Dewberry Group, Inc. v. Dewberry Engineers Inc. (23-900)

argument 23-900

Dewberry Group, Inc. v. Dewberry Engineers Inc.

Supreme Court of the United States 1h 10m 7 speakers 8 chapters transcribed 1 month ago official recording ↗

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What does the Lanham Act authorize regarding disgorgement of profits?

John G. Roberts 0:00

We will hear argument this

Unknown 0:01

morning in case twenty three nine hundred, Dewbury Group versus Dewbury engineers. Mr Hungar? Thank you, Mr Chief Justice, and may it please the Court. The Lanham Act authorizes disgorgement of the defendant's profits. Petitioner is the only defendant in this case, but it had no profits to disgorge. So the courts below ordered petitioner to disgorge the profits of its legally distinct affiliates to the tune of forty three million dollars. Nothing in the Lanham Act authorizes that blatant disregard of corporate separateness. Under the Act's plain language, a defendant's profits do not include the profits of separate corporations. A respondent asserted a quote collective economic enterprise theory, persuading the courts below to treat petitioner and its affiliates as a single corporate entity so as to attribute the affiliates' profits to petitioner.

Unknown 0:48

That's classic disregard of the corporate form, yet both respondent and the courts below disavowed any claim of veil piercing. Instead, the Fourth Circuit relied on its notion of equity to justify the single corporate entity approach. But that assertion of unbounded equitable authority violates the maxim that equity follows the law, including the best food's presumption of corporate separateness. It also contradicts the equitable principles that disgorgement is limited to the defendant's profits, not those of affiliates, and does not allow penalties like the awards. Here. For precisely those same reasons, respondent fails in its attempt to justify the award by distorting the just sum provision. Starbucks held that the word just in a remedial statute incorporates traditional equitable limits.

Unknown 1:35

So rejection of the Fourth Circuit's rationale as contrary to equitable principles and the best foods presumption necessarily leads to rejection of respondents' just sum argument as well. Courts don't respect corporate separateness by treating the rental profits received by separate corporations from their own properties as if they belonged to the defendant. The disgorgement award is unlawful under the Lanham Act and should be reversed outright. I welcome the court's questions.

Clarence Thomas 2:03

Uh these separate corporations uh have the same owner, right? Correct. Uh would it make any difference to your argument or what would your argument be if this were in a partnership form?

Unknown 2:16

Well, so in the Liu case, which recognised many of the principles that we're advocating here today, the the Court said that partnership is uh uh b an accepted basis for joint and several liability, even in the disgorgement context, but there is no proof or allegation here of partnership and that theory was not

Clarence Thomas 2:32

so your your your argument basically relies on it's more of a formalistic argument relies on the fact that these uh uh that these businesses that are owned by one person are in a separate corporate form as opposed to partnership or sole proprietorship.

Unknown 2:50

Correct. And that's the that is the fundamental uh r principle of corporate separateness that this court has recognised in numerous cases, the Dole Foods case we cited in our brief, the best foods case itself. Because of a long tradition of history and reliance to the tune of billions, if not trillions, of dollars in corporate America, relying on the principle of corporate separateness and its recognition by the courts, the court said in Best Foods that unless Congress uh directly says otherwise, corporate separateness is the norm unless you can prove the normal uh grounds for disregarding separate corporations, which respondent disavowed doing here.

Clarence Thomas 3:23

Well I the I think the courts below thought that uh this looked pr Uh if you got past the form, again I there's a comparison between partnership and uh corporate form, uh but it uh it seemed as though the court was saying, look, this is one business and uh we'll treat it as one business and we'll ignore the corporate form of the separate businesses owned by the same person.

Unknown 3:48

Well, Your Honor, there are recognized principles and rules that govern the circumstances in which the corporate form will be disregarded, and respondent and the courts below expressly disavowed any reliance on those accepted principles.