Marks v. UMG

Case 2:21-cv-04043-MCS-JPR Document 37 Filed 04/06/22 Page 1 of 6 Page ID #:412
per record for retail sales in the country of manufacture.” Id. ¶ 22 n.7 (first alteration
in original). Following Plaintiff’s dissociation from The Beach Boys and subsequent
litigation, Plaintiff signed a 1972 Settlement Agreement that states “[a]s to records
manufactured outside the USA . . . [o]nly records for which payment is received by
Capitol in the United States of America shall be deemed sold” and thus generate
royalties. Id. ¶ 23 n.9 (alterations in original). These agreements, mentioning
physical records, did not anticipate the shift in the music industry from consumers
buying records to consumers digitally streaming songs. Id. ¶ 25. Defendants
represented to Plaintiff and class members on written royalty statements that Plaintiff
and class members would receive royalty payments for the digital streaming of their
music. Id. ¶ 26. Defendants allegedly failed to disclose the full extent of foreign
royalties derived from streaming and made arbitrary deductions. Id. ¶¶ 27–28.
Defendants purportedly enacted this “scheme” by having foreign subsidiaries take a
portion of the royalties and only reporting the foreign royalties to Plaintiff and class
members left after the deduction by the subsidiaries. Id. ¶¶ 29–31.
To support that Defendants defrauded Plaintiff and the class members, the
SAC includes the following allegations:
34. WHO: Defendants failed to disclose and omitted

material facts regarding the total foreign streaming
revenues collected by its foreign affiliates;
35. WHAT: Defendants failed to disclose and omitted

material facts regarding the total foreign streaming
revenues collected by its foreign affiliates as detailed
herein and instead only disclosed amounts remaining after
imposing an intercompany charge between Defendants
and their foreign affiliates. Further, Defendants failed to
indicate the true royalty rate being paid to Plaintiff and
Class Members. Defendants’ omissions of material fact
were intentional and made with knowledge as to the total
foreign streaming revenues generated by their foreign
affiliates. Defendants’ omissions were material because
Class Members are unable to determine the total foreign
streaming revenues generated abroad absent undertaking a
lengthy and expensive audit. Defendants actively
concealed the total foreign streaming revenues generated
by its foreign affiliates from Plaintiff and Class Members;
Page 2 of 6 CIVIL MINUTES – GENERAL Initials of Deputy Clerk SMO

36. WHEN: Defendants failed to disclose the material

facts detailed herein continuously on each royalty
statements [sic] issued from the commencement of
distribution via foreign streaming until the present. The
non-disclosure is ongoing as the statements provide [sic]
to Plaintiff and the Class fail to disclose that Defendants’
foreign affiliates are withholding royalty revenues and the
true royalty being paid in light of that impermissible
deduction;
37. WHERE: Defendants’ omissions of material fact

were made, inter alia, on Plaintiff’s and Class Members’
royalty statements from UMG, which fail to disclose the
intercompany charge and its distortion of the represented
royalty rates;
38. HOW: Defendants failed to pay Plaintiff and Class

Member’s [sic] their fair share of foreign streaming
revenues collected by Defendants’ foreign affiliates and
failed to disclose the material facts detailed herein in their
royalty statements; and
39. WHY: Defendants failed to disclose the material

facts detailed herein for the express purpose of inducing
Plaintiff and Class Members to accept the reduced
royalties without having full knowledge of the total
foreign streaming revenues that Defendants were
withholding. Defendants profited by concealing the total
foreign streaming revenues from Plaintiff and Class
Members. Defendants knew that Plaintiff and Class
Members would be unable to determine the total foreign
streaming revenues absent a lengthy and expensive audit
since Defendants were the sole entities in possession of the
data that would show the harm complained of herein.
Id. ¶¶ 34–39.

Plaintiff brings seven claims on behalf of himself and the putative classes:
(1) breach of contract; (2) account stated; (3) fraud; (4) violation of California
Business & Professions Code section 17200 et seq. (“UCL”); (5) accounting;
(6) breach of the covenant of good faith and fair dealing; and (7) declaratory relief.
Id. ¶¶ 52–106.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows an attack on the pleadings for
“failure to state a claim upon which relief can be granted.” “To survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Iqbal, 556 U.S. at 678.
The determination of whether a complaint satisfies the plausibility standard is

a “context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679. Generally, a court must accept the factual
allegations in the pleadings as true and view them in the light most favorable to the
plaintiff. Park v. Thompson, 851 F.3d 910, 918 (9th Cir. 2017); Lee v. City of Los
Angeles, 250 F.3d 668, 679 (9th Cir. 2001). But a court is “not bound to accept as
true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 555).
Averments of fraud are subject to the heightened pleading standard of Rule

9(b). Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003). To meet
Rule 9(b), a plaintiff must “state with particularity the circumstances constituting
fraud.” Fed. R. Civ. P. 9(b). The complaint must identify the “who, what, when,
where, and how” of the fraudulent misconduct, “as well as what is false or
misleading about” it, and “why it is false.” Cafasso v. Gen. Dynamics C4 Sys., Inc.,
637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks omitted).
III. DISCUSSION
The Court previously dismissed Plaintiff’s claims on two grounds. First, the
Court dismissed the fraud claims because “Plaintiff include[d] no particularized facts
that would allow the Court to determine what fraud occurred, when, and through

what instrument.” Order 5 (citing Cafasso, 637 F.3d at 1055). Second, the Court
dismissed the contract claims because Plaintiff “fail[ed] to identify a bargained-for
provision requiring UMG to pay Plaintiff his claimed royalties.” Id. at 7. Plaintiff’s
SAC faces the same deficiencies and must be dismissed.
A. Fraud
Plaintiff once again “includes no particularized facts that would allow the
Court to determine what fraud occurred, when, and through what instrument.” Id. at
5. Plaintiff attaches no contract or fraudulent royalty statement to the SAC, and once
again Plaintiff makes no effort to narrow his serious fraud accusations to a
reasonably discrete period or individual such that UMG can meaningfully respond.
These vague statements do not “state with particularity the circumstances
constituting fraud.” Fed. R. Civ. P. 9(b). The Court thus GRANTS the motion to
dismiss the fraud claim.
B. Breach of Contract
Plaintiff still has not pleaded a bargained-for agreement that Defendants

breached. Even assuming Defendants are the proper parties to the alleged
agreements to pay foreign streaming royalties without deduction, Plaintiff does not
“present the material terms and conditions of the contract in writing or in substance.”
Frezza v. Google Inc., No. 5:12-cv-00237-RMW, 2013 WL 1736788, at *4 (N.D.
Cal. Apr. 22, 2013). Plaintiff only presents excerpts of past contracts that do not
mention digital streaming. SAC ¶¶ 22–23 nn. 6–9. The breach of contract claim fails
for this reason.
Plaintiff also argues that Defendants paying him royalties for foreign
streaming reflects an intent to modify the contract. Opp’n 3–4. Modification of a
contract requires consideration. See D.L. Godbey & Sons Constr. Co. v. Deane, 39
Cal. 2d 429, 431 (1952); Fairline Ests., Inc. v. Carrico Constr. Co., 228 Cal. App.
2d 65, 71 (1964). Plaintiff argues that a change in legal relationship constitutes
sufficient consideration. Opp’n 7 (citing Chi. Title Ins. Co. v. AMZ Ins. Servs., Inc.,
188 Cal. App. 4th 401, 423 (2010)). Consideration requires both parties to “have
assumed some legal obligations.” Chi. Title, 188 Cal. App. 4th at 423. Plaintiff’s
SAC points to no new legal obligation he assumed after the 1972 Settlement
Agreement. Thus, the purported modification fails for lack of consideration.

Plaintiff finally claims a right to recission of the original contract in the event
the Court finds no breach of contract. Opp’n 8–10. But Plaintiff seeks to keep past
royalties previously paid to him under his contract with Capitol Records. See SAC
¶¶ 6–7, 53–58. Because this is an affirmation of those contracts, Plaintiff cannot seek
to rescind them. Cf. Broad. Music, Inc. v. Davis, No. CV 10-10089-RGK (FFMx),
2012 WL 13008124, at *6 (C.D. Cal. Mar. 30, 2012) (dismissing claim seeking
rescission where claimants affirmed contracts by seeking to retain their benefits).
The Court GRANTS the motion to dismiss the breach of contract claim.
C. Remaining Claims
Every other claim depends on either the fraud allegations or contract

provisions Plaintiff failed to identify. SAC ¶ 64 (account stated); id. ¶ 88 (UCL); id.
¶ 92 (accounting) id. ¶ 97 (breach of the implied covenant of good faith and fair
dealing); id. ¶ 104 (declaratory relief). Lieblong v. Abella, 503 F. Supp. 3d 1011,
1022 (D. Haw. 2020) ("A claim for declaratory relief rises or falls with the other
claims." (internal quotation marks omitted)); McAfee v. Francis, No. 5:11-cv-00821-
LHK, 2011 U.S. Dist. LEXIS 83878, at *6–7 (N.D. Cal. Aug. 1, 2011) (“When a
common count is used as an alternative way of seeking the same recovery demanded
in a specific claim, and is based on the same facts, it does not survive if the
underlying claim does not survive.” (cleaned up)). Accordingly, the Court GRANTS
the motion to dismiss as to these claims.
IV. CONCLUSION
The Court GRANTS the motion. The Court determines that granting further
leave to amend would be futile. See Rutman Wine Co. v. E. & J. Gallo Winery, 829
F.2d 729, 738 (9th Cir. 1987) (affirming denial of leave to amend where amended
complaint failed to cure defects identified in order dismissing prior complaint). The
Court directs the Clerk to enter judgment and close the case.
IT IS SO ORDERED.

Marks v. UMG

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Case 2:21-cv-04043-MCS-JPR Document 37 Filed 04/06/22 Page 1 of 6 Page ID #:412

Case 2:21-cv-04043-MCS-JPR Document 37 Filed 04/06/22 Page 2 of 6 Page ID #:413

34. WHO: Defendants failed to disclose and omitted

35. WHAT: Defendants failed to disclose and omitted

Page 2 of 6 CIVIL MINUTES – GENERAL Initials of Deputy Clerk SMO

36. WHEN: Defendants failed to disclose the material

37. WHERE: Defendants’ omissions of material fact

38. HOW: Defendants failed to pay Plaintiff and Class

39. WHY: Defendants failed to disclose the material

Page 3 of 6 CIVIL MINUTES – GENERAL Initials of Deputy Clerk SMO

II. LEGAL STANDARD

The determination of whether a complaint satisfies the plausibility standard is

Averments of fraud are subject to the heightened pleading standard of Rule

Page 4 of 6 CIVIL MINUTES – GENERAL Initials of Deputy Clerk SMO

Plaintiff still has not pleaded a bargained-for agreement that Defendants

Page 5 of 6 CIVIL MINUTES – GENERAL Initials of Deputy Clerk SMO

Every other claim depends on either the fraud allegations or contract

Page 6 of 6 CIVIL MINUTES – GENERAL Initials of Deputy Clerk SMO

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