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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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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JL BEVERAGE COMPANY, LLC, a Nevada
limited liability company,

Case No. 2:11-cv-00417-MMD-CWH
ORDER

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Plaintiff and Counter-Defendant,
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v.

(Defs.’ Motion to Strike Jury Demand –
ECF No. 193)

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BEAM INC., a Delaware corporation, and
JM BEAM BRANDS CO., a Delaware
corporation; and DOES 1 through 10,

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Defendants and Counter-Plaintiffs.
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I.

SUMMARY

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Before the Court is Defendants Beam Inc. and Jim Beam Brands Co.’s (“Jim

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Beam”) Motion to Strike Jury Demand (“Motion”) (ECF No. 193). The Court has reviewed

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Plaintiff JL Beverage Company, LLC’s (“JL”) response (ECF No. 194) and Jim Beam’s

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reply (ECF No. 198). For the reasons stated below, the Motion is granted.

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II.

BACKGROUND

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The facts giving rise to this action are set out in detail in the Court’s previous orders

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and in the Ninth Circuit’s opinion reversing an earlier order granting summary judgment

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on different grounds. (ECF Nos. 98, 107, 147.)

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In brief, JL manufactures and sells vodka whose bottles feature stylized depictions

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of lips that JL has trademarked. Jim Beam also sells vodka whose bottles feature stylized

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depictions of lips. JL alleges that Jim Beam’s use of the lips constitutes trademark

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infringement and false designation of origin under the Lanham Act as well as common law

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trademark infringement and unfair competition. (See ECF No. 30 at 9-11; see also ECF

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No. 160 at 1-2 (clarifying what claims were revived by the Ninth Circuit’s decision); ECF

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No. 162 at 3 (same).) The Court has previously held that JL may not seek actual damages

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or royalties on any of its claims. (ECF No. 185 at 10.) Consequently, the only issue

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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

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entitled to a jury trial. (ECF No. 193 at 2.)

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III.

LEGAL STANDARD

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To determine whether a party has the right to a jury trial, the Court must first

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ascertain whether the statutes underlying the party’s claims afford the right to a jury trial.

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See City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 707 (1999). If

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the statutes do not afford the right to a jury trial, the court must consider whether the

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Seventh Amendment of the United States Constitution affords such a right. Id. The

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Seventh Amendment provides that “[i]n Suits at common law, where the value in

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controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” U.S.

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CONST. amend. VII. “Consistent with the textual mandate that the jury right be

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preserved . . . interpretation of the Amendment has been guided by historical analysis

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comprising two principal inquiries.” City of Monterey, 526 U.S. at 708. First, the court must

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determine whether it is “dealing with a cause of action that either was tried at law at the

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time of the founding or is at least analogous to one that was.” Id. (quoting Markman v.

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Westview Instruments, Inc., 517 U.S. 370, 376 (1996)). “If the action in question belongs

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in the law category, [then the court] ask[s] whether the particular trial decision must fall to

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the jury in order to preserve the substance of the common-law right as it existed in 1791.”

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Id. (quoting Markman, 517 U.S. at 376).

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IV.

DISCUSSION

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The statutory text of the Lanham Act does not, by itself, provide for the right to a

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jury trial. See Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059, 1074 (9th

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Cir. 2015), cert. denied, 136 S. Ct. 410 (2015) (considering only whether the Seventh
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Amendment affords the right to a jury trial regarding disgorgement); see also Visible Sys.

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Corp. v. Unisys Corp., 551 F.3d 65, 78 (1st Cir. 2008) (“[I]t seems clear that the Lanham

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Act itself does not create a right to a jury trial whenever the remedy of an accounting of

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defendant’s profits is sought.”). Neither does the Seventh Amendment afford the right to a

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jury trial in this case. Defendants argue that a recent decision by the Ninth Circuit Court of

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Appeals controls, Fifty-Six Hope Rd. Music, 778 F.3d at 1075.

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This Court finds that Fifty-Six Hope Rd. Music controls in this case. In Fifty-Six

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Hope Rd. Music, the owners of rights to Bob Marley’s image sued the producers of t-shirts

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and other merchandise bearing Marley’s likeness for, inter alia, trademark infringement

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and false endorsement under the Lanham Act. Id. at 1066. The trademark owners sought

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remedies including disgorgement of profits, and they requested that the calculation of such

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profits be made by a jury. Id. at 1067. The court denied the trademark owners’ request for

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calculation by a jury. Id. Instead, after the trademark owners prevailed on their false

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endorsement claim at trial, the court calculated and awarded profits itself. Id. The

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trademark owners appealed the order awarding profits, claiming that the “Seventh

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Amendment necessitates a jury calculation of profits to be disgorged.” Id. at 1074. The

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Ninth Circuit disagreed and held that the Seventh Amendment does not afford the right to

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a jury calculation of profits for two reasons: disgorgement is an equitable remedy, and “the

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specific issue of profit determination cannot be said to be traditionally tried to a jury.” Id.

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at 1075-76.

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Here, in light of this court’s prior ruling (ECF No. 185 at 10), the only issue

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potentially suitable for resolution by jury is an accounting of profits. A request for

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accounting and disgorgement under these circumstances does not give rise to the right to

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a jury trial for the reasons described in Fifty-Six Hope Rd. Music—disgorgement is an

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equitable remedy, and “the specific issue of profit determination cannot be said to be

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traditionally tried to a jury.” 778 F.3d at 1075.

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Plaintiff argues that the United States Supreme Court’s decision in Dairy Queen,

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Inc. v. Wood, 369 U.S. 469 (1962), controls instead. In Dairy Queen, the owners of the
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Dairy Queen trademark sued a licensee for breach of contract and trademark infringement

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when the licensee failed to make payments under the licensing contract. Id. at 474-75.

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The trademark owners sought, inter alia, “an accounting to determine the exact amount of

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money owing by [the licensee] and a judgment for that amount.” Id. at 475. The licensee

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demanded a jury trial in its answer, id. at 476, and the trademark owners moved to strike

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the demand, id. at 470. The trial court granted the trademark owners’ motion to strike,

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concluding, inter alia, that the action was purely equitable. Id. The licensee sought

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mandamus in the Third Circuit Court of Appeals, and the Third Circuit denied the request

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without opinion. Id. The Supreme Court granted certiorari. Id.

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The trademark owner argued that the licensee had no right to a jury trial because

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an accounting is a purely equitable remedy. Id. at 477. The Court, observing that the

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trademark owner’s argument was “based primarily upon the fact that their complaint is

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cast in terms of an ‘accounting,’ rather than in terms of an action for ‘debt or ‘damages,’”

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noted that “the constitutional right to trial by jury cannot be made to depend upon the

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choice of words used in the pleadings.” Id. at 477. The Court then looked beyond the

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words used in the complaint and concluded that the owner’s request for “an accounting to

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determine the exact amount of money owing by [the licensee] and a judgment for that

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amount” amounted to a legal claim for damages. See id. at 476 (“[The licensee’s]

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contention . . . is that insofar as the complaint requests a money judgment it presents a

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claim which is unquestionably legal. We agree with that contention.”); see also Feltner v.

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Columbia Pictures Television, Inc., 523 U.S. 340, 346 (1998) (“[A]wards of actual damages

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and profits . . . generally are thought to constitute legal relief.”) (citing Dairy Queen, 369

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U.S. at 477); Fifty-Six Hope Rd. Music, 778 F.3d at 1075 (“[T]he Supreme Court

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characterizes the Dairy Queen claim as a legal claim for damages (not disgorgement of

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profits).”).

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Dairy Queen is thus readily distinguishable—it was a case about the right to a jury

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trial to determine legal damages, not the amount of profits to be disgorged. Fifty-Six Hope

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Rd. Music, 778 F.3d at 1075. Here, Plaintiff can seek only a determination of the latter,

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the former being precluded by this Court’s prior order. (ECF No. 185 at 10.)

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Plaintiff further contends that another decision by the Ninth Circuit Court of

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Appeals—Sid & Marty Krofft Television Prods., Inc. v. McDonald’s Corp., 562 F.2d 1157

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(9th Cir. 1977)—controls. In Krofft, the owners of copyrights relating to a children’s

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television show sued the producers of “McDonaldland” television commercials for

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copyright infringement. Id. at 1162. The copyright owners prevailed at trial, and the jury

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assessed damages of $50,000 against the defendants. Id. The copyright owners sought

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additional monetary relief in the form of, inter alia, “an order for an accounting of profits

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attributable to the infringements,” id., but the trial court concluded that the copyright

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owners were not entitled to any additional recovery and denied the copyright owners’

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motion for an accounting of profits, id. at 1173. The plaintiffs appealed the order. Id. at

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1161.

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The Ninth Circuit found that the “[p]laintiffs’ claim for damages and an accounting

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of profits in this case parallels that made in Dairy Queen.” Id. at 1175. The court then

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concluded that, just as in Dairy Queen, the copyright owners were entitled to a jury trial

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because the claim for an accounting amounted to a money claim for damages. See id.

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The court adopted the Fifth Circuit’s reasoning in Swofford v. B & W, Inc. that an

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“accounting for profits . . . . is basically a money claim for damages.” 336 F.2d 406, 411

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(5th Cir. 1964), cert. denied, 379 U.S. 962 (1964).

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Krofft is distinguishable on a number of grounds. First, the court’s decision was

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predicated on a finding that the plaintiff’s claim for an accounting amounted to a claim for

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legal damages, just as in Dairy Queen. See Krofft, 562 F.2d at 1175. Here, Plaintiff is

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precluded from seeking legal damages based on the Court’s prior order granting summary

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judgment. (ECF No. 185 at 10.) Second, Krofft was a copyright infringement case as

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opposed to a trademark infringement case. This is significant because the Copyright Act

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entitled the plaintiff to an award of profits upon a finding of infringement in Krofft, see 17

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U.S.C. § 101(b) (1977), whereas the Lanham Act specifies that an award of profits is

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“subject to the principles of equity” and is to be made by “[t]he court.” 15 U.S.C. § 1117(a).

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Profits may serve as a proxy for damages in some instances, Black & Decker Corp.

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v. Positec USA Inc., 118 F. Supp. 3d 1056, 1061 (N.D. Ill. 2015) (collecting cases), but

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profits cannot serve such a purpose here given the Court’s prior order. (ECF No. 185 at

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10.) Moreover, allowing Plaintiff to use profits as a proxy for damages (and thus proceed

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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

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affords Plaintiff the right to a jury trial in this case.
V.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several cases

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not discussed above. The Court has reviewed these arguments and cases and determines

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that they do not warrant discussion as they do not affect the outcome of the motion before

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the Court.

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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.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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