81 F. Supp. 3d 938
N.D. Cal.2015Background
- Plaintiff Stephanie Ford Stewart (widow/trustee for songwriter John Stewart) alleges Screen Gems‑EMI withheld royalties from the song “Daydream Believer” under a 1967 songwriter agreement that pays 50% of “net sums actually received.”
- Plaintiff claims Screen Gems‑EMI reduced royalties by (1) using affiliated foreign sub‑publishers (allegedly alter egos/single enterprise) that retained 50% of foreign receipts and (2) deducting domestic collection/agency fees (and some fictitious fees) before computing her 50% share.
- Royalty statements and payments used various EMI names and a centralized bank account; Plaintiff alleges statements were misleading and she only discovered the practices after hiring an accountant in 2014.
- Defendants: Screen Gems‑EMI (party to the contract; New York/Delaware presence), EMI North America (Delaware), and EMI (UK). EMI and EMI North America moved to dismiss for lack of personal jurisdiction; Screen Gems‑EMI moved to dismiss for failure to state claims.
- The court concluded there is no personal jurisdiction over EMI and EMI North America and dismissed them; it denied Screen Gems‑EMI’s 12(b)(6) motion in large part, allowing claims to proceed against Screen Gems‑EMI (but dismissed the UCL fraud prong with leave to amend).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over EMI and EMI North America (impute Screen Gems‑EMI contacts) | Impute contacts under alter ego/agency or single enterprise theories because EMI entities operate as a unified “EMI Music Publishing.” | No basis to impute: the companies maintain separate corporate form, finances, and limited forum contacts; Screen Gems‑EMI is party to the contract so jurisdiction over it suffices. | Dismissed EMI and EMI North America for lack of personal jurisdiction; alter ego/agency not shown and no inequitable result if those entities are absent. |
| Specific jurisdiction over EMI North America based on royalty statements | EMI North America’s name/address/footer on royalty statements creates continuing obligations to a California resident and gives rise to claims. | The footer is a geographic designation; evidence shows statements originated from Screen Gems‑EMI/administrators, not EMI North America. | No specific jurisdiction: plaintiff failed to show EMI North America purposefully availed itself of California. |
| Breach of contract (foreign and domestic deductions) | Screen Gems‑EMI breached the Agreement by treating affiliated sub‑publishers as separate payees (thereby shrinking the “net sums actually received”) and by deducting unlawful collection/agency fees. | The contract language allows deduction of amounts not actually received; precedent and course of performance support publisher practices. | Denied dismissal: complaint plausibly alleges Screen Gems‑EMI and foreign sub‑publishers form a single enterprise (alter ego/single enterprise) so deductions may be improper and the breach claim survives. |
| Implied covenant and UCL claims | Screen Gems‑EMI’s payment of grossly above‑market sub‑publisher fees and misleading statements deprived plaintiff of contract benefits and constituted unfair/deceptive business practices. | These claims are duplicative of breach of contract or inadequately pleaded (fraud prong requires specificity). | Breach of implied covenant claim survives (distinct theory: excessive fees). UCL claim survives on unfair prong but fraudulent prong dismissed for failure to plead with Rule 9(b) specificity (leave to amend). |
Key Cases Cited
- Int’l Shoe Co. v. State of Wash., 326 U.S. 310 (minimum contacts standard for personal jurisdiction)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (facial plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must contain factual content to be plausible)
- Unocal Corp. v. Mesa Petroleum Co., 248 F.3d 915 (alter ego/agency imputation of contacts for jurisdiction)
- Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122 (agency/alter ego considerations for imputing contacts)
- Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (California long‑arm and purposeful availment analysis)
- Pebble Beach Co. v. Caddy, 453 F.3d 1151 (prima facie showing for jurisdiction; resolve factual disputes for plaintiff)