3:20-cv-00251
E.D. Tenn.May 7, 2025Background
- Diamond Resorts (Plaintiffs) manage and develop timeshare resorts, operating points-based programs across the U.S. and Hawaii.
- Plaintiffs allege that Wesley Financial Group and its principal (Defendants) operate a deceptive timeshare cancellation business, inducing customers to breach contracts with Diamond, for large upfront fees.
- Plaintiffs sued for false advertising under the Lanham Act, violation of the Tennessee Consumer Protection Act, and unauthorized practice of law, originally seeking both legal (damages) and equitable remedies.
- Plaintiffs withdrew their claims for legal damages, pursuing only equitable relief: injunctive relief, disgorgement of profits, and attorney fees.
- Defendants demanded a jury trial, arguing the right to a jury on Lanham Act disgorgement claims, even when only equitable relief is sought.
- Plaintiffs moved to strike the jury demand and proceed with a bench trial; the court was asked to decide whether a jury trial right attaches to these claims under Rule 39(a)(2).
Issues
| Issue | Plaintiffs' Argument | Defendants' Argument | Held |
|---|---|---|---|
| Whether the Lanham Act creates a statutory right to jury trial for disgorgement claims | No explicit statutory right; Act is silent on jury trials for these remedies | Structure/language of Act implies right, citing "compensation" as legal | No statutory right; Congress' silence is controlling |
| Whether the Seventh Amendment requires a jury trial for Lanham Act disgorgement | Disgorgement is an equitable remedy, historically and doctrinally | Disgorgement is legal in nature, especially for false advertising; seeks compensation like damages | Disgorgement is equitable; jury trial not required |
| Whether Ferrari S.p.A. v. Roberts is dispositive for false advertising claims | Ferrari controls: no jury trial right for Lanham Act disgorgement, applies to false advertising as to trademark | Ferrari only applies to trademark cases, not false advertising | Ferrari applies; false advertising is sufficiently analogous to trademark claims |
| Whether Plaintiff’s withdrawal of damages precludes jury rights | Only equitable remedies sought, so no jury right remains | Withdrawal is tactical; should not remove jury right if remedy is functionally legal | Plaintiff’s withdrawal of legal claims leaves only equitable issues for bench trial |
Key Cases Cited
- Curtis v. Loether, 415 U.S. 189 (Seventh Amendment applies to statutory rights where legal remedies are sought, jury trial required if statute creates legal rights/remedies)
- Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (Seventh Amendment applies to suits at common law for legal rights/remedies, not equitable)
- Tull v. United States, 481 U.S. 412 (Established the two-part test for Seventh Amendment jury rights: look to historical analogy and nature of remedy)
- City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687 (Interprets historical analysis for Seventh Amendment jury rights)
- Ferrari S.p.A. v. Roberts, 944 F.2d 1235 (6th Cir. 1991) (Disgorgement under Lanham Act is equitable, no right to a jury trial)
- Dairy Queen, Inc. v. Wood, 369 U.S. 469 (Money damages are legal remedy; seeking a money judgment triggers jury trial right)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (Lanham Act false advertising is a form of unfair competition, analogous to trademark claims)
- Liu v. SEC, 591 U.S. 71 (Disgorgement is inherently equitable, designed to restore status quo)