Background
This special action arises from a business dispute between former co-owners of a digital marketing agency. Marcus Piazzisi founded VIIRL, LLC in 2018, and Kellen Moen joined shortly thereafter as a member and employee. In late 2022, Moen announced his intent to sell his membership interest and leave. The parties executed a Redemption Agreement and an Amended Operating Agreement in March 2023, both containing restrictive covenants prohibiting Moen from competing with the Company and requiring him to refer business opportunities to it.
Within months, and before the redemption closed, Moen disclosed plans to pursue an interactive mapping product. The Company terminated the Redemption Agreement and invoked its right to purchase Moen’s interest under the Operating Agreement’s disassociation provision. Moen commenced arbitration in September 2023. The arbitrator’s January 2025 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 September 2024, and confirmed that Moen remained bound by the Operating Agreement’s surviving non-competition and referral provisions.
While the arbitration was pending in March 2024, Moen formed Pin Parrot, LLC, with the owner of one of the Company’s largest customers. Pin Parrot sold online “map boosting” services similar to the Company’s offerings. The superior court confirmed the arbitration award in April 2025, entering judgment that enjoined Moen from selling or licensing map boosting services for two years. Nevertheless, Moen continued to sell these services through Pin Parrot. In September 2025, the Company moved to hold Moen in contempt. Two months later, Moen sold his stake in Pin Parrot for $500,000. The superior court found Moen in civil contempt for violating the judgment.
The Court’s Holding
The Arizona Court of Appeals accepted special action jurisdiction and granted relief, vacating the superior court’s ruling that the Company could not seek disgorgement of Moen’s profits. The court held that a contemnor’s profits may be used to measure a complainant’s actual loss in a civil contempt proceeding.
The superior court had ruled that Trombi v. Donahoe, 223 Ariz. 261 (App. 2009), limited the Company to its out-of-pocket losses and precluded disgorgement of profits. The appellate court disagreed, explaining that while Trombi requires compensatory civil contempt sanctions to rest on evidence of the complainant’s actual loss, it does not prescribe how that loss is measured. The court traced the actual-loss requirement to United States v. United Mine Workers, 330 U.S. 258 (1947), which in turn cited Leman v. Krentler-Arnold Hinge Last Co., 284 U.S. 448 (1932). Leman explicitly held that a contemnor’s profits may be included in compensatory relief, rejecting the narrow view that relief must be confined to proven out-of-pocket damages.
The court rejected Moen’s argument that Leman was distinguishable as a patent case, noting that Leman relied on general equitable principles applicable to injunctions, not merely patent-equity rules. The court also rejected the argument that disgorgement is punitive, citing the Restatement (Third) of Restitution and Unjust Enrichment and federal precedent holding that disgorgement of wrongful gain is not punishment but rather rests on the equitable principle of unjust enrichment. The court emphasized that the Company must still prove actual loss, but the contemnor’s profits can serve as a measure or proxy for that loss. What portion of the Pin Parrot sale price reflects profits from enjoined conduct remains a question of fact for the superior court on remand.
Key Takeaways
- A contemnor’s profits earned by violating an injunction may be used to measure a complainant’s actual loss for purposes of a compensatory civil contempt sanction.
- The actual-loss requirement for civil contempt sanctions does not limit recovery to out-of-pocket losses; disgorgement of profits is an available equitable remedy.
- Disgorgement is not a punitive remedy but rather an equitable measure based on unjust enrichment principles.
- Special action jurisdiction is appropriate to review civil contempt rulings because such orders are not appealable.
Why It Matters
This decision clarifies the scope of compensatory remedies available in civil contempt proceedings under Arizona law. By confirming that courts may consider a contemnor’s profits when measuring actual loss, the opinion provides trial courts with broader discretion to fashion remedies that fully compensate injured parties without being limited to difficult-to-prove out-of-pocket damages.
The ruling aligns Arizona with federal precedent and other jurisdictions that have long recognized disgorgement as a compensatory, rather than punitive, tool in contempt proceedings. Practitioners should note that while the contemnor’s profits may serve as a proxy for loss, the complainant still bears the burden of establishing that some actual loss occurred, and the trial court retains discretion to determine what portion of the profits fairly represents the loss attributable to the contemptuous conduct.