Dairy Queen, Inc. v. Wood

Brief Fact Summary.

Plaintiff and Defendant entered into a licensing contract in which Defendant breached. Plaintiff’s complaint asserted language that did not directly ask for money damages.

Synopsis of Rule of Law.

A claim that is traditionally brought as a legal issue for money damages that has incidental equitable issues will not lose the right to a jury trial simply because of the wording in a complaint.

Facts.

Dairy Queen, Inc. (Defendant) and the McCullough partnership (Plaintiff) entered into a licensing contract in which Defendant agreed to pay Plaintiff $150,000 to be able to use the trademark “Dairy Queen” trademark in parts of Pennsylvania. After Defendant defaulted on its payments to Plaintiff, Plaintiff terminated Defendant’s right to use the trademark and sent Defendant a notice of such termination. Despite this termination letter, Defendant continued to use the trademark. Plaintiff sued Defendant for breach of contract. In the complaint, Plaintiff sought “an accounting to determine the exact amount of money owing by [Defendant] and a judgment for that amount.” In the complaint, Plaintiff also demanded a jury trial. However, Defendant filed a motion to strike the demand for a jury trial. The federal district court in Pennsylvania (Judge Wood) granted Defendant’s motion to strike because Plaintiff’s lawsuit was “purely equitable.” The federal district court based its decision on the fact that Plaintiff’s complaint sought “accounting” terms, rather than for damages. Plaintiff appealed to Court of Appeals for the Third Circuit, which affirmed the district court’s decision. The United States Supreme Court granted certiorari.

Issue.

Does the diction in a complaint dictate whether the claim is a legal issue or an equitable issue when such a claim is traditionally brought as a legal issue for money damages?

Held.

No. The diction in a complaint does not dictate whether the claim is a legal issue or an equitable issue when such a claim is traditionally brought as a legal issue for money damages. In this case, Plaintiff was seeking money damages after Defendant breached their contract. As such, Plaintiff is entitled to have a trial by jury on the legal issues in the case. The United States Supreme Court reversed the lower court’s decision.  

Concurrence.

The concurring opinion of Justice Harlan is omitted.

Discussion.

In this case, the fact that Plaintiff asked for “an accounting” to determine the damages owed to it made Judge Wood rule that the claim was an equitable issue because such a remedy was not in existence when the Seventh Amendment was enacted. However, Plaintiff’s breach of contract claim was a legal issue. Although it did not know the exact amount of damages and thus asked for an accounting, damages were the remedy sought.