Judge: H. Jay Ford, III, Case: 22SMCV02485, Date: 2024-11-22 Tentative Ruling

Case Number: 22SMCV02485    Hearing Date: November 22, 2024    Dept: O

  Case Name:  London Calling Entertainment, INC v. NKSFB, LLC, et al.

SUBJECT:                 MOTION FOR SUMMARY JUDGMENT

MOVING PARTY:   Defendants NKSFB, LLC and KSFB Management, LLC

RESP. PARTY:         Plaintiffs London Calling Entertainment, INC

TENTATIVE RULING

            Defendants NKSFB, LLC and KSFB Management, LLC’s Motion for Summary Judment on  Plaintiffs London Calling Entertainment, Inc’s Complaint is GRANTED. Defendants meets their initial burden to provide undisputed material facts to show that one or more elements of the plaintiff's first and second causes of action cannot be met. Plaintiff does not meet its burden to show there are triable issues material fact regarding its claims for breach of contract and breach of confidence.

            Plaintiff London Calling Entertainment, INC Objections No.1 and 2 to the Segal Declaration are SUSTAINED.  Objection No. 1 to the Roses Declaration is SUSTAINED.

            Ruling on Defendants NKSFB, LLC and KSFB Management, LLC evidentiary objections:

1.     Leader Declaration ¶ 5 is SUSTAINED as to the word “novel” only – legal conclusion.

2.     Leader Declaration ¶ 6 is SUSTAINED – hearsay, foundation.

3.     Leader Declaration ¶ 12 is SUSTAINED – foundation, speculation.

4.     Leader Declaration ¶ 15 is SUSTAINED as to Multiple partners of NKSFB, including Mr. Oppenheim, assisted with the SVOG applications for the loan-out companies of their touring musician clients — foundation.

5.     Leader Declaration ¶ 15 is SUSTAINED as to “I became aware of NKSFB’s chicanery only because “ — foundation.

6.     Leader Declaration ¶ 17 is OVERRULED— party admission.

7.  Leader Declaration ¶ 19 is SUSTAINED—speculative, lacks foundation.

8.  Leader Declaration ¶ 20 is SUSTAINED—argumentative, leg, not appropriate for declarations.

9.  Leader Declaration ¶ 21 is SUSTAINED as to “I also understand NKSFB asserts that its and KSFB Partner Melissa Earnhart’s significant other submitted a SVOG application for her client Right Angle Entertainment, LP (“Right Angle”).” — speculative, lacks foundation.

10.  Leader Declaration ¶ 21 is SUSTAINED as to “Accordingly, Right Angle’s application is also irrelevant”—argumentative, not appropriate for declarations

11.  Piesen-Love Declaration ¶ 5 is SUSTAINED – foundation, speculation as to whether Kaplan understood that the inquiry was made in confidence with respect to Mr. Leader’s interpretation of Meleco’s eligibility.

REASONING

I.  Defendants have shown that one or more elements of Plaintiff’s first cause of action for breach of implied-in-fact contract cannot be established.

            In its first amended complaint, Plaintiff London Calling Entertainment, INC (“Plaintiff”) alleges a implied contract was formed with Defendants when Plaintiff disclosed his idea that loan-out companies of touring music artists and bands qualified for awards under the Shuttered Venue Operator Grants (“SVOG”) program by using the “live performing arts organization operators” eligibility category.  Plaintiff alleges its disclosure of this novel idea to Defendants was done “in confidence and with the understanding Plaintiff would be paid a 15% commission on monies received by [Defendant’s] clients.” (Amended Complaint, p. 7.)

            "[T]o prevail on a cause of action for breach of implied-in-fact contract, plaintiffs must show (1) they clearly conditioned the submission of their ideas on an obligation to pay for any use of their ideas; (2) the defendants, knowing this condition before the plaintiffs disclosed the ideas, voluntarily accepted the submission of the ideas; and (3) the defendants found the ideas valuable and actually used them—that is, the defendants based their work substantially on the plaintiffs' ideas, rather than on their own ideas or ideas from other sources." (Spinner v. American Broadcasting Companies, Inc. (2013) 215 Cal.App.4th 172, 184.) “When plaintiffs do not have direct evidence of use, they may raise an inference of use by showing the defendants had access to their ideas and the defendants' work is substantially similar to the plaintiffs' ideas.” (Id., at pp. 184–185.)

            “An obligation to pay could not be inferred from the mere fact of submission on a theory that everyone knows that the idea man expects to be paid.” (Faris v. Enberg (1979) 97 Cal.App.3d 309, 319.)  “The idea man who blurts out his idea without having first made his bargain has no one but himself to blame for the loss of his bargaining power. The law will not in any event, from demands stated subsequent to the unconditioned disclosure of an abstract idea, imply a promise to pay for the idea, for its use, or for its previous disclosure.” (Desny v. Wilder (1956) 46 Cal.2d 715, 739.)

A.    Defendant’s Burden

Defendants argue that Plaintiff cannot establish the first and second elements of the breach if implied-in-fact contract cause of action because “the undisputed evidence demonstrates that Lawrence Leader (“Leader”), the Chief Executive Officer of Plaintiff, disclosed its idea to NKSFB unconditionally at least a month before he claims he formed an implied contract with NKSFB.  The Court agrees.   

As observed in Desny, supra, the “conveyance of an idea can constitute valuable consideration and can be bargained for before it is disclosed to the proposed purchaser, but once it is conveyed, i. e., disclosed to him and he has grasped it, it is henceforth his own and he may work with it and use it as he sees fit.” (46 Cal.2d at pp. 737–738.) 

It is undisputed that no contract was formed between the parties prior to the July 22, 2021, meeting between Leader and Oppenheim. (PSS 4.) What the evidence shows is that Mr Leader unilaterally disclosed the idea to submit “SVOG” grant applications on behalf of touring entities as ‘live performing arts organization operators’ to NKSFB managers prior in the months preceding the July 22, 2021, admittedly without any any agreement Defendant would pay Plaintiff a commission if Defendants used that idea to submit SVOG grant applications for its clients. (SSUF, ¶¶ 4, 7, 9, 11, 14, 16, 19, 20; O’Donnell Decl., ¶ 6, Ex. 45 [Plaintiff’s Response to RFA Nos. 7, 8]; Wong Decl., ¶¶ 6–16, Ex. 8–11; Salzman Decl., ¶¶ 9–16, Ex. 1–3; Roses Decl. ¶¶ 6-7, Ex. 6; Masuda Decl., ¶¶ 3–4, 8–11, Ex. 18–21; Segal Decl., ¶¶ 7–11. Ex. 38–40; Neuman Decl., ¶¶ 6, 8–9,12–13.)

Defendants have met their initial burden to show Plaintiff cannot establish the first and second  elements of the breach of implied-in-fact cause of action. The burden shifts to the Plaintiff to show there are triable issues of fact as to these elements.

B.    Plaintiff’s Burden

Plaintiff argues in June, 2021when Plaintiff disclosed his idea to NKSFB partners, managers, and clients Robert Salzman (“Salzman”), Bessie Wong (“Wong”), Harley Neuman (“Neuman”), Jason Latimer (“Latimer”), Paul Anka Productions (“PAP”), David Koz (“Kos”), and Masuda, each party was informed that Plaintiff’s idea was confidential, the idea was being disclosed in confidence, and the idea was accepted on this basis. (SSUF, ¶¶ 10, 12, 13, 17, 18, 21; Busch Decl., ¶ 2, Ex. 1 (Leader Deposition), at pp. 73:12-74:19, 86:5-90:15, 90:16-92:20, 105:8-107:8, 209:12-25, 210:18- 22, 214:2-215:12, 217:4-218:14, 221:7-223:21; Leader Decl., ¶ 9.)

However, Plaintiff presents no evidence that these disclosures were made only after Plaintiff clearly conditioned that disclosure on NKSFB’s agreement to pay for its use, and NKSFB accepted that condition. The obligation to be paid cannot be inferred from the fact that the NKSFB parties should have expected Plaintiff to be paid from the idea. (See Faris, supra, 97 Cal.App.3d at p. 319.; Aliotti v. R. Dakin & Co. (9th Cir. 1987) 831 F.2d 898, 902, citations omitted, applying California law [“If disclosure occurs before it is known that compensation is a condition of its use, ... no contract will be implied.”].) Plaintiff’s argument the disclosures of his idea in June 2021, were made with the understanding that the idea was confidential does not meet the elements of an implied in fact contract to pay for the use of that idea as alleged in Plaintiff’s first cause of action. (Amended Complaint, ¶ 29. (“Plaintiff’s implied in fact contract was with NKSFB. NKSFB was thus the party responsible for payment to Plaintiff. The idea was that Plaintiff’s novel idea would thus only be shared by NKSFB with the clients with the understanding that NKSFB would be responsible for payments to Plaintiff for the successful obtaining of grants by clients.... NKSFB was the one in contract with Plaintiff and the party responsible for payment to Plaintiff.”)

The Court finds the undisputed evidence shows that, before Mr. Oppenheim invited Mr. Leader to meet with Defendant’s managers on July 29, 2022, Mr. Leader unilaterally disclosed his idea to multiple NKSFB managers, including Rob Salzman, Bessy Wong, Greg Roses, Harley Neuman, and Jason Latimer all without conditioning the submission of his idea, before its disclosure, on an obligation by NKSFB to pay for its use. (SSUF, ¶¶ 7, 9, 11, 16l Leader Decl. ¶ 9; Salzman Decl. ¶¶ 11, 15; Wong Decl. ¶ 15; Roses Decl. ¶ 7; Neuman Decl. ¶ 8.) It is undisputed Mr. Leader first told Mr. Oppenheimer at the July 22, 2022 meeting that that he was receiving a commission from Bridgeway (one of Defendant’s clients), and that he “expected to be compensated similarly by NKSFB if NKSFB or its clients used Mr. Leader’s idea.” (PSS 162.)

No competent evidence shows Plaintiff conditioned his disclosure of his idea to Defendants on Defendant’s agreement to pay Plaintiff a commission based on some percentage of any grant award received by Defendant’s clients. Instead, Plaintiff points to evidence that Defendants knew Plaintiff had contracted with two of Defendant’s clients who had respectively agreed to pay Plaintiff 10% or 15% of any SVOG grant award they received using Plaintiff’s idea. [PSS 7, 13, 14.]  From that knowledge, Plaintiff claims Defendant should have known Plaintiff expected to be compensated directly by Defendant if Defendant used or disclosed Plaintiff’s idea to Defendant’s clients who thereafter were awarded a SVOG grant. (See, Amended Complaint,  ¶16, p. 8:7-8.)  There is no evidence showing Defendant had such knowledge or should have known that Defendant, (as opposed to the grant recipient) would be obligated to pay Plaintiff a percentage of any SVOG grant Defendant’s clients might receive. The Court finds no reasonable jury could find or infer from this evidence, that Plaintiff conditioned its disclosure of his idea on Defendant’s agreement to pay Plaintiff a percentage of any SVOG grant awarded to Defendant’s clients.

Plaintiff does not meet their burden to show a triable issue of material fact as to the first and second element of the 1^st cause of action for breach of implied-in-fact contract. Because Plaintiff cannot establish the first and second elements of its claim for breach of implied-in-fact contract, summary adjudication on that claim in favor of Defendant is proper.

II.  Plaintiff cannot establish one or more elements of its second cause of action for breach of confidence.

“In order to recover on the theory of breach of confidence, the plaintiff has the burden of establishing by a preponderance of the evidence all of the facts necessary to prove each of the following issues: [¶] (1) that plaintiff conveyed substantially secret information to [defendant]; [¶] (2) that the confidential nature of such information was made known to [defendant] before plaintiff's disclosure of it to [defendant]; [¶] (3) that before disclosure by plaintiff, [defendant] had an opportunity to reject receipt of the information on a confidential basis; [¶] (4) that [defendant] voluntarily accepted said information with the understanding and in agreement that it would keep the information confidential; [¶] (5) that [defendant] disclosed such information in breach of confidence; [¶] (6) that [a third-party or Defendant] used said information . . .; [¶] (7) that such use was the proximate cause of damage to the plaintiff; and [¶] (8) the nature and extent of such damages. [¶].” (Tele-Count Engineers, Inc. v. Pacific Tel. & Tel. Co. (1985) 168 Cal.App.3d 455, 461.)

“To prevail on a claim for breach of confidence under California law, a plaintiff must demonstrate that: (1) the plaintiff conveyed “confidential and novel information” to the defendant; (2) the defendant had knowledge that the information was being disclosed in confidence; (3) there was an understanding between the defendant and the plaintiff that the confidence be maintained; and (4) there was a disclosure or use in violation of the understanding.” (Entertainment Research Group, Inc. v. Genesis Creative Group, Inc. (9th Cir. 1997) 122 F.3d 1211, 1227, citing Tele-Count Engineers, Inc., supra, 168 Cal.App.3d at pp. 462–466.)

A ”cause of action for breach of confidence requires a finding that respondents actually used appellants' confidential information to their benefit.” (Hollywood Screentest, supra, 151 Cal.App.4th at p. 651.)

In protecting property rights in ideas, California has long recognized that an idea “must be something novel and new” but that this “question of originality… is one of fact for the determination of the jury.” (Yadkoe v. Fields (1944) 66 Cal.App.2d 150, 159.)

A.    Defendant’s Burden

Preliminarily, the Court agrees with NKSFB that Plaintiff forming an opinion from reading a Federal statue regarding who could be eligible for a SVOG grant award is not a novel idea that can be the subject of a claim for breach of confidence. Plaintiff does not claim he created any unique method to compile an application for a SVOG grant.  But rather, he simply formed an opinion that some of Defenant’s clients of performing artists who perform through a “loan out company” or “touring entity” would be eligible for a SVOG grant under the SBA definition of “performing arts organization operators.”

Moreover,  NKSFB shows Plaintiff’s SVOG grant idea was not novel or unique, but rather is the same idea was being used separately and independently by multiple third parties, including Rambo, Kaplan, Jamie Humphres, MySVOG.com, Get My Funds, LLC, and NKSFB’s own Melissa Earnhart who read the statute in the same way as Plaintiff and communicated this reading of the statute to third persons, including NKSFB. (SSUF, ¶¶ 30, 34-36, 38-43, 47, 101–103; Jaime Decl. ¶¶ 4-10, Ex. 32-33; Millsap Decl. ¶¶ 5-8, Ex. 26-28; Earnhart Decl. ¶¶ 3-8; Salzman Decl. ¶¶ 19-20; Parks Decl. ¶ 8, Ex. 37)  

Likewise, the Court agrees NKSFB has shown Plaintiff cannot establish its idea was substantially secret because Mr. Leader publicly disclosed the idea to the Federal government by submitting SVOG applications on behalf two of its touring musician clients, without any expectation of confidentiality. (See Plaintiff’s Additional Separate Statement (“PASS”), ¶ 164; Busch Declaration, ¶ 2, Ex. 1 (Leader Deposition), 169:5-182:5; Leader Declaration, ¶ 13.)

            Thus, NKSFB has met their initial burden to show that Plaintiff cannot meet the novel and substantially secret elements of a breach of confidence claim.

B.    Plaintiff’s Burden

Plaintiff argues that the trier of fact may find that Plaintiff’s idea was novel from his claim to be the first person to come up with the idea that loan out entities of touring music artists and bands could successfully qualify for SVOG awards under the live performing arts organization operators eligibility category. (SSUF, ¶¶ 54, 103.)  However, this evidence does show the Mr. Leaders opinion regarding who could be eligible was actually novel. 

Nor does Mr. Leader’s opinion show no one else had the same opinion or idea,  Indeed, the undisputed evidence shows NKSFB already knew of the idea. (SSUF, ¶¶ 29-30, 32-33; Wong Decl. ¶¶ 3-5, Ex. 7; Roses Decl. ¶ 4; Segal Decl. ¶ 5; Jaime Decl. ¶¶ 4-10, Ex. 32-33; Parks Decl. ¶ 7, Ex. 36; Earnhart Decl. ¶ 3-5, Ex. 29, 30.) The undisputed evidence shows that in April 2021, —three months prior to the meetings with Plaintiff that  Oppenheim and his team knew and understood in April 2021 that a musician’s touring entity, like YG’s entity, could apply for and potentially receive the grant.  (SSUF, ¶ 30; Jaime Decl. ¶¶ 4-10, Ex. 32-33).

Finally, additionally, Plaintiff does not provide any authority or evidence that Plaintiff’s disclosure of the idea through Plaintiff’s successful SVOG applications submitted to the Federal government, via the SBA, prior to the NKSFB disclosure, will not bar Plaintiff from a breach of confidentiality claim. Thus, it follows that Plaintiff cannot prove the element of the idea being a substantial secret when the idea was voluntarily disclosed, made public, via a federal government application process.  There is no evidence the SBA had any obligation to keep any grant applications secret.  Indeed, Leader claims he was able to who was awarded SVOG grants on the SBA website. (See Leader Decl., Ex. 13.) The Court agrees no reasonable jury can find NKSFB Plaintiff’s idea was substantially secret after Plaintiff publicly disclosed that idea to the Federal government.

            Thus, Plaintiff fails to meet its burden to show raise a triable issue of fact exists as to the novelty and substantial secret elements of the 2^nd cause of action for breach of confidence. Because Plaintiff cannot establish the elements of novelty and substantial secrecy of its idea,  summary adjudication on that claim in favor of Defendant is proper.