UMG Recordings, Inc. v. Global Eagle Entertainment, Inc., 117 F. Supp. 3d 1092

Plaintiffs are record companies and music publishers alleging infringement of sound recordings, musical compositions, and music videos by Inflight under the Copyright Act and California law, plus unfair competition claims.
Defendants Global Eagle/Inflight allegedly provided unlicensed in-flight entertainment using plaintiffs’ works to airline passengers.
An original complaint was filed May 5, 2014; defendants moved to dismiss the state-law claims in June 2014 and the court denied the motion in February 2015.
Plaintiffs filed a first amended complaint on February 24, 2015 adding Universal Music Group International Ltd. as a plaintiff and American Airlines as a defendant, with American Airlines later dismissed with prejudice on May 15, 2015.
Counterclaims were filed March 10, 2015 asserting intentional misrepresentation, fraudulent concealment, negligent misrepresentation, and intentional/negligent interference with contractual relations and prospective business advantage; plaintiffs moved to dismiss these counterclaims on April 3, 2015.
The court granted leave to amend after determining the counterclaims failed to plead viable claims, and ultimately dismissed the counterclaims with leave to amend.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether counterclaims are barred by the economic loss rule	Counterclaimants rely on tort theories for alleged contract-based harm	Plaintiffs’ misrepresentations were intended to induce reliance on ongoing licensing and thus are torts	Fraud and related claims dismissed under the economic loss rule
Whether fraud and misrepresentation claims meet Rule 9(b) pleading	Counterclaims plead promissory fraud and concealment supporting tort claims	Content and identity of misrepresentations insufficiently pled	Claims dismissed for failure to plead with particularity under Rule 9(b)
Whether interference claims are barred by Noerr-Pennington and litigation privilege	Interference based on pre-suit communications and threats	Thereto challenged as interfering with business; privilege applies	Interference claims dismissed to the extent based on cease-and-desist letter and related communications
Whether intentional interference with contractual relations and prospective business advantage are sufficiently pled	Counterclaimants allege disruption of existing and prospective relationships	Claims lack identifying third-party contracts/relationships	Claims deficient and dismissed; leave to amend granted
Whether leave to amend should be granted	Amendment could cure deficiencies based on discovery		Leave to amend granted with 20 days to amend; must cure identified defects

Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for pleading; grounds to relief must be stated)
Twombly, 550 U.S. 544 (U.S. 2007) (the pleading must contain more than mere conclusory statements)
Balistreri v. Pacifica Police Dept., 901 F.2d 696 (9th Cir. 1988) (standard for Rule 12(b)(6) dismissal; plausibility required)
City Solutions Inc. v. Clear Channel Communications, Inc., 365 F.3d 835 (9th Cir. 2004) (noerr-pennington and independent wrongful conduct considerations)
Rock River Communications, Inc. v. Universal Music Group, 745 F.3d 343 (9th Cir. 2014) (Noerr-Pennington: sham litigation exception)