Swofford v. B & W, INCORPORATED

• Decision Date: 28 July 1964
• Docket Number: No. 21024.,21024.
• Citation: 336 F.2d 406
• Parties: Marvin K. SWOFFORD, Marion F. Wright, and Pathfinder Oil Tool Co., Appellants, v. B & W, INC., Appellee. B & W, INC., Appellant, v. Marvin K. SWOFFORD, Marion F. Wright, and Pathfinder Oil Tool Co., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

336 F.2d 406 (1964)

Marvin K. SWOFFORD, Marion F. Wright, and Pathfinder Oil Tool Co., Appellants, v. B & W, INC., Appellee.

B & W, INC., Appellant, v. Marvin K. SWOFFORD, Marion F. Wright, and Pathfinder Oil Tool Co., Appellee.

No. 21024.

United States Court of Appeals Fifth Circuit.

July 28, 1964.

Jack W. Hayden, Hayden & Pravel, H. Coke Wilson, Houston, Tex., for Marvin K. Swofford, Marion F. Wright, and Pathfinder Oil Tool Co., appellants.

Tom Arnold, Arnold & Roylance, Houston, Tex., R. Douglas Lyon, Lyon & Lyon, Los Angeles, Cal., of counsel, for appellee.

Before TUTTLE, Chief Judge, and RIVES and WISDOM, Circuit Judges.

RIVES, Circuit Judge.

These are interlocutory appeals¹ by all parties in an action for patent infringement. The appeals concern the propriety of a jury trial in a patent infringement action in light of the Seventh Amendment to the Constitution and Rules 38 and 39(b) of the Federal Rules of Civil Procedure, the propriety of separate trials of the issues of liability and damages under Rule 42(b) and the constitutionality of using different juries to try the separated issues.

The corporate plaintiff, assignee and owner of a patent, filed a complaint for infringement of patent² in the United States District Court for the Southern District of Texas in March 1961. The complaint requested a preliminary and final injunction against infringement by the defendant, an accounting for profits, damages, and reasonable attorneys' fees, and an assessment of costs and treble damages against the defendant. The defendant answered, denying the validity and the infringement of the patent, and counterclaimed for a declaratory judgment of patent invalidity and noninfringement. The plaintiff replied to the counterclaim, reasserting the validity of the patent and its infringement by the defendant. The answer and counterclaim and the reply to the counterclaim were filed in April 1961. Pursuant to stipulation of counsel, the patentees joined as individual plaintiffs, and the plaintiffs filed an amended complaint which contained identical allegations to the complaint filed originally by the corporate plaintiff, except for the addition and identification of the individual plaintiffs and a statement that the corporate plaintiff was authorized to maintain the suit for infringement subject to the payment of royalties to the individual plaintiffs. The plaintiffs filed the amended complaint on December 7, 1961, and on the same day they filed a demand for trial by jury. Subsequently, the defendant moved to strike the plaintiffs' jury demand on the grounds that the demand was untimely and that the case was in equity for an injunction and an accounting. The court³ denied the motion and ordered a jury trial on the issues of validity of the patent, its infringement, and appropriate damages; a separate trial of the issues of liability and damages before separate juries; and reserved the requests for injunctive relief, costs, attorneys' fees, and exemplary damages for consideration by the judge in the light of the relevant jury findings.

The defendant appeals from the denial of its motion to strike the plaintiffs' demand for a jury trial. The plaintiffs appeal from that part of the judgment which orders a separate trial of the issues of liability and damages before separate juries and which denies a jury trial of the plaintiffs' claims for attorneys' fees and exemplary damages. We deal first with the questions raised by the defendant's appeal.

The defendant maintains that the plaintiffs have failed to make a timely demand pursuant to Rule 38 of the Federal Rules of Civil Procedure and thereby have waived any right to trial by jury.

The plaintiffs' demand for a jury trial was made within ten days after the filing of the amended complaint but several months after the filing of the original complaint, the answer and counterclaim and the reply to the counterclaim. The question is whether the amended complaint, which contains allegations identical to the original complaint except for the addition of the individual plaintiffs and the statement that the corporate plaintiff is authorized to maintain the suit for infringement subject to the payment of royalties, is the "last pleading" within the meaning of Rule 38(b). The defendant contends that the amended complaint "added nothing to the issues raised by the original Complaint, but merely added two unnecessary parties as nominal plaintiffs * * *."

We do not find it necessary to decide this question since the district judge based his order on Rule 39(b) of the Federal Rules of Civil Procedure. Under that rule the court has a broad discretion in determining whether to relieve a party from waiver of jury trial, and its decision will be reversed only for abuse of discretion. 2B Barron & Holtzoff, Federal Practice and Procedure § 892, at 72 (Wright ed. 1961).

The right to a jury in a federal court as declared by the Seventh Amendment is a basic and fundamental feature of our system. And when the discretion of the court is invoked under Rule 39(b), the court should grant a jury trial in the absence of strong and compelling reasons to the contrary. See Albert v. R. P. Farnsworth & Co., 5 Cir. 1949, 176 F.2d 198, 203.

However, if a jury trial has been waived, a motion is necessary to invoke the court's discretion since the court may not employ Rule 39(b) of its own initiative. See 2B Barron & Holtzoff, Federal Practice and Procedure § 892, at 67 (Wright ed. 1961). But Rule 39(b) says in part: "notwithstanding the failure of a party to demand a jury in an action in which such a demand might have been made of right, the court in its discretion upon motion may order a trial by a jury * * *." (Emphasis added.) We think that when a demand has been made, though untimely, it is not reversible error for the district court to exercise its discretion under Rule 39(b) even though we have advised previously that "a motion to the court under Rule 39 rather than service of a demand under Rule 38 is the proper course * * *." Roth v. Hyer, 5 Cir. 1944, 142 F.2d 227, 228.

The defendant contends that the plaintiffs' requests for injunctive relief, and an "accounting" are solely and traditionally equitable remedies, and that the plaintiffs are not entitled to a trial by jury.⁴ Its conclusion is based on the test stated in its brief that "whether or not a jury trial is available as a matter of right is to be determined by looking at the Complaint to determine whether or not the cause of action set forth therein is legal or equitable in character."

In an action where a single claim is presented and a single remedy demanded, the action can rationally be classified as one which historically would have been either legal or equitable. Wright, Federal Courts 353 (1963). In such a case, the proper approach to deciding whether a claimant has a right to a jury trial is whether the action is "legal" or "equitable." See Simler v. Conner, 1963, 372 U.S. 221, 83 S.Ct. 609, 9 L.Ed.2d 691 (suit to adjudicate the amount of fees owing to lawyer under contingent fee retainer contract). Similarly, where the case presents several claims or demands more than one remedy, as in the instant case, the matter is no more difficult than in a simple suit if the claims, or the remedies, are either all legal or all equitable. Thus, where the case presents several claims or demands more than one remedy, the most direct test is "whether the action now pending before the District Court contains legal issues." Dairy Queen, Inc. v. Wood, 1962, 369 U.S. 469, 473, 82 S.Ct. 894, 897, 8 L.Ed.2d 44. If so, the parties are entitled to a jury trial as of right on those issues.

It has been held that when the plaintiffs seek injunctive relief, an equitable accounting and damages under the current patent act, they are entitled to a jury trial as of right on the claim for damages. National Dryer Mfg. Corp. v. Dryer Co. of Am., E.D.Pa.1955, 130 F.Supp. 912. In the instant action, the defendant contends that the plaintiffs are not entitled to a jury trial since the complaint is cast in terms of an "accounting for profits, damages * * *." It urges the complaint does not constitute a "demand for fixed money damages in the legal sense."⁵ It is unclear what the defendant means by the latter statement unless it is suggesting that items of special damages must be stated specifically under Rule 9(g) of the Federal Rules of Civil Procedure.

We think it is clear that the plaintiffs have requested damages. At the pretrial and oral hearing on the defendant's motion to strike the plaintiffs' demand for a jury trial, counsel for the plaintiffs emphasized the damage request and offered to amend the complaint by substituting "damages" for "accounting" if the court thought there is "magic" in the term, "accounting." The district judge replied that he was not "troubled about the word accounting at this time."

The defendant seeks a distinction — between damages in the legal sense and requesting an equitable accounting wherein damages may be determined — on the basis of pleading. "But the constitutional right to trial by jury cannot be made to depend upon the choice of words used in the pleadings." Dairy Queen, Inc. v. Wood, supra, 369 U.S. at 477-478, 82 S.Ct. at 900.⁶ Moreover, as the district court noted in its memorandum and order, the Supreme Court in Dairy Queen found a legal issue in a request for an accounting. In that case, the respondents prayed for temporary and permanent injunctions and "an accounting to determine the exact amount of money owing by petitioner and a judgment for that amount." 369 U.S. at 475, 82 S.Ct. at 898. The respondents contended that such a money claim is "purely equitable" since their complaint was cast in terms of an "accounting" rather than in terms of an action for "debt or damages." The Court held that whether the complaint was construed as an action on a debt allegedly due under a contract or as an action for...