viirl/piazzisi v. Moen

IN THE ARIZONA COURT OF APPEALS DIVISION ONE VIIRL, LLC d/b/a VIIRL MARKETING, an Arizona limited liability company; MARCUS PIAZZISI, an individual, Petitioners, v. KELLEN MOEN, an individual, Respondent. No. 1 CA-SA 26-0185 FILED 11-04-2026 Petition for Special Action from the Superior Court in Maricopa County No. CV2025-009262 The Honorable Jason Easterday, Judge Pro Tempore JURISDICTION ACCEPTED; RELIEF GRANTED COUNSEL Weiss Brown, Scottsdale By Brian J. Schulman, Alexander H. Park and Raynee Clemente Counsel for Petitioners Fennemore Craig PC, Phoenix By Timothy J. Berg, William G. Klain and Kristen N. Iteen Counsel for Respondent  VIIRL/PIAZZISI v. MOEN Opinion of the Court OPINION Judge Veronika Fabian delivered the opinion of the Court, in which Presiding Judge Michael J. Brown and Chief Judge Randall M. Howe joined. F A B I A N, Judge: ¶1 Petitioners VIIRL, LLC, and Marcus Piazzisi (collectively “the Company”) seek special action review of the superior court’s ruling that disgorgement of profits is not an available remedy in a civil contempt proceeding. The superior court found Respondent Kellen Moen in civil contempt for violating an injunction, but ruled that Trombi v. Donahoe, 223 Ariz. 261 (App. 2009), limited the Company to its out-of-pocket losses. Trombi requires a compensatory civil contempt sanction to rest on evidence of the complainant’s actual loss but does not prescribe how that loss is measured. We hold that a contemnor’s profits may be used to measure a complainant’s actual loss. We therefore accept jurisdiction and grant relief. FACTUAL AND PROCEDURAL BACKGROUND ¶2 This case arises from a business dispute between former co- owners of a digital marketing agency. In 2018, Marcus Piazzisi started VIIRL, LLC. Moen joined soon after as a member and employee. In November 2022, Moen told Piazzisi that he wanted to sell his membership interest and leave. After negotiating the terms, in March 2023, the parties signed two documents: (1) a Redemption Agreement setting the terms by which the Company would purchase Moen’s membership interest, and (2) an Amended Operating Agreement governing the Company’s general affairs but also providing for the purchase of any member’s interest upon an “event of disassociation.” Both agreements contained restrictive covenants in which Moen promised not to compete with the Company and to refer business opportunities to it. ¶3 Within a few months of signing, and before the purchase of Moen’s membership interest closed under the Redemption Agreement, Moen disclosed plans to pursue an interactive mapping product. The Company concluded Moen’s plans violated the restrictive covenants in both agreements. It then terminated the Redemption Agreement and invoked its right to buy Moen’s interest under the Operating Agreement’s disassociation provision. Moen sought to enforce the Redemption 2  VIIRL/PIAZZISI v. MOEN Opinion of the Court Agreement and commenced arbitration proceedings in September 2023. The Company counterclaimed in the arbitration. ¶4 The arbitration concluded in January 2025. The arbitrator’s final award provided monetary relief to both parties, enjoined Moen from directly or indirectly selling or licensing any online “map boosting” service in the United States for two years starting in September 2024, and confirmed that Moen remained bound by the surviving terms of the Operating Agreement—including its non-competition and referral provisions. After entry of the final award, the parties closed the purchase of Moen’s interest under the Operating Agreement, and the Company began making payments to Moen for the purchase amount. ¶5 Meanwhile, in March 2024, while the arbitration was pending, Moen formed Pin Parrot, LLC, with the owner of one of the Company’s biggest customers. Pin Parrot sold online “map boosting” services similar to the Company’s products and services. ¶6 The Company moved to confirm the arbitration award, including the injunction, in superior court. In April 2025, the court confirmed the arbitration award and entered judgment that Moen “is restrained and enjoined from directly or indirectly selling or licensing any online map boosting services in the United States for a period of two (2) years following September 20, 2024.” Nevertheless, Moen continued to sell map boosting services through Pin Parrot. In September 2025, the Company moved to hold him in contempt. Two months later, Moen sold his stake in Pin Parrot for $500,000. Shortly thereafter, the superior court found Moen in civil contempt for violating the judgment and the parties began discovery related to the appropriate remedy. ¶7 To determine the scope of discovery, the parties agreed to have the superior court first decide whether the Company could seek disgorgement of Moen’s profits from the sale of Pin Parrot. Moen argued the Company’s relief was limited to its out-of-pocket losses and that the arbitrator had already found the Company did not suffer any losses from Moen’s conduct. The Company countered that it could seek disgorgement of profits even without proof of loss. The court ruled the Company could not seek disgorgement, because the holding in Trombi limited the Company’s recovery to its “actual loss.” Thus, the court limited discovery to the Company’s “actual loss” resulting from the “violation of the judgment.” 3  VIIRL/PIAZZISI v. MOEN Opinion of the Court ¶8 The Company then asked the court to designate the question for special action review. The court declined, but the parties agreed to stay the proceedings pending review. This special action followed. DISCUSSION ¶9 The Company argues that we should accept jurisdiction and reverse the superior court’s ruling barring disgorgement of profits as a possible compensatory sanction for an injunction violation. Moen argues that we should decline special action jurisdiction and that disgorgement is not appropriate unless the Company shows some evidence of actual loss caused by Moen’s violation of the injunction. We begin with jurisdiction. I. Special Action Jurisdiction Is Appropriate. ¶10 Special action jurisdiction is discretionary. Ariz. R.P. Spec. Act. 12(a). It is appropriate when the petitioner has no “equally plain, speedy, and adequate” remedy by appeal. Id. Because civil contempt orders, sanctions included, are not appealable, Stoddard v. Donahoe, 224 Ariz. 152, 154 ¶ 7 (App. 2010) (citing Trombi, 223 Ariz. at 265 ¶ 14), the Company has no remedy by appeal. See Ariz. R.P. Spec. Act. 12(b)(5). Moen claims that the Company can raise the issue in “an appeal in the ordinary course” once the contempt proceeding ends. But he does not identify an appealable contempt order, and under Stoddard, none exists. Because there is no adequate remedy on appeal, we exercise our discretion to accept jurisdiction. II. The Superior Court May Consider a Contemnor’s Profits When Measuring a Complainant’s Actual Loss. ¶11 This special action presents one question of law: May the superior court consider a contemnor’s profits earned by violating an injunction when determining the amount of a civil contempt sanction? We review questions of law de novo. See Sierra Tucson, Inc. v. Lee, 230 Ariz. 255, 257 ¶ 7 (App. 2012). A. Trombi Does Not Preclude Consideration of a Contemnor’s Profits. ¶12 The superior court found Trombi’s statement that “[c]ompensatory sanctions must be based upon evidence of the complainant’s actual loss,” precluded the Company from recovering any of Moen’s profits. 223 Ariz. at 267 ¶ 26. Trombi, however, did not address the issue raised here. 4  VIIRL/PIAZZISI v. MOEN Opinion of the Court ¶13 Trombi addressed the repeated failure of a sheriff’s office to deliver in-custody defendants to their court hearings on time. Id. at 264 ¶¶ 3-7. The superior court held the office’s deputy chief in contempt for failing to comply with court orders and ordered him to pay sums to the defendants, their lawyers, the prosecutors, and the jurors whose time had been wasted. Id. at 264-65 ¶¶ 3-11. This Court found those payment obligations were impermissible criminal sanctions imposed after a civil proceeding, chiefly because the recipients were not complainants and thus could not receive compensatory civil sanctions. Id. at 267-68 ¶¶ 25-27. ¶14 In reaching that decision, Trombi described the difference between civil and criminal contempt sanctions as follows: A contempt sanction is considered civil if it either “coerce[s] the defendant into compliance with the court’s order, [or] . . . compensate[s] the complainant for losses sustained.” Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 829 (1994) (alterations in original) (quoting United States v. United Mine Workers of Am., 330 U.S. 258, 303–04 (1947)). Compensatory civil contempt sanctions are intended to benefit the complainant, and are therefore paid to the complainant. United Mine Workers of Am., 330 U.S. at 304; see also Hicks ex rel. Feiock v. Feiock, 485 U.S. 624, 631–32 (1988). Compensatory sanctions must be based upon evidence of the complainant’s actual loss. United Mine Workers of Am., 330 U.S. at 304. 223 Ariz. at 267 ¶ 26 (parallel citations omitted). ¶15 The superior court read the final sentence as barring it from considering Moen’s profits in determining appropriate sanctions. It does not. Trombi was not asked to address whether profits earned as a result of violating an injunction can be used to measure “actual loss.” As a result, Trombi does not define “actual loss” nor explain how to measure it. Neither the word “disgorgement” nor “profit” appears in the opinion because the contemnor did not receive a monetary profit from the contempt. See id. at 268 ¶ 27 & n.7. The question we address here was not before the Trombi court. B. A Contemnor’s Profits May Be Used as a Measure of a Complainant’s Actual Loss. ¶16 The actual-loss requirement did not originate in Trombi. Trombi borrowed it from United States v. United Mine Workers, 330 U.S. 258, 5  VIIRL/PIAZZISI v. MOEN Opinion of the Court 304 (1947). Trombi, 223 Ariz. at 267 ¶ 26. That case arose from a nationwide coal strike in which the federal government sued the mine workers union and obtained a restraining order, which the union then defied. United Mine Workers, 330 U.S. at 264-67. The district court found the union in both criminal and civil contempt, imposing a flat $3,500,000 fine. Id. at 269. The U.S. Supreme Court sustained part of the union’s fine as criminal punishment and turned the remaining fine into a coercive civil sanction that could be purged by compliance with the court’s order. Id. at 304-05. No compensatory fine was imposed, and no contemnor’s profits were at issue. The Court noted only that civil contempt may compensate the complainant “based upon evidence of [its] actual loss.” Id. at 304. Like Trombi after it, United Mine Workers described the rule for compensatory sanctions without addressing whether a court can consider a contemnor’s profits in measuring actual loss. ¶17 The root of the actual-loss requirement goes deeper still. United Mine Workers supported its actual-loss rule with a footnote citing Leman v. Krentler-Arnold Hinge Last Co., 284 U.S. 448, 455-56 (1932). United Mine Workers, 330 U.S. at 304 n.80. Leman held the opposite of what Moen contends. The contemnor in Leman violated a permanent injunction and made profits on the offending sales. 284 U.S. at 450-51. The federal appellate court refused to award those profits to the complainant, reasoning that relief in a civil contempt proceeding must rest on the “pecuniary injury or damage” caused by the contemptuous acts, and no damages had been shown. Id. at 455. The Supreme Court reversed, rejecting “so narrow a view of what should be embraced in an adequate remedial award,” explaining: While the distinction is clear between damages, in the sense of actual pecuniary loss, and profits, the latter may none the less be included in the concept of compensatory relief. In a suit in equity against an infringer, profits are recoverable not by way of punishment but to insure full compensation to the party injured. Id. at 456. ¶18 Leman makes clear that a contemnor’s profits may be considered in measuring a complainant’s actual loss. Were “actual loss” confined to proven out-of-pocket loss, as Moen contends, Leman would be an odd choice for the Supreme Court to cite first. Moen’s reading would have United Mine Workers overruling Leman in the same sentence citing it for support. We are not inclined to read a decision to have silently displaced the authority it relies on. See Shalala v. Ill. Council on Long Term Care, Inc., 6  VIIRL/PIAZZISI v. MOEN Opinion of the Court 529 U.S. 1, 18 (2000) (“[The U.S. Supreme] Court does not normally overturn, or so dramatically limit, earlier authority sub silentio.”). So, offered a reading reconciling the authorities and a reading setting them against one another, we choose the former. See Connolly v. J.T. Ventures, 851 F.2d 930, 934 (7th Cir. 1988) (“We are persuaded that United Mine Workers does not affect the Leman holding . . . .”). ¶19 Moen argues that Leman is distinguishable because it is a patent case resting on patent-equity principles, under which an infringer’s profits are treated as “an equitable measure of compensation” for the invasion of the patent right. But Leman does not tie its holding only to equity cases involving patents. Instead, the Court relied on the difference between equity and law generally: “In view of the principles governing the broader relief obtainable in equity, as contrasted with those applicable in courts of law, it is apparent that there is no necessary exclusion of profits from the idea of compensation in a remedial proceeding.” Leman, 284 U.S. at 457. And under Arizona law, an injunction is an equitable remedy whose enforcement is governed by equitable principles. Ahwatukee Custom Ests. Mgmt. Ass’n v. Turner, 196 Ariz. 631, 635 ¶ 9 (App. 2000). In fashioning an equitable remedy, the superior court has broad discretion to determine a remedy that promotes fairness between the parties. Scholten v. Blackhawk Partners, 184 Ariz. 326, 331 (App. 1995); Hamberlin v. State ex rel. Ariz. Game & Fish Dep’t, 249 Ariz. 31, 35–36 ¶ 24 (App. 2020). ¶20 Finally, Moen argues a court may not go behind Trombi to reexamine the federal authority it adopted, and that no volume of out-of- state decisions can displace binding Arizona precedent. Arizona law requires a compensatory sanction to rest on evidence of the complainant’s actual loss. To the extent that the Company argues that it need not show it suffered loss or was damaged, we disagree. But Trombi adopted out-of-state precedent, and the ordinary way to learn what a borrowed formulation means is to read the decision it came from. See Sekhar v. United States, 570 U.S. 729, 733 (2013) (“[A]s Justice Frankfurter colorfully put it, ‘if a word is obviously transplanted from another legal source . . . it brings the old soil with it.’” (quoting Felix Frankfurter, Some Reflections on the Reading of Statutes, 47 Colum. L. Rev. 527, 537 (1947))). C. Many Courts Applying the Actual-Loss Rule Have Allowed Profits to Measure Loss. ¶21 Beginning with Leman, federal courts have repeatedly affirmed that a contemnor’s profits may be used to measure actual loss. The Second Circuit found “no error in requiring the defendant to account for 7  VIIRL/PIAZZISI v. MOEN Opinion of the Court profits in a civil contempt proceeding.” John B. Stetson Co. v. Stephen L. Stetson Co., 133 F.2d 129, 130 (2d Cir. 1943); see Sunbeam Corp. v. Golden Rule Appliance Co., 252 F.2d 467, 470 (2d Cir. 1958) (holding that a civil contempt fine payable to the plaintiff and measured by the defendant’s profits would have been a proper compensatory sanction). The Seventh Circuit affirmed an award of the contemnor’s profits as the compensatory measure even though “the evidence of sales actually lost was not the best.” Connolly, 851 F.2d at 932-34. The Fourth Circuit has explained that “where a ‘harm’ amount is difficult to calculate, a court is wholly justified in requiring the party in contempt to disgorge any profits it may have received that resulted in whole or in part from the contemptuous conduct.” In re Gen. Motors Corp., 110 F.3d 1003, 1018 n.16 (4th Cir. 1997); see Colonial Williamsburg Found. v. Kittinger Co., 38 F.3d 133, 135, 137 (4th Cir. 1994) (affirming a contempt sanction disgorging profits equal to one-third of the revenues from the offending sales). The Eleventh Circuit has also allowed disgorgement of profits as a compensatory remedy when a party violates an injunction. See Tom James Co. v. Morgan, 141 F. App’x 894, 899 (11th Cir. 2005) (“To the extent that the district court did not think that the disgorgement of [contemnor]’s profits was within its power to award as a civil contempt sanction, the district court erred.”); Abbott Lab’ys v. Unlimited Beverages, Inc., 218 F.3d 1238, 1242 (11th Cir. 2000) (“Where a plaintiff’s harm is difficult to calculate, the court may disgorge the party in contempt of any profits it may have received.”). ¶22 Moen argues that many of the decisions are distinguishable because they are intellectual property cases, where federal statutes supply profit-based remedies. True, that describes some of them. See Abbott Lab’ys, 218 F.3d at 1242 (Lanham Act); Colonial Williamsburg Found., 38 F.3d at 135, 137 (trademark). But not the rest. Sunbeam Corp. enforced an unfair- competition claim under the New York Fair Trade Law. 252 F.2d at 468. Connolly v. J.T. Ventures involved a copyright analysis by the district court, but the court of appeals upheld the sanction award because it was “an appropriate equitable remedy in the equitable contempt proceeding.” 851 F.2d at 932. In re General Motors Corp. arose from an attorney’s defiance of an order striking findings from a recusal order in products-liability litigation. 110 F.3d at 1005-06. And Tom James Co. was a non-competition clause case involving an injunction indistinguishable in substance from this one. See 141 F. App’x at 896. ¶23 A review of the case law makes clear that courts have not restricted the practice to only intellectual property cases. And, significantly, Moen cites no case holding that a contemnor’s profits may not be used to measure a complainant’s actual loss in an equitable proceeding. 8  VIIRL/PIAZZISI v. MOEN Opinion of the Court D. Disgorgement Is Not Punitive. ¶24 Moen’s remaining argument is that disgorgement cannot be compensatory because it is “plainly punitive.” We disagree. “Disgorgement of wrongful gain is not a punitive remedy.” Restatement (Third) of Restitution and Unjust Enrichment § 51 cmt. k (A.L.I. 2011). It “does not take from the defendant assets not related to its wrongful conduct,” and so “rests upon the equitable principle of unjust enrichment which is the antithesis of punishment.” Sunbeam Corp., 252 F.2d at 470 (citation modified) (“An award in such cases surely cannot be characterized as ‘punitive.’ For its effect goes no further than to give to the plaintiff the profits derived by the defendant’s wrongful conduct . . . .”). ¶25 Moen relies on Hirsch v. Arizona Corp. Commission, where this Court stated “[d]isgorgement does not aim to compensate the victims of wrongful acts, as restitution does.” 237 Ariz. 456, 466 ¶ 41 (App. 2015) (quoting SEC v. Huffman, 996 F.2d 800, 802 (5th Cir. 1993)), superseded on other grounds by A.R.S. § 12-910(F). Civil disgorgement does not aim to compensate victims as restitution does because the two remedies “are different and have different purposes.” Id. However, that distinction does not mandate that disgorgement is punitive or that it has no compensatory function. Moreover, Hirsch compared restitution and disgorgement in the context of analyzing whether a federal securities statute gave analogous powers to the Arizona Corporation Commission. Id. Its guidance would be of little use for the contempt-proceeding issue we address here. ¶26 Moen argues that disgorgement here would be punitive because it would not be based on evidence of actual loss. He cites Yanish v. Barber, where the Ninth Circuit held that a contempt fine “must not exceed the actual loss to the complainant,” must “be based upon evidence of complainant’s actual loss,” and, absent such evidence, “must necessarily be arrived at by conjecture, and in this sense it would be merely an arbitrary decision.” 232 F.2d 939, 944 (9th Cir. 1956) (citation modified), overruled on other grounds by Donovan v. Burlington N., Inc., 781 F.2d 680, 682 (9th Cir. 1986). As explained above, we agree that the Company must show it suffered “actual loss,” but a contemnor’s profits can be a way to measure actual loss. The Third Circuit has provided a helpful general example of such a measure. In National Drying Machinery Co. v. Ackoff, the court held that a plaintiff’s loss for a civil contempt award may be measured either by the amount he is out of pocket or by “what defendant by his wrong may . . . have diverted from the plaintiff or gained at plaintiff’s expense.” 245 F.2d 192, 194 (3d Cir. 1957) (reversing a contempt award because the complainant showed no economic injury from the violation). 9  VIIRL/PIAZZISI v. MOEN Opinion of the Court ¶27 A civil contempt sanction must rest on evidence of the complainant’s actual loss. See Trombi, 223 Ariz. at 267-68 ¶¶ 26-27. But in such an equitable proceeding, the superior court has discretion to consider the contemnor’s profits in measuring that loss. See Leman, 284 U.S. at 455- 57. For example, if Moen sold one of the Company’s former clients map boosting services, a court, within its discretion, could determine those profits were an adequate estimate of, or proxy for, the Company’s loss. Moen claims Pin Parrot did other business besides the enjoined map boosting services. What portion of the Pin Parrot sale price, if any, reflects profits from enjoined conduct is a question of fact for the superior court to resolve. ¶28 As a final matter, Moen claims that “the factfinder determined [the Company] suffered no loss of revenue or business,” citing the arbitration award. But the superior court, not the arbitrator, is the relevant factfinder because the question is whether Moen’s violation of the court’s judgment caused the Company actual loss. The superior court has yet to make that determination. III. Attorney Fees and Costs. ¶29 Both parties request attorney fees and costs for this special action. The Company cites A.R.S. §§ 12-341 and 341.01, sections 17.4(e) and 17.5 of the Operating Agreement, and section 9.10(e) of the Redemption Agreement. Moen cites A.R.S. § 12-341.01 and section 17.5 of the Operating Agreement. The express contractual provisions for attorney fees are controlling and A.R.S. § 12-341.01 applies only to the extent it does not conflict with the contract’s terms. Am. Power Prods., Inc. v. CSK Auto, Inc., 242 Ariz. 364, 368 ¶ 14 (2017). ¶30 Both parties invoke section 17.5 of the Operating Agreement provides for an award of fees to the “prevailing party” in litigation but does not define that term. Because the litigation has not yet concluded, we decline to find either party is the prevailing party, leaving that determination for the superior court after resolving the contempt issues pending before it. We award the Company its taxable costs incurred in this special action proceeding upon compliance with Rule 21, Ariz. R. Civ. App. P. See A.R.S. § 12-341. 10  VIIRL/PIAZZISI v. MOEN Opinion of the Court CONCLUSION ¶31 We accept jurisdiction and grant relief. We vacate the superior court’s ruling that the Company may not seek disgorgement of Moen’s profits and remand for further proceedings consistent with this opinion. MATTHEW J. MARTIN • Clerk of the Court FILED: JR 11