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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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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12 SAM RUBIN ENTERTAINMENT,
INC.
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Plaintiff,

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v.
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17 AARP, INC., and DOES 1-10,
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Defendants.

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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

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