                                                                           FILED
                             NOT FOR PUBLICATION
                                                                           AUG 23 2016
                      UNITED STATES COURT OF APPEALS                    MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS


                             FOR THE NINTH CIRCUIT


TU THIEN THE, INC., a California                  No.   14-56487
corporation,
                                                  D.C. No.
                Plaintiff-counter-defendant -     2:11-cv-09899-MWF-JEM
Appellee,

  and                                             MEMORANDUM*

HUONG THANH NGUYEN, an
individual, AKA Hai Le,

                Counter-defendant - Appellee,

 v.

TU THIEN TELECOM, INC., a California
corporation; LAM NGUYEN,

                Defendants-counter-claimants
- Appellants.


                     Appeal from the United States District Court
                         for the Central District of California
                    Michael W. Fitzgerald, District Judge, Presiding




         *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
                              Submitted August 5, 2016**
                                 Pasadena, California

Before: KOZINSKI and WARDLAW, Circuit Judges, and BENCIVENGO,***
District Judge.

       Tu Thien Telecom, Inc. and Lam Nguyen appeal the district court’s order

enhancing the actual damages awarded by the jury and declining to reduce the

jury’s award of disgorged profits. We have jurisdiction pursuant to 28 U.S.C.

§ 1291, and we affirm.

       1. The district court did not err in enhancing the damages awarded by the

jury from $500,000 to $750,000. The district court is permitted to enhance a

judgment by up to three times the actual damages found, but the judgment assessed

“shall constitute compensation and not a penalty.” 15 U.S.C. § 1117(a). In

awarding damages, the court may consider any loss of reputation and goodwill,

including “a plaintiff’s expenditures in building its reputation . . . after a

defendant’s bad acts.” Skydive Ariz., Inc. v. Quattrocchi, 673 F.3d 1105, 1112 (9th

Cir. 2012). Furthermore, a district court is permitted to consider the “likely

deterrent effect” of the damages assessed. Faberge, Inc. v. Saxony Prods., Inc.,


         **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
         ***
             The Honorable Cathy Ann Bencivengo, United States District Judge
for the Southern District of California, sitting by designation.
                                             2
605 F.2d 426, 429 (9th Cir. 1979). Here, the district court determined that “the

‘circumstances of the case’ warrant a small increase” in damages, see 15 U.S.C.

§ 1117(a), because “[t]he jury found that Defendants acted willfully or in bad

faith” and because “the damages do not account for the intangible harm to

Plaintiff’s reputation and goodwill.” Additionally, the district court noted in its

order that damages assessed “shall constitute compensation and not a penalty.”

Because the district court’s order reveals that the goals of the enhanced award were

to compensate for reputational harm and to deter future misconduct, not to penalize

prior bad acts, the enhancement was not an abuse of discretion.

      2. The district court did not err in declining to sua sponte reduce the award

of disgorged profits in the amount of $668,000. Assuming the issue was

preserved, we conclude that the district court did not abuse its discretion by

sustaining the disgorged profit. Defendants bore the burden of proving any

deductions from the assessment of defendants’ profits. 15 U.S.C. § 1117(a). In

reviewing a jury’s award of disgorged profits, the district court “only ascertain[s]

whether the award was based on reasonable inferences and fair assessments of the

evidence in the record.” Skydive, 673 F.3d at 1113. Though defendants claimed to

have operated at a loss every year, defendants failed to document certain costs,

including defendants’ largest expense, the cost of purchasing minutes from


                                           3
Vietnam. In addition, defendants did not account for inconsistencies in their

testimony, such as why they maintained an unprofitable business for years or why

defendant Lam Nguyen paid thousands of dollars for a failing company. The jury

could have reasonably rejected defendants’ accounting of expenses and credited

plaintiffs’ argument that defendants “were not honest about what their operating

costs were.” The district court therefore did not abuse its discretion in declining to

disturb the jury’s award of disgorged profits.

      AFFIRMED.




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