Moreno v. SFX Entm't, Inc., CV 14-880 RSWL (CWx)
| Decision Date | 01 August 2014 |
| Docket Number | CV 14-880 RSWL (CWx) |
| Court | U.S. District Court — Central District of California |
| Parties | PAOLO MORENO, an individual; LAWRENCE VAVRA, an individual; and GABRIEL MORENO, an individual, Plaintiffs, v. SFX ENTERTAINMENT, INC., a Delaware corporation with offices in California; ROBERT F.X. SILLERMAN, an individual; SHELDON FINKEL, an individual Defendants. |
Currently before the Court are Defendant Sheldon Finkel's Motion to Dismiss Twelfth and Thirteenth Claims Pursuant to Fed. R. Civ. P. 12(b)(6) [14] and Defendants SFX Entertainment, Inc. ("SFX") and Robert F.X. Sillerman's Motion to Transfer Case to Southern District of New York Pursuant to 28 U.S.C. § 1404(a) [15], both filed on April 2, 2014. Plaintiffs PaoloMoreno, Gabriel Moreno, and Lawrence Vavra (collectively, "Plaintiffs") filed Oppositions on May 2, 2014 [19, 20]. Defendants filed Replies to their respective Motions on May 16, 2014 [24, 25]. These matters were taken under submission on June 3, 2014 [29]. Having reviewed all papers and arguments submitted pertaining to this Motion, the Court NOW FINDS AND RULES AS FOLLOWS:
The Court hereby GRANTS Defendant Finkel's Motion to Dismiss and DENIES Defendants SFX and Sillerman's Motion to Transfer.
Plaintiffs are experienced members of the electronic dance music ("EDM") community and are founders of Defendant SFX. Compl. ¶¶ 9-11. Plaintiffs spent nearly two years creating a business plan now known as Defendant SFX. Id. The global market for EDM has grown dramatically since 2009, prompting Plaintiffs to begin developing a business strategy to consolidate the industry in 2010 and 2011. Id. at ¶¶ 15-16.
Defendant SFX is a Delaware corporation with its principal place of business in New York, New York. Id. at ¶ 12. Defendants Sillerman and Finkel are New York citizens. Id. at ¶¶ 13-14. Defendant Sillerman owns 57% and Defendant Finkel owns 2% of Defendant SFX. Id. at ¶ 5.
In early January 2012, Plaintiffs and their colleague Donnie Estinopal met with Defendant Sillermanto present a plan for a venture that would identify, acquire, consolidate, and operate assets in the EDM industry. Id. at ¶ 2. Specifically, on January 5, 2012, Plaintiff Paolo Moreno met with Defendants Sillerman and Finkel in Sillerman's office in New York City. Id. at ¶ 20. At this six-hour meeting, Defendant Sillerman represented that he would provide all necessary financing and Plaintiffs would negotiate and close deals. Id. In and after this meeting, Plaintiffs and Defendant Sillerman agreed to partner in a venture that is now known as Defendant SFX. Id. at ¶ 2. In the 72 hours after this meeting, Defendant Sillerman and Plaintiff Paolo Moreno exchanged emails wherein Plaintiffs were promised millions of "founders' shares," guaranteed annual stock options, and lucrative compensation packages. Id. at ¶ 21.
Plaintiffs allege that they and Defendant Sillerman reached a deal that granted Plaintiffs millions of "founders' shares" in the enterprise along with options, cash compensation, and control of the company. Id. at ¶¶ 3, 20-26. Plaintiffs contend that Defendant Sillerman never intended to honor the joint venture agreement. Id. at ¶ 27.
Plaintiffs allege that following the formation of the venture, they performed their role. Id. at ¶ 4. Plaintiffs worked full-time on the venture's behalf to close its most important and lucrative acquisitions, including seven of the eight principal assetsidentified in Defendant SFX's S-1 Securities and Exchange Commission filing in support of its Initial Public Offering ("IPO"). Id. at ¶¶ 4, 30, 32-35.
Plaintiffs allege that although they inquired about formal documents memorializing their joint venture agreement with Defendant Sillerman, no such documents were forthcoming. Id. at ¶ 38. Instead, Defendants allegedly engaged in a pattern of evasion, delay, and deception to prevent the memorialization of the agreement and to avoid compensating Plaintiffs. Id. Defendant Sillerman also developed a corporate structure and IPO that would exclude Plaintiffs. Id. Ultimately, Defendants provided Plaintiffs with employment agreements providing for lower compensation than previously agreed and including onerous provisions. Id. at ¶ 40.
Plaintiffs filed their Complaint on February 5, 2014 [1]. Defendants SFX and Sillerman Answered on April 2, 2014 [12].
Federal Rule of Civil Procedure 12(b)(6) allows a party to move for dismissal of one or more claims if the pleading fails to state a claim upon which relief can be granted. Dismissal can be based on a lack of cognizable legal theory or lack of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1990). However, a party is not required to state the legal basis for its claim, only the facts underlying it. McCalden v. Cal. Library Ass'n, 955 F.2d 1214, 1223 (9th Cir. 1990). In a Rule 12(b)(6) motion to dismiss, a court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the non-moving party. Klarfeld v. United States, 944 F.2d 583, 585 (9th Cir. 1991).
The question presented by a motion to dismiss is not whether the plaintiff will prevail in the action, but whether the plaintiff is entitled to offer evidence in support of its claim. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citation omitted). Although specific facts are not necessary if the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless "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) (internal quotation marks omitted). If dismissed, a court must then decide whether togrant leave to amend. The Ninth Circuit has repeatedly held that a district court should grant leave to amend even if no request to amend the pleadings was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000).
Under 28 U.S.C. § 1404(a), "[f]or the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a).
Before a court may transfer venue under 28 U.S.C. § 1404, it must find that: (i) the action is one that might have been brought in the transferee court and (ii) the convenience of the parties and the interest of justice favor the transfer. Colt Studio, Inc. v. Badpuppy Enter., 75 F. Supp. 2d 1104, 1112 (C.D. Cal. 1999) (citing Hatch v. Reliance Ins. Co., 758 F.2d 409, 414 (9th Cir. 1985)). Transfer under § 1404(a) is discretionary. A.J. Indus. v. U.S. Dist. Court for Cent. Dist. lf Cal., 503 F.2d 384, 389 (9th Cir. 1974). The purpose of § 1404(a) is to "prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Van Dusen v. Darrack, 376 U.S. 612, 616 (1964) (quoting Cont'l Grain Co. v. BargeFBL-585, 364 U.S. 19, 26-27 (1960)).
An action is one that might have been brought in the transferee court when (i) the transferee court would have had subject matter jurisdiction at the time the action was filed; (ii) defendants would have been subject to personal jurisdiction; and (iii) venue would have been proper. E. & J. Gallo Winery v. F. & P. S.p.A., 899 F. Supp. 465, 466 (E.D. Cal. 1994) (citing Hoffman v. Blaski, 363 U.S. 335, 343-44 (1960)).
In determining whether the convenience of the parties and the interest of justice favor transfer, the court should consider certain factors, including:
(1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof.
Jones v. GNC Franchising, 211 F.3d 495, 498-99 (9th Cir. 2000); see also Sec. Investor Prot. Corp. v. Vigman, 764 F.2d 1309, 1317 (9th Cir. 1985).
The burden is on the moving party to demonstratethat the balance of these factors favors the transfer. Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270, 279 (9th Cir. 1986); Pfeiffer v. Himax Techs., Inc., 530 F. Supp. 2d 1121, 1123 (C.D. Cal. 2008); Florens Container v. Cho Yang Shipping, 245 F. Supp. 2d 1086, 1089 (N.D. Cal. 2002). A transfer of venue is not appropriate unless the factors enumerated strongly favor venue elsewhere. Pac. Car & Foundry v. Pence, 403 F.2d 949, 953 (9th Cir. 1968). "The defendant must make a strong showing of inconvenience to warrant upsetting the plaintiff's choice of forum." Decker Coal v. Commonwealth Edison, 805 F.2d 834, 843 (9th Cir. 1986).
Plaintiffs allege claims for breach of fiduciary duty and interference with prospective economic advantage against Defend...
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