Fifty-Six Hope Road Music Limited et al v. Jammin Java Corporation et al

NOTICE OF MOTION AND MOTION to Dismiss Amended Counterclaim

C.D. Cal.November 10, 2016

2 3 4 s 6 s 9 t o 1 1 Z ~~0 ~ 0 13 ~ ~~ ~ V wO ~~ J Z ¢z~ ~ ~o > y -' 15~ ~ ¢ o Q 16 l7 ~ g 19 20 21 22 23 24 25 26 27 ~g MERCINTH PEARCE (Pro Hac Vice) mp earce bryantrabbino.com BRYAN RABBINO LLP 1180 Avenue of the Americas, Suite 620 New York, New York 10036 Tel: (212) 967-1800 Fax: (212) 967-1811 KICK D. NAVARRETTE (CA Bar No. 122653) rnavarrette AlvaradoSmith.com ALVARADO MITH A Professional Corporation 633 W. Fifth Street, Suite 1100 Los Angeles, CA 90071 Tel: (2I3) 229-2400 Fax: (213) 229-2499 Attorneys for Third Party Defendant ROHAN MARLEY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA —WESTERN DIVISION FIFTY-SIX HOPE ROAD MUSIC LIMITED, a Bahamian Corporation, And HOPE ROAD MERCHANDISING, LLC, a Florida limited liability company, CASE NO.: 16-cv-05810-SVW (MRW) JUDGE: Hon. Stephen V. Wilson Plaintiffs, JAMMIN JAVA, CORPORATION, a Nevada corporation, and DOES 1-10, Defendants. JAMMIN JAVA CORPORATION, a Nevada Corporation, Counterclaim Plaintiff, vs. FIFTY-SIX-SIX HOPE ROAD MUSIC LIMITED, a Bahamian Corporation, And HOPE ROAD MERCHANDISING, LLC, a Florida limited liability company, Counterclaim Defendants. COUNTERCLAIM DEFENDANT ROHAN MARLEY' S NOTICE OF MOTION AND MOTION TO DISMISS JAMMIN JAVA CORPORATION'S AMENDED COUNTERCLAIM• MEMORANDUM ~F POINTS AND AUTHORITIES IN SUPPORT THEREOF [FRCP 12(B)(1), 12(B)(2), 12(B)(6), 14 AND FRCP 21 Date: December 12, 2016 Time: 1:30~p~ m. Place: 312 N. Spring Street Los Angeles, CA 90012 Courtroom 6 1 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS C C C7t~7tZ1~ m II Ili ~ 1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 1 of 17 Page ID #:887 2 -, 4 s 6 7 s 9 10 ~ ~ Z i~0 ~ < ~ 0 13 ~ ~~~ a~ °"~ 14 0-'z z o > N -' 15, W Q O 1.6 17 18 19 20 21 22 23 24 25 26 27 2s ~ JAMMIN JAVA CORPORATION, Counterclaim Plaintiff, VS. ~ ROHAN MARLEY, an Individual, Third Party Defendant. TO COUNTERCLAIM PLAINTIFF JAMMIN JAVA CORPORATION AND ITS ATTORNEYS OF RECORD: NOTICE IS GIVEN that on December 12, 2016 at 1:30 p.m. in Courtroom "6" of the above-entitled Court located at 312 North Spring Street, Los Angeles, California 90012, Counterclaim Defendant Rohan Marley will move the Court to dismiss with prejudice Jammin Java Corporation's ("JJC") Amended Counterclaim , without leave to amend, pursuant to Federal Rules of Civil Procedure ("FRCP") 12(b)(1), 12(b)(2), 12(b)(6), 14 and FRCP 21; to stay discovery relating to the Amended Counterclaim, and for such other and further relief as the Court deems just and proper. This Motion to Dismiss (the "Motion"), which seeks dismissal of the Amended Counterclaim, is based on the following grounds: 1. Counterclaim Plaintiff has filed the Amended Third Party Complaint in violation of FRCP 14(a)(1). 2. Counterclaim Plaintiff fails to state facts sufficient to constitute a claim for relief pursuant to FRCP 12(b)(6). 3. Counterclaim Plaintiff fails to sufficiently allege facts to show subject matter jurisdiction. (FRCP 12(b)(1)) 4. Counterclaim Plaintiff fails to sufficiently allege facts showing personal jurisdiction. (FRCP 12(b)(2)) 5. This Court should reject Counterclaim Plaintiff's frivolous claims and order that Mr. Marley be dropped as a party to this action. 2 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 2 of 17 Page ID #:888 2 3 4 s 6 g ~~ 10 > > Z 12a o ]3 S' W ~ ~~ V w o ~z 14 a z¢ ¢°o > y -~ 15~ ~ o z 16 ~ ~ t8 19 20 2~ 22 23 24 2s 26 27 2s As a result of the foregoing, Counterclaim Plaintiff's claims are frivolous, vexatious and designed to harass Counterclaim Defendant Rohan Marley. This Motion is made following the conference of counsel pursuant to L.R. 7-3 which took place on October 6, 2016. Upon the conclusion of the meet and confer conference, counsel for Counterclaim Plaintiff (formerly known as Third Party Plaintiff advised that the Amended Third Party Complaint would not be voluntarily dismissed. Subsequently, Counterclaim Defendant (formerly known as Third Party Defendant) timely filed a Motion to Dismiss the Amended Third Party Complaint (Document #51). On October 27, 2016, Counterclaim Plaintiff's Motion for Enlargement of Time to File a Response (Document #55) to Third Party Defendant's Motion to Dismiss was rejected by the Court as untimely, among other deficiencies (Document #56). On October 27, 2016, Counterclaim Plaintiff, without leave of Court, intentionally and erroneously filed an Amended Counterclaim against Rohan Marley (Document #58). The Motion will be based on this Notice of Hearing, the Memorandum of Points and Authorities, all documents, records, and pleadings on file, and any evidence and/or oral argument presented at the time of hearing on this matter. DATED: November 10, 2016 BRYANT RABBINO A Limited Liability Partnership By: /s/Mercinth C. Pearce MERCINTH C. PEARCE (PRO HAC VICE) By: /s/Rick D. Navarrette RICK D. NAVARRETTE ALVARADOSMITH A Professional Corporation Attorneys for Third Party Defendant ROHAN MARLEY 3 DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 3 of 17 Page ID #:889 0 ~ < F ~„_, O C W~ o~ O V D -~z z a o ~ y ~--~ ,~ W Q ~ i 2 3 4 J 6 7 s ~ o > > 1 2 13 14 'i ~ 5 16 17 18 ~o ~ ~ 22 23 24 25 26 27 28 TABLE OF CONTENTS MEMORANI~tJM OF POINTS AND AUTHORITIES ........................................... 1 I. SUMMARY OF ARGLJMENT ....................................................................... 1 I I. SUMMARY OF ALLEGATIONS ..................................................................3 I II. STANDARD FOR A MOTION TO DISMISS ..............................................3 I V. THE AMENDED CC VIOLATES FRCP 14 ..................................................4 V. THE AMENDED CC FAILS TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED ........................................................................ 5 A. The Amended Third Party Complaint is Facially Deficient .................5 B. JJC Has Not Pled Sufficient Allegations To State A Claim of Breach of Fiduciary Duty Under Applicable Nevada Law ...................6 VI. THE AMENDED CC MUST BE DISMISSED FOR LACK OF SUBJECT MATTER AND PERSONAL JURISDICTION AND INSUFFICIENT SERVICE OF PROCESS ....................................................9 A. The Court Lacks Subject Matter and Personal Jurisdiction Over Mr. Marley .............................................................................................9 1. Lack of Subject Matter Jurisdiction ............................................9 2. Lack of Personal Jurisdiction ......................................................9 VII. THE COURT SHOULD STAY UISCOVI:IZY REGARDING THE AMENDEDCC .............................................................................................10 VIII. CONCLUSION ..............................................................................................11 i DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS 4463530.1 -- L751. Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 4 of 17 Page ID #:890 TABLE OF AUTHORITIES 3 4 5 6 s 9 to > > z ~2 0 ~ 0 13 ~ ~~mo o,~ V w o ~z 14 z¢ <°o > y -' 15a ~ ¢o °' 16a 17 ~ g 19 20 21 22 23 24 2s 26 27 28 Pa e s Cases Ashcro t v. Iq bal, 556 .S. 662, 663 (2009) ............................................................................................2 Bell Atl. Corp . v. Twombly, 550 U.S. 544, 555 (2007) ............................................................................................. Cordova v. FedEx Ground Package Sy stems, Inc. (D. OR 2015) 104 F. Supp. 3d 1119, 1131-1132 ........................................................3 Klaxon Co. v. Stentor Elec. Mfg. Co. 313 US 487 (1941) ..................................................................................................... 5 OSUStudentAlliance v. Ray 699 F.2d 1053, 1078 (9 h̀ Cir. 2012) ............................................................................8 Patton v. Cox 276 F.3d 493, 495 (9th Cir. 2002) ................................................................................5 Reich v. Purcell (1967) 67 Cal.2d 551, 554-556 ...................................................................................5 Seismic Reservoir 2020 Inc. v. Paulsson 785 F.3d. 330, 335 (9t" Cir. 2015) ...............................................................................? Shroyer v. New Cingular Wireless Services, Inc. 622 F.3d 1035, 1041(9" Cir 2010) ..............................................................................? Southwest Admin., Inc v. Rozay 's Transfer 791 F.2d 769, 777 (9th Cir. 1986) ......................................... ............. .........3 Statutes FRCP§ 12(b)(6) .............................................................................................................. ~.. FRCP 12(b)(1) ................................................................................................................. 7 FRCP 12(b)(2) ................................................................................................................. FRCP 14 ..............................................................................................................1, 3, 4, 8 Other Authorities Nevada Rev. Statutes, Section 78.138 ............................................................................6 ii DEFENDANT'S NOTICE OF MOTION AND MOTION TO DISMISS 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 5 of 17 Page ID #:891 MEMORANDUM OF POINTS AND AUTHORITIES 2 3 4 5 6 7 s 9 to 1 1 Z 120 y a F o 13 ~ ~w (n O J Q U '~ o .~Z 14 a Za a ° o > y -a 15.~ ¢ o Q 16 1 7 1 8 19 20 21 22 23 24 25 26 27 2s I. SUMMARY OF ARGUMENT As previously discussed, at its heart, this is a simple contract dispute between plaintiffs licensors Fifty-Six Hope Road Music Limited ("56 HR") and Hope Road Merchandising, LLC ("HRM") and a licensee Jamming Java Corporation ("JJC"). Unfortunately, JJC persists in a pattern of conduct designed to confuse and muddy the issues by improperly attempting to join Rohan Marley ("Mr. Marley") as a party to this dispute. This is JJC's THIRD attempt to amend the pleadings against Mr. Marley, JJC's frivolous mislabeling its pleading a "counterclaim" does not make it any more viable than when JJC called it a "Third Party Complaint." The pleading, whatever disguise that JJC places on it, remains irremediably flawed. For all these reasons, the Court should grant Mr. Marley's Motion to Dismiss with prejudice and without leave to amend. Counterclaim Plaintiff Jammin Java Corporation's ("JJC") Amended Counterclaim (the "Amended CC") is inherently flawed. Procedurally, the Amended I~ CC is deficient because it was improperly filed against Counterclaim Defendant Rohan Marley ("Mr. Marley") in violation of Federal Rules of Civil Procedure ("FRCP") Rule 15. On its face the Amended CC is erroneously titled. Indeed, JJC states in its. pleadings that the Amended CC is its first attempt to amend its pleadings against Mr. Marley and that the first set of pleadings should be overlooked by the Court as they were erroneously titled. However, JJC fails to address the fact that its Counterclaim is actually its THIRD attempt to amend its pleading and not an amendment of the original Third Party Complaint (Doc #3) as required under FRCP 15. Indeed, on August 23, 2016, JJC and Mr. Marley entered into a Stipulation for an extension of time to respond to the Third Party Complaint (Document #3). At no time during the negotiations did counsel for JJC raise the alleged clerical error with respect to the titling of its Pleadings. Instead, the document was executed and filed with the Court (Document #) and Mr. Marley submitted is response an Amended Third Party 1 MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 6 of 17 Page ID #:892 2 3 4 5 6 7 s 9 10 t ~ Z 120 z ~- °` ] 3 1' W O (J W o ~Z 14 a Za ° o > N -' 15 ~ LL Q O C Q 16 t~ 1s 19 20 21 22 23 24 2s 26 27 2s Complaint wherein it alleged Instead, after being served with Mr. Marley's Motion to ~ Dismiss the Amended Complaint for, among other things, failure to state a claim for relief pursuant to FRCP 14, JJC filed the very same document as an Amended 'Counterclaim and now attempts to convince this Court that it should accept the Amended Counterclaim since the original Third Party Complaint was merely mistitled. On its face, the Amended CC states no claim for relief directly against Mr. Marley and certainly none for which JJC may be derivatively liable, in whole or part, as required under FRCP 14. Rather, the single claim for injunctive relief alleged by JJC seeks some form of relief directly against plaintiffs Fifty-Six Hope Road Music Limited ("56 HR") and Hope Road Merchandising, LLC ("HRM"). In its flawed pleading, JJC does not seep to transfer liability for some or all of plaintiffs' claims against JJC. Indeed, the Amended CC appears to have been filed with the sole intent of trying to pressure settlement with plaintiffs by improperly harassing a member of the Marley family. And, in any event, even if the meandering and disconnected allegations of breach of fiduciary duty in the Amended CC were directed at Mr. Marley, those allegations are clearly deficient under the applicable law of Nevada, which applies here. At its heart, this is a simple contract dispute between a licensor (i.e. 56 HR) and a licensee (i.e. JJC). Interestingly, none of the parties have any relation to the State of California. The reason that plaintiffs chose to file in California is that the license agreements mandate California venue. Importantly, however, Mr. Marley is neither a party to the license agreements nor is he personally bound by the venue or choice of law provisions contained in those documents. Moreover, the pleadings state that Mr. Marley is anon-resident of California and a citizen of Jamaica, so JJC has not met its burden to sufficiently plead the Court's subject matter jurisdiction or personal jurisdiction over Mr. Marley in California. For all these reasons, the Motion should be granted without leave to amend. 2 MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 7 of 17 Page ID #:893 II. SUMMARY OF ALLEGATIONS 2 3 4 5 6 s 9 ~ o 1 1 Z 120 z < ~- 0 13 ~ ~~~ o~~ U w Q ~z 14 ¢ Z¢ a ~ o > N -' 15a W ¢ o Q 16 ~ g 19 20 21 22 23 24 25 26 27 2g The Amended CC is stated in paragraphs 139 to 144 of JJC's Answer to 'I Amended Complaint; Second Amended Verified Counterclaims and Amended Third Party Complaint. The Amended CC makes only one claim, which is for "injunction" (sic) relief against plaintiffs 56 HR and HRM. Inexplicably, the Amended CC does 'not make any affirmative claim for relief against Mr. Marley, the sole Third Party Defendant. Nonetheless, the gist of the allegations is that Mr. Marley breached fiduciary duties allegedly owed to JJC, a Nevada corporation.' III. STANDARD FOR A MOTION TO DISMISS A motion to dismiss under FRCP § 12(b)(6) may be brought when a pleading fails to state a claim upon which relief can be granted. While a complaint attacked by a FRCP § 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff s obligation to provide the grounds of its entitlement to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint's allegations are true." Id. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft v. Igbal, 556 U.S. 662, 663 (2009). Further, in evaluating a motion to dismiss, a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Id. at 678. Dismissal is appropriate under FRCP § 12(b)(6) if the pleading fails to allege a cognizable legal theory or it lacks sufficient facts to support a cognizable legal theory. Sh~oyer v. New Cingular Wireless Services, Inc. 622 F.3d 1035, 1041(9th Cir 2010); Seismic Reservoir 2020 Inc. v. Paulsson 785 F.3d. 330, 335 (9t" Cir. 2015). ~ It should be noted that JJC's injunctive relief claim appears to be an intentional departure from its original Counterclaims and Third Party Claim, which attempted (unsuccessfully) to plead a claim for relief for breach of fiduciary duty. 3 MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 8 of 17 Page ID #:894 I V. THE AMENDED CC VIOLATES FRCP 14 2 3 4 s 6 g 9 to 1 1 Z ~?0 x < o >> ~ ~~mo o,~ U w o -~Z 14 z o > N -' 15~ ~ ¢o a 16 17 is 19 20 21 22 23 24 25 26 27 2s FRCP 14 clearly states that a Third Party Complaint is only permissible against a "nonparty who is or may be liable to it for all or part of the claim against it." See FRCP 14. To the extent that JJC's allegations can be understood, JJC seems to be trying to hold Mr. Marley liable for breaches of alleged fiduciary duties owed to JJC and not the plaintiffs. See Second Amended Verified Counterclaims and Amended CC, Par. 141. The purpose of a third party complaint is to allow a defendant to bring an action against parties who are secondarily or derivatively liable to the defendant on account of the plaintiff's claim. Southwest Admin., Inc v. Rozay's Transfer 791 F.2d 769, 777 (9th Cir. 1986). Since third party claim is limited to claims that are derivative of the plaintiff's claims, the third party claim must have as its "essential criterion" an attempt by the defendant to transfer to the Counterclaim Defendants liability that is asserted by the original plaintiff against that defendant. As a corollary, the third party claim cannot merely assert an independent or related claim by the defendant against the third party; the claim must instead be based on the plaintiff's original claim against that defendant. Cordova v. FedEx Ground Package Systems, Inc. (D. OR 2015) 104 F. Supp. 3d 1119, 1131-1132. The Amended CC violates FRCP 14. JJC improperly attempts under the guise of a Third Party Complaint to forcibly inject Mr. Marley into a dispute that JJC has with plaintiffs. JJC's claim in the Amended CC, however, does not implicate derivative liability by Mr. Marley for the claims that have been asserted by plaintiffs against JJC. The entire Amended CC is therefore improper under FRCP 14. Furthermore, the Amended CC suffers from other inherent defects. By JJC's own admission the events about which it complains occurred after Mr. Marley resigned his position as a director of JJC. In a nutshell the alleged timeline is as follows: 1) Mr. Marley resigned as a director of JJC on June 27, 2016. See 4 MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 9 of 17 Page ID #:895 -~ E~ s 9 ~ o I l Z t2a a ~ o l3 ~ ~~ ~~~ ° 14Q J Z Q Z Q Q O ~ > N -' 15a ~ Q o Q ~6 t ~ 18 19 20 2t 22 23 24 25 26 27 2s Second Amended Verified Counterclaims, Par. 65. 2) JJC admits that it signed what it refers to as the Short Term License Agreement on July 6, 2016. See Second Amended Verified Counterclaims, Pars. 70-71. (The Court may take judicial notice that the Short Term License Agreement clearly states that it supersedes and replaces the Long Term License Agreement; therefore, any allegations concerning the Long Term License Agreement are moot. See Short Term License Agreement, attached as Exhibit D to the Declaration of Anh Tran In Support of Ex Parte Application For Temporary Restraining Order.) 3) Plaintiffs terminated the Short Term License Agreement on July 21, 2016. See Second Amended Verified Counterclaims, Par. 71. There is no plausible legal theory pled in the Amended CC under which Mr. Marley would owe fiduciary duties to JJC to act or not act in any certain way at the time when he was a director or officer of JJC. See Second Amended Verified Counterclaims and Amended CC, Par. 141 (listing all events that occurred after Mr. Marley had resigned). More importantly, there is nothing alleged by JJC that would require Mr. Marley to indemnify it for plaintiffs' claims or contribute to any award given to plaintiffs; which confirms that filing the Amended CC is improper under FRCP 14. Therefore, the Amended CC should be dismissed for violating FRCP 14. V. THE AMENDED CC FAILS TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED A. The Amended Third Party Complaint is Facially Deficient The Amended CC makes only one claim, which is for injunctive relief against plaintiffs 56 HR and HRM. See Amended CC, Pars. 139 through 144. Inexplicably, ~ the Amended CC does not make ANY claims for relief directly against Mr. Marley, ~ the sole Third Party Defendant. Therefore, the pleadings are fatally defective and the Amended CC should be s MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751. Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 10 of 17 Page ID #:896 1 2 3 4 5 6 H ~~ ~ o ~ ~ z ~2 0 a F o 13 ~ ~~te a,~ V m o ~z 14 Z¢ a ° o > N -' 15a ~ ¢ o 16 ~ x 19 20 21 22 23 24 25 26 27 2s dismissed. As this is already an amended pleading, the Court should not grant leave to further amend. B. JJC Has Not Pled Sufficient Allegations To State A Claim of Breach of Fiduciary Duty Under Applicable Nevada Law JJC is a Nevada Corporation. See Second Amended Verified Counterclaims, Par. 19. Although JJC has not asked for any relief against Mr. Marley, it is alleged that Mr. Marley, in his capacity as a director of JJC, breached his fiduciary duty to JJC. See Amended CC, Pars. 140-141. As is more fully discussed below, even if JJC had asked for affirmative relief against Mr. Marley, and it did not, the allegations fall short of stating a cognizable claim under applicable Nevada law. The Amended CC is basically akin to a shareholder's derivative claim. Under California Corporations Code Section 2116 the law of incorporation controls for such a claim. See California Corporations Code, Section 2116. Here, the state of incorporation of JJC is indisputably Nevada. In addition, Nevada law governs any claim for breach of fiduciary duty against Mr. Marley. This is because in diversity cases (such as alleged here) federal courts apply the same choice of law rules that the local state courts would apply. Klaxon Co. v. Stentor Elec. Mfg. Co. 313 US 487 (1941); Patton v. Cox 276 F.3d 493, 495 (gtn Cir. 2002). California applies the "governmental interest analysis" in resolving choice-of-law issues. Reich v. Purcell (1967) 67 Ca1.2d 551, 554-556. The governmental interest approach generally involves three steps. First, the court determines whether the relevant law is the same or different for each of the potentially affected jurisdictions with regard to the particular issue in question. Second, if there is a difference in the law, the court examines each jurisdiction's interest in the application of its own law under the circumstances of the particular case to determine whether a true conflict exists. Third, if the court finds that there is a true conflict, it carefully evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law "to determine which state's interest would 6 MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 11 of 17 Page ID #:897 0 z <~- ~o ~ V vo -~Z a Za a ° o 7 vyi -~~ ~ ¢ o a a t 2 3 4 s ~~ s 9 ~ o 1 1 12 13 ]4 ]5 16 t~ ~8 19 20 21 22 23 24 2s 26 27 2s be more impaired if its policy were subordinated to the policy of the other state" and then ultimately applies "the law of the state whose interest would be the more impaired if its law were not applied." See also, Kearney v. Salomon Smith Barney, Inc. (2006) 39 Ca1.4th 95, 106. Here, California has no interest in any outcome of the breach of fiduciary duty claim because: (1) JJC is not a resident or citizen of California, (2) no specific wrongful acts are alleged to have taken place in California, and (3) there was no harm caused to JJC in California. Nevada, on the other hand, has compelling reasons to apply its law to this case because JJC is a Nevada corporation that is incorporated under and subject to the jurisdiction and laws of Nevada. And, to the extent any wrongful acts or harm can be alleged they would likely accrue in Nevada or to Nevada citizen (i.e. JJC). Furthermore, Mr. Marley, as a director of a Nevada corporation, would reasonably expect that Nevada law would apply to his fiduciary duties. Nevada law therefore applies to the extent that JJC's allegations can be seen to constitute a claim for breach of fiduciary duty against Mr. Marley. Unlike California, if a company incorporates in Nevada its directors and officers are statutorily protected from liability for breaches of duty of care, loyalty and good faith, and even improper personal benefits; unless it is alleged that these officers or directors committed fraud or a knowing violation of law. See Nevada Rev. Statutes, Section 78.138. Here, JJC has not (and cannot in good faith) make any allegations that Mr. Marley engaged in any intentional misconduct, fraud or knowing violation of law. Therefore, JJC has failed to state a claim upon which relief can be granted and ~ the Amended CC must be dismissed. As this is an amended pleading, the Court should ~ not grant leave to further amend. C. The Civil Conspiracy Claim Must be Dismissed A naked claim of civil conspiracy cannot stand on its own. "A conspiracy cannot be alleged as a tort separate from the underlying wrong it is organized to MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 12 of 17 Page ID #:898 2 3 4 5 6 s 9 ~0 t ~ z ~2 0 F 2 a ~- 0 13 ~ ~~ ~ O J 0 V w o -~Z 14 a z ° o > y-' ]5~ W Q o °' 16 17 ~8 19 20 2t 22 23 24 2s 26 27 2s achieve. As long as the underlying wrongs are subject to privilege, defendants cannot be held liable for a conspiracy to commit those wrongs. Acting in concert with others does not destroy the immunity of defendants." McMartin v. Children's Institute International (1989) 212 Cal.App.3d 1393, 1406 [261 Ca1.Rptr. 437J, internal citations omitted; see also Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 510-11 (1994) (noting that in California civil conspiracy is "not a cause of action"). In short a pleading of civil conspiracy is defective if there is not an underlying cause of action that is also alleged. Here, JJC has only alleged two causes of action in its proposed amended pleading, the first is for breach of fiduciary duty (which was shown to be defective in Mr. Marley's motion papers and is not alleged to be the basis of the civil conspiracy claim), and a second for civil conspiracy that lists several torts that are nowhere alleged against Mr. Marley in the proposed third amendment. Therefore, the civil conspiracy claim must fall and the Court should deny permission to further amend. VI. MR. MARLEY SHOULD NOT BE A PARTY TO THIS ACTION A review of the allegations in the Complaint makes clear that Mr. Marley cannot be properly joined in this action as either a Third Party Defendant nor through joinder as "counterclaim defendant." The Complaint asserts eight causes of action against JJC. None of these causes of action require or allow Mr. Marley to be added as a party to this action. Indeed, the causes of action for breach of the licensing agreements concern only the acts of JJC that breached the agreements (e.g. failure to provide required financial statements, failure to pay royalties, and violation of SEC regulations). See Complaint pars. 56 and 61. The other causes of action also do not relate to Mr. Marley. See Complaint pars. 64 - 104. The allegations raised by JJC (and the allegations that JJC would like to add in a third amended pleading) simply do not have a common nexus with the allegations of the Complaint. JJC cannot rely on Fed. R. Civ. Proc. 20(a)(1)(A), because Mr. Marley has not asserted any claims against JJC. In addition, the lack of common s MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 13 of 17 Page ID #:899 t 2 3 4 s 6 s 9 ~ o 1 1 Z 120 _ < F' 0 13 ~ ~Wmo o, O () W ~ ~ 14 Z¢ a ° c > ~ -' 15a ¢ o Q 16 t~ 18 19 20 ~ ~ 22 23 24 25 26 27 2s causes and facts is fatal under Fed. R. Civ. Proc. 20(a)(1)(B), which JJC purportedly relies (the same defects exist if JJC had cited to Fed R. Civ. Proc. 20(a)(2)). Despite JJC's attempt to allege civil conspiracy, the breach of fiduciary duty allegations are personal to Mr. Marley cannot be common with the plaintiffs. If JJC wants to attempt asserting of cause of action against Mr. Marley, then it must do so in a separate action and in a proper venue. This Court should reject JJC's frivolous claims and order that Mr. Marley be dropped as a party to this action. See Fed. R. Civ. Proc. 21. VII. THE AMENDED CC MUST BE DISMISSED FOR LACK OF SUBJECT MATTER AND PERSONAL JURISDICTION AND INSUFFICIENT SERVICE OF PROCESS A. The Court Lacks Subject Matter and Personal Jurisdiction Over Mr. Markey 1. Lack of Subject Matter Jurisdiction The Amended CC must stand on its own and establish the court's subject matter and personal jurisdiction. A mere claim for breach of fiduciary duty against Mr. Marley (assuming that is what JJC has attempted to plead) does not give rise to original federal subject matter jurisdiction. Moreover, since the only claim alleged in the Amended CC is for injunctive relief, the Court lacks diversity jurisdiction because there is no claim for an amount greater than $75,000. Therefore, the Amended CC should be dismissed for lack of subject matter jurisdiction under FRCP 12(b)(1). 2. Lack of Personal Jurisdiction JJC alleges that "Rohan Marley is not, and was not at any relevant time, a citizen of the State of California." See Second Amended Verified Counterclaims, Par. 13. Counterclaim Plaintiff JJC is a Nevada corporation. Id., Par. 19. Plaintiff 56 HR is a Bahamian corporation and plaintiff HRM is a Florida limited liability company. Id., Pars. 3-4. In short, NONE of the parties to this case have a relevant connection with California. In fact, the reason that plaintiffs chose to file suit in California 9 MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751. Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 14 of 17 Page ID #:900 4 s 6 s 9 to t ~ z 12 0 x a ~- °` 13+ 0 G C' W ~ ~ °"~ 14o - Z¢Z< ¢°o > N -' l 5~ w ¢ o Q 16 17 18 19 20 21 ~~ 23 24 25 26 27 ~g appears to be that the license agreements mandate a California venue. Mr. Marley, however, is not a party to the license agreements and he is not personally bound by the venue or choice of law provisions contained in those documents. More importantly, the relevant events alleged in the Amended CC do not take place in California and do not concern California. Second Amended Verified Counterclaims and Amended CC, Pars. 30-144. Minimum contacts have clearly not been sufficiently alleged to support personal jurisdiction over Mr. Marley. Therefore, the Amended CC should be dismissed for lack of personal jurisdiction under FRCP 12(b)(2). VIII. THE COURT SHOULD STAY DISCOVERY REGARDING THE AMENDED CC It is clear that the primary purpose of the Amended CC is to vex and harass Mr. Marley. In this situation, the Court has the power to grant a stay on discovery if the challenged pleading lacks plausibility, where discovery would be futile, or the Court is convinced that a party will be unable to state a claim. OSUStudentAlliance v. Ray 699 F.2d 1053, 1078 (9t" Cir. 2012). Based on the circumstances presented in this case with (1) a clear violation of FRCP 14, (2) the lack of a cognizable legal theory asserted against Mr. Marley, (3) lack of subject matter jurisdiction, and (4) lack of personal jurisdiction in California, the Court has ample grounds to issue a stay on all discovery with respect to the Amended CC until a decision is rendered on the Motion to Dismiss. A stay on discovery is warranted in order to conserve judicial resources and avoid causing Mr. Marley to incur additional unnecessary expenses and attorneys' fees. /// /// /// /// /// 10 MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 15 of 17 Page ID #:901 t 2 3 4 5 :~ s 9 to z ~2 0 x < ~- 0 13 ~ ~w Cn O -~ O (~ W o,z 14 z a o 0 > y -' 15~ ~ Q ~ Q 16 17 1 K 19 ~p ~ ~ 22 23 24 25 26 27 28 IX. CONCLUSION Based on the foregoing reasons, Mr. Marley respectfully requests that the Court grant this Motion to Dismiss the Amended CC in its entirety, with prejudice and without leave to amend; stay discovery with respect to the Third Party action pending decision of this Motion to Dismiss and award Counterclaim Defendant any other relief as may be just. DATED: November 10, 2016 BRYANT RABBINO A Limited Liability Partnership By: /s/Mercinth C. Pearce MERCINTH C. PEARCE (PRO HAC VICE) By: /s/Rick D. Navarrette RICK D. NAVARRETTE ALVARADOSMITH A Professional Corporation Attorneys for Third Party Defendant ROHAN MARLEY 1 1 MEMORANDUM OF POINTS AND AUTHORITIES 4463530.1 -- L751.1 Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 16 of 17 Page ID #:902 CERTIFICATE OF SERVICE 2 3 4 5 r s 9 10 1 1 Z 120 ~ < F o 13 ~ a~ ~ U ~ o ~z 14 z¢ ~ ~o > y -' 15~ ~ a o Q 16 1 ~ 19 20 21 22 23 24 25 26 27 28 I HEREBY CERTIFY that a true and correct copy of the foregoing was electronically served via email to the parties listed on the service list below, and to the parties authorized to receive via this Court's CM/ECF system on this l Ot" day of November, 2016. Giovanni M. Ruscitti Berg,Hill, Greenleaf & Ruscitti 1712 Pearl Street Boulder, Colorado 80302 Padraic I. McCoy Tilden, McCoy & Dilweg, LLP 13310 Maxella Avenue, Suite D Marina Del Rey, California 90292 Joshua Geller Jonathon B. Sokol Greenberg, Glusker, Fields, Claman & Machtinger 1900 Avenue of the Stars, 21St Floor Los Angeles, California 90067 Taylor C. Foss Michelman &Robinson, LLP 17901 Von Karman Avenue, Suite 1000 Irvine, California 92614 Michael L. Francisco MRD Law 3301 W. Clyde Place Denver, Colorado 80211 B JO IE L. ALAMILLO 1 CERTIFICATE OF SERVICE 4463530.1 -- L751. Case 2:16-cv-05810-SVW-MRW Document 65 Filed 11/10/16 Page 17 of 17 Page ID #:903