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`Case 2:15-cv-02227-TLN-EFB Document 63 Filed 08/03/18 Page 1 of 11
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`UNITED STATES DISTRICT COURT
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`EASTERN DISTRICT OF CALIFORNIA
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`RONALD A. HINSON,
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`No. 2:15-cv-02227-TLN-EFB
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`Plaintiff,
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`v.
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`CALVARY RECORDS, INC., et al.,
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`Defendants.
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`ORDER GRANTING DEFENDANT
`WARNER/CHAPPELL MUSIC, INC.’S
`MOTION TO DISMISS
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`This matter is before the Court pursuant to Defendant Warner/Chappell Music, Inc.’s
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`(“Warner/Chappell”) Motion to Dismiss Plaintiff’s First Amended Complaint (“FAC”) under
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`Federal Rule of Civil Procedure (“Rule”) 12(b)(6). (Mot. to Dismiss First Am. Compl., ECF No.
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`52.) Plaintiff Ronald A. Hinson (“Plaintiff”) filed an opposition (Opp’n to Mot. to Dismiss, ECF
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`No. 53), and Warner/Chappell filed a reply (Reply to Mot. to Dismiss, ECF No. 57). For the
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`reasons set forth below, the Court hereby GRANTS Warner/Chappell’s Motion to Dismiss with
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`leave to amend. (ECF No. 52.)
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`///
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`///
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`///
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`///
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`///
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`I.
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`FACTUAL AND PROCEDURAL BACKGROUND
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`Plaintiff filed this suit on October 26, 2015. (ECF No. 1.) On January 11, 2016, Plaintiff
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`filed the FAC against Calvary Records, Inc., a California corporation dba The Calvary Music
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`Group dba Songs of Calvary (“Calvary Records”); Songs of Calvary, an entity whose form of
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`organization is unknown (“Songs of Calvary”); Calvary Music Group, Inc., a Tennessee
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`corporation (“Calvary Music”); Nelson S. Parkerson, Jr., deceased, by and through the Public
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`Administrator, as special administrator of Parkerson’s estate (“Parkerson”)1; and Phyllis
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`Bradhurst (“Bradhurst”); Warner/Chappell (collectively, “Defendants”) for various causes of
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`action resulting out of the alleged copyright infringement of Plaintiff’s gospel songs. (ECF No.
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`7.) Plaintiff’s FAC alleges the following:
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` In 1971, Plaintiff, a professional songwriter and composer of gospel songs, composed the
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`words and music to the songs “The Lighthouse” and “He Pilots My Ship.” (ECF No. 7 ¶¶ 13–
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`14.) Both songs contain “a large amount of material wholly original with [P]laintiff,” and are
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`thus copyrightable subject matter under United States law. (ECF No. 7 ¶ 15.) On September 8,
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`1971, “The Lighthouse” was registered with the U.S. Copyright Office. (ECF No. 7 ¶ 16.) On
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`July 24, 1972, Plaintiff’s song “He Pilots My Ship” was registered with the U.S. Copyright
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`Office. (ECF No. 7 ¶ 16.)
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`On an unidentified date, Plaintiff entered into a contractual agreement with Calvary
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`Records, Songs of Calvary, Calvary Music, Parkerson, and/or Bradhurst (collectively, “Calvary
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`Defendants”), wherein the Calvary Defendants were granted the right to publish and “split-
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`publish” both “The Lighthouse” and “He Pilots My Ship.” (ECF No. 7 ¶¶ 9, 16.) Calvary
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`Records and Calvary Music are the alter egos of Parkerson and/or Bradhurst and are mere shells
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`through which Parkerson and/or Bradhurst carried on music publishing and recording businesses.
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`(ECF No. 7 ¶ 9.) At some time from 1971 to 1972, the Calvary Defendants and Journey Music
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`Company split-published “The Lighthouse” and “He Pilots My Ship.” (ECF No. 7 ¶ 16.)
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`Pursuant to the terms of the split-publishing arrangement, fifty percent of the income generated
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`from the exploitation of the songs was to be payable to Plaintiff as the songwriter, and the
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`On February 6, 2018, the parties stipulated to dismiss Defendant Parkerson with prejudice.
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`remaining fifty percent was to be apportioned between the Calvary Defendants and Journey
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`Music Company as the split-publishers. (ECF No. 7 ¶ 16.)
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`On August 11, 1975, Plaintiff and the Calvary Defendants entered into a subsequent
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`“Artist Recording & Songwriter’s Agreement” (the “1975 Agreement”). (ECF No. 7 ¶ 17.) The
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`1975 Agreement consisted of a Part A entitled “Artist Recording Agreement” and a Part B
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`entitled “Songwriter’s Agreement.” (ECF No. 7 ¶ 17.) Part B granted the Calvary Defendants,
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`among other things, “exclusive publishing rights to any and all songs Plaintiff composed—
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`including ‘The Lighthouse’ and ‘He Pilots My Ship,’ the right to split-publish any song Plaintiff
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`composed with another publisher, and the right to administer the copyright of any song Plaintiff
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`composed.” (ECF No. 7 ¶ 17.) Pursuant to the 1975 Agreement, income generated from the
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`songs continued to be split fifty percent to Plaintiff and fifty percent between Journey Music
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`Company and the Calvary Defendants. (ECF No. 7 ¶ 17.)
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`On or about June 9, 1992, Plaintiff and the Calvary Defendants entered into a new “Artist
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`Recording Agreement” (the “1992 Agreement”). (ECF No. 7 ¶ 18.) The 1992 Agreement
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`expressly nullified all prior agreements between the parties, except Part B of the 1975 agreement,
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`which was to remain in effect temporarily and be renegotiated within three months. (ECF No. 7
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`¶ 18.) The 1992 Agreement also obligated Plaintiff to “perform at a mutually designated studio,
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`for the purpose of recording three master scale studio projects, and one live audio-video project,
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`each project containing a minimum of 9 songs.” (ECF No. 7 ¶ 19.) It further provided that the
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`term of the 1992 Agreement would be a minimum of 36 months and a maximum of 48 months.
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`(ECF No. 7 ¶ 19.) However, if all projects were not completed in 48 months, the 1992
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`Agreement would remain in effect unless it could be demonstrated that “[Calvary Records] was in
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`any way responsible for their incompleteness.” (ECF No. 7 ¶ 19.) The projects were never
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`completed because the Calvary Defendants never secured the use of a recording studio. (ECF No.
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`7 ¶ 19.)
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`Between 1971 and 1995, Journey Music Company’s publishing rights with regard to “The
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`Lighthouse” and “He Pilots My Ship,” as well as other songs written by Plaintiff, “ultimately
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`devolved to Word Music.” (ECF No. 7 ¶ 20.) In 1995, the Calvary Defendants wrote to Word
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`Music and claimed that Plaintiff was an exclusive songwriter for them and that they held the
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`publishing rights for “The Lighthouse.” (ECF No. 7 ¶ 21.) The Calvary Defendants then
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`demanded they should be paid the songwriter’s share of all songwriter royalties in addition to the
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`publisher’s share. (ECF No. 7 ¶ 21.) Word Music agreed and established two accounts, one in
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`the name of Plaintiff as the songwriter under his social security number and the other in the name
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`of Songs of Calvary as the publisher under Parkerson’s social security number. (ECF No. 7 ¶ 21.)
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`Thereafter, “with respect to the royalties paid on ‘The Lighthouse,’ Word Music paid both the
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`publisher’s share and the songwriter’s share from the two respective accounts to the Calvary
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`Defendants.” (ECF No. 7 ¶ 21.)
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`In 2002, Warner/Chappell acquired Word Music, including Word Music’s rights with
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`respect to “The Lighthouse” and “He Pilots My Ship.” (ECF No. 7 ¶ 22.) Warner/Chappell
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`continued to pay both the publisher and songwriter’s royalty shares to the Calvary Defendants
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`from the two accounts Word Music had set up. (ECF No. 7 ¶ 22.) On April 27, 2011, the
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`Calvary Defendants emailed Warner/Chappell and notified it that the songwriter and publisher
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`royalty accounts for “The Lighthouse” should have been merged, requesting that those accounts
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`from then on be maintained under only Parkerson’s social security number. (ECF No. 7 ¶ 23.)
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`Warner/Chappell made the requested change. (ECF No. 7 ¶ 23.)
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`On October 25, 2012, Plaintiff discovered that the Calvary Defendants had “for a number
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`of years concealed, withheld, and cashed checks representing accrued royalties for ‘The
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`Lighthouse’ and ‘He Pilots My Ship.’” (ECF No. 7 ¶ 24.) The amount of royalties wrongfully
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`concealed is presently unknown, but amounts to at least $66,200.41. (ECF No. 7 ¶ 24.) On
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`December 18, 2013, Warner/Chappell advised Plaintiff that it placed a legal hold on the Calvary
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`Defendants’ royalty accounts. (ECF No. 7 ¶ 25.) Warner/Chappell has since refused to release
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`any of the money placed on legal hold, which is at least $29,000.00. (ECF No. 7 ¶ 25.)
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`Plaintiff pleads the following causes of action: (1) violation of the Copyright Act, 17
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`U.S.C. §§ 101 et seq., against all Defendants; (2) breach of fiduciary duty (constructive fraud)
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`against all Defendants except for Warner/Chappell; (3) conversion against all Defendants; (4)
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`declaratory relief against all Defendants except for Warner/Chappell; (5) breach of contract
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`against all Defendants except for Warner/Chappell; (6) rescission of contract against all
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`Defendants except for Warner/Chappell; (7) negligence against all Defendants; (8) common
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`counts – money had and received against all Defendants except Warner/Chappell; (9) common
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`counts – money had and received against Warner/Chappell; and (10) accounting against all
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`Defendants. (ECF No. 7.)
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`II.
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`STANDARD OF LAW
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`A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal
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`sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Rule 8(a)
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`requires that a pleading contain “a short and plain statement of the claim showing that the pleader
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`is entitled to relief.” See Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009). Under notice pleading
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`in federal court, the complaint must “give the defendant fair notice of what the . . . claim is and
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`the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). “This
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`simplified notice pleading standard relies on liberal discovery rules and summary judgment
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`motions to define disputed facts and issues and to dispose of unmeritorious claims.” Swierkiewicz
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`v. Sorema N.A., 534 U.S. 506, 512 (2002).
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`On a motion to dismiss, the factual allegations of the complaint must be accepted
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`as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of
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`every reasonable inference to be drawn from the “well-pleaded” allegations of the complaint.
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`Retail Clerks Int’l Ass’n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not
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`allege “‘specific facts’ beyond those necessary to state his claim and the grounds showing
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`entitlement to relief.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the
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`plaintiff pleads factual content that allows the court to draw the reasonable inference that the
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`defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S.
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`544, 556 (2007)).
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`Nevertheless, a court “need not assume the truth of legal conclusions cast in the
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`form of factual allegations.” United States ex rel. Chunie v. RingrosHee, 788 F.2d 638, 643 n.2
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`(9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, “it demands more
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`than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A
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`pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the
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`elements of a cause of action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678
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`(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
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`statements, do not suffice.”). Moreover, it is inappropriate to assume that the plaintiff “can prove
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`facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not
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`been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459
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`U.S. 519, 526 (1983).
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`Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged
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`“enough facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 697
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`(quoting Twombly, 550 U.S. at 570). Only where a plaintiff fails to “nudge[] [his or her] claims
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`. . . across the line from conceivable to plausible,” is the complaint properly dismissed. Id. at
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`680. While the plausibility requirement is not akin to a probability requirement, it demands more
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`than “a sheer possibility that a defendant has acted unlawfully.” Id. at 678. This plausibility
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`inquiry is “a context-specific task that requires the reviewing court to draw on its judicial
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`experience and common sense.” Id. at 679.
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`If a complaint fails to state a plausible claim, “[a] district court should grant leave to
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`amend even if no request to amend the pleading was made, unless it determines that the pleading
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`could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130
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`(9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 484, 497 (9th Cir. 1995)); see
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`also Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009) (finding no abuse of discretion in
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`denying leave to amend when amendment would be futile). Although a district court should
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`freely give leave to amend when justice so requires under Rule 15(a)(2), “the court’s discretion to
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`deny such leave is ‘particularly broad’ where the plaintiff has previously amended its complaint.”
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`Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting
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`Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)).
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`III. ANALYSIS
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`Warner/Chappell argues that Plaintiff’s allegations in support of all of his claims against
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`Warner/Chappell are insufficient under Rule 12(b)(6). The Court will address each claim in turn.
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`A.
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`Copyright Infringement
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`To present a prima facie case for copyright infringement, a plaintiff must (1) show
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`ownership of the allegedly infringed material and (2) demonstrate that the alleged infringer
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`violated at least one exclusive right granted to copyright holders under 17 U.S.C. § 106. A&M
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`Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001) (citing 17 U.S.C. § 501(a)).
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`The Copyright Act grants the following six exclusive rights to copyright holders: “(1) to
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`reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based
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`on the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the
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`public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of
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`literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other
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`audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical,
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`dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works,
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`including the individual images of a motion picture or other audiovisual work, to display the
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`copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted
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`work publicly by means of a digital audio transmission.” 17 U.S.C. § 106.
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`Plaintiff’s allegations relating to his copyright infringement claim state that
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`Warner/Chappell infringed Plaintiff’s songs “by permitting the publishing of the songs or
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`otherwise permitting use of the songs without compensation to Plaintiff.” (ECF No. 7 ¶ 30,
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`emphasis added.) Warner/Chappell interprets “without compensation” to mean without paying
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`songwriter royalties, and argues that a failure to pay royalties does not constitute a violation of
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`one of the six exclusive § 106 rights. (ECF No. 52 at 10.) Plaintiff concedes his allegations are
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`vague, yet fails to explain what “without compensation” means. (ECF No. 53 at 8.) In the
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`absence of an explanation from Plaintiff, the Court interprets “without compensation” to mean
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`without paying songwriter royalties. Presumably, Plaintiff is referring to the royalties due under
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`the 1992 Agreement because the FAC provides no other basis under which royalties would be
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`due. However, “the failure to pay royalties under a private license agreement is not an act of
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`infringement” because such an agreement grants a licensee the right to utilize the licensor’s
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`copyright. Peer Int’l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1338–39 (9th Cir. 1990).
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`Rather, a common law action such as breach of contract or rescission may exist to recover unpaid
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`royalties. Id. at 1339 n.9.
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`While Plaintiff argues in his opposition that the 1992 Agreement terminated and therefore
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`Warner/Chappell utilized Plaintiff’s copyright without a license (ECF No. 53 at 9), Plaintiff’s
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`copyright infringement claim is devoid of such allegations. Rather, Plaintiff’s allegations state
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`only that Plaintiff was not paid his royalties. “[I]t is axiomatic that the complaint may not be
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`amended by the briefs in opposition to a motion to dismiss.” Frenzel v. AliphCom, 76 F. Supp.
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`3d 999, 1009 (N.D. Cal. 2014). Therefore, Plaintiff has failed to allege that Warner/Chappell
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`violated any of Plaintiff’s exclusive § 106 rights. However, because the Court finds amendment
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`would not be futile, the Court dismisses Plaintiff’s copyright infringement claim with leave to
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`amend.
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`B.
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`Conversion
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`“Conversion is the wrongful exercise of dominion over the personal property of another.”
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`Taylor v. Forte Hotels Int’l, 235 Cal. App. 3d 1119, 1124 (1991). “The elements of a conversion
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`claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s
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`conversion by a wrongful act or disposition of property rights; and (3) damages.” Lee v. Hanley,
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`61 Cal. 4th 1225, 1240 (2015). Plaintiff alleges that Warner/Chappell converted Plaintiff’s
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`royalty payments by failing and refusing “to disburse the [royalty payments] to Plaintiff,” despite
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`Plaintiff’s numerous demands. (ECF No. 7 at 11–12.)
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`To allege a conversion claim, a plaintiff must first allege ownership or a right to
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`possession of the property. Lee, 61 Cal. 4th at 1240. Here, Plaintiff alleges he was the “intended
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`beneficiary and owner of the royalty payments” collected for the songs “The Lighthouse” and
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`“He Pilots My Ship.” (ECF No. 7 at 11.) However, Plaintiff also specifically alleges in his
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`conversion claim that all contractual agreements between Plaintiff and the Calvary Defendants
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`(and subsequently, Warner/Chappell) had terminated. (ECF No. 7 ¶ 42.) This begs the question:
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`Where did Plaintiff’s purported ownership right in these royalties derive from? Plaintiff explains
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`in his opposition that his ownership right in these royalties stems from “the [Copyright Act’s]
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`statutorily mandated compulsory licensing scheme.” (ECF No. 53 at 12.)
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`The Copyright Act’s compulsory licensing scheme provides that any person may obtain a
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`compulsory license to make and distribute phonorecords that have already been distributed to the
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`public. 17 U.S.C. § 115(a)(1). In order to obtain a compulsory license, a person must serve the
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`copyright owner with a notice of intention before, or within thirty days after, the licensee makes
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`any phonorecords. Id. § 115(b)(1). Once a compulsory license is obtained, a licensee must pay
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`the copyright owner the statutory prescribed royalties. Id. § 115(c). Here, Plaintiff never alleges
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`that Warner/Chappell obtained a compulsory license, or that Warner/Chappell had the authority to
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`issue compulsory licenses on Plaintiff’s behalf. In fact, the gravamen of Plaintiff’s opposition
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`argues that Warner/Chappell had no right to publish Plaintiff’s songs or issue compulsory licenses
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`for Plaintiff’s songs. (ECF No. 53 at 9.) Thus, if no one had a valid compulsory license, it is
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`unclear why § 115 would apply, and consequently why Plaintiff would possess an ownership
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`right to royalties under this section.
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`When a party does not obtain a compulsory license, “the making and distribution of
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`phonorecords [are] actionable as acts of infringement under section 501.” 17 U.S.C. § 115(b)(2);
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`see also EMI Entm’t World, Inc. v. Karen Records, Inc., 603 F. Supp. 2d 759, 768 (S.D.N.Y.
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`2009) (holding the defendant liable for copyright infringement since it did not acquire a valid
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`compulsory license). Therefore, Plaintiff’s conversion claim as currently pled lies in an action for
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`copyright infringement, and copyright infringement claims may not be recast as state law tort
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`claims. See Dielsi v. Falk, 916 F. Supp. 985, 992 (C.D. Cal. 1996) (“Regardless of how it is cast,
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`however, Plaintiff’s [conversion claim] is clearly preempted by federal copyright law because it
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`makes the crucial allegation that Defendants have wrongfully used and distributed Plaintiff’s
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`work of authorship.”).
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`Since Plaintiff has failed to sufficiently allege an ownership interest to form the basis of
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`his conversion claim, the Court does not discuss the other elements of conversion. However,
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`because it is unclear whether the deficiencies may be cured by amendment, the Court acts within
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`its discretion to grant Plaintiff leave to amend the claim. Accordingly, the Court dismisses
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`Plaintiff’s conversion claim with leave to amend.
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`///
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`Case 2:15-cv-02227-TLN-EFB Document 63 Filed 08/03/18 Page 10 of 11
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`C.
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`Negligence
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`Plaintiff does not dispute this claim is deficient, but requests leave to amend this claim.
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`(ECF No. 53 at 3.) Warner/Chappell argues Plaintiff should not be given leave to amend his claim
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`because Plaintiff cannot establish Warner/Chappell owed Plaintiff a duty to “investigate the extent
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`of its ‘purported contractual co-publishing rights,’” nor can he “establish any breaches of these
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`purported duties.” (ECF No. 57 at 7.) However, because it is unclear whether the deficiencies
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`may be cured by amendment, the Court acts within its discretion to grant Plaintiff leave to amend
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`the claim. Therefore, the Court dismisses Plaintiff’s negligence claim with leave to amend.
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`D.
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`Common Counts
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`Plaintiff does not dispute this claim is deficient, but requests leave to amend this claim.
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`(ECF No. 53 at 3.) Warner/Chappell argues Plaintiff should not be given leave to amend his claim
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`because Plaintiff “fails to allege a sum certain” and “cannot plead a basis for why the money should
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`be immediately . . . paid ‘in equity and good conscience.’” (ECF No. 57 at 8.) However, because
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`it is unclear whether the deficiencies may be cured by amendment, the Court acts within its
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`discretion to grant Plaintiff leave to amend the claim. Therefore, the Court dismisses Plaintiff’s
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`common counts claim with leave to amend.
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`E.
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`Accounting
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`“A cause of action for an accounting requires a showing that a relationship exists between
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`the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff
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`that can only be ascertained by an accounting.” Teselle v. McLoughlin, 173 Cal. App. 4th 156,
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`179 (2009). Here, Plaintiff argues there is a copyright owner-infringer relationship giving rise to
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`an accounting claim. (ECF No. 53 at 16.) However, because Plaintiff has failed to sufficiently
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`allege a copyright infringement claim, this argument fails. Accordingly, the Court dismisses
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`Plaintiff’s accounting claim with leave to amend.
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`IV. CONCLUSION
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`For the foregoing reasons, the Court hereby GRANTS Warner/Chappell’s Motion to
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`Dismiss. (ECF No. 52.) Plaintiff is afforded thirty (30) days from the date of this Order to file an
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`amended complaint.
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`Case 2:15-cv-02227-TLN-EFB Document 63 Filed 08/03/18 Page 11 of 11
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`IT IS SO ORDERED.
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`Dated: August 2, 2018
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