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Dairy Queen, Inc. v. Wood

Supreme Court of the United States · 1962 · Civil Procedure

Civil ProcedureSeventh Amendmentjury trial rightlegal remedyaccountingSeventh Amendmentjury triallegal vs equitable claims

Facts

Respondents, owners of the 'DAIRY QUEEN' trademark, had licensed petitioner to use the mark in parts of Pennsylvania under a written contract requiring payments up to about $150,000, including minimum annual payments. Respondents later claimed petitioner had materially breached the contract by failing to pay more than $60,000, sent a notice purporting to terminate the contract, and alleged that petitioner's continued use of the mark thereafter constituted trademark infringement. In district court, respondents sought injunctions, an accounting to determine the exact amount owed, and a money judgment for that amount. Petitioner denied breach, asserted that a later oral agreement modified the payment terms, and demanded a jury trial under Rule 38(b).

Issue

Whether respondents' complaint contained legal issues entitling petitioner to a jury trial under the Seventh Amendment, despite the complaint's request for an 'accounting' and equitable relief. Also, whether any such legal issues could be denied a jury on the theory that they were merely incidental to equitable claims.

Rule

In federal court, the right to jury trial on legal claims must be preserved inviolate. Legal issues do not lose their jury-trial right because they are characterized as incidental to equitable issues, and where legal and equitable issues are joined, only the most imperative circumstances can justify loss of jury trial through prior determination of equitable claims. A plaintiff seeking an equitable accounting on a cause of action cognizable at law must show that the accounts are so complicated that only equity can satisfactorily unravel them; merely styling a money claim as an accounting does not make it equitable.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In federal court in Chicago, Larkspur Music Licensing sues Omar Vega, a former regional licensee, alleging he failed to make required royalty payments under a written contract and kept using Larkspur's mark after termination. The complaint seeks a permanent injunction, an 'accounting' of unpaid sums, and a money judgment, and Vega timely demands a jury trial.

How should the district court rule on the jury demand as to the disputed issues of breach and the amount of money owed?

Explanation. The Seventh Amendment right to jury trial turns on the substance of the claim, not the pleading label. A claim seeking recovery of debt allegedly due under a contract or damages for wrongful use of a mark is legal in nature. When legal and equitable claims are joined, the legal issues for which a timely jury demand is made must be submitted to a jury; they do not lose that status because the complaint also seeks an injunction or uses the term 'accounting.'