Judge: Robert B. Broadbelt, Case: 20STCV27472, Date: 2023-03-08 Tentative Ruling

Tentative rulings are sometimes, but not always, posted. The purpose of posting a tentative ruling is to to help focus the argument. The posting of a tentative ruling is not an invitation for the filing of additional papers shortly before the hearing.

Case Number: 20STCV27472    Hearing Date: March 8, 2023    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                 Plaintiff Arclight Films International Pty Ltd.

RESPONDING PARTY:       Unopposed

(1)   Motion to Seal

MOVING PARTIES:              Defendants Netflix Global, LLC, Netflix, Inc., and Mayday Movie Productions, Inc.      

RESPONDING PARTY:       Plaintiff Arclight Films International Pty Ltd.

(2)   Motion for Summary Judgment or, in the Alternative, Summary Adjudication

The court considered the moving papers filed in connection with the motion to seal.  No opposition papers to the motion to seal were filed. 

The court considered the moving, opposition, and reply papers filed in connection with the motion for summary judgment or, in the alternative, summary adjudication.

EVIDENTIARY OBJECTIONS 

The court rules on Plaintiff’s evidentiary objections to the declaration of Rodger May, filed on February 2, 2023, as follows:

The court overrules Objections Nos. 1-10.

The court rules on Plaintiff’s evidentiary objections to the declaration of Amy Takahara, filed on February 2, 2023, as follows:

The court overrules Objections Nos. 1-5.

The court rules on Defendants’ evidentiary objections to the declaration of Brian Beckmann, filed on February 10, 2023, as follows:

The court sustains Objections Nos. 5-7, 10-12, 15-16, 18-21, 26-27, 30, and 33.

The court overrules Objections Nos. 1-4, 8-9, 13-14, 17, 22-25, 28-29, 31-32, and 34-38.

The court rules on Defendants’ evidentiary objections to the declaration of Scott Sava, filed on February 10, 2023, as follows:

The court sustains Objections Nos. 1-2, 4-7, and 12-13.

The court overrules Objections Nos. 3, and 8-11.

LEGAL STANDARD

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)  “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.”  (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.)  A defendant or cross-defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.”  (Code Civ. Proc., § 437c, subd. (p)(2).)  “Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.”  (Code Civ. Proc., § 437c, subd. (p)(2).)  “If the plaintiff cannot do so, summary judgment should be granted.”  (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)  “When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.”  (Id. at p. 467; Code Civ. Proc., § 437c, subd. (c).)

MOTION TO SEAL

Plaintiff Arclight Films International Pty Ltd. (“Plaintiff”) moves the court for an order permitting it to file under seal certain documents in its Compendium of Evidence.  Specifically, Plaintiff moves to seal the following portions of its Compendium of Evidence, filed on February 2, 2023: (1) Exhibit 4 to the declaration of Scott Sava, and (2) page 7, lines 21-28, page 8, and page 9, lines 1-5 of the declaration of Scott Sava.

The court notes that Plaintiff does not move to file under seal portions of its opposition papers which reference this evidence, but that Plaintiff has electronically filed redacted versions of its (1) Memorandum of Points and Authorities in opposition to Defendants’ motion for summary judgment, and (2) Separate Statement of Disputed and Undisputed Material Facts in opposition to the motion.  Because the redacted portions of these documents reference or quote the information Plaintiff moves to seal in its motion, the court considers Plaintiff’s motion to encompass the redacted portions of those filings.  The court therefore considers, in addition to the excerpts of the documents listed above, the request to seal the following: (1) page 5, lines 23-26, page 8 lines 5-9, page 10, lines 7-11, page 12, lines 4-7, page 18, lines 18-21, page 20, lines 21-24, page 22, lines 22-25, page 28, lines 15-19, page 30, lines 22-26, page 32, lines 24-26, page 33, lines 1-2, page 34, lines 21-24, page 41, lines 8-13, page 45, lines 18-21, page 47, lines 15-18, page 59, lines 11-14, page 62, lines 8-11, and page 68, lines 20-23 of Plaintiff’s Separate Statement, and (2) page 9, lines 18-20, page 12, lines 21-27, and page 13, lines 1-7 of Plaintiff’s Memorandum of Points and Authorities in opposition to Defendants’ motion for summary judgment or, alternatively, summary adjudication.

Generally, court records are presumed to be open unless confidentiality is required by law.  (Cal. Rules of Court, rule 2.550, subd. (c).)  If the presumption of access applies, the court may order that a record be filed under seal “if it expressly finds facts that establish: (1) There exists an overriding interest that overcomes the right of public access to the record; (2) The overriding interest supports sealing the record; (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.”  (Cal. Rules of Court, rule 2.550, subd. (d).)

The court finds that (1) there exists an overriding interest that overcomes the right of public access to the exhibits and portions of Plaintiff’s filings described above, because they consist of documents that have been designated as confidential or include references to a confidential settlement agreement, (2) the overriding interest supports sealing the record to preserve the confidentiality of the settlement agreement, (3) a substantial probability exists that the overriding interests will be prejudiced if the record is not sealed, (4) the proposed sealing is narrowly tailored, and (5) no less restrictive means exist to achieve the overriding interest.  (Cal. Rules of Ct., rule 2.550, subd. (d); Lindblom Decl., ¶ 3.)  The court therefore grants Plaintiff’s motion.

MOTION FOR SUMMARY JUDGMENT OR, ALTERNATIVELY, SUMMARY ADJUDICATION

Defendants Netflix Global, LLC and Netflix, Inc. (“Netflix”) and Mayday Movie Productions, Inc. (“Mayday”) (collectively, “Defendants”) move the court for an order granting their motion summary judgment, or, in the alternative, summary adjudication as to each cause of action alleged by Plaintiff in the Second Amended Complaint.

1.     First Cause of Action for Breach of Contract against defendant Mayday

“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.”  (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

The court finds that Mayday has met its burden of showing that the first cause of action for breach of contract has no merit because Mayday has shown that an element of the cause of action (the existence of a contract between Plaintiff and Mayday) cannot be established.  In its Second Amended Complaint, Plaintiff alleges that Mayday breached the March 29, 2017 sales agent agreement (the “Sales Agency Agreement”) by granting rights in the motion picture Animal Crackers (the “Picture”) to Netflix during the term of the Sales Agency Agreement.  (SAC ¶¶ 24, 26-27.)  However, the Sales Agency Agreement was entered into by and between nonmoving defendant Animal Crackers Movie Ltd. (“Animal Crackers”), on the one hand, and Plaintiff, on the other hand.  (Undisputed Material Fact No. 5; Sorrell Decl., Ex. 6, Beckmann Dep., pp. PL008486-PL008496 [Sales Agency Agreement].)  Mayday was not a party or signatory to the Sales Agency Agreement.  (Ibid.)  The court therefore finds that Mayday has met its burden of showing that Plaintiff cannot establish the existence of a contract between it and Mayday.

The court finds that Plaintiff has not met its burden to show that a triable issue of material fact exists as to the element of the existence of a contract between Mayday and Plaintiff. 

Plaintiff argues that its breach of contract claim is based on Animal Cracker’s assignment of the copyright of the Picture to Mayday.  Specifically, Plaintiff contends that (1) Animal Crackers conveyed its exclusive foreign distribution rights to Plaintiff in 2017 (2) before Animal Crackers assigned the Picture’s copyright to Mayday, and (3) therefore, Mayday “stands in the shoes of [Animal Crackers] as the owner of the copyright and producer of the Picture and obtains not only the benefit of the copyright but assumes the obligations of the 2017 Sales Agency Agreement.”  (Opp., p. 6:10-15.)  Thus, Plaintiff argues that, because Animal Crackers had already conveyed to Plaintiff exclusive, foreign distribution rights, Mayday did not have the authority to sell those rights to Netflix.  Plaintiff also argues that Mayday received the benefit of the Animal Cracker’s assignment of its copyright interests in the Picture to Mayday, and that the Sales Agency Agreement is an obligation that arises under the assignment.

The court finds that Plaintiff has not met its burden to show that Mayday assumed the obligations of the Sales Agency Agreement pursuant to the law of assignments or Civil Code section 1589.

First, Plaintiff appears to argue that the Sales Agency Agreement conveyed to it distribution rights under the Copyright Act.  However, as noted by Mayday, the Sales Agency Agreement did not assign exclusive distribution rights, and instead was executed to appoint Plaintiff as Animal Crackers’ sales agent for the Picture. 

The Sales Agency Agreement provides that it was executed “with regards to [Animal Cracker’s] engagement of [Plaintiff] as the sole and exclusive sales agent for the Picture in the Territory” as set forth in the agreement.  (Beckmann Decl., Ex. 1, Sales Agency Agreement, p. 1.)  The licensed rights, as defined by the Sales Agency Agreement, consist of “the right to exploit, exhibit, distribute, market, promote, transmit and disseminate the Picture . . . in any and all media now known or hereafter devised . . ..”  (Beckmann Decl., Ex. 1, Sales Agency Agreement, § 4, subd. (a).)  The Sales Agency Agreement provides that Plaintiff was appointed “to act as [Animal Crackers’] sole and exclusive sales agent in the Territory during the Term with respect to the sales, marketing, licensing, and servicing of the Licensed Rights in the Picture.”  (Beckmann Decl., Ex. 1, Sales Agency Agreement, § 5, subd. (a).)  Pursuant to that appointment, Plaintiff was to “perform all services customarily undertaken by sales agents in the motion picture industry” on Animal Cracker’s behalf.  (Ibid.)  However, Animal Crackers retained the right of “approval over the Basic Material Terms (as defined below) of the Distribution Agreements, provided that such approval is not unreasonably withheld or delayed.”  (Id. at p. 3, § 6, subd. (a).)  The “Basic Material Terms” include the licensed rights that are subject to any distribution agreements, the length of the license period, the territory to be licensed, the license fee, and any delivery materials required under the agreement.  (Ibid.)

The court finds that the language of the Sales Agency Agreement does not convey to Plaintiff the exclusive copyright right to distribute the Picture.  Instead, the language of the Sales Agency Agreement, as set forth above, establishes that (1) Plaintiff was engaged by Animal Crackers to be “the sole and exclusive sales agent for the Picture” in the defined territories, and (2) as the sales agent, Plaintiff was only conveyed the right to act as Animal Cracker’s agent to negotiate and promote distribution agreements with third parties, subject to the approval of the copyright holder—i.e., Animal Crackers.  (Beckmann Decl., Ex. 1, Sales Agency Agreement, §§ 4, subd. (a), 5, subd. (a), 6, subd. (a).)  The court therefore finds that, because the Sales Agency Agreement did not assign Plaintiff any copyright interests—instead granting Plaintiff the right to act as a sales agent—Mayday did not assume Animal Cracker’s obligations of the Sales Agency Agreement.

Second, Plaintiff argues that the Sales Agency Agreement is an obligation arising under Animal Crackers’ assignment of the copyright to Mayday.

“A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting.”  (Civ. Code, § 1589.)  “‘The general rule is that the mere assignment of rights under an executory contract does not cast upon the assignee the obligations imposed by the contract upon the assignor….  The rule is otherwise, however, where the assignee assumes such obligations….”  (Recorded Picture Co. v. Nelson Entertainment, Inc. (1997) 53 Cal.App.4th 350, 362.)  Here, Plaintiff contends that the obligations owed to it arise from the Sales Agency Agreement (i.e., allowing Plaintiff to act as the sales agent).  However, Plaintiff has not presented evidence establishing that Mayday voluntarily accepted the benefit of the Sales Agency Agreement or assumed any obligations imposed therein.  For example, although Plaintiff contends that it successfully sold the foreign distribution rights of the Picture to various territories, Plaintiff does not submit evidence establishing (1) how these agreements provided a benefit to Mayday, or (2) that Mayday accepted any such benefits.  (Opp., p. 10:7-11; Beckmann Decl., ¶¶ 19, 22.)  Plaintiff also does not submit admissible evidence showing that its initial discussions with Netflix later conferred a benefit on Mayday.

The court therefore finds that Plaintiff has not met its burden of showing that a triable issue of material fact exists as to the existence of a contract or contractual obligations based on an assignment between Plaintiff and Mayday.

The court therefore grants Mayday’s motion for summary adjudication as to the first cause of action for breach of contract.

2.     Second Cause of Action for Intentional Interference with Contractual Relations against Defendants

“Tortious interference with contractual relations requires ‘(1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of that contract; (3) the defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.’”  (Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1141.)

Defendants contend that the second cause of action for intentional interference with contractual relations lacks merit because (1) Plaintiff had no valid contract with which Mayday or Netflix could interfere in 2020 since Plaintiff agreed to terminate that agreement in 2018; (2) Plaintiff cannot establish the element of knowledge; (3) Plaintiff cannot establish the element of intent to interfere; and (4) as to Mayday, Plaintiff cannot pursue this claim since Plaintiff also alleges that Mayday is a party to the Sales Agency Agreement.

As a threshold matter, the court notes that Defendants appear to take the position that the date of interference is the date on which they entered into the license agreement to distribute the Picture “in 2020.”  (Mot., p. 14:8-10.)  First, Defendants executed the License Agreement on December 3, 2019, and not in 2020.  (May Decl., Ex. 5 [License Agreement for Animal Crackers states that is “is entered into as of December 3, 2019 (‘Effective Date’)”].)  Second, it appears that Plaintiff has also alleged, and claims in opposition, that the interference is the distribution of the Picture.  Specifically, Plaintiff alleges that Defendants knew of the Sales Agency Agreement “prior to their distribution of the Picture….”  (SAC ¶ 31; Opp., pp. 16:2-3 [Netflix knew of the Sales Agency Agreement before Netflix streamed the Picture in July 2020], 16:5-8 [stating that its counsel informed Netflix that the streaming of the Picture would be a direct interference with the Sales Agency Agreement]; Pl. Additional Fact No. 89 [Netflix “went ahead and entered into the [] licensing agreement with Mayday and streamed the Picture worldwide”] [emphasis added].)    

The court therefore evaluates the evidence submitted by Defendants to determine whether Defendants have met their burden of showing that Plaintiff cannot establish the elements of this cause of action as to both (1) the date on which Defendants entered into the Licensing Agreement (i.e., December 3, 2019), and (2) the dates on which Netflix first began to stream the Picture (i.e., July 2020).  (May Decl., Ex. 5; May Decl., ¶ 11 [“The Picture was streamed by Netflix to consumers beginning in July 2020”].)  The court notes that, even if Defendants present evidence negating an element of this cause of action as to only one of the alleged interference dates, the court could not grant summary adjudication because it would not completely dispose of this cause of action.  (Code Civ. Proc., § 437c, subd. (f)(1) [“A motion for summary adjudication shall be granted only if it completely disposes of a cause of action”].)

A.    Element of Existence of Contract

The court finds that Defendants have met their burden of showing that the second cause of action for intentional interference with contractual relations has no merit because Defendants have shown that an element of the cause of action (the existence of a valid contract at the time of the alleged interference) cannot be established.

Defendants present evidence showing that the Sales Agency Agreement was no longer in effect at the time of interference because the parties agreed to termination of the agreement.  On June 18, 2018, Scott Sava (“Sava”) of Animal Crackers, sent an email to Plaintiff’s Chief Financial Officer Brian Beckmann (“Beckmann”) (1) stating that “it’s best [they] separate” and (2) asking what paperwork was needed to effect termination, acknowledging that the parties “need[ed] to submit in writing that [they] are terminating.”  (Sorrell Decl., Ex. 6, Beckmann Dep., Ex. 12, pp. 2-3.)  On June 19, 2018, Sava sent a second email asking if his previous email “constitute[d] a termination.”  (Id. at p. 2.)  On June 21, 2018, Beckmann replied to Sava, stating the following:  “We accept your termination and will have our lawyers wrap up the paperwork with Leighton.”  (Id. at p. 1.)

The court finds that this evidence shows that the Sales Agency Agreement—the contract with which Defendants allegedly interfered—was terminated as of (1) the date on which Defendants executed the License Agreement (i.e., December 3, 2019), and (2) the date on which Netflix began distributing the Picture pursuant to the parties’ License Agreement (i.e., July 2020).  (SAC ¶ ¶ 30-32 [alleging that Defendants interfered with the Sales Agency Agreement with Animal Crackers].)

The court finds that Plaintiff has met its burden to show that a triable issue of material fact exists as to whether the Sales Agency Agreement was terminated by the parties and therefore has established a triable issue of material fact as to the element of the existence of a valid contract between Plaintiff and Animal Crackers.

“[I]f the parties intend a reduction of their proposed agreement to writing before it can be considered complete, there is no contract until the formal agreement is signed [citations].”  (Apablasa v. Merritt & Co. (1959) 176 Cal.App.2d 719, 729 [internal citations omitted].)  Thus, “[w]hile preliminary negotiations ordinarily result in a binding contract when all of the terms are definitely understood, even though the parties intend to later execute a formal writing [citations], where any of the essential terms are left for future determination and it is understood that the agreement is not deemed complete until they are settled or where the parties understood that the proposed agreement is not complete until reduced to formal writing and signed, no binding contract results until this is done.”  (Louis Lesser Enterprises, Limited v. Roeder (1962) 209 Cal.App.2d 401, 404-405 [internal citations omitted].)

As set forth above, on June 21, 2018, Beckmann (1) accepted Sava’s termination of the agreement, but (2) stated that the parties would “have [their] lawyers wrap up the paperwork….”  (Sorrell Decl., Ex. 6, Beckmann Dep., Ex. 12, p. 1.)  Plaintiff contends that this language demonstrates that the parties understood their communications to mean that there was no agreement to terminate the Sales Agency Agreement until there was a signed writing.  Plaintiff also submits the declarations of Beckmann and Sava, in which they state the following:  (1) Beckmann instructed Plaintiff’s attorney to draft a proposed settlement agreement, dated June 28, 2019, to “wrap things up” with Animal Crackers, but Sava did not respond to or accept the settlement agreement; (2) Beckmann does not believe the Sales Agency Agreement was terminated; and (3) Sava understood the June 2019 emails “to mean that there was no settlement without a signed writing[;]” and (4) Sava does not believe the Sales Agency Agreement was terminated because he “never accepted [the proposed settlement agreement] or signed it.”  (Beckmann Decl., ¶¶ 37, 39, 40 [“Both Sava and I agree that the 2017 Sales Agency Agreement was never terminated”]; Sava Decl., ¶¶ 19-20.)

The court therefore finds that Plaintiff has met its burden of showing a triable issue of material fact as to whether the Sales Agency Agreement was terminated by the parties based on (1) the language of the emails stating that the parties’ lawyers would “wrap up the paperwork,” which indicates that the parties understood that the proposed termination would not be complete until reduced to formal writing, and (2) the declarations of Beckmann and Sava, which establish that the parties did not consider their emails to have been a termination of the Sales Agency Agreement.  (Louis Lesser Enterprises, Limited, supra, 209 Cal.App.2d at pp. 405-406 [“where the parties understood that the proposed agreement is not complete until reduced to formal writing and signed, no binding contract results until this is done”].)

B.    Element of Knowledge

The court finds that Mayday has not met its burden of showing that the second cause of action for intentional interference with contractual relations has no merit because Mayday has not shown that the element of Mayday’s knowledge of the Sales Agency Agreement cannot be established.

Although Mayday contends that it did not have knowledge of the Sales Agency Agreement at the time of interference, its Chief Executive Officer and principal, Rodger May (“May”) does not state that Mayday did not have knowledge of the Sales Agency Agreement at the time (1) it executed the License Agreement with Netflix, or (2) Netflix distributed the Picture.  Instead, May states that Mayday had no knowledge of Arclight’s involvement “until after Mayday owned the copyright.”  (May Decl., ¶ 12.)  Mayday was assigned the copyright in the Picture by the Short Form Assignment on July 9, 2018, which was recorded on April 24, 2019.  (May Decl., Exs. 3-4.)  Thus, the declaration of Mayday’s principal establishes only that it learned of the Sales Agency Agreement between Plaintiff and Animal Crackers sometime after, at the latest, April 2019, and does not establish that Mayday learned of the existence of the Sales Agency Agreement after (1) December 3, 2019, or (2) July 2020.

The court therefore finds that Mayday has not met its burden of showing that Plaintiff cannot establish that Mayday knew of the Sales Agency Agreement as of the dates of the alleged interference.

Even if Mayday had met its burden of showing that Plaintiff could not establish the element of Mayday’s knowledge of the Sales Agency Agreement, Plaintiff has submitted evidence showing a triable issue of material fact as to this element.  Specifically, Plaintiff submits the declaration of Sava, in which he states that (1) he sent a number of emails to Mayday’s representatives regarding the validity of the Sales Agency Agreement and that Plaintiff would be entitled to payment of $350,000 if it was terminated; (2) on August 1, 2018, he emailed Mayday’s counsel, Lance Rosen, stating that Plaintiff was re-hired in 2017; and (3) on May 29, 2018, he sent an email to a potential investor stating that he was “already under a contract with [Plaintiff] for Sales” and forwarded that email to Mayday’s counsel.  (Sava Decl., ¶¶ 14, 15, 16 [stating that Lance Rosen is Mayday’s counsel]; Sava Decl., Ex. 2, p. 1 [August 1, 2018 email], Ex. 3, pp. 2 [forwarded message to “Lance Rosen”], 3 [May 29, 2018 email stating that Sava is under contract with Plaintiff].)  The court finds that this evidence is sufficient to show that there is a triable issue of material fact as to Mayday’s knowledge of the Sales Agency Agreement before the alleged interferences occurred in December 2019 and July 2020.

The court finds that Netflix has not met its burden of showing that the second cause of action for intentional interference with contractual relations has no merit because Netflix has not shown that the element of Netflix’s knowledge of the Sales Agency Agreement cannot be established.  Netflix submits the declaration of its director, Takahara, who states that Netflix did not have knowledge of the Sales Agency Agreement at the time they entered into the License Agreement on December 3, 2019.  (Takahara Decl., ¶ 4 [director at Netflix was “not aware of any distribution agreements with respect [to] the Picture, negotiated by Arclight or anyone else” at the time the License Agreement was executed].)  However, as set forth above, the alleged dates of interference also includes the date on which the Picture was distributed.  (SAC ¶ 31.) 

Takahara further states that, from 2019 “until the filing of this lawsuit, [Takahara] was unaware that [Plaintiff] claimed to have any rights in the Picture or had ever reached out to Netflix about the Picture.”  (Takahara Decl., ¶ 6.)  Plaintiff filed the original Complaint in this action on July 21, 2020.  Defendants have not provided evidence establishing the exact date on which the Picture began streaming and have instead presented evidence showing that the Picture was distributed “beginning in July 2020” or “commencing in late July 2020.”  (May Decl., ¶ 11; Takahara Decl., ¶ 3.)  Thus, Netflix has not submitted evidence showing that (1) distribution of the Picture commenced before July 21, 2020, and therefore (2) Netflix did not know of the Sales Agency Agreement before it began distributing the Picture.

Even if Netflix had met its burden of showing that Plaintiff could not establish the element of Netflix’s knowledge of the Sales Agency Agreement, Plaintiff has submitted evidence sufficient to show that there is a triable issue of material fact as to this element.  In support of its opposition, Plaintiff submits evidence of communications between it and Netflix during two separate time periods: (1) 2017, and (2) 2020.

First, Plaintiff presents evidence showing that Plaintiff and Netflix had discussions regarding the acquisition of the Picture between May 2017 and July 2017.  Specifically, Plaintiff (1) talked to the head of acquisitions for Netflix during that time period, Matt Brodlie, and (2) sent promotional material concerning the Picture to Netflix, including the script and partially completed scenes.  (Beckmann Decl., ¶ 17.)  However, the court finds that this evidence is insufficient to show that a triable issue of material fact exists as to Netflix’s knowledge of the Sales Agency Agreement when it entered into the License Agreement with Mayday or distributed the Picture beginning in July 2020.  While this evidence is sufficient to establish that Plaintiff and Netflix engaged in discussions regarding the Picture, the evidence does not show that, at this time, Plaintiff informed Netflix of either (1) the existence of the Sales Agency Agreement, or (2) the terms of the Sales Agency Agreement, including Plaintiff’s exclusive right to act as the sales agent on behalf of Animal Crackers.

Second, Plaintiff presents evidence establishing that its counsel sent cease and desist letters to Netflix’s general counsel prior to the date that Netflix began streaming the Picture.  Plaintiff’s counsel sent four letters to Netflix informing it of the Sales Agency Agreement and Plaintiff’s exclusive distribution rights on (1) March 25, 2020, (2) April 3, 2020, (3) June 29, 2020, and (4) July 14, 2020.  (Lindblom Decl., ¶¶ 3-5, 8; Lindblom Decl., Ex. 1 [March 25, 2020 letter], Ex. 2 [April 3, 2020 letter], Ex. 3 [June 29, 2020 letter], Ex. 6 [July 14, 2020 letter].)  The court therefore finds that Plaintiff has shown that a triable issue of material fact exists as to Netflix’s knowledge of the Sales Agency Agreement prior to its distribution of the Picture in July 2020. 

C.    Element of Intent

The court finds that Defendants have met their burden of showing that the second cause of action for intentional interference with contractual relations has no merit because Defendants have shown that an element of the cause of action (Defendants’ intentional acts designed to induce a breach of the contractual relationship) cannot be established.

Defendants present the declarations of May and Takahara, which each state that Defendants did not intend to interfere with the Sales Agency Agreement.  (May Decl., ¶ 11 [“Mayday did not take action at any time to interfere with the legal rights of any third party” and did not seek to interfere with any rights of Plaintiff in entering a deal with Netflix]; Takahara Decl., ¶ 5 [“By entering into the License Agreement, Netflix had no intent to interfere with rights of Arclight or anyone else in connection with the Picture”].)

The court finds that Plaintiff has met its burden to show that a triable issue of material fact exists as to the element of Defendants’ intentional acts designed to induce or disrupt a breach of the contractual relationship.  As set forth above, Plaintiff has presented evidence establishing that there are triable issues of material fact as to whether Mayday and Netflix had knowledge of the Sales Agency Agreement at the time Netflix began to stream the Picture pursuant to Defendants’ License Agreement.

“The required intent is shown if the defendant ‘knows that the interference is certain or substantially certain to occur as a result of his action.  The rule applies, in other words, to an interference that is incidental to the actor’s independent purpose and desire but known to him to be a necessary consequence of his action.’”  (Tuchscher Development Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1239.)  The court finds that evidence of Defendants’ knowledge sufficiently supports an inference that Defendants knew that their conduct was substantially certain to result in an interference with the rights given to Plaintiff pursuant to the Sales Agency Agreement.

D.    Element of Existence of Contract between Plaintiff and a Third Party

The court finds that Mayday has not met its burden of showing that that the second cause of action for intentional interference with contractual relations has no merit because Mayday has not shown that the element of the existence of a valid contract between Plaintiff and a third party cannot be established.

Mayday argues that Plaintiff cannot pursue this cause of action against it “because according to [Plaintiff], Mayday is a party to the Sales Agency Agreement.”  (Mot., p. 15:6-7.)  However, (1) the modern rules of pleading permit Plaintiff “to ‘set forth alternative theories in varied and inconsistent counts[,]’” and (2) the court has determined, as set forth above, that Plaintiff did not meet its burden of establishing that Mayday was a party to, or assumed the obligations of, the Sales Agency Agreement.  (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1388.)

E.     Conclusion

The court notes that the second cause of action for intentional interference with contractual relations might not have merit because Plaintiff might not be able to establish the elements of (1) a valid contract between Plaintiff and Animal Crackers at the time of the alleged interferences, or (2) Defendants’ intentional acts designed to induce a breach of the contractual relationship, because once Animal Crackers assigned the copyright to Mayday, Animal Crackers was no longer the holder of the copyright and it appears that Animal Crackers no longer had the right to distribute the Picture.  [May Decl., Ex. 3, Amendment 1 to Loan and Investment Agreement, p. 1 [Animal Crackers “assigns and transfers all copyright…in and to the Picture” and “[t]he completed Picture…will become solely owned by” Mayday upon execution of the amendment]; May Decl., Ex. 4, April 24, 2019 Certificate of Recordation, p. 3, Short Form Assignment [Animal Cracker assigned to Mayday “all rights in and to” the Picture, “encompass[ing] full assignment of the Picture’s copyright”].)  Thus, when Animal Crackers assigned the copyright to Mayday, Plaintiff might have been divested of its contractual right to sell the distribution rights in the Picture, because, as an agent, Plaintiff has no greater right to distribute the Picture than its principal, Animal Crackers.  However, Defendants did not raise this argument as a basis for their motion for summary adjudication.  The court therefore declines to rule on this issue in connection with this motion.

For the reasons discussed above, the court denies Defendants’ motion for summary adjudication as to the second cause of action for intentional interference with contractual relations.

3.     Third Cause of Action for Unjust Enrichment against Mayday

The doctrine of unjust enrichment “applies where plaintiffs, while having no enforceable contract, nonetheless have conferred a benefit on defendant which defendant has knowingly accepted under circumstances that make it inequitable for the defendant to retain the benefit without paying for its value.”  (Hernandez v. Lopez (2009) 180 Cal.App.4th 932, 938.)

The court finds that Mayday has met its burden of showing that the third cause of action for unjust enrichment has no merit because Mayday has shown that an element of the cause of action (that Plaintiff conferred a benefit on Mayday which Mayday knowingly accepted) cannot be established.  Mayday has submitted evidence showing that (1) Mayday had no business relationship with Plaintiff, (2) Plaintiff performed no services with respect to the Picture after Mayday took over efforts to complete and distribute the Picture, and (3) Mayday has not received any benefit from Plaintiff’s alleged involvement on the Picture.  (May Decl., ¶¶ 10-12.)

The court finds that Plaintiff has not met its burden to show that a triable issue of material fact exists as to the element of Mayday’s receipt and acceptance of a benefit conferred by Plaintiff.  As set forth in connection with the first cause of action, Plaintiff has not submitted any admissible evidence showing that any of Plaintiff’s acts conferred a benefit on Mayday, or that Mayday assumed any benefits from Plaintiff pursuant to the Sales Agency Agreement.

The court therefore grants Mayday’s motion for summary adjudication as to the third cause of action for unjust enrichment.

ORDER

The court grants plaintiff Arclight Films International Pty Ltd.’s motion to seal.

The court orders that the unredacted versions of the exhibits and documents shall be filed under seal as follows:

1. Exhibit 4 to the declaration of Scott Sava, as attached to Attachment B of the “Compendium of Evidence in Support of Plaintiff’s Opposition to Motion of Defendants Netflix Global, LLC, Netflix, Inc., and Mayday Movie Productions, LLC for Summary Judgment or, In the Alternative, Summary Adjudication of the First, Second, and Third Causes of Action of the Second Amended Complaint Comprised of Declarations of Brian Beckmann Scott Sava and Roderick Lindblom and Exhibits,” filed by plaintiff Arclight Films International Pty Ltd. on February 2, 2023.

2. Page 7, lines 21-28, page 8, and page 9, lines 1-5 of the declaration of Scott Sava as attached to Attachment B of the “Compendium of Evidence in Support of Plaintiff’s Opposition to Motion of Defendants Netflix Global, LLC, Netflix, Inc., and Mayday Movie Productions, LLC for Summary Judgment or, In the Alternative, Summary Adjudication of the First, Second, and Third Causes of Action of the Second Amended Complaint Comprised of Declarations of Brian Beckmann Scott Sava and Roderick Lindblom and Exhibits,” filed by plaintiff Arclight Films International Pty Ltd. on February 2, 2023.

3. Page 5, lines 23-26, page 8 lines 5-9, page 10, lines 7-11, page 12, lines 4-7, page 18, lines 18-21, page 20, lines 21-24, page 22, lines 22-25, page 28, lines 15-19, page 30, lines 22-26, page 32, lines 24-26, page 33, lines 1-2, page 34, lines 21-24, page 41, lines 8-13, page 45, lines 18-21, page 47, lines 15-18, page 59, lines 11-14, page 62, lines 8-11, and page 68, lines 20-23 of “Plaintiff’s Separate Statement of Disputed and Undisputed Material Facts and Supporting Evidence in Opposition to Motion of Defendants Netflix Global, LLC, Netflix, Inc., and Mayday Movie Productions, LLC for Summary Judgment or, In the Alternative, Summary Adjudication of the First, Second, and Third Causes of Action of the Second Amended Complaint,” filed by plaintiff Arclight Films International Pty, Ltd. on February 2, 2023.

4. Page 9, lines 18-20, page 12, lines 21-27, and page 13, lines 1-7 of “Plaintiff’s Memorandum of Points and Authorities in Opposition to Motion of Defendants Netflix Global, LLC, Netflix, Inc., and Mayday Movie Productions, LLC for Summary Judgment or, In the Alternative, Summary Adjudication of the First, Second, and Third Causes of Action of the Second Amended Complaint,” filed by plaintiff Arclight Films International Pty Ltd. on February 2, 2023.

Pursuant to California Rules of Court, rule 2.551, subdivision (e), the court directs the clerk to file this order, maintain the records ordered sealed in a secure manner, and clearly identify the records as sealed by this order.  

The court denies defendants Mayday Movie Productions, Inc., Netflix Global, LLC, and Netflix, Inc.’s motion for summary judgment on plaintiff Arclight Films International Pty Ltd.’s Second Amended Complaint. 

The court grants defendant Mayday Movie Productions, Inc.’s motion for summary adjudication as to plaintiff Arclight Films International Pty Ltd.’s first cause of action for breach of contract and third cause of action for unjust enrichment.

The court denies defendants Mayday Movie Productions, Inc., Netflix Global, LLC, and Netflix, Inc.’s motion for summary adjudication as to plaintiff Arclight Films International Pty Ltd.’s second cause of action for intentional interference with contractual relations. 

The court orders defendant Mayday Movie Productions, Inc. to give notice of this ruling.

IT IS SO ORDERED.

DATED:  March 8, 2023

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court