James v. UMG Recordings, Inc.

MOTION for Summary Judgment No. 2 on All Causes of Action of All Plaintiffs, or Alternatively, on Plaintiffs' Fourth, Fifth and Sixth Causes of Action for Open Book Account, Violation of California Business & Professions Code 17200, and Violation of New York General Business Law 349

N.D. Cal.May 23, 2014

LA 10795919v1 Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER JEFFREY D. GOLDMAN (Bar No. 155589), JGoldman@jmbm.com RYAN S. MAUCK (Bar No. 223173), RMauck@jmbm.com BRIAN M. YATES (Bar No. 241798), BYates@jmbm.com JEFFER MANGELS BUTLER & MITCHELL LLP 1900 Avenue of the Stars, Seventh Floor Los Angeles, California 90067-4308 Telephone: (310) 203-8080 Facsimile: (310) 203-0567 Attorneys for Defendant UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA RICK JAMES, by and through THE JAMES AMBROSE JOHNSON, JR., 1999 TRUST, his successor in interest; CARLTON DOUGLAS RIDENHOUR, d/b/a "CHUCK D," individually and as a member of PUBLIC ENEMY; WHITESNAKE, a doing business as designation of David Coverdale, by and for WHITESNAKE PRODUCTIONS (OVERSEAS) LIMITED; DAVE MASON; OTIS WILLIAMS and RON TYSON, jointly d/b/a THE TEMPTATIONS; and ROBERT WALTER "BO" DONALDSON, individually and d/b/a BO DONALDSON AND THE HEYWOODS; WILLIAM MCLEAN, a/k/a "WILL MCLEAN" and p/k/a "MISTA LAWNGE," and ANDRES TITUS, p/k/a "DRES," jointly d/b/a BLACK SHEEP, individually and on behalf of all others similarly situated, Plaintiff, v. UMG RECORDINGS, INC., a Delaware corporation, Defendant. CASE NO. CV11-01613 SI DEFENDANT UMG RECORDINGS, INC.’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT NO. 2: ON ALL CAUSES OF ACTION OF ALL PLAINTIFFS, OR, ALTERNATIVELY, ON PLAINTIFFS’ FOURTH, FIFTH AND SIXTH CAUSES OF ACTION FOR OPEN BOOK ACCOUNT, VIOLATION OF CALIFORNIA BUSINESS & PROFESSIONS CODE § 17200, AND VIOLATION OF NEW YORK GENERAL BUSINESS LAW § 349 Date: June 27, 2014 Time: 9:00 a.m. Courtroom: 10, 19th Floor Judge: Hon. Susan Illston Case3:11-cv-01613-SI Document205 Filed05/23/14 Page1 of 32 LA 10795919v1 - 1 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that, on June 27, 2014 at 9:00 a.m. or as soon thereafter as counsel may be heard in Courtroom 10 of the above-entitled Court, located at 450 Golden Gate Avenue, San Francisco, CA 94102, before the Honorable Susan Illston, defendant UMG Recordings, Inc. (“UMGR”) will and hereby does move for an Order granting summary judgment to UMGR on the Fourth Causes of Action for open book account,1 Fifth Causes of Action for violation of California Business & Professions Code § 17200 (the “UCL”) and Sixth Causes of Action for violation of New York General Business Law § 349 in the Consolidated Amended Complaint (“CAC”) of plaintiffs Rick James, by and through the James Ambrose Johnson, Jr., 1999 Trust (the “James Trust”), Whitesnake, a doing business designation of David Coverdale, by and for Whitesnake Productions (Overseas) Limited (“Whitesnake”), Carlton Douglas Ridenhour (“Ridenhour”), Dave Mason (“Mason”), Ron Tyson (“Tyson”), Robert Walter “Bo” Donaldson (“Donaldson”), William McLean (“McLean”) and Andres Titus (“Titus”) (collectively “Plaintiffs”). The grounds of this motion are as follows: A. UCL CLAIMS Plaintiffs’ UCL claims should be dismissed because: 1. The gravamen of the claims are private commercial contract disputes that, after discovery, lack a sufficient connection to the protection of the public or consumers generally. 2. Plaintiffs Ridenhour, Titus, and McLean are also precluded from asserting such claims, based upon their contracts’ New York choice-of-law provisions. B. NEW YORK GENERAL BUSINESS LAW SECTION 349 CLAIMS Plaintiffs’ claim under New York General Business Law section 349 should be dismissed because: 1. After discovery, Plaintiffs’ claims do not have “a broad impact on consumers at large,” as section 349 requires. 1 Ridenhour’s “open book account” claim was dismissed by this Court based on his New York choice of law provisions. Ridenhour v. UMG Recordings, Inc., 2012 WL 463960, *4 (N.D. Cal. 2012). McLean and Titus also do not have open book account claims for the same reason. Case3:11-cv-01613-SI Document205 Filed05/23/14 Page2 of 32 LA 10795919v1 - 2 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER 2. For the same reasons that plaintiffs Ridenhour, McLean and Titus cannot assert claims under the California UCL, plaintiffs the James Trust, Mason, Tyson and Donaldson - whose contracts contain California choice-of-law provisions - cannot assert claims under New York law. C. PLAINTIFFS’ OPEN BOOK ACCOUNT CLAIMS Certain Plaintiffs’ open book account claims should be dismissed because these claims are based upon express written contracts that govern the manner in which their royalties are to be paid, and, after discovery, there is insufficient evidence any Plaintiff and UMGR had a “mutual understanding” and “contrary agreement” to treat Plaintiffs’ royalties as an open book account. D. STATUTORY AND/OR CONTRACTUAL LIMITATIONS Plaintiffs’ claims are barred by the applicable statute of limitations under California and New York law, as applicable. 1. California Plaintiffs / UCL: a. Plaintiffs’ claims accrued when Plaintiffs could first have asserted the contractual interpretations they assert in this action, i.e., by March 24, 2004 at the latest. b. Even if this Court does not conclude that all Plaintiffs’ UCL claims accrued by 2003, plaintiff Whitesnake’s UCL claim accrued by no later than April 22, 2004, when UMGR repudiated its claim. 2. New York Plaintiffs / General Business Law section 349: Plaintiffs’ claims accrued when Plaintiffs could first have asserted the contractual interpretations they assert in this action, i.e., by 2003 at the latest. 3. At a minimum, even if each of the semi-annual royalty statements rendered by UMGR to each Plaintiff gives rise to a separate cause of action, each Plaintiff’s respective claims must be barred as to royalty statements rendered prior to the date permitted by the contractual limitations provisions in that Plaintiff’s contract(s). This motion is based upon this Notice, the accompanying Memorandum of Points and Authorities; the accompanying Declaration of Jeffrey D. Goldman (“Goldman Decl.”) and exhibits thereto; the depositions of Dennis King (“King Depo.”), David Coverdale (“Coverdale Depo.”), Dave Mason (“Mason Depo.”), Carlton Ridenhour (“Ridenhour Depo.”), Ron Tyson (“Tyson Case3:11-cv-01613-SI Document205 Filed05/23/14 Page3 of 32 LA 10795919v1 - 3 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER Depo.”), Bo Donaldson (“Donaldson Depo.”), William McLean (“McLean Depo.”) and Andres Titus (“Titus Depo.”); the court file; any matters of which this Court may properly take judicial notice or may otherwise consider; any reply UMGR may make; and any further evidence and argument that may be presented to the Court prior to or at the hearing on this Motion. DATED: May 23, 2014 JEFFREY D. GOLDMAN RYAN S. MAUCK BRIAN M. YATES JEFFER MANGELS BUTLER & MITCHELL LLP By: /s/ Jeffrey D. Goldman JEFFREY D. GOLDMAN Attorneys for Defendant Case3:11-cv-01613-SI Document205 Filed05/23/14 Page4 of 32 LA 10795919v1 TABLE OF CONTENTS Page - i - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER I. PRELIMINARY STATEMENT ...........................................................................................1 II. ARGUMENT.........................................................................................................................3 A. UMGR IS ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFFS’ UCL CAUSES OF ACTION.....................................................................................3 1. After Discovery, Plaintiffs Cannot Establish Their Claims Have A Sufficient “Connection To The Protection Of The Public.”..........................3 2. New York Choice-of-Law Provisions Preclude Plaintiffs Ridenhour, McLean And Titus From Asserting UCL Claims..........................................9 B. UMGR IS ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFFS’ CAUSES OF ACTION FOR VIOLATION OF NEW YORK GENERAL BUSINESS LAW section 349 .................................................................................11 C. UMGR IS ENTITLED TO SUMMARY JUDGMENT ON CERTAIN PLAINTIFFS’ CAUSES OF ACTION FOR OPEN BOOK ACCOUNT ..............12 D. PLAINTIFFS’ CLAIMS ARE BARRED BY THE APPLICABLE STATUTORY OR CONTRACTUAL LIMITATIONS PERIODS, IN WHOLE OR IN PART............................................................................................13 1. California Plaintiffs / UCL Claims ..............................................................15 a. Plaintiffs’ Breach of Contract and UCL Claims Accrued When They First Could Have Asserted Their Interpretation to Establish the Existence of the Contractual Right at Issue. ..............15 b. Alternatively, Whitesnake’s Claims Accrued When UMGR Repudiated Them on April 22, 2004. ..............................................16 2. New York Plaintiffs / Section 349 Claims ..................................................19 3. At A Minimum, Each Of Plaintiffs’ Claims Is Barred In Part Based on the Contractual Limitations Provisions in their Contracts...........................19 III. CONCLUSION....................................................................................................................22 Case3:11-cv-01613-SI Document205 Filed05/23/14 Page5 of 32 LA 10795919v1 TABLE OF AUTHORITIES Page(s) CASES - ii - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER Air Transport Ass’n of America v. Lenkin, 711 F. Supp. 25 (D.D.C. 1989)..........................................................................................15, 16 Allman v. UMG Recordings, 530 F. Supp. 2d 602 (S.D.N.Y. 2008) .....................................................................................19 Anunnziato v. eMachines, Inc., 402 F. Supp. 2d 1133 (C.D. Cal. 2005) .....................................................................................8 Aryeh v. Canon Business Solutions, Inc., 185 Cal. App. 4th 1159 (2010) ................................................................................................14 Audio Marketing Servs., S.A.S. v. Monster Cable Products, Inc., 2013 WL 633202 (N.D. Cal. 2013) .........................................................................................10 Beller v. William Penn Life Ins. Co. of New York, 8 A.D.3d 310, 778 N.Y.S.2d 82 (N.Y.A.D. 2 Dept. 2004)......................................................19 Bild v. Konig, 2011 WL 666259 (E.D.N.Y. 2011) .........................................................................................14 Braun v. Chronicle Publishing Co., 52 Cal. App. 4th 1036 (1997) ....................................................................................................6 Briggs v. Eden Council for Hope & Opportunity, 19 Cal. 4th 1106 (1999) .............................................................................................................6 Brown v. Cosby, 433 F. Supp. 1331 (E.D. Pa. 1977)..........................................................................................16 Clinton v. Universal Music Group, Inc., 2011 WL 3501818 (C.D. Cal. 2011) .......................................................................................19 Coastal Abstract Service, Inc. v. First American Title Ins. Co., 173 F.3d 725 (9th Cir. 1999) .....................................................................................................7 Continental Airlines, Inc. v. Mundo Travel Corporation, 412 F. Supp. 2d 1059 (E.D. Cal. 2006) ...................................................................................10 Corazzini v. Litton Loan Servicing LLP, 2010 WL 1132683 (N.D.N.Y. 2010).......................................................................................11 Corsello v. Verizon New York, Inc., 18 N.Y.3d 777, 967 N.E.2d 1177 (N.Y. 2012)........................................................................14 Case3:11-cv-01613-SI Document205 Filed05/23/14 Page6 of 32 LA 10795919v1 TABLE OF AUTHORITIES CONTINUED Page(s) CASES - iii - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER County of San Diego v. Myers, 147 Cal. App. 3d 417 (1983) ...................................................................................................17 Denenberg v. Rosen, 71 A.D.3d 187 (2010)..............................................................................................................11 Dillon v. Board of Pension Comm’rs, 18 Cal. 2d 427 (1941) ..............................................................................................................15 Dillon v. NBCUniversal Media LLC, 2013 WL 3581938 (C.D. Cal. 2013) .........................................................................................5 Dollar Tree Stores Inc. v. Toyama Partners LLC, 875 F. Supp. 2d 1058 (N.D. Cal. 2012).................................................................................4, 9 Dugan v. Lloyds TSB Bank, 2014 WL 1647691 (N.D. Cal. 2014) .......................................................................................11 El Comite Para El Bienestar de Earlimart v. Warmerdam, 539 F.3d 1062 (9th Cir. 2008) ...................................................................................................6 Ely-Cruikshank Co., Inc. v. Bank of Montreal, 81 N.Y.2d 399 (N.Y. 1993) .....................................................................................................14 F.B.T. Productions, LLC v. Aftermath Records, 621 F.3d 958 (9th Cir. 2010) ...........................................................................................2, 9, 16 Fox v. Dehn, 42 Cal. App. 3d 165 (1974) .....................................................................................................17 Global Financial Corp. v. Triarc Corp., 93 N.Y.2d 525, 715 N.E.2d 482 (N.Y. 1999)..........................................................................19 Gold Mining & Water Company v. Swinterton, 23 Cal. 2d 19 (1943) ................................................................................................................17 Gustafson v. BAC Home Loan Servicing, LP, 294 F.R.D. 529 (C.D. Cal. 2013).............................................................................................10 Hambrecht & Quist Venture Partners v. American Medical Intern., Inc., 38 Cal.......................................................................................................................................19 Hynix Semiconductor Inc. v. Rambus Inc., 2007 WL 4062845 (N.D. Cal. 2007) .........................................................................................8 Case3:11-cv-01613-SI Document205 Filed05/23/14 Page7 of 32 LA 10795919v1 TABLE OF AUTHORITIES CONTINUED Page(s) CASES - iv - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER In re Chemtura Corp., 448 B.R. 635 (Bankr. S.D.N.Y. 2011).....................................................................................17 In re ConocoPhillips Co. Service Station Rent Contract Litigation, 2011 WL 1399783 (N.D. Cal. 2011) .....................................................................................4, 9 In re Sony Gaming Networks and Customer Data Security Breach Litigation, 2014 WL 223677 (S.D. Cal. 2014) (valid California choice-of-law provision prohibits application of laws of other states) ..........................................................................................11 Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103 (1988) ......................................................................................................13, 14 Krieger v. Nick Alexander Imports, Inc., 234 Cal. App. 3d 205 (1991) ...................................................................................................14 Kuperman v. Assessment Appeals Bd. No. 1, 137 Cal. App. 4th 918 (2006) ....................................................................................................6 Lazzarevich v. Lazzarevich, 39 Cal. 2d 48 (1952) ................................................................................................................18 Lia v. Saporito, 909 F. Supp. 2d 149 (E.D.N.Y. 2012) .....................................................................................14 Linear Technology Corp. v. Applied Materials, Inc., 152 Cal. App. 4th 115 (2007) ....................................................................................................4 Love v. Fire Ins. Exch., 221 Cal. App. 3d 1136 (1990) .................................................................................................13 Madanat v. First Data Corp., 2011 WL 208062 (N.D. Cal. 2011) .........................................................................................10 Malmsteen v. Universal Music Group, Inc., 2012 WL 2159281 ...................................................................................................................20 Mappa Music Co. v. Universal-Polygram Int’l Pub. Inc., 2001 WL 1868083 (C.D. Cal. Dec. 17, 2001)...................................................................15, 16 Medimatch, Inc. v. Lucent Techs., Inc., 120 F. Supp. 2d 842 (N.D. Cal. 2000).....................................................................................10 Merin v. Precinct Developers LLC, 74 A.D. 3d 688, 902 N.Y.S. 2d 821 (2010).............................................................................11 Case3:11-cv-01613-SI Document205 Filed05/23/14 Page8 of 32 LA 10795919v1 TABLE OF AUTHORITIES CONTINUED Page(s) CASES - v - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER Mezey v. State of California, 161 Cal. App. 3d 1060 (1984) .................................................................................................15 Minidoka Irr. Dist. v. Department of Interior of U.S., 154 F.3d 924 (9th Cir. 1998) .............................................................................................17, 18 Norgart v. Upjohn Co., 21 Cal. 4th 383 (1999) .............................................................................................................14 NSB Technologies, Inc. v. Specialty Direct Marketing, Inc., 2004 WL 1898778 (N.D. Ill. 2004) ...........................................................................................8 Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (N.Y. 1995) .......................................................................................................11 Parker v. Shell Oil Co., 29 Cal. 2d 503 (1946) ..............................................................................................................13 Ridenhour v. UMG Recordings, Inc., 2012 WL 463960 (N.D. Cal. 2012) ...............................................................................1, 10, 12 Rosenbluth International, Inc. v. Superior Court, 101 Cal. App. 4th 1073 (2002) ..................................................................................................4 Sacramento E.D.M., Inc. v. Hynes Aviation Indus., 965 F. Supp. 2d 1141 (E.D. Cal. 2013) .....................................................................................4 Sgaliordich v. Lloyd’s Asset Management, 2012 WL 4327283 (E.D.N.Y. 2012) (Florida choice-of-law provision barred claim under section 349)..............................................................................................................................12 Stalberg v. Western Title Ins. Co., 230 Cal. App. 3d 1223 (1991) (“Since the [attorneys’] knowledge is imputed to plaintiffs as of April of 1979, the statute of limitations appears to have run in February of 1982.”) .....18 Sun Microsystems, Inc. v. Dataram Corp., 1997 WL 50272 (N.D. Cal. 1997) .............................................................................................8 Town of Oyster Bay v. Lizza Industries, Inc., 22 N.Y.3d 1024, 4 N.E.3d .......................................................................................................19 Tsemetzin v. Coast Federal Savings & Loan Assn., 57 Cal. App. 4th 1334 (1997) ..................................................................................................12 Village Nurseries, L.P. v. Greenbaum, 101 Cal. App. 4th 26 (2002) ....................................................................................................13 Case3:11-cv-01613-SI Document205 Filed05/23/14 Page9 of 32 LA 10795919v1 TABLE OF AUTHORITIES CONTINUED Page(s) CASES - vi - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER Wang Laboratories, Inc. v. Mitsubishi Electronics America, Inc., 103 F.3d 1571 (Fed. Cir. 1997) .................................................................................................8 Xin Wei Lin v. Chinese Staff & Workers’ Ass’n, 2012 WL 5457493 (S.D.N.Y. 2012)..........................................................................................8 ZilYen, Inc. v. Rubber Mfrs. Ass’n, 935 F. Supp. 2d 211 (D.D.C. 2013)...........................................................................................8 STATUTES Fed. R. Civ. P. 26(e) ........................................................................................................................5 Cal. Bus. & Prof. Code § 17200 ..................................................................................................................................1, 8 § 17208 ....................................................................................................................................13 Cal. Civ. Code § 1761(d)....................................................................................................................................7 § 2332 ......................................................................................................................................18 § 2501 ....................................................................................................................................5, 6 Cal. Code Civ. Proc § 337(3)....................................................................................................................................13 § 343 ........................................................................................................................................13 New York General Business Law § 349 .................................................................................................................................passim N.Y. Civ. Prac. Law and Rules § 213(2) .......................................................................................14 OTHER AUTHORITIES Norman J. Singer & J.D. Shambie Singer, Statutes and Statutory Construction (7th ed. 2009) § 20:3...............................................................................................................................5 Restatement (Second) of Contracts § 250 cmt...............................................................................18 Case3:11-cv-01613-SI Document205 Filed05/23/14 Page10 of 32 LA 10795919v1 - 1 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER MEMORANDUM OF POINTS AND AUTHORITIES I. PRELIMINARY STATEMENT In 2002, with online piracy still ravaging the music industry, UMGR sought to enlist support from recording artists for legal online music sales by announcing to the music community a new “royalties model” for calculating artists’ royalties for Downloads.2 UMGR viewed Downloads as “equivalent of a physical sale through a new distribution channel” (Ex. 353), which under many artist contracts would be subject to various contractual deductions when calculating artist royalties. UMGR determined it would not to take such contractual royalty deductions for Downloads, even when an artist’s contract allowed it. In October 2002, UMGR’s initiative was widely publicized and the subject of extensive industry discussion. Some recording artist representatives hailed UMGR’s position4; others expressed more ambivalence5; and 18 months later, still others contended (in a letter to UMGR’s President in 2004 signed by 27 prominent artist attorneys) that UMGR had not gone far enough; that its “position that paid downloads are equivalent to sales of CDs through retailers” was incorrect. These artist attorneys asserted there could be “no bona fide legal dispute” that UMGR’s contracts with Download Providers were “licenses,” and claimed this entitled artists to an entirely different formula for calculating Download royalties - a percentage of UMGR’s net receipts from Downloads. Ex. 43. UMGR responded in writing that it respectfully disagreed with the artist 2 Downloads and Download Providers are defined herein as in UMGR’s concurrently filed Motion for Summary Judgment No. 1. 3 Unless otherwise noted, all references to exhibit numbers are to the Goldman Decl. 4 E.g., “Concessions on Contractual Deductions Could Mean More Money for Artists” (HITS, Oct. 17, 2002) [Ex. 36] (“In a move being hailed by artist representatives as a significant step in the right direction…”); “Universal Music Ups Royalties for Song Downloads” (Reuters, Oct. 127, 2002) [Ex. 37] (quoting Jay Cooper, a prominent artist attorney, as championing UMGR’s initiative as “a good faith attempt by the company to respond to certain artists’ complaints to get them to work with the labels in building a real download business”). 5 E.g., “UMG sings new tune online: Modifications designed to get more artists involved” (Variety, Oct. 17, 2002) [Ex. 38] (quoting artist attorney Don Engel as saying “UMG’s initiative is fine as far as it goes,” but that “it’s hard to be really impressed by what they’re doing with such a small part of the market”). Case3:11-cv-01613-SI Document205 Filed05/23/14 Page11 of 32 LA 10795919v1 - 2 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER attorneys’ position based on “our own evaluation of the activity concerned and our application of the language in our artist recording contracts,” asserted its “treatment of digital downloads is proper and in accord with the spirit, intent and language of our contracts,” and urged “discussions on an individual basis” with artists “who have a contractual relationship with us.” Ex. 44. Seven years elapsed. In April 2011, Plaintiffs filed the first of these five actions (consolidated by stipulation), making the same contention, that UMGR has breached eleven recording contracts entered into with eight recording artists by underpaying royalties for Downloads sold through Download Providers (such as Apple’s iTunes store). Plaintiffs supplement their breach of express contract claims with claims for breach of the implied covenant of good faith and fair dealing, “open book account” (for some Plaintiffs), and violation of California’s Unfair Competition Law and New York General Business Law section 349. Plaintiffs claim support from F.B.T. Productions, LLC v. Aftermath Records, 621 F.3d 958 (9th Cir. 2010). But even assuming arguendo for present purposes that F.B.T. established that UMGR’s agreements with Download Providers are “licenses” for purposes of calculating royalties under Plaintiffs’ contracts (instead of just the specific artist contract at issue in that case), it does not resolve how that legal conclusion applies to the differing provisions of Plaintiffs’ various contracts. See, e.g., UMGR’s Summary Judgment Motion No. 1, at 1-3 and et seq. Perhaps for this reason, Plaintiffs pepper their CAC with a series of provocative allegations that radically distort the objective evidence of the events surrounding the inception of the legal Download market. Woefully late to the party, Plaintiffs seek to reinvent history by claiming that an open and knowing dialogue between sophisticated professionals about legal issues and the terms of commercial music industry contracts (e.g., the 2004 letters between artist lawyers and UMGR’s then-President) was somehow a “consumer matter” involving misrepresentations and concealments to the general public. In belatedly concocting their own narrative, Plaintiffs make many allegations that contradict not only the objective evidence, but one another. For example, Plaintiffs simultaneously argue UMGR both concealed and widely disseminated its royalty policy; and that UMGR revised its contracts with Download Providers to mislead recording artists, then refused to let those artists see the very contracts supposedly drafted to mislead them. Case3:11-cv-01613-SI Document205 Filed05/23/14 Page12 of 32 LA 10795919v1 - 3 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER The Court need not resolve any of these issues on this motion, which is addressed only to several threshold issues regarding Plaintiffs’ claims, as described more fully in the Notice of Motion. Some of these issues were previously addressed in UMGR’s summary judgment motion filed in March 2012. Docket 66. Plaintiffs’ opposition to that motion largely argued it was “grossly premature” and should be deferred until they conducted further discovery. Docket 74 at 6-7. The Court agreed, inviting UMGR to revisit various grounds after more discovery and after the California Supreme Court ruled on a statute of limitations issue. Docket 87 at 4-5. All of this has occurred. The California Supreme Court has clarified when a claim accrues under the UCL’s statute of limitations. Plaintiffs have had more than two years to take the discovery they said they needed. They have taken ten depositions of past and present UMGR executives and employees; propounded 77 document requests and 18 interrogatories; received over 665,000 pages of documents and over 200,000 electronic records produced by UMGR; and filed ten discovery motions regarding many of their remarkably broad discovery requests (motions which have been mostly, though not entirely, unsuccessful). After all of this, the relevant record is materially unchanged. Plaintiffs still cannot establish that their commercial contract claims concern the protection of the public or consumers generally; cannot identify any “contrary” agreements by the parties to treat any contractual relationship as an “open book account”; cannot assert claims under one state’s laws when their contracts provide that another state’s laws govern their claims; and cannot dispute they could have asserted the contractual interpretation underlying all of their claims a decade ago (and one Plaintiff, Whitesnake, actually did so). No reason exists to further defer dismissal of these meritless claims. And even claims that are not entirely barred should be limited in accordance with the various contractual limitations provisions in the parties’ contracts. II. ARGUMENT A. UMGR IS ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFFS’ UCL CAUSES OF ACTION. 1. After Discovery, Plaintiffs Cannot Establish Their Claims Have A Sufficient “Connection To The Protection Of The Public.” This Court has previously recognized certain important limitations on the application of the UCL to contract (and other) claims, consistent with the principle that “a UCL action based on a Case3:11-cv-01613-SI Document205 Filed05/23/14 Page13 of 32 LA 10795919v1 - 4 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER contract is not appropriate where the public in general is not harmed by the defendant’s alleged unlawful practices[.]” Rosenbluth International, Inc. v. Superior Court, 101 Cal. App. 4th 1073, 1077-78 (2002). In addressing this issue at the pleading stage, this Court agreed with Judge White’s analysis in In Re Webkinz Antitrust Litigation, 695 F. Supp. 2d 987 (N.D. Cal. 2010), where he stated, ‘[T]he central issue presented under California law is whether the public at large, or consumers generally, are affected by the alleged unlawful business practice of defendants … Judge White dismissed the plaintiffs’ claims with leave to amend because the complaint did ‘not allege facts sufficient to demonstrate a connection to the protection of the public.’” Docket No. 49 at 7 (emphasis added), quoting Webkinz, 695 F. Supp. 2d at 998-99. Judge White eventually dismissed the claims in Webkinz with prejudice, concluding that allegations that consumers and the general public “spent time and money repeatedly traveling to and visiting Plaintiffs’ stores only to be unable to purchase [the Webkinz dolls],” that “their choices were restricted to [defendant’s] products” and that the dolls contained “dangerous and unlawful levels of lead” were “insufficient to convert what fundamentally remains a dispute, contractual in essence, between a distributor and retailers, into a consumer matter within the meaning of” the UCL. Ex. 40 at 10. This Court later dismissed a UCL claim in Dollar Tree Stores Inc. v. Toyama Partners LLC, 875 F. Supp. 2d 1058 (N.D. Cal. 2012), that was “based on a breach of a contract that does not implicate the public in general or individual consumers.” Id. at 1083. The Court quoted with approval In re ConocoPhillips Co. Service Station Rent Contract Litigation, 2011 WL 1399783, *3 (N.D. Cal. 2011), for the proposition that a UCL claim is not appropriate where “Plaintiffs’ relationship with defendant is defined by their contractual arrangement” and “[t]he case does not involve the general public or individual consumers who are parties to a contract. Rather, it is a dispute between commercial parties over their economic relationship.” 875 F. Supp. 2d at 1083; see also, e.g., Linear Technology Corp. v. Applied Materials, Inc., 152 Cal. App. 4th 115, 135 (2007) (UCL claim properly dismissed because it was “based on contracts not involving either the public in general or individual consumers who are parties to the contract”); Sacramento E.D.M., Inc. v. Hynes Aviation Indus., 965 F. Supp. 2d 1141, 1155 (E.D. Cal. 2013) (dismissing UCL claim where Case3:11-cv-01613-SI Document205 Filed05/23/14 Page14 of 32 LA 10795919v1 - 5 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER “[n]othing in the Complaint suggests that individual consumers or the public at large were harmed as a result of Defendants’ wrongdoing.”); Dillon v. NBCUniversal Media LLC, 2013 WL 3581938, *7 (C.D. Cal. 2013) (“dismissal of UCL actions is appropriate when the plaintiff is neither a competitor nor a consumer.”). So here, the parties undertook discovery to determine whether these actions were a “consumer matter.” In November 2011, UMGR propounded an interrogatory to determine the basis, if any, of Plaintiffs’ contention that UMGR’s alleged misconduct bore a “connection to the protection of the public,” or “consumers generally.” Plaintiffs’ responses contained what might charitably be called, in plain English, a whole bunch of nothing. Ex. 21 at 5-9. Nevertheless, this Court accepted Plaintiffs’ pleas for more discovery to support their allegations, inviting UMGR to renew its motion “after a complete record has been developed.” Docket 87 at 5. In December 2012, after Plaintiffs filed the CAC, several newly-added Plaintiffs responded to the same interrogatory on this issue with a virtually identical response, which added only a single additional public statement as innocuous and irrelevant as the ones Plaintiffs previously identified. Ex. 22. Since then, Plaintiffs have not amended their interrogatory responses on this issue, despite their obligation to do so “in a timely manner.” Fed. R. Civ. P. 26(e). After two years of discovery, the record remains devoid of evidence that the industry discussion about Download royalties in the early 2000s had anything to do with the general public, let alone even reached consumers or would have been comprehensible to them. Rather, the entirety of Plaintiffs’ evidence that their UCL claim is a “consumer matter,” i.e., bears a sufficient “connection to the protection of the public” or “consumers generally,” is the following: First, Plaintiffs cite the preamble6 of the Senate Bill which enacted California Civil Code section 2501. However, the legislation that was enacted - codified in Section 2501 - authorizes recording artists to conduct audits of record companies’ books and records, within certain 6 The “preamble” of a bill is the “prefatory explanation or statement .. which purports to state the reason or occasion for making a law or to explain in general terms the policy of the enactment.” 1A Norman J. Singer & J.D. Shambie Singer, Statutes and Statutory Construction (7th ed. 2009) § 20:3, pp. 122-123. This is contrasted with the “enacting clause,” which is “the part of the act’s body stating precise action taken by the legislature.” Id. § 20:6, at 130-31. Case3:11-cv-01613-SI Document205 Filed05/23/14 Page15 of 32 LA 10795919v1 - 6 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER limitations, even if their contract does not provide for such an audit right. It is irrelevant to Plaintiffs’ claims here: all Plaintiffs’ contracts already contained audit rights before section 2501 was enacted; section 2501 does not define the scope of any audit or require a record company to permit artists to inspect any particular item; and section 2501 does not regulate or affect the calculation of royalties under recording artists’ contracts or interpose any legislative gloss on the interpretation of such contracts. Plaintiffs do not allege UMGR violated section 2501. The preamble to a statute, such as the one on which Plaintiffs rely, is “not an operative part of the statute” and “does not ‘prescribe rights and duties and otherwise declare the legislative will’[.]” El Comite Para El Bienestar de Earlimart v. Warmerdam, 539 F.3d 1062, 1070 (9th Cir. 2008), quoting Wyoming Outdoor Council v. United States Forest Service, 165 F.3d 43, 53 (D.C. Cir. 1999). Indeed, even with respect to the statute to which it relates (here, Civil Code section 2501 concerning audits), it “should not be considered” at all unless the statute itself is ambiguous. Earlimart, 539 F.3d at 1070. A preamble to a statute must be read in accommodation with “the singular, clearly defined … activities set forth in” the statute to which it relates, Braun v. Chronicle Publishing Co., 52 Cal. App. 4th 1036, 1048 (1997), and the “particular directives” of that statute, Briggs v. Eden Council for Hope & Opportunity, 19 Cal. 4th 1106, 1118 (1999). The “sweeping language” of a preamble cannot even modify “the actual legislation enacted.” Kuperman v. Assessment Appeals Bd. No. 1, 137 Cal. App. 4th 918, 928 (2006). So a preamble certainly cannot be used, as Plaintiffs attempt here, to expand the coverage of an unrelated statute (here, the UCL) to embrace commercial contracts in a single industry. If sweeping recitals in the preamble of section 2501 were sufficient to find an adequate “connection to the protection of the public” in this case, then every lawsuit brought by a recording artist - whether involving Section 2501 or not - would henceforth justify a companion UCL claim. This is not, and cannot be, the law. Second, Plaintiffs make the claim that “[m]embers of the public include Defendant’s numerous underpaid and misled artists and other royalty participants.” Ex. 22 at 16. However, every plaintiff asserting a UCL claim is, in some way, a “member of the public.” If that alone was sufficient to establish a connection to consumers or the “protection of the general public,” then every case would meet that criteria and this threshold requirement would be meaningless. Plaintiffs Case3:11-cv-01613-SI Document205 Filed05/23/14 Page16 of 32 LA 10795919v1 - 7 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER may be consumers when they shop for groceries or visit a museum, but they are clearly not for purposes of enforcing their commercial contracts with UMGR. See generally Cal. Civ. Code § 1761(d) (in other statutory scheme, defining “consumer” as “an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.”). Third, Plaintiffs assert UMGR made various allegedly inaccurate public statements. As a threshold matter, there is no evidence that a single consumer heard any such statements, let alone understood them, was harmed by them, or needs “protection” from them. Indeed, even Plaintiffs themselves - well-known recording artists and music industry veterans all - admitted at their depositions that they never heard, or were misled by, any public statements by UMGR.7 And in many cases, Plaintiffs cannot even point to any specific statements. For example, Plaintiffs allude to “a number of public statements [by UMGR] regarding its relationship with third parties digital download providers [sic] such as Apple,” but have never identified any such specific statements. Ex. 22 at 18. The only specific statements Plaintiffs cite have nothing to do with consumers. Plaintiffs cite a 2007 speech to lawyers and law students at an industry event in which UMGR’s then- President Zach Horowitz commented that UMGR “pioneered what we believe to be the industry’s most artist friendly contractual provisions for sharing digital income - eliminating free goods, packaging, new media and other deductions.” Ex. 22 at 17; Ex. 45 at 3. This statement does not concern or address consumers, and does not show that Download royalties have anything to do with the public at large. Even if it did, there is no evidence the general public heard these comments or relied on them (for what exactly, Plaintiffs have never explained).8 Even more remote is Plaintiffs’ 7 Coverdale Depo. [Ex. 16] 327:17-328:9; Mason Depo. [Ex. 17] 186:7-23; Ridenhour Depo. [Ex. 19] 171:25-173:1; Donaldson Depo. [Ex. 12] 145:10-14; Titus Depo. [Ex. 20] 161:12-162:6; McLean Depo. [Ex. 18] 102:12-19; Tyson Depo. [Ex. 14] 55:21-56:3. 8 The statement could not be actionable even if it concerned, was directed to, and was heard by consumers. It is undisputed that UMGR did eliminate the stated deductions (UMGR did so in the new contractual provisions they negotiated in new contracts starting in 2002, and refrained from applying such deductions to existing contracts); there is no evidence that UMGR’s were not the “industry’s most artist friendly contractual provisions”; and anyway, Horowitz stated only that UMGR “believe[d] [them] to be,” not that they were. Horowitz’s comment is a classic “statement[] of opinion,” not “a specific and measurable claim, capable of being proved false or of being Case3:11-cv-01613-SI Document205 Filed05/23/14 Page17 of 32 LA 10795919v1 - 8 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER citation to testimony by UMGR’s then-General Counsel Michael Ostroff to the U.S. House of Representatives Subcommittee on Commerce, Trade, and Consumer Protection in 2006. Ex. 22 at 17-18. Ostroff’s testimony concerned compulsory licenses obtained by satellite radio companies (e.g., SiriusXM) pursuant to Section 114 of the Copyright Act - not Downloads, royalties, or even artists (other than a passing remark that “in the case of iTunes, Apple compensates artists, creators and copyright owners through a distribution fee”), let alone consumers or the general public. The remainder of Plaintiffs’ interrogatory responses on this issue assert UMGR disputed Plaintiffs’ legal position that UMGR should “treat digital downloads as a sale, rather than a license.” Ex. 22 at 15-19. The only specific evidence they cite is the 2004 exchange of letters between artists’ lawyers and UMGR’s then-President Horowitz and a private letter from UMGR to the James Trust’s auditor in 2010 explaining that UMGR treated sales of Downloads the same as sales of physical product for royalty calculation purposes. Neither of these documents concerned or addressed consumers, nor would consumers have had any need to understand (or legitimate interest in) the esoteric legal issue being discussed. The artist attorneys’ 2004 letter to Horowitz itself characterized the parties’ disagreement as a “legal dispute.” 9 Ex. 43 at 2. And the F.B.T. decision, too, did not rely on any “secret” or non-public facts or documents to support the proposition that reasonably interpreted as a statement of objective fact.” Coastal Abstract Service, Inc. v. First American Title Ins. Co., 173 F.3d 725, 731 (9th Cir. 1999). “Generalized, vague, and unspecified assertions constitute ‘mere puffery’ upon which a reasonable consumer could not rely, and hence are not actionable” under Section 17200. Anunnziato v. eMachines, Inc., 402 F. Supp. 2d 1133, 1139 (C.D. Cal. 2005), quoting Glen Holly Entertainment, Inc. v. Tektronix Inc., 343 F.3d 1000, 1005 (9th Cir. 2003). 9 Even if “consumers in general” had access to these letters, asserting a legal conclusion is not actionable. Xin Wei Lin v. Chinese Staff & Workers’ Ass’n, 2012 WL 5457493, *7 (S.D.N.Y. 2012) (no fraudulent concealment where alleged “deceit concerned a legal conclusion and not a factual element of Plaintiffs’ cause of action.”). Asserting that a contract is not a “license” (which UMGR’s letters never even state) is a “legal conclusion,” not a statement of fact. Wang Laboratories, Inc. v. Mitsubishi Electronics America, Inc., 103 F.3d 1571, 1580 (Fed. Cir. 1997); see also ZilYen, Inc. v. Rubber Mfrs. Ass’n, 935 F. Supp. 2d 211, 221-22 (D.D.C. 2013). There is a distinction between “[t]he legal conclusion” that a license exists and “factual allegations that demonstrate the existence of a license.” Sun Microsystems, Inc. v. Dataram Corp., 1997 WL 50272, *4 (N.D. Cal. 1997); accord, Hynix Semiconductor Inc. v. Rambus Inc., 2007 WL 4062845, *2 (N.D. Cal. 2007); see also NSB Technologies, Inc. v. Specialty Direct Marketing, Inc., 2004 WL 1898778, *1 (N.D. Ill. 2004) (whether “(t)he Agreement ... was a license agreement” was a “legal conclusion[],” not a “statement[] of fact”). Case3:11-cv-01613-SI Document205 Filed05/23/14 Page18 of 32 LA 10795919v1 - 9 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER UMGR’s contracts with Downloads Providers legally satisfied the definition of “licenses,” as used in the specific recording agreement at issue in that lawsuit - the court cited only the dictionary and Copyright Act meanings of the term “license,” and the court’s own conclusion that UMGR “permitted iTunes, cellular phone carriers, and other third parties to use its sound recordings to produce and sell” Downloads. 621 F.3d at 964. After discovery, it could not be clearer that this case involves parties whose “relationship … is defined by their contractual arrangement,” ConocoPhillips, 2011 WL 1399783, at *3, and “is a dispute between commercial parties over their economic relationship (id.) which “does not implicate the public in general or individual consumers.” Dollar Tree Stores, 875 F. Supp. 2d at 1083. Accordingly, Plaintiffs’ UCL claims should be dismissed. 2. New York Choice-of-Law Provisions Preclude Plaintiffs Ridenhour, McLean And Titus From Asserting UCL Claims. In any event, Plaintiffs Ridenhour, McLean, and Titus cannot assert claims under the UCL because they agreed their relationships with UMGR would be governed by New York law. Ridenhour is suing on two contracts he entered into with UMGR’s predecessor-in-interest Def Jam Recordings, Inc. as of September 15, 1986 (the “1986 Contract”), and April 15, 1992 (the “1992 Contract”). Exs. 9-10. McLean and Titus are suing on a contract entered into as of July 5, 1991 with UMGR under its former name PolyGram Records, Inc. (the “1991 Contract”). Ex. 11. Paragraph 21.07 of Ridenhour’s 1986 Contract (Ex. 9) provides: This agreement has been entered into in the State of New York, and the validity, interpretation and legal effect of this agreement shall be governed by the laws of the State of New York applicable to contracts entered into and performed entirely within the State of New York. Paragraph 19.08 of Ridenhour’s 1992 Contract (Ex. 10) provides: THIS AGREEMENT HAS BEEN ENTERED INTO IN THE STATE OF NEW YORK, AND THE VALIDITY, INTERPRETATION AND LEGAL EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES UNDER NEW YORK LAW). Paragraph 14.07 of McLean’s and Titus’s 1991 Contract (Ex. 11) provides: Case3:11-cv-01613-SI Document205 Filed05/23/14 Page19 of 32 LA 10795919v1 - 10 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER This agreement is entered into in the State of New York and shall be construed in accordance with the laws of New York applicable to contracts entered into and to be wholly performed therein. These provisions are valid and enforceable. This Court previously held there is a “substantial relationship” between New York and Ridenhour’s 1986 and 1992 Contracts. Ridenhour v. UMG Recordings, Inc., 2012 WL 463960, *3 (N.D. Cal. 2012). For similar reasons, a “substantial relationship” exists between New York and McLean’s and Titus’s 1991 Contract.10 A “valid choice-of-law clause, which provides that a specified body of law ‘governs’ the ‘agreement’ between the parties, encompasses all causes of action arising from or related to that agreement, regardless how they are characterized, including tortious breaches of duties emanating from the agreement or the legal relationships it creates.” Audio Marketing Servs., S.A.S. v. Monster Cable Products, Inc., 2013 WL 633202, *2 (N.D. Cal. 2013), quoting Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459, 470 (1992).11 Specifically, “[a] valid choice-of-law provision selecting another state’s law is grounds to dismiss a claim under California’s UCL.” Continental Airlines, Inc. v. Mundo Travel Corporation, 412 F. Supp. 2d 1059, 1070 (E.D. Cal. 2006); see also, e.g., Medimatch, Inc. v. Lucent Techs., Inc., 120 F. Supp. 2d 842, 862 (N.D. Cal. 2000) (agreement that “construction, interpretation and performance of this Agreement shall be governed by the local laws of the State of New Jersey” required dismissal of California UCL claims); Gustafson v. BAC Home Loan Servicing, LP, 294 F.R.D. 529, 537 (C.D. Cal. 2013) (non-California “choice-of-law provisions … would bar a claim under the UCL”). Plaintiffs cannot meet their burden to show that enforcing these Plaintiffs’ choice-of-law clauses to dismiss their UCL claims would “violate a fundamental policy of California.” See Madanat v. First Data Corp., 2011 WL 208062, *4 (N.D. 10 UMGR (under its former name PolyGram Records, Inc.), Titus, and McLean were all domiciled in New York at the time the contract was entered into in 1991 (Titus Depo. [Ex. 20] at 15:3-17; McLean Depo. [Ex. 18] at 11:1-15; 1991 Contract [Ex. 11] at 1); and the contract specifies New York as the place where the parties are to provide notices and where Titus and McLean were to receive “all royalties, royalty statements and payments and any and all notices.” 1991 Contract [Ex. 11] ¶ 14.05. 11 The outcome would be the same under New York law, because Ridenhour’s, McLean’s and Titus’ UCL claims are not “extra-contractual,” i.e., they derive from the parties’ contractual relationship and would not exist but for their contracts. Case3:11-cv-01613-SI Document205 Filed05/23/14 Page20 of 32 LA 10795919v1 - 11 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER Cal. 2011) (“plaintiff has not demonstrated that forcing him to proceed in the New York forum without [an] unfair practices claim would contravene a strong public policy of California”); Dugan v. Lloyds TSB Bank, 2014 WL 1647691, *5 (N.D. Cal. 2014) (“This order agrees with other decisions in this district which have upheld choice-of-law provisions even when doing so restricts UCL claims.”). B. UMGR IS ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFFS’ CAUSES OF ACTION FOR VIOLATION OF NEW YORK GENERAL BUSINESS LAW SECTION 349 Along with their UCL claims, Plaintiffs assert (presumably identical) claims under New York’s unfair competition law, General Business Law section 349. These claims, too, fail as a matter of law for similar reasons. First, a section 349 plaintiff “must demonstrate that the acts or practices have a broader impact on consumers at large. Private contract disputes, unique to the parties, for example, would not fall within the ambit of the statute.” Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 25 (N.Y. 1995); see Merin v. Precinct Developers LLC, 74 A.D. 3d 688, 902 N.Y.S. 2d 821 (2010) (section 349 claim dismissed “since it stemmed from a private contractual dispute between the parties without ramifications for the public at large”); Denenberg v. Rosen, 71 A.D.3d 187, 195 (2010) (dismissing section 349 claim in what was “essentially a private dispute among the parties … rather than conduct affecting the consuming public at large”); Corazzini v. Litton Loan Servicing LLP, 2010 WL 1132683, *8 (N.D.N.Y. 2010). As set forth in Section (II)(A)(1) supra, the acts about which Plaintiffs are complaining do not have a broad impact (or any impact) on “consumers at large.” Second, for the same reasons plaintiffs Ridenhour, McLean and Titus cannot assert claims under the California UCL, plaintiffs the James Trust, Mason, Tyson and Donaldson - whose contracts contain California choice-of-law provisions12 - cannot sue under New York law. In re 12 James 1977 Artist Contract [Ex. 2] ¶ 26 (“This Agreement shall be deemed to have been made in the State of California and its validity, construction and effect shall be governed by the laws of the State of California applicable to agreements wholly to be performed therein...”); James 1979 Contract [Ex. 3] ¶ (“The validity, construction and effect of this Agreement and any and all amendments thereto and modifications thereof, shall be governed by the laws of the State of Case3:11-cv-01613-SI Document205 Filed05/23/14 Page21 of 32 LA 10795919v1 - 12 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER Sony Gaming Networks and Customer Data Security Breach Litigation, 2014 WL 223677, *22-*24 (S.D. Cal. 2014) (valid California choice-of-law provision prohibits application of laws of other states); Sgaliordich v. Lloyd’s Asset Management, 2012 WL 4327283, *5 (E.D.N.Y. 2012) (Florida choice-of-law provision barred claim under section 349). C. UMGR IS ENTITLED TO SUMMARY JUDGMENT ON CERTAIN PLAINTIFFS’ CAUSES OF ACTION FOR OPEN BOOK ACCOUNT This Court previously denied without prejudice UMGR’s summary judgment motion on certain Plaintiffs’13 Fourth Cause of Action for “open book accounts” under California law. In California, express contracts governing how parties will compensate one another preclude open book accounts “in the absence of a contrary agreement between the parties.” Tsemetzin v. Coast Federal Savings & Loan Assn., 57 Cal. App. 4th 1334, 1343 (1997) (emphasis added). In its prior Order, the Court concluded Plaintiffs were entitled to discovery on whether such contrary agreements existed, noting that “even where there are express contracts stating exact amounts due, those agreements may nonetheless be treated as items under an open book account ‘by mutual understanding of the parties,’” and “[a]fter adequate discovery, defendant may renew its motion regarding the mutual understanding of the parties with respect to creating open book accounts.” Docket 87 at 6. California”); Mason 1969 Contract [Ex. 5] ¶ 17 (“This Agreement ... shall be deemed to have been made in the State of California. Its validity, construction, performance, breach and operation shall be governed by the laws of the State of California”); Tyson 1987 Contract [Ex. 7] ¶ 21 (“The validity, construction and effect of this Agreement and any and all amendments thereto and modifications thereof, shall be governed by the laws of the State of California applicable to contracts made and to be performed in California”); Tyson 1993 Contract [Ex. 8] ¶ 16.08 (“This agreement has been entered into in the State of California and the validity, interpretation and legal effect of this agreement shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely within such State”); Donaldson 1973 Contract [Ex. 1] ¶ 23 (“This contract shall be deemed to have been made in the State of California and its validity, construction and effect shall be governed by the laws of the State of California applicable to agreements wholly to be performed therein”). 13 Ridenhour’s “open book account” claim was dismissed by this Court based on his New York choice of law provisions. Ridenhour v. UMG Recordings, Inc., 2012 WL 463960, *4 (N.D. Cal. 2012). McLean and Titus also do not have open book account claims for the same reason. See Section II(A)(2) supra; CAC [Docket 130] ¶ 131 (acknowledging claim is not applicable to all Plaintiffs). Case3:11-cv-01613-SI Document205 Filed05/23/14 Page22 of 32 LA 10795919v1 - 13 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER In discovery, Plaintiffs have failed to identify any such mutual understandings. UMGR propounded an interrogatory asking Plaintiffs to identify all “written or oral communication between [them] or anyone acting on [their] behalf, on the one part, and UMGR or its predecessors- in-interest or anyone acting on its or their behalf, on the other part, in which the parties specifically agreed to treat their contractual relationship as an open book account.” Ex. 31 at 14. Plaintiffs did not identify any such communications, citing only the royalty statements UMGR rendered pursuant to the parties’ express contracts. Id. at 14-15. However, these royalty statements were rendered pursuant to the parties’ contracts; they cannot simultaneously evidence an agreement “contrary” to those contracts. Ex. 31 at 9, 14. Further, an open book account must consist of “reciprocal demands.” Parker v. Shell Oil Co., 29 Cal. 2d 503, 507 (1946). As Plaintiffs are not rendering ongoing services to UMGR, UMGR’s unilateral (not reciprocal) provision of royalty statements to Plaintiffs - which reflect ongoing contractual royalty payments in consideration of Plaintiffs’ original delivery of recordings many years ago - would not be evidence of a reciprocal exchange of services and, therefore, an “open book account.” Accordingly, all remaining claims for “open book account” should be dismissed. D. PLAINTIFFS’ CLAIMS ARE BARRED BY THE APPLICABLE STATUTORY OR CONTRACTUAL LIMITATIONS PERIODS, IN WHOLE OR IN PART “Where the operative facts are undisputed, the question of the application of the statute of limitations is a matter of law and summary judgment is proper where the facts show the action is time barred.” Love v. Fire Ins. Exch., 221 Cal. App. 3d 1136, 1142-43 (1990); see also Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1112 (1988); Village Nurseries, L.P. v. Greenbaum, 101 Cal. App. 4th 26, 40 (2002) (“when the material facts are undisputed, the trial court can resolve the matter as a question of law in conformity with summary judgment principles”) (internal brackets, quotations and citations omitted). All of Plaintiffs’ California-based claims are subject to four-year statutes of limitations. Cal. Code Civ. Proc. § 337(3) (“Within four years. 1. An action upon any contract, obligation or liability founded upon an instrument in writing...2. An action to recover (1) upon a book account whether consisting of one or more entries...”); Cal Code Civ. Proc. § 343 (“An action Case3:11-cv-01613-SI Document205 Filed05/23/14 Page23 of 32 LA 10795919v1 - 14 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER for relief not hereinbefore provided for must be commenced within four years after the cause of action shall have accrued.”); Cal. Bus. & Prof. Code § 17208. In April 2012, this Court declined to grant summary judgment to UMGR on Plaintiffs’ UCL claim on the basis of the statute of limitations “at that time,” noting that the California Supreme Court was reviewing a case considering the accrual of UCL claims, Aryeh v. Canon Business Solutions, Inc., 185 Cal. App. 4th 1159 (2010). Docket 87 at 4. The court decided Aryeh in 2013. 55 Cal. 4th 1185. It concluded the discovery rule could operate to toll the UCL statute of limitations (though tolling was not supported based on the facts of that case, or here), but more importantly, the court held that “the UCL is governed by common law accrual rules to the same extent as any other statute. That a cause of action is labeled a UCL claim is not dispositive; instead, ‘the nature of the right sued upon’ … and the circumstances attending its invocation control the point of accrual. The common law last element accrual rule is the default … while exceptions to that rule apply precisely to the extent the preconditions for their application are met, as would be true under any other statute.” Aryeh, 55 Cal. 4th at 1196-97. Under the common law and California law, “[i]n ordinary tort and contract actions, the statute of limitations begins to run upon the occurrence of the last element necessary to the cause of action.” Krieger v. Nick Alexander Imports, Inc., 234 Cal. App. 3d 205, 221 (1991). Further, a claim accrues, at the latest, when a plaintiff “discover[ed], or ha[d] reason to discover, the cause of action[.]” Norgart v. Upjohn Co., 21 Cal. 4th 383, 397 (1999). “A plaintiff is held to her actual knowledge as well as knowledge that could reasonably be discovered through investigation of sources open to her.... [T]he plaintiff must go find the facts; she cannot wait for the facts to find her.” Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1109-11 (1988). New York law applies to Ridenhour, McLean’s and Titus’s claims based on their choice-of- law provisions and to all Plaintiffs’ claims under New York General Business Law section 349. Under New York law, the statute of limitations for breach of contract is six years. N.Y. Civ. Prac. Law and Rules § 213(2). The same limitations period applies to Ridenhour’s, McLean’s, and Titus’ declaratory relief claims. Lia v. Saporito, 909 F. Supp. 2d 149, 164 (E.D.N.Y. 2012). The “delayed discovery” doctrine does not apply under New York law. Ely-Cruikshank Co., Inc. v. Bank of Case3:11-cv-01613-SI Document205 Filed05/23/14 Page24 of 32 LA 10795919v1 - 15 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER Montreal, 81 N.Y.2d 399, 404 (N.Y. 1993); Corsello v. Verizon New York, Inc., 18 N.Y.3d 777, 789-90, 967 N.E.2d 1177 (N.Y. 2012). Nor does fraudulent concealment toll the statute of limitations. Bild v. Konig, 2011 WL 666259, *4 (E.D.N.Y. 2011). Here, Plaintiffs’ claims should be dismissed in their entirety. At a minimum, they should be limited to causes of action on royalty statements rendered within the various contractual limitations periods set forth in Plaintiffs’ contracts, which range from one to three years. 1. California Plaintiffs / UCL Claims a. Plaintiffs’ Breach of Contract and UCL Claims Accrued When They First Could Have Asserted Their Interpretation to Establish the Existence of the Contractual Right at Issue. Plaintiffs’ claims seek to challenge UMGR’s interpretation of the parties’ contracts, to establish a right to receive 50% of UMGR’s net receipts from Downloads. Under California law, “[a]n action to determine the existence of [a] right … necessarily precedes and is distinct from an action to recover installments which have fallen due after the [right] has been granted…. [T]he statute therefore begins to run at the time when the plaintiff first had the power to make such demand [to establish the right].” Dillon v. Board of Pension Comm’rs, 18 Cal. 2d 427, 430 (1941); see Mezey v. State of California, 161 Cal. App. 3d 1060, 1064 (1984) (concept of continuing breach “has no application where the plaintiff is seeking to establish his right to receive the payments”). Consistent with this principle, where a breach allegedly results from a dispute over “contract interpretation, as opposed to situations devoid of any interpretive questions such as nonpayment of installments,” a claim accrues “on the date on which plaintiff becomes or should become aware of the parties’ differing interpretations.” Air Transport Ass’n of America v. Lenkin, 711 F. Supp. 25, 27-28 (D.D.C. 1989). These principles apply to royalty disputes under California law where, as here, the plaintiffs could have asserted their interpretation of the contracts many years before they filed suit. In Mappa Music Co. v. Universal-Polygram Int’l Pub. Inc., 2001 WL 1868083 (C.D. Cal. Dec. 17, 2001), the court dismissed a breach of contract action brought by a songwriter’s heirs on statute of limitations grounds. The heirs claimed entitlement to certain music royalties under their interpretation of a 1956 contract, but did not sue until 2000. The court ruled that, as a matter of law, “[a]ny breach of this contract occurred when [defendant’s predecessor] first failed to send Case3:11-cv-01613-SI Document205 Filed05/23/14 Page25 of 32 LA 10795919v1 - 16 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER the royalty payments under the contract…. The fact that the [contract allegedly] gave rise to an ongoing obligation to pay royalty payments to [the songwriter and his heirs] does not change this conclusion.” Id. at *8. Similarly, in Brown v. Cosby, 433 F. Supp. 1331 (E.D. Pa. 1977), also decided under California law, the plaintiff waited five years before suing for breach of a contract for failure to pay a “fair share” of the profits from exploitation of certain cartoon characters. The court found the claim barred by the statute of limitations as a matter of law because “the first failure of defendants to pay plaintiff a ‘fair share’ of the profits from any commercial exploitation of the Characters would give rise to the only cause of action for breach of the contract to pay defendant a ‘fair share,’ and would, therefore, start the running of the [applicable two-year] statute of limitations for any claim to receive a ‘fair share’ of the profits,” including future payments. Id. at 1342. Here, the 2004 letter from artists’ lawyers to UMGR amply demonstrates that Plaintiffs could have asserted the theory they advance in this case - that UMGR’s relationships with Download Providers were “licenses,” and that UMGR was obligated to pay Plaintiffs 50% of its net receipts from exploitation of its recordings in the form of Downloads - at least seven years before filing these suits. Plaintiffs obviously possessed their own contracts, and do not contend UMGR concealed whether it “permitted iTunes, cellular phone carriers, and other third parties to use its sound recordings to produce and sell” Downloads, F.B.T., 621 F.3d at 964. Plainly, Plaintiffs became, or should have become, “aware of the parties’ differing interpretations” of their contractual royalty provisions more than four years prior to the filing of this action. Air Transport Ass’n of America, 711 F. Supp. at 27-28. Accordingly, all of Plaintiffs’ claims are time-barred. Further, all of the James Trust’s, Mason’s, Tyson’s, and Donaldson’s claims should, at a minimum, be limited pursuant to their contractual limitations provisions of their contracts, as described below. b. Alternatively, Whitesnake’s Claims Accrued When UMGR Repudiated Them on April 22, 2004. Even if not all of Plaintiffs’ claims are wholly time-barred for the foregoing reason, certainly plaintiff Whitesnake’s claim is. Even if Plaintiffs characterize their contracts as akin to installment Case3:11-cv-01613-SI Document205 Filed05/23/14 Page26 of 32 LA 10795919v1 - 17 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER contracts creating continuing obligations, and the Court agrees, “[a] contract that creates continuing obligations ‘is capable of … a single total breach by repudiation’” which commences the statute of limitations to run on all claims for both past and future compensation. Minidoka Irr. Dist. v. Department of Interior of U.S., 154 F.3d 924, 926-27 (9th Cir. 1998) (emphasis added). In such cases, “the statute runs from the date … entitlement is rejected, not upon failure to make a future periodic reimbursement[.]” County of San Diego v. Myers, 147 Cal. App. 3d 417, 422 (1983); see Fox v. Dehn, 42 Cal. App. 3d 165, 172 (1974) (where defendant repudiated its alleged obligation to pay ongoing commissions under a written contract, statute of limitations accrued on all claims, for both past and future payments; rejecting plaintiff’s contention that, because “continuous performance was required,” agreement was “severable and as such the statute of limitations only began to run at the time of breach as to each obligation”); see also Gold Mining & Water Company v. Swinterton, 23 Cal. 2d 19, 30 (1943) (“Where the acts to be performed by the promisor are connected, and the thing to be accomplished by the contract is an entirety, the breach may be total where there is a partial breach coupled with repudiation”); In re Chemtura Corp., 448 B.R. 635, 660-64 (Bankr. S.D.N.Y. 2011) (surveying California law and concluding that even if “the timing of the monetary obligations under the [contract] made the contract an ‘installment contract’ as that expression is used in California law, an unequivocal repudiation could take the situation out of the general rule that, for statute of limitations purposes, a party may sit back and wait for each required payment as such payments come due in the future”). Here, as of March 24, 2004, Whitesnake was represented by the prominent entertainment law firm now known as Ziffren, Brittenham, Branca, Fischer, Gilbert-Lurie, Stiffelman, Cook, Johnson, Lande & Wolf LLP (“Ziffren”). Coverdale Depo. [Ex. 15] 121:13-123:15.14 Ziffren name partner Gary Stiffelman was one of the 27 attorneys who sent the March 24, 2004 letter to UMGR taking the position that there was “no bona fide legal dispute” and demanding UMGR “recognize the arrangements between the major labels and independent electronic distributors as licenses.” Ex. 14 See http://www.linkedin.com/pub/david-lande/b/5a6/638 (last accessed Dec. 19, 2013); http://www.hollywoodreporter.com/lists/david-lande-526339 (last accessed Dec. 19, 2013). Case3:11-cv-01613-SI Document205 Filed05/23/14 Page27 of 32 LA 10795919v1 - 18 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER 43. In 2006, Whitesnake hired a different law firm, now known as Myman Greenspan Fineman Fox Rosenberg & Light LLP. Coverdale Depo. [Ex. 15] 121:13-123:15. Two name partners of this firm, Jeffrey Light and Eric Greenspan, also signed the March 2004 letter. Ex. 43. Each of these three attorneys was also a recipient of UMGR’s April 22, 2004 response disputing the artists’ interpretation of their contracts. Ex. 44. An attorney’s knowledge is imputed to his client for purposes of the statute of limitations. Cal. Civ. Code § 2332; Stalberg v. Western Title Ins. Co., 230 Cal. App. 3d 1223, 1231 (1991) (“Since the [attorneys’] knowledge is imputed to plaintiffs as of April of 1979, the statute of limitations appears to have run in February of 1982.”); Lazzarevich v. Lazzarevich, 39 Cal. 2d 48, 50 (1952) (“a person is held to know what his attorney knows and should communicate to him”). A statement by a contracting party is a “repudiation” if is “sufficiently positive to be reasonably interpreted to mean that the party will not or cannot perform.” Restatement (Second) of Contracts § 250 cmt. b (1981); Minidoka, 154 F.3d at 962-927. In his April 22, 2004 letter, UMGR’s then-President Horowitz, made it clear UMGR would not pay royalties for Downloads at the rate the artists demanded. Indeed, David Coverdale, who owns and controls Whitesnake, admitted as much at his deposition: Q Is that - is that - is that correct, they’re they are not agreeing, therefore they are disagreeing, right? A It sounds like they are disagreeing, yes. Q Okay. In other words, the lawyers for the artists, including Mr. Light, took a position about how downloads should be treated for royalty purposes. And Mr. Horowitz essentially repudiated that position, right? ... [Objections omitted.] A Yeah, it doesn’t sound like they are on the same page. I think they are warning shots across the bows…. Universal sounds to me from reading that that it’s going to dig its feet in, and these lawyers are going to do whatever happens. Coverdale Depo. [Ex. 15] 93:10-97:21. Even if one were to characterize Whitesnake’s contract with UMGR as akin to an installment contract, UMGR’s repudiation caused the statute of limitations to accrue on all Whitesnake’s disputed Download claims, past and future. Accordingly, Whitesnake’s claims accrued in their entirety, at the latest, on April 22, 2004, and are therefore time-barred. Case3:11-cv-01613-SI Document205 Filed05/23/14 Page28 of 32 LA 10795919v1 - 19 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER 2. New York Plaintiffs / Section 349 Claims For the same reasons the California Plaintiffs’ claims are entirely time-barred, to the extent Plaintiffs characterize their claims as arising from a single policy or decision made by UMGR in 2002 which has been injuring them on an ongoing basis ever since, the New York Plaintiffs’ claims are also time-barred. See Global Financial Corp. v. Triarc Corp., 93 N.Y.2d 525, 529, 715 N.E.2d 482 (N.Y. 1999) (“we have consistently employed the traditional definition of accrual-a cause of action accrues at the time and in the place of the injury”); Town of Oyster Bay v. Lizza Industries, Inc., 22 N.Y.3d 1024, 1030-32, 4 N.E.3d 944 (N.Y. 2013) (breach of contract claim accrues when harmful act is committed, not each time additional damage is incurred). In addition, under the three-year statute of limitations under General Business Law section 349, Plaintiffs’ claims accrued when UMGR first began allegedly underpaying their royalties, not upon each successive underpayment. Beller v. William Penn Life Ins. Co. of New York, 8 A.D.3d 310, 778 N.Y.S.2d 82 (N.Y.A.D. 2 Dept. 2004) (section 349 claim was entirely time-barred because it “accrued… when the defendant allegedly began to increase her cost of insurance rates in violation of the terms of the policy,” not upon each successive rate increase). Further, all of Ridenhour’s, McLean’s and Titus’s claims should, at a minimum, be limited pursuant to the contractual limitations provisions of their contracts, as discussed below. 3. At A Minimum, Each Of Plaintiffs’ Claims Is Barred In Part Based on the Contractual Limitations Provisions in their Contracts. Even if the Court were to accept Plaintiffs’ likely argument that their contracts with UMGR are akin to installment contracts, as to which a new cause of action arises with each semi-annual royalty statement rendered by UMGR, then the Court should nevertheless grant UMGR’s motion as to those royalty statements rendered outside the contractual limitations periods agreed upon in each of Plaintiffs’ respective contracts. Contractual limitations provisions are enforceable in both California and New York. Hambrecht & Quist Venture Partners v. American Medical Intern., Inc., 38 Cal .App. 4th 1532, 1548 (1995); Clinton v. Universal Music Group, Inc., 2011 WL 3501818, *5 (C.D. Cal. 2011) (enforcing contractual limitations provision in recording agreement); Allman v. UMG Recordings, Case3:11-cv-01613-SI Document205 Filed05/23/14 Page29 of 32 LA 10795919v1 - 20 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER 530 F. Supp. 2d 602, 606-07 (S.D.N.Y. 2008) (“Courts applying New York law have routinely upheld the enforceability of contractual limitation periods….”); Malmsteen v. Universal Music Group, Inc., 2012 WL 2159281, *6-8 (“Contractual statutes of limitations and objection provisions are generally respected by New York courts.”). Here, Plaintiffs’ contracts generally provide for UMGR to render royalty statements to them on a semi-annual basis and contain contractual limitations provisions placing time limits on their right to challenge such statements for any reason. These provisions differ in length: one year (Mason15), two years (Tyson16, Donaldson17, and McLean and Titus,18 and one of Ridenhour’s contracts19), two and a half years (Ridenhour’s other 15 Mason’s 1969 Contract provides: “Artist shall be deemed to have consented to all royalty statements and any and all other accounts rendered by [UMGR] to him and said statements and other accounts shall be binding upon Artist and not subject to any objection by him for any reason unless specific objection in writing, stating the basis thereof, is given to Company within (1) year from the date rendered.” Ex. 5 at ¶ 8. 16 The 1987 Contract on which Tyson is suing provides: “You and ARTIST shall be deemed to have consented to each statement and each statement shall become final and binding upon you and ARTIST two years after the rendition thereof, unless you and ARTIST render specific written objection thereto within such period. Suit with respect to a particular statement rendered hereunder shall be forever barred unless instituted within three years from the date such statement was rendered.” Ex. 7, Ex. A, ¶ 4. The 1993 Contract on which Tyson is suing provides: “All royalty statements rendered by [UMGR] shall be conclusively binding upon you and not subject to any objection by you for any reason unless specific objection in writing, stating the basis thereof, is given to [UMGR] within two (2) years from the date such statement is rendered, and an audit pursuant to paragraph 8.04 for that statement is completed within three (3) months after such objection notice is given. Failure to make specific objection or conduct the audit within said time periods shall be deemed to be your approval of such statement, your waiver of such audit rights, and your waiver of the right to sue [UMGR] for additional royalties in connection with the applicable accounting period. You will not have the right to sue [UMGR] in connection with any royalty accounting, or to sue [UMGR] for royalties on Records sold during the period a royalty accounting covers, unless you commence the suit within nine (9) months after completion (as such is restricted herein) of your audit for the applicable period.” Ex. 8, ¶ 8.03. 17 The 1973 Contraction on which Donaldson is suing provides that royalty statements “shall be binding upon you and not subject to any objection by you for any reason, unless specific objection in writing, stating the basis thereof, is given by you to us within two (2) years from the date rendered.” Ex. 1, ¶ 3(k). 18 Titus and McLean’s 1991 Contract provides: “All royalty statements rendered by PRI to Artist shall be binding upon Artist and not subject to any objection by Artist for any reason unless specific objection in writing, stating the basis thereof, is given to PRI within two (2) years from the date due. Failure to make specific objection within said time period shall be deemed approval of such statement.” Ex. 11, ¶ 8.03. 19 Ridenhour’s 1986 Contract provides: “If you have any objections to a royalty statement, you will give [UMGR] specific notice of that objection and your reasons for it within two (2) years Case3:11-cv-01613-SI Document205 Filed05/23/14 Page30 of 32 LA 10795919v1 - 21 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER contract20), and three years (Whitesnake21). The James Trust’s multiple contractual instruments contain limitations provisions of between one and two years.22 The James Trust (almost a year before it filed its lawsuit) specifically objected in writing to UMGR’s calculation of Download royalties on May 24, 2010. Ex. 46. None of the other Plaintiffs made any specific written objections on this issue prior to the filing of their lawsuits. Even assuming (without conceding) that the filing of the first lawsuit by the James Trust on April 1, 2011, was a qualifying specific written objection on behalf of all Plaintiffs and that Plaintiffs’ later-filed claims relate back to this date,23 at a minimum Plaintiffs’ claims should be barred as to royalty statements rendered prior to the following dates: after the date when [UMGR] is required to send you that statement under paragraph 11.01. Each royalty statement will become conclusively binding on you at the end of that two (2) year period, and you will no longer have any right to make any other objections to it. You will not have the right to sue [UMGR] in connection with any royalty accounting, or to sue [UMGR] for royalties on Records sold or Net Receipts derived by [UMGR] during the period a royalty accounting covers, unless you commence the suit within that two (2) year period.” Ex. 9 at ¶¶ 11.01, 11.04. 20 Ridenhour’s 1992 Contract is virtually identical to his 1986 Contract in this respect, providing that royalty statements are “conclusively binding” unless Ridenhour makes a specific written objection, but within 30 months (i.e., September 30 or March 31), rather than two years as under the 1986 Contract. Ex. 10 at ¶¶ 11.04. 21 Whitesnake’s 1982 Contract provides that Whitesnake “shall be deemed to have consented to each statement, and such statement shall become final and binding upon [Whitesnake], three (3) years after the rendition thereof unless [Whitesnake] renders specific written objection thereto within such period.” Ex. 6, Ex. 34, § 3(a). 22 James’ 1977 Recording Contract provides that James “shall be deemed to have consented to all royalty statements and all other accounts rendered to you by [UMGR] and said statements and other accounts shall be binding on you and not subject to any objection by you for any reason, unless specific objection in writing, stating the basis thereof, is given by you to [UMGR] within one (1) year from the date rendered.” Ex. 2, ¶ 3. James’ 1977 Producer Contract provides: “You shall be deemed to have consented to all royalty statements and all other accounts rendered by us to you, and said statements and other accounts shall be binding upon you and not subject to any objection by you for any reason, unless specific objection in writing, stating the basis thereof, is given by you to us within one (1) year from the date rendered.” Ex. 4, ¶ 13. James’ 1979 Contract provides: “Each statement shall be binding and you shall neither have nor make any claim against [UMGR] with respect thereto unless you advise [UMGR], in writing, of the specific basis of such claim within two (2) years after such statement was mailed.” Ex. 3, ¶ 18(b). 23 These propositions are dubious and UMGR does not concede them, but they are beyond the scope of this motion. Case3:11-cv-01613-SI Document205 Filed05/23/14 Page31 of 32 LA 10795919v1 - 22 - Defendant's Motion for Summary Judgment No. 2 CV11-01613 SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PRINTED ON RECYCLED PAPER James Trust - 1977 Artist Contract and 1977 Producer Contract: May 24, 2009 (one year prior to the written objection). James Trust - 1979 Contract: May 24, 2008 (two years prior to the written objection). Mason 1969 Contract: April 1, 2010 (one year prior to the filing of this action). Ridenhour 1986 Contract: April 1, 2009 (two years prior to the filing of this action). Ridenhour 1992 Contract: October 1, 2008 (two and a half years prior to the filing of this action). Tyson 1987 Contract and 1993 Contract: April 1, 2009 (two years prior to the filing of this action). Donaldson 1973 Contract: April 1, 2009 (two years prior to the filing of this action). McLean and Titus 1991 Contract: April 1, 2009 (two years prior to the filing of this action). Whitesnake 1982 Contract: April 1, 2008 (three years prior to the filing of this action). III. CONCLUSION For all of the foregoing reasons, UMGR is entitled to summary judgment as set forth in the Notice of Motion. DATED: May 23, 2014 JEFFREY D. GOLDMAN RYAN S. MAUCK BRIAN M. YATES JEFFER MANGELS BUTLER & MITCHELL LLP By: /s/ Jeffrey D. Goldman JEFFREY D. GOLDMAN Attorneys for Defendant Case3:11-cv-01613-SI Document205 Filed05/23/14 Page32 of 32