Van Leeuwen Ice Cream LLC v. Rebel Creamery LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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VAN LEEUWEN ICE CREAM LLC,

Plaintiff, MEMORANDUM & ORDER

21-CV-2356(EK)(JRC)

-against-

REBEL CREAMERY LLC,

Defendant.

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ERIC KOMITEE, United States District Judge:

Background

In this trademark case, Van Leeuwen Ice Cream LLC sues

a competitor of sorts, Rebel Creamery LLC, for infringement of

Van Leeuwen’s trade dress and related claims under federal and

New York law. Van Leeuwen’s complaint seeks, among other

remedies: injunctive relief requiring Rebel to repackage its

products, compensatory and punitive damages, attorney’s fees and

costs, and an order requiring Rebel to account for and pay over

the profits from its infringement. Rebel has filed certain

counterclaims. Neither party has moved for summary judgment.

After discovery closed, Rebel moved to strike Van

Leeuwen’s jury demand, arguing that Van Leeuwen has abandoned

its claims that were legal in nature, and is not entitled to a

jury trial on the equitable claims that remain. Van Leeuwen

abandoned its claim for legal relief, according to Rebel, when

it declined to provide a computation of its damages in discovery

as required by Rule 26(a) of the Federal Rules of Civil

Procedure. As discussed below, this decision triggered the

prohibition, set out in Rule 37(c) of the Federal Rules of Civil

Procedure, on the introduction of such a calculation at trial.

As a result, Van Leeuwen is limited to the pursuit of equitable

remedies.

For the following reasons, the motion to strike the

jury demand is granted.

Discussion

A jury demand on a given claim or issue must be

stricken when “the court, on motion or on its own, finds that on

some or all of those issues [for which a jury is demanded] there

is no federal right to a jury trial.” Fed. R. Civ. P. 39(a)(2).

The Seventh Amendment guarantees the right to trial by jury only

“[i]n Suits at common law.” See Tull v. United States, 481 U.S.

412, 417 (1987).1

The right applies in those actions, including actions

created by statute, that are analogous to “Suits at common law”

brought in the English law courts prior to the adoption of the

Seventh Amendment. See id. “[T]he phrase ‘Suits at common law’

refers to suits in which legal rights are to be ascertained and

1 Unless otherwise noted, when quoting judicial decisions this order

accepts all alterations and omits all citations, footnotes, and internal

quotation marks.

determined, in contradistinction to those where equitable rights

alone are recognized, and equitable remedies are administered.”

Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494

U.S. 558, 564 (1990).

However, merely pleading entitlement to legal relief

does not necessarily guarantee a jury trial: if the only

remedies that the plaintiff can receive from trial are

equitable, the plaintiff has no right to a jury trial. In

Design Strategy, Inc. v. Davis, for example, the Second Circuit

affirmed the district court’s decision to strike a jury demand

once it became clear that the plaintiff could prevail only on

equitable theories of recovery. 469 F.3d 284, 299–300 (2d Cir.

2006). The plaintiff originally sought both “compensatory

damages” for lost profits — classic legal relief — and various

forms of equitable relief, including disgorgement of profits and

an accounting. See id. at 289–90. As the case progressed,

however, the district court precluded the plaintiff from

introducing evidence of lost profits at trial as a discovery

sanction. See id. at 296. Thus, the plaintiff could not prove

compensatory damages, see id. at 299; the district court then

denied the plaintiff a jury trial, as only equitable relief

remained in issue. See id. at 299–300. The Second Circuit

affirmed. See id.

Thus, to defeat the instant motion, Van Leeuwen must

show that it not only has pled, but that it can prevail on, at

least one legal claim. The claims Van Leeuwen has pled that can

potentially be so characterized are those seeking monetary

relief under the Lanham Act and under New York common law. I

consider the nature of these claims in turn.

A. Lanham Act Claims

1. The Jury Trial Right in Lanham Act Cases

Under the Lanham Act, a plaintiff in a trademark case

can recover: its own damages (from, for example, lost profits

and injured reputation); its attorneys’ fees and costs; and the

defendant’s profits. Merck Eprova AG v. Gnosis S.p.A., 760 F.3d

247, 261 (2d Cir. 2014) (citing 15 U.S.C. § 1117(a)); see George

Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1539–40 (2d Cir.

1992).

“[D]amages for trademark infringement” are a “legal

form[] of monetary relief” to which the right to a jury trial

attaches. Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 133 (2d

Cir. 2014) (citing Dairy Queen, Inc. v. Wood, 369 U.S. 469, 472–

73, 477–78 (1962)). In contrast, “[i]t is well settled that a

claim for attorneys’ fees and costs under the Lanham Act does

not entitle a party to a trial by jury.” Empresa Cubana Del

Tabaco v. Culbro Corp., 123 F. Supp. 2d 203, 211 (S.D.N.Y.

2000).

The Supreme Court has explained that as an alternative

to damages for its own lost profits, a trademark plaintiff may

recover an infringing defendant’s illicit gains “as an equitable

measure of compensation.” Hamilton–Brown Shoe Co. v. Wolf Bros.

& Co., 240 U.S. 251, 259 (1916). “A defendant who is liable in

a trademark or trade dress infringement action may be deemed to

hold its profits in constructive trust for the injured

plaintiff.” George Basch, 968 F.2d at 1538. In other words, a

defendant may be “accountable for its profits” to the plaintiff.

Id. A claim seeking an “accounting” of such profits is “a

restitutionary action in equity, imposing on a defendant the

obligation to disclose and return profits from the use of the

plaintiff’s property.” Gucci, 768 F.3d at 131. It is “founded

in the Chancellor’s equitable power to compel an accounting of

wrongly gained assets.” Id.

The Second Circuit recognizes “three categorically

distinct rationales for awarding a successful Lanham Act

plaintiff an accounting for the defendant’s profits: (1) to

avoid unjust enrichment; (2) as a proxy for plaintiff’s actual

damages; and (3) to deter infringement.” 4 Pillar Dynasty LLC

v. N. Y. & Co., Inc., 933 F.3d 202, 212 (2d Cir. 2019). In this

case, Van Leeuwen invokes the second rationale, arguing that it

is seeking Rebel’s profits as a proxy for Van Leeuwen’s actual

damages. See Van Leeuwen Opp. to Mot. to Strike 3, ECF No. 48.

And Van Leeuwen contends that this class of Lanham Act claims

supports a jury demand. See id. Effectively, according to Van

Leeuwen’s view, the claim for an accounting is equitable, but

when that claim is made as a proxy for a legal claim, the jury

entitlement still holds. This view is not, in the end, correct.

Van Leeuwen’s position does find support in several

district court opinions from this circuit that predate Gucci.

These decisions held that a claim for an infringer’s profits as

a “proxy for damages” was legal in nature, and thus could

support a jury demand. Some of these cases relied on the

Supreme Court’s 1962 decision in Dairy Queen, which held that a

trademark infringement claim was triable to a jury despite the

plaintiff’s prayer for an accounting, where the particular money

judgment requested in the complaint was “unquestionably legal”

in nature. See 369 U.S. at 472–73, 476–78.

In Daisy Group, Ltd. v. Newport News, Inc., for

example, the district court held that the plaintiff’s “claim for

profits under the Lanham Act g[ave] rise to a right to trial by

jury” because the plaintiff sought “profits as a rough proxy

measure of its damages.” 999 F. Supp. 548, 551–52 (S.D.N.Y.

1998). In Ideal World Marketing, Inc. v. Duracell, Inc., the

court went as far as to hold that all Lanham Act profits claims

garner the jury trial right. 997 F. Supp. 334, 339 (E.D.N.Y.

1998). The Ideal World court rejected that “a right as

fundamental as the Seventh Amendment right to a jury trial can

be made to depend upon subtle distinctions between . . .

rationales” for the remedy. Id.

But these district court decisions, and their

interpretation of Dairy Queen, cannot be reconciled with the

Second Circuit’s subsequent — and more specific — holding in

Gucci. The Gucci panel considered whether a district court had

the power to issue a preliminary injunction freezing an

infringer’s assets in a trademark case. 768 F.3d at 132-33.

The court would have that power only if the plaintiff sought at

least one equitable, rather than legal, remedy. Id. at 131.2

The Second Circuit concluded that the district court

could issue the injunction because the plaintiff prayed for an

accounting for the defendant’s profits under the Lanham Act.

Id. at 133. That remedy, the court held, is equitable, not

legal. Id. at 132. The court distinguished Dairy Queen as

involving a request for the plaintiff’s damages — not solely for

the defendant’s profits. See Gucci, 768 F.3d at 132-33. The

court explained that while the Dairy Queen plaintiffs’

“complaint included a request for an accounting,” those

plaintiffs “did not seek an award of profits, but amounts owed

2 As the Second Circuit explained, “district courts have no authority to

issue a prejudgment asset freeze . . . where such relief was not

traditionally accorded by courts of equity.” Id. Yet “they maintain the

equitable power to do so” where the plaintiff is “pursuing a claim for final

equitable relief.” Id.

under a contract and damages for trademark infringement.” Id.

This conclusion relied on the following description, in Dairy

Queen, of the remedies sought:

The most natural construction of the respondents’

claim for a money judgment would seem to be that it is

a claim that they are entitled to recover whatever was

owed them under the [trademark license] contract as of

the date of its purported termination plus damages for

infringement of their trademark since that date.

Dairy Queen, 369 U.S. at 477.

Gucci thus clarified that a Lanham Act accounting for

profits — even when the rationale for the remedy is to supply a

“proxy” for legal damages — is equitable. It follows that

entitlement to a jury trial cannot be manufactured by “the

rationale the plaintiff offer[s] for seeking to recover the

defendant’s profits.” Hard Candy, LLC v. Anastasia Beverly

Hills, Inc., 921 F.3d 1343, 1360 (11th Cir. 2019) (affirming

denial of jury trial on Lanham Act profits claim, and invoking

Gucci in support). That conclusion is consistent with “the

longstanding interpretation of the Seventh Amendment set out by

the Supreme Court, which requires [courts] to look to the nature

of the action and the nature of the requested remedy” to

determine whether it supports a jury demand. Id.; see also

Tull, 481 U.S. at 417 (articulating this interpretation).

Since Gucci, other district courts in this circuit

have recognized that a Lanham Act profits claim — a disgorgement

remedy, at bottom — cannot support a jury demand. This trend is

consistent with Design Strategy’s teaching that there is no

right to a jury trial unless the court can award “damages in the

strict sense of remedying loss.” 469 F.3d at 300.

A court in this district recently struck a jury demand

in reliance on Gucci. See RVC Floor Decor, Ltd. v. Floor &

Decor Outlets of Am., Inc., No. 18-CV-6449, 2023 WL 3092918, at

*7 (E.D.N.Y. Apr. 26, 2023). The court reasoned that

“Plaintiff’s remaining remedies” of “disgorgement of profits

under [the Lanham Act] and state law, and an injunction” were

all equitable. Id.

Similarly, in Bruce Kirby, Inc. v. Laserperformance

(Europe) Ltd., after a jury in a Lanham Act case purported to

award the defendant’s profits as “damages,” the court deemed the

award advisory. No. 13-CV-00297, 2021 WL 328632, at *12 (D.

Conn. Feb. 1, 2021), aff’d in part on other grounds, No. 21-519,

2023 WL 5319216 (2d Cir. Aug. 18, 2023). The court, applying

Gucci, concluded that the remedy the plaintiffs had sought was

the equitable profits remedy, not the legal damages remedy, and

“there [was] no right to a jury trial on that issue.” Id.

To be sure, some district courts have allowed juries

to award profits in Lanham Act cases even after Gucci. For

example, in Car Freshner Corp. v. D & J Distrib. & Mfg., Inc. —

provided in slip copy by the plaintiffs — the court “instructed

the jury that the Lanham Act permits a plaintiff to recover the

profits that a defendant earned through its acts of

infringement.” No. 14-CV-391, slip. op. at 3 (S.D.N.Y. Mar. 1,

2016), ECF No. 114 (emphasis added). The court then upheld the

jury’s award of such profits, without deeming it advisory. See

id. But it did so with no analysis of the Seventh Amendment

question, and it appears from the court’s passing description

that damages, as well as equitable remedies, were in play.3

The Seventh Amendment question here is resolved by

Gucci: damages (i.e., harm to the plaintiff) support a jury

demand, while profits (gain to the defendant) do not. See 768

F.3d at 131–33. A profits claim does not support a jury demand

even if the plaintiff purports to seek “a determination of a

defendant’s profits for the purposes of a damages award under

the Lanham Act.” Bruce Kirby, 2021 WL 328632, at *12. It is

“the basis for the plaintiff’s claim and the nature of the

underlying remedies sought,” and not how the plaintiff has

“labeled” it, that dictates whether a claim is legal or

equitable. Cent. States, Se. & Sw. Areas Health & Welfare Fund

v. Gerber Life Ins. Co., 771 F.3d 150, 153–54 (2d Cir. 2014).

3 In Car Freshner, the defendant had not objected to the jury’s deciding

the issue; on the contrary, the defendants had actually moved for a new trial

— before a new jury — because “the jury lacked the necessary proof . . . to

render a damages verdict.” Defs.’ Reply Mem. 12, Car Freshner, No. 14-CV-391

(S.D.N.Y. Feb. 9, 2016), ECF No. 113.

2. Van Leeuwen’s Lanham Act Claims Do Not Support its

Jury Demand

Here, as noted above, Van Leeuwen pled Lanham Act

claims for damages and profits alike. On the face of Van

Leeuwen’s complaint, Van Leeuwen seeks the relief that, per

Dairy Queen, entitles a trademark plaintiff to a jury trial: a

legal claim for “damages based upon a charge of trademark

infringement,” plus equitable remedies. See 369 U.S. at 477,

479. Nevertheless, Van Leeuwen can obtain only equitable

remedies on its Lanham Act claims, as it can no longer prove

actual damages at trial. Design Strategy, 469 F.3d at 299–300.

This is true because of the way Van Leeuwen opted to conduct

discovery.

Under Rule 26(a), a party must “provide a computation

of any category of damages voluntarily, i.e., ‘without awaiting

a discovery request.’” Id. (quoting Fed. R. Civ. P.

26(a)(1)(A)). If a party fails to disclose such a computation,

“the party is not allowed to use that information . . . to

supply evidence . . . at a trial, unless the failure was

substantially justified or is harmless.” Fed R. Civ. P.

37(c)(1); see also Design Strategy, 469 F.3d at 298.

Van Leeuwen disclosed a computation of Rebel’s illicit

gains during discovery, which has now closed. See Expert Report

of Phillip Brida, Mot. Ex. B ¶ 7, ECF No. 46 (calculating “the

amount of damages due to Van Leeuwen based on the profits

realized by Rebel”). But Van Leeuwen explicitly declined to

disclose a computation of its own lost profits, stating that

“[a] computation of damages in accordance with Rule

26(a)(1)(A)(iii) is premature at this time.” Van Leeuwen

Initial Disclosures, Mot. Ex. A at 6, ECF No. 38–1.

While I might possess discretion to allow Van Leeuwen

to belatedly introduce a computation of its actual damages, Van

Leeuwen has confirmed that no such computation will be

forthcoming. At oral argument, Van Leeuwen unequivocally

disclaimed any intention to offer proof of its actual damages in

this case, contenting itself to rely on its expert’s calculation

of Rebel’s profits as a proxy for Van Leeuwen’s damages. See

Hr’g Tr. 16:15–19, ECF No. 63 (“The only computation of damages

that Van Leeuwen is putting forth is an accounting of Rebel’s

profits, the computation that was set forth in our damages

report. Van Leeuwen does not intend to present a separate

actual damages computation.”).

Notwithstanding the case law discussed above, Van

Leeuwen argues that this tack entitles it to a jury trial. As

noted above, the Second Circuit recognizes that one “rationale[]

for awarding a successful Lanham Act plaintiff an accounting for

the defendant’s profits” is that a profits award can serve “as a

proxy for plaintiff’s actual damages,” 4 Pillar Dynasty, 933

F.3d at 212 — albeit only a “rough” one. George Basch, 968 F.2d

at 1539. From this principle, Van Leeuwen argues that a

computation of a Lanham Act defendant’s profits, unmoored from

the plaintiff’s actual damages, is necessarily an adequate

computation of the plaintiff’s actual damages, as it is a

“rough” equivalent thereof. See Van Leeuwen Opp. 15. Thus, Van

Leeuwen insists, it has introduced a calculation of its actual

damages: the calculation of Rebel’s profits.

But Van Leeuwen takes the Second Circuit’s words out

of context. It is the profits equitable remedy that is a rough

proxy for the legal remedy of damages. Calculations of

trademark infringers’ profits are not, as an arithmetic matter,

“proxies” for markholders’ actual damages.

Underscoring this point, when courts in this circuit

have calculated Lanham Act plaintiffs’ actual damages, they have

not simply tallied up the defendants’ total profits from

infringing sales. For example, in River Light V, L.P. v. Lin &

J Int’l, Inc., the court calculated actual damages by estimating

the percentage of the infringer’s customers who bought

infringing “knock-offs” by mistake. See No. 13-CV-3669, 2015 WL

3916271, at *7–8 (S.D.N.Y. June 25, 2015). The court then

assumed that the markholder would have been able to sell — at

the markholder’s profit margins — to that subset of the

infringer’s customers. See id. The defendant’s profits played

no per se role in the calculation.

Similarly, in Church & Dwight Co. v. SPD Swiss

Precision Diagnostics GmbH, when calculating actual damages, the

court did not use the defendants’ profits — i.e., the

defendants’ sales multiplied by its profit margin per unit. Id.

Instead, as in River Light, the court used the defendants’ sales

multiplied by the plaintiff’s profit margin per unit. See id.

The district court used this methodology even though the

“plaintiff’s lost profits and the defendants’ [gained] profits

[we]re based upon the same sales.” No. 14-CV-585, 2018 WL

4253181, at *16 (S.D.N.Y. Sept. 5, 2018).

Van Leeuwen counters that “damages” are available

under the Lanham Act even to plaintiffs who cannot prove the

amount of their damages, if they can show a “general right to

damages.” Hr’g Tr. 22:6 (quoting George Basch, 968 F.2d at

1539). To that end, Van Leeuwen relies on George Basch, in

which the Second Circuit noted “the inherent difficulty in

isolating the causation behind diverted sales and injured

reputation” and that “damages from trademark or trade dress

infringement are often hard to establish.” 968 F.2d at 1539.

As a result, as a “rule,” “profits from defendant’s proven sales

are awarded to the plaintiff unless the defendant can show that

the infringement had no relationship to those earnings.” Id.

But George Basch never suggests that a plaintiff can prevail in

a jury trial without proving actual damages. Indeed, George

Basch sourced its “rule” from a passage in the Supreme Court’s

decision in Mishawaka Manufacturing Co. v. S.S. Kresge Co., 316

U.S. 203 (1942), discussing an accounting for defendant’s

profits under the Trade-Mark Act of 1905, not a claim for

plaintiff’s damages. See George Basch, 968 F.2d at 1539 (citing

Mishawaka, 316 U.S. at 206).4 Thus, the George Basch rule eases

a plaintiff’s burden on a profits claim — but such a claim still

cannot support a jury demand, even when labeled as a damages

claim. See also Cent. States, 771 F.3d at 153–54 (nature of

claim, not label, controls whether it is legal or equitable).

In sum, none of Van Leeuwen’s Lanham Act claims

support its jury demand.

B. New York Law Claims

Van Leeuwen also asserts New York common law claims

for trade-dress infringement and unfair competition, and a

trademark dilution claim under N.Y. Gen. Bus. Law § 360–l.

Compl. ¶¶ 54–55, 63, ECF No. 1. But without a computation of

actual damages, Van Leeuwen cannot recover compensatory damages

4 See also Mishawaka, 316 U.S. at 205–06 (“[The Trade-Mark Act of 1905]

provides that upon a decree being rendered in any such case for wrongful use

of a trade-mark the complainant shall be entitled to recover, in addition to

the profits to be accounted for by the defendant, the damages the complainant

has sustained thereby . . . and in assessing profits the plaintiff shall be

required to prove defendant’s sales only . . . . Infringement and damage

having been found, the Act requires the trade-mark owner to prove only the

sales of articles bearing the infringing mark.” (emphasis added)).

under state law, either. See Design Strategy, 469 F.3d at 299–

300. The Second Circuit held as much in Design Strategy, which

involved New York common law claims seeking to recover “lost

profits,” on the one hand, and “profits earned by the

Defendants,” on the other. Id. The Design Strategy court held

that the district court’s “decision to preclude evidence, and

therefore a claim, of lost profits” left the plaintiff seeking

“profits earned by the Defendants,” a remedy that was equitable

because it had no “connection to [the plaintiff’s] actual loss.”

Id.

Since Design Strategy, the New York Court of Appeals

has confirmed that “profits” cannot be awarded in New York

unfair competition cases unless the plaintiff demonstrates “a

causal relation not wholly unsubstantial and imaginary[] between

the gains of the [defendant] and those diverted from” the

plaintiff. E.J. Brooks Co. v. Cambridge Sec. Seals, 105 N.E.3d

301, 308–09 (N.Y. 2018). Van Leeuwen insists that it will

combine its computation of Rebel’s profits with “evidence of

actual damage” such as “a drop in year-over-year sales when

Rebel hit the market.” Van Leeuwen Opp. 15. But, at least in

federal court, Van Leeuwen cannot escape Design Strategy and

Rule 26’s requirement of a computation of Van Leeuwen’s actual

damages as a prerequisite to asserting a lost profits theory at

trial.

Furthermore, under New York law, “punitive damages may

not be awarded absent sustainable compensatory damages.” Rivera

v. City of New York, 836 N.Y.S.2d 108, 117 (N.Y. App. Div. 1st

Dep’t 2007); see N.Y. Pattern Jury Instr. Civil 2:278 (“Punitive

damages may not be awarded unless there has been an award for

compensatory damages (even nominal).” (citing Hubbell v. Trans

World Life Ins. Co. of N.Y., 408 N.E.2d 918, 919 (N.Y. 1980))).

Punitive damages are accordingly unavailable on the New York law

claims. See Design Strategy, 469 F.3d at 300 (no compensatory

damages possible without evidence of plaintiff’s “actual loss”).5

And injunctive relief for trademark dilution, available under

Section 360–l, is of course equitable, not legal. RVC Floor

Decor, 2023 WL 3092918, at *7; see also F.T.C. v. Bronson

Partners, LLC, 654 F.3d 359, 367 (2d Cir. 2011) (noting that “a

court of equity” historically “had exclusive jurisdiction” to

“award[] [an] injunction”). Van Leeuwen’s state law claims thus

cannot save its jury demand.6

5 The Design Strategy court declined to reach the question of whether

punitive damages alone would support a jury trial, as it had not been

briefed, and accordingly did not analyze whether the plaintiff there could

obtain punitive damages. Id. Because Van Leeuwen cannot prove any

entitlement to punitive damages under New York law, I also need not consider

whether, were such damages available, Van Leeuwen would be entitled to a jury

trial.

6 Though Van Leeuwen argued in its briefing that it should at minimum be

entitled to an advisory jury, Van Leeuwen Opp. 16, Van Leeuwen withdrew the

request for an advisory jury at oral argument. Hr’g Tr. 40:20–41:3.

Conclusion

For the foregoing reasons, the motion to strike the

jury demand is granted. By April 5, 2024, the parties shall

submit an updated Joint Pretrial Order consistent with this

order. A pretrial conference shall be held on April 8 at 10:30

AM.

SO ORDERED.

/s/ Eric Komitee__________

ERIC KOMITEE

United States District Judge

Dated: March 11, 2024

Brooklyn, New York