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

Filing 26

ORDER re: DEFENDANT AARP, INC.'S MOTION TO DISMISS FIRST AMENDED COMPLAINT 21 by Judge Ronald S.W. Lew. The Court grants in part and denies in part AARP's Motion to Dismiss. The Motion to Dismiss is GRANTED as to the fraudulent inducement claim and as to Doe Defendants 1-10 WITH 21 DAYS LEAVE TO AMEND. The Court DENIES AARP's Motion to Dismiss as to the breach of contract claim. (jre)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 SAM RUBIN ENTERTAINMENT, INC. 13 14 Plaintiff, 15 v. 16 17 AARP, INC., and DOES 1-10, 18 19 20 21 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CV 16-6431-RSWL-SSx ORDER re: DEFENDANT AARP, INC.’S MOTION TO DISMISS FIRST AMENDED COMPLAINT [21] Currently before the Court is a Motion by Defendant 22 AARP, Inc. (“AARP”) to Dismiss Plaintiff Sam Rubin 23 Entertainment, Inc.’s (“Plaintiff”) First Amended 24 Complaint pursuant to Federal Rule of Civil Procedure 25 12(b)(6) (“Motion” or “Motion to Dismiss”). 26 21. For the reasons set forth below, the Court GRANTS 27 in part and DENIES in part AARP’s Motion. 28 /// 1 ECF No. 1 I. BACKGROUND 2 A. Factual Background 3 Plaintiff is a California corporation that serves 4 as a full-time production company. 5 (“FAC”) ¶¶ 1, 9, ECF No. 18. First Am. Compl. Sam Rubin (“Rubin”), a 6 television producer and entertainment reporter for the 7 KTLA morning news, is Plaintiff’s founder and owner. 8 Id. at ¶¶ 7, 9. AARP is a Washington, D.C. corporation 9 that has sponsored the “Movies for Grown-Ups Awards” 10 (“MFGAs”) since 2002. Id. at ¶¶ 2, 10.1 The MFGAs are 11 a ceremony recognizing films geared towards moviegoers 12 over 50 years old. 13 Id. at ¶ 10. Sometime in 2014, Rubin met with AARP’s 14 representative Bill Newcott (“Newcott”) and offered to 15 joint venture with AARP to produce the MFGAs for 16 television on KTLA. Id. at ¶¶ 11, 13. During 17 negotiations, Rubin wanted a long-term production 18 commitment. Id. at ¶ 16. Rubin produced the 2015 19 MFGAs for KTLA, incurring all costs and securing 20 sponsors, among other things. 21 Id. at ¶ 18. Around March 2015, Rubin and another entertainment 22 producer, Robb Weller (“Weller”) met with several AARP 23 representatives in Washington, D.C. Id. at ¶ 23. The 24 25 26 27 28 1 Plaintiff has also included Does 1 through 10 in its First Amended Complaint (“FAC”), whose “true names and capacities . . . are presently unknown to Plaintiff.” FAC ¶ 3. Plaintiff believes that the Doe Defendants are “in some way responsible for the damages herein alleged,” and thus will seek leave of Court to amend the FAC when Doe Defendants’ true names and capacities are discerned. Id. 2 1 following individuals were present: Martha Boudreau 2 (“Boudreau”), Chief Communications and Marketing 3 Officer; and Myrna Blyth (“Blyth”), Senior Vice 4 President and Editorial Director of Media. 5 23. Id. at ¶ Meg Grant (“Grant”), a former AARP representative, 6 was present by telephone. Id. At the meeting, Rubin 7 and Weller pitched their long-term vision for 8 televising the MFGAs (“the Project”). Id. at ¶ 24. 9 They allegedly emphasized that a “long-term 10 arrangement” was necessary to ensure the MFGA’s 11 continued success. 12 Id. Although AARP was initially reluctant to expend 13 money on the television production, Boudreau and other 14 representatives purportedly expressed enthusiasm for 15 the Project and moving forward with negotiations. 16 at ¶ 26. Id. Per Plaintiff, “[t]hey never mentioned that 17 they intended for the [P]roject to be a one-year deal 18 only.” Id. Plaintiff also alleges that the AARP 19 representatives at the March 2015 meeting never 20 mentioned the following: a multi-year deal was a non21 starter, and on multiple occasions, they had previously 22 rejected offers for a multi-year production deal for 23 the MFGAs. Id. at ¶ 26. Nevertheless, AARP led 24 Plaintiff to believe it would negotiate a long-term 25 production deal. 26 Id. The parties continued to negotiate a long-term 27 agreement after the March 2015 meeting. Id. at ¶ 27. 28 By June 2015, the parties realized that they would not 3 1 conclude negotiations in time to produce the 2016 2 MFGAs. Id. at ¶ 29. Accordingly, they entered into a 3 one-page stop-gap agreement (the “Agreement”) to 4 continue engaging in good-faith negotiations regarding 5 a production deal. Id. at ¶ 30. The portion giving 6 rise to the breach of contract claim provides: 7 8 9 10 11 12 13 14 15 If and when [Plaintiff] 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 . . . [i]f, however, by September 30, 2015 [Plaintiff] 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 . . . the parties shall have no further obligation to each other . . . and the Proposal shall otherwise be deemed null and void. 16 FAC Ex. A., ECF No. 18-1. 17 After entering into the Agreement, Rubin secured a 18 meeting with WGN-America, a national broadcaster. 19 at ¶ 35. Id. WGN-America purportedly enthusiastically 20 expressed its commitment to televise the MFGAs 21 nationwide. Id. Per Plaintiff, it secured the 22 “requisite guaranteed distribution in over 50% of the 23 country.” 24 Id. Sometime after this meeting, AARP allegedly 25 breached the Agreement. Blyth called Rubin and Weller, 26 subjected them to verbal abuse, and then AARP emailed 27 Plaintiff that it was no longer interested in a 28 possible deal with WGN-America. 4 Id. at ¶ 36. In so 1 doing, AARP allegedly harmed Plaintiff’s reputation and 2 goodwill in the entertainment industry. Id. at ¶ 38. 3 B. Procedural Background 4 Plaintiff filed its First Amended Complaint (“FAC”) 5 on September 23, 2016 [18], and AARP filed a Motion to 6 Dismiss the First Amended Complaint on October 11, 2016 7 [21]. The Opposition and Reply timely followed on 8 November 1, 2016 and November 8, 2016 [22, 23]. 9 II. DISCUSSION 10 A. Legal Standard 11 Federal Rule of Civil Procedure 12(b)(6) allows a 12 party to move for dismissal of one or more claims if 13 the pleading fails to state a claim upon which relief 14 can be granted. Fed. R. Civ. P. 12(b)(6). A complaint 15 must “contain sufficient factual matter, accepted as 16 true, to state a claim to relief that is plausible on 17 its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 18 (internal quotation marks omitted). Dismissal can be 19 based on a “lack of a cognizable legal theory or the 20 absence of sufficient facts alleged under a cognizable 21 legal theory.” Balistreri v. Pacifica Police Dep't, 22 901 F.2d 696, 699 (9th Cir. 1990). 23 In ruling on a 12(b)(6) motion, a court may 24 generally consider only allegations contained in the 25 pleadings, exhibits attached to the complaint, and 26 matters properly subject to judicial notice. Swartz v. 27 KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A court 28 must presume all factual allegations of the complaint 5 1 to be true and draw all reasonable inferences in favor 2 of the non-moving party. Klarfeld v. United States, 3 944 F.2d 583, 585 (9th Cir. 1991). The question 4 presented by a motion to dismiss is not whether the 5 plaintiff will ultimately prevail, but whether the 6 plaintiff has alleged sufficient factual grounds to 7 support a plausible claim to relief, thereby entitling 8 the plaintiff to offer evidence in support of its 9 claim. Iqbal, 556 U.S. at 678; Swierkiewicz v. Sorema 10 N.A., 534 U.S. 506, 511 (2002). While a complaint need 11 not contain detailed factual allegations, a plaintiff 12 must provide more than “labels and conclusions” or “a 13 formulaic recitation of a cause of action’s elements.” 14 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 15 (internal citation omitted). 16 B. Discussion 17 1. 18 Plaintiff alleges that AARP and its representatives Fraudulent Inducement 19 fraudulently induced it to enter into the Agreement by 20 (1) misrepresenting that it would engage in good-faith 21 negotiations regarding a long-term production deal; and 22 (2) failing to disclose that it never intended to 23 undertake a multi-year deal. 24 FAC ¶¶ 26, 46. To state a claim for fraudulent inducement, a party 25 must allege the following: (1) misrepresentation or 26 omission; (2) knowledge of falsity; (3) intent to 27 defraud; (4) justifiable reliance; and (5) resulting 28 damage. See Stewart v. Ragland, 934 F.2d 1033, 1043 6 1 (9th Cir. 1991). 2 If a claim sounds in fraud, it must comply with the 3 heightened pleading requirements in Federal Rule of 4 Civil Procedure 9(b). See UMG Recordings, Inc. v. 5 Global Eagle Entm’t, Inc., 117 F. Supp. 3d 1092, 1106 6 (C.D. Cal. 2015). Plaintiff must provide “an account 7 of the time, place, and specific content of the false 8 representations as well as the identities of the 9 parties to the misrepresentations.” Swartz v. KPMG 10 LLP, 476 F.3d 756, 764 (9th Cir. 2007). Rule 9(b) asks 11 for an identification of the parties to the alleged 12 misrepresentations, putting defendant “on notice of the 13 specific conduct that forms the basis of the claim 14 against them.” Chronic Tacos Enters., Inc. v. Chronic 15 Tacos Huntington Beach, Inc., No. SACV-10-1414 DOC 16 (RNBx), 2011 WL 1585594, at * 2 (C.D. Cal. April 26, 17 2011). “Averments of fraud must be accompanied by ‘the 18 who, what, when, where, and how’ of the misconduct 19 charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 20 1106 (9th Cir. 2003). 21 The Court now turns to whether Plaintiff has 22 adequately pled the elements of its fraudulent 23 inducement claim under Rule 9(b)’s more exacting 24 standards. 25 26 a. Misrepresentation or Omission The Court must decide whether AARP’s omissions and 27 misrepresentations satisfy Rule 9(b). Plaintiff 28 alleges that at the March 2015 meeting in Washington, 7 1 D.C., AARP representatives Boudreau, Blythe, and Grant 2 “failed to disclose” that they only intended the 3 televised production of the MFGAs to be a one-year deal 4 and that they had repeatedly rejected previous offers 5 for a multi-year production deal for the MFGAs. 6 26, 46. FAC ¶¶ They also actively misrepresented their 7 willingness to engage in a long-term production deal. 8 Id. at ¶ 46. 9 “Where a fraudulent omission is at issue, the 10 requirements of Rule 9(b) are relaxed, but not 11 eliminated.” UMG Recordings, 117 F. Supp. 3d at 1107. 12 This is because a plaintiff is unable to plead the 13 specific time, place, and content of an omission. See 14 Huntair, Inc. v. Gladstone, 774 F. Supp. 2d 1035, 1044 15 (N.D. Cal. 2011). 16 Recently, in Romero v. Securus Techs., Inc., ---F. 17 Supp. 3d--- 2016 WL 6157953, at *9 (S.D. Cal. Oct. 24, 18 2016), plaintiff stated a claim for fraudulent 19 concealment under Rule 9(b). Plaintiffs alleged that 20 between April 2014 and August 2014 in San Diego, 21 defendant’s employee knew that the securities-company 22 defendant was recording attorney-client calls but 23 omitted this information, sidestepping its duty to 24 disclose this information to victims and general 25 public. Id. The allegations passed muster, as they 26 pinpointed the “who, what, where, when, and how” 27 required by Rule 9(b). 28 Id. Plaintiff alleges that at the March 2015 8 1 Washington, D.C. meeting, Boudreau, Blyth, and Grant 2 failed to mention the Project was only a one-year deal 3 and that they had fielded and rejected multi-year 4 offers for the Project. 5 where, and who.” Id. This evinces the “when, And Plaintiff does aver—albeit in a 6 convoluted way—that the omission is material because 7 AARP knew that “if [p]laintiff knew that (a) the best 8 AARP would ever consider doing was a single-year deal . 9 . . then Plaintiff would not have expended its time and 10 effort on the project.” FAC ¶ 48; Romero, 2016 WL 11 6157953, at *9 (defendant’s duty to disclose the 12 recording of phone calls, and plaintiffs’ allegation 13 that they would not have used defendants’ services had 14 the omitted facts been disclosed, satisfied Rule 9(b)) 15 (citation omitted). 16 While the purported omissions could possibly 17 satisfy Rule 9(b), Plaintiff’s allegations are 18 railroaded by other deficiencies. It bears repeating 19 that an omission does not obviate Rule 9(b), but rather 20 relaxes its standards. 21 at 1107. UMG Recordings, 117 F. Supp. 3d In Romero, the omission was material because 22 defendants gleaned private information about 23 plaintiffs—violating attorney-client privacy—that would 24 be material to plaintiffs and potentially the public. 25 By contrast, AARP’s failure to disclose its stance on a 26 long-term deal strikes more at AARP’s purported 27 nonperformance of its promise to enter into a multi28 year deal. UMG Recordings, 117 F. Supp. 3d at 1108 9 1 (“Mere nonperformance of a promise does not suffice to 2 show the falsity of the promise.”) (citations omitted). 3 Plaintiff has not pled the “how/why” specificity; if 4 anything, AARP’s failure to disclose its intentions is 5 more of a vehicle for Plaintiff to grouse about the 6 ultimate failure of the Project and the Agreement. 7 Even if the alleged omissions satisfy Rule 9(b), 8 AARP’s spoken misrepresentations do not. Plaintiff 9 avers that AARP misrepresented its willingness to 10 “engage in good-faith negotiations regarding a long11 term production deal.” 12 FAC ¶ 46. AARP argues that Plaintiff cannot identify any 13 specific false statement, let alone the speaker making 14 the statement. Def.’s Mot. to Dismiss (“Mot.”) 10:1-9. 15 The Court agrees. When a corporation has committed a 16 fraud, Rule 9(b) requires the plaintiff to “allege the 17 names of the employees or agents who purportedly made 18 the fraudulent representations or omissions, or at a 19 minimum identify them by their titles and/or job 20 responsibilities.” UMG Recordings, 117 F. Supp. 3d at 21 1108 (citing U.S. ex rel. Lee v. SmithKline Beecham, 22 Inc., 245 F.3d 1048, 1051 (9th Cir. 2001)). The 23 plaintiff should also allege the individuals’ 24 “authority to speak, to whom they spoke, what they said 25 or wrote, and when it was said or written.” Id. at 26 1107. 27 At first glance, Plaintiff’s allegations are 28 adequate. Plaintiff generally identifies that 10 1 Boudreau, Blyth, and Grant were present at the March 2 2015 Washington, D.C. meeting, and sets forth their job 3 titles (e.g., Chief Communications and Marketing 4 Officer). FAC ¶¶ 22-23. But cracks begin to show in 5 Plaintiff’s allegations when it uses the collective 6 “they” or “AARP” to state that the corporation 7 generally, or its representatives, failed to disclose 8 their disinterest in a long-term deal. Not only does 9 Plaintiff fail to indicate who—among Boudreau, Blythe, 10 and Grant—communicated what, but also Plaintiff fails 11 to specify what was said, instead generally averring 12 that “AARP [represented] it would engage in good faith 13 negotiations regarding a long-term production deal.” 14 FAC ¶ 46. Were the Court to sign on to Plaintiff’s 15 reasoning, any plaintiff could generally mention 16 employees/representatives present at a meeting, specify 17 their job titles, and then vaguely mention a 18 misrepresentation. 19 Rule 9(b). This is simply not enough under Moreover, the Rule 9(b) specificity 20 framework is in place to prevent this kind of unchecked 21 fact pleading from happening. 22 Plaintiff’s allegations also fail under Rule 9(b) 23 because they lack the specific content of the 24 fraudulent representations or why the statements were 25 false when made. In UMG Recordings, defendant 26 fraudulently promised to continue distributing 27 plaintiff’s recordings for in-flight entertainment use, 28 and the parties concurred that an “agreement” would 11 1 follow. Id. at 1107. These representations were not 2 sufficiently specific in content. Plaintiff did not 3 provide details about the terms of this hazy 4 “agreement,” and only vaguely asserted that “the 5 parties agreed [to] continued use of the sound records 6 for an indefinite period.” 117 F. Supp 3d at 1107. 7 Like the vague “agreement” defendant conceded to in 8 UMG, AARP agreed to engage in future “good-faith 9 negotiations” with Plaintiff. FAC ¶ 46. And 10 similarly, Plaintiff does not detail the contours of 11 these good-faith negotiations that AARP allegedly 12 promised to undertake.2 13 14 b. Knowledge of Falsity and Intent to Defraud Plaintiff avers that AARP knew it had no intention 15 to enter into a multi-year deal to produce the MFGAs, 16 FAC ¶ 47. Plaintiff also avers the following 17 circumstantial evidence of AARP’s knowledge and intent: 18 (1) AARP knew at least in March 2015 that Plaintiff was 19 only interested in a long-term deal; (2) AARP actively 20 engaged Plaintiff after the March 2015 meeting, leading 21 it to believe in its commitment to a long-term deal; 22 (3) AARP later breached the Agreement; (4) Blyth 23 verbally berated Plaintiff to inform it that AARP would 24 25 2 To be fair, the parties here had an Agreement detailing 26 contingencies should Plaintiff secure national broadcasting, unlike the lack of an agreement altogether in UMG. But a 27 substantive agreement does not fix the lack of detail inherent in the allegation that AARP would engage in “good-faith 28 negotiations.” 12 1 no longer negotiate; (5) and AARP explored alternative 2 production arrangements after breaching the Agreement. 3 FAC ¶ 49. 4 Knowledge and intent can be averred generally under 5 Rule 9(b). Fed. R. Civ. P. 9(b) (“Malice, intent, 6 knowledge, and other conditions of a person’s mind may 7 be alleged generally.”) Effectively, the plaintiff 8 should explain why the disputed statement was false 9 when it was made, see UMG Recordings, 117 F. Supp. 3d 10 at 1107, and “point to facts which show that defendant 11 harbored an intention not to be bound by the terms of 12 the contract at formation.” Nikoonahad v. Rudolph 13 Techs., Inc., C 08-2290 JF (PVT), 2008 WL 4065831, at 14 *4 (N.D. Cal. Aug. 27, 2008) (citation omitted). 15 It is unclear how AARP harbored the requisite 16 intent and knowledge at the time of contract formation, 17 anywhere between June and July 2015.3 Plaintiff’s focus 18 on the March 2015 meeting in Washington D.C. is 19 specious and distracting. Even accepting March 2015 as 20 the key time window for AARP’s purportedly nefarious 21 conduct, it is difficult to reconcile AARP’s March 2015 22 intent not to enter into a long-term agreement with its 23 contradictory “earnest” efforts to negotiate a long24 term agreement from March 2015 to June 2015, when the 25 26 27 28 3 Because the contract at issue was formed between June 2015—the date of the proposal—or even as late as July 2015, FAC ¶¶ 28-31, when the parties reviewed their “AARP Awards Preliminary Deal Memo,” the Court focuses its attention on AARP’s intent and knowledge at that time. 13 1 parties continued negotiations. FAC ¶¶ 27-28, 30, 49 2 (“[T]he negotiation of a long-term agreement commenced 3 in earnest . . . AARP actively and continuously engaged 4 with Plaintiff, both during the [March 2015] meeting 5 and after.”). The link between these allegations is 6 tenuous at best. Plaintiff needs at least some 7 specific indication that AARP never intended to 8 engineer a long-term deal; for instance, a statement 9 from AARP that they “knew it all along.” In re 10 Glenfed, Inc. Sec. Litig., 42 F.3d 1541, n.9 (9th Cir. 11 1994), superseded by statute on other grounds by, 12 Johnson v. Wal-Mart Stores, Inc., 544 F. App’x 696 (9th 13 Cir. 2013).4 14 The Court is cognizant that weighing contradictions 15 between Plaintiff’s allegations treads into summary 16 judgment territory; as such, these contradictions do 17 not carry the day in the Court’s analysis. 18 Nevertheless, internal inconsistencies between 19 Plaintiff’s allegations places them in tension with the 20 facial plausibility required in Twombly/Iqbal and 21 22 23 24 25 26 27 28 4 Plaintiff’s theory is that AARP kept up a “ruse, since the March 2015 meeting, of pretending it was interested in a longterm deal . . . to induce [Plaintiff to sign the July 2015 Agreement].” Opp’n 10:8-10. But various inconsistences undermine this theory. Plaintiff argues that AARP did not disclose its unwillingness to strike a long-term deal, yet in the same breath alleges that as early as late 2014, before the February 2015 MFGAs, AARP was “initially uncertain” and “reluctant” to commit to a multi-year deal. FAC ¶¶ 16, 25. If anything, this inconsistency shows that Plaintiff was perhaps on some notice that AARP was not fully on board with a long-term deal. 14 1 jettisons them more into the realm of speculative 2 allegations. And the inconsistencies undercut 3 Plaintiff’s insistence that AARP knew and intended all 4 along to fraudulently induce Plaintiff into the 5 Agreement. 6 The most compelling reason why Plaintiff fails to 7 state a claim under the “knowledge/intent to induce” 8 elements is because Plaintiff attempts to recast its 9 breach of contract claim as a fraudulent inducement 10 claim. “Something more than nonperformance is required 11 to prove the defendant’s intent not to perform his 12 promise.” Tanedo v. East Baton Rouge Parish School 13 Bd., No. SA CV10–01172 JAK, 2012 WL 5447949, at *7 14 (C.D. Cal. Oct. 4, 2012). “[M]ere failure to perform a 15 contract does not constitute fraud.” Richardson v. 16 Reliance Nat’l. Indem. Co., No. C 99-2952 CRB, 2000 WL 17 284211, at *4 (N.D. Cal. Mar. 9, 2000). Otherwise, 18 “every breach of contract claim would support a claim 19 of fraud so long as the [plaintiff] adds to his 20 complaint a general allegation that the defendant never 21 intended to keep her promise.” Tanedo, 2012 WL 22 5447959, at *8 (citations, internal quotation marks, 23 and alterations omitted). 24 For instance, AARP’s “complete disregard[]” for the 25 Agreement, Blyth’s verbal tirade against Plaintiff 26 before truncating the contract, and AARP’s later 27 alleged pursuit of alternative production arrangements 28 are all part and parcel of AARP’s non-performance of 15 1 the Agreement. The center of gravity should be AARP’s 2 intent at the time of contract formation, not 3 allegations of AARP’s breach after the fact. Plaintiff 4 channels its disappointment over the failed Project to 5 retroactively accuse AARP of fraudulent inducement in 6 the most general of averments. This is insufficient to 7 plead knowledge and intent. 8 9 c. Justifiable Reliance and Resulting Damage “Reliance exists when the misrepresentation or non- 10 disclosure was an immediate cause of the plaintiff’s 11 conduct which altered his or her legal relations, and 12 when without such misrepresentation or non-disclosure 13 he or she would not, in all reasonable probability, 14 have entered into the contract or other transaction.” 15 City Solutions, Inc. v. Clear Channel Commc’ns., 365 16 F.3d 835, 840 (9th Cir. 2004) (citation omitted). 17 Plaintiff argues that he has expended a “substantial 18 amount of time” discussing the Project with AARP and 19 its representatives, flying to D.C. for a lengthy 20 meeting, and entering into the Agreement. 21 FAC ¶ 50. Plaintiff’s alleged reliance is specific enough and 22 justifiable under Twombly/Iqbal’s general averments, 23 but the Court has difficulty discerning whether the 24 allegedly fraudulent misrepresentations and omissions 25 were the “sole or even the predominant or decisive 26 factor in influencing [Plaintiff’s] conduct.” 27 Solutions, 365 F.3d at 840 (citation omitted). 28 Assuming for the moment that AARP indeed made 16 City 1 misrepresentations, Plaintiff’s reliance in the form of 2 investing time and effort may nevertheless have been 3 influenced in part by AARP’s initial “hesitation” to 4 negotiate, rather than its misrepresentations. See FAC 5 ¶ 25 (“Recognizing AARP’s reluctance to spend 6 substantial funds on the television production, 7 [Plaintiff] presented a budget [at the March 2015 8 meeting].”) Nonetheless, Plaintiff has at least 9 facially demonstrated the plausibility of its 10 justifiable reliance.5 11 12 d. Economic Loss Doctrine Aside from failing under the Rule 9(b) specific 13 pleading standards, Plaintiff’s fraudulent inducement 14 claim is barred by the economic loss doctrine. The 15 economic loss doctrine provides that “no tort cause of 16 action will lie where the breach of duty is nothing 17 more than a violation of a promise which undermines the 18 expectations of the parties to an agreement.” JMP 19 Secs. LLP v. Altair Nanotechs. Inc., 880 F. Supp. 2d 20 1029, 1042 (N.D. Cal. 2012). The policy behind the 21 rule is to “prevent every breach of contract from 22 giving rise to tort liability and the threat of 23 24 25 26 27 28 5 The “resulting damages” element is on shakier ground. Plaintiff allegedly has lost goodwill “generated over decades in Hollywood” and has also suffered “severe[] harm[] to [its] reputation,” detrimentally affecting its ability to get future projects. FAC ¶¶ 33, 38. While Plaintiff plausibly alleges damages, the resulting damages are problematically intertwined with the contract claim damages, and likely barred under the economic loss doctrine, as discussed in infra Part II.B.1.d. 17 1 punitive damages.” 2 Id. at 1042. In Altair, defendant hired JMP as its financial 3 advisor, but allegedly did not “make good on its 4 promise to pay JMP its contingent fee” after JMP 5 facilitated a transaction. Id. at 1033. JMP sued for 6 fraud, claiming Altair misrepresented it would pay 7 certain fees, but knowing full well that it would not. 8 Id. The court applied the economic loss doctrine, 9 explaining that JMP took its allegations for a 10 “straightforward claim for breach of commercial 11 contract” and “recast them as torts.” Id. at 1043. 12 Altair’s alleged conduct was not sufficiently deviant 13 to warrant tort remedies. Instead, the parties’ 14 dispute was whether JMP was owed 1.5% commission or a 15 4% commission; effectively, a claim that Altair broke 16 its promises in bad faith. 17 Id. at 1044. Plaintiff’s fraudulent inducement claim fails under 18 the economic loss doctrine. Plaintiff has not 19 identified any independent duty AARP had to furnish it 20 with a long-term production deal. Hannibal Pictures, 21 Inc. v. Sonja Prods. LLC, 432 F. App’x 700, 702 (9th 22 Cir. 2011)(“Purported tort claims related to the 23 performance of a contract are viable only where the 24 duty that gives rise to tort liability is either 25 completely independent of the contract or arises from 26 conduct which is both intentional and intended to 27 harm”)(emphasis in original). 28 Moreover, Plaintiff has not established that AARP’s 18 1 conduct was intentional or intentionally harmful, as 2 discussed in supra Part II.B.1.b. On its face, the 3 Agreement shows that the allegedly fraudulent 4 claims—that AARP would good-faith negotiate a possible 5 long-term deal—are intertwined with the substance of 6 the Agreement. FAC Ex. A (“If and when [Plaintiff] 7 obtains guaranteed distribution commitments from 8 television and/or cable stations to exhibit the First 9 Program . . . then the parties shall attempt in good 10 faith to complete negotiation of their agreement 11 concerning the Programs.”) Plaintiff also collapses 12 the remedies sought under both the contract and tort 13 claims; for both, Plaintiff claims that it has suffered 14 reputational harm and lost goodwill in its industry. 15 FAC ¶¶ 38, 39 (“Plaintiff never would have incurred 16 those costs and would not have lost those opportunities 17 had it known that AARP did not intend to negotiate in 18 good faith and abide by its promises.”) As in Altair, 19 Plaintiff’s fraudulent inducement claim is a thinly 20 veiled attempt to seek the same remedies for the 21 contract claim and to punish AARP for its 22 nonperformance under the contract. 23 Based on the above, the Court GRANTS AARP’s Motion 24 to Dismiss as to the fraudulent inducement claim. 25 2. 26 Plaintiff argues that it has satisfied the Breach of Contract 27 /// 28 /// 19 1 condition precedent6 under the Agreement by meeting with 2 WGN-America, who “enthusiastically expressed its 3 commitment to televise the show nationwide . . . 4 Plaintiff had secured from WGN-America the requisite 5 guaranteed distribution in over 50% of the country.” 6 Id. at ¶ 35. Plaintiff alleges that AARP breached the 7 Agreement by failing to complete negotiations after the 8 successful meeting. 9 FAC ¶ 42. The key inquiry for the Court is whether Plaintiff 10 has pled performance or occurrence of a condition 11 precedent. Per Federal Rule of Civil Procedure 9(c), 12 “it is sufficient to aver generally that all conditions 13 precedent have been performed or have occurred.” But 14 “denial of performance or occurrence shall be made 15 specifically and with particularity.” Fed. R. Civ. P. 16 9(c). 17 Plaintiff relies on Kieran v. Zurich Cos., 150 F.3d 18 1120, 1123-24 (9th Cir. 1998), where a plaintiff did 19 not specifically allege that he signed a waiver, which 20 was a condition precedent to the “Parasailing 21 Warranties” provision. Nonetheless, he alleged that 22 23 24 25 26 27 28 6 As previously mentioned, the Agreement provided that once Plaintiff obtained “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 would attempt in good faith to complete negotiations. FAC Ex. A. But if Plaintiff was unable to garner distribution commitments “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” by September 30, 2015, then the parties would “have no further obligation to each other.” Id. 20 1 the parasailing accident took place “while the policy 2 was in full force and effect,” indicating to the Court 3 that he must have satisfied all the conditions 4 precedent. Id. at 1124. The court concluded that 5 “[t]his general statement is an adequate averment under 6 the loose guidelines of Rule 9(c).” 7 Id. The standards for pleading a condition precedent 8 are lax. As such, the Court is persuaded that 9 Plaintiff’s FAC can survive at least as to this claim. 10 Ruiz Food Prods. v. Catlin Underwriting U.S., Inc., No. 11 1:11–cv–00889 OWW DLB, 2011 WL 3323046, at *4 (E.D. 12 Cal. Aug. 2, 2011) (motion to dismiss denied for 13 allegation that “[p]laintiff has performed all 14 obligations required of it to be performed under the 15 terms of the Policy” was a general allegation of full 16 performance). Even though Plaintiff could have 17 generally alleged it satisfied the condition precedent, 18 it pled that “it secured from [WGN] the requisite 19 guaranteed distribution in over 50% of the country. 20 Now the good-faith negotiations should have begun in 21 earnest.” FAC ¶ 35. Under the relaxed pleading 22 standards of Rule 9(c), and in light of Kieran, this 23 allegation is enough to show that Plaintiff performed 24 the condition precedent of obtaining guaranteed 25 distribution commitments in at least 50% of the U.S. 26 Markets. 27 FAC Ex. A. AARP’s argument that “[WGN’s] [e]nthusiastic 28 expression of commitment is not a guarantee,” and its 21 1 focus on the lack of facts showing guaranteed 2 distribution by the September 30 deadline, Mot. 20:83 10, does not convince the Court that Plaintiff’s 4 allegations are defective. Effectively, AARP tries to 5 import Rule 9(b)’s heightened pleading requirements 6 onto the contract claim and extract meaning from 7 Plaintiff’s allegations; this demands “a factual 8 analysis that is not appropriate at the motion to 9 dismiss stage.” City & Cnty. Of S.F. v. Tutor-Saliba 10 Corporation, No. C 02-5286 CW, 2005 WL 645389, at *19 11 (N.D. Cal. Mar. 17, 2005). A motion to dismiss does 12 not ask whether Plaintiff will prevail in the action, 13 but whether Plaintiff is entitled to offer evidence in 14 support of its claim. Swierkiewicz v. Sorema N.A., 534 15 U.S. 506, 511 (2002). Plaintiff’s allegations of a 16 satisfied condition precedent are sufficient to survive 17 a motion to dismiss, and the issue of breach of 18 contract shall be further explored in discovery. 19 Therefore, the Court DENIES AARP’s Motion to 20 Dismiss for the breach of contract claim. 21 3. 22 AARP argues that the claims against the Doe Whether the Doe Defendants Should be Dismissed 23 Defendants should be dismissed as the FAC fails to 24 allege facts or specific claims regarding any unknown 25 individuals. Mot. 22:9-10. And it is unlikely that 26 discovery will reveal Doe Defendant identities. 27 14:6-7. Reply Plaintiff counters that the Doe Defendants are 28 relevant and create a substantive right under 22 1 California Code of Civil Procedure §§ 474, 583.210 to 2 “substitute real defendants for Does for three years 3 after filing the complaint . . . .” 4 Opp’n 13:5-14. As “a general rule, the use of John Doe to identify 5 a defendant is not favored in federal court.” Gillespie 6 v. Civiletti, 629 F.2d 637, 642 (9th Cir. 1980). 7 Unlike under California law, there is no provision in 8 the Federal Rules permitting the use of fictitious 9 defendants.7 Id. Pleading Doe Defendants is disfavored, 10 as the court cannot determine that it is a real person 11 or entity that can be sued in federal court, or 12 determine if plaintiff's suit could survive a Doe 13 Defendant's motion to dismiss. Lee v. Plummer, No. 14 C-04-2636 VRW, 2005 WL 91380, at *5 (N.D. Cal. Jan. 17, 15 2005). 16 Plaintiff has not pled enough facts to maintain its 17 unnamed Doe Defendants. Galindo v. City of San Mateo, 18 No. 16-cv-03651-EMC, 2016 WL 7116927, at *10 (N.D. Cal. 19 Dec. 7, 2016) (allegation that one or more Doe 20 Defendants was responsible for the hiring and 21 supervising other defendants was not enough, nor was 22 only mentioning Doe Defendants in headings or after 23 other defendants’ names). Plaintiff’s allegation is 24 even more conclusory than in Galindo; it only alleges 25 26 27 28 7 Pleading Doe Defendants is not per se prohibited in federal court. L.R. 19-1 (limiting parties from pleading no more than ten “Doe or fictitiously named parties.”) Rather, there is no affirmative substantive right to plead Doe Defendants, as in California law. 23 1 that the “true names and capacities” of Does 1-10 are 2 “presently unknown to Plaintiff . . . [but] each of the 3 Doe defendants is in some way responsible for the 4 damages herein alleged.” The Court agrees with AARP 5 that Plaintiff has likely adduced all individuals 6 allegedly responsible for the fraudulent inducement 7 claims at the March 2015 meeting. Mot. 13:22-27. And 8 it is unlikely that Plaintiff can allege any new, 9 unknown individual engaging in independent misconduct 10 at the meeting. Thus, the Court GRANTS the Motion to 11 Dismiss as to all claims against the Doe Defendants. 12 4. Leave to Amend 13 Federal Rule of Civil Procedure 15(a) provides that 14 a party may amend their complaint once “as a matter of 15 course” before a responsive pleading is served. 16 R. Civ. P. 15(a). Fed. After that, the “party may amend the 17 party's pleading only by leave of court or by written 18 consent of the adverse party and leave shall be freely 19 given when justice so requires.” Id. “Rule 15's 20 policy of favoring amendments to pleadings should be 21 applied with extreme liberality.” United States v. 22 Webb, 655 F.2d 977, 979 (9th Cir. 1981) (internal 23 quotations omitted). But if in a motion to dismiss, 24 any amendment to the pleadings would be futile, leave 25 to amend should not be granted. Bush v. Liberty Life 26 Assurance Co. of Boston, 77 F. Supp. 3d 900, 906-07 27 (N.D. Cal. 2015). 28 Plaintiff should have leave to amend its fraudulent 24 1 inducement claim, to flesh out which AARP employees 2 induced it to enter the contract and what, precisely, 3 they said that was misleading. Plaintiff may also 4 distinguish the remedies for its tort claim from its 5 contract claim, to shore up the economic loss doctrine 6 problem. The Court also gives Plaintiff leave to 7 provide the court with the identities of the Doe 8 defendants, or with specific factual information 9 identifying them. 10 III. CONCLUSION 11 Based on the foregoing, the Court grants in part 12 and denies in part AARP’s Motion to Dismiss. The 13 Motion to Dismiss is GRANTED as to the fraudulent 14 inducement claim and as to Doe Defendants 1-10 WITH 14 15 21 DAYS LEAVE TO AMEND. The Court DENIES AARP’s Motion 16 to Dismiss as to the breach of contract claim. 17 IT IS SO ORDERED. 18 19 DATED: December 16, 2016 s/ 20 HONORABLE RONALD S.W. LEW Senior U.S. District Judge 21 22 23 24 25 26 27 28 25

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