JL Beverage Company, LLC v. Fortune Brands Inc. et al

Filing 201

ORDER - Jim Beam's Motion to Strike Jury Demand (ECF No. 193 ) is granted. Signed by Judge Miranda M. Du on 11/7/2017. (Copies have been distributed pursuant to the NEF - DRM)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 *** 9 JL BEVERAGE COMPANY, LLC, a Nevada limited liability company, Case No. 2:11-cv-00417-MMD-CWH ORDER 10 Plaintiff and Counter-Defendant, 11 v. (Defs.’ Motion to Strike Jury Demand – ECF No. 193) 12 13 BEAM INC., a Delaware corporation, and JM BEAM BRANDS CO., a Delaware corporation; and DOES 1 through 10, 14 Defendants and Counter-Plaintiffs. 15 16 I. SUMMARY 17 Before the Court is Defendants Beam Inc. and Jim Beam Brands Co.’s (“Jim 18 Beam”) Motion to Strike Jury Demand (“Motion”) (ECF No. 193). The Court has reviewed 19 Plaintiff JL Beverage Company, LLC’s (“JL”) response (ECF No. 194) and Jim Beam’s 20 reply (ECF No. 198). For the reasons stated below, the Motion is granted. 21 II. BACKGROUND 22 The facts giving rise to this action are set out in detail in the Court’s previous orders 23 and in the Ninth Circuit’s opinion reversing an earlier order granting summary judgment 24 on different grounds. (ECF Nos. 98, 107, 147.) 25 In brief, JL manufactures and sells vodka whose bottles feature stylized depictions 26 of lips that JL has trademarked. Jim Beam also sells vodka whose bottles feature stylized 27 depictions of lips. JL alleges that Jim Beam’s use of the lips constitutes trademark 28 infringement and false designation of origin under the Lanham Act as well as common law 1 trademark infringement and unfair competition. (See ECF No. 30 at 9-11; see also ECF 2 No. 160 at 1-2 (clarifying what claims were revived by the Ninth Circuit’s decision); ECF 3 No. 162 at 3 (same).) The Court has previously held that JL may not seek actual damages 4 or royalties on any of its claims. (ECF No. 185 at 10.) Consequently, the only issue 5 potentially suitable for jury resolution is an accounting of profits under the Lanham Act. Jim Beam moves to strike Plaintiff’s jury demand on the basis that Plaintiff is not 6 7 entitled to a jury trial. (ECF No. 193 at 2.) 8 III. LEGAL STANDARD 9 To determine whether a party has the right to a jury trial, the Court must first 10 ascertain whether the statutes underlying the party’s claims afford the right to a jury trial. 11 See City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 707 (1999). If 12 the statutes do not afford the right to a jury trial, the court must consider whether the 13 Seventh Amendment of the United States Constitution affords such a right. Id. The 14 Seventh Amendment provides that “[i]n Suits at common law, where the value in 15 controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” U.S. 16 CONST. amend. VII. “Consistent with the textual mandate that the jury right be 17 preserved . . . interpretation of the Amendment has been guided by historical analysis 18 comprising two principal inquiries.” City of Monterey, 526 U.S. at 708. First, the court must 19 determine whether it is “dealing with a cause of action that either was tried at law at the 20 time of the founding or is at least analogous to one that was.” Id. (quoting Markman v. 21 Westview Instruments, Inc., 517 U.S. 370, 376 (1996)). “If the action in question belongs 22 in the law category, [then the court] ask[s] whether the particular trial decision must fall to 23 the jury in order to preserve the substance of the common-law right as it existed in 1791.” 24 Id. (quoting Markman, 517 U.S. at 376). 25 IV. DISCUSSION 26 The statutory text of the Lanham Act does not, by itself, provide for the right to a 27 jury trial. See Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059, 1074 (9th 28 Cir. 2015), cert. denied, 136 S. Ct. 410 (2015) (considering only whether the Seventh 2 1 Amendment affords the right to a jury trial regarding disgorgement); see also Visible Sys. 2 Corp. v. Unisys Corp., 551 F.3d 65, 78 (1st Cir. 2008) (“[I]t seems clear that the Lanham 3 Act itself does not create a right to a jury trial whenever the remedy of an accounting of 4 defendant’s profits is sought.”). Neither does the Seventh Amendment afford the right to a 5 jury trial in this case. Defendants argue that a recent decision by the Ninth Circuit Court of 6 Appeals controls, Fifty-Six Hope Rd. Music, 778 F.3d at 1075. 7 This Court finds that Fifty-Six Hope Rd. Music controls in this case. In Fifty-Six 8 Hope Rd. Music, the owners of rights to Bob Marley’s image sued the producers of t-shirts 9 and other merchandise bearing Marley’s likeness for, inter alia, trademark infringement 10 and false endorsement under the Lanham Act. Id. at 1066. The trademark owners sought 11 remedies including disgorgement of profits, and they requested that the calculation of such 12 profits be made by a jury. Id. at 1067. The court denied the trademark owners’ request for 13 calculation by a jury. Id. Instead, after the trademark owners prevailed on their false 14 endorsement claim at trial, the court calculated and awarded profits itself. Id. The 15 trademark owners appealed the order awarding profits, claiming that the “Seventh 16 Amendment necessitates a jury calculation of profits to be disgorged.” Id. at 1074. The 17 Ninth Circuit disagreed and held that the Seventh Amendment does not afford the right to 18 a jury calculation of profits for two reasons: disgorgement is an equitable remedy, and “the 19 specific issue of profit determination cannot be said to be traditionally tried to a jury.” Id. 20 at 1075-76. 21 Here, in light of this court’s prior ruling (ECF No. 185 at 10), the only issue 22 potentially suitable for resolution by jury is an accounting of profits. A request for 23 accounting and disgorgement under these circumstances does not give rise to the right to 24 a jury trial for the reasons described in Fifty-Six Hope Rd. Music—disgorgement is an 25 equitable remedy, and “the specific issue of profit determination cannot be said to be 26 traditionally tried to a jury.” 778 F.3d at 1075. 27 Plaintiff argues that the United States Supreme Court’s decision in Dairy Queen, 28 Inc. v. Wood, 369 U.S. 469 (1962), controls instead. In Dairy Queen, the owners of the 3 1 Dairy Queen trademark sued a licensee for breach of contract and trademark infringement 2 when the licensee failed to make payments under the licensing contract. Id. at 474-75. 3 The trademark owners sought, inter alia, “an accounting to determine the exact amount of 4 money owing by [the licensee] and a judgment for that amount.” Id. at 475. The licensee 5 demanded a jury trial in its answer, id. at 476, and the trademark owners moved to strike 6 the demand, id. at 470. The trial court granted the trademark owners’ motion to strike, 7 concluding, inter alia, that the action was purely equitable. Id. The licensee sought 8 mandamus in the Third Circuit Court of Appeals, and the Third Circuit denied the request 9 without opinion. Id. The Supreme Court granted certiorari. Id. 10 The trademark owner argued that the licensee had no right to a jury trial because 11 an accounting is a purely equitable remedy. Id. at 477. The Court, observing that the 12 trademark owner’s argument was “based primarily upon the fact that their complaint is 13 cast in terms of an ‘accounting,’ rather than in terms of an action for ‘debt or ‘damages,’” 14 noted that “the constitutional right to trial by jury cannot be made to depend upon the 15 choice of words used in the pleadings.” Id. at 477. The Court then looked beyond the 16 words used in the complaint and concluded that the owner’s request for “an accounting to 17 determine the exact amount of money owing by [the licensee] and a judgment for that 18 amount” amounted to a legal claim for damages. See id. at 476 (“[The licensee’s] 19 contention . . . is that insofar as the complaint requests a money judgment it presents a 20 claim which is unquestionably legal. We agree with that contention.”); see also Feltner v. 21 Columbia Pictures Television, Inc., 523 U.S. 340, 346 (1998) (“[A]wards of actual damages 22 and profits . . . generally are thought to constitute legal relief.”) (citing Dairy Queen, 369 23 U.S. at 477); Fifty-Six Hope Rd. Music, 778 F.3d at 1075 (“[T]he Supreme Court 24 characterizes the Dairy Queen claim as a legal claim for damages (not disgorgement of 25 profits).”). 26 Dairy Queen is thus readily distinguishable—it was a case about the right to a jury 27 trial to determine legal damages, not the amount of profits to be disgorged. Fifty-Six Hope 28 /// 4 1 Rd. Music, 778 F.3d at 1075. Here, Plaintiff can seek only a determination of the latter, 2 the former being precluded by this Court’s prior order. (ECF No. 185 at 10.) 3 Plaintiff further contends that another decision by the Ninth Circuit Court of 4 Appeals—Sid & Marty Krofft Television Prods., Inc. v. McDonald’s Corp., 562 F.2d 1157 5 (9th Cir. 1977)—controls. In Krofft, the owners of copyrights relating to a children’s 6 television show sued the producers of “McDonaldland” television commercials for 7 copyright infringement. Id. at 1162. The copyright owners prevailed at trial, and the jury 8 assessed damages of $50,000 against the defendants. Id. The copyright owners sought 9 additional monetary relief in the form of, inter alia, “an order for an accounting of profits 10 attributable to the infringements,” id., but the trial court concluded that the copyright 11 owners were not entitled to any additional recovery and denied the copyright owners’ 12 motion for an accounting of profits, id. at 1173. The plaintiffs appealed the order. Id. at 13 1161. 14 The Ninth Circuit found that the “[p]laintiffs’ claim for damages and an accounting 15 of profits in this case parallels that made in Dairy Queen.” Id. at 1175. The court then 16 concluded that, just as in Dairy Queen, the copyright owners were entitled to a jury trial 17 because the claim for an accounting amounted to a money claim for damages. See id. 18 The court adopted the Fifth Circuit’s reasoning in Swofford v. B & W, Inc. that an 19 “accounting for profits . . . . is basically a money claim for damages.” 336 F.2d 406, 411 20 (5th Cir. 1964), cert. denied, 379 U.S. 962 (1964). 21 Krofft is distinguishable on a number of grounds. First, the court’s decision was 22 predicated on a finding that the plaintiff’s claim for an accounting amounted to a claim for 23 legal damages, just as in Dairy Queen. See Krofft, 562 F.2d at 1175. Here, Plaintiff is 24 precluded from seeking legal damages based on the Court’s prior order granting summary 25 judgment. (ECF No. 185 at 10.) Second, Krofft was a copyright infringement case as 26 opposed to a trademark infringement case. This is significant because the Copyright Act 27 entitled the plaintiff to an award of profits upon a finding of infringement in Krofft, see 17 28 /// 5 1 U.S.C. § 101(b) (1977), whereas the Lanham Act specifies that an award of profits is 2 “subject to the principles of equity” and is to be made by “[t]he court.” 15 U.S.C. § 1117(a). 3 Profits may serve as a proxy for damages in some instances, Black & Decker Corp. 4 v. Positec USA Inc., 118 F. Supp. 3d 1056, 1061 (N.D. Ill. 2015) (collecting cases), but 5 profits cannot serve such a purpose here given the Court’s prior order. (ECF No. 185 at 6 10.) Moreover, allowing Plaintiff to use profits as a proxy for damages (and thus proceed 7 to trial) would give Plaintiff an end-run around the Court’s prior order. In sum, the Court holds that neither the Lanham Act nor the Seventh Amendment 8 9 10 affords Plaintiff the right to a jury trial in this case. V. CONCLUSION 11 The Court notes that the parties made several arguments and cited to several cases 12 not discussed above. The Court has reviewed these arguments and cases and determines 13 that they do not warrant discussion as they do not affect the outcome of the motion before 14 the Court. 15 16 17 It is therefore ordered that Jim Beam’s Motion to Strike Jury Demand (ECF No. 193) is granted. DATED THIS 7th day of November 2017. 18 19 MIRANDA M. DU UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 6

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