Continental Vineyard LLC et al v. Vinifera Wine Co., LLC et al
Filing
328
MEMORANDUM Opinion and Order: The Court finds that Plaintiffs are not prevailing parties and they cannot seek costs under Rule 54(d) 296 . Signed by the Honorable Thomas M. Durkin on 12/8/2020. Mailed notice. (ecw, )
Case: 1:12-cv-03375 Document #: 328 Filed: 12/08/20 Page 1 of 5 PageID #:14629
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CONTINENTAL VINEYARD LLC and
INDECK-PASO ROBLES LLC,
Plaintiffs,
v.
No. 12 C 3375
Judge Thomas M. Durkin
RANDY DZIERZAWSKI and VINIFERA WINE
CO., LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
A jury found for Defendants on all but an unfair competition claim against
defendant Randy Dzierzawski, a former officer of both plaintiff entities. Plaintiffs
sought more than $3.5 million in damages. The jury awarded $0, but the Court
ordered Dzierzawski to disgorge $285,731 to Plaintiffs. See R. 293 (Cont’l Vineyard
LLC v. Dzierzawski, 2019 WL 2076248, at *1 (N.D. Ill. May 10, 2019)). The judgment
was affirmed on appeal. See Cont’l Vineyard, LLC v. Vinifera Wine Co., LLC, 973 F.3d
747 (7th Cir. 2020).
The Court ordered any party seeking costs pursuant to Federal Rule of Civil
Procedure 54(d)(1) to first file a brief arguing that they are a prevailing party.
Plaintiffs filed such a brief. See R. 296.
Under Rule 54(d)(1), costs “should be allowed to the prevailing party.” In cases
where a party prevails on some claims but not others, costs are appropriate for a party
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“who prevails as to the substantial part of the litigation.” Testa v. Village of
Mundelein, 89 F.3d 443, 447 (7th Cir. 1996); First Commodity Traders, Inc. v. Heinold
Commodities, Inc., 766 F.2d 1007, 1015 (7th Cir. 1985); The Medicines Co. v. Mylan
Inc., 2017 WL 4882379, at *3 (N.D. Ill. Oct. 30, 2017). A district court enjoys “wide
discretion in determining and awarding reasonable costs.” Testa, 89 F.3d at 447.
Whether a party prevailed as to a “substantial part” of the case is necessarily
relative to the case as a whole. The absolute or relative amount of monetary relief
awarded (i.e., relative to the amount of damages originally sought) is one indication
of whether a party prevailed as to a substantial part of the case, but it is not the only
factor. The number of claims prevailed upon, and their significance to the case, are
also relevant to this analysis.
Plaintiffs cite a number of cases finding judgments of smaller absolute and
relative values to demonstrate a substantial victory. But while these cases establish
that the Court is within its discretion to find that Plaintiffs won a substantial part of
this case, they do not demonstrate why the Court should make that finding. In other
words, Plaintiffs do not make any argument as to why the monetary award they
received is indicative of a substantial victory in the context of this case. Such analysis
is particularly necessary here because Plaintiffs won only one claim against one
defendant when they asserted eight claims total. 1 See Springer v. Ethicon, Inc., 2018
The jury was asked to decide the following four claims against each defendant: (1)
breach of fiduciary duty for failure to act in good faith; (2) breach of fiduciary duty for
self-dealing; (3) unfair competition; and (4) unjust enrichment. See R. 272 (verdict
form).
1
2
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WL 1453553, at *12 (N.D. Ill. Mar. 23, 2018) (citing cases denying costs when the
plaintiff won only some claims against some defendants).
The primary claims here were for breach of fiduciary duty and unfair
competition. Plaintiffs alleged that Dzierzawski breached his fiduciary duty to
Plaintiffs because he formed a separate company to take advantage of certain
business opportunities that he should have directed to Plaintiffs as their officer.
Specifically, Dzierzawski satisfied a deal he made with Meijer Stores to sell it certain
varietals of wine by purchasing the wine from Plaintiffs and then reselling it under
his own brand name. Plaintiffs alleged both that they lost sales specifically because
Dzierzawaski sold their wine under his label and generally because he focused his
energy on his own company to Plaintiffs’ detriment. Plaintiffs sought more than $2.1
million in lost profits, $191,000 in costs due to Dzierzawski using Plaintiffs’ assets for
his own benefit, and $408,000 in compensation paid to Dzierzawski during the
relevant time period. The jury awarded nothing.
Lost profits are also an available form of damages for an unfair competition
claim. To succeed on an unfair competition claim, a plaintiff must prove brand
confusion. Unlike the breach of fiduciary duty claim, the jury found for Plaintiffs on
unfair competition, presumably because Defendants were reselling Plaintiffs’ wine
under Defendants’ brand without Plaintiffs’ express permission. But the $0 in
damages indicates that the jury found that any brand confusion was not the source
of Plaintiffs’ alleged damages. Rather, the jury apparently understood the alleged
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damages to be tied to Dzierzawski’s alleged breach of fiduciary duty, which the jury
rejected.
On post-trial review, the Court ordered disgorgement for unfair competition,
an equitable claim that is the purview of a court not a jury. See R. 214 (the Court’s
order addressing this issue). Plaintiffs sought $814,000. But the Court limited
disgorgement to net profits from Defendants’ sales of wine varietals that Plaintiffs
also sold, which amounted to $285,731.
In sum, as Plaintiffs themselves argued at trial, “the heart” of Plaintiffs’ case
was the claim for breach of fiduciary duty. See R. 264 at 50 (closing argument
transcript). The jury agreed, such that when they rejected the breach of fiduciary
duty claim, they also found $0 damages, despite a finding of brand confusion. The
Court also agrees that this case was primarily about Dzierzawski’s work for his own
company and whether it detracted from his obligations to Plaintiffs and cost Plaintiffs
profits. The unfair competition claim, premised on brand confusion, was a secondary
theory of the case and aspect of Plaintiffs’ damages. Having been awarded nothing
based on their primary theory, the Court finds that Plaintiffs did not win a
substantial part of the case.
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Conclusion
Therefore, the Court finds that Plaintiffs are not prevailing parties and they
cannot seek costs under Rule 54(d).
ENTERED:
______________________________
Honorable Thomas M. Durkin
United States District Judge
Dated: December 8, 2020
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