Callaway Golf Co. v. Slazenger, CIV.A. 01-669 KAJ.
| Decision Date | 25 August 2005 |
| Docket Number | No. CIV.A. 01-669 KAJ.,CIV.A. 01-669 KAJ. |
| Citation | 384 F.Supp.2d 735 |
| Parties | CALLAWAY GOLF COMPANY, Plaintiff, v. Dunlop SLAZENGER, Defendant. |
| Court | U.S. District Court — District of Delaware |
Jack B. Blumenfeld, Esq., Morris Nichols Arsht & Tunnell, Wilmington, DE, Of Counsel: Robert E. Cooper, Esq., Gibson Dunn & Crutcher, Los Angeles, CA, Jeffrey T. Thomas, Esq., Gibson Dunn & Crutcher, Irvine, CA, Counsel for Plaintiff.
Rick S. Miller, Esq., Ferry, Joseph & Pearce, P.A., Wilmington, DE, Of Counsel: John P. Kelly, Esq., Lorusso Loud & Kelly, LLP, Fort Lauderdale, FL, Richard M. Husband, Esq., Mark D. Lorusso, Esq., Lorusso Loud & Kelly, LLP, Portsmouth, NH, David P. Tulchin, Esq., Robin D. Fessel, Esq., Sullivan & Cromwell, LLP, New York City, for Defendant.
This case about false advertising and misappropriation of trade secrets relates to golf ball technology. It was tried to a jury and, on August 12, 2004, the jury returned a verdict for Callaway Golf Company ("Callaway"), awarding $2.2 million on Callaway's false advertising claim. The jury also found in favor of Callaway on the counterclaim filed by Dunlop Slazenger ("Dunlop") alleging misappropriation of trade secrets. (Id.) Presently before me are Dunlop's Motion for Judgment as a Matter of Law and/or for a New Trial pursuant to Rule 50 and 59 of the Federal Rules of Civil Procedure (D.I.434), Dunlop's Motion for Attorney Fees and Costs (D.I.438), and Callaway's Motion for Attorney Fees and Costs (D.I.437). As set forth herein, Dunlop's Motion for Judgment as a Matter of Law is granted in part and denied in part. Both Dunlop's and Callaway's Motions for Attorneys Fees and Costs are denied.
Because the factual and procedural history of this case is set forth in several prior rulings, see Memorandum Opinion dated May 13, 2004 (D.I.359), Memorandum Opinion dated May 18, 2004 (D.I.362), Memorandum Order dated May 18, 2004 (D.I.360), and Memorandum Order dated May 21, 2004 (D.I.363), it will not be repeated here.
On August 17, 2004, judgment was entered in favor of Callaway for $2.2 million (D.I.432), based on the August 12, 2004, jury verdict. (D.I.410.) The jury specifically found that Dunlop had willfully and in bad faith engaged in literally false advertising by claiming that its A10 golf ball was "the Longest Ball on Tour." (Id. at 1, 2.) The jury awarded to Callaway $1.1 million for "corrective advertising" expenditures and another $1.1 million as damages for Dunlop's "unjust enrichment." (Id. at 2, 3.) The jury also found that Callaway had wrongly acquired Dunlop's trade secrets but that Callaway did not use that information. (Id. at 3.) Dunlop seeks to overturn the jury's verdict on the false advertising claim and demands a new trial on the trade secret counterclaims because of "erroneous pre-trial rulings." (D.I. 446 at 8.)
"Pursuant to Federal Rule of Civil Procedure 50, judgment as a matter of law may be granted only when `there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.'" Bullen v. Chaffinch, 336 F.Supp.2d, 342, 346 (D.Del.2004) (quoting FED. R. CIV. P. 50(a)). In assessing the sufficiency of the evidence, the court must give the non-moving party, "as [the] verdict winner, the benefit of all logical inferences that could be drawn from the evidence presented, resolve all conflicts in the evidence in his favor, and in general, view the record in the light most favorable to him." Williamson v. Consol. Rail Corp., 926 F.2d 1344, 1348 (3d Cir.1991). The court must determine "whether the record contains the minimum quantum of evidence from which a jury might reasonably afford relief." Keith v. Truck Stops Corp. of America, 909 F.2d 743, 745 (3d Cir.1990) (quoting Smollett v. Skayting Dev. Corp., 793 F.2d 547, 548 (3d Cir.1986) (internal quotation marks omitted)). "[A] court is not free to weigh the evidence, pass on the credibility of witnesses, or substitute its judgment of the facts for that of the jury." Aloe Coal Co. v. Clark Equipment Co., 816 F.2d 110, 113 (3d Cir.1987). "The difference in views between court and the jury is an insufficient basis to enter judgment as a matter of law." Boyce v. Edis Co., 224 F.Supp.2d 814, 817 (D.Del.2002).
Federal Rule of Civil Procedure 59(a) provides, in pertinent part:
A new trial may be granted to all or any of the parties and on all or part of the issues in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States.
The decision to grant or deny a new trial is within the sound discretion of the trial court and, unlike the standard for determining judgment as a matter of law, the court need not view the evidence in the light most favorable to the verdict winner. See Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980); Olefins Trading, Inc. v. Han Yang Chem. Corp., 9 F.3d 282 (3d Cir.1993). Among the most common reasons for granting a new trial are: "(1) ... the jury's verdict is against the clear weight of the evidence, and a new trial must be granted to prevent a miscarriage of justice; (2) ... newly-discovered evidence exists that would likely alter the outcome of the trial ...; (3) ... improper conduct by an attorney or the court unfairly influenced the verdict; ... [and] (4)... the jury's verdict was facially inconsistent." Zarow-Smith v. N.J. Transit Rail Operations, 953 F.Supp. 581, 584 (D.N.J.1997) (citations omitted). The court should grant a new trial on the basis that the verdict was against the weight of the evidence "only where a miscarriage of justice would result if the verdict were to stand." See Williamson, 926 F.2d at 1352; EEOC v. Del. Dep't of Health and Soc. Servs., 865 F.2d 1408, 1413 (3d Cir.1989).
Claims for false advertising in interstate commerce are authorized by section 43(a) of the Lanham Act ("the Act"), 15 U.S.C. § 1125(a). The Act allows a claimant "to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the cost of the action." 15 U.S.C. § 1117(a). Further, the Act "permits cumulative recovery of both profits and damages where the offending party's conduct is willful." Novell, Inc. v. Network Trade Center, Inc., 25 F.Supp.2d 1233, 1243 (D.Utah 1998). However, "[i]f the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case." 15 U.S.C. § 1117(a).
Dunlop argues that the jury verdict resulted in a "windfall double recovery" for Callaway. (D.I. 446 at 6.) Dunlop contends that the award of $1.1 million for "corrective advertising" and the identical award of $1.1 million for "unjust enrichment" were both based on the $1.1 million Dunlop spent on media advertising of its A10 golf ball. (D.I. 446 at 12.) Specifically, Dunlop argues that the award for "corrective advertising" amounts to an award of "prospective corrective advertising" damages, for which there is no equitable basis. (Id. at 20-21.) Further, Dunlop contends that because Callaway's expert suggested that a fair recovery would be $1.1 million for either corrective advertising or for unjust enrichment, "the allowance of the same measure for both verdict awards amounts to a double recovery." (Id. at 24-25.) Callaway responds that the amount awarded for "corrective advertising" was proper because Callaway "was spending huge amounts to promote the distance of the very balls [Dunlop] knew were longer than the A10" and "[Dunlop's] false claims ... made it more difficult and more expensive ... to successfully promote those balls." (D.I. 453 at 15.)
Although corrective advertising damages are usually for costs incurred prior to trial, damages may be awarded to allow an aggrieved party to conduct corrective advertising after trial. See Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1374-75 (10th Cir.1977) (). To grant such damages, however, there must be an economic rationale. See Zazu Designs v. L'Oreal, S.A., 979 F.2d 499, 506, 509 (7th Cir.1992) (). Furthermore, an award of money for post-trial corrective advertising must be justifiable as "a surrogate for plaintiff's damages or defendant's profit." PBM Products, Inc. v. Mead Johnson & Co., 174 F.Supp.2d 417, 420 (E.D.Va.2001) (internal citations omitted).
At trial, Callaway did not put on evidence of any expenditures it had already incurred in corrective advertising. The only evidence presented by Callaway about its advertising expenses was a comment by Callaway's damages expert, Dr. Cox, that Callaway spent between 17 and 23% of its sales on advertising. (D.I. 424 at 348.) He did not testify, however, as to how much, if any, of that advertising budget had been spent on corrective advertising prior to this trial. (Id.) Furthermore, the jury instructions were explicit, as suggested by Callaway, that the "corrective advertising damages" Callaway sought were intended to be used to conduct a "prospective corrective advertising campaign." (D.I. 387 at 22.)
In this case, there is no economic rationale to support...
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