disgorging a CEO's salary, then trebling the amount?

Multiple Energy Technologies, LLC v. Casden, 2025 WL 579641, № 2:21-cv-01149-ODW (RAOx) (C.D. Cal. Feb. 21, 2025)

I just posted about courts’ increasing openness to disgorgement. Here, the court trebles an award in a way that seems definitionally disconnected to the amount of defendant’s profits from false advertising—three times his total salary—in ways that seem to me inconsistent with Dewberry. I wonder if a motion for reconsideration is justified.

Plaintiff MET sued an individual, Casden, for false advertising and tortious interference with contractual relations. MET developed a patented bioceramic infrared material; Casden is the co-founder and CEO of Hologenix, which made a competing product. MET sued Hologenix for false advertising, and they settled in 2020. Casden negotiated and signed the Settlement Agreement on behalf of Hologenix. The settlement involved agreed payments and a permanent injunction against Hologenix barring it from “stat[ing] or suggest[ing]” that the Food and Drug Administration (“FDA”) “approved” Celliant or “made a ‘determination’ ” that Celliant promoted any benefits.

Afterwards, Casden made or approved statements about Celliant that violated the stipulated permanent injunction. And, the day before Hologenix was scheduled to pay $1,400,000 to MET pursuant to the Settlement Agreement, Hologenix filed for Chapter 11 bankruptcy. As a result of the bankruptcy proceedings, MET returned $100,000 it had received from Hologenix. MET then sued Casden for Lanham Act and state law false advertising violations, as well as tortious interference contractual relations. The court found that Casden acted to advance his personal interests when he tortiously interfered with the settlement agreement, thus foreclosing any agency immunity defense. The jury returned an advisory verdict in MET’s favor on its tortious interference cause of action with an award of $1 in nominal damages and a verdict in MET’s favor on its Lanham Act false advertising cause of action, similarly awarding $1 in nominal damages.

The court then awarded MET $2.5 million in damages on the tortious interference claim, and found that, on the Lanham Act claim, MET was entitled to disgorgement of Casden’s profits, treble damages, and attorneys’ fees. “[T]he jury viewed exhibits that reflect the statements Casden authorized or made himself, and they heard testimony from Casden acknowledging his discovery admissions that those statements were not true. This evidence is sufficient such that a reasonable jury could find the statements literally false.”

The court found that Casden’s salary could be disgorged as profits, and that this award could be trebled, because it had the discretion to award up to three times the “financial benefit [Casden] received because of the [false] advertising.” I don’t think that’s true if there’s no uncertainty about the amount of financial benefit received, because trebling the damages just because the deception was willful is a penalty, which disgorgement under the Lanham Act is not supposed to be.

The court determined that Casden’s annual salary of $300,000 since 2019 should be disgorged, because it was undisputed that the only product Hologenix sold was Celliant. And “the deliberate and willful nature of Casden’s conduct warranted trebling the award of Casden’s financial benefit.” The court found that it was not awarding a “penalty” or “windfall.” “Rather, the trebled amount is the amount the Court found to be ‘just, according to the circumstances of the case.’” But if it’s only just because Casden is bad, how is that not a penalty?

MET was also awarded nearly $600,000 in attorneys’ fees.