On August 5, 2022, a federal trial court in Ohio ruled that the location of a social media influencer meant that jurisdiction was proper for a tortious interference with contract lawsuit brought against the influencer and alleged interferers, even though one of the defendants had only been to Ohio once, five years ago. EHPLabs Research, LLC, v. Smith, No. 5:22CV0653 (N.D. Ohio, Aug. 5, 2022) (2022 WL 3139604). Although the matter is at the motion-to-dismiss stage, it provides some good takeaways for anyone entering into arrangements with social media influencers.
The case began when Mr. Smith, a high-profile fitness industry athlete and certified personal trainer from Akron, Ohio, entered into an agreement with EHPLabs to become a brand ambassador, including promoting EHPLabs’ products on social media. The agreement, governed by Ohio law, required the company to pay Mr. Smith a monthly base retainer, plus a revenue share based on total monthly sales on EHPLabs’ website directly attributable to the coupon code created for, and allocated to, Mr. Smith for use in his promotional activities. The renewal agreement, signed in July of 2021 with a term extending through July 2023, contained a non-competition clause, prohibiting Mr. Smith from promoting any competitor’s products, and included a substantial liquidated damages clause.
In January of 2022, Mr. Smith asked EHPLabs if he could promote the goods of Revive MD, whose sole owner was Domenic Iacovone. EHPLabs declined, pointing out that Revive was a competitor of EHPLabs. Nevertheless, on February 14, Mr. Smith began promoting the goods of both Revive and another company co-owned by Mr. Iacovone, Raw Nutrition Supplement Company, LLC. Mr. Smith ceased promotion of EHPLabs’ products.
(According to Mr. Smith – which EHPLabs denied – in January 2022, he was advised by his manager at EHPLabs that, as a result of a change in ownership of EHPLabs, the renewed July 2021 Athlete Agreement had been terminated and Mr. Smith needed to sign another agreement by February 2022 with substantially different terms more favorable to EHPLabs.)
EHPLabs sued in federal court in Ohio, on two counts. First, EHPLabs claimed that Mr. Smith breached the non-compete provision of his sponsorship agreement with EHPLabs when he entered into a similar arrangement with Revive MD and Raw Nutrition, began promoting their products. Second, EHPLabs claimed tortious interference with a contractual relationship against Revive MD, Raw Nutrition, and Mr. Iacovone, all of whom are residents of Florida. Mr. Iacovone has been to Ohio on only one occasion, approximately five years ago, for a basketball game. At this early stage of the case, Revive MD, Raw Nutrition, and Mr. Iacovone moved to dismiss the case based on (a) lack of personal jurisdiction and (b) EHPLabs’ failure to establish the elements of tortious interference with contract. The court denied both motions.
The court denied the motion to dismiss with respect to personal jurisdiction because of EHPLabs’ assertions (accepted as true for this purpose) that Mr. Iacovone intentionally caused Smith to breach the Athlete Agreement by inducing him to promote products of Raw Nutrition and Revive MD that are directly competitive with EHPLabs’ own products, including through numerous posts on Mr. Smith’s social media pages. The court pointed to three factors:
- Mr. Iacovone “purposefully availed himself of the privilege in acting in Ohio when he allegedly personally participated in causing Smith – an Ohio resident – to breach his contract with” EHPLabs. “That is true regardless of whether Iacovone set foot in Ohio.”
- “There is no dispute that those contacts are directly related to the operative facts alleged in the Complaint “
- Mr. Iacovone’s actions in allegedly causing Mr. Smith to breach a contract governed by Ohio law “is sufficiently connected to Ohio to make the exercise of jurisdiction reasonable.”
In other words, “the Court concludes it has personal jurisdiction over Iacovone because Plaintiff has adequately alleged that Iacovone committed a tort within the state of Ohio.”
As for the tortious interference claim, the court ruled:
Plaintiff asserts that Iacovone was actively and personally involved in the allegedly tortious interference of Revive MD and Raw Nutrition. EHPLabs specifically alleges that Iacovone was aware that Smith had an exclusive agreement with Plaintiff, intentionally caused Smith to breach that arrangement, induced him to promote the products of Revive MD and Raw Nutrition, and that Smith made social media posts promoting Revive MD and Raw Nutrition with Iacovone’s full knowledge and support. Therefore, the Court concludes that Plaintiff has adequately pled Iacovone’s personal participation in the alleged tortious conduct at issue.
This case is in the early stages (at the motion to dismiss stage), but it raises some points to consider in dealings with social media influencers:
- Do you have a written agreement with a social media influencer?
- Does that agreement state the influencers physical address, or—like some we’ve seen—does it simply list an email address? (As this case demonstrates, you could be sued in a state you hadn’t visited for 5 years.)
- Does the agreement include a (standard) statement that the influencer is able to enter into the agreement and is not violating any other agreement by doing so?