Aecom Energy & Constr., Inc. v. Morrison Knudsen Corp. ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 24 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
AECOM ENERGY AND No. 19-55588
CONSTRUCTION, INC., an Ohio
corporation, D.C. No.
2:17-cv-05398-RSWL-SS
Plaintiff-Appellee,
v. MEMORANDUM*
MORRISON KNUDSEN CORPORATION,
a Nevada corporation; et al.,
Defendants-Appellants,
and
JOHN RIPLEY; et al.,
Defendants.
Appeal from the United States District Court
for the Central District of California
Ronald S.W. Lew, District Judge, Presiding
Argued and Submitted March 15, 2021
Pasadena, California
Before: WATFORD, FRIEDLAND, and BENNETT, Circuit Judges.
Concurrence by Judge Friedland
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
The district court granted summary judgment to Plaintiff-Appellee AECOM
Energy and Construction, Inc. (“AECOM”) and awarded AECOM $1,802,834,672
(“$1.8 billion”) in damages under the Lanham Act, 15 U.S.C. § 1117(a).
Defendants-Appellants1 appeal only the damages award. They also argue for the
first time on appeal that AECOM lacks Article III standing. We have jurisdiction
under 28 U.S.C. § 1291. We hold that AECOM has standing, and we reverse and
remand the damages award.
We must determine whether AECOM has standing, even though
Defendants-Appellants did not raise the issue below. See Animal Prot. Inst. of Am.
v. Hodel, 860 F.2d 920, 923 (9th Cir. 1988). Defendants-Appellants argue that
AECOM has failed to establish that it owned a legally protectable interest in the
“Morrison Knudsen” name, trademarks, and attendant goodwill (“MK property”).
Thus, according to Defendants-Appellants, AECOM has failed to show that it
suffered an “injury in fact,” a necessary element for constitutional standing. See
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). We reject Defendants-
Appellants’ argument because the record shows that the original entity that owned
1
Defendants-Appellants are Morrison Knudsen Corporation, Morrison-Knudsen
Company, Inc., Morrison-Knudsen Services, Inc., Morrison-Knudsen International,
Inc., and Gary Topolewski.
2
the MK property became AECOM through various name changes.2 AECOM is
therefore the entity that always owned and still owns the MK property.
On summary judgment, we must “draw[] all justifiable inferences in favor of
the non-moving party.” Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771
F.3d 1119, 1125 (9th Cir. 2014). Because the district court decided the damages
award on summary judgment, we review it de novo. Cf. Chao v. A-One Med.
Servs., Inc., 346 F.3d 908, 920 (9th Cir. 2003) (“Although we generally review a
district court’s decision on liquidated damages for abuse of discretion, we review
the issue here, which was decided below on summary judgment, de novo.” (citation
omitted)).
Under 15 U.S.C. § 1117(a), a plaintiff is generally entitled to a disgorgement
award equal to the defendant’s profits derived from the infringing activity. Id. In
seeking such an award, it is the plaintiff’s “burden to show with reasonable
certainty [the defendant’s] gross sales from [the infringing activity].” Rolex
Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704, 712 (9th Cir. 1999). AECOM’s
only evidence establishing Defendants-Appellants’ sales were three press releases.
These press releases announced that the EPA and the Bureau of Land
Management, the Blackstone Mining Group, and the Indonesian Infrastructure
2
Contrary to Defendants-Appellants’ argument, we are not limited to the summary
judgment record in determining whether AECOM has standing. See Animal Prot.
Inst. of Am., 860 F.2d at 924 n.6.
3
Partnership had awarded “Morrison-Knudsen” three construction contracts totaling
$1.8 billion. Defendants-Appellants failed to dispute the accuracy of the press
releases or AECOM’s calculation of $1.8 billion in damages based on the press
releases. Thus, the district court reasoned that Defendants-Appellants had failed to
raise a genuine factual dispute as to the amount of damages and awarded AECOM
$1.8 billion in damages.
Defendants-Appellants argue that the press releases failed to satisfy
AECOM’s burden of proving Defendants-Appellants’ sales under § 1117(a)
because the press releases “merely announce construction projects have been
awarded,” and fail to show that Defendants-Appellants completed any of the
projects or received any revenue from the projects.3 We agree. The press releases,
viewed in the light most favorable to Defendants-Appellants, merely show that
Defendants-Appellants had been awarded contracts; they do not show whether
Defendants-Appellants completed (or even started) the projects or whether
Defendants-Appellants received any payments under the contracts, much less
3
We consider this argument even though Defendants-Appellants failed to raise it
below because the district court necessarily considered it in granting the damages
award. See Cmty. House, Inc. v. City of Boise, 490 F.3d 1041, 1054 (9th Cir. 2007)
(“We need not resolve whether this issue was raised before that court because even
if a party fails to raise an issue in the district court, we generally will not deem the
issue waived if the district court actually considered it.”). Because this argument is
dispositive, we do not consider Defendants-Appellants’ other arguments
challenging the damages award or whether they waived those arguments by failing
to raise them below.
4
almost $2 billion.4 Thus, AECOM failed to carry its burden of establishing
Defendants-Appellants’ sales arising from their infringing activity, and the district
court erred in granting the damages award.
The parties shall bear their own costs on appeal.
REVERSED AND REMANDED.5
4
Even if we were to view the press releases in the light most favorable to AECOM,
we doubt they would support an inference that there were “sales”—i.e., monies
actually received—by Defendants-Appellants, in any amount, much less in the
amount of $1.8 billion. And this is without even considering that there was no
evidence in the record that Defendants-Appellants had started any of the claimed
massive construction contracts or were remotely able to undertake any of the
construction.
5
We note that Defendants-Appellants failed to provide in discovery any reliable
evidence of their sales, profits, or costs, despite court orders compelling them to do
so. Our decision does not preclude the district court on remand from considering
whether a discovery sanction is appropriate should AECOM seek such relief, such
as a sanction focused on the evidentiary inferences that may be drawn from the
defendants’ refusal to produce relevant financial records. We express no opinion
on whether any such sanction would be appropriate.
5
FILED
MAR 24 2021
AECOM Energy & Constr., Inc. v. Morrison Knudsen Corp., No. 19-55588 MOLLY C. DWYER,
CLERK
U.S. COURT OF APPEALS
FRIEDLAND, J., concurring in the judgment:
I concur in the judgment because it appears that the district court did not
understand that it had discretion to reduce the disgorgement award under 15 U.S.C.
§ 1117(a). I would reverse and remand for the district court to reconsider whether
to exercise such discretion.
The Lanham Act states that plaintiffs shall be entitled to recover damages
“subject to the principles of equity,” and that “the court may in its discretion” alter
awards based on profits “as the court shall find to be just.” 15 U.S.C. § 1117(a);
see also Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059, 1073
(9th Cir. 2015). The district court did not appear to recognize its duty to consider
equitable principles or its discretion to reduce the disgorgement award if it
determined that $1.8 billion would be excessive. See 15 U.S.C. § 1117(a). To the
contrary, the district court stated that it was “restless . . . over the amount of
damages,” but Defendants-Appellants’ “procedural failures left the [c]ourt with no
clear avenue other than to rest upon the standards of civil procedure,” which
suggests that it may have felt bound to grant $1.8 billion or nothing. This error
amounted to an abuse of discretion requiring a remand for reconsideration. See
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990).
1
But I respectfully disagree with my colleagues’ conclusion that a summary
judgment ruling granting some damages amount to AECOM was inappropriate—
and, indeed, I believe that the damages amount the district court entered was within
the range of options available for the court to consider in exercising its discretion.
As the majority mentions only in passing, see supra note 5, the defining feature of
this dispute has been what the district court aptly described as Defendants-
Appellants’ “lengthy history of bad faith litigation practices.” Defendants-
Appellants ignored multiple discovery orders, refused to appear for depositions,
and ultimately failed to produce a single reliable business record from which
AECOM could calculate damages. Unsurprisingly, AECOM’s reliance on the
publicly available press releases to meet its burden under § 1117(a) was the direct
result of Defendants-Appellants’ tactics. This context is important because
“[r]equiring more precision than can be attained, especially where the impossibility
of more precise ascertainment was the fault of the wrongdoer, would be inequitable
and is not required.” DSPT Int’l, Inc. v. Nahum, 624 F.3d 1213, 1223 (9th Cir.
2010).
Critically, Defendants-Appellants failed to contest the press releases as
evidence of their revenue. As the moving party on summary judgment, AECOM
had the burden to prove that it was entitled to a disgorgement award. Fed. R. Civ.
P. 56. AECOM submitted the press releases into evidence, and its statement of
2
uncontroverted facts in support of its motion for summary judgment included the
fact that Defendants-Appellants had claimed to earn revenue totaling $1.802
billion. Given that Defendants-Appellants had stonewalled AECOM’s every effort
to ascertain information about their finances, it was reasonable for AECOM to
assert that the publicly available press releases accurately reflected Defendants-
Appellants’ revenues—and Defendants-Appellants still had the opportunity to
contest that assertion in opposition to summary judgment, as the local rules
required them to do if they believed Plaintiff’s asserted undisputed fact was untrue.
See C.D. Cal. R. 56-2. But when Defendants-Appellants then filed a statement of
genuine disputes of material facts in opposition to AECOM’s motion, they raised
no objection the asserted revenue fact. Nor did they otherwise deny winning the
contracts or contest that they had received the revenue anticipated by the awards.
Consequently, the district court was permitted to assume that this fact “as claimed
and adequately supported by the moving party [was] admitted to exist without
controversy.” C.D. Cal. R. 56-3.
Even under the majority’s reasoning, on remand the district court will have
another opportunity to decide whether or how this case should proceed. I share the
majority’s opinion that the district court could consider entering discovery
sanctions. See supra note 5. In my view, appropriate sanctions could even include
a default judgment against Defendants-Appellants, if the district court deems it
3
justified. See Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d
1091, 1096 (9th Cir. 2007) (describing a five-part test to determine “whether a
case-dispositive sanction under [Federal Rule of Civil Procedure 37(b)(2)] is just”).
Especially if discovery abuses were what was already motivating the district
court’s reasoning, it would be preferable for the court to describe the sanctions it
has chosen to impose in clear terms and explain the reasons for doing so.
4