Tiffany & Co. is looking to get the amended complaint filed against it by Cartier tossed out of court, arguing that its rival jeweler’s case is a “doomed” attack, “calibrated for maximum publicity.” In a newly-filed motion to dismiss, Tiffany & Co. asserts that Cartier has failed to establish the trade secret misappropriation, unfair competition, and tortious interference claims that it sets out in the case that it first filed in New York state court in March, in which it accuses Tiffany of luring former Cartier employee – and named defendant – Megan Marino away from her role as its Assistant Manager for Jewelry Merchandising to join Tiffany, and getting her to share “very sensitive and valuable” internal Cartier documents in the process. 

In response to the amended complaint that Cartier lodged with the court in April, in which it claims that Tiffany engaged in a concerted effort “to solicit and receive … trade secrets and other confidential information that would facilitate the pursuit of [its] stated corporate goal of competing with Cartier’s High Jewelry business” from two former Cartier employees, Tiffany argues that Cartier has failed to make its case. Primarily, Tiffany asserts that Cartier does not allege that the information that Marino allegedly stole from Cartier – including an inventory spreadsheet and “general revenue data” – amounts to trade secret information. 

In accordance with New York law, Tiffany contends that trade secrets are limited to “the most sensitive corporate information designed for ‘continuous use in the operation of the business,’” which is distinct from information about “‘single or ephemeral events in the conduct of the business,’ such as general financial and operational data.” While Cartier argues that access to such information “would allow a competitor to ‘make adjustments’ to their product allocations to match [its own],” Tiffany asserts that the information is “ephemeral, operational data, long-since outdated or provisional only, that can never qualify for protection under New York law.”

Second, Tiffany asserts that even if the information at issue was to be construed as trade secrets, Cartier’s claim is still lacking, as that information was “never sufficiently kept secret.” The ability of “Marino, a low-level assistant manager who did not work with High Jewelry, [to] so easily to access supposedly highly-sensitive High Jewelry documents prove[s] only that the documents are not and were never treated as sensitive at all,” Tiffany contends. While Cartier’s shared drive – where the information at issue was stored – was password-protected and its employees were required to sign confidentiality agreements, Tiffany contends that “Cartier admits that the documents were not separately encrypted, password-protected, marked or segregated, or otherwise given protections beyond those provided to standard Cartier documents.” 

Finally, Tiffany pushes back against Cartier’s trade secret claim on the basis that it “did nothing wrongful” in connection with Marino’s alleged misappropriation. “Tiffany cannot have aided and abetted Marino in breaching any fiduciary duty where there are no allegations that Tiffany knew what Marino was doing or offered assistance,” the LVMH-owned brand argues. Instead, Tiffany asserts that “Cartier admits that Marino took the documents at issue without any prompting from Tiffany and then voluntarily created and used spreadsheets at Tiffany without Tiffany’s knowledge.” 

In addition to allegedly falling short in establishing its trade secret claim, Tiffany argues that Cartier’s claim that Tiffany tortiously interfered fails because “there are no alleged facts showing Tiffany knew of Marino’s agreements or was the but-for cause of any breach.” Beyond that, Cartier’s allegation that Tiffany aided and abetted Marino’s breach of her fiduciary duty to Cartier similarly fails because Cartier “did not and cannot plead at least two elements of this claim,” per Tiffany. Specifically, it argues that Cartier makes “no specific factual allegations supporting its naked assertion that Tiffany knew of Marino’s breach,” and “no particularized allegation that Tiffany ever gave ‘substantial assistance’ to Marino in the ‘achievement of the primary violation.’” And still yet, Cartier’s unfair competition claim “fails for the same reasons as its other claims,” per Tiffany. 

With the foregoing in mind, Tiffany argues that the court should dismiss all of Cartier’s claims against it with prejudice. 

Tiffany’s motion comes less than a month after Cartier filed an amended complaint, adding an additional defendant on the heels of allegedly “discover[ing] additional substantial evidence of trade secrets misappropriated from Cartier.” Since filing suit, Cartier claims that it “has confronted Tiffany about another employee, Jaron Green, who recently misappropriated dozens of confidential Cartier documents immediately prior to resigning” from his role as Cartier’s Assistant Boutique Manager in Honolulu, Hawaii to take on a “more senior role” at Tiffany. 

“Rather than disclose the extent of Green’s misconduct and state whether any of Cartier’s information was disseminated or used,” Cartier claims that Tiffany “continues to employ Green and to defend him,” thereby, requiring it to “bring this action to address Green’s breach of his Confidential Information and Non-Solicitation Agreement and misappropriation of Cartier’s trade secrets and to hold Tiffany responsible for its conduct” in connection with that alleged “breach,” as well as the previously alleged wrongdoing of Tiffany and Marino. 

The case is Cartier v. Tiffany & Co., et al., 650925/2022 (N.Y. Sup.).

In the context of work, the digital divide has become less about access to devices and connectivity and more about skills and mindset. Many experienced professionals have never learned more than the rudimentary basics of email, web search and Microsoft Office. Instead, they lean hard on nearby colleagues or the IT helpdesk when things go wrong. By contrast, young people have already demonstrated a competitive edge in the virtual workplace. They come equipped with a more intuitive grasp of digital technology and the initiative to troubleshoot problems via YouTube tutorials, social media, and subreddits.

As a generation, they are also bigger gamers. As more work takes place in virtual reality (“VR”) – and one does not have to share the somewhat eccentric vision of the metaverse Mark Zuckerberg articulated at the 2021 Connect Conference to believe that it will – being familiar with massively multiplayer online games (“MMOs”) like Fortnite and Roblox, not to mention the ability to manage multiple digital identities, is set to make that edge keener still.

While most of the metaverse is still to be built, VR has long been used in training for certain physical jobs, from astronauts and pilots to law enforcement, surgery and manufacturing. When it comes to specialist machinery or complex locations, the relative safety and cost advantages of training virtually are obvious. But it is in knowledge work – from software engineering to law and design – where the changes will be most profound.

Communication in the Virtual Workplace

For most people, remote working during the pandemic has been characterized by alt-tabbing between communications apps and videoconferencing platforms, such as Slack, Teams and Miro. And there is certainly a lot of room for improvement there, particularly as academic studies have found that collaborative work between colleagues suffers when they work remotely. Exchanges over email or Slack increasingly replace real-time in-person conversations, potentially hampering communication. 

Google, itself, has claimed that informal chats at coffee machines and lunch tables in its campus were responsible for innovations, such as Street View and Gmail. With remote working, this kind of serendipitous encounter all but disappears. And, of course, there are costs to remote working in terms of individual wellbeing. Stanford researchers have found that so-called “Zoom fatigue” is driven by a combination of intense eye contact, lack of mobility, self-consciousness about one’s own video feed, and the cognitive demands of needing to give exaggerated feedback to signal understanding, agreement, or concern.

Technological advances mean solutions to the problems related to remote working are becoming possible. Collaboration software, such as Meta’s Horizon Workrooms and Microsoft Mesh, which tout the ability to ensable colleagues to meet as avatars in VR or take part in a real-world meeting as a photo-realistic hologram, are already available. 

The metaverse 1.0 will no doubt see organizations creating persistent VR workplace environments, in which employees can interact in real time as embodied avatars. VR versions of office spaces can be designed to encourage chance encounters and corridor chats. 

Imagine, for example, if going from one remote meeting to another involved leaving the conference room and crossing a bustling virtual atrium. That might sound far-fetched but bear in mind that Korean PropTech company Zigbang has already opened a 30-floor VR office called Metapolis. Employees choose an avatar and navigate to their desks via elevators and corridors. When they meet a colleague’s avatar, their webcam and mic are activated so they are able to have a conversation. The webcam and mic then turn off automatically as their avatar walks away. Meanwhile, the ability to use and read body language and actively participate in group discussions by scribbling post-it notes or drawing on a virtual whiteboard should make remote meetings in VR more engaging and less sedentary. They require much more active use of the neck, shoulders, arms, and hands than a typical hour on Zoom. 

How to Work in the Metaverse

It seems likely that a new set of workplace norms will emerge as the metaverse develops. Team games, including virtual bowling nights and virtual ping-pong tournaments, might supplant Zoom drinks as the default remote working social event. When it comes to hiring, VR could also bring benefits. “Blind” auditions have been shown to significantly increase the representation of female musicians in symphony orchestras. It follows that interviewing as an avatar might diminish the effect of bias – unconscious or otherwise – against people on the basis of their gender, age, or appearance. 

Just as custom “skins” are a feature of many MMOs, in the virtual world of work, there may well be demand for creativity in virtual fashion and accessories too, as people seek to express their personal brand within the constraints of professional dress codes for avatars. Gucci has already sold virtual hats, handbags, and sunglasses on the MMO platform Roblox.

Young people have been the worst affected by the disruption COVID has caused to the job market. While some struggled with working productively from shared house or their parents’ homes, others were scammed into joining companies that did not even exist. Nonetheless, the pandemic has also brought exciting glimpses of how remote working might evolve. Due to public health concerns and climate pressure, the latter is here to stay. As it develops into the metaverse, it could continue to bring capabilities that are concentrated among younger people to the fore.

Sam Gilbert is an Affiliated Researcher at the Bennett Institute for Public Policy at University of Cambridge. (This article was initially published by The Conversation.)

Fashion brands are warming up to crypto as a way to cater to buyers who have amassed sizable sums of currencies like Bitcoin, Ether, Binance Coin, Tether, etc., and who want to spend it on consumer goods/services. Gucci, Philipp Plein and Off-White, for instance, have joined the likes of Starbucks, Microsoft, PayPal, Etsy, and Overstock, among others, and now accept cryptocurrency as a form of payment (in certain stores), with others expected to follow suit and test the waters. As companies come to embrace crypto, some are opting to use it as a way to pay their employees, raising questions about whether fashion’s push towards Web3 will entail crypto wages and where – exactly – the law stands on offering up crypto as a form of compensation. 

“A small but growing number of employees are asking for cryptocurrency as a form of compensation,” according to Hunton Andrews Kurth LLP attorneys Daniel Butler and Kevin White, who state that “whether a substitute for wages or as part of an incentive package, offering cryptocurrency as compensation has become a way for some companies to differentiate themselves from others.” At the same time, Littler attorneys Lisa Schreter and Justin Brown confirm that they are seeing an “uptick in questions from employers about using cryptocurrency as a signifier in a competitive labor market.”

For companies that are considering paying their employees in cryptocurrency, there are an array of issues and risks to consider, with the primary question being whether using crypto as compensation satisfies labor laws in the U.S., namely, the Fair Labor Standards Act (“FLSA”), which mandates that employees be paid “in cash or negotiable instrument payable at par.” In terms of negotiable instruments, the Department of Labor stated in a May 2006 opinion letter that payment in “both U.S. Dollars and foreign currency” may satisfy the minimum salary requirement under the FLSA’s executive, administrative, and professional exemption. Neither the Department of Labor nor courts “have indicated that cryptocurrency is considered functionally similar to foreign currency and therefore, a negotiable instrument payable at par,” Morrison & Foerster LLP’s Oswald Cousins and David Papas note

Meanwhile, many state laws put additional mandates in place when it comes to what constitutes acceptable compensation, with Pennsylvania, for instance, requiring that wages be made in “lawful money of the United States.” 

As a non-fiat currency, cryptocurrencies very well may fall outside the FLSA’s definition of “cash or negotiable instrument,” and if used as pay, may also run afoul of state mandates, thereby, putting it outside of the realm of recommended forms of base compensation. And while there “may be an argument that some forms of cryptocurrency are readily exchangeable for U.S. currency,” Schreter and Brown assert that “the legal system is still catching up to the use of crypto and has not issued any binding precedent to allow for the practice of payment of wages in crypto,” which should serve as a deterrent – or at the very least, a warning – for companies looking to pay out base salaries in crypto. 

There are additional risks for companies to consider, particularly in light of the volatility that comes hand-in-hand with many cryptocurrencies. “When compared to the rather stable value of the U.S. dollar, the value of cryptocurrencies is subject to large fluctuations,” per Butler and White, who note that such volatility can lead to the under-payment of wages or violation of minimum wage or overtime requirements under the FLSA.

Beyond that, many states – from Washington to California – require that wages be provided at no cost to the employee. According to Cousins and Papas, this means that “to proceed with crypto-paychecks, employers must ensure that any wages … do not include any costs for the employee,” such as transaction fees that an employee must pay to redeem or access the cryptocurrency, including if/when it is exchanged for U.S. dollars. 

And still yet, there are an array of tax and benefits issues to take into consideration since the IRS considers virtual currencies to be “property,” subject to capital gains tax rates, per Butler and White, and “has also confirmed in guidance materials that any payment to employees in a virtual currency must be reported on a W-2 based upon the value of the currency in U.S. dollars at the time it was delivered to the employee.”

While the desire of companies to differentiate themselves in the market makes sense (as does the desire to pay in crypto in specific scenarios, such as when employees are located internationally in order to avoid exchange rate differences), there is early-stage uncertainty from employers as to the risks that come with using crypto as compensation. Should companies opt to move forward with a crypto-as-compensation plan, Cousins and Papas say that companies may consider following in Mayor Eric Adams’ lead. The New York City politican has accepted his own wages in U.S. currency and then converted those U.S. Dollars into crypto, namely, Bitcoin and Ethereum. (In a statement in January, a spokesman for New York City said that “due to U.S. Department of Labor regulations, New York City cannot pay employees in cryptocurrency.” Against that background, the spokesman said that “by using a cryptocurrency exchange, anyone paid in U.S. dollars can have funds converted into cryptocurrency before funds are deposited into their account,” which is what Adams did.)

While payment in crypto appears to be a ways away for many fashion and luxury brands, Schreter and Brown, nonetheless, suggest four practical recommendations for companies that opt to issue crypto outright in connection with employees’ wages. Specifically, they suggest that companies …

(1) Limit the use of cryptocurrency to exempt employees. Calculating the correct regular rate of pay for non-exempt employees will be difficult and poses potential minimum wage and overtime concerns if you are using cryptocurrency for regular wages; 

(2) Limit the use of cryptocurrency to bonuses. Given the variability and potential decrease in the value of a cryptocurrency, using cryptocurrency as part of a salary puts at jeopardy the salary level and salary basis requirements for exemption classification purposes; 

(3) Draft clear bonus plan documentation discussing the potential variation in the value of the cryptocurrency bonus, the date the cryptocurrency bonus will be issued/earned so a valuation can be placed for tax and accounting purposes, the cryptocurrency exchange where the cryptocurrency is being issued, and that the bonus has no strings attached and is issued/cashed out on the day it is earned; and 

(4) Consider including an acknowledgment in the bonus plan document where the employee acknowledges and accepts the risk of receiving compensation in cryptocurrency, the legal risks of receiving any form of compensation in cryptocurrency, and the potential drop in value. 

“A lot of people don’t belong [in our clothes],” Mike Jeffries told Salon in 2006 explaining the culture of the brand he was tasked with overseeing at the time. “That’s why we hire good-looking people in our stores. Good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t market to anyone other than that.” That brand was Abercrombie & Fitch, of course, the traditional mall retailer known for its “clean and classic” apparel, its ad campaigns, complete with semi-nude models, and its explicitly exclusionary attitude.

This is something Jeffries, who had been hired in 1992 to revamp the brand (following its bankruptcy and subsequent acquisition by Limited Brands in 1988), would freely admit. “Are we exclusionary?,” he asks himself aloud. “Absolutely.” The rationale behind Jeffries’ flippancy: “I don’t want our core customers to see people who aren’t as hot as them wearing our clothing.”

Jeffries, himself, came of age in Los Angeles (hence, his bleach blonde hair and penchant for the word “dude”) before studying at the London School of Economics and Columbia Business School, where he would earn his MBA. He joined Abercrombie from Paul Harris, a Midwestern women’s chain, at age 48, and despite his wildly controversial public dialogue about Abercrombie’s revamp, within just a few years as CEO, he had succeeded in crafting the retailer into one of the hottest brands of the 1990’s.

In its heyday, Abercrombie boasted a network of 700 dimly-lit and thoroughly-fragranced stores, boasting 22,000 strikingly attractive employees and nearly $2 billion in annual sales. The entrance ways of the individual stores, almost always located inside a mall, were flanked with shirtless teenage boys, the walls covered with Bruce Weber-lensed ad campaign imagery of more toned and tanned teens. The music was loud and the offerings – A&F logo-ed tees, $90 distressed jeans, and ripped denim skirts, which went up to size Large (no XL for girls and certainly no XXL) – were irresistible to teens that wanted to embody the lifestyle that the brand was selling and that could afford to do so.

The Look Policy

By the early-to-mid-2000’s, Jeffries had, irrefutably, taken the dusty 100+ year old casualwear brand and turned it into one of the most relevant destinations for all-American collegiate types. In large part, Jeffries – who was bringing in $71.8 million in compensation as of 2007 – succeeded thanks to the wildly specific branding he put in place. 

Abercrombie was an apparel business, with its relatively pricey mini-skirts and house-branded polos, but beyond that and under the direction of Jeffries, the retailer was most certainly selling sex. And it was only selling it to “good-looking, cool kids,” according to the former CEO. This is where the retailer’s now-notorious “Look Policy” came into play. Specific guidelines on everything from the color and length of employees’ hair to the specifics of girls’ makeup (“must be worn to enhance natural features and create a fresh, natural appearance,” per Abercrombie rules) to the length of fingernails helped to ensure that, as Forbes put it, “the sales clerks all looked like your biggest high school crushes.”

Treating hiring like model castings also worked to further this narrative: “Store managers would often approach attractive white customers who had the ‘look’ and urge them to apply for sales jobs,” according to Think Progress. It was imperative for Jeffries – who reportedly made “every decision, from the hiring of the models to the placement of every item of clothing in every store” –  that everyone from the greeters in the stores’ entryways to the individuals behind the cash registers looked the part. That “looking the part” requirement was observed so strictly that according to a discrimination lawsuit filed in June 2003, any Asian-American, African-American, and Latino individuals who were hired by Abercrombie were relegated to stockrooms where those staffers could not be seen by customers. The retailer settled the class action suit a year later, agreeing to pay $40 million to put an end to the litigation in November 2004.

The retailer also revealed that it as part of the lawsuit settlement would appoint a Vice President for Diversity, who would report directly to Jefferies, in order to provide diversity training for all employees with hiring authority. Still yet, Abercrombie was also required to hire 25 recruiters to seek out minority employees, and prohibited from relying on previous recruitment strategies, including “targeting particular predominately white fraternities or sororities.”

That lawsuit was followed up by another headline-making case just over five years later, this time initiated by the Equal Employment Opportunity Commission filed suit against Abercrombie after the retailer refused to hire Samantha Elauf, a young Muslim woman, arguing that because she wore a hijab (in accordance with her religious views), she did not comply with the company’s strict dress code. Despite a ruling from the Supreme Court that Abercrombie’s “Look Policy” ran afoul of federal law, the company was undeterred. (In its June 1, 2015 decision, the Supreme Court held that an employer may not refuse to hire an applicant if the employer was motivated by avoiding the need to accommodate a religious practice. Such behavior violates the prohibition on religious discrimination contained in Title VII of the Civil Rights Act of 1964.)

Any doubts as to whether Abercrombie’s “Look Policy” – which was made clear via internal company documents and posters, such as its “Hairstyle Sketchbook” – was still being enforced to any meaningful extent after America’s highest court called foul were clarified when yet another lawsuit was filed against the retailer.

62,000 Employees

It was 2015 – one year after Jeffries retired from his CEO position in light of eleven straight quarters of same-store sales declines and after he was ousted as chairman of Abercrombie’s board of directors due to investor pressure – when Abercrombie was hit with another damning lawsuit. Former employees Alexander Brown and Arik Silva filed suit against the retailer in federal court in California, alleging that Abercrombie management required that its hourly workers purchase the brand’s clothing to wear on the job. In doing so, Abercrombie was, according to the lawsuit, running afoul of various state labor codes, including those in California, Florida, New York, and Massachusetts.

As Brown and Silva set forth in their complaint, Abercrombie policy “forced” employees to buy new Abercrombie clothes “each time a new sales guide came out.” In the suit, the plaintiffs further alleged that the retailer failed to reimburse them and other employees for such purchases despite obligating them to wear a specific “uniform.” In accordance with California, Florida, New York, and Massachusetts labor law, employers are required to reimburse any employee that is required to purchase a work uniform as a condition of employment or business-related expenses. Abercrombie did no such thing, per Brown and Silva.

What started as a seemingly small-scale lawsuit filed by two individuals turned into a legal bombshell when a California federal judge held that the case could be extended to a much larger pool of former and then-current Abercrombie employees. Overnight, the lawsuit went from having two plaintiffs to potentially allowing some 250,000 different individuals to join the fight. The case (which was removed from Alameda County Superior Court to the U.S. District Court for the Southern District of Ohio in December 2017) was followed closely by another Fair Labor Standards Act suit, which was filed in federal court in California (and subsequently transferred to Ohio) by former Abercrombie employee, Alma Bojorquez, in June 2016. 

In order to avoid trial and further litigation costs, Abercrombie agreed to settle the cases in January 2018 with a payment of $25 million, which it would put into a class settlement fund, a portion of which would be distributed to the plaintiff employees that were not reimbursed for Abercrombie apparel they purchased specifically to wear on the job. ($7.5 million would be used to pay the plaintiffs’ attorneys’ fees and an additional $1 million would be used to cover administrative costs and other legal costs).

According to a statement from an Abercrombie spokeswoman: “Abercrombie & Fitch Co. and Abercrombie & Fitch Stores, Inc. have agreed to settle two putative class action lawsuits and a national collective action case, originally filed in 2013, alleging that the company required its employees to purchase its clothing dating back to 2009. At that time Abercrombie had, and continues to have, clear written policies and associate handbooks in place that stated its employees were not required to purchase or to wear company merchandise, nor were they obligated to make use of their employee discounts.”

The spokesman further told TFL, “Abercrombie strongly contests the lawsuit allegations. However, it believes it is in the best interest of the company and all its stakeholders, including its employees, to settle this matter.”

As for Jeffries, he may have left Abercrombie in 2014, but his penchant for strict – and in some cases, downright illegal – branding techniques lives on. And as he put it during his tenure as CEO, “Do we go too far sometimes? Absolutely.”

The cases are Alma Bojorquez et al. v. Abercrombie & Fitch Co. et al., 2:16-cv-00551 (S.D. Ohio), and Alexander Brown et al. v. Abercrombie & Fitch Co. et al., 2:17-cv-01093 (S.D. Ohio).

* This article was originally published in January 2018.

A federal court has issued its decision in what has been called “a novel lawsuit between a leading bridal wear designer and the manufacturer from whose employ she resigned over the control and use of social media accounts.” In a mixed decision on Tuesday, the U.S. Court of Appeals for the Second Circuit held that the lower court got it right when it barred designer Hayley Paige Gutman from competing with former employer JLM Couture and using her name for business purposes, but sided with the former “Say Yes to the Dress” designer over who may control a number of social media accounts bearing her name, calling on the lower court to revisit the issue in the ongoing lawsuit. 

In its recently-issued decision in the closely-watched Hayley Paige lawsuit, which JLM filed in December 2020, accusing Gutman of breach of employment agreement, trademark dilution, unfair competition, and conversion, the Second Circuit determined that despite Gutman’s arguments to the contrary, the district court did not err in ordering her not to compete with JLM or barring her from using the name “Hayley Paige Gutman” and its derivatives in trade or commerce, as such pleas by the designer are “foreclosed by the plain language of the contract” she entered into with JLM. (In March 2021, the district court awarded JLM a preliminary injunction, barring Gutman from competing with JLM through the end of her contractual term, and using her name and its derivatives in trade or commerce, and granted JLM exclusive control over three disputed social media accounts for the duration of the litigation, prompting Gutman to appeal to the Second Circuit.)

“Gutman agreed to sign away various rights to JLM in exchange for her salary, a stream of royalty payments, and JLM’s investment of time and capital in the Hayley Paige brand,” a panel of judges for the Second Circuit held. “She offers no persuasive reason why the Contract no longer binds her.” 

Looking specifically to the non-compete agreement in her employment agreement with JLM, Judge Michael Park, writing for the majority, held that the provision is enforceable, as “New York recognizes the availability of injunctive relief ‘where the non-compete covenant is found to be reasonable and the employee’s services are unique.’” The court notes that Gutman “does not meaningfully contest the district court’s reliance on the fact that her services are ‘special, unique or extraordinary.’” Also weighing in the favor of the enforceability of the non-compete provision, the court states that it is limited enough, as it “does not even extend beyond Gutman’s contractual period of employment with JLM [and] was triggered only because Gutman stopped working before the Term was complete.” 

The court also held that “Gutman impermissibly competed with JLM” by agreeing to appear at a bridal expo in her capacity as a designer (and used her name to promote the impending launch of a new bridal brand on Instagram and in a Business Insider interview last fall), and “may have continued doing so absent an injunction.” 

In terms of her use of her name, JLM argued – and the Second Circuit agreed – that use is governed by the terms of the parties’ agreement, in connection with which Gutman granted JLM the exclusive right to use “her name ‘Hayley,’ ‘Paige,’ ‘Hayley Paige Gutman,’ ‘Hayley Gutman,’ ‘Hayley Paige,’ or any derivative thereof in connection with the design, manufacture, marketing and/or sale of bridal clothing, bridal accessories and related bridal and wedding items,” and to file (and own) any subsequently-earned federal trademark registrations for “any such name.” 

JLM had claimed that Gutman breached their agreement “and infringed on the trademarks by using the @misshayleypaige Instagram account, whose handle is in the Designer’s Name, for third-party promotional deals.” 

While the court largely sided with JLM, it did agree with Gutman on one point: the district court’s decision to award control over a number of social media accounts – namely, the @misshayleypaige Instagram, TikTok, and Pinterest accounts – to JLM, thereby, requiring Gutman to turn the accounts over to JLM for the duration of the Hayley Paige lawsuit. The court notes that the two parties disagree over who has exclusive ownership rights in the accounts, including the Instagram account, which “comes with direct access to [more than 1 million] followers and opportunities to monetize it,” and by one expert’s appraisal, “a single post on [which], on average, is worth nearly $30,000.” JLM contends that Gutman created the disputed accounts in her capacity as an employee, thus, the accounts are therefore owned by the company.

Gutman, on the other hand, argues that she “created the accounts in her personal capacity, that JLM did not acquire them simply by virtue of investing in the Hayley Paige brand, and that she did not cede ownership to JLM by agreeing to use her accounts to market Hayley Paige products or by occasionally giving other JLM employees direct access when it was in her interest to do so.” 

Judge Park stated that the district court “recognized that the question of social media account ownership was ‘novel’ and declined at the preliminary injunction stage to evaluate the merits of those claims.” The lower court, nevertheless, “entered JLM’s proposed provision transferring control of the disputed accounts nearly verbatim,” Judge Park stated, asserting that the appeals court “do[es] not see how a grant of indefinite, exclusive control over the accounts could be a proper remedy for any of JLM’s other claims.”

Reflecting on the lower court’s decision, the Second Circuit found that it “exceeded its discretion by granting exclusive control over the accounts to JLM while explicitly declining to assess JLM’s likelihood of success on its claim that it owned the accounts.” 

“While Gutman signed away several of her rights to JLM,” the court states that “she never forfeited her right to keep property that is legally hers,” which may or may not include the social media accounts. The appeals court further held that the district court “may well determine that some or all of the accounts do not belong to Gutman, or that additional relief is nevertheless appropriate.” But “in any event,” the court concluded that “the district court exceeded its discretion by effectively assigning valuable assets to JLM without first determining whether the company likely owns them.” 

Judges Jon Newman and Gerard Lynch joined much of the majority opinion, but dissented in part, with Judge Newman asserting that JLM “has no right to such a sweeping prohibition on Gutman’s use of her name,” noting that “a prohibition on using one’s name ‘as trademarks,’ [as] contained in a subsection [in Gutman’s employment agreement] concerned with trademarks, is surely not a clear prohibition on using the name for non-trademark purposes.” 

Meanwhile, Judge Lynch stated that he does not believe that the district court erred in transferring the social media accounts to JLM. “The district court did not purport to give JLM control over the Instagram account because JLM is the account’s rightful owner,” but instead, Lynch says that the injunction was granted – and thus, is proper – as it aims to “restore the operation and control of the account to the manner in which they were operated before Gutman unilaterally seized exclusive control, pending resolution of the case.”

The Hayley Paige lawsuit will now go back before the district court on remand.  

In the wake of the Second Circuit’s decision, a rep for Gutman told TFL that the designer is “grate[ful] to the Second Circuit Court of Appeals for vacating a lower court ruling and returning control of her social media accounts to her.” At the same time, a spokesman for JLM stated that it is pleased with the outcome, noting that the appeals court did not order it grant Gutman access the accounts, and the court’s decision does not impact its control over the accounts.

The case is JLM Couture, Inc. v. Gutman, 1:20-cv-10575 (SDNY).