Tuesday, June 15, 2021
Keeping with our Martial Arts Theme: Influencer Wins A Technical Knock-out in SDNY
Yesterday, we posted about a boxing match. Today, we move on to mixed martial arts.
Have you ever wanted a behind-the-scenes look at how YouTuber "influencers" make money? I certainly have. I asked my daughter what seemed to me the obvious question: Why would anybody take seriously an endorsement from an "influencer" when you know that influencers get paid to endorse products and that their endorsement is thus effectively meaningless? Her shrug, accompanied by an eye-roll spoke volumes.
Fortunately, Jed Rakoff, of the Southern District of New York, just decided an influencer case, Brueckner v. You Can Beam, LLC, that reveals quite a few details about how these deals work (H/T New York Contract Decisions Twitter Feed), although I admit I still don't really understand the premise behind these deals.
Josh Brueckner (Brueckner), for those who don't know, is a professional mixed martial arts athlete and influencer. On February 1, 2020, he entered into an agreement with You Can Beam LLC (Beam), a nutritional supplements company. The agreement provided that Brueckner would post (i) at least six promotional Instagram posts a year about Beam's nutritional supplements, (ii) at least one Instagram story per week mentioning a Beam product, and (iii) at least one YouTube video a month on Brueckner's YouTube channel, including Brueckner's coupon code and a link to the You Can Beam website in any YouTube videos. Even if the video was not about Beam’s products, Brueckner was required to link his coupon code in the description box. In exchange, he was to be paid a monthly fixed rate of $15,000 and a commission of $4 per unit sold using Brueckner's coupon code or link. Wow, so that's how that works. Thanks, Judge Rakoff!
The initial term of the agreement was one year, but then came COVID. On March 17, Beam told Brueckner to “hold off” on the posting due to COVID-19 restrictions, because "everything with this virus has put us on hold unfortunately.” Beam still paid Brueckner his $15,000 for March, but they also sent him a termination notice dated April 8, 2020. Contending that the termination was not in accordance with the contract terms, Brueckner filed suit on April 28th. I'll say this for him, he's quick. Beam counterpunched, alleging that Brueckner had been in breach of the agreement since February 28th, when Beam had sent him notice that he had failed to include a link and discount code in his YouTube videos as required under the parties' agreement. Beam's counterpunch failed to land.
Brueckner moved for summary judgment, and he won. Beam's sent its February 28 notice to the wrong address. As a result, Brueckner was never properly put on notice that he was in breach. Moreover, Brueckner clearly cured the alleged breach within the 10-day period provided for in the agreement. As a result, he was not in breach when Beam instructed him to "hold off" on his influencing activities, and it was thus Beam, not Brueckner that was in breach. The Court granted Brueckner’s motion for summary judgment, finding Beam liable on Brueckner's breach of contract claim and dismissing Beam's breach of contract counterclaim.
Brueckner sought an additional $75,000 for the five months on the contract. It is not clear if he could also seek to recover the $4 per sale he would have been entitled to but for Beam's breach. As a side note, if you can offer reductions on each sale via coupon and pay an influencer $4 per sale, doesn't it seem like your product is overpriced? Or is it common that most of what we pay for goes to marketing and not product. Do I pay more for Progressive Insurance than Geico because Progressive has to pay Flo, while Geico stiffs its gecko?
H/T to ContractsProf Blog Intern Sydney Scott (left) for research on this post.