ‘engaging in . . . the design’ of competitive goods,” as JLM offers up sketches to brides as part of the Hayley Paige brand “as accessories for brides to use as part of a memory or scrapbook about a wedding.”
And still yet, JLM argued that Gutman – who resigned from her role at her JLM-owned eponymous label in December 2020, almost 10 years after signing away her rights to the commercial use of her name to JLM as part of a previously-entered employment agreement – “continued to promote her future bridal collection when she gave an exclusive interview to Business Insider [in June] about her plans for ‘reentering the bridal space [she] was meant to be in,’” and then shared a link to the interview on her Instagram account.
Hayley Paige’s Arguments
Granting the bulk of JLM’s motion, Judge Swain found that Gutman did, in fact, violate the terms of the PI Order by way of her social media posts, including her post that linked to the Business Insider interview. In siding with JLM, the court shot down Gutman’s various arguments to the contrary. Primarily, Judge Swain stated that Gutman’s claim that she did not violate the court order because “[t]here are no ‘competitive goods’ that have been designed or manufactured at this point” was “unavailing,” as such a reading of the PI Order “completely ignores [its] prohibition against the ‘marketing’ of such goods, whether or not they have yet to be manufactured.”
“Even if Ms. Gutman has not begun the process of creating the dresses that will be a part of her forthcoming collection, she has advertised her future bridal brand in violation of … the PI Order,” per Judge Swain.
“Ms. Gutman has created and posted videos of sketches of gowns, and dress sketches are competitive goods manufactured and sold by JLM to brides as accessories or memorabilia of their weddings,” Judge Swain stated. She further declared that “Gutman’s assertion that the creation of her drawings does not violate [the order] because her ‘drawings are not for sale,’ nor are they ‘aimed at creating a product line,’ again takes an impermissibly narrow view of [the PI Order], which prohibits engaging in the ‘design, manufacturing, marketing or sale of’ ‘goods designed, manufactured, marketed, licensed or sold by JLM.’”
Beyond that, the court held that Gutman’s argument that she should not be found in contempt because she “has only made preparations for her future brand, and has not taken sufficient steps to engage in competition with JLM,” is similarly unpersuasive. Although Judge Swain stated that Gutman is correct in arguing that “under applicable New York law, a former employee may prepare to compete during the term of a non-competition provision,” the judge held that such acts “cease to be preparatory where they detrimentally impact the former employer’s economic interests during the term of a non-competition clause.”
Gutman actions “go far past mere preparatory actions, to the detriment of JLM’s economic interests,” according to the court, particularly since Gutman “publicly announced and promoted her future bridal brand on her Instagram account, a powerful advertising medium on which she has accumulated approximately 197,000 followers, and also through her interview with Business Insider.”
Finally, and in addition to other arguments unsuccessfully waged by Gutman, the court pushed back against her assertion that the limitations imposed by the PI Order violate her First Amendment rights. “Ms. Gutman has already argued that the court should reconsider the PI Order because it constitutes an improper restraint on her speech in violation of the First Amendment,” Judge Swain stated, noting that the Court already rejected that contention.
Even if that argument had not been previously dismissed by the court, Judge Swain held that “the court has already found that the ‘relevant provisions of the negotiated contract’ constitute ‘clear and compelling evidence’ that ‘Ms. Gutman voluntarily, knowingly, and intelligently, in exchange for consideration’ waived her rights to use the [Hayley Paige] name for commercial purposes without JLM’s permission,” thereby, doing away with any First Amendment concerns.
Siding with JLM
Ultimately, the court determined that JLM proven by clear and convincing evidence, on the undisputed facts of record, that Gutman was in civil contempt of the court’s PI Order and that her contempt of the order was willful. As for remedies, Judge Swain stated that the court’s “finding of contempt and order granting equitable relief, coercive sanctions, and an award of JLM’s attorneys’ fees and costs incurred with the prosecution of this motion are sufficient to address Ms. Gutman’s violations of the PI Order and the dual coercive and compensatory purposes of civil contempt.”
Not a total win for JLM, the judge found that JLM’s request for monetary compensation “based on actual harm to JLM’s business and reputation,” including at least $66,000 in lost sales based on the average price of a JLM Hayley Paige bridal dress multiplied by the 15 comments on Instagram “showing refusal to buy from JLM/waiting for August 2022” was “too speculative in nature” in order to warrant a monetary damages award.
In terms of the Instagram posts at issue, the court directed Gutman to remove them within five days of the date of the September 8 order, while also reiterating that “Ms. Gutman is also enjoined, effective immediately, from announcing a new brand name in the context of any present or future commercial venture involving any category of goods listed in the PI Order” as long as the order remains in effect.
In a statement issued on the heels of the court order, a spokesman for Gutman said, “We are disappointed by the court’s ruling. Many elements of the matter are on appeal to the [U.S. Court of Appeals for the] Second Circuit, and we look forward to their consideration this fall.”
The court’s latest decision comes nine months after JLM filed suit against Gutman – who found widespread fame thanks to her recurring role on TLC’s reality show Say Yes to the Dress – in December 2020, accusing Gutman of federal and common law trademark dilution and unfair competition, breach of contract, conversion, and breach of fiduciary duty, among other claims, after she began posting “personal images in addition to bridal images” to the @misshayleypaige account, as well as uploading posts “promoting the goods of third parties, such as olive oil, beer, and nutritional supplements, none of which were approved by JLM, and none of which relate to the bridal industry.” Not only did Gutman “hijack the [@misshayleypaige] account,” JLM has argued that she took “steps to convert it from a JLM company account” – and its 1.1 million followers – “to her own business platform, as if she were an influencer.”
The court has since characterized the case as “a novel dispute between a leading bridal wear designer and the manufacturer from whose employ she recently resigned over the control and use of social media accounts.”
The case is JLM Couture, Inc. v. Gutman, 1:20-cv-10575 (SDNY).
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