FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CALIFORNIA SCENTS, aka California 

Scents, Inc.,

Plaintiff-counter-defendantAppellant,

v.

SURCO PRODUCTS, INC., aka Doe 1;

MAGIC MOUNTAIN PRODUCTS, aka

Doe 2; ODOR CONTROL CENTRAL,

aka Doe 3, No. 03-56116

Defendants,

D.C. No.

ASSOCIATED PRODUCTS, INC., a  CV-99-00009-GLT

Pennslyvania Corporation; RALPH

J. SIMONS, OPINION

Counter-defendants,

and

PESTCO, INC., a Pennsylvania

Corporation dba Pacific Coast;

AIR-SCENT INTERNATIONAL, a

Pennslyvania Corporation,

Defendants-counter-claimantsAppellees. 

Appeal from the United States District Court

for the Central District of California

Gary L. Taylor, District Judge, Presiding

Argued and Submitted

February 8, 2005—Pasadena, California

Filed May 6, 2005

4987
Before: Harry Pregerson, William C. Canby, Jr.,

Circuit Judges, and Edward C. Reed, Jr.,* District Judge.

Opinion by Judge Pregerson

*Honorable Edward C. Reed, Jr., Senior United States District Judge for

the District of Nevada, sitting by designation. 

4988 CALIFORNIA SCENTS v. PESTCO, INC.
COUNSEL

Steven Brower (argued) and Robert M. Dato (briefed), Stephan, Oringher, Richman & Theodora, Costa Mesa, California, for the plaintiff-appellant.

4990 CALIFORNIA SCENTS v. PESTCO, INC.
Richard A. Ejzak, Cohen & Grigsby, Pittsburgh, Pennsylvania, for the defendants-appellees. 

OPINION

PREGERSON, Circuit Judge: 

When plaintiff California Scents filed its complaint it did

not demand a jury trial. Defendant Pestco answered, filed

counterclaims, and did demand a jury trial “as to all counterclaims.” In this appeal we consider whether, under Federal

Rule of Civil Procedure 38, California Scents reasonably

relied on Pestco’s jury trial demand “as to all counterclaims”

so as to preserve California Scents’s right to a jury trial on the

claims pled in its complaint. 

We conclude that the district court’s denial of a jury trial

on California Scents’s claims was error that caused California

Scents to suffer prejudice. We reverse and remand for trial.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Complaint, Answer, and Summary Judgment

California Scents manufactures air fresheners for the retail

market. Its air fresheners are individually packaged “pull top”

aluminum cans carrying brightly colored “scratch and sniff”

labels. The labels produce a fragrance that corresponds to the

name of the air freshener. The names of California Scents’s

air fresheners, for example “Sierra Meadows” and “Pasadena

Rose,” are suggestive of various California regions. Pestco

manufactures a similar air freshener for the retail market. 

California Scents brought suit against Pestco in district

court, alleging trade dress infringement, unfair competition,

and false advertising under the Lanham Act, 15 U.S.C.

CALIFORNIA SCENTS v. PESTCO, INC. 4991
§ 1125(a), and unfair competition under California Business

and Professions Code § 17200. In its complaint, California

Scents alleged that it had developed and marketed an “inherently distinctive and non functional” trade dress for its air

freshener. California Scents further alleged that after it sent

Pestco a cease-and-desist letter, Pestco continued to manufacture a “nearly identical air freshener product, in nearly identical color-coded cans, with nearly identical color coded

‘scratch and sniff’ labels,” and “exhibited [its] air fresheners

in counter top display boxes which are nearly identical to

[California] Scents’s display box.” Finally, California Scents

claimed that Pestco falsely advertised that it had been in business since 1946. California Scents did not demand a jury trial

when it filed its complaint. 

Pestco asserted several affirmative defenses and counterclaims in its answer. Pestco admitted to manufacturing air

fresheners such as “Sierra Spruce” and “Rose Parade,” but

alleged that California Scents’s claims were barred by the

doctrine of “unclean hands” because California Scents had

copied Pestco’s distinctive product line. Specifically, in its

third affirmative defense, Pestco alleged that California

Scents copied Pestco’s “Nature Scent” product line, which

consists of “a spill proof wafer impregnated with organic air

fresheners in a variety of fragrances contained in a recyclable

aluminum can with a removable ring-top cover and a multicolor outer label.” Pestco further alleged that it began manufacturing and selling the distinctive air fresheners at least

eight years before California Scents came into existence. 

Pestco counterclaimed alleging (1) business disparagement,

(2) business defamation, (3) conspiracy to disparage and

defame under California law, and (4) false advertising under

federal law. Pestco’s first three counterclaims are based on the

same allegations: that California Scents injured Pestco’s reputation and sales by falsely representing to sales representatives

and competitors in the air freshener industry that Pestco “copied and/or infringed upon” California Scents’s air freshener

4992 CALIFORNIA SCENTS v. PESTCO, INC.
trade dress. Pestco’s fourth counterclaim is based on the allegation that California Scents falsely advertised that its product

contains one-hundred percent natural fragrance oils and made

contradictory representations about the life-span of its air

fresheners. The factual allegations in Pestco’s third affirmative defense, including the contention that California Scents

copied its trade dress from Pestco, were incorporated by reference into each of Pestco’s counterclaims. Pestco demanded a

jury trial “as to all counterclaims.” The case was set for a jury

trial in September 2000. 

Pestco moved for summary judgment on California

Scents’s trade dress infringement and unfair competition

claims.1 The district court granted Pestco’s motion for summary judgment. The district court then granted Pestco’s subsequent motion to dismiss its counterclaims with prejudice. 

California Scents appealed the grant of summary judgment

in favor of Pestco. See Cal. Scents v. Surco Prods., Inc., No.

00-56763, 2002 WL 22346 (9th Cir. Jan. 8, 2002) (unpublished disposition). We reversed and held that a genuine issue

of material fact existed on each of the three factors necessary

to make out a trade dress claim under the Lanham Act. See

id. at *4.

II. The Bench Trial

On remand, California Scents argued that it was entitled to

a jury trial on its claims for trade dress infringement and

unfair competition even though it never demanded a jury trial.

California Scents contended that many of the factual issues

raised in Pestco’s business defamation and disparagement

counterclaims were similar to the issues raised in its trade

dress infringement and unfair competition claims. In other

words, California Scents believed that Pestco’s jury demand

1The district court dismissed California Scents’s false advertising claim

in a separate order. 

CALIFORNIA SCENTS v. PESTCO, INC. 4993
was directed to the same issues raised in California Scents’s

complaint. California Scents claimed that it was therefore

entitled to rely on Pestco’s jury demand to preserve its own

right to a jury trial on its complaint. The district court disagreed, and ordered the case to be tried as a bench trial. 

After a four day bench trial, the district court ruled for

Pestco. The court found that California Scents failed to show

by a preponderance of the evidence that its trade dress was

nonfunctional, distinctive, or that there was a likelihood that

the public would confuse Pestco’s and California Scents’s

trade dress. 

California Scents appeals the district court’s ruling. California Scents argues that the district court erred in denying it a

jury trial on its complaint and that the error was not harmless.

STANDARD OF REVIEW

Entitlement to a jury trial is a question of law reviewed de

novo. See Kulas v. Flores, 255 F.3d 780, 783 (9th Cir. 2001).

This court reviews de novo a district court’s interpretation of

the Federal Rules of Civil Procedure. See Atchison, Topeka &

Santa Fe Ry. Co. v. Hercules Inc., 146 F.3d 1071, 1073 (9th

Cir. 1998). 

ANALYSIS

I. The Scope of Reasonable Reliance Under Rule 38

[1] Federal Rule of Civil Procedure 38(b) provides that a

party seeking to have a disputed issue tried before a jury must

serve a jury demand upon the other parties “at any time after

the commencement of the action and not later than 10 days

after the service of the last pleading directed to such issue.”

Fed. R. Civ. P. 38(b). A party may “specify the issues which

the party wishes so tried; otherwise the party shall be deemed

to have demanded trial by jury for all the issues so triable.”

4994 CALIFORNIA SCENTS v. PESTCO, INC.
Fed. R. Civ. P. 38(c). Once a demand has been made, it “may

not be withdrawn without the consent of the parties.” Fed. R.

Civ. P. 38(d). 

[2] Rule 38 “has been interpreted as incorporating a right

of reasonable reliance on the jury demand of another party.”

In re N-500L Cases, 691 F.2d 15, 22 (1st Cir. 1982); see also

Rosen v. Dick, 639 F.2d 82, 87 (2d Cir. 1980) (“Undoubtedly,

Rule 38 embodies the equitable principles of reasonable reliance (for a party seeking to invoke the jury trial right) and

adequate notice (for the other parties in an action).”). Thus,

“once one party files such a [jury] demand other parties are

entitled to rely on that demand for the issues it covers, and

need not file their own demands.” Fuller v. City of Oakland,

47 F.3d 1522, 1531 (9th Cir. 1995); see also Rosen, 639 F.2d

at 91 (“[C]ourts will not require the formal making of a superfluous second demand, nor will they penalize a party who has

reasonably relied on an existing demand.”). 

[3] The question presented in this appeal is whether the “issues” raised in California Scents’s complaint were embraced

by Pestco’s jury demand. See Rosen, 639 F.2d at 92 (“If the

first demand does not cover issues pertinent to a second party,

the second party cannot rely reasonably on the first demand,

and the second demand would be far from superfluous since,

without it, the right to a jury trial will have been waived as

to those additional issues.”). If so, California Scents reasonably relied on Pestco’s jury demand to preserve its own right

to a jury trial on the claims in its complaint. If not, California

Scents waived its right to a jury trial on its claims by failing

to request a jury trial within ten days of the last pleading

directed to the issues raised in its complaint. See Fed. R. Civ.

P. 38(b), 38(d). 

[4] In deciding this question, we draw on those cases analyzing whether a plaintiff that has waived its right to a jury

trial on the claims in its complaint may nonetheless be entitled

to a jury trial on the claims in its amended complaint. See Lutz

CALIFORNIA SCENTS v. PESTCO, INC. 4995
v. Glendale Union High Sch., No. 03-15745, 2005 WL

797409 (9th Cir. April 8, 2005); Las Vegas Sun, Inc. v.

Summa Corp., 610 F.2d 614 (9th Cir. 1979); Trixler Brokerage Co. v. Ralston Purina Co., 505 F.2d 1045 (9th Cir. 1974).

Specifically, these cases focus on whether the amended complaint raises an “issue” for the purpose of Rule 38(b), not previously raised in the original complaint. See, e.g., Lutz, 2005

WL 797409, at *4 (“If these additional claims were new

‘issue[s]’ under Rule 38(b), then [the plaintiff’s] jury trial

demand . . . was timely as to them.”). And, as these cases

illustrate, “Rule 38(b) is concerned with issues of fact.” Id.

(emphasis in original); Trixler Brokerage, 505 F.2d at 1050

(“Manifestly, the issue contemplated by [Rule 38(b)] is one of

fact.”). 

Most recently, we considered whether a plaintiff who had

waived her right to a jury trial on the question of liability in

her original complaint could nonetheless request a jury trial

on liability in her amended complaint. See Lutz, 2005 WL

797409. The plaintiff’s original complaint alleged violations

of the Americans with Disabilities Act (“ADA”), while her

amended complaint raised new claims under the Rehabilitation Act and under Arizona law. Id. at *1, *4. We found that

“there [was] no significant difference in the facts necessary to

support [the plaintiff’s] original ADA claim and those supporting her new claims.” Id. at *4. Because “ ‘the issues in the

original complaint and the amended complaint turn[ed] on the

same matrix of facts,’ ” we concluded that the amended complaint did not revive the plaintiff’s right to request a jury trial

on the question of liability. Id. (quoting Las Vegas Sun, 610

F.2d at 620). 

[5] Our holding in Lutz followed from our earlier decision

in Las Vegas Sun. There, we concluded that a plaintiff that

had waived its right to a jury trial in its initial complaint was

not entitled to a jury trial for the claims in its amended complaint. 610 F.2d at 620. We reasoned that the claims in both

complaints “share[d] and hinge[d] entirely on the absence of

4996 CALIFORNIA SCENTS v. PESTCO, INC.
a legitimate business justification” for the defendants’ conduct, and that both complaints “turn[ed] on the same matrix

of facts.” Id.; see also Trixler Brokerage, 505 F.2d at 1050

(holding that the plaintiff had waived its right to a jury trial

for the claims in its amended complaint where the substance

of the new claims “[a]t most . . . clarif[ied] the charges

already made” by “elaborating on the charges of bad faith” in

the original complaint). 

[6] In cases examining whether a party may rely on the jury

demand of another party to preserve its own right to a jury

trial, other circuits have taken a similar approach to defining

“issue” for the purposes of Rule 38. See Rosen, 639 F.2d at

93-96; In re N-500L Cases, 691 F.2d at 22-23. In Rosen, the

Second Circuit considered whether a defendant was entitled

to a jury trial based on the jury demand of a co-defendant. 639

F.2d at 83-84. The court recognized that a “ ‘defendant can

rely on the jury demand of a co-defendant to the extent of the

issues embraced by that demand.’ ” Id. at 93 (quoting Collins

v. Gov’t of Virgin Islands, 366 F.2d 279, 284 (3d Cir. 1966)).

The court stressed that “the term ‘issue’ means something

more than the evidence offered and the legal theories pursued,

although these are pertinent factors,” id. at 94, and noted that

“the initial jury demand . . . will put the other parties on notice

that a jury . . . will be trying all issues relating to (the) general

area of dispute,” id. at 96 (internal quotations and citation

omitted). 

Applying these principles, the Second Circuit concluded

that the defendant was not entitled to a jury trial on the plaintiff’s claims on the basis of the co-defendant’s jury demand.

See id. The defendant was charged with willful, reckless, and

negligent investigation and preparation of an auditing report

that company directors relied on to their detriment. Id. at 97-

98. The co-defendant, a company director, was charged with

willful and negligent failure to report misrepresentations and

self-dealing of a business partner. Id. at 97. The court found

that there was a “substantial difference in the factual issues

CALIFORNIA SCENTS v. PESTCO, INC. 4997
concerning these defendants,” id., and that corporate mismanagement and self-dealing were distinct issues from negligent

accountancy, id. at 98. 

The First Circuit used similar reasoning in In re N-500L

Cases. In that case, relatives of victims of a plane crash sued

various defendants for losses associated with the crash and

demanded a jury trial in all cases. 691 F.2d at 18. On the eve

of trial, two defendants, Eastern Airlines and the Federal Aviation Administration (“FAA”), settled with the plaintiffs and

assumed all liability but reserved their right to seek contribution from the other defendants. Id. Eastern and FAA then

moved for a bench trial on their contribution claims. Id. Two

of the remaining insurer-defendants objected, claiming that

they had justifiably relied on the plaintiff’s jury demands. Id.

The district court held that the insurer-defendants waived their

rights to a jury trial by not raising a demand in their answers.

Id. 

The First Circuit reversed in part. See id. at 23-24. Relying

on the Second Circuit’s decision in Rosen, the court explained

that “since justifiable reliance is based on recurring issues, the

question is, when are issues the same.” Id. at 23. The court

noted that “[t]he definition of an issue for purposes of Rule

38 is not a matter solely of fact or of law” and that “[o]ne

issue is the same as another when it is based on the same conduct or concerns the same general area of dispute.” Id. Relying on our decision in Las Vegas Sun, the court stated that

“[i]f the factual allegations underlying two claims are the

same or if the issues ‘turn on the same matrix of facts’ the

issues are the same.” Id. (quoting Las Vegas Sun, 610 F.2d at

620). 

Thus, the First Circuit held that the insurer-defendants were

entitled to a jury trial on the issue of their insureds’ liability

to the plaintiffs for negligence. See id. But because the court

found that the issue of contribution among the defendants

raised “issues with which plaintiffs were not concerned,” the

4998 CALIFORNIA SCENTS v. PESTCO, INC.
court held that the plaintiffs’ “complaints . . . [could not] reasonably be read as embracing these other contribution issues

and reliance on [the plaintiffs’] jury demand for these issues

[was] not reasonable.” Id. at 24. 

Here, both parties believe that “[t]he test for determining

whether a request for a jury on a counterclaim entitles a party

to a jury trial on the complaint is whether the counterclaim is

compulsory, that is, whether it arises out of the subject matter

of the plaintiff’s legal claim.” 8 James Wm. Moore et al.,

Moore’s Federal Practice ¶ 38.50[9][c] (3d ed. 1999); Park

Club, Inc. v. Resolution Trust Corp., 967 F.2d 1053, 1057

(5th Cir. 1992). We do not need to decide, however, whether

Pestco’s counterclaims were compulsory to resolve the present dispute.2

[7] Rather, we decide only whether Pestco’s counterclaims

embraced the same “issues” within the meaning of Rule 38 as

the claims in California Scents’s complaint. If so, California

Scents’s reliance on Pestco’s jury demand was reasonable and

2We recognize that the tests to determine whether an “issue” is the same

for Rule 38 purposes discussed in Las Vegas Sun, Rosen, and In re N-500L

Cases, are similar to this court’s test for determining whether a counterclaim is compulsory. Compare, e.g., Las Vegas Sun, 610 F.2d at 620 (concluding that issues are the same for purposes of Rule 38 when they “turn

on the same matrix of facts”), with Pochiro v. Prudential Ins. Co. of Am.,

827 F.2d 1246, 1249 (9th Cir. 1987) (noting that a claim is considered

compulsory where “the essential facts of the various claims are so logically connected that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit”) (internal quotation and

citation omitted). Nevertheless, we express no view as to whether Pestco’s

counterclaims were compulsory. 

Accordingly, we need not decide whether we agree with the reasoning

in the line of cases cited by Pestco that hold that “a counterclaim which

stems from the filing of the main action and subsequent alleged defamations is not a compulsory counterclaim covered by Rule 13(a).” Harris v.

Steinem, 571 F.2d 119, 124 (2d Cir. 1978); see also Computer Assocs.

Int’l, Inc. v. Altai, Inc., 893 F.2d 26, 29 (2d Cir. 1990); Pochiro, 827 F.2d

at 1251 n.9 (discussing cases). 

CALIFORNIA SCENTS v. PESTCO, INC. 4999
it was not required to make its own jury demand to preserve

its right to a jury trial on the issues raised in its complaint. See

Rosen, 639 F.2d at 92; In re N-500L Cases, 691 F.2d at 24.

In examining this question, we “indulge every reasonable presumption against waiver” of the jury trial right. Aetna Ins. Co.

v. Kennedy ex rel. Bogash, 301 U.S. 389, 393 (1937). 

II. California Scents’s Reliance on Pestco’s Jury

Demand

[8] The legal issues asserted by each party are distinct, as

is evident from a comparison of the elements of the parties’

respective claims. To prevail in its business defamation and

business disparagement counterclaims, Pestco would have

had to prove facts that were unnecessary to California

Scents’s trade dress infringement claims, and vice-versa.

Compare 4 J. Thomas McCarthy, McCarthy on Trademarks

& Unfair Competition § 27:99 (4th ed. 2004) (defining elements of common law product disparagement as (1) publication, (2) of a false and disparaging statement of fact about the

product of plaintiff, (3) made with either knowledge of falsity

or with reckless disregard of its truth or falsity, (4) with intent

to harm plaintiff’s interest, and (5) specific damages), with

Disc Golf Ass’n v. Champion Discs, Inc., 158 F.3d 1002, 1005

(9th Cir. 1998) (requiring plaintiff in trade dress infringement

suit to prove that (1) the trade dress is nonfunctional, (2) the

trade dress is inherently distinctive or acquired distinctiveness

through secondary meaning, and (3) there is a likelihood that

the public will confuse the alleged infringer’s trade dress with

that of the plaintiff’s). 

[9] Nonetheless, we conclude that Pestco’s business disparagement and business defamation counterclaims and California Scents’s trade dress claims “turn on the same matrix of

facts,” Las Vegas Sun, 610 F.2d at 620, and “concern[ ] the

same general area of dispute,” In re N-500L Cases, 691 F.2d

at 23. Aside from their false advertising claims, the basic dispute between the parties concerns whether Pestco infringed on

5000 CALIFORNIA SCENTS v. PESTCO, INC.
California Scents’s trade dress. The facts relevant to that dispute were central not only to California Scent’s claims for

trade dress infringement and unfair competition, but also to

Pestco’s counterclaims for business disparagement and business defamation. Indeed, Pestco would have been required to

prove as part of its disparagement and defamation counterclaims that California Scents’s statements—that Pestco

infringed on or copied California Scents’s trade dress—were

untrue or misleading. See Fin. Programs, Inc. v. Falcon Fin.

Servs., Inc., 371 F. Supp. 770, 776 (D. Or. 1974) (“To support

a claim of commercial disparagement, a plaintiff has the burden of establishing that the defendant has made untrue or misleading statements which disparage the quality of the

plaintiff’s product or services.”); 4 McCarthy on Trademarks

at § 27:103 (“The plaintiff in a commercial disparagement

claim always bears the burden of proving that the alleged disparaging statement is substantially false or misleading.”). 

[10] The substantial factual overlap underpinning the parties’ respective claims compels our conclusion that Pestco’s

jury demand on its counterclaims was directed, at least in part,

to the same “issues” as California Scent’s complaint. On this

basis, we hold that California Scents’s reliance on Pestco’s

jury demand to preserve its own right to a jury trial on its

complaint was reasonable. See Rosen, 639 F.2d at 92; In re N500L Cases, 691 F.2d at 24. Therefore, the district court erred

in concluding that California Scents was not entitled a jury

trial on its trade dress and unfair competition claims.

III. Harmless Error Analysis

“The erroneous denial of a jury trial in a civil case is subject to harmless error analysis.” Fuller, 47 F.3d at 1533. “The

denial will be harmless only if ‘no reasonable jury could have

found for the losing party, and the trial court could have

granted a directed verdict for the prevailing party.’ ” Id. (quoting Davis & Cox v. Summa Corp., 751 F.2d 1507, 1516 (9th

Cir. 1985)). 

CALIFORNIA SCENTS v. PESTCO, INC. 5001
[11] In the earlier appeal of this case, we concluded that

California Scents provided sufficient evidence to raise a genuine issue of material fact for each of the three factors needed

to make a trade dress claim against Pestco under the Lanham

Act. Though the district court concluded at the end of the

bench trial that California Scents had not proved by a preponderance of the evidence that Pestco had infringed on its trade

dress, we cannot say on the record before us that “no reasonable jury could have found for [California Scents].” Id. (internal quotation omitted). Accordingly, we conclude that the

erroneous denial of a jury trial to California Scents was not

harmless. See id.

CONCLUSION

We conclude that the district court erred in denying California Scents a jury trial on its complaint. Furthermore, we

conclude that the error was not harmless. 

The parties will bear their own costs on appeal. 

REVERSED and REMANDED. 

5002 CALIFORNIA SCENTS v. PESTCO, INC.