Issue by: James Patrick
Olive v. General Nutrition Centers, Inc.
Second Appellate District, Division Four (Nov 02, 2018)

The Second Appellate District, Division Four, in Olive v. General Nutrition Centers (GNC), Inc., B279490 (11/02/18), was confronted with the question whether a plaintiff who was awarded in excess of $1 million on one claim, but did not prevail on significant other claims whereby he sought as much as $23 million, was the “prevailing party” under California’s Right of Publicity Law (Code of Civil Procedure, section 3344). Section 3344 mandates an award of attorney’s fees for “[t]he prevailing party in any action under this section.” (§ 3344, subd. (a); Kirby v. Sega of America, Inc. (2006) 144 Cal.App.4th 47, 62.) However, the statute does not define the phrase “prevailing party.”

Plaintiff-Appellant Jason Olive, an actor/model contracted with General Nutrition Centers, Inc. (GNC) to use his likeness in its advertising campaign, but sued when GNC continued to use his likeness beyond the terms of the contract. GNC admitted liability for the unauthorized use of Olive’s likeness in violation of California Civil Code section 3344, but contested the amount of damages.

During closing argument, Olive argued he was entitled to actual damages of $500,000 to $1 million, a claw back of profits attributable to the unauthorized use up to $23 million. GNC impliedly recommended actual damages of no greater than $4,800, and argued there should be no award of emotional distress damages or profits attributable to the unauthorized use.

The jury found that Olive was entitled to $213,000 in actual damages and $910,000 in emotional distress damages. The jury also found that Olive failed to prove any of GNC’s profits were attributable to the unauthorized use of his image, or that GNC acted with malice or fraud for the purpose of punitive damages. The trial court denied both parties’ motions for prevailing party attorney fees and costs, and Olive and GNC separately appealed from the judgment and the order denying prevailing party attorney fees.

On appeal, Olive contended the court erred by (1) failing to provide his proposed special jury instruction concerning the burden of proof under section 3344, (2) excluding his expert witnesses who would have testified about the amount of GNC’s profits from the unauthorized use of his likeness, and (3) determining he was not the prevailing party for purposes of awarding statutory attorney fees. In its cross-appeal, GNC contended it should have been deemed to be the prevailing party.

The Second Appellate District, Division Four, reversed, concluding the trial court abused its discretion by denying Olive’s claim that he was the “prevailing party” because, despite not prevailing on all of his claims, and notwithstanding that he sought $23 million, he nonetheless recovered in excess of $1 million in damages. The court of appeal found error in the trial court’s conclusion that neither party prevailed, because “the jury accepted neither party’s recommendation but instead awarded a middling sum amounting to a tie.” The court of appeal found the trial court placed undue emphasis on the fact both parties were “visibly dismayed” by the jury verdict, which Olive thought was too low and GNC thought was too high, and its analogy to a teeter-totter:

“Think of a teeter totter. Olive is in one seat. GNC is in the other. The pivot point is the jury verdict. The seesaw’s pivot is far closer to GNC than to Olive…According to the goal Olive set for himself, one cannot say Olive prevailed. He lost, which is why he and his team thought he lost…GNC also thought it lost, and for good reason. In addition to an actual damage award that vastly exceeded GNC’s assessment, the jury awarded Olive $910,000 in emotional distress damages. The GNC lawyers were plainly shocked by this pain and suffering sum.”

The Court of Appeal found Ajaxo, Inc. v. E*Trade Group, Inc. (2005) 135 Cal.App.4th 21 instructive in determining that Olive was the prevailing party. In Ajaxo, the plaintiff sought lost profits of $19.2 million, but ultimately received an award of $1.29 million in restitution. The trial court deemed Ajaxo to be the “prevailing party” despite the fact that four of its theories of liability were rejected, it failed to secure a permanent injunction, and it only received a fraction of the damages it sought. The Court of Appeal affirmed the prevailing party determination on the grounds that the victim company received a “simple, unqualified verdict on the breach of contract claim,” along with damages in excess of $1 million. (Id. at p. 59.)

The court of appeal relied on the reasoning of contract-based fee decisions: “If the results in a case are lopsided in terms of one party obtaining ‘greater relieaf’ than the other in comparative terms, it may be an abuse of discretion for the trial court not to recognize that the party obtaining the ‘greater’ relief was indeed the prevailing party.” The Court cited de la Cuesta v. Benham (2011) 193 Cal.App.4th 1287, 1295; accord, Silver Creek, LLC v. BlackRock Realty Advisors, Inc. (2009) 173 Cal.App.4th 1533, 1541 [prevailing party is the party who recovered “greater relief” on the contract] in holding that Olive clearly obtained the greater relief.

In de la Cuesta, supra, a landlord brought an unlawful detainer action and sought unpaid rent, and the tenant asserted she owed the landlord nothing because there were leaks in the premises. (Id. at p. 1290.) The day before the trial, the tenant vacated the premises, so the case proceeded to trial only as to the landlord’s money claims. (Ibid.) The landlord recovered 70 percent of what he claimed was owing.  Nevertheless, the trial court ruled that there was no “prevailing party.” (Ibid.) The appellate court reversed, concluding “[t]he result was so lopsided that, even under an abuse of discretion standard, it was unreasonable to say the landlord was not the prevailing party.” (Ibid.)

In Silver Creek, supra, 173 Cal.App.4th 1533, the parties executed agreements to purchase two commercial properties for $29.75 million, with $1.13 million deposited into escrow accounts. The deal fell through during escrow, and the seller sought a declaration that it validly terminated the agreements and was entitled to retain the deposit. (Id. at p. 1536.) The buyer cross-complained. (Ibid.) The trial court found in favor of the seller on the complaint and the cross-complaint, but concluded the buyer was entitled to a return of the deposit. (Id. at p. 1537.) It determined there was no prevailing party because each party won one of the claims. (Id. at p. 1540.) The Court of Appeal in Silver Creek reversed, concluding that the trial court’s approach “oversimplified its duties by counting the number of contract claims presented and essentially declaring a tie because each party won one of the claims presented for resolution.” (Silver Creek, supra, 173 Cal.App.4th at p. 1540.) The seller had achieved its main litigation objective in terms of monetary value—terminating the $29.75 million deal—even though the buyer retained the $1.13 million deposit. (Ibid.) Because the seller obtained the greater relief on the contract, the trial court abused its discretion by finding neither party achieved greater relief. (Id. at p. 1541.)

Comment:
The prevailing party is the one who obtains the “greater relief”. Like the victim in Ajaxo, Olive recovered less than 10 percent of the maximum damages sought. And like the seller in Silver Creek, Olive clearly obtained the “greater relief” compared to GNC since he is walking away from the litigation with more than $1 million. Although the verdict was certainly lower than the amount sought by Olive and the percentage recovered by the landlord in de la Cuesta, it greatly exceeded GNC’s damages recommendation of $4,800.

For a copy of the complete decision, see: Olive v. General Nutrition Centers, Inc.

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