Daisley v. Blizzard Music Limited (US) et al

Filing 48

MINUTES (IN CHAMBERS)DEFENDANTS' MOTION TO DISMISS OR STAY ACTION (Dkt. 41, filed March 8, 2017) by Judge Christina A. Snyder: In accordance with the foregoing, the Court GRANTS defendants motion to dismiss plaintiff's complaint. The action is dismissed without prejudice to plaintiff's right to reassert his claims in arbitration. IT IS SO ORDERED. granting 41 MOTION to Dismiss Case ( MD JS-6. Case Terminated ); granting 41 MOTION to Stay Case (MD JS-6. Case Terminated) (yl)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

Present: The Honorable 

CHRISTINA A. SNYDER 

Attorneys Present for Plaintiffs: 

N/A 

Tape No.

Attorneys Present for Defendants: 

Colin Proksel

Peter Anderson 

Catherine Jeang 
Deputy Clerk 

Laura Elias 
Court Reporter / Recorder

Alan Howard
DEFENDANTS’ MOTION TO DISMISS OR STAY ACTION
Proceedings:  
(Dkt. 41, filed March 8, 2017)

I.

INTRODUCTION

On August 8, 2016, plaintiff Robert Daisley filed this action in the District Court
for the State of Nevada against defendants Blizzard Music Limited (US) (“Blizzard US”)
and John Michael “Ozzy” Osbourne. Dkt. 1, Ex. 1 (“Compl.”). On August 31, 2016,
defendants removed this case to federal court in Nevada. Dkt. 1. On February 22, 2017,
the U.S. District Court for the District of Nevada granted defendants’ motion to transfer
this case to this district. Dkt. 26.
Plaintiff asserts three claims: (1) fraud against Blizzard US, (2) fraud against
Osbourne, and (3) accounting against both defendants. Compl. ¶¶ 97–130. The
gravamen of plaintiff’s complaint is that defendants deprived plaintiff of his rightful
compensation because Blizzard US improperly deducted 15 percent from its gross
receipts before remitting payments to its parent company, Blizzard Music Limited (UK)
(“Blizzard UK”), which distributes royalties to plaintiff.
On March 8, 2017, defendants filed a motion to dismiss or stay this action pending
arbitration or, alternatively, to dismiss this action for failure to state a claim on which
relief may be granted. Dkt. 41 (“Motion”). Plaintiff filed his opposition on March 27,
2017, dkt. 43 (“Opp’n), and defendants filed their reply on April 10, 2017, dkt. 46
(“Reply”).
Having carefully considered the parties’ arguments, the Court finds and concludes
as follows.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

II.

BACKGROUND
Plaintiff alleges the following facts.

Plaintiff is a musician and composer who co-authored songs on two albums—
Blizzard of Ozz and Diary of a Madman—with Osborne, among others. Compl. ¶¶ 3,
19–31, 112. Plaintiff refers to the songs on these two albums collectively as the
“Disputed Compositions.” Id. ¶ 32.
Blizzard US is a Nevada corporation that is the wholly-owned subsidiary of
Blizzard UK. Id. ¶ 11. Osbourne is the president, treasurer, director, and CEO of
Blizzard US, and served as the lead vocalist on Blizzard of Ozz and Diary of a Madman.
Id. ¶¶ 12, 85.
On July 1, 1980 and February 1, 1981, plaintiff assigned his author share of the
copyrights for the Disputed Compositions to Blizzard UK. Id. ¶¶ 34, 36. Plaintiff refers
to these assignment contracts as the “Songwriter Agreements.” Id. ¶ 33.
Blizzard UK administers the copyrights for the Disputed Compositions and is
responsible for the collection and distribution of royalties to plaintiff. Id. ¶ 39. The
royalties are earned through various types of licenses and sales, which plaintiff refers to
collectively as “Commercial Exploitations.” Id.
Under each of the Songwriter Agreements for the Disputed Compositions, Blizzard
UK is required to “pay or cause to be paid to the Composer/Author in respect of said
work . . . 90 percent . . . of all gross royalties and other payments received by the
Publisher in respect of sound recordings, piano rolls, and all other devices for audibly and
visual reproducing the said work for sale or hire in the United Kingdom of Great Britain
and northern Ireland.” Id. ¶ 41. For income earned through Commercial Exploitations in
the United States and other territories, Blizzard UK was required to pay plaintiff “90
percent . . . of all monies received in respect of the right to record the said work on sound
tracks for use with cinematograph, television and other films, and to the right to use said
work (whether prerecorded or not) in any television or other programme.” Id. ¶ 42. On
information and belief, plaintiff alleges that Osbourne relied on Blizzard US to serve as
the publisher for the Disputed Compositions in the United States, including the
Commercial Exploitation of the Disputed Compositions. Id. ¶ 43.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

Since the execution of the Songwriter Agreements, Blizzard UK has provided
royalty statements to plaintiff twice a year, which are required to represent accurately
payments in accordance with the terms of the Songwriter Agreements, including (a) that
Blizzard UK received 100 percent of the agreed-upon license fee; (b) the share to be
allocated to the recipient for the specific Disputed Composition; and (c) the royalty rate
applied. Id. ¶ 44.
In or around February 2014, plaintiff—concerned about his royalty statements and
the amount of compensation received as a result of the Commercial Exploitation of the
Disputed Compositions—attempted to conduct a comprehensive inspection of the books
and records for the Disputed Compositions. Id. ¶¶ 55–57. The audit, conducted by Audit
Time, LLC, revealed that Blizzard US improperly deducted 15 percent for the gross
receipts on Commercial Exploitations negotiated by Blizzard US. Id. ¶ 63. As a result,
only 85 percent of the gross receipts collected by Blizzard US were transferred to
Blizzard UK. Id. ¶ 64. However, Blizzard UK represented to plaintiff that the 85 percent
was “100 percent” of the gross receipts on the royalty statements and allegedly concealed
from plaintiff the withholding of 15 percent of the royalties owed to him. Id. ¶ 65.
None of plaintiff’s royalty statements disclosed this deduction of income and none
of the Songwriter Agreements contained any rights for Blizzard US or Blizzard UK to
undertake the extra deductions. Id. ¶¶ 66–67.
On October 2, 2014, plaintiff raised his concerns about fraudulent conduct with
Blizzard UK’s counsel, Sheridans. Id. ¶ 70. On October 16, 2014, Sheridans responded
in relevant part that:
 Blizzard US accounts to Blizzard UK “in respect of publishing
activities in relation to the Songs in the U.S. territory and receives a
fee of 15% by way of remuneration for the services provided;”
 “[R]etaining a sub publisher on such commercial terms is standard
within the music publish industry;”
 “[R]oyalty statements rendered to [plaintiff] may not have expressly
stated the amount of overseas sub-publisher representations;”

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

Id. ¶ 73. Before receiving the letter from Sheridans, plaintiff was not aware that Blizzard
US withheld income from Blizzard UK from Commercial Exploitations of the Disputed
Compositions in the United States as a resulted of a supposed sub-publishing agreement.
Id. ¶ 81. Plaintiff has never been provided a copy of any sub-publisher agreement
between Blizzard UK and Blizzard US. Id. ¶ 75. On information and belief, plaintiff
alleges that Osbourne directed Blizzard UK and Blizzard US to reject all of plaintiff and
Audit Time’s requests for individual contracts and additional information regarding the
sub-publishing arrangement between Blizzard UK and Blizzard US. Id. ¶ 79. On
information and belief, plaintiff alleges that “standard” sub-publishing agreements
require the sub-publishers to account to the publisher, and by extension the authors, and
provide copies of all business conducted by the sub-publisher. Id. ¶ 77. On information
and belief, plaintiff contends that Blizzard UK and Blizzard US do not have a “standard”
sub-publishing arrangement. Id. ¶ 78.
Plaintiff alleges that Blizzard US and Blizzard UK only perform publishing and
sub-publishing functions for the Disputed Compositions and compositions involving
Osbourne and his family. Id. ¶¶ 88–90. Upon information and belief, Blizzard US and
Blizzard UK share employees and Osbourne does not maintain corporate formalities in
his operation of Blizzard US. Id. ¶¶ 91–92. Upon information and belief, the accounting
records for Blizzard US show irregularities, indicating that Blizzard US is not adequately
capitalized. Id. ¶¶ 93–94. Plaintiff alleges that Blizzard US and Blizzard UK are alter
egos of Osbourne because “both companies exist for the sole purpose of exploiting the
Disputed Compositions to the detriment of his co-authors.” Id. ¶ 95. Because of his
domination and control of Blizzard US and Blizzard UK, plaintiff contends that
Osbourne is individually liable for the fraudulent activities undertaken by Blizzard US.
Id. ¶ 96.
Plaintiff asserts a claim of fraud against Blizzard US because: (a) “Blizzard US
misrepresented the total amount of income received from Commercial Exploitation of the
Disputed Compositions in the United States”; (b) “Blizzard US withheld money in the
United States that it knew should have been transferred to Blizzard UK and distributed to
Plaintiff”; and (c) “[b]ased on these misrepresentations, royalty statements provided by
Blizzard UK to Plaintiff reflected an inaccurate percentage of income received.” Id.
¶¶ 100–02. Plaintiff asserts his fraud claim against Osbourne on the basis of alter ego
liability. Id. ¶¶ 111–23. Finally, plaintiff requests an accounting of Blizzard US,
Blizzard UK, and Osbourne in order to assess the precise amount of income owed to
plaintiff. Id. ¶ 130.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

III.

LEGAL STANDARDS

Defendants seek the dismissal or stay of this action pending arbitration pursuant to
Federal Rules of Civil Procedure 12(b)(1), (3), and (6), and the Federal Arbitration Act
(“FAA”), 9 U.S.C. §§ 1 et seq. Substantial case law establishes that these are the correct
rules under which to seek dismissal based on an arbitration provision. See, e.g., Thinket
Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004)
(affirming dismissal of plaintiffs’ claims subject to arbitration provision pursuant to Rule
12(b)(6)); Chappel v. Lab. Corp. of Am., 232 F.3d 719, 725 (9th Cir. 2000) (same);
Cancer Ctr. Assocs. for Research & Excellence, Inc. v. Philadelphia Ins. Companies, No.
1:15-cv-00084-LJO, 2015 WL 1766938, at *2 (E.D. Cal. Apr. 17, 2015) (“[C]ourts have
held that a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction is a
procedurally sufficient mechanism to enforce [an] [a]rbitration [p]rovision.” (quotation
marks omitted)); Minnesota Supply Co. v. Mitsubishi Caterpillar Forklift Am. Inc., 822
F. Supp. 2d 896, 905 n.10 (D. Minn. 2011) (noting that a dismissal based on a binding
arbitration agreement is proper pursuant to Rule 12(b)(3) and Rule 12(b)(6)); Luna v.
Kemira Specialty, Inc., 575 F. Supp. 2d 1166, 1176 (C.D. Cal. 2008) (“[E]ven where a
party moves to stay litigation pending arbitration under the Federal Arbitration Act, 9
U.S.C. § 3, the district court has discretion to dismiss the complaint if it finds all of the
claims before it are arbitrable.”).
A.

Rule 12(b)(1)

A motion pursuant to Federal Rule of Civil Procedure Rule 12(b)(1) motion tests
whether the court has subject matter jurisdiction to hear the claims alleged in the
complaint. Fed. R. Civ. P. 12(b)(1). Such a motion may be “facial” or “factual.” Safe
Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). That is, a party
mounting a Rule 12(b)(1) challenge to the court’s jurisdiction may do so either on the
face of the pleadings or by presenting extrinsic evidence for the court’s consideration.
See White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000); Thornhill Publishing co. v.
General Tel. & Electronics, 594 F.2d 730, 733 (9th Cir. 1979).
Once a Rule 12(b)(1) motion has been raised, the burden is on the party asserting
jurisdiction. Sopcak v. N. Mountain Helicopter Serv., 52 F.3d 817, 818 (9th Cir. 1995);
Ass’n of Am. Med. Coll. v. United States, 217 F.3d 770, 778–79 (9th Cir. 2000). If
jurisdiction is based on a federal question, the pleader must show that he has alleged a
claim under federal law and that the claim is not frivolous. See 5B Charles A. Wright &

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

Arthur R. Miller, Federal Practice and Procedure, § 1350, pp. 211, 231 (3d ed. 2004). If
jurisdiction is based on diversity of citizenship, the pleader must show real and complete
diversity, and also that his asserted claim exceeds the requisite jurisdictional amount of
$75,000. See id. When deciding a Rule 12(b)(1) motion, the court construes all factual
disputes in favor of the non-moving party. See Dreier v. United States, 106 F.3d 844,
847 (9th Cir. 1996).
As a general rule, leave to amend a complaint that has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th
Cir. 2000).
B.

Rule 12(b)(3)

Pursuant to Federal Rule of Civil Procedure 12(b)(3), a defendant may move to
dismiss a complaint for improper venue. Generally, courts look to the venue provisions
set forth in 28 U.S.C. § 1391 to determine whether venue is proper. However, a
defendant may move to dismiss pursuant to Rule 12(b)(3) based on a forum selection
clause, even if venue would otherwise be proper under 28 U.S.C. § 1391. Argueta v.
Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). When considering a motion to
dismiss under Rule 12(b)(3), a court need not accept the pleadings as true and may
consider facts outside of the pleadings. Id. Once the defendant has challenged a given
court’s jurisdiction for improper venue, the plaintiff bears the burden of showing that
venue is proper. Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th
Cir. 1979). If the court determines that venue is improper, the court must dismiss the
action or, if it is in the interests of justice, transfer the action to a district or division in
which the action could have been brought. 28 U.S.C. § 1406(a). Whether to dismiss for
improper venue or transfer venue to a proper court is within the sound discretion of the
district court. See King v. Russell, 963 F.2d 1301, 1304 (9th Cir. 1992).
C.

Rule 12(b)(6)

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the claims asserted in a complaint. Under this Rule, a district court
properly dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

of sufficient facts alleged under a cognizable legal theory.’” Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t,
901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must
be enough to raise a right to relief above the speculative level.” Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
“[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
Unless a court converts a Rule 12(b)(6) motion into a motion for summary
judgment, a court cannot consider material outside of the complaint (e.g., facts presented
in briefs, affidavits, or discovery materials). In re American Cont’l Corp./Lincoln Sav. &
Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on other grounds sub nom
Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court
may, however, consider exhibits submitted with or alleged in the complaint and matters
that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon
Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles,
250 F.3d 668, 689 (9th Cir. 2001).
Federal Rule of Civil Procedure 8(a) provides that a pleading stating a claim for
relief must contain “a short and plain statement of the claim showing that the pleader is

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

entitled to relief.” Fed. R. Civ. P. 8(a)(2). In order to meet this standard, a claim for
relief must be stated with “brevity, conciseness, and clarity.” See Charles A. Wright &
Arthur R. Miller, 5 Federal Practice and Procedure § 1215 (3d ed.). “The Plaintiff must
allege with at least some degree of particularity overt acts which Defendants engaged in
that support the Plaintiff’s claim.” Jones v. Community Redevelopment Agency, 733
F.2d 646, 649 (9th Cir. 1984). The purpose of Rule 8(a) is to ensure that a complaint
“fully sets forth who is being sued, for what relief, and on what theory, with enough
detail to guide discovery.” McHenry v. Renne, 84 F.3d 1172, 1177 (9th Cir. 1996).
D.

The Federal Arbitration Act

The FAA provides that “a contract evidencing a transaction involving commerce to
settle by arbitration a controversy thereafter arising . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. The FAA reflects a “liberal federal policy favoring arbitrations
agreements.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) (quotation
marks omitted).
The “first task of a court asked to compel arbitration of a dispute is to determine
whether the parties agreed to arbitrate the dispute.” Mitsubishi Motors Corp. v. Soler
Chrysler–Plymouth, Inc., 473 U.S. 614, 626 (1985). The court must determine
(1) whether there exists a valid agreement to arbitrate; and (2) if there is a valid
agreement, whether the dispute falls within its terms. Chiron Corp. v. Ortho Diagnostic
Sys., 207 F.3d 1126, 1130 (9th Cir. 2000). When determining whether a valid and
enforceable contract to arbitrate has been established for the purposes of the FAA, federal
courts should apply “ordinary state-law principles that govern the formation of contracts
to decide whether the parties agreed to arbitrate a certain matter.” First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); Circuit City Stores v. Adams, 279
F.3d 889, 892 (2002). “[A]greements to arbitrate [may] be invalidated by generally
applicable contract defenses, such as fraud, duress, or unconscionability, but not by
defenses that apply only to arbitration or that derive their meaning from the fact that an
agreement to arbitrate is at issue.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333,
339 (2011). “[P]arties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such
as whether the parties have agreed to arbitrate or whether their agreement covers a
particular controversy.” Rent–A–Center, W., Inc. v. Jackson, 561 U.S. 63, 68–69 (2010).
However, “the question of arbitrability, is an issue for judicial determination [u]nless the

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

parties clearly and unmistakably provide otherwise.” Howsam v. Dean Witter Reynolds,
Inc., 537 U.S. 79, 83 (2002) (quotation marks omitted).
IV.

DISCUSSION
A.

Whether the Arbitration Agreement is Valid and Enforceable

Plaintiff concedes that he executed the Songwriter Agreements and that each one
of the Disputed Compositions is subject to a Songwriter Agreement. Compl. ¶ 33. The
Songwriter Agreements contain the following provision:
IF any dispute or difference shall arise between the parties hereto on any
matter touching this Agreement or any of the terms hereof the same and all
matters arising therefrom shall be referred to a single Arbitrator to be agreed
between the parties or in the case of failure to agree to be appointed by the
President for the time being of the Law Society and the decision of such
Arbitrator shall be final and binding on the parties hereto.
Dkt. 41-9, Declaration of Peter J. Anderson Ex. 7 at 107 (“Songwriter Agreement”) ¶ 18.
During plaintiff’s 1998 lawsuit against Blizzard UK and Osbourne, this Court concluded
that plaintiff is bound by the Songwriter Agreements’ arbitration provision. See Daisley
v. Osbourne, No. 2:98-cv-6954-CAS-SH, dkt. 110 at 12 (C.D. Cal. June 4, 2002). Thus,
the doctrine of collateral estoppel prevents the relitigation of this issue. See Five Star
Capital Corp. v. Ruby, 124 Nev. 1048, 1055, 194 P.3d 709, 713 (2008) (under Nevada
law, issue preclusion applies where, as here: “(1) the issue decided in the prior litigation
must be identical to the issue presented in the current action; (2) the initial ruling must
have been on the merits and have become final; . . . (3) the party against whom the
judgment is asserted must have been a party or in privity with a party to the prior
litigation”; and (4) the issue was actually and necessarily litigated.” (citation and
quotation marks omitted)).1 Notably, however, plaintiff does not dispute that the

1

The Court applies Nevada law to state law issues because the case was transferred
to this district pursuant to 28 U.S.C. § 1404(a). See Van Dusen v. Barrack, 376 U.S. 612,
639 (1964) (“[W]here the defendants seek transfer, the transferee district court must be
obligated to apply the state law that would have been applied if there had been no change
of venue. A change of venue under s 1404(a) generally should be, with respect to state
law, but a change of courtrooms.”); Hooper v. Lockheed Martin Corp., 688 F.3d 1037,

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

arbitration provision of the Songwriter Agreements are valid and enforceable. Rather,
plaintiff argues that the arbitration provision does not apply to this dispute. Opp’n at 9.
B.

Whether Plaintiff’s Claims are Subject to Arbitration

Defendants argue that plaintiff’s claims are subject to arbitration because they arise
out of rights and duties set forth in the Songwriter Agreements. Motion at 11–12.
According to defendants, they can invoke plaintiff’s obligation to arbitrate for three
reasons: (1) plaintiff cannot avoid an arbitration agreement where he relies on the
contract as a basis for relief; (2) subsidiaries and officers of a corporate party to an
arbitration agreement can raise the duty to arbitrate claims that are within the arbitration
clause; and (3) non-signatory alleged alter egos may compel arbitration under clauses
signed by the corporations whose liabilities they are alleged to assume. Motion at 12–14.
Plaintiff disputes that his claims are based on the Songwriter Agreements because
Blizzard US is not a party to those agreements. Opp’n at 10. Plaintiff further argues that
defendants should be estopped from arguing that Blizzard US’s withholding of income
falls within the scope of the Songwriter Agreements because, according to plaintiff,
defendants have previously represented that Blizzard US is distinct entity with separate
books and records that plaintiff could not access under the Songwriter Agreements. Id. at
11–12. At oral argument on May 1, 2017, plaintiff’s counsel argued that the arbitration
agreement is not enforceable because it applies only to “any dispute or difference [that]
arise[s] between the parties hereto[.]” Because Osbourne and Blizzard US are not parties
to the Songwriter Agreements, plaintiff’s counsel asserted that the arbitration provision
does not apply to defendants.
The Court finds defendants’ arguments persuasive. First, the Court finds that
plaintiff’s claims arise from “any matter touching” the Songwriter Agreements or “any of
[its] terms” and “arising therefrom[.]” See Songwriter Agreement ¶ 18. Plaintiff would
not be entitled to any income from Blizzard US absent the Songwriter Agreement with
Blizzard UK, which entitled plaintiff to 90 percent of the monies that Blizzard UK
received from Commercial Exploitations of the Disputed Compositions in the United
States. See Compl. ¶ 42. “Keeping in mind that ‘any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration,’” the Court concludes that

1045, 1046 (9th Cir. 2012) (concluding that Van Dusen applies to cases arising under
federal question jurisdiction where there are “embedded state law issues”).

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Page 10 of 12 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

plaintiff’s fraud claim, along with his derivative alter ego and accounting claims touch
and arise from the Songwriter Agreements. See Ferguson v. Corinthian Colleges, Inc.,
733 F.3d 928, 938 (9th Cir. 2013) (quoting Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24–25 (1983)). That plaintiff expressly requests an accounting
of non-party Blizzard UK, along with defendants Blizzard US and Osbourne, see Compl.
¶ 130, further underscores that plaintiff’s claims arise out of the Songwriter Agreements
entered into with Blizzard UK.
Second, the Court finds that defendants can invoke the arbitration provision of the
Songwriter Agreements because plaintiff has alleged that Blizzard US and Blizzard UK
are alter egos of Osbourne. See Compl. ¶ 95. The Supreme Court has recognized that
“traditional principles of state law, allow a contract to be enforced by or against
nonparties to the contract through assumption, piercing the corporate veil, alter ego,
incorporation by reference, third-party beneficiary theories, waiver and estoppel[.]”
Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009) (emphasis added, quotation
marks omitted). The Supreme Court reached that conclusion when considering whether a
nonparty could enforce an arbitration agreement. Id. at 629–32. That defendants contest
the existence of alter ego liability does not mean that the Arthur Andersen principle does
not apply. For example, in Formostar LLC v. Florentius, No. 2:11-cv-01166-GMN-CW,
2012 WL 2873928 (D. Nev. July 13, 2012), even after the court concluded that the
magistrate judge’s finding of alter ego liability was “clearly erroneous[,]” the court went
on to conclude:
this does not change the ultimate finding that this Court can compel all
parties in this matter to arbitrate the dispute. “Nonsignatory . . . alleged alter
egos are entitled to compel arbitration under clauses signed by the
corporations whose liabilities they are alleged to have assumed.” Plaintiffs
allege that Florentius is the alter ego of Solipax. Furthermore, . . . since
Florentius, as sole owner, president and manager of Solipax, was the agent
of the company that the arbitration provision intended to cover, he has
standing to compel arbitration.
See Formostar LLC v. Florentius, No. 2:11-cv-01166-GMN-CW, 2012 WL 2873928, at
*2–3 (D. Nev. July 13, 2012) (quoting Prograph Intern., Inc. v. Barhydt, 928 F. Supp.
983, 991 (N.D. Cal. 1996)) (citation omitted). Therefore, the Court finds that plaintiff’s
alter ego allegations alone are sufficient to allow defendants to invoke the arbitration
provision of the Songwriter Agreements.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-01500-CAS(AS)
Date May 1, 2017
ROBERT DAISLEY v. BLIZZARD MUSIC LIMITED (US) ET AL.

Third, the Court finds that plaintiff does allege a “dispute or difference . . . between
the parties” to the Songwriter Agreements because the complaint is replete with
allegations as against Blizzard UK. For example, plaintiff alleges that “Blizzard UK
deducted an extra 15% from gross receipts on Commercial Exploitations negotiated by
Blizzard US.” Compl. ¶ 63. Plaintiff avers that “Blizzard UK nonetheless represented to
Plaintiff that 85% was ‘100%’ of the gross receipts on the royalty statements . . . and
concealed from Plaintiff the fact that Defendants had withheld from Plaintiff an
additional 15% of the royalties otherwise owed to him.” Id. ¶ 65. And plaintiff seeks an
accounting of Blizzard UK. Id. ¶ 130.
Accordingly, the Court concludes that plaintiff’s claims are subject to arbitration.
C.

Whether the Court should Dismiss or Stay the Action

The Court finds that dismissal, rather than a stay, is the appropriate remedy in this
case. The Ninth Circuit has held that where, as here, all the claims in the dispute are
subject to arbitration, dismissal is the appropriate remedy. See, e.g., Thinket Ink, 368
F.3d at 1060 (holding that district court did not err “in dismissing the plaintiffs’ claims
that were subject to arbitration pursuant to Fed. R. Civ. P. 12(b)(6)”); Chappel, 232 F.3d
at 725 (where “judicial review . . . is barred by the [contract’s] valid and enforceable
arbitration clause[,][t]he district court properly dismissed [plaintiff’s] complaint under
Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim”). Indeed, district
courts in the Ninth Circuit routinely dismiss when all claims are subject to arbitration.
See, e.g., Lewis v. UBS Fin. Servs. Inc., 818 F. Supp. 2d 1161, 1169 (N.D. Cal. 2011);
KKE Architects, Inc. v. Diamond Ridge Dev. LLC, No. 07-cv-06866-MMM, 2008 WL
637603, *3–7 (C.D. Cal. Mar. 3, 2008).
V.

CONCLUSION

In accordance with the foregoing, the Court GRANTS defendants’ motion to
dismiss plaintiff’s complaint. The action is dismissed without prejudice to plaintiff’s
right to reassert his claims in arbitration.
IT IS SO ORDERED.
Initials of Preparer

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