When a $1M+ Publicity Rights Damages Award Isn’t a Win–Olive v. GNC
This case provides a fascinating look into the rough-and-tumble world of publicity rights damages. It raises the philosophical, and intensely practical, question of just how much a face is worth. The answer: a lot, but not nearly as much as the face owner believed.
The plaintiff is Jason Olive, a model and actor. He appeared in a General Nutrition Centers (GNC) print ad as part of GNC’s “Live Well” ad campaign, for which he was compensated. However, GNC used the ad beyond the term of Olive’s publicity rights license. Olive refused to accept an extended license despite a substantial offer from GNC. GNC stripped him out of the ad, but Olive sued anyway for the period of unconsented use. GNC eventually admitted liability, but the parties’ views damages diverged so massively that settlement never seemed like a possibility. This results in a super-interesting and novel ruling on damages and attorneys’ fees in the publicity rights context.
Here’s my attempted reconstruction of the case timeline (the opinion is a little vague):
Summer 2010: GNC’s agency hires around 15 models, including Olive, for the ad campaign
Sept. 24, 2010: the photo shoot takes place. Olive signs a “Photograph and Likeness Release” for 1 year’s use of the photo, plus a GNC option for a second year by paying another license fee. The agency paid Olive $4k + $800 for his agent.
Nov. 2010: Olive signs a second “Photograph and Likeness Release” allowing GNC to use the photo on company vehicles in North America through 12/31/21. Olive was paid $8k for this consent.
Jan. 2011: GNC launched its new ad campaign “in outdoor billboards, bus shelters, kiosks, social media websites, direct mail advertising, as well as in-store posters and signage.”
May 2011: GNC decides it wants to redo the print campaign with new models.
Late 2011/early 2012: Olive’s first release expires. No one appears to know exactly when. GNC doesn’t exercise its extension option.
Jan. 9, 2012: Olive, through his agent, tells GNC to stop using his image. Due to internal disorganization, GNC doesn’t pull the ad.
Early 2012: GNC eventually realized its mistake and negotiated 5 year extensions with the Sept. 2010 models for fees ranging from $7,500 to $32,000. However, Olive holds out.
2012: GNC offered Olive $150k. He refused.
Nov. or Dec. 2012: GNC removes Olive’s image from its print campaign, incurring $350k in removal expenses. This helps explain GNC’s $150k offer–it reflects a holdout premium.
All told, it appears GNC overused Olive’s image for about a year.
If we don’t award Olive a holdout premium or punish GNC for its sloppiness, we actually have a pretty good way of measuring the market value of Olive’s images: the license fees GNC negotiated with the 14 other models who appeared in the same print ad from the same Sept. 2010 photoshoot. The other models were paid between $2,500 and $6,400 per year for their publicity rights associated with that print ad. GNC apparently proposed $4,800 in damages for its year of overuse, which sounds like a lowball number but is actually consistent with the market data.
In contrast, Olive demanded a lot of money. The opinion is a little fuzzy on exactly how much. The court says he requested:
actual damages of $1.5 million for the licensing fee to use his likeness in 2012-2013; past and future emotional distress damages of $2 million; restitution for GNC’s profits based on the unlicensed use of his likeness in a range that went from approximately $54 million to as high as $175.9 million; and punitive damages of at least five times the amount of the jury’s damage award. During argument, Olive asked the jury to award restitution in amounts ranging from $11.7 to $35.2 million.
Elsewhere, the court says Olive’s “bottom-range” restitution damage was $11M and his “mid-point” restitution damage was $20M plus 5x punitive damages. The trial court say Olive “recommended” damages of $23.5M.
Where do these huge numbers come from? The relevant provision of Cal. Civil Code 3344 says damages include:
the actual damages suffered by him or her as a result of the unauthorized use, and any profits from the unauthorized use that are attributable to the use and are not taken into account in computing the actual damages. In establishing such profits, the injured party or parties are required to present proof only of the gross revenue attributable to such use, and the person who violated this section is required to prove his or her deductible expenses
This formula contemplates a burden-shift: The plaintiff shows revenues; the defendant shows expenses. Other IPs use the same approach to damages, but it’s a terrible model.
Plaintiffs will always claim that the infringement caused all of the defendant’s revenues during the infringement period (instead of just the revenue attributable to the misuse). This leads plaintiffs to massively overestimate their damages, which hinders settlement negotiations.
Here, Olive’s massive damages estimates come from overclaiming a share of GNC’s total revenue in 2012. Olive requested a jury instruction that GNC had the burden to show what revenues were not attributable to the misuse, but the court correctly says that the statute clearly says that Olive has the burden to establish the revenues attributable to the misuse. As it turns out, the “jury found that Olive failed to prove any of GNC’s profits were attributable to the unauthorized use of his image,” so it awarded zero restitution.
Nevertheless, the jury awarded Olive $213,000 in actual damages. Without any share of GNC’s revenues, where did that number come from? The actual damages substantially exceeds what Olive could have earned in the open market (at his peak, he was paid $25k/day as a model) and more than GNC would have ever agreed to pay.
This highlights how the burden-shifting formula creates a terrible framing effect for juries. They are exposed to massive potential damages which sets a high bar and almost certainly has the natural effect of pulling up any jury damages awards.
The jury awarded Olive $910,000 in emotional distress damages. Where did that number come from? The jury didn’t award any punitive damages; it found GNC didn’t act with malice or fraud. Without any punitive damages, the emotional distress damages amount doesn’t make much sense except as a “bone” for not giving Olive his requested tens of millions of dollars.
In total, the jury awarded over $1.1M in damages. “The trial court noted that both parties were visibly disappointed after the jury rendered its verdict….The court emphasized counsel’s facial reactions, stating ‘[t]his . . . mutually transparent display was unprecedented in the court’s experience.'”
This was an expensive case for Olive to bring. The jury trial and appeal appears to be running about 5 years. In addition to his lawyers, Olive retained three damages experts. [Unhelpfully, two of the experts were excluded because they used a “nearly data free and methodologically primitive” analysis that “simply relied on mere wishful thinking”]. If Olive paid everyone on his legal team per-hour, I imagine his litigation expenses were many hundreds of thousands of dollars (I don’t know if his attorneys were on contingency).
Civil Code 3344 has a mandatory attorneys’ fee-shifting provision for the “prevailing party.” Surely that describes Olive, no? GNC admitted liability, and the jury awarded him over $1M.
Nope. Basically, Olive’s high damages request worked against him. The trial court said the $1.1M award meant Olive didn’t achieve his trial objectives. If he demanded $23.5M, the jury gave him less than 5%. (Correspondingly, the jury award was over 200x what GNC proposed, but the court doesn’t explicitly address that). Because Olive got a pittance of his request, both the trial court and the appeals court call the outcome a “draw” (the trial court said it was “a middling sum amounting to a tie”), so neither party was the “prevailing party.” As a result, Olive doesn’t get his expected attorneys’ fee award. I believe finding that neither party prevailed in 3344 litigation is a novel outcome (but a reasonable one IMO).
An obvious question: if Olive wanted an attorneys’ fee award, were his damages requests too high? If Olive had made a lower damages request, he would have more clearly qualified as the prevailing party and picked up a lot of extra money. On the other hand, the high damages request had a framing effect on the jury, so a lower damages request might have led to the jury awarding less money. It’s hard to tell which strategy (high damages request with no attorneys’ fees vs. lower damages request with attorneys’ fees) was more lucrative.
I think the better question is: was Olive better off taking the $150k offered in 2012 over the $1.1M damages award he still hasn’t been paid? After deducting attorney and expert fees from his award, plus the time and aggravation of litigating over a half-decade, the $150k offer doesn’t look too bad. If we could have avoided this very expensive litigation, it would have definitely been a better deal for society.
Obviously, GNC should have managed its publicity consents better. It was literally a million-dollar mistake. Still, I’ve been noodling all morning whether GNC could have avoided creating this mess. One obvious solution is to avoid hiring any models who are litigious or have an over-inflated sense of self-worth. That might narrow the model pool down to zero. Another solution would be to avoid short license deals. Getting annual consents from models guarantees future holdup opportunities, especially when multiple model are in the same photoshoot. Perhaps annual consents are necessary under union rules. Otherwise, I’m a huge fan of pay-once, use-forever deals–even if they cost more upfront–because they avoid holdup games.
Case Citation: Olive v. General Nutrition Centers, Inc., B279490 (Cal. App. Ct.). The initial opinion was issued Nov. 2, 2018. The opinion following rehearing was issued Dec. 27, 2018.