Hayley Paige wedding-dress dispute again sent back to federal court

Jan 17 (Reuters) - Wedding-dress designer and influencer Hayley Paige Gutman on Wednesday received a new chance from a U.S. appeals court to regain control of "Hayley Paige" social media accounts and end a five-year ban on competing with dressmaker JLM Couture (JLMCQ.PK), opens new tab following the breakdown of their partnership.

The 2nd U.S. Circuit Court of Appeals said that a Manhattan federal court should reconsider, opens new tab its decision that JLM was entitled to exclusive control of the Instagram and Pinterest accounts and determine whether the parties' noncompetition agreement was too restrictive.

"We have set a productive precedent in the Second Circuit to shield young creatives from facing what I have endured — a monumental achievement," Gutman said in a statement.

JLM CEO Joseph Murphy said in a statement that the company was pleased with other aspects of the ruling and confident that the district court will "come to the same determination" on the social media and noncompetition disputes.

Gutman, who has since changed her professional name to Cheval, was the maker of "Hayley Paige" wedding dresses until 2020. She signed on to design dresses for New York-based JLM in 2011.

After later contract negotiations broke down, JLM said Gutman locked the company out of the "Miss Hayley Paige" Instagram account, promoted products from other companies without JLM's permission and violated a noncompetition agreement.

JLM sued Gutman in 2020. U.S. District Judge Laura Swain granted JLM a preliminary injunction in 2021 that blocked Gutman from competing with the company until the end of their contract in 2022 and prevented her from using the "Hayley Paige" name in advertising.

The 2nd Circuit upheld parts of the decision in 2022, but sent the case back for the district court to reconsider who should control "Miss Hayley Paige" social media accounts.

On remand last year, Swain altered the injunction to give JLM exclusive control of the accounts and barred Gutman from identifying herself as a designer of competing dresses for five years based on a clause in the parties' contract.

The 2nd Circuit on Wednesday said that Swain had analyzed ownership of the social media counts incorrectly. The appeals court also said that Swain should reconsider whether the competition ban was enforceable under New York law, noting that such agreements are "disfavored" in the state and "enforced only after careful analysis."

The court also rejected Gutman's bid to dissolve the injunction altogether and declined to review a decision to hold her in contempt in 2021 for Instagram posts "teasing her return to the bridal industry."

The case is JLM Couture Inc v. Gutman, 2nd U.S. Circuit Court of Appeals, No. 21-2535.