Court: No 3rd Party Complaint for Playboy in Class Action

DETROIT – In the latest development in a class action lawsuit filed against Playboy last year, the court has denied a motion from Playboy for leave to file a third-party complaint against PubWorx Services, LLC and Specialist Marketing Services, Inc. (“SMS”) – two marketing firms Playboy contends “are contractually obligated to indemnify Playboy for all losses Playboy incurred as a result of the breaches of Third Party Defendants’ duties under their respective contracts.”

The class action was filed by a Michigan resident named Mark Kokoszki, who alleged that Playboy violated his rights under Michigan’s Preservation of Personal Privacy Act by disclosing “personal information about [his] Playboy magazine subscription to data aggregators, data appenders, data cooperatives, and list brokers,” which in turn “disclosed his information to aggressive advertisers, political organizations, and non-profit companies,” allegedly resulting in Kokoszki receiving “a barrage of unwanted junk mail.”

Playboy originally answered Kokoszki’s complaint in April, 2019, after which mediation began in which the parties “engaged in extensive settlement negotiations,” according to court documents, eventually entering into a settlement agreement. Playboy didn’t enter its motion for leave to file a third-party complaint against PubWorx and SMS until last month – over a year since the publisher first responded to Kokoszki’s complaint. That long delay in making the request seems to have sunk Playboy’s motion, in the eyes of the court.

“In deciding such a motion, ‘timeliness is an important factor,’” wrote U.S. District Judge Bernard Friedman in his order issued Monday, citing S. Macomb Disposal Auth. v. Model Dev., LLC. “Indeed, the Sixth Circuit has stated that ‘the timeliness of the motion is an urgent factor governing the exercise of such discretion.’”

Friedman continued that in the present case, Playboy’s “motion is grossly untimely.”

“As noted, defendant answered the complaint on April 1, 2019,” Friedman noted. “Defendant did not file the instant motion until a little more than one year later (after the case was preliminarily settled and final approval of the settlement was imminent), although it was aware of its indemnification claims against PubWorx and SMS at the time it answered the complaint or very shortly thereafter.

“Not only is defendant’s motion unreasonably untimely on its face, but it also comes many months after the June 28, 2019, deadline set by the Court’s June 3, 2019, scheduling order for the amendment of pleadings,” Friedman added. “That deadline, like all others in the scheduling order, ‘may be modified only for good cause and with the judge’s consent.’ Defendant has not requested modification of the scheduling order, it has not shown good cause to modify it by pushing back the deadline for amending the pleadings by ten months, and the Court has not consented and does not consent to such a modification.”

Friedman also observed that Playboy’s motion comes an order from the court to stay all further proceedings in the case “until Final Judgment or termination of the Settlement Agreement, whichever occurs earlier, except for those matters necessary to obtain and/or effectuate final approval of the Settlement Agreement.”

“The filing of the instant motion violates the Court’s stay order,” Friedman wrote.

Friedman acknowledged Playboy’s argument that it has for months “been attempting to recover all or part of its anticipated settlement costs from its indemnitors” and the company’s assertion that after “multiple rounds of demand letters, phone conferences, and requests to mediate their dispute, it has become clear that these third parties will not budge” – but the court was unmoved by Playboy’s argument, given the circumstances.

Writing that Playboy’s claims about the third parties “may be true,” Friedman said those facts don’t “explain why defendant did not move promptly to implead these potentially liable third parties.”

“While defendant was negotiating with them, month by month this case was proceeding towards settlement,” Friedman wrote. “At this late date, when the case has been preliminarily settled and the final approval hearing is less than one month away, it would not be fair to plaintiff or the class he represents to further delay final resolution or indeed risk derailing the settlement agreement, as the proposed third-party defendants, according to defendant, intend to challenge the settlement’s reasonableness.”

Conversely, Friedman wrote, making Playboy pursue its claims against PubWorx and SSM in a separate lawsuit will do Playboy no harm. Playboy, Friedman concluded, “will suffer no prejudice if its motion is denied because it may pursue its indemnification claims in a separate lawsuit.”

The court has scheduled a June 10 hearing for final approval of the proposed settlement between Kokoszki and Playboy.