Davalos et al. v. Bay Watch, Inc. et al. (D. Mass. 21-cv-11075).

Bay Watch, which runs Club Alex’s Adult Entertainment, was sued in 2021 by a group of models who asserted that their images were misappropriated and altered to promote the club by suggesting that they had worked at the club.  The complaint alleged false advertising and false association under the Lanham Act, violation of statutory and common law right to privacy, and a variety of other state and common law claims.  The Court previously ruled that the state law claims were brought outside of the statute of limitations, but reconsidered and applied the “discovery rule,” under which time doesn’t start to run until a party knew or reasonably should have known about the alleged injury and that the defendant was the cause of the injury.  The Court certified the question to the Massachusetts Supreme Judicial Court (“SJC”) as to when a party should reasonably know about alleged defamation occurring as a result of social media posts, and the SJC responded that such an inquiry would be highly fact-specific, given the vast and wide-spread nature of social media, with a court permitted to refuse to apply the discovery rule where the material is widely distributed and readily accessible and searchable.

Following the SJC’s response, the Defendants moved for summary judgment on statute of limitations grounds as well as on the grounds of laches as to the Lanham Act claims, which do not have an express statute of limitations.  Judge Gorton first addressed the state and common law claims, which were all subject to Massachusetts’ 3-year statute of limitations for tort claims.  He noted that the Plaintiffs, as the parties asserting that the discovery rule should apply, bore the burden of proffering sufficient facts to demonstrate that they did not know and could not reasonably have been expected to know about the alleged injury.  Here, the advertisements featuring the models’ likenesses were posted to Facebook more than three years before suit was filed.  Judge Gorton noted that Facebook has over one billion users, and that the Plaintiffs had failed to allege how many people actually viewed the offending posts or Club Alex’s Facebook page, and stated that absent this kind of information, he could not determine whether these posts were insufficiently circulated such that Plaintiffs’ lack of knowledge was reasonable.  There was further no indication that the posts were kept secret or that steps were taken to prevent the Plaintiffs from discovering them.  Finally, he noted that the Plaintiffs had been involved with numerous similar suits (there appears to be a cottage industry of Gentlemen’s Clubs misappropriating popular models’ images for promotional purposes and of law firms bringing lawsuits as a result thereof, no doubt fostered by the relatively new prevalence of image-searching software) and therefore were known to be scouring the web for such misappropriations, yet no explanation was provided as to why this particular misappropriation was not earlier discovered.  As the Plaintiffs failed to meet their burden, Judge Gorton refused to apply the discovery rule and found these claims time-barred.

Regarding the Lanham Act claims, Judge Gorton rejected a statute of limitations argument, as the Lanham Act has no specific statute.  While some courts utilize the most analogous state statute of limitations, Judge Gorton noted that the First Circuit had yet to address this issue, and that there was a conflict among lower courts as to what should apply, with some utilizing the doctrine of laches rather than analogizing to a state statute of limitations.  He opted to use the equitable doctrine of laches approach favored by the majority of other Circuit Courts, which requires a showing that the Plaintiffs negligently or willfully failed to timely assert their claims and resulting prejudice to the defendant.  He rejected Plaintiffs’ argument that laches was inapplicable due to the willful nature of the alleged violations – while fraud, inequitable conduct or other knowing and willful conduct might obviate an equitable defense, no Circuit other than the Second Circuit had applied this to disregard the equitable requirements of laches, instead considering it but one of many factors to be considered.  He further applied the presumption that, if the most relevant state statute of limitations applied, laches is in applicable.  He applied the four-year statute of limitations for the Massachusetts Consumer Protection Act (c. 93A, which the parties agreed was most relevant) to place the burden of rebutting the application of laches on the Plaintiffs.

Judge Gorton found that the timing of Plaintiffs’ discovery of the alleged violations was unreasonable.  Eight years had passed since the Facebook posts went up, and the Plaintiffs indicated either that they were unaware until being informed by their attorney or that they could not recall when they first discovered the posts, which was not sufficient, particularly given that they had already brought multiple complaints of a similar nature elsewhere and should have been on notice to look for further infringements.  Regarding the harm to the Defendants, the owner of the club at the time of the alleged infringement had passed away, depriving them of the ability to present potentially relevant information about intent and likelihood of confusion.  Further, while Plaintiffs presented survey evidence of confusion that was conducted in 2023, the delay precluded Defendants from assessing potential confusion at or near the time of the alleged violations some ten years earlier.  Accordingly, he granted summary judgment on these claims in favor of the Defendants.