Antitrust Law Daily Wrap Up, ADVERTISING—DColo: False Advertising Award Stayed Pending Motion to Amend Judgment, (Jun 14, 2013)

By John W. Arden, J.D., LL.M.

A prefabricated steel building seller, found liable under the Lanham Act for its literally false comparative advertising, was granted a stay of execution and enforcement of a money judgment pending a ruling on its motion to amend the judgment by the federal district court in Denver (General Steel Domestic Sales, LLC v. Chumley, June 12, 2013, Brimmer, P.). The plaintiff’s interest in its judgment would be adequately protected by a bond comprising a cashier’s check for $243,462, matching a disgorgement award; $67 in post-judgment interest; and $13,773 in costs, the court ruled.

General Steel Domestic Sales, LLC brought an action, claiming that Ethan Chumley and Atlantic Building Systems, doing business as Armstrong Steel Corp, committed trademark infringement and false advertising under the Lanham Act by using the phrase “General Steel Buildings” and “general steel” in its Google AdWords advertising copy, as paid keywords in the AdWords program, and in the text of several websites.

On May 7, 2013, the federal district court ruled in favor of General Steel on its false advertising claim and against General Steel on its trademark infringement claims. The court enjoined the defendants from engaging in the specific misrepresentations for which they were found liable and awarded disgorgement of profits in the amount of $243,462 and costs of suit.

Defendants filed a motion to stay execution and enforcement of the money judgment pending the court’s determination of their motion to amend the judgment and delivered a cashier’s check for $243,462 to the clerk of court. General Steel did not oppose a stay, but argued that the amount of the security was insufficient because it did not account for General Steel’s costs, prejudgment interest, post-judgment interest, attorney fees, and costs of appeal.

Under Rule 62(b) of the Federal Rules of Civil Procedure, a court may stay the execution of a judgment pending the resolution of a motion pursuant to Rule 59, so long as the court fixes “appropriate terms for the opposing party’s security.” Accordingly, courts typically require security in the full amount of the judgment.

The district court concluded that General Steel’s interest in the judgment would be adequately protected by a bond comprising the $243,462 disgorgement award; $67 in post-judgment interest for a period of three months; and $13,773 in costs taxed by the clerk of court. Since General Steel’s motions for attorney fees and prejudgment interest had not yet been decided, and were opposed, General Steel had no protectable interest in these amounts, the court found. Nor did General Steel have an interest in costs not yet incurred on an appeal that has not yet been filed.

The case is Civil Action No. 10-cv-01398-PAB-KLM.

Attorneys: David Samuel Fein (Building Services Group, LLC) for General Steel Domestic Sales, LLC. Paul Matthew Grant (Grant/Kuhn LLC) for Ethan Daniel Chumley.

Companies: General Steel Domestic Sales, LLC; Atlantic Building Systems, LLC

Cases: Advertising ColoradoNews