Sam Rubin Entertainment, Inc. v. Aarp Inc et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.September 2, 2016

ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 KAREN VAN ESSEN (SBN 278407) karen.vanessen@arentfox.com ARENT FOX LLP 555 West Fifth Street, 48th Floor Los Angeles, California 90013-1065 Telephone: 213.629.7400 Facsimile: 213.629.7401 KAREN CARR (Pro Hac Vice pending) karen.carr@arentfox.com ARENT FOX LLP 1717 K Street, NW Washington, DC 20006-5344 Telephone: 202.857.6000 Facsimile: 202.857.6395 Attorneys for Defendant AARP, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SAM RUBIN ENTERTAINMENT, INC., a California corporation, Plaintiff, v. AARP, INC., a District of Columbia corporation, and DOES 1-10, Defendants. Case No. 2:16-cv-6431-RSWL-SS [Assigned to Hon. Ronald S.W. Lew] NOTICE OF MOTION AND MOTION TO DISMISS BY DEFENDANT AARP, INC. [(Proposed) Order Lodged Concurrently Herewith] Date: October 4, 2016 Time: 10:00 a.m. Ctrm.: 21 (Spring Street) Compl. Filed: July 25, 2016 Removal Date: August 26, 2016 Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 1 of 27 Page ID #:82 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 2 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 NOTICE OF MOTION TO ALL PARTIES AND THEIR COUNSEL OF RECORD, PLEASE TAKE NOTICE THAT on October 4, 2016, at 10:00 a.m., or as soon thereafter as the matter may be heard, in Courtroom 21 of the above-referenced Court, located at 312 N. Spring Street, Los Angeles, California, 90012, Defendant AARP, Inc. will and hereby does move this Court to dismiss with prejudice the first, second, and third causes of action in Plaintiff Sam Rubin Entertainment, Inc.’s Complaint dated July 25, 2016, (Doc. # 1, Ex. 1) pursuant to Federal Rules of Civil Procedure 9(b), and 12(b)(6). This motion is made following the conference of counsel pursuant to L.R. 7- 3, which took place on August 17, 2016. This motion is based on the attached Memorandum of Points and Authorities, and the pleadings, records, and files in this case, and such other matters as may be considered by the Court. Dated: September 2, 2016 ARENT FOX LLP By: /s/ Karen Van Essen KAREN VAN ESSEN KAREN CARR (Pro Hac Vice pending) Attorneys for Defendant AARP, INC. Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 2 of 27 Page ID #:83 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES TABLE OF CONTENTS Page(s) - i - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 I. INTRODUCTION ........................................................................................... 1 II. STATEMENT OF FACTS .............................................................................. 2 A. The 2015 Movies for Grownups Awards ............................................. 2 B. Subsequent Negotiations ....................................................................... 2 C. The “Stop-Gap” Agreement .................................................................. 3 III. ARGUMENT .................................................................................................. 4 A. Standard of Review ............................................................................... 4 B. SRE Fails to State a Claim for Promissory Fraud ................................ 5 1. SRE’s promissory fraud claim is barred by the economic loss doctrine ................................................................................ 6 2. SRE fails to plead its promissory fraud claim with particularity ................................................................................. 8 a. AARP’s alleged statement regarding a five-year commitment to SRE following the 2015 Movies for Grownups Awards .......................................................... 10 b. AARP’s alleged statement regarding the Agreement ...................................................................... 12 C. SRE Fails to State a Claim for Breach of Contract ............................ 13 D. SRE Fails to State a Claim For Breach of Implied Covenant of Good Faith and Fair Dealing ............................................................... 16 E. The Doe Defendants Should Be Dismissed ........................................ 19 IV. CONCLUSION ............................................................................................. 20 Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 3 of 27 Page ID #:84 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES TABLE OF AUTHORITIES Page(s) - ii - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 Cases Aas v. Superior Court, 24 Cal. 4th 627 (2000), superseded by statute on other grounds in as stated in Rosen v. State Farm Gen. Ins. Co., 30 Cal. 4th 1070 (2003) ..................................................................................................................... 6 Alpha Inv., LLC v. Zynga, Inc., No. C 11-03500 JSW, 2012 WL 832447 (N.D. Cal. Mar. 12, 2012) ................. 15 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ........................................................................................ 5, 15 Audigier Brand Mgmt v. Perez, No. CV 12-5687-CAS(RZx), 2012 WL 5470888 (C.D. Cal. Nov. 5, 2012) .................................................................................................................. 6, 7 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .............................................................................................. 5 Careau & Co. v. Sec. Pac. Bus. Credit, 222 Cal. App. 3d 1371 (1990) ................................................................. 14, 17, 19 Digerati Holdings, LLC v. Young Money Entm’t, LLC, 194 Cal. App. 4th 873 (2011) ........................................................................ 16, 18 Epstein v. Wash. Energy Co., 83 F.3d 1136 (9th Cir. 1996) ................................................................................. 5 Gompper v. VISX, Inc., 298 F.3d 893 (9th Cir. 2002) ................................................................................. 5 Kaar v. Wells Fargo Bank, N.A., No. C 16-01290 WHA, 2016 WL 3068396 (N.D. Cal. June 1, 2016) ................ 16 Kadner v. Shields, 20 Cal. App. 3d 251 (1971) ................................................................................. 14 Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 4 of 27 Page ID #:85 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES TABLE OF AUTHORITIES Page(s) - iii - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 Kransco v. Am. Empire Surplus Lines Ins. Co., 23 Cal.4th 390 (2000) .......................................................................................... 16 Lazar v. Superior Court, 12 Cal. 4th 631 (1996) ........................................................................................... 8 Lee v. City of Los Angeles, 250 F.3d 668 (9th Cir. 2001) ................................................................................. 5 Lesley v. Ocwen Fin. Corp., No. SA CV 12-1737-DOC(PJRx), 2013 WL 990668 (C.D. Cal. Mar. 13, 2013) ..................................................................................................... 14 Martel v. Cadjew, No. CIV S-11-0509 JAM, 2011 WL 4386209 (E.D. Cal. Sept. 20, 2011) .................................................................................................................... 19 Mat-Van, Inc. v. Sheldon Good & Co. Auctions, LLC, No. 07-CV-912 .................................................................................................... 12 May v. Williams, No. 2:10-CV-576-GMN-LRL, 2012 WL 1155390 (D. Nev. Apr. 4, 2012) .................................................................................................................... 19 Mollett v. Netflix, Inc., 795 F.3d 1062 (9th Cir. 2015) ............................................................................... 4 Newman v. San Joaquin Delta Cmty. Coll. Dist., No. CIV. 2:09-3441 WBS K, 2010 WL 3633737 (E.D. Cal. Sept. 14, 2010) .............................................................................................................. 19 Oracle Corp. v. Falotti, 319 F.3d 1106 (9th Cir. 2003) ............................................................................. 16 Orlando v. Carolina Cas. Ins. Co., No. CIV F 07-0092AWISMS, 2007 WL 781598 (E.D. Cal. Mar. 13, 2007) ........................................................................................................ 10, 14 Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 5 of 27 Page ID #:86 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES TABLE OF AUTHORITIES Page(s) - iv - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 Platt Pac., Inc. v. Andelson, 6 Cal. 4th 307 (1993) ........................................................................................... 14 Richman v. Hartley, 224 Cal. App. 4th 1182 (2014) ............................................................................ 14 Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979 (2004) ........................................................................................... 6 Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952 (N.D. Cal. 2010)........................................................... 16, 17 Tanedo v. E. Baton Rouge Par. Sch. Bd., No. SA CV10-01172 JAK, 2012 WL 5447959 (C.D. Cal. Oct. 4, 2012) ............................................................................................................. passim Tenzer v. Superscope, Inc., 39 Cal. 3d 18 (1985) ............................................................................................ 12 Turner v. Cty. of Los Angeles, 18 F. App’x 592 (9th Cir. 2001) .......................................................................... 20 UMG Recordings, Inc. v. Glob. Eagle Entm’t, Inc., 117 F. Supp. 3d 1092 (C.D. Cal. 2015) ........................................................ passim United Guar. Mortg. Indem. Co. v. Countrywide Fin. Corp., 660 F. Supp. 2d 1163 (C.D. Cal. 2009) ................................................................. 6 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) ................................................................... 8, 12, 13 Wyler Summit P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658 (9th Cir. 1998) ................................................................................. 5 Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 6 of 27 Page ID #:87 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES TABLE OF AUTHORITIES Page(s) - v - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 Statutes Federal Rule of Civil Procedure 9(b) ................................................................. 1, 8, 9 Federal Rule of Civil Procedure 12(b)(6) ................................................................... 4 Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 7 of 27 Page ID #:88 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES -1- MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AARP, Inc. is a non-profit organization dedicated to helping people 50 and older improve the quality of their lives. For years, AARP has hosted the Movies for Grownups Awards (“MFGAs”), which spotlights films that resonate with a 50- plus audience and celebrates the work of actors and filmmakers 50 and older. The awards are featured in the February/March issue of AARP’s bi-monthly magazine and given each February in Beverly Hills, California. As others had done in the past, Mr. Sam Rubin and his production company, Plaintiff Sam Rubin Entertainment, Inc. (“SRE”), approached AARP in late 2014 with a proposal to televise the MFGAs. The parties discussed various potential options for collaboration and executed a short-term agreement framing the process for additional negotiations (“Agreement”), pursuant to which AARP paid SRE $50,000. The parties attempted but ultimately failed to reach an agreement on terms for a long-term deal. AARP has obtained no value in exchange for its $50,000 payment to SRE and has entered into no agreement for broadcast of the show. Notwithstanding those facts, SRE has brought the instant action against AARP alleging claims for promissory fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing. All three claims must be dismissed for failure to state a claim. There are two independent grounds on which to dismiss SRE’s fraud claim. First, SRE’s fraud claim relies on the same factual allegations and damages as its breach of contract claim and is therefore barred by the economic loss doctrine. Second, SRE fails to meet the heightened pleading standard required by Federal Rule of Civil Procedure 9(b) in alleging its promissory fraud claim. SRE’s breach of contract claim fails because the Complaint does not contain any factual allegations that SRE satisfied the condition precedent set forth in the Agreement-that SRE obtain guaranteed distribution commitments to televise the Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 8 of 27 Page ID #:89 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 2 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 show in over 50% of United States markets by September 30, 2015. By the explicit terms of the Agreement, AARP was not required to engage in good faith negotiations with SRE unless this condition was fulfilled. In addition, SRE’s claim for breach of the implied covenant of good faith and fair dealing must be dismissed because the Complaint does not allege any conduct on the part of AARP that prevented SRE from realizing the benefits of the Agreement. Indeed, in support of its implied covenant claim, SRE relies exclusively on the same allegations and purported damages that serve as the basis for its breach of contract claim, which are insufficient as a matter of law to state a claim for breach of the implied covenant of good faith and fair dealing. For these reasons, SRE’s Complaint should be dismissed in its entirety. II. STATEMENT OF FACTS A. The 2015 Movies for Grownups Awards Sam Rubin, who owns SRE, approached AARP with a proposal to present AARP’s MFGAs gala on television. Compl. ¶¶ 7-12. Mr. Rubin insisted on a “long-term production commitment” “to make any deal worthwhile.” Compl. ¶ 14. SRE alleges that “Mr. Rubin offered to ‘prove the concept’ at his own expense by producing the 2015 show for airing on KTLA.” Compl. ¶ 15. SRE further alleges that following the initial 2015 show, AARP and SRE would negotiate a potential production deal. Compl. ¶ 16. SRE alleges that Mr. Rubin produced the show that it aired on February 15, 2015. Compl. ¶¶ 17-18. B. Subsequent Negotiations The Complaint alleges that, following the 2015 event, AARP and SRE met in March 2015 in Washington D.C. to further discuss a long-term deal. Compl. ¶¶ 22- 23. During this meeting, SRE alleges that Mr. Rubin and an associate presented their “vision” for the future broadcast productions of MFGAs, including a proposed budget. Compl. ¶¶ 23-24. The Complaint indicates that the parties were unable to reach agreement on the proposal terms at that time but alleges that the parties Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 9 of 27 Page ID #:90 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 3 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 agreed to continue negotiations. Compl. ¶ 27. According to the Complaint, the parties exchanged further drafts and comments, none of which progressed into a long-term production deal, but instead resulted in a proposal dated June 6, 2015 (“Proposal”). Compl. ¶ 28. The Complaint alleges that, while not an agreement between the Parties, the Proposal might serve as a starting point upon which further negotiations could possibly proceed. Compl. ¶ 28. C. The “Stop-Gap” Agreement SRE alleges that “the parties recognized that the negotiations were moving too slowly” to meet production deadlines for a televised 2016 MFGAs show. Compl. ¶ 29. Accordingly, the parties entered into a “stop-gap agreement” (the “Agreement”). Compl. ¶ 30. The Agreement stated that SRE and AARP “are currently in negotiations regarding a possible agreement . . . .” Compl., Ex. A. The Agreement memorialized the fact that AARP had already paid SRE $50,000 while the parties were negotiating, and that the negotiations to date had been in good faith. Compl., Ex. A. (“The parties shall continue their negotiation in good faith of the Proposal, but in the meantime, AARP has paid SRE $50,000.”). The Agreement further provided: If and when SRE obtains guaranteed distribution commitments from television and/or cable stations to exhibit the First Program in no less than 50% of the United States Markets, then the parties shall attempt in good faith to complete negotiation of their agreement concerning the Programs along the lines set forth in the Proposal . . . If, however, by September 30, 2015 SRE fails to obtain guaranteed distribution commitments from television/and or cable stations to exhibit the First Program in not less than 50% of the United States Markets, or if the parties fail to reach agreement as to the production and distribution of the Programs . . . then SRE shall retain such $50,000 but the parties Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 10 of 27 Page ID #:91 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 4 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 shall have no obligation to each other of any kind, nature or description . . . . Compl. ¶ 30 (emphasis added). The Complaint summarizes the terms as follows: “[I]f Mr. Rubin obtained guaranteed distribution for no less than half the country on or before September 30, 2015, then AARP was contractually required to attempt in good faith to complete an agreement with Mr. Rubin along the lines of the June 6, 2015 Proposal. On the other hand, if Mr. Rubin failed to obtain the requisite distribution by September 30, 2015, then AARP could do as it wished.” Compl. ¶ 31. SRE alleges that Mr. Rubin “went to work” and “got a meeting with the national broadcaster WGN- America.” Compl. ¶¶ 32, 35. During the meeting with WGN-America, SRE alleges the network “enthusiastically expressed its commitment to televise the show nationwide.” Compl. ¶ 35. The Complaint is silent on written documentation supporting this commitment, the firmness of WGN’s commitment, and the details involved in such a nationwide production. See id. SRE alleges that AARP breached the Agreement by failing to negotiate in good faith. Compl. ¶¶ 36-37. SRE further alleges that “it appears AARP never intended to enter into a definitive agreement, or make the five-year commitment, that it had originally promised.” Compl. ¶ 37 (emphasis added). III. ARGUMENT A. Standard of Review Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff’s allegations fail “to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6) can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged. Mollett v. Netflix, Inc., 795 F.3d 1062, 1065 (9th Cir. 2015). The factual allegations are sufficient only if, when accepted as true and construed in the light most favorable to plaintiff, they state a claim for relief that is plausible on its face. FRCP Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 11 of 27 Page ID #:92 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 5 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully . . . . Where a complaint pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief”)); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007) (explaining that a complaint must include enough “[f]actual allegations . . . to raise a right to relief above the speculative level.”). A complaint must contain more than “an unadorned, the defendant- unlawfully-harmed-me accusation.” Ashcroft, 556 U.S. at 678. In particular, courts need not accept as true “legal conclusions” masquerading as fact. Id. “Threadbare recitals” of a cause of action’s elements will not support a claim either. Id.; see also Twombly, 550 U.S. at 555 (requiring more than “a formulaic recitation of the elements of a cause of action”); Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996) (“Conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim.”). A court may disregard allegations that contradict documents that are properly attached to the complaint. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001); Wyler Summit P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 665 (9th Cir. 1998). Leave to amend need not be granted when amendment would be futile. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002). B. SRE Fails to State a Claim for Promissory Fraud SRE’s claim for promissory fraud fails because it does not meet the minimum pleading standards required to state a plausible claim for relief. SRE alleges that AARP promised it a five-year production deal if it successfully produced the 2015 MFGAs, and promised to negotiate in good faith pursuant to the Agreement. See Compl. ¶ 54. SRE’s promissory fraud claim suffers two fatal defects. First, SRE’s fraud claim is barred by the economic loss doctrine because it Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 12 of 27 Page ID #:93 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 6 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 fails to allege any harms other than the losses it purportedly suffered as a result of AARP’s alleged breach of the Agreement. Second, SRE’s fraud claim is not pleaded with the requisite particularity because the Complaint lacks sufficient facts to establish the “who, what, when, where, and how” of AARP’s alleged misconduct, or to establish that the purported “promises” were knowingly false at the time they were made. Each of these two defects provides an independent basis for dismissal of SRE’s promissory fraud claim. 1. SRE’s promissory fraud claim is barred by the economic loss doctrine SRE’s fraud claim must be dismissed because it is barred by the economic loss doctrine. “The economic loss rule generally bars tort claims for contract breaches, thereby limiting contracting parties to contract damages.” United Guar. Mortg. Indem. Co. v. Countrywide Fin. Corp., 660 F. Supp. 2d 1163, 1180 (C.D. Cal. 2009). “The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise.” Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979, 988 (2004). A party “may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations.” Aas v. Superior Court, 24 Cal. 4th 627, 643 (2000), superseded by statute on other grounds in as stated in Rosen v. State Farm Gen. Ins. Co., 30 Cal. 4th 1070, 1079- 80 (2003). A party’s “purported tort claims related to the performance of a contract are viable only where the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.” Audigier Brand Mgmt v. Perez, No. CV 12-5687-CAS(RZx), 2012 WL 5470888, at *5 (C.D. Cal. Nov. 5, 2012) (internal quotations and citations omitted). “[C]ourts have applied the economic loss rule to bar recovery in tort where ‘the damages [a] plaintiff seek[s] are the same economic losses arising from the Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 13 of 27 Page ID #:94 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 7 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 alleged breach of contract.’” Id. *5-6 (dismissing fraud claim where plaintiff failed to demonstrate that it would be entitled to any additional measure of damages beyond its contract damages); see also UMG Recordings, Inc. v. Glob. Eagle Entm’t, Inc., 117 F. Supp. 3d 1092, 1103, 1106 (C.D. Cal. 2015) (dismissing promissory fraud claim as deficiently pled under the economic loss rule where plaintiff sought to take “the allegations underpinning a straightforward claim for breach of a commercial contract and recast them as torts,” which “consist of nothing more than [defendants’] alleged failure to make good on its contractual promises.”). Like the plaintiffs in the above cases, SRE has sought to impermissibly recast its breach of contract claim against AARP as a fraud claim. As set forth in the Complaint, SRE’s purported harms are the result of AARP’s alleged misrepresentation and subsequent alleged failure to negotiate in good faith a long- term deal. SRE contends that, as a result of AARP’s alleged misrepresentation regarding the five-year production deal, SRE “expended substantial time, effort, money, and industry goodwill on the AARP project . . . .” Compl. ¶ 57. SRE further claims that, as a result of the alleged misrepresentation and subsequent alleged failure to negotiate in good faith, SRE suffered reputational harm and a loss of good will. Compl. ¶ 38 (“Relying on the contract with AARP, as well as AARP’s representations to him, Mr. Rubin told nearly everyone he knew that he would be producing the new AARP show . . . . AARP severely harmed the reputation and goodwill in the industry that took Mr. Rubin decades to create. That harm has detrimentally affected Plaintiff’s ability to get future projects.” (emphasis added)). These are the identical harms that SRE alleges flowed from AARP’s purported breach of contract-namely, that SRE incurred substantial costs and Mr. Rubin’s reputation and goodwill were harmed, which affected SRE’s ability to get future projects. See id.; Compl. ¶ 36 (“After Mr. Rubin expended substantial time, Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 14 of 27 Page ID #:95 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 8 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 effort, and money, as well as used his industry goodwill to uphold his end of the bargain, AARP breached its duties . . . .”); Compl. ¶ 39 (“Plaintiff incurred substantial out-of-pocket costs and lost business opportunities because of its work on the AARP project.”). As such, SRE fails to plead any facts that would entitle it to damages beyond its alleged economic losses from the purported breach of contract. Accordingly, its fraud claim is barred by the economic loss rule and should be dismissed. 2. SRE fails to plead its promissory fraud claim with particularity In diversity cases such as this one, federal courts apply substantive state law for fraud claims, which must be plead in accordance with Federal Rule of Civil Procedure 9(b)’s particularity requirements. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003); Fed. R. Civ. P. 9(b) (providing that a plaintiff “must plead with particularity the circumstances constituting fraud.”). Under California law, the elements of promissory fraud include: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” Tanedo v. E. Baton Rouge Par. Sch. Bd., No. SA CV10- 01172 JAK, 2012 WL 5447959, at *7 (C.D. Cal. Oct. 4, 2012) (quoting Engalla v. Permanente Med. Group, Inc., 15 Cal. 4th 951, 974 (1997)). “‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). “Averments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged . . . . ‘The plaintiff must set forth what is false or misleading about a statement, and why it is false.’” Vess, 317 F.3d at 1106. Consistent with Rule 9(b)’s requirements, while scienter may generally be alleged, Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 15 of 27 Page ID #:96 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 9 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 a plaintiff must also “plead sufficient facts to make a claim of promissory fraud plausible.” Tanedo, 2012 WL 5447959, at *7-8 (citing Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)). “This requirement of pleading facts to make the allegations of a defendant’s state of mind plausible is particularly important in the context of promissory fraud. Otherwise, every breach of contract claim would ‘support a claim of fraud so long as the [claimant] adds to his complaint a general allegation that the defendant never intended to keep her promise.’” Tanedo, 2012 WL 5447959, at *8 (citations omitted). Accordingly, “something more than nonperformance is required to prove the defendant’s intent not to perform his promise.” Id. at *7-8 (citation omitted) (granting motion to dismiss because “[d]efendant may not transform its contract claim into one of promissory fraud by simply pleading, without more, that Plaintiffs never intended to perform on the contracts”); see also UMG Recordings, 117 F. Supp. 3d at 1109-10 (explaining that “a plaintiff must point to facts which show that defendant harbored an intention not to be bound by terms of the contract at formation.” (citation omitted)). Here, SRE bases its fraud claim on two purported “promises” by AARP: (1) “a five-year commitment if Plaintiff successfully produced the 2015 AARP award show,” and (2) continued “work in good faith to complete negotiation of the June 6, 2015 Proposal.”1 Compl. ¶ 54. As set forth below, SRE fails to meet its heavy pleading burden to state a claim for promissory fraud with respect to these two alleged statements. 1 The Complaint alleges that AARP “made several affirmative material misrepresentations to Plaintiff including, but not limited to,” the two statements quoted here. Compl. ¶ 54 (emphasis added). This vague and conclusory allegation is insufficient under Federal Rules of Civil Procedure 8 and 9(b). Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 16 of 27 Page ID #:97 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 10 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 a. AARP’s alleged statement regarding a five-year commitment to SRE following the 2015 Movies for Grownups Awards SRE’s claim for fraud based on an alleged five-year distribution commitment from AARP following the 2015 MFGAs fails because it is not supported with any factual allegations, much less the particularized factual allegations necessary to state such a claim. There is a complete dearth of facts in the Complaint as to the “who, what, when, where, and how” of the supposed promise of a five-year commitment following the 2015 show. SRE fails to allege the name or position of any AARP representative that supposedly made this promise. See, e.g., UMG Recordings, 117 F. Supp. 3d at 1108 (“Where fraud has allegedly been perpetrated by a corporation, moreover, plaintiffs must allege the names of the employees or agents who purportedly made the fraudulent representations or omissions, or at a minimum identify them by their titles and/or job responsibilities.” (citing United States ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 1051 (9th Cir. 2001)). SRE similarly fails to allege where and when the supposed misrepresentation was made. See, e.g., Orlando v. Carolina Cas. Ins. Co., No. CIV F 07- 0092AWISMS, 2007 WL 781598, at *8 (E.D. Cal. Mar. 13, 2007) (granting motion to dismiss fraud claim where, inter alia, the plaintiff did not allege “when” the misrepresentations occurred). Additionally, SRE does not allege specific facts related to the content of the supposedly fraudulent statement, such as the terms of any such “commitment.” Nor does it provide any detail regarding the negotiation process to which AARP is alleged to have committed, such as how long negotiations would last before impasse could be declared in good faith.2 See, e.g., 2 Indeed, SRE fails to allege that SRE-as compared to Mr. Rubin, who is not a plaintiff in this matter-was even harmed by AARP’s purported misrepresentation Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 17 of 27 Page ID #:98 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 11 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 UMG Recordings, 117 F. Supp. 3d at 1107 (finding that the specific content of the fraudulent representation was not adequately pleaded where the complaint merely stated in conclusory fashion that there was a promise to continue distribution of sound recordings with an agreement to follow). Moreover, the facts SRE alleges in the Complaint contradict SRE’s conclusory allegation that AARP misrepresented its intention to negotiate in good faith. In other words, SRE “has not pleaded any facts to make plausible the claim that,” at the time AARP purportedly made the alleged promise to SRE, AARP had “no intention of honoring” it. See Tanedo, 2012 WL 5447959, at *9. Indeed, the Complaint recites the following facts affirmatively establishing that AARP engaged in good faith negotiations with SRE following the February 2015 MFGAs: • The parties met in March 2015 in Washington D.C. to further discuss the show and SRE presented its proposal a long-term deal regarding production and distribution of the MFGAs for television. Compl. ¶ 22- 24. • After the meeting in Washington D.C., “the negotiation of a long-term agreement commenced in earnest.” Compl. ¶ 27. • “The parties exchanged drafts and comments, ultimately resulting in [the Proposal] dated June 6, 2015.” Compl. ¶ 28. • The parties negotiated the Agreement. Compl. ¶ 30. • The Agreement expressly acknowledged that the parties had been negotiating in good faith. Compl., Ex. A. (“[SRE] and AARP are currently in negotiations regarding a possible agreement . . . The parties shall continue their negotiation in good faith . . . .”). • AARP paid SRE $50,000 in accordance with its obligations under the related to the 2015 show. See Compl. ¶ 17 (“Mr. Rubin expended substantial time, effort, and money to produce the 2015 edition . . . .”); Compl. ¶ 19 (“All costs were borne by Mr. Rubin.”). Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 18 of 27 Page ID #:99 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 12 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 Agreement. Compl. ¶ 30., Ex. A. In short, SRE fails to meet the requirement to “set forth what is false or misleading about” AARP’s purported statement that it would negotiate in good faith with SRE regarding a five-year commitment after the February 2015 show and “why it is false.’” See Vess, 317 F.3d at 1106. b. AARP’s alleged statement regarding the Agreement SRE’s allegation that AARP misrepresented its intention to work in good faith to continue to negotiate the June 6, 2015 Proposal is likewise insufficient to state a claim for fraud. SRE fails to plead facts showing that AARP knowingly and intentionally made a misrepresentation at the time it signed the Agreement. Instead, SRE relies on the purported breach of contract, or supposed nonperformance (AARP’s alleged refusal to negotiate in good faith after SRE’s one-time meeting with WGN-America), and then seeks to link AARP’s alleged nonperformance back to its intent at the time it signed the Agreement: “AARP showed a complete disregard for its contractual obligations. So much so that it appears AARP never intended to enter into a definitive agreement, or to make the five-year commitment, that it had originally promised.” Compl. ¶ 37 (emphasis added). Governing case law is clear that “something more than nonperformance is required to prove the defendant’s intent not to perform his promise.” Tanedo, 2012 WL 5447959, at *8 (citation omitted) (dismissing promissory fraud claim); see also UMG Recordings, 117 F. Supp. 3d at 1109-10 (explaining that “a plaintiff must point to facts which show that defendant harbored an intention not to be bound by terms of the contract at formation,” and dismissing promissory fraud claim (citation omitted)); Tenzer v. Superscope, Inc., 39 Cal. 3d 18, 30 (1985) (“[S]omething more than nonperformance is required to prove the defendant’s intent not to perform his promise.”); Mat-Van, Inc. v. Sheldon Good & Co. Auctions, LLC, No. 07-CV-912 IEG(BLM), 2007 WL 2206946, at *6 (S.D. Cal. July 27, 2007) (dismissing Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 19 of 27 Page ID #:100 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 13 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 promissory fraud claim because, inter alia, “Plaintiffs’ reliance on nonperformance as circumstantial evidence of defendants’ fraudulent intent at the time of contract formation is misplaced.”). Here, because SRE fails to plead any facts beyond a conclusory statement regarding AARP’s alleged nonperformance, its fraud claim should be dismissed for failure to plead with the requisite particularity. SRE’s statement also contains the equivocal language of “appears” that belies any particularized statement of misconduct. Under no set of facts can the mere “appearance” of an intent not to perform give rise to a cause of action for fraud. The case law is clear that far more is required to state a claim. See Tanedo, 2012 WL 5447959, at *8 (“This requirement of pleading facts to make the allegations of a defendant’s state of mind plausible is particularly important in the context of promissory fraud.”). SRE also fails to plead any facts showing that AARP’s promise in the Agreement is false or misleading. As set forth in detail below, see section C infra, any obligation on the part of AARP to negotiate in good faith was entirely contingent on SRE first obtaining guaranteed distribution commitments for over 50% of the United States markets by September 30, 2015. See Compl., Ex. A. Yet the Complaint does not contain any facts that SRE satisfied the condition precedent and thereby triggered AARP’s obligation to negotiate in good faith. Accordingly, there are no facts in the Complaint establishing that AARP’s promise in the Agreement to negotiate in good faith-after SRE obtained the necessary guaranteed distribution-was false or misleading, or made with an intent to defraud. See Vess, 317 F.3d at 1106. C. SRE Fails to State a Claim for Breach of Contract SRE’s breach of contract claim fails because it did not plead facts establishing that the essential condition precedent was met-namely, that SRE had obtained by September 30, 2015, the required guaranteed distribution of the MFGAs to at least 50% of the United States markets. Under the explicit terms of Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 20 of 27 Page ID #:101 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 14 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 the Agreement, as pleaded, AARP did not have a duty to negotiate in good faith with SRE until and unless SRE obtained the guaranteed distribution. Because SRE cannot plead that it satisfied the condition precedent by timely obtaining the required guaranteed distribution, its claim for breach of contract fails and must be dismissed. Parties may expressly agree that a contractual duty is conditioned upon the occurrence of an act or event. Platt Pac., Inc. v. Andelson, 6 Cal. 4th 307, 313 (1993). “[A] condition precedent is either an act of a party that must be performed or an uncertain event that must happen before the contractual right accrues or the contractual duty arises.” Id. at 313 (citing Cal. Civ. Code § 1436). “Generally, a party’s failure to perform a condition precedent will preclude an action for breach of contract.” Richman v. Hartley, 224 Cal. App. 4th 1182, 1192 (2014); see also Kadner v. Shields, 20 Cal. App. 3d 251, 258 (1971) (explaining that if a condition precedent “is not fulfilled, the right to enforce the contract does not evolve”). “Where contractual liability depends upon the satisfaction or performance of one or more conditions precedent, the allegation of such satisfaction or performance is an essential part of the cause of action.” Careau & Co. v. Sec. Pac. Bus. Credit, 222 Cal. App. 3d 1371, 1389 (1990) (dismissing for failure to state a cause of action for breach of contract where the complaint did not contain any “specific allegations of the performance of any of the conditions”); see also, e.g., Lesley v. Ocwen Fin. Corp., No. SA CV 12-1737-DOC(PJRx), 2013 WL 990668, at *4 (C.D. Cal. Mar. 13, 2013) (dismissing complaint where plaintiffs failed to allege that they performed their own contractual obligations that would trigger defendants’ subsequent obligations); Orlando, 2007 WL 781598, at *5 (granting motion to dismiss under California law because plaintiff failed to state a claim for breach of contract where she “has not alleged that conditions precedent necessary for her to recover have been performed, waived, or excused”). Here, the Agreement sets forth the condition precedent-that SRE obtain by Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 21 of 27 Page ID #:102 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 15 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 September 30, 2015, guaranteed distribution that would televise the MFGAs to at least 50% of the United States markets-before AARP would resume negotiation. Compl. ¶ 30. Tellingly, SRE fails to allege any facts demonstrating that the condition precedent was timely satisfied.3 SRE specifically did not allege that it had obtained “guaranteed” distribution. Indeed, according to its own allegations, SRE had one meeting with WGN-America, during which WGN-America “enthusiastically expressed its commitment.” Compl. ¶ 35. Enthusiastic expression of commitment is not a guarantee. SRE also fails to allege that it had obtained the guaranteed distribution by the Agreement’s deadline, September 30, 2015, or that the guarantee covered 50% of the United States markets. See, e.g., Alpha Inv., LLC v. Zynga, Inc., No. C 11-03500 JSW, 2012 WL 832447, at *4 (N.D. Cal. Mar. 12, 2012) (granting motion to dismiss where plaintiff did not allege that the transaction was completed within the required 120 days). The only inference that can be drawn from the facts pleaded in the Complaint is that SRE failed to obtain the guaranteed distribution commitments prior to September 30, 2015, for over 50% of the markets. Furthermore, as the Agreement specifically sets forth, if “SRE fails to obtain guaranteed distribution commitments,” then the parties had “no obligation to each other of any kind, nature or description.” Compl. ¶ 30. Because the face of the Complaint does not contain any facts that the guaranteed distribution commitments were obtained within the requisite time period, there are no facts triggering AARP’s obligation to negotiate in good faith. Without the duty to negotiate in good faith, AARP could not have breached the Agreement as alleged by SRE. Accordingly, SRE’s claim for breach of contract should be dismissed for failure to state a 3 After its factual recitation in the Complaint, SRE makes the conclusory allegation that Mr. Rubin “had succeeded in securing the required distribution deal.” Compl. ¶ 38. This conclusory allegation is insufficient to state a plausible claim for relief. See Ashcroft, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 22 of 27 Page ID #:103 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 16 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 plausible claim. D. SRE Fails to State a Claim For Breach of Implied Covenant of Good Faith and Fair Dealing SRE’s claim for breach of implied covenant of good faith and fair dealing is likewise flawed and should be dismissed. Under California law, “[t]here is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.” Kransco v. Am. Empire Surplus Lines Ins. Co., 23 Cal.4th 390, 400 (2000) (internal quotation marks and citation omitted). “The implied covenant protects the reasonable expectations of the contracting parties based on their mutual promises.” Digerati Holdings, LLC v. Young Money Entm’t, LLC, 194 Cal. App. 4th 873, 885 (2011) (citing Carma Developers (Cal.), Inc. v. Marathon Development Cal., Inc., 2 Cal. 4th 342, 373-74 (1992)). “These duties prevent one party from frustrating the other party’s right to receive benefits from a contract between the parties.” Oracle Corp. v. Falotti, 319 F.3d 1106, 1111-12 (9th Cir. 2003) (citing Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317 (2000)). A claim for breach of the implied covenant of good faith and fair dealing has five elements under California law: “(1) the parties entered into a contract; (2) the plaintiff fulfilled his obligations under the contract; (3) any conditions precedent to the defendant’s performance occurred; (4) the defendant unfairly interfered with the plaintiff’s rights to receive the benefits of the contract; and (5) the plaintiff was harmed by the defendant’s conduct.” Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952, 968 (N.D. Cal. 2010) (citing CACI Jury Instruction 325). “[T]he authorities hold that breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself.” Kaar v. Wells Fargo Bank, N.A., No. C 16-01290 WHA, 2016 WL 3068396, at *2 (N.D. Cal. June 1, 2016) (citation omitted) (granting motion to dismiss implied covenant claim where plaintiffs made “no separate factual claims for the breach of the Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 23 of 27 Page ID #:104 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 17 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 implied covenant of good faith and fair dealing” from their breach of contract claim that subsumed the allegations); see Careau, 222 Cal. App. 3d at 1395 (“If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.”). Here, SRE’s breach of the implied covenant of good faith and fair dealing claim fails to state a plausible claim for two reasons: (1) it cannot meet its burden as to several of the elements of its claim, including that the required condition precedent occurred, that AARP unfairly interfered with the SRE’s right to receive the benefits of the contract, or that SRE was harmed by such interference; and (2) the gravamen of the implied covenant claim relies on the same facts and damages as SRE’s breach of contract claim and therefore renders the implied covenant claim superfluous. First, SRE is required to plead facts showing that “any conditions precedent to the defendant’s performance occurred.” See Rosenfeld, 732 F. Supp. 2d at 968. However, as set forth above, SRE fails to allege facts sufficient to demonstrate that the condition precedent-the guaranteed distribution commitments for 50% of the United States markets by September 30, 2015-occurred in order to trigger AARP’s obligation to negotiate in good faith under the terms of the Agreement. Because SRE fails to allege that the condition precedent was satisfied, SRE cannot meet the third required element and fails to state a plausible claim. On this independent basis, SRE’s claim for breach of the implied covenant of good faith and fair dealing should be dismissed. Second, SRE fails to plead any facts that AARP unfairly interfered with the SRE’s right to receive the benefits of the contract and that SRE was harmed by such interference. See Rosenfeld, 732 F. Supp. 2d at 968 (listing the required elements). In particular, SRE fails to allege that AARP engaged in any conduct to frustrate the Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 24 of 27 Page ID #:105 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 18 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 purpose of the Agreement, independent of the duplicative breach of contract allegations. The requirement of misconduct by a defendant, beyond breach of contract allegations, is demonstrated in Digerati Holdings. There, the parties had an agreement whereby, inter alia, the defendants were to make themselves available for interviews, access, and the provision of marketing materials. Digerati, 194 Cal. App. 4th at 884. The plaintiff complained that the defendants breached these contractual obligations. The plaintiff’s implied covenant claim was based on different grounds. In particular, the defendants allegedly undermined the sale and distribution of the film by telling distributors the film was unauthorized and could be subject to future litigation. Id. at 885. Thus, the breach of contract claim was based on alleged breaches of the express terms of the contract, while the implied covenant claim was based on alleged misconduct that frustrated the purpose of the contract. Because the plaintiff’s claims for breach of contract and breach of an implied covenant of good faith and fair dealing were based on separate and independent alleged conduct on the part of defendants, the court in Digerati addressed the merits of each claim independently.4 Id. at 885-86. In contrast, SRE fails to allege any separate and independent conduct on the part of AARP that would sustain a claim for breach of an implied covenant of good faith and fair dealing. Instead, SRE merely repeats its allegation that AARP breached the Agreement by failing to negotiate in good faith with SRE a long-term deal regarding production and distribution of the MFGAs. Compl. ¶ 44. Although SRE attempts to cast these conclusory allegations in the language of an implied covenant claim-i.e., that AARP “interfered” with its “right to receive the benefits of the Agreement” by “refusing to negotiate in good faith” and “cutting Plaintiff out,” it is plain that the underlying alleged conduct on the part of AARP recited in 4 The Digerati court was tasked with deciding a special motion to strike based on California’s anti-SLAPP statute. Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 25 of 27 Page ID #:106 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 19 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 support of SRE’s implied covenant claim is identical to the alleged conduct that serves as the basis for SRE’s breach of contract claim. See Compl. ¶¶ 44, 51. Because the Complaint does not contain any separate factual allegations of conduct beyond the supposed breach of AARP’s contractual duty to negotiate in good faith, the claims are duplicative. See Careau, 222 Cal. App. 3d at 1401 (dismissing implied covenant claim as “nothing more than a duplicative claim for contract damages”). For this additional reason, SRE’s claim for breach of an implied covenant of good faith and fair dealing should be dismissed. E. The Doe Defendants Should Be Dismissed Plaintiff’s claims against the Doe defendants should be dismissed for failure to state a claim against any unknown defendant.5 “As a general rule, the use of Doe pleading is disfavored in federal court.” See Newman v. San Joaquin Delta Cmty. Coll. Dist., No. CIV. 2:09-3441 WBS K, 2010 WL 3633737, at *2 (E.D. Cal. Sept. 14, 2010) (citing Turner v. Cty. of Los Angeles, 18 F. App’x 592, 596 (9th Cir. 2001) (affirming the district court’s grant of a motion to dismiss because plaintiff had not “shown that further discovery would uncover [the Doe defendants’] identities”)). Here, SRE filed its Complaint against AARP and “DOES 1-10,” and alleges that “each of the defendants was the agent, servant or employee of each of the other 5 The Doe defendants are a vestige of the state court proceedings prior to removal. The Federal Rules of Civil Procedure do not have a provision permitting the use of fictitious defendants. See, e.g., May v. Williams, No. 2:10-CV-576-GMN-LRL, 2012 WL 1155390, at *2, n.1 (D. Nev. Apr. 4, 2012) (granting motion to dismiss against Doe defendants where there was no indication that discovery would uncover the identity of the Doe defendants). Rather, the proper procedure in federal court is for a plaintiff to amend the complaint under Rule 15 if the identity of a defendant is discovered. Martel v. Cadjew, No. CIV S-11-0509 JAM, 2011 WL 4386209, at *4 (E.D. Cal. Sept. 20, 2011) (“Should plaintiff learn through discovery the identities of parties he wishes to serve, he must promptly move pursuant to Rule 15 of the Federal Rules of Civil Procedure to file an amended complaint to add them as defendants.”). Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 26 of 27 Page ID #:107 ARENT FOX LLP ATTO RN EY S AT LA W LOS A NG EL ES - 20 - MOTION TO DISMISS CASE NO. 2:16-cv-6431-RSWL-SS 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 defendants . . . .” Compl. ¶ 4. However, the Complaint fails to allege any facts pertaining to any unknown individual. The Complaint also fails to allege any specific claim against an unknown individual. The Doe defendants are simply a placeholder for which Plaintiff has not pleaded any facts that would state a plausible claim for relief. Without pleading a single fact against an unknown individual, there is no reason that discovery would reveal the identity of a single Doe defendant. See Turner, 18 F. App’x at 596. Moreover, for all of the reasons stated above, even if an individual Doe defendant’s conduct was identified-which it is not-the Complaint fails to state sufficient facts to state a claim for relief for any of the alleged claims. Accordingly, the Complaint must be dismissed as to the Doe defendants as well. IV. CONCLUSION For the foregoing reasons, the allegations set forth in SRE’s Complaint fail to state a claim upon which relief can be granted. Accordingly, AARP asks that SRE’s Complaint be dismissed in its entirety and with prejudice. Dated: September 2, 2016 ARENT FOX LLP By: /s/ Karen Van Essen KAREN VAN ESSEN KAREN CARR (Pro Hac Vice pending) Attorneys for Defendant AARP, INC. Case 2:16-cv-06431-RSWL-SS Document 7 Filed 09/02/16 Page 27 of 27 Page ID #:108 ORDER RE MOTION TO DISMISS CASE NO. 2:16-CV-6431-RSWL-SS 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 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SAM RUBIN ENTERTAINMENT, INC., a California corporation, Plaintiff, v. AARP, INC., a District of Columbia corporation, and DOES 1-10, Defendants. Case No. 2:16-cv-6431-RSWL-SS [Assigned to Hon. Ronald S.W. Lew] (PROPOSED) ORDER REGARDING DEFENDANT AARP, INC.’S MOTION TO DISMISS Case 2:16-cv-06431-RSWL-SS Document 7-1 Filed 09/02/16 Page 1 of 2 Page ID #:109 - 2 - ORDER RE MOTION TO DISMISS CASE NO. 2:16-CV-6431-RSWL-SS 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 (PROPOSED) ORDER Defendant AARP, Inc.’s Motion to Dismiss came on for a regularly scheduled hearing on October 4, 2016, at 10:00 a.m. in Courtroom 21, the Honorable Ronald S.W. Lew presiding. After considering the moving, opposing, and reply papers; the file and record in this case; and the oral argument of counsel, IT IS HEREBY ORDERED AND ADJUDGED that the Defendant AARP, Inc.’s Motion to Dismiss is GRANTED, and Plaintiff Sam Rubin Entertainment, Inc.’s Complaint is dismissed with prejudice. IT IS SO ORDERED. Dated: _______ __, 2016 Hon. Judge Ronald S.W. Lew United States District Court Judge Case 2:16-cv-06431-RSWL-SS Document 7-1 Filed 09/02/16 Page 2 of 2 Page ID #:110