James v. UMG Recordings, Inc., C 11-01613 SI

• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
• Parties: RICK JAMES, by and through THE JAMES AMBROSE JOHNSON, JR., 1999 TRUST, his successor in interest, individually and on behalf of all others similarly situated, Plaintiff, v. UMG RECORDINGS, INC., Defendant. ROB ZOMBIE, a/k/a Robert Wolfgang Zombie, f/k/a Robert Cummings; WHITE ZOMBIE, a general partnership; WHITESNAKE, a doing business as designation of David Cloverdale, by and for WHITESNAKE PRODUCTIONS (OVERSEAS) LIMITED; and DAVE MASON, individually and on behalf of all others similarly situated, Plaintiff, v. UMG RECORDINGS, INC., Defendant.
• Docket Number: No. C 11-02431 SI,No. C 11-01613 SI,C 11-01613 SI,C 11-02431 SI
• Decision Date: 19 April 2012

RICK JAMES, by and through THE JAMES AMBROSE JOHNSON, JR.,
1999 TRUST, his successor in interest, individually and on behalf of all others similarly situated, Plaintiff,
v.
UMG RECORDINGS, INC., Defendant.
ROB ZOMBIE, a/k/a Robert Wolfgang Zombie, f/k/a Robert Cummings; WHITE ZOMBIE, a general partnership; WHITESNAKE, a doing business as designation of David Cloverdale,
by and for WHITESNAKE PRODUCTIONS (OVERSEAS) LIMITED; and DAVE MASON, individually and on behalf of all others similarly situated, Plaintiff,
v.
UMG RECORDINGS, INC., Defendant.

No. C 11-01613 SI
No. C 11-02431 SI

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

Dated: April 19, 2012

ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Defendant's motion for summary judgment is scheduled for a hearing on April 20, 2012. Pursuant to Civil Local Rule 7-1(b), the Court determines that these matters are appropriate for resolution without oral argument, and VACATES the hearing. For the reasons set forth below, the Court DENIES defendant's motion for summary judgment.

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BACKGROUND

This matter concerns a contract dispute and several related claims brought by Rick James and other recording artists¹ ("plaintiffs" or "artists") against UMG Recordings, Inc. Plaintiffs are recording artists who have recording contracts with defendant. The recording contracts define the royalties to be paid by defendant to the artists for certain types of income. One type of income is derived from retail sales of physical products, such as CDs and vinyl records, in brick-and-mortar retailers. Another type of income is derived from license agreements. Royalty rates for income derived from the first type, pursuant to resale agreements, are lower than royalty rates for license agreements.

A central question in this litigation is whether, within the meaning of the recording contracts, agreements between defendant and digital retailers, such as Apple/iTunes or Amazon.com, for the sale of digital products like downloads and/or ringtones are license agreements or resale agreements. Plaintiffs maintain that such agreements are license agreements and, therefore, that defendant is obligated to pay to plaintiffs the royalty rate appropriate for income derived from license agreements. Plaintiffs allege that defendant has been incorrectly treating income derived from sales of digital products through digital retailers as "resale" income, akin to income received from the sale of physical products sold in brick-and-mortar stores, and has been paying the lower royalty rate called for by the recording contracts for such income.

Plaintiffs assert four claims in this action: breach of contract; declaratory judgment; an Open Book Account ("open book account") claim pursuant to Cal. Code Civ. Pro. § 337a; and an Unfair Competition Law ("UCL") claim pursuant to Cal. Bus. & Prof. Code § 17200. Defendant has filed a motion for summary judgment against the UCL and the open book account claims.

LEGAL STANDARD

Pursuant to Fed. R. Civ. P. 56(a), "summary judgment is only appropriate if, viewing the

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evidence in the light most favorable to the party opposing the motion, the court finds that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law." Taylor v. List, 880 F.2d 1040, 1044 (9th Cir. 1989). No genuine issue of material fact exists if the nonmoving party "fails to make an adequate showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). There is also no genuine issue of material fact if a rational trier of fact, examining the record as a whole, could not find for the nonmoving party on a particular issue. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

In some cases, a court may deny a motion for summary judgment if the nonmoving party "shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition," Fed. R. Civ. P. 56(d), because "it has not had an opportunity to make full discovery." Celotex, 477 U.S. at 326. This Rule prevents parties from being "railroaded" by "premature motions" for summary judgment. Id.

DISCUSSION

I. Plaintiffs' UCL Claims

A. UCL Claims - Adequate Statement

Defendant moves for summary judgment arguing, first, that plaintiffs have not stated a UCL claim because their UCL claim is based on purely private contractual arrangements, which do not affect consumers. See Motion for Summary Judgment ("Motion") at 7-10; 17–20. Relatedly, defendant also argues that plaintiffs cannot state a UCL claim because the UCL makes actionable only harms suffered by consumers, not harms to "producers" like plaintiffs. Id., at 10-17. These arguments are almost identical to the ones defendant made in support of its motion to dismiss. See Docket Nos. 25, 37. In denying the motion to dismiss, the Court held that plaintiffs had stated a claim under the UCL because the complaint alleges an adequate connection to the "public...