Stone Brewing Co., LLC v. Molson Coors Brewing Company et al

Filing 716

ORDER On Motions For: (1) Treble Damages (2) Attorney's Fees (3) Disgorgement Of Profits [ECF Nos. 642 , 654 ]. Signed by Judge Roger T. Benitez on 7/29/2022. (ddf)

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FILED 1 JUL 2 9 2022 2 CLERK, U.S. DISTRICT CL\JRT SOUTHERN DISTRICT OF CALIFORNIA 3 BY :nj.,..... DEPUTY 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 II STONE BREWING CO., LLC, 12 Case No.: 3:18-cv-00331-BEN-MDD ORDER ON MOTIONS FOR: (1) TREBLE DAMAGES (2) ATTORNEYS' FEES (3) DISGORGEMENT OF PROFITS Plaintiff, 13 vs. 14 15 II MILLERCOORS LLC, 16 Defendant. I [ECF Nos. 642, 654] 17 18 19 20 21 22 23 24 I. Background Following trial, the jury awarded Stone $56 million after finding MillerCoors infringed on Stone's STONE trademark. Verdict, ECF No. 625. Before the Court are Plaintiff Stone Brewing Co. LLC's ("Stone") Motion for Treble Damages, Motion for Attorney's Fees and Costs, and Motion for Disgorgement of Defendant MillerCoors's Profits. ECF Nos. 642, 654 Defendant MillerCoors opposes the motions. For the reasons set forth below, the Court DENIES the motions. 25 26 27 28 1 3: 18-cv-00331-BEN-MDD 1 11 II. Legal Standards A. 2 11 Treble Damages and Disgorgement of Profits II Under 15 U.S.C. § l l l 7(a), a prevailing party, subject to the principles of equity, 4 II may recover (1) the infringing party's profits, (2) damages sustained by the injured party, 3 and (3) the costs of the action. "Principles of equity" as used in §111 7 refers to 5 11 6 II"fundamental rules that apply more systematically across claims and practice areas," and II include consideration of the defendant's mental state. Romag Fasteners, Inc. v. Fossil, 8 II Inc., 140 S. Ct. 1492, 2497 (2020). "If the court shall find that the amount of the 7 9 11 recovery based on profits is either inadequate or excessive the court may in its discretion 10 11 enter judgment for such sum as the court shall find to be just, according to the 11 11 circumstances 12 II exceeding three times such amount." 15 U.S.C. § l l l 7(a). The increased monetary 13 11 award of the case, for any sum above the amount found as actual damages, not must have a remedial or compensatory purpose and must not be punitive in nature. Id.; see also SkyDive Arizona, Inc. v. Quattrocchi, 673 F.3d 1105, 1114 (9th Cir. 2012). 14 B. 15 Attorney's Fees II In "exceptional cases," the Court "may award reasonable attorney's fees to the 17 II prevailing party." 15 U.S.C. § 1117(a). Courts examine whether a case is "exceptional" 18 II under a "totality of the circumstances test." SunEarth, Inc., 839 F.3d at 1180 (citing 19 II Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014). The Court 16 20 11 must evaluate a "nonexclusive list of factors, including frivolousness, motivation, 21 II objective unreasonableness (both in the factual and legal components of the case) and the 22 11 23 11 deterrence" need in particular circumstances to advance considerations of compensation and in exercising its discretion to award fees. Id. (quoting Octane Fitness) 24 (internal quotations omitted). 25 III. Analysis 26 11 A. Treble Damages and Disgorgement of Profits 27 11 As a threshold matter, the Court notes that the jury found MillerCoors did not 28 II willfully infringe on Stone's trademark. Verdict, ECF No. 625. While willfulness is no 2 3: l 8-cv-00331-BEN-MDD 1 longer a prerequisite to a court ordering disgorgement of profits (Romag, 140 S. Ct. at 2 3 1497; Harbor Breeze v. Newport Landing Sportfishing, 28 F.4th 35, 38 (9th Cir. 2022)), 11 an infringer's mental state is a "highly important consideration in determining whether an 4 II award of profits is appropriate." Harbor Breeze, at 38. While not dispositive, the Court 5 affords substantial weight to the jury's finding that MillerCoors did not willfully infringe 6 on Stone's trademark. 7 II Coupled with the jury's finding, the Court finds the totality of circumstances do 8 11 not 9 11 support disgorgement of profits in this case, either from before or after the verdict. Stone argues the jury's verdict is somehow consistent with MillerCoors acting with a 10 knowing disregard of Stone's trademark rights. Pl.' s Reply, ECF No. 698 at 9. Even if 11 this Court were to split hairs in the way Stone argues, comparing willfulness and 12 knowing indifference, the evidence presented does not support this conclusion. The 13 jury's finding of infringement, but not willfulness, logically follows the evidence 14 presented that while the "Own the Stone" campaign and 2017 Keystone Light refresh 15 may have led to a likelihood of consumer confusion, MillerCoors was not attempting to 16 use Stone's name to sell its own beer and had a good faith belief that its product was not 17 infringing on Stone's "STONE" trademark. This is not deliberate indifference, but rather 18 a mistaken belief that it was advertising and selling a non-infringing product. 19 Other factors to consider in a disgorgement of profits analysis are deterrence, 20 fairness, availability of adequate remedies at law, and irreparable harm. Monster Energy 21 Co. v. Integrated Supply Network, LLC, 533 F. Supp. 3d 928, 933-34 (C.D. Cal. 2021). 22 All factors favor MillerCoors. The Court agrees with MillerCoors that this is not a 23 11 typical 24 11 infringement case where the infringer is selling a counterfeit product or attempting to pass off its own product as that of another. Any deterrent effect is minimal 25 as MillerCoors has already committed to updating the infringing packaging. ECF No. 26 652-1. Stone's request for disgorgement of profits is based on speculation from its 27 experts that any uptick in Keystone Light sales must have been at the expense of Stone. 28 II Pl.'s Mot, ECF No. 654-1, 23-27. However, the empirical evidence in the form of 3 3:18-cv-00331-BEN-MDD 1 II Nielsen data specifically cuts against this. DX6534; 6537; 6575; 8491. While Stone 2 11 argues 3 11 the 4 11 5 11 that allowing MillerCoors to keep these profits would amount to unjust enrichment, opposite is also true. Stone would be reaping a windfall of sales of Keystone Light beer that, based on the evidence, never would have gone to Stone. The Court also finds Stone had an adequate remedy at law in that it presented its lost profits case to the 6 Iljury and the jury was able to take that into consideration in its damages calculation. Any 7 11 8 11 disgorgement 9 11 10 one of the above-mentioned factors are not dispositive, but when considered as a whole, of profits is not supported by the evidence. The Court also finds the awarded damages should not be trebled. As discussed, 11 this is not a case where the infringing party acted willfully. Stone argues it suffered 11 II "genuine, intangible harms that could not be calculated or addressed in damages 12 II calculations at trial." ECF No. 698 at 14. The Court rejects this rationale in its decision 13 II to not award treble damages. Stone had ample opportunity at trial to present its theory of 14 II damages to the jury. Having considered the entirety of Stone's case, the jury awarded 15 II $56 million. Stone's proffered evidence regarding loss of market share and loss of points 16 11 of distribution 17 11 causation, 18 11 19 II losses Stone claims, as well as the Nielsen surveys indicating no Stone-to-Keystone or 20 11 Keystone-to-Stone 21 11 22 II award is appropriate. To the extent, if any, that there is intangible harm, the jury award is 23 11 adequate 24 II case. Coupled with the lack of willfulness by MillerCoors, this case does not warrant 25 11 26 II denied. are correlated with Keystone Light's refresh, but there is scant evidence of especially in light of the other factors (many more players in the craft beer market, craft beer's stagnation as a whole) that are much more likely the cause of the customers. This is not a case where the damages are hard to quantify, as Stone argues, but rather one where the evidence simply fails to prove a higher damages compensation for the damages Stone suffered from MillerCoors' actions in this trebling of damages. Stone's motion for disgorgement of profits and treble damages is 27 28 4 3: 18-cv-00331-BEN-MDD 1 B. 11 2 II Attorneys' Fees Section 1 l 17(a) provides that "[t]he court in exceptional cases may award 3 II reasonable attorney fees to the prevailing party." 15 U.S.C. § l 117(a). Here, Stone is the 4 11 prevailing 5 II awarded Stone $56 million in damages. This Court also denied MillerCoors's motion for party. The jury found MillerCoors liable for trademark infringement and 6 I!judgment as a matter of law and motion for entry of judgment on affirmative defenses. 7 II ECF No. 710. Even though Stone is the prevailing party in this case, the Court finds 8 11 9 11 Even in a case where a non-prevailing party failed to produce any evidence, the 10 11 Ninth Circuit has upheld a finding the case was not exceptional and denied attorney's fees 11 11 because 12 II Information Sciences Corp. v. eBay, Inc., 511 F.3d 966,973 (9th Cir. 2007). Regarding 13 11 the 14 II consider, the Court finds MillerCoors's defenses were not frivolous, and the evidence 15 11 presented 16 11 17 11 MillerCoors 18 II host of Keystone Light packaging and advertising throughout the existence of Keystone 19 11 Beer 20 11 products 21 11 the 22 11 take 23 11 24 11 25 II conduct to deter here. MillerCoors believed it was not infringing on Stone's trademark, 26 11 presented 27 11 28 II the jury found to be infringing. ECF No. 653-1. Stone argues that MillerCoors's hiring awarding attorney fees is not warranted, as this is not an "exceptional case." it found the case was not frivolous and raised debatable issues. Applied frivolousness, motivation, and objective unreasonableness factors the Court must to the jury very likely could have convinced them that trademark infringement did not occur in this case. The Court previously highlighted the Nielsen reports, but also presented a variety of evidence including their own confusion survey, a tending to show prior use, as well as evidence that Stone Brewing Company were not the target of their refreshed ad campaign for Keystone Light. While jury ultimately found Stone's evidence more compelling on these fronts, it does not away from the reasonableness and good faith with which it was presented. Regarding the need to advance "considerations of compensation and deterrence," the Court finds this factor also weighs against awarding attorneys' fees. There is no its case to the jury, and ultimately lost. Following the verdict, MillerCoors undertook an extensive rebranding and repackaging of the Keystone Light product that 5 3: 18-cv-00331-BEN-MDD 1 11 three premier law firms is somehow evidence of this being an exceptional case. Pl.' s 2 11 Reply, 3 11 4 11 points 5 11 the ECF No. 699 at 14. This Court is not prepared to find a litigant's selection of law firm( s) a factor that makes a case exceptional for purposes of attorneys' fees. Stone also to the "scorched earth" nature ofMillerCoors' litigation strategy, while ignoring role Stone themselves played in fostering a contentious litigation environment. While 6 11 this case was well litigated by both parties, it certainly was one of the most fiercely 7 11 contested 8 II 9 11 cases the Court has seen in many years. But, the Court finds Stone as responsible for this as MillerCoors. For example, Stone again highlights in its reply that MillerCoors' s late notice of witness Scott Whitley 10 II was in bad faith. Id. at 13. But this Court already found that the late disclosure of Mr. 11 11 Whitley 12 11 notice 13 II depose Mr. Whitley. Even after this deposition, Stone moved to exclude his testimony on 14 11 the was not in bad faith and the factual circumstances that led to his discovery and to Stone were justified. ECF No. 533 at 2. The Court then allowed Stone to basis of late disclosure, despite having ample time to depose and prepare for trial. 15 Before the Special Master was appointed in this case to handle jury instructions, 16 certain exhibits, and deposition excerpts, Stone previously moved for and was denied a 17 Special Master to address certain discovery matters. ECF No. 482. In addressing Stone's 18 attempt to relitigate already decided matters, the Court stated: [T]he Court finds the disputed discovery matters raised by Stone were previously litigated. See ECF Nos. 250,283,284,360,363,408,409,440. In the absence of being able to demonstrate an actual need for a special master, Stone's motion appears to be focused on relitigating discovery matters already decided. Stone had the chance to seek reconsideration of the initial rulings on these matters. Appointing a special master now would seem to be opening up an unorthodox avenue for re-visiting discovery rulings while avoiding the usual hurdles of untimely reconsideration motions. See Valley Forge Insurance Co. v. Hartford Iron & Metal, Inc., 2017 WL 365630, at *3 (N.D. Ind. Jan. 25, 2017). Here, discovery has been closed for two years and the parties are preparing for a trial that commences in just over six weeks. 19 20 21 22 23 24 25 26 27 11/d. at 3. If Stone wants to spend time relitigating matters this Court has already decided, 28 11 that falls on Stone. It does not make this case "exceptional," and the costs should not fall 6 3: l 8-cv-00331-BEN-MDD 1 11 on MillerCoors. Based on the totality of the circumstances, this Court does not find this 2 11 to be an exceptional case that warrants awarding attorneys' fees to the prevailing party. 3 Accordingly, Stone's motion for attorneys' fees is denied. 4 IV. Conclusion 5 For the reasons set forth above, Plaintiffs Motions for Disgorgement of Profits, 6 Trebling of Damages, and Attorneys' Fees are denied. 7 IT IS SO ORDERED. 8 9 IIDATED: July 29, 2022 10 11 I ,/ / --+,-+---+-~ 1;1o'NJ(o<fER T. BENITEZ /Jnited States District Judge V 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 3:18-cv-00331-BEN-MDD

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