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Case 2:19-cv-05449-JAK-JPR Document 14-1 Filed 07/17/19 Page 1 of 34 Page ID #:135

1 SCOTT A. EDELMAN, SBN 116927


sedelman@gibsondunn.com
2 DEBORAH L. STEIN, SBN 224570
dstein@gibsondunn.com
3 NATHANIEL L. BACH, SBN 246518
nbach@gibsondunn.com
4 GIBSON, DUNN & CRUTCHER LLP
333 South Grand Avenue
5 Los Angeles, CA 90071
Telephone: 213.229.7000
6 Facsimile: 213.229.7520
7 Attorneys for Defendant
UMG RECORDINGS, INC.
8
9 UNITED STATES DISTRICT COURT
10 CENTRAL DISTRICT OF CALIFORNIA
11 WESTERN DIVISION
12 SOUNDGARDEN, a Partnership; TOM CASE NO. 2:19-cv-05449-JAK-JPR
WHALLEY, as Trustee of the Afeni
13 Shakur Trust; JANE PETTY; HOLE, a DEFENDANT UMG RECORDINGS,
Partnership; STEVE EARLE, INC.’S MEMORANDUM OF POINTS
14 individually and on behalf of all others AND AUTHORITIES IN SUPPORT
similarly situated, OF ITS MOTION TO DISMISS
15 PLAINTIFFS’ CLASS ACTION
Plaintiffs, COMPLAINT
16
v. Hearing:
17 Date: November 4, 2019
UMG RECORDINGS, INC., a Time: 8:30 a.m.
18 Delaware corporation, Place: Courtroom 10B
First Street Courthouse
19 Defendant. 350 W. First Street
Los Angeles, CA 90012
20 Judge: Hon. John A. Kronstadt
21
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1 TABLE OF CONTENTS
2 Page
3 I. INTRODUCTION ................................................................................................ 1
4 II. BACKGROUND .................................................................................................. 3
5 III. LEGAL STANDARD .......................................................................................... 8
6 IV. ARGUMENT........................................................................................................ 8
7 A. Plaintiffs Fail to State a Claim for Breach of Contract Because
They Plead No Facts Showing That UMG Breached the Alleged
8 Contractual Obligation to Pay Royalties to Plaintiffs ................................ 8
9 1. Plaintiffs do not furnish the specific contractual terms that
were allegedly breached................................................................... 9
10
2. The facts—as pleaded—do not plausibly establish a
11 contractual breach by UMG. .......................................................... 10
12 3. Tellingly, the contracts that Plaintiffs fail to attach to the
Complaint negate any breach of contract claim. ........................... 12
13
B. Plaintiffs Fail to State a Claim for Breach of a Bailment Agreement ..... 13
14
1. The Complaint does not plausibly allege a bailment because
15 Plaintiffs do not and cannot plead that UMG had an
obligation to return the property—meaning there was no
16 bailment as a matter of law. ........................................................... 14
17 2. The Complaint also fails to plausibly plead a violation of the
implied covenant of good faith and fair dealing. ........................... 16
18
C. Plaintiffs’ Claims Are Time-Barred, and Plaintiffs Plead No Facts
19 That Would Permit Them to Sue UMG More Than 11 Years After
the Well-Publicized Fire and Ensuing Lawsuits ...................................... 18
20
1. The breach of contract claim is subject to a four-year statute
21 of limitations, which expired many years ago. .............................. 19
22 2. The statute of limitations for the “bailment” claim expired
three years after the fire. ................................................................ 19
23
3. Plaintiffs do not plead facts entitling them to toll the statutes
24 of limitations based upon “delayed discovery” of the factual
basis of their claims. ...................................................................... 20
25
4. Plaintiffs fail to plead facts sufficient to extend the statute of
26 limitations on a fraudulent concealment theory. ........................... 21
27 D. Plaintiffs Tom Whalley and Jane Petty Lack Standing Because the
Complaint Fails to Plead Facts Demonstrating a Valid Assignment ....... 24
28
V. CONCLUSION .................................................................................................. 25
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1 TABLE OF AUTHORITIES
2 Page(s)
3 Cases
4 Allen v. Similasan Corp.,
5 96 F. Supp. 3d 1063 (S.D. Cal. 2015) ...................................................................... 23
6 Alvarado v. Aurora Loan Servs., LLC,
7 2012 WL 4475330 (C.D. Cal. Sept. 20, 2012) ..................................................... 9, 10

8 April Enters., Inc. v. KTTV,


147 Cal. App. 3d 805 (1983) .................................................................................... 17
9
10 Ashcroft v. Iqbal,
556 U.S. 662 (2009).............................................................................................. 8, 24
11
Bell Atl. Corp. v. Twombly,
12 550 U.S. 544 (2007).................................................................................................... 8
13
Blyden v. Navient Corp.,
14 2016 WL 6601658 (C.D. Cal. Feb. 16, 2016) .......................................................... 22
15
Brisbane Lodging, L.P. v. Webcor Builders, Inc.,
16 216 Cal. App. 4th 1249 (2013) ................................................................................. 18
17 Careau & Co. v. Sec. Pac. Bus. Credit, Inc.,
18 222 Cal. App. 3d 1371 (1990) .................................................................................. 17

19 Cochran v. Cochran,
56 Cal. App. 4th 1115 (1997) ................................................................................... 19
20
21 Collins v. Nationalpoint Loan Servs.,
2009 WL 3213979 (S.D. Cal. Sept. 29, 2009) ......................................................... 22
22
Community Cause v. Boatwright,
23
124 Cal. App. 3d 888 (1981) .................................................................................... 23
24
Conroy v. Capital One, N.A.,
25 2014 WL 12586070 (C.D. Cal. Sept. 15, 2014) ................................................... 9, 10
26
Coy v. Cty. of Los Angeles,
27 235 Cal. App. 3d 1077 (1991) .................................................................................. 19
28

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TABLE OF AUTHORITIES
1 (continued)
2 Page(s)
3 Dual Diagnosis Treatment Ctr., Inc. v. Blue Cross of Cal.,
4 2016 WL 6892140 (C.D. Cal. Nov. 22, 2016) ......................................................... 25

5 Env’t Furniture, Inc. v. Bina,


2010 WL 5060381 (C.D. Cal. Dec. 6, 2010) ............................................................ 17
6
7 Free Range Content, Inc. v. Google Inc.,
2016 WL 2902332 (N.D. Cal. May 13, 2016).......................................................... 17
8
Gebert v. Yank,
9 172 Cal. App. 3d 544 (1985) ................................................................................ 3, 14
10
Gerritsen v. Warner Bros. Entm’t Inc.,
11 112 F. Supp. 3d 1011 (C.D. Cal. 2015) .............................................................. 24, 25
12 In re Gilead Scis. Sec. Litig.,
13 536 F.3d 1049 (9th Cir. 2008) .................................................................................... 8
14 Greenberg Bros., Inc. v. Ernest W. Hahn, Inc.,
15 246 Cal. App. 2d 529 (1966) .................................................................................... 16

16 Grisham v. Philip Morris U.S.A., Inc.,


40 Cal. 4th 623 (2007) .............................................................................................. 20
17
18 Guerrero v. Gates,
442 F.3d 697 (9th Cir. 2006) .............................................................................. 21, 22
19
H.S. Crocker Co. v. McFaddin,
20
148 Cal. App. 2d 639 (1957) .................................................................................... 16
21
Haaland v. Garfield Beach CVS, LLC,
22 2018 WL 5086493 (C.D. Cal. June 6, 2018) ............................................................ 18
23
Hexcel Corp. v. Ineos Polymers, Inc.,
24 681 F.3d 1055 (9th Cir. 2012) ............................................................................ 21, 23
25 Indus. Indem. v. Super. Ct.,
26 224 Cal. App. 3d 828 (1990) .................................................................................... 12
27 IV Sols., Inc. v. United Healthcare,
2015 WL 4127823 (C.D. Cal. July 7, 2015) ............................................................ 19
28

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TABLE OF AUTHORITIES
1 (continued)
2 Page(s)
3 Kent v. Microsoft Corp.,
4 2013 WL 3353875 (C.D. Cal. July 1, 2013) .............................................................. 9

5 Klees v. Liberty Life Assurance Co. of Boston,


110 F. Supp. 3d 978 (C.D. Cal. 2015) ........................................................................ 5
6
7 Knievel v. ESPN,
393 F.3d 1068 (9th Cir. 2005) .................................................................................... 5
8
Long v. Keller,
9 104 Cal. App. 3d 312 (1980) .................................................................................... 12
10
Mac’Avoy v. Smithsonian Inst.,
11 757 F. Supp. 60 (D.D.C. 1991) ................................................................................. 16
12 MAO-MSO Recovery II, LLC v. Farmers Ins. Exch.,
13 2017 WL 5634097 (C.D. Cal. Nov. 20, 2017) ..................................................... 3, 24
14 McKell v. Wash. Mut., Inc.,
15 142 Cal. App. 4th 1457 (2006) ................................................................................. 10

16 Moore v. Way FM Media Group Inc.,


2013 WL 12246337 (C.D. Cal. Aug. 2, 2013) ......................................................... 24
17
18 Needelman v. DeWolf Realty Co.,
239 Cal. App. 4th 750 (2015) ................................................................................... 16
19
Norgart v. Upjohn Co.,
20
21 Cal. 4th 383 (1999) .............................................................................................. 20
21
Ohlweiler v. Bank of Am. Corp.,
22 2015 WL 8484526 (S.D. Cal. Dec. 9, 2015) ............................................................ 10
23
Plumlee v. Pfizer, Inc.,
24 664 F. App’x 651 (9th Cir. 2016) ............................................................................. 20
25 Produce Pay, Inc. v. Promate Produce U.S.A., Inc.,
26 2017 WL 10636409 (C.D. Cal. Jan. 31, 2017) ......................................................... 25
27 Pure Bioscience v. Ross Sys., Inc.,
2008 WL 938956 (S.D. Cal. Apr. 7, 2008) .............................................................. 11
28

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TABLE OF AUTHORITIES
1 (continued)
2 Page(s)
3 Re/Max Mega Grp. v. Maxum Indem. Co.,
4 2010 WL 11507373 (C.D. Cal. Sept. 24, 2010) ....................................................... 11

5 Rutledge v. Bos. Woven Hose & Rubber Co.,


576 F.2d 248 (9th Cir. 1978) .............................................................................. 21, 22
6
7 Seven Arts Filmed Entm’t Ltd. v. Content Media Corp. PLC,
733 F.3d 1251 (9th Cir. 2013) .................................................................................. 18
8
Sprewell v. Golden State Warriors,
9 266 F.3d 979 (9th Cir. 2001) ...................................................................................... 8
10
Thorman v. Am. Seafoods Co.,
11 421 F.3d 1090 (9th Cir. 2005) .................................................................................. 21
12 Townsend v. Columbia Operations,
13 667 F.2d 844 (9th Cir. 1982) ...................................................................................... 5
14 Union Carbide Corp. v. Super. Ct.,
15 36 Cal. 3d 15 (1984) ................................................................................................. 18

16 Wu v. Sunrider Corp.,
2018 WL 6266577 (C.D. Cal. May 22, 2018) .......................................................... 18
17
18 Yumul v. Smart Balance, Inc.,
733 F. Supp. 2d 1117 (C.D. Cal. 2010) .................................................................... 21
19
Statutes
20
21 Cal. Civ. Code § 1814 .................................................................................................... 14
22 Cal. Civ. Code § 1817 ................................................................................................ 2, 14
23 Cal. Civ. Proc. Code § 337 ............................................................................................ 19
24
Cal. Civ. Proc. Code § 338 ............................................................................................ 19
25
Fed. R. Civ. P. 8 ............................................................................................................... 8
26
Fed. R. Civ. P. 9 ............................................................................................................. 21
27
28

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TABLE OF AUTHORITIES
1 (continued)
2 Page(s)
3 Other Authorities
4 9 Cal. Jur. 3d .................................................................................................................. 16
5
Interview with Steve Hoffman (May 9, 2012),
6 https://judygarlandnews.com/2012/ 05/09/interview-with-steve-
7 hoffman/ ...................................................................................................................... 8

8 Randy Lewis, Universal Music Group’s Vintage Recordings Head to


Library of Congress (Jan. 10, 2011),
9 https://latimesblogs.latimes.com/music_blog /2011/01/ universal-
10 music-library-of-congress-bing-crosby-ella-fitzgerald.html ...................................... 8
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

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1 I. INTRODUCTION
2 On June 1, 2008, a devastating fire at the Universal Studios backlot destroyed
3 many structures on the lot, including a video vault containing archived recordings,
4 videos, and other materials owned by UMG Recordings, Inc. More than a decade later,
5 UMG is reliving that heartbreaking loss and working closely with its community of
6 artists to sort through speculation, resulting from recent media coverage, about which
7 recordings were lost and which were stored elsewhere, previously moved, or otherwise
8 preserved (digitally or via other copies) before the fire. According to the Complaint, a
9 June 2019 article in The New York Times Magazine—which relies in large part on court
10 filings from UMG’s 2009 fire-related litigation against landlords NBC Universal, Inc.
11 and Vivendi Universal Entertainment LLLP—prompted this lawsuit. Compl. ¶¶ 20–21.
12 UMG appreciates that artists and music fans are deeply concerned that
13 historically significant assets may have been lost in the fire. Since publication of the
14 New York Times Magazine article, UMG has (understandably) received many inquiries
15 from recording artists or their representatives concerning the status of musical assets.
16 UMG views its relationship with its artists—current, past, and future—as the backbone
17 of its business and has assembled a worldwide team tasked with providing artists with
18 answers as quickly and transparently as possible. UMG is grateful to the large number
19 of artists utilizing that process, a company-wide effort of primary importance.
20 As UMG began responding to these new inquiries about the fire, Plaintiffs filed
21 this lawsuit. Plaintiffs’ Complaint is not based on any valid legal theory and must be
22 dismissed as a matter of law. The Complaint includes two breach of contract “Claims
23 for Relief” but conspicuously avoids reciting any language from the recording
24 agreements that Plaintiffs accuse UMG of breaching. Those agreements grant UMG
25 ownership of any master recordings and entitle the artists to royalties in specific
26 enumerated circumstances, none of which has been or can be pleaded here. The
27 Complaint does not and cannot plead any facts plausibly showing that UMG breached
28 any provision in any contract. UMG respectfully submits that the Court should dismiss

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1 the Complaint with prejudice for the following reasons:


2 First, the Complaint’s First Claim for Relief theorizes that UMG has an
3 obligation to share with Plaintiffs proceeds that UMG received by settling lawsuits with
4 the backlot owners and UMG’s insurer. But nothing in the underlying contracts at issue
5 (or Plaintiffs’ broad-brush generalizations thereof) even remotely entitles Plaintiffs to
6 any such proceeds. Perhaps for this reason, the Complaint noticeably steers clear of
7 referencing any actual contract language, instead summarizing UMG’s alleged
8 obligation as requiring “a 50/50 sharing of revenues derived from furnishing, licensing
9 or authorizing the use by others of Master Recordings embodying their musical works.”
10 Compl. ¶ 35. The Complaint pleads no facts suggesting that the fire or any ensuing
11 settlements triggered these royalty provisions. To the contrary, Plaintiffs claim that the
12 settlements were paid precisely because revenues “could no longer be derived from
13 furnishing [the master recordings], authorizing their use or licensing them to third
14 parties because they were destroyed in the fire.” Id. ¶ 38 (emphasis added). In other
15 words, Plaintiffs purport to allege the breach of a contract provision that, by Plaintiffs’
16 own allegations, could not possibly have been implicated. Indeed, the recording
17 agreements that Plaintiffs say were breached unequivocally show that the master
18 recordings were UMG’s property, “free of any claims whatsoever by [the artist] or any
19 other person, firm, or corporation,” and provide for royalties in specific circumstances,
20 not one of which has been pleaded. See infra Section II, IV.A.3, B.1.
21 Second, the Complaint’s Second Claim for Relief attempts unsuccessfully to
22 allege that UMG violated an alleged bailment agreement. The Complaint does not
23 plead facts demonstrating a bailment, and the recording agreements incorporated by
24 reference into the Complaint belie any possible bailment. By California statute and
25 black letter law, there is no bailment where, as here, the party in possession of the
26 property is not “bound to return the identical thing deposited.” Cal. Civ. Code § 1817.
27 Plaintiffs do not plead facts establishing that UMG had any obligation to return the
28 masters to the artists, nor could they given the terms of the recording agreements.

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1 Accordingly, Plaintiffs have not and cannot plead breach of a purported bailment
2 agreement. See Gebert v. Yank, 172 Cal. App. 3d 544, 551 (1985) (breach of bailment
3 contract claim requires “a failure to return that which was bailed”).
4 Third, Plaintiffs’ claims are barred because the statutes of limitations expired
5 long ago. The Complaint tries to circumvent that time bar by pointing to the delayed
6 discovery rule and by asserting fraudulent concealment. But Plaintiffs again do not
7 plead the facts required to plausibly invoke either of these tolling doctrines. Indeed,
8 while Plaintiffs are quick to accuse UMG of fraud based on purported statements to the
9 media just days after the fire, Plaintiffs do not allege that they ever even read those
10 statements. Nor do they allege a single fact explaining how, over the course of a
11 decade, they never had reason to inquire into the status of master recordings featuring
12 their performances—even in the face of a 2009 lawsuit in which UMG publicly stated
13 that hundreds of thousands of recordings were destroyed.
14 Finally, two of the Plaintiffs—Tom Whalley and Jane Petty—fail to plead facts
15 demonstrating their standing to sue. The Complaint does not allege that either is a party
16 to recording contracts with UMG, nor does it quote (or otherwise provide) any
17 purported assignment of rights under contracts with UMG. Instead, the Complaint
18 pleads in a conclusory fashion that Whalley and Petty were assigned the right to pursue
19 these claims. Such unadorned allegations regarding an assignment’s existence, without
20 supporting facts, are insufficient to confer standing. See, e.g., MAO-MSO Recovery II,
21 LLC v. Farmers Ins. Exch., 2017 WL 5634097, at *7 (C.D. Cal. Nov. 20, 2017).
22 For all of these reasons, the Complaint must be dismissed.
23 II. BACKGROUND
24 More than a decade ago—on June 1, 2008—a fire broke out on the Universal
25 Studios backlot in an area consisting of movie set facades. Compl. ¶¶ 17–19; RJN Ex. 1
26 (UMG Recordings, Inc. v. NBCUniversal Media LLC, L.A. Sup. Ct. No. 106213,
27 Second Am. Compl. ¶ 12). The fire ultimately consumed other structures including
28 attractions on the Universal Studios tour and a building housing various archival

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1 materials owned by UMG. See Compl. ¶¶ 4, 17, 19. That building had been leased
2 from Vivendi Universal Entertainment, which was obligated to maintain the structure in
3 “good order, repair[,] and condition.” RJN Ex. 1 ¶ 11; see Compl. ¶ 16. A roofing
4 crew performing repairs started the fire. Compl. ¶ 19. UMG sued the owners of the
5 leased building soon after.1 Id. ¶¶ 5, 17.
6 Eleven years after the fire, and long after the public litigation between UMG and
7 the warehouse owners concluded, Plaintiffs Soundgarden, Tom Whalley, Jane Petty,
8 Hole, and Steve Earle filed this putative class action against UMG on behalf of
9 themselves and all other similarly situated recording artists, their heirs, successors, and
10 assigns. Compl. ¶ 6; see id. ¶¶ 27–33. The Complaint asserts two claims for relief: the
11 first for breach of contract relating to UMG’s alleged failure to share revenues derived
12 from master recordings (id. ¶¶ 34–40), and a second for breach of an alleged implied
13 bailment contract (id. ¶¶ 41–47).
14 The Complaint does not recite actual contractual terms from any of the Plaintiffs’
15 recording agreements. Instead, the Complaint’s first claim for relief purports to
16 paraphrase UMG’s contractual obligations, alleging that “[t]he written recording
17 agreements Plaintiffs and all other class members entered into with UMG, or its
18 predecessors, provide for a 50/50 sharing of revenues derived from [1] furnishing, [2]
19 licensing or [3] authorizing the use by others of Master Recordings embodying their
20 musical works.” Compl. ¶ 35 (emphasis added). The Complaint wildly and
21 inaccurately speculates that UMG received a $150 million settlement payment to
22 resolve the earlier litigation, as well as additional compensation from UMG’s insurers.
23 Id. ¶¶ 36–37. Plaintiffs then allege that these settlement proceeds and insurance
24 payments were paid “as a lump sum replacement for the revenues which could no
25 longer be derived from furnishing [the recordings], authorizing their use or licensing
26 them to third parties because they were destroyed in the fire.” Id. ¶ 38 (emphasis
27
28 1
Though UMG and Universal Studios had historically shared a common parent
company, they were no longer affiliated by the time of the fire. Compl. ¶ 16.
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1 added). Plaintiffs apparently theorize that UMG’s alleged failure to share those
2 payments constitutes a breach of the alleged furnishing-licensing-authorization
3 provision above. But the Complaint does not allege facts demonstrating that UMG
4 actually failed to share revenues derived from “furnishing, licensing[,] or authorizing
5 the use” of the masters—in fact, Plaintiffs claim that any such use of the masters was no
6 longer possible because of the fire. Id. ¶¶ 35, 38–40.
7 While the Complaint does not quote any specific contractual language, Plaintiffs
8 allege the following regarding the contracts at issue:
9  “In 1988, members of Soundgarden entered into a recording agreement with
10 A&M Records, a predecessor to UMG.” Id. ¶ 7.
11  “Tupac entered into a recording agreement with Interscope Records, a
predecessor to UMG.” Id. ¶ 8.
12
13  “From at least February 6, 1984, [Tom] Petty entered into recording
agreements with MCA Records, a predecessor of UMG.” Id. ¶ 9.
14
 “In 1993, Hole entered into a recording agreement with Geffen Records, a
15 predecessor of UMG.” Id. ¶ 10.
16  “In or about 1985, Earle entered into a recording agreement with MCA
17 Records, a predecessor in interest of UMG Recordings, Inc.” Id. ¶ 11.
18 Because the Complaint relies on these agreements, they are appropriately considered on
19 a motion to dismiss.2 See Declaration of Sheryl Gold (Gold Decl.) (authenticating
20 agreements).3
21
22 2
See, e.g., Townsend v. Columbia Operations, 667 F.2d 844, 848–49 (9th Cir. 1982)
(finding the district court properly referred to four documents on motion to dismiss
23 because “[t]hey are in substance a part of that pleading. While they are not literally
incorporated in it by reference, they are in every other way so incorporated. The
24 claims made in the complaint are based on the four documents . . . .”); Klees v.
Liberty Life Assurance Co. of Boston, 110 F. Supp. 3d 978, 982 (C.D. Cal. 2015)
25 (stating that “under the ‘incorporation by reference’ doctrine, a court may consider
documents ‘whose contents are alleged in a complaint’ or that ‘plaintiff’s claim
26 depends on,’ as long as the authenticity of the document is not disputed” (quoting
Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005))).
27
3
The Gold Declaration attaches the agreements described in the Complaint. Where
28 such descriptions were incomplete or inaccurate, the Gold Declaration attaches the
agreement closest to the description.
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1 Plaintiffs’ Complaint affirmatively acknowledges that master recordings are


2 among UMG’s “most prized and valuable assets.” Compl. ¶ 3. That these masters
3 constitute UMG’s property is crucial and plainly reflected in the recording contracts that
4 form the basis of Plaintiffs’ claims. For example, Soundgarden’s 1988 contract with
5 A&M Records—one of the recording agreements that Plaintiffs reference (id. ¶ 7)—
6 states that the master recordings “shall be entirely [UMG’s] property, free of any claims
7 whatsoever by [Soundgarden] or any other person, firm, or corporation.” Gold Decl.
8 Ex. A § 6(a) (emphasis added). Materially similar language is found in each of the
9 recording agreements at issue, specifying that the master recordings created pursuant to
10 the agreements belong to record labels now owned by UMG. See id. Exs. B–E
11 (reflecting substantially the same language in all the named Plaintiffs’ agreements).
12 Plaintiffs’ second claim for relief alleges that UMG breached the obligation of
13 good faith and fair dealing by “fail[ing] to take reasonable measures to preserve and
14 maintain the Master Recordings.” Compl. ¶ 42. The Complaint also alleges that
15 statements on UMG’s website—together with the implied obligation of good faith and
16 fair dealing in Plaintiffs’ recording contracts—established a “voluntary bailment.” Id.
17 ¶¶ 43–44. Plaintiffs assert that “[a]s a direct and proximate consequence of UMG’s
18 breach of the implied covenant of good faith and fair dealing and its voluntary bailment
19 in connection with the Master Recordings, Plaintiffs and the putative class have been
20 damaged in an amount that . . . equals 50% of the value of the Master Recordings, less
21 whatever damages” they recover under the first claim for relief. Id. ¶ 47. But again,
22 Plaintiffs do not allege (nor could they) that they owned the master recordings.
23 Plaintiffs claim that it was not until publication of the June 11, 2019 article in The
24 New York Times Magazine that they first had “notice” that some UMG recordings
25 embodying their performances may have been destroyed in the fire. Compl. ¶¶ 20, 23.
26 The Complaint alleges that “[d]uring the relevant statute of limitations period . . .
27 Plaintiffs and members of the Class did not discover, and could not have discovered
28 through the exercise of reasonable diligence, the existence of any conspiracy.” Id. ¶ 25.

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1 The Complaint makes no other reference to an alleged “conspiracy.” Even so, it alleges
2 that UMG “is estopped to raise the statute of limitations as a result of its fraudulent
3 concealment of the loss of the Master Recordings.” Id.
4 As Plaintiffs acknowledge in the Complaint, the loss of UMG’s master
5 recordings resulted in the multiyear legal action that UMG filed against the warehouse
6 owners in 2009, and that resolved in 2012. Much of the information in the article that
7 spurred this suit “comes from depositions and documents that emerged from this
8 [decade-old] litigation.” RJN Ex. 7 (Jody Rosen, The Day the Music Burned, NYT
9 MAG. (June 11, 2019)). Among the publicly filed documents in that case were multiple
10 rounds of pleadings, summary judgment briefing, and motions in limine. See Compl.
11 ¶ 17 (recognizing existence of public filings in that litigation and incorporating the
12 second amended complaint by reference). Those public filings reveal that at least as far
13 back as 2012, UMG acknowledged that over 100,000 of its recordings had been
14 destroyed in the fire (RJN Ex. 2 (Opp. to UMG Mot. in Limine No. 6 at 2–3)), and that
15 it had created a database to attempt to document which of its tapes had been destroyed
16 (RJN Ex. 3 (Decl. Supporting Mot. in Limine No. 2 at 1)).
17 The Complaint alleges no facts concerning what any of the Plaintiffs or their
18 representatives knew, read, or heard about the fire at any time between 2008 and 2019.
19 Nor does the Complaint plead facts demonstrating why they “could not have discovered
20 [the factual bases of their purported claims] through the exercise of reasonable
21 diligence,” Compl. ¶ 25, or how any such failure to discover the facts underlying their
22 claims can be squared with years-old public references to the destruction of master
23 recordings in the fire. Indeed, back in 2011, long-time Los Angeles Times reporter and
24 music critic Randy Lewis published an article stating that the 2008 fire “destroyed
25 many thousands of master tapes and other recordings originally issued by Decca, MCA
26 and ABC Records.” Universal Music Group’s Vintage Recordings Head to Library of
27 Congress (Jan. 10, 2011), https://latimesblogs.latimes.com/music_blog /2011/01/
28 universal-music-library-of-congress-bing-crosby-ella-fitzgerald.html. Even journalists

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1 on niche music-industry blogs have long been asking interviewees questions relating to
2 the fire, including about their “reaction to the fire at Universal in 2008, during which
3 many masters . . . might have been destroyed.” See, e.g., Interview with Steve Hoffman
4 (May 9, 2012), https://judygarlandnews.com/2012/ 05/09/interview-with-steve-
5 hoffman/.
6 III. LEGAL STANDARD
7 To survive dismissal, “a complaint must contain sufficient factual matter,
8 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
9 Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
10 (2007)). A claim is facially plausible when a plaintiff “pleads factual content that
11 allows the court to draw the reasonable inference that the defendant is liable for the
12 misconduct alleged.” Id. A court is not “required to accept as true allegations that are
13 merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re
14 Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (quoting Sprewell v.
15 Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). Nor must it “accept as true
16 allegations that contradict matters properly subject to judicial notice.” Id. (quoting
17 Sprewell, 266 F.3d at 988). Rule 8(a) “asks for more than a sheer possibility that a
18 defendant has acted unlawfully. Where a complaint pleads facts that are ‘merely
19 consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and
20 plausibility.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557).
21 IV. ARGUMENT
22
A. Plaintiffs Fail to State a Claim for Breach of Contract Because They Plead
23 No Facts Showing That UMG Breached the Alleged Contractual Obligation
24 to Pay Royalties to Plaintiffs

25 Plaintiffs’ breach of contact claim cannot survive as a matter of law because


26 neither the incorrectly paraphrased contract language—nor the actual contract
27 language (incorporated by reference into the Complaint)—creates an obligation to
28 share insurance or litigation recoveries with Plaintiffs. The Complaint improperly

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1 seeks to transform a specific and limited royalty provision into a sweeping obligation
2 on the part of UMG to share with Plaintiffs any monies that UMG receives in any way
3 whatsoever relating to the master recordings that UMG owns outright. The contract
4 terms, even as pleaded, impose no such payment obligation.
5 1. Plaintiffs do not furnish the specific contractual terms that were
allegedly breached.
6
7 Courts routinely dismiss contract claims where, as here, the contractual
8 provision that is allegedly breached is neither set forth verbatim nor attached to the
9 complaint. See Conroy v. Capital One, N.A., 2014 WL 12586070, at *6 (C.D. Cal.
10 Sept. 15, 2014) (dismissing breach of contract claim where plaintiff did not “attach
11 [the contractual] documents, set out their terms verbatim in the FAC, or provide a
12 careful analysis of their terms”); Kent v. Microsoft Corp., 2013 WL 3353875, at *3
13 (C.D. Cal. July 1, 2013) (dismissing breach of contract claim where terms of contract
14 were not pleaded with “sufficient detail”); Alvarado v. Aurora Loan Servs., LLC, 2012
15 WL 4475330, at *5 (C.D. Cal. Sept. 20, 2012) (dismissing conclusory breach of
16 contract claim and requiring amended pleading to provide “the part of either contract
17 referred to in the SAC”). When a complaint attempts to plead the legal effect of a
18 contract’s terms—rather than quote from or attach the contract—“a plaintiff can . . .
19 alleg[e] the substance of [the contract’s] relevant terms[,]” but “[t]his is more difficult
20 because it requires a ‘careful analysis of the instrument, comprehensiveness in
21 statement, and avoidance of legal conclusions.’” Alvarado, 2012 WL 4475330, at *4
22 (quoting McKell v. Wash. Mut., Inc., 142 Cal. App. 4th 1457, 1489 (2006)); see
23 Ohlweiler v. Bank of Am. Corp., 2015 WL 8484526, at *3 (S.D. Cal. Dec. 9, 2015)
24 (finding substance of contract’s relevant terms insufficiently pleaded).
25 Here, the Complaint does not include a careful or comprehensive analysis of any
26 contractual terms, and instead relies on generalizations and bare conclusions.
27 Specifically, Plaintiffs assert that, “by the terms of their recording contracts, [they] are
28 entitled to 50% of [the] proceeds and payments” associated with UMG’s pursuit of

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1 “litigation and insurance claims” related to the fire. Compl. ¶ 5. But Plaintiffs never
2 actually provide the specific language or terms of the contracts; the closest they come
3 is their summary assertion that their “written recording agreements . . . provide for a
4 50/50 sharing of revenues derived from furnishing, licensing or authorizing the use by
5 others of Master Recordings embodying [Plaintiffs’] musical works.” Id. ¶ 35. This
6 failure alone is grounds for dismissal.
7 2. The facts—as pleaded—do not plausibly establish a contractual
breach by UMG.
8
9 Even if Plaintiffs’ conclusory allegations of “50/50” revenue sharing are taken
10 as true (and they are not, see infra at 12–13), Plaintiffs have pleaded no facts that
11 plausibly demonstrate a breach of this purported obligation. The Complaint alleges
12 that the “written recording agreements” at issue “provide for a 50/50 sharing of
13 revenues derived from [1] furnishing, [2] licensing or [3] authorizing the use by others
14 of Master Recordings embodying their musical works.” Compl. ¶ 35 (emphasis
15 added). To establish a breach of this purported provision, Plaintiff must therefore
16 allege facts plausibly showing that UMG (a) “furnish[ed], licens[ed,] or authoriz[ed]
17 the use by others of Master Recordings”; (b) “derived” “revenues” from such
18 furnishing, licensing, or authorization; and (c) subsequently failed to “shar[e]” 50% of
19 such “revenues” with Plaintiffs. Id.; see Conroy, 2014 WL 12586070, at *5 (reciting
20 elements of breach of contract claim as: existence of contract, performance by or
21 excuse for nonperformance by the plaintiff, breach by the defendant, and damages).
22 The Complaint does not allege that any of these things occurred. In fact, the
23 Complaint expressly alleges the absence of any revenues derived from any
24 “furnishing, licensing or authoriz[ation]” related to the master recordings. Indeed, the
25 Complaint alleges that UMG received “settlement proceeds” from the NBCUniversal
26 litigation as well as “insurance payments” from “its insurers for the loss of the Master
27 Recordings.” Compl. ¶¶ 36–38. According to Plaintiffs, “[t]hese settlement proceeds
28 and insurance payments” were allegedly “paid on account of the Master Recordings as

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1 a lump sum replacement for the revenues which could no longer be derived from
2 furnishing them, authorizing their use or licensing them to third parties because they
3 were destroyed in the fire.” Id. ¶ 38 (emphasis added).4
4 Because Plaintiffs expressly allege that UMG did not derive the settlement
5 proceeds or insurance payments from “furnishing, licensing, or authorizing their use by
6 others of Master Recordings,” Plaintiffs cannot possibly claim that UMG breached a
7 contractual provision that, as summarily alleged, only required payment in those
8 circumstances. See Pure Bioscience v. Ross Sys., Inc., 2008 WL 938956, at *7 (S.D.
9 Cal. Apr. 7, 2008) (plaintiff “fail[ed] to actually allege an underlying breach of
10 contract” where plaintiff did “not properly tether” alleged wrongdoing “to an
11 underlying breach” of a contractual provision); cf. Re/Max Mega Grp. v. Maxum
12 Indem. Co., 2010 WL 11507373, at *6 (C.D. Cal. Sept. 24, 2010) (where parties “have
13 openly and fairly entered into an unambiguous contract,” court must not “rewrite [its]
14 clear terms” (quoting Indus. Indem. v. Super. Ct., 224 Cal. App. 3d 828, 832 (1990))).
15 Indeed, as a matter of California insurance law, any proceeds that UMG received as a
16 result of its insurance settlement “[are] in no proper or just sense the proceeds of the
17 [destroyed] property.” Long v. Keller, 104 Cal. App. 3d 312, 313, 320 (1980)
18 (explaining that “[a] fire insurance policy does not insure the property covered thereby,
19 but [rather] is a personal contract indemnifying the insured against loss resulting from
20 the destruction of or damage to his interest in that property”).5
21
22 4
Of course, even if any masters were destroyed, this would have no impact on the
revenues Plaintiffs continue to receive from UMG’s exploitation of the sound
23 recordings that have been released. Those sound recordings continue to be
exploited by UMG to Plaintiffs’ benefit, including via streaming services and
24 physical sales. Indeed, while the master is one version of the sound recording—for
example, the original studio tape recording—it does not follow that loss of an
25 original tape master includes the loss of all other copies of that sound recording.
Plaintiffs continue to share in revenues from the exploitation of these sound
26 recordings, and Plaintiffs do not allege otherwise.
27 5
In Long, after a for-sale property was destroyed by fire prior to close of escrow, the
would-be buyer (and former lessor) sought a portion of the fire insurance proceeds
28 the owner collected “for the destruction of the structures on the subject property,
including improvements made by [the] buyer.” 104 Cal. App. 3d at 315–16. The
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1 3. Tellingly, the contracts that Plaintiffs fail to attach to the Complaint


negate any breach of contract claim.
2
3 The actual language from the contracts upon which Plaintiffs’ claims are based
4 confirms that Plaintiffs have no plausible breach of contract claim. For example,
5 Plaintiff Soundgarden’s 1988 recording agreement with A&M Records (Compl. ¶ 7)
6 contains the following royalty provision: “On Masters licensed by us to others on a
7 royalty basis for their manufacture and sale of Phonograph records, your royalty shall
8 be an amount equal to one-half (1/2) of the Net Royalty from the sale of those
9 Phonograph Records.” Gold Decl., Ex. A § 9(b)(ix); id. § 9(b)(iii) (similar provision
10 for masters licensed on a flat-fee basis). On its face, this provision creates a payment
11 obligation with respect to masters licensed to others on a royalty basis. Nowhere does
12 the Complaint allege facts showing that UMG did not pay Plaintiffs royalties received
13 by UMG as a result of “Masters licensed by us to others on a royalty basis for their
14 manufacture and sale of Phonograph records.” Id. § 9(b)(ix). There is simply no
15 plausible connection between the contractual obligation (to pay royalties for the
16 manufacture and sale of records by licensees) and the alleged breach (not sharing
17 insurance and settlement proceeds).
18 The same is true of Plaintiff Hole’s recording agreement, which contains among
19 its various royalty terms an even narrower 50/50 royalty provision that provides “the
20 royalty” for “Records and/or exploitation of Masters recorded hereunder” shall be:
21 fifty percent (50%) of Geffen’s net receipts with respect to . . .
22 exploitation [from] (a) Records derived from Masters recorded hereunder
sold through record clubs or similar sales plans, . . . [b] licenses of
23 Masters recorded hereunder for methods of distribution such as “key
24 outlet marketing” (distribution through retail fulfillment centers in
conjunction with special advertisements on radio or television), direct
25
(Cont’d from previous page)
26
would-be buyer sought “the benefits of sellers’ insurance proceeds” on the ground
27 that “once escrow opened [the] buyer’s interest was in the land while the sellers’
interest was only the unpaid purchase price.” Id. at 320. The court acknowledged
28 that “the buyer’s [post-contract] interest [was in fact] in the land,” but nonetheless
found that the buyer had no interest in the insurance proceeds. Id. 320–21.
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1 mail, mail order, phone order, or by any combination of the methods set
2 forth above or other methods; (c) direct mail or mail order marketed by
Geffen itself; and (d) licenses of Masters recorded hereunder for
3 distribution other than through Normal Retail Channels or other than by
4 the distributor who normally distributes Geffen Records or Records
hereunder in the territory concerned.
5
6 Gold Decl., Ex. D § 7.03. Again, as with the Soundgarden contract, the fire and
7 subsequent litigation and insurance settlements do not, as a matter of law, trigger any of
8 these very specific, enumerated forms of “exploitation.” The 50/50 sharing provisions
9 in the other named Plaintiffs’ contracts are similarly limited in their scope and wholly
10 inapplicable to Plaintiffs’ allegations here. See, e.g., Gold Decl., Ex. B (Tupac Shakur
11 1991 Recording Contract) §§ 5(c), (6), (7); Ex. C (Tom Petty 1984 Recording Contract
12 § 6(l)); Ex. E (Steve Earle 1985 Recording Contract) § 7.03.
13 Because Plaintiffs have failed to plead facts showing that a contractual obligation
14 was breached—and, to the contrary, plead that UMG could not receive revenues
15 implicating these contract provisions after the fire—Plaintiffs’ first breach of contract
16 claim must be dismissed.
17 B. Plaintiffs Fail to State a Claim for Breach of a Bailment Agreement
18 The Complaint’s second claim appears to be an amalgamation of claims for
19 bailment and breach of the implied covenant of good faith and fair dealing. The
20 Complaint does not allege that Plaintiffs owned the recordings (or legally expected
21 them returned) nor does it allege that the parties to each agreement entered into an
22 express bailment agreement. Rather, Plaintiffs borrow elements from multiple legal
23 theories and surmise that UMG breached an unidentified contractual obligation to
24 Plaintiffs by allegedly failing “to take reasonable measures to preserve and maintain the
25 Master Recordings.” Compl. ¶ 42. Regardless of the label, this claim fails as a matter
26 of law.
27
28

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1 1. The Complaint does not plausibly allege a bailment because Plaintiffs


do not and cannot plead that UMG had an obligation to return the
2 property—meaning there was no bailment as a matter of law.
3
Plaintiffs seek to invoke the California Civil Code’s bailment or “deposit”
4
provisions, which are not applicable to the alleged circumstances here. California Civil
5
Code section 1814, upon which Plaintiffs rely (Compl. ¶ 44), provides that “a voluntary
6
deposit is made by one giving to another, with his consent, the possession of personal
7
property to keep for the benefit of the former.” Cal. Civ. Code § 1814. A “deposit for
8
keeping” is statutorily defined as “one in which the depositary is bound to return the
9
identical thing deposited.” Cal. Civ. Code § 1817. Where there is no obligation to
10
return the property, there is no bailment. Cf. Gebert v. Yank, 172 Cal. App. 3d 544, 551
11
(1985) (breach of bailment contract claim requires “a failure to return that which was
12
bailed”).
13
The Complaint does not allege facts implicating these statutory provisions.
14
Plaintiffs do not—and cannot—show that UMG had an obligation to return the master
15
recordings. Indeed, the contracts that the Complaint incorporates by reference make
16
clear that UMG owned the master recordings free and clear of any claims by Plaintiffs:
17
18  Soundgarden’s contract states “[a]ll Master Recordings recorded during the
Term which embody your performances . . . shall, for purposes of copyright
19
law, be deemed works made for hire for [UMG] by [Soundgarden]. . . .
20 Those Master Recordings . . . shall be entirely [UMG’s] property, free of any
21 claims whatsoever by you [Soundgarden] or any other person, firm, or
corporation.” Gold Decl., Ex. A § 6(a).
22
23  Tupac Shakur’s contract states “[UMG] shall be the sole and exclusive
owner of the Masters and artwork, and in its sole discretion shall have the
24 exclusive, perpetual and universal right to use and control the Masters in any
25 manner it deems appropriate. [UMG] shall have the right to manufacture,
advertise, sell, lease, license or otherwise dispose of the Masters or any part
26 of them, and any reproductions upon such terms as [UMG] may approve.”
27 Gold Decl., Ex. B § 1.

28

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1  Tom Petty’s contract states “[t]itle to the Masters . . . shall vest in [UMG]
2 from inception of recording and thereafter [UMG] shall be the sole and
exclusive owner . . . of such Masters.” That contract also gave UMG (via
3 MCA) “[t]he exclusive and perpetual right throughout the Territory to
4 manufacture, advertise, publicize, sell, lease, license, or otherwise use or
dispose of and exploit records and/or derivatives manufactured from or
5 embodying the Masters” and “[a]ll right, title and interest in the copyright in
6 and to the Masters and all reproductions thereof.” Gold Decl., Ex. C § 7(a)–
(c).
7
8  Hole’s contract states “[a]ll Masters and Videos made under this Agreement
or during its term (including duplicates, work tapes, etc.), the performances
9 contained thereon and the Recordings derived therefrom and the related
10 Artwork shall, from the inception of their creation, be the sole property of
[UMG], in perpetuity, free from any claims by you, [Hole] or any other
11 Person and [UMG] shall have the right to use and control same subject to the
12 terms herein.” Gold Decl., Ex. D § 9.01.
13
 And Steve Earle’s contract states “[UMG] is the sole, exclusive and
14 perpetual owner of all Masters Delivered hereunder or recorded by [Earle]
during the term of this agreement, which ownership entitles [UMG], among
15
other things, to all right, title and interest in the copyright in and to the
16 Masters. . . . All Masters made under this agreement or during its term . . .
shall, from the inception of their creation, be the sole property of [UMG], in
17
perpetuity, free from any claims by [Earle], other than as specifically set
18 forth in this agreement, [Earle] or any other person.” Gold Decl., Ex. E
§ 9.01.
19
20 Courts in California have long held that “[n]o bailment can be implied where it
21 appears it was the intention of the parties, as derived from their relationship to each
22 other and from the circumstances of the case, that the property was to be held by the
23 party in possession in some capacity other than as bailee.” H.S. Crocker Co. v.
24 McFaddin, 148 Cal. App. 2d 639, 644 (1957); see Needelman v. DeWolf Realty Co.,
25 239 Cal. App. 4th 750, 762 n.5 (2015) (same); 9 Cal. Jur. 3d (Bailments) § 2; see also
26 Mac’Avoy v. Smithsonian Inst., 757 F. Supp. 60, 65 (D.D.C. 1991) (citing H.S.
27 Crocker for that proposition, finding no implied bailment agreement, and granting
28 summary judgment for defendant).

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1 Here, the Complaint pleads no facts permitting an implied bailment. The


2 Complaint nowhere alleges—because it cannot—that UMG has an obligation to return
3 the master recordings. Moreover, the contracts on which Plaintiffs’ claims hinge
4 negate any possible implied bailment. In Greenberg Brothers, Inc. v. Ernest W. Hahn,
5 Inc., which Plaintiffs cite (Compl. ¶ 44), the court describes a bailment as a “deposit of
6 personal property to be cared for until the owner demands redelivery.” 246 Cal. App.
7 2d 529, 531 (1966) (emphasis added). Plaintiffs do not and cannot allege that they
8 owned the master recordings when the very contracts upon which they rely confirm
9 that UMG is, in fact, the owner.
10 2. The Complaint also fails to plausibly plead a violation of the implied
11 covenant of good faith and fair dealing.
12 To the extent Plaintiffs’ bailment claim is actually a claim for breach of the
13 implied covenant of good faith and fair dealing, that too fails. According to the
14 Complaint, the implied covenant requires that “neither party to the contract will
15 undertake actions to deprive the other party of the expected fruits and benefits of the
16 contractual relationship.” Compl. ¶ 42. Plaintiffs allege “it would breach the
17 obligation of good faith and fair dealing for UMG to fail to take reasonable measures
18 to preserve and maintain the Master Recordings.” Id. This legal theory—that
19 purported negligence violates the implied covenant—cannot survive as a matter of law.
20 A plaintiff alleging breach of the implied covenant must establish that the
21 defendant “unfairly interfered with [the plaintiff’s] right to receive the benefits of the
22 contract.”6 Cal. Civ. Jury Instructions No. 325 (emphasis added). Allegations
23 asserting such a claim “must show that the conduct of the defendant . . . demonstrates a
24 failure or refusal to discharge contractual responsibilities, prompted not by an honest
25 mistake, bad judgment or negligence but rather by a conscious and deliberate act,
26
27 6
Plaintiffs’ repeated citation to statements on UMG’s website—for example, “we are
all responsible for protecting” the Master Recordings, see Compl. ¶¶ 3, 4, 43—in
28 no way supports the argument that UMG somehow interfered with Plaintiffs’ rights
under the contracts.
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1 which unfairly frustrates the agreed common purposes and disappoints the reasonable
2 expectations of the other party.” Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal.
3 App. 3d 1371, 1395 (1990) (emphasis added); see Free Range Content, Inc. v. Google
4 Inc., 2016 WL 2902332, at *14, 16 (N.D. Cal. May 13, 2016) (quoting this language
5 from Careau and granting motion to dismiss breach of implied covenant claim where
6 plaintiff could not “plead bad faith”); Env’t Furniture, Inc. v. Bina, 2010 WL 5060381,
7 at *3 (C.D. Cal. Dec. 6, 2010) (quoting this same language from Careau and
8 dismissing counterclaim with prejudice for failure to “allege facts establishing the bad
9 faith breach of the implied covenant”).
10 Here, the Complaint pleads no facts showing that UMG undertook a conscious
11 and deliberate act to destroy the recordings; and indeed, any such allegation would be
12 implausible, because UMG was deprived of its own property as a result of a fire that it
13 did not start. Contra April Enters., Inc. v. KTTV, 147 Cal. App. 3d 805, 814, 818
14 (1983) (addressing whether the intentional erasure of videotapes could support an
15 implied covenant claim). Indeed, the Complaint does not even plead facts showing
16 that UMG acted negligently. Rather, Plaintiffs cite extensively from UMG’s own
17 allegations of negligence against its landlords in the NBCUniversal litigation. See,
18 e.g., Compl. ¶ 17 (quoting UMG’s allegations that the NBCUniversal defendants
19 “persistently ignored the recommendations of their fire prevention and risk assessment
20 expert and their own experiences after a similar fire in 1990 destroyed a similar area on
21 the back lot”).
22 Plaintiffs’ theory that UMG allegedly deprived Plaintiffs of their right to receive
23 the “expected fruits and benefits” of the recording agreements, (Compl. ¶ 42), is made
24 all the more implausible by the terms of the contracts themselves. Specifically, each of
25 the named Plaintiffs’ recording agreements contains a provision expressly permitting
26 UMG to “refrain,” if it so chooses, from exercising its right to exploit the master
27 recordings in various ways—including by refraining from manufacturing, advertising,
28 selling, distributing, and/or licensing records embodying the masters. See Gold Decl.,

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1 Ex. A (Soundgarden) § 6(a); Ex. B-1 (Tupac) § 7.02; Ex. C (Petty) § 7(b), Ex. D
2 (Hole) § 9.02; Ex. E (Earle) § 9.02.
3 Accordingly, even if the Court determines that the Complaint plausibly alleged
4 the existence of a bailment contract (it should not), this claim for relief still fails
5 because the Complaint does not plausibly allege that UMG breached the implied
6 covenant of good faith and fair dealing.
7 C. Plaintiffs’ Claims Are Time-Barred, and Plaintiffs Plead No Facts That
8 Would Permit Them to Sue UMG More Than 11 Years After the Well-
Publicized Fire and Ensuing Lawsuits
9
10 The limitations period on a claim begins when the cause of action accrues, and

11 “cause[s] of action ordinarily accrue[] when, under the substantive law, the wrongful act

12 is done and the obligation or liability arises.” Brisbane Lodging, L.P. v. Webcor

13 Builders, Inc., 216 Cal. App. 4th 1249, 1257 (2013); see Wu v. Sunrider Corp., 2018

14 WL 6266577, at *4 (C.D. Cal. May 22, 2018) (same) (citation omitted). Where, as

15 here, “an issue as to the statute of limitations appears ‘on the face of the complaint,’ the

16 party seeking tolling ‘has an obligation to anticipate the defense and plead facts to

17 negative the bar.’” Haaland v. Garfield Beach CVS, LLC, 2018 WL 5086493, at *3–4

18 (C.D. Cal. June 6, 2018) (Kronstadt, J.) (dismissing time-barred claim with prejudice)

19 (quoting Union Carbide Corp. v. Super. Ct., 36 Cal. 3d 15, 25 (1984)); Seven Arts

20 Filmed Entm’t Ltd. v. Content Media Corp. PLC, 733 F.3d 1251, 1254 (9th Cir. 2013)

21 (when a “statute-of-limitations defense[] [is] ‘apparent from the face of the complaint,’

22 [it] may properly be raised in a motion to dismiss”) (citation omitted). Here, the

23 Complaint specifically alleges that the fire occurred on June 1, 2008 (Compl. ¶ 4), but

24 fails to plead facts negating the statute of limitations bar for any (let alone all) of the

25 Plaintiffs. In the face of such a well-publicized tragedy that was thereafter the subject

26 of numerous articles and public litigation from 2009–2012, in which the fire and its

27 losses were discussed in detail, Plaintiffs’ claims are time-barred.

28

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1 1. The breach of contract claim is subject to a four-year statute of


limitations, which expired many years ago.
2
Claims for breach of contract under California law are subject to a four-year
3
statute of limitations (Cal. Civ. Proc. Code § 337(1)), and generally “‘accrue[] at the
4
time of breach, which then starts the limitations period running.’” IV Sols., Inc. v.
5
United Healthcare, 2015 WL 4127823, at *2 (C.D. Cal. July 7, 2015) (quoting Cochran
6
v. Cochran, 56 Cal. App. 4th 1115, 1120 (1997)). Because Plaintiffs allege that UMG
7
“breached the recording agreements” by failing to “pay Plaintiffs and members of the
8
class 50% of the settlement proceeds and insurance payments it received” (Compl.
9
¶ 39), the four-year statute of limitations began to run at the time of that alleged
10
breach—i.e., no later than February 2013 when UMG’s prior suit had been settled and
11
formally dismissed. See RJN Ex. 5 (Docket).7 Thus, Plaintiffs’ revenue-sharing breach
12
of contract claim is time-barred. See IV Sols., 2015 WL 4127823, at *2 (contract claim
13
time-barred where complaint was filed more than four years after “payment due under a
14
contract . . . would have been due”).
15
16 2. The statute of limitations for the “bailment” claim expired three
years after the fire.
17
18 The applicable statute of limitations for a bailment action is three years. See Coy

19 v. Cty. of Los Angeles, 235 Cal. App. 3d 1077, 1087–88 (1991) (citing Cal. Civ. Proc.

20 Code § 338(c)(1)). Because the Complaint alleges that UMG breached the alleged

21 bailment agreement by negligently permitting the destruction of the master recordings

22 in the 2008 fire (see Compl. ¶¶ 45–47), the three-year statute of limitations began to run

23 on June 1, 2008.8 See Coy, 235 Cal. App. 3d at 1087 (statute of limitations accrues

24
25
7
UMG’s insurance litigation resolved in 2011, RJN Ex. 6 (Docket), but for purposes
26 of this motion only—since the statute of limitations has long expired regardless—
the later of the two settlements is being used.
27
8
Even if the Court disagrees and instead applies a four-year statute of limitations
28 because the claim is labeled “Breach of Contract,” that period still would have
expired long ago (four years after the property was destroyed).
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1 “from the time of the unlawful taking”). Accordingly, Plaintiffs’ bailment claim is also
2 time-barred.
3 3. Plaintiffs do not plead facts entitling them to toll the statutes of
limitations based upon “delayed discovery” of the factual basis of
4 their claims.
5 The Complaint acknowledges the statute of limitations issue that Plaintiffs face
6 and appears to assert that the delayed discovery rule extends the applicable statutes.
7 Compl. ¶ 25. “Under California law, the discovery rule delays accrual of claims only
8 when a plaintiff has no reason to suspect wrongdoing and can not discover his or her
9 claims with reasonable diligence.” Plumlee v. Pfizer, Inc., 664 F. App’x 651, 652–53
10 (9th Cir. 2016) (citing Norgart v. Upjohn Co., 21 Cal. 4th 383, 397–98 (1999)). “[A]
11 plaintiff whose complaint shows on its face that his claim would be barred without the
12 benefit of the discovery rule must specifically plead facts to show (1) the time and
13 manner of discovery and (2) the inability to have made earlier discovery despite
14 reasonable diligence.” Grisham v. Philip Morris U.S.A., Inc., 40 Cal. 4th 623, 638
15 (2007); see Plumlee, 664 F. App’x at 653 (quoting Grisham standard).
16 Here, as a matter of law, Plaintiffs have not pleaded facts demonstrating an
17 entitlement to delay accrual of their otherwise time-barred claims. The Ninth Circuit’s
18 decision in Plumlee is instructive. There, as here, “although [the plaintiff] alleged the
19 ‘time and manner of discovery’ of the factual bases of her claims” (“she first discovered
20 the bases for her claims when she watched a 60 Minutes rerun”), this was insufficient to
21 toll her claims because she “failed to allege any facts [indicating] that she was unable to
22 discover the factual bases of her claims earlier despite exercising reasonable diligence.”
23 Id. at 653. Here, too, the Complaint is bereft of any factual allegations regarding any
24 steps taken by Plaintiffs to investigate their potential claims in the more than 11 years
25 between the fire and the filing of their Complaint.
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1 4. Plaintiffs fail to plead facts sufficient to extend the statute of


limitations on a fraudulent concealment theory.
2
Plaintiffs’ effort to toll the statute by invoking the doctrine of “fraudulent
3
concealment” (Compl. ¶ 25) falls well short of what is required at the pleading stage.
4
For tolling to apply, the Complaint must sufficiently allege that UMG “fraudulently
5
concealed the existence of a cause of action in such a way that the plaintiff[s], acting as
6
. . . reasonable person[s], did not know of its existence.” Hexcel Corp. v. Ineos
7
Polymers, Inc., 681 F.3d 1055, 1060 (9th Cir. 2012). Plaintiffs “carr[y] the burden of
8
pleading and proving” the doctrine’s applicability. Id. (citation omitted). Specifically,
9
Plaintiffs “must plead facts showing that [the defendant] affirmatively misled it, and
10
that [the plaintiffs] had neither actual nor constructive knowledge of the facts giving
11
rise to its claim despite its diligence in trying to uncover those facts.” Id. (citation and
12
emphasis omitted). The Ninth Circuit has cautioned that “conclusory statements” are
13
not enough and that a plaintiff “must plead with particularity the circumstances
14
surrounding the concealment and state facts showing his due diligence in trying to
15
uncover the facts.” Rutledge v. Bos. Woven Hose & Rubber Co., 576 F.2d 248, 250 (9th
16
Cir. 1978) (holding complaint failed sufficiently to plead “fraudulent concealment to
17
avoid the limitations bar”) (emphasis added).9 Failure to satisfy any one of these
18
elements defeats application of the doctrine. See, e.g., Thorman v. Am. Seafoods Co.,
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421 F.3d 1090, 1096 (9th Cir. 2005).
20
21 a. Plaintiffs fail to plead concealment sufficient to toll the statute
of limitations.
22
For fraudulent concealment to “halt[] the statute of limitations,” “plaintiff must
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demonstrate that he relied on the defendant’s misconduct in failing to file in a timely
24
manner.” Guerrero, 442 F.3d at 706–07 (affirming 12(b)(6) dismissal where plaintiff
25
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Because Rule 9(b) applies to allegations of fraudulent concealment, Plaintiffs must
27 plead specific facts as to each of these elements with particularity. Guerrero v.
Gates, 442 F.3d 697, 707 (9th Cir. 2006); Yumul v. Smart Balance, Inc., 733 F.
28 Supp. 2d 1117, 1132–33 (C.D. Cal. 2010) (collecting cases applying Rule 9(b)’s
heightened pleading standard to fraudulent concealment allegations).
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1 failed to file lawsuit within limitations period or sufficiently plead facts “that would
2 excuse [such] delay”) (emphasis added). Here, Plaintiffs cite to various “[p]ress
3 accounts . . . based on statements by UMG representatives” (Compl. ¶ 22), before the
4 full extent of the losses were known to UMG, but none of the Plaintiffs alleges that they
5 ever actually saw these purportedly misleading accounts or reasonably relied upon
6 them, as is necessary. See Guerrero, 442 F.3d at 706–07.
7 b. Plaintiffs fail to allege the facts showing the exercise of
8 reasonable diligence sufficient to toll the statute of limitations.
9 Plaintiffs do not plead—even in conclusory fashion—that they exercised
10 reasonable diligence, but rather surmise that they would not have been able to discover
11 the “pertinent facts” had they in fact exercised such diligence. See Compl. ¶ 25
12 (“Plaintiffs and members of the Class did not discover, and could not have discovered
13 through the exercise of reasonable diligence, the existence of any conspiracy.”). The
14 Complaint therefore does not satisfy the Ninth Circuit’s requirement that plaintiffs
15 plead particularized facts supporting due diligence (Rutledge, 576 F.2d at 250), given
16 that these Plaintiffs plead no facts whatsoever concerning any due diligence. Indeed,
17 the Complaint contains an 11-year gap between the June 2008 media statements and the
18 June 2019 New York Times Magazine coverage. See Blyden v. Navient Corp., 2016 WL
19 6601658, at *8 (C.D. Cal. Feb. 16, 2016) (“Plaintiff has not alleged that she was
20 reasonably diligent in attempting to pursue her claims.”); Collins v. Nationalpoint Loan
21 Servs., 2009 WL 3213979, at *3 (S.D. Cal. Sept. 29, 2009) (dismissing complaint where
22 plaintiff did not “particularly set forth his own due diligence in pursuing [his] claim”).
23 Needless to say, much transpired in those 11 years. As noted by the very New
24 York Times Magazine article that gave rise to this suit (and that Plaintiffs quote at
25 length, Compl. ¶¶ 20–21), “[t]he fate of all th[e] tapes has been an open secret for
26 years,” “hid[ing] in plain sight on the internet,” including on public online message
27 boards and even “the Wikipedia entry for Universal Studios Hollywood.” RJN Ex. 7.
28 That article also quotes a 2014 interview with Richard Carpenter, “one-half of the

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1 superstar 1970s duo the Carpenters, [who] stated that masters for the group’s
2 multimillion-selling A&M albums were lost on the backlot.” Id. (quoting Carpenter as
3 stating, “A lot of those masters . . . they went up in the fire at Universal”). These (and
4 other) statements in the New York Times Magazine piece alone establish that Plaintiffs
5 and their representatives (attorneys, managers, or agents) could have learned of their
6 alleged claims following the requisite “duly diligent inquiry” in the years after the 2008
7 fire. Hexcel, 681 F.3d at 1060; Allen v. Similasan Corp., 96 F. Supp. 3d 1063, 1071
8 (S.D. Cal. 2015) (fraudulent-concealment allegations insufficient because complaint
9 relied on “internet research” that plaintiff could have completed 10 years earlier).
10 Indeed, the New York Times Magazine article itself belies Plaintiffs’ claim that
11 UMG had been engaging in “fraudulent concealment,” expressly noting that “[m]uch of
12 what we know about the [fire] event comes from depositions and documents that
13 emerged from [UMG’s prior] litigation” over “losses suffered in the fire.” RJN Ex. 7.
14 One such document—UMG’s publicly filed brief in opposition to defendants’
15 summary-judgment motion—opens as follows: “On June 1, 2008, tens of thousands of
16 master recordings belong to [UMG] were destroyed in a catastrophic fire . . . .” RJN
17 Ex. 4 at 43. Another—a sworn declaration by former UMG employee Randy Aronson,
18 who was featured prominently in the New York Times Magazine piece—states that “the
19 vast majority of the tapes stored in the vault were analog master tapes.” RJN Ex. 3 at 1.
20 Given these circumstances—and the Ninth Circuit’s prohibition of conclusory
21 pleading—the lack of any facts pleaded concerning Plaintiffs’ diligence during an 11-
22 year period is notable, not to mention fatal to these claims. The Complaint does not
23 allege any facts why Plaintiffs or their representatives were unable to review these same
24 public documents or why they were actually or reasonably oblivious to the “open
25 secret,” “hid[ing] in plain sight on the internet,” that forms the basis of this suit. RJN
26 Ex. 7; Community Cause v. Boatwright, 124 Cal. App. 3d 888, 902 (1981) (claim was
27 time-barred despite fraudulent-concealment allegations where complaint “allege[d] no
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1 facts to explain the gap between the date” on which “the documents which led to the
2 discovery became available as public records” and “the alleged date of discovery”).
3 D. Plaintiffs Tom Whalley and Jane Petty Lack Standing Because the
4 Complaint Fails to Plead Facts Demonstrating a Valid Assignment
5 The Complaint’s conclusory allegations that Tom Whalley and Jane Petty are
6 “assignee[s]” under the relevant (and unidentified) recording agreements do not satisfy
7 Rule 8’s plausibility standard. See Compl. ¶¶ 8–9. Because they were not parties to
8 those agreements, Whalley and Petty do not have standing to sue for an alleged breach
9 unless they received a valid assignment of the rights therein. Consequently, the claims
10 of both should be dismissed for this additional reason.
11 Courts in this district have repeatedly dismissed contractual claims for lack of
12 standing when the plaintiff failed to plausibly allege a valid assignment. As with other
13 matters, allegations regarding assignments that amount to mere legal conclusions are
14 not enough; instead, “plaintiffs should, at the very least, plead the identity of the
15 parties to the assignments and their essential terms.” MAO-MSO Recovery II, LLC v.
16 Farmers Ins. Exchange, 2017 WL 5634097, at *7 (C.D. Cal. Nov. 20, 2017) (citing
17 cases). In MAO, for example, allegations that the plaintiffs had valid assignments were
18 insufficient because the plaintiffs “plead[ed] no facts supporting that legal conclusion.”
19 Id. And in Moore v. Way FM Media Group Inc., the court dismissed the complaint for
20 lack of standing where the plaintiff “ha[d] not adequately alleged facts supporting an
21 inference that there was a valid assignment” of contractual rights. 2013 WL
22 12246337, at *5 (C.D. Cal. Aug. 2, 2013) (citing Iqbal and finding assignment
23 allegations to be “too conclusory” to withstand dismissal); see also Gerritsen v.
24 Warner Bros. Entm’t Inc., 112 F. Supp. 3d 1011, 1037–39 (C.D. Cal. 2015) (plaintiff
25 failed to plead successor-in-interest liability where allegation that defendant had
26 assumed legal obligations “by virtue of [a] transaction” was “the very legal conclusion
27 that numerous courts have found insufficient under Rule 8”).
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1 Here, the Complaint fails to adequately allege facts—as opposed to legal


2 conclusions—to support a valid assignment to either Whalley or Petty. Nor can those
3 facts be gleaned from the assignments themselves because Plaintiffs do not attach the
4 agreements containing those alleged assignments to their Complaint. See, e.g.,
5 Produce Pay, Inc. v. Promate Produce U.S.A., Inc., 2017 WL 10636409, at *2 (C.D.
6 Cal. Jan. 31, 2017) (evaluating attached agreement at the motion to dismiss stage);
7 Dual Diagnosis Treatment Ctr., Inc. v. Blue Cross of Cal., 2016 WL 6892140, at *3
8 (C.D. Cal. Nov. 22, 2016) (same). For Whalley, we are left with the sole allegation
9 that he, “as Trustee of the Afeni Shakur Trust, is the owner, assignee, and successor in
10 interest” to all contractual rights at issue. Compl. ¶ 8. That conclusory allegation
11 contains no facts regarding the essential terms of the supposed assignment and
12 therefore plainly stumbles over Rule 8’s plausibility hurdle.
13 The same is true for Jane Petty, the alleged “owner, assignee, and successor in
14 interest to all contractual rights of [Tom] Petty at issue in this action.” Compl. ¶ 9.
15 That the Complaint also alleges Tom Petty assigned Jane an interest in “certain of his
16 recording agreements,” such as a 50% interest in master recordings “through a certain
17 time period, including on seminal albums Damn the Torpedoes, Full Moon Fever and
18 Southern Accents,” does not compel a different conclusion because this allegation falls
19 short of alleging the essential terms of the assignment. Id. (emphasis added).
20 Accordingly, to the extent the Petty allegations constitute “some [sparse] facts” that
21 might support the finding of an assignment, “they do not give rise to a plausible
22 inference” of it. Gerritsen, 112 F. Supp. 3d at 1038.
23 Because the Complaint fails to plausibly allege the existence of a valid
24 assignment to either Tom Whalley or Jane Petty, their claims should be dismissed for
25 lack of standing.
26 V. CONCLUSION
27 The Court should therefore grant this motion and dismiss Plaintiffs’ claims with
28 prejudice.

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1 Dated: July 17, 2019 Respectfully submitted,


2 GIBSON, DUNN & CRUTCHER LLP
3 By: /s/ Scott A. Edelman
4 Scott A. Edelman (SBN 116927)
sedelman@gibsondunn.com
5 Deborah L. Stein (SBN 224570)
dstein@gibsondunn.com
6 Nathaniel L. Bach (SBN 246518)
nbach@gibsondunn.com
7 333 South Grand Avenue
Los Angeles, CA 90071
8 Telephone: 213.229.7000
Facsimile: 213.229.7520
9
Attorneys for Defendant
10 UMG RECORDINGS, INC.
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1 CERTIFICATE OF SERVICE
2 I hereby certify that on this the 17th day of July, 2019, I have electronically filed
3 the foregoing document with the Clerk of the Court using the CM/ECF system. Notice
4 of this filing will be sent to all parties and counsel of record by operation of the Court’s
5 CM/ECF system. All other parties will be served by regular U.S. Mail. Parties may
6 access this filing through the Court’s electronic filing system.
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8 /s/ Scott A. Edelman
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