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Dairy Queen, Inc. v. Wood

Supreme Court of United States
369 U.S. 469 (1962)
ELI5:

Rule of Law:

The Seventh Amendment right to a jury trial on a legal claim for money damages is preserved even when that claim is joined with equitable claims in the same lawsuit. A plaintiff cannot defeat this right by characterizing the legal claim as an equitable one, such as an "accounting," unless the accounts are too complex for a jury to resolve.


Facts:

  • In December 1949, McCullough's Dairy Queen (McCullough), the trademark owner, and Dairy Queen, Inc. (Petitioner) entered into a written licensing contract.
  • The contract granted Petitioner the exclusive right to use the "DAIRY QUEEN" trademark in parts of Pennsylvania in exchange for payments, including minimum annual payments.
  • In August 1960, McCullough alleged Petitioner had defaulted on payments by over $60,000, constituting a material breach of the contract.
  • McCullough sent a letter notifying Petitioner that the contract would be terminated unless the default was remedied immediately.
  • Despite the termination notice, Petitioner continued to conduct business using the Dairy Queen trademark.
  • Petitioner contended that the parties had entered into an oral agreement in 1955 that modified the original contract by removing the minimum annual payment provision, and therefore no breach had occurred.

Procedural Posture:

  • The owners of the 'DAIRY QUEEN' trademark sued Dairy Queen, Inc. in the United States District Court for the Eastern District of Pennsylvania.
  • The complaint sought an injunction, an accounting for profits, and a money judgment.
  • Petitioner, Dairy Queen, Inc., filed an answer and demanded a jury trial.
  • The District Court granted the trademark owners' motion to strike the jury demand, holding that the action was either 'purely equitable' or that the legal issues were 'incidental' to the equitable claims.
  • Petitioner sought a writ of mandamus in the Court of Appeals for the Third Circuit to compel the district judge to vacate his order.
  • The Court of Appeals denied the petition for mandamus without an opinion.
  • The United States Supreme Court granted certiorari.

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Issue:

Does a plaintiff's characterization of a legal claim for money damages as an "accounting," when joined with a claim for equitable relief, eliminate the defendant's Seventh Amendment right to a jury trial on the underlying factual issues of the legal claim?


Opinions:

Majority - Mr. Justice Black

No. The constitutional right to a trial by jury cannot be made to depend upon the choice of words used in the pleadings. Where a complaint makes a claim for a money judgment, it presents a legal claim for which a jury trial is required, regardless of whether it is joined with equitable claims. Citing its precedent in Beacon Theatres, Inc. v. Westover, the Court held that when legal and equitable issues are presented in a single case, any legal issues must be submitted to a jury first. The Court rejected the argument that the legal issues were merely "incidental" to the equitable claims. Furthermore, a claim for money damages cannot be deemed equitable merely by labeling it an "accounting." A suit for an equitable accounting is only proper where the accounts are so complicated that a remedy at law would be inadequate, a burden that is rarely met, especially given a court's ability to appoint a master to assist the jury.


Concurring - Mr. Justice Harlan

No. A jury trial is required on the legal claim contained in the complaint. Even if the complaint is construed as seeking an accounting for trademark infringement rather than contract damages, the request is not truly equitable. To be equitable, an accounting must either involve a substantive claim cognizable only in equity or involve accounts of such a complicated nature that only a court of equity could unravel them. In this case, a jury could readily calculate the damages flowing from the alleged trademark infringement, just as they do in copyright and patent cases. Therefore, the complaint simply joins a legal claim for damages with a prayer for equitable relief, and the petitioner cannot be deprived of its constitutional right to a jury trial on the legal claim.



Analysis:

This case significantly reinforces the Supreme Court's commitment to protecting the Seventh Amendment right to a jury trial, building directly on the principles established in Beacon Theatres, Inc. v. Westover. The Court's decision makes it clear that federal courts must look to the substance of a claim, not the labels used in the pleadings, to determine whether a right to a jury trial exists. By rejecting the "incidental" test and setting a high bar for what constitutes a truly "equitable accounting," the ruling prevents plaintiffs from strategically pleading their cases to circumvent a defendant's jury right in the modern procedural system where legal and equitable claims are merged.

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