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Cody, Inc. v. Falsetti

United States District Court, W.D. Washington, Seattle

March 8, 2018

CODY INC., Plaintiff,


          Marsha J. Pechman United States District Judge

         THIS MATTER comes before the Court on Plaintiff and Counter-Defendant Cody, Inc.'s Motion to Dismiss Defendant's Counterclaims and Affirmative Defenses. (Dkt. No. 19.) Having reviewed the Motion, the Response (Dkt. No. 20), the Reply (Dkt. No. 25) and all related papers, the Court GRANTS the Motion to Dismiss the counterclaims and DENIES the Motion to Strike the affirmative defenses. The Court declines to hear oral argument on this matter.


         Plaintiff Cody, Inc. (“Cody”) brings this action against Defendant Dana Falsetti for breach of contract and trade libel. (Dkt. No. 1.) Ms. Falsetti counterclaims for breach of contract and equitable indemnity. (Dkt. No. 16.)

         I. Agreement Between Cody and Ms. Falsetti

         Cody produces online health and fitness content, including training videos on yoga and wellness. (Dkt. No. 1 at 1.) Ms. Falsetti is a well-known yoga teacher who offers videos and related content on Cody's site. (Dkt. No. 16 at 6.) Ms. Falsetti describes herself as a “large-bodied woman” who “advocates for those with similar body types who want to find the confidence to live life more fully.” (Id.) Ms. Falsetti has been featured in numerous media outlets and has hundreds of thousands of followers on Instagram and Facebook. (Dkt. No. 1 at 3.) Ms. Falsetti states that she “uses her platform to inspire critical thinking, self-awareness and confidence” among her followers, and that “[a]t the heart of [her] inspirational videos and messaging is her desire to inspire large-bodied persons, and others who feel dehumanized, to find self-worth and motivation to accomplish their own goals in life.” (Dkt. No. 16 at 7.)

         On August 1, 2016, Cody and Ms. Falsetti entered into a “Talent License and Release Agreement” (the “TLRA”). (See Dkt. No. 19-1.) The TLRA granted to Cody and “its agents, subsidiaries, affiliates, licensees, successors, and assigns, and to other such entities or persons as [Cody] may designate from time to time” the rights to produce, promote, and own video and other content using Ms. Falsetti's “physical likeness, name, voice, image, performance, persona, and exercise routine, ” and the rights to “any marketing collateral associated therewith” (collectively, the “Falsetti Content”) (Id. at § 1.a.)

         The TLRA granted Cody an irrevocable license to “use and exploit” the Falsetti Content “in whole or in part, either alone or in conjunction or combination with other works . . . for any advertising, marketing, and promotional purposes . . .” (Id. at § 1.b.) Notwithstanding the foregoing grant of rights, Cody agreed not to use the Falsetti Content “in a manner intended to harm” Ms. Falsetti's reputation. (Id.)

         The TRLA included a provision by which Ms. Falsetti agreed not to disclose to any third party the content of any of Cody's or its affiliates' “business plans, marketing strategies, advertising campaigns, and the like” without Cody's prior written consent. (Id. at § 5.)

         The TRLA also included a provision by which Ms. Falsetti agreed to indemnify and hold harmless Cody and its affiliates for any third-party claims arising out of any use of the Falsetti Content. (Id. at § 8.)

         II. Cody's Merger with ALO, LLC

         Around September 27, 2017, Cody informed Ms. Falsetti that it had been acquired by ALO, a yoga apparel company. (Dkt. No. 1 at 3-4; Dkt. No. 16 at 8.) Cody claims it informed Ms. Falsetti that this information was not public, and that it was developing a public campaign and strategy to announce the acquisition. (Dkt. No. 1 at 3-4.) Cody claims Ms. Falsetti “agreed at that time in that conversation that she would maintain the confidentiality of this information.” (Id.)

         On October 31, 2017, Cody sent an email to its subscription-based customers advertising a “last chance” sale featuring Ms. Falsetti's yoga videos. (Dkt. No. 16 at 8.) The email stated that Ms. Falsetti's videos would be “unavailable for purchase after November 6th, ” but that Cody hoped the sale would allow “members of the Cody community to enjoy her training for years to come, and wish[ed] her success in her future endeavors.” (Id.) Ms. Falsetti claims she was not informed of this advertisement before it was sent, that it “generated considerable concern” and “raised numerous questions” among her followers, and that she was “left to fend off questions from concerned students” who contacted her via social media. (Dkt. No. 16 at 8-9.)

         On November 22, 2017, ALO sent an email to Cody's subscription-based customers advertising its apparel. (Id. at 9.) Ms. Falsetti claims this email led her students and followers to “reasonably believe[]” she was affiliated with ALO. (Id.) Thereafter, Ms. Falsetti “became aware that her students and followers were expressing concern and disappointment about her new affiliation with ALO, ” which they viewed ...

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