Wednesday, March 09, 2022

Applying Romag to false advertising cases

Harbor Breeze Corporation v. Newport Landing Sportfishing, Inc., --- F.4th ----, 2022 WL 664918, No. 19-56138 (9th Cir. Mar. 7, 2022)

Plaintiffs sued defendants for violating § 1125(a). A jury found that defendants had engaged in materially false or misleading advertising about the parties’ competing whale-watching-cruise business in violation of the Lanham Act, but the jury awarded $0 in actual damages. “The jury also declined to award the equitable remedy of disgorgement of profits, which had been submitted to the jury with the agreement of all parties.” The district court then permanently enjoined defendants from engaging in specified false advertising and denied plaintiffs’ request for attorneys’ fees. The court of appeals reversed in part, vacated in part, and remanded; the district court had instructed the jury using pre-Romag law requiring willfulness for disgorgement.

“Viewed in the context of the evidence and the arguments at trial, the error would ordinarily warrant reversal of the judgment.” Defendants argued that the now-error was immaterial, because the decision rested with the district judge, but the district judge too thought that willfulness was required.  Remand for new trial, though it didn’t have to be a jury trial.  The fee issue would also have to be relitigated in case the disgorgement retrial affected the assessment of some of the relevant circumstances, such as “the manner in which the case was litigated” and the “need in particular circumstances to advance considerations of compensation and deterrence.”

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