United States District Court, C.D. California
Present: The Honorable CHRISTINA A. SNYDER
CIVIL MINUTES - GENERAL
DEFENDANTS' MOTION TO DISMISS OR STAY ACTION (Dkt. 41,
filed March 8, 2017)
August 8, 2016, plaintiff Robert Daisley filed this action in
the District Court for the State of Nevada against defendants
Blizzard Music Limited (US) (“Blizzard US”) and
John Michael “Ozzy” Osbourne. Dkt. 1, Ex. 1
(“Compl.”). On August 31, 2016, defendants
removed this case to federal court in Nevada. Dkt. 1. On
February 22, 2017, the U.S. District Court for the District
of Nevada granted defendants' motion to transfer this
case to this district. Dkt. 26.
asserts three claims: (1) fraud against Blizzard US, (2)
fraud against Osbourne, and (3) accounting against both
defendants. Compl. ¶¶ 97-130. The gravamen of
plaintiff's complaint is that defendants deprived
plaintiff of his rightful compensation because Blizzard U.S.
improperly deducted 15 percent from its gross receipts before
remitting payments to its parent company, Blizzard Music
Limited (UK) (“Blizzard UK”), which distributes
royalties to plaintiff.
March 8, 2017, defendants filed a motion to dismiss or stay
this action pending arbitration or, alternatively, to dismiss
this action for failure to state a claim on which relief may
be granted. Dkt. 41 (“Motion”). Plaintiff filed
his opposition on March 27, 2017, dkt. 43 (“Opp'n),
and defendants filed their reply on April 10, 2017, dkt. 46
carefully considered the parties' arguments, the Court
finds and concludes as follows.
alleges the following facts.
is a musician and composer who co-authored songs on two
albums- Blizzard of Ozz and Diary of a Madman-with Osborne,
among others. Compl. ¶¶ 3, 19-31, 112. Plaintiff
refers to the songs on these two albums collectively as the
“Disputed Compositions.” Id. ¶ 32.
U.S. is a Nevada corporation that is the wholly-owned
subsidiary of Blizzard UK. Id. ¶ 11. Osbourne
is the president, treasurer, director, and CEO of Blizzard
US, and served as the lead vocalist on Blizzard of Ozz and
Diary of a Madman. Id. ¶¶ 12, 85.
1, 1980 and February 1, 1981, plaintiff assigned his author
share of the copyrights for the Disputed Compositions to
Blizzard UK. Id. ¶¶ 34, 36. Plaintiff
refers to these assignment contracts as the “Songwriter
Agreements.” Id. ¶ 33.
UK administers the copyrights for the Disputed Compositions
and is responsible for the collection and distribution of
royalties to plaintiff. Id. ¶ 39. The royalties
are earned through various types of licenses and sales, which
plaintiff refers to collectively as “Commercial
each of the Songwriter Agreements for the Disputed
Compositions, Blizzard UK is required to “pay or cause
to be paid to the Composer/Author in respect of said work . .
. 90 percent . . . of all gross royalties and other payments
received by the Publisher in respect of sound recordings,
piano rolls, and all other devices for audibly and visual
reproducing the said work for sale or hire in the United
Kingdom of Great Britain and northern Ireland.”
Id. ¶ 41. For income earned through Commercial
Exploitations in the United States and other territories,
Blizzard UK was required to pay plaintiff “90 percent .
. . of all monies received in respect of the right to record
the said work on sound tracks for use with cinematograph,
television and other films, and to the right to use said work
(whether prerecorded or not) in any television or other
programme.” Id. ¶ 42. On information and
belief, plaintiff alleges that Osbourne relied on Blizzard
U.S. to serve as the publisher for the Disputed Compositions
in the United States, including the Commercial Exploitation
of the Disputed Compositions. Id. ¶ 43.
the execution of the Songwriter Agreements, Blizzard UK has
provided royalty statements to plaintiff twice a year, which
are required to represent accurately payments in accordance
with the terms of the Songwriter Agreements, including (a)
that Blizzard UK received 100 percent of the agreed-upon
license fee; (b) the share to be allocated to the recipient
for the specific Disputed Composition; and (c) the royalty
rate applied. Id. ¶ 44.
around February 2014, plaintiff-concerned about his royalty
statements and the amount of compensation received as a
result of the Commercial Exploitation of the Disputed
Compositions-attempted to conduct a comprehensive inspection
of the books and records for the Disputed Compositions.
Id. ¶¶ 55-57. The audit, conducted by
Audit Time, LLC, revealed that Blizzard U.S. improperly
deducted 15 percent for the gross receipts on Commercial
Exploitations negotiated by Blizzard US. Id. ¶
63. As a result, only 85 percent of the gross receipts
collected by Blizzard U.S. were transferred to Blizzard UK.
Id. ¶ 64. However, Blizzard UK represented to
plaintiff that the 85 percent was “100 percent”
of the gross receipts on the royalty statements and allegedly
concealed from plaintiff the withholding of 15 percent of the
royalties owed to him. Id. ¶ 65.
plaintiff's royalty statements disclosed this deduction
of income and none of the Songwriter Agreements contained any
rights for Blizzard U.S. or Blizzard UK to undertake the
extra deductions. Id. ¶¶ 66-67.
October 2, 2014, plaintiff raised his concerns about
fraudulent conduct with Blizzard UK's counsel, Sheridans.
Id. ¶ 70. On October 16, ...