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8 United States District Court 9 Central District of California

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11 ITN FLIX, LLC, et al., Case № 2:14-CV-08797-ODW (AGRx)

12 Plaintiffs, ORDER GRANTING MOTION TO

13 v. DISMISS AND/OR STRIKE [107],

GRANTING MOTION TO DISMISS

14 GLORIA HINOJOSA, et al., [109], AND DENYING AS MOOT

15 Defendants. MOTION TO STRIKE [110]

16 17 I. INTRODUCTION 18 This action is a long-running business dispute involving independent film 19 producer Gil Medina, actor Danny Trejo, director Robert Rodriguez, and talent agent 20 Gloria Hinojosa. Medina and his production company, ITN Flix, LLC, developed the 21 vigilante-action film Vengeance starring Trejo and assert that Rodriguez and Hinojosa 22 interfered with Vengeance’s successful release. For the reasons discussed below, the 23 Court GRANTS Defendants’ motions to dismiss and/or strike (ECF Nos. 107, 109), 24 and DENIES as moot Defendants Hinojosa and Amstel, Eisenstadt, Frazier & 25 Hinojosa Talent Agency’s (“AEFH”) Motion to Strike (ECF No. 110).1 26 27

28 1 Having carefully considered the papers filed in connection with the Motions, the Court deemed the matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 A. Factual Background 3 Medina “was and is an independent filmmaker” and is a principal and managing 4 member of ITN Flix, LLC (“ITN”), an independent production company located in 5 Utah (Medina and ITN collectively are “Plaintiffs”). (First Am. Compl. (“FAC”) 6 ¶¶ 7–8, ECF No. 93.) Around 2004 to 2005, Medina pitched to Trejo the idea of a 7 vigilante action movie starring Trejo, eventually titled Vengeance. (FAC ¶¶ 64, 66.) 8 Trejo agreed to the project as both the lead actor and as a producer. (FAC ¶ 66.) 9 Thereafter, in 2006, Plaintiffs and Trejo entered into two written agreements: a Master 10 Licensing Agreement (“MLA”) and an Acting Agreement (collectively “2006 11 Agreements”). (FAC ¶¶ 112, 124.) The 2006 Agreements included exclusivity 12 provisions restricting Trejo’s rights of publicity and acting services to Plaintiffs, 13 including not playing any other vigilante character through at least 2013.2 However, 14 in 2009, Trejo agreed to star in Machete, a vigilante action film directed and produced 15 by Rodriguez. (FAC ¶ 155.) Plaintiffs and Trejo agreed that Trejo would perform in 16 Machete and continue to work on Vengeance, which Trejo did. (FAC ¶ 156.) 17 In approximately May 2012, Rodriguez Defendants3 decided to produce a 18 sequel to Machete, entitled Machete Kills, again casting Trejo. (FAC ¶¶ 176, 182.) 19 Thus, in the spring and summer of 2012, Plaintiffs expressed concern that Trejo’s 20 involvement on Machete Kills would affect his availability to work on Vengeance. 21 (FAC ¶ 186.) Accordingly, Plaintiffs allege that “at about this time,” they reached a 22 “new agreement” (the “2012 Agreement”). (FAC ¶ 190.) Plaintiffs allege that in the 23 2012 Agreement, Trejo: 24 specifically promised and committed to Plaintiffs that Trejo would do at least the following: 25 • Continue to film new scenes for the film as needed. 26

2 As detailed below, the Ninth Circuit affirmed that the 2006 Agreements are unenforceable as 27 unlawful restraints on trade. See ITN Flix, LLC v. Hinojosa, 686 F. App’x. 441, 443 (9th Cir. 2017). 28 3 “Rodriguez Defendants” include Rodriguez and production company Defendants Machete Kills, LLC; El Chignon, Inc.; Troublemaker Studios, L.P.; and Quick Draw Productions, LLC. • Continue to lend the active support of his name, likeness, and 1 celebrity to the project, including to promotional, marketing and 2 publicity activities “all the way to the bank,” meaning throughout the 3 release and monetization process of the film. • Continue to support the film actively as both an actor and producer. 4 • Make himself available and use his best efforts to support the 5 development, production and release of the film, including 6 specifically a release essentially concurrently with the initial theatrical release of Machete Kills. 7 • Continue to work with Plaintiffs on their personal appearances and 8 commercial work. • Trejo would continue to facilitate and allow Plaintiffs to maintain and 9 exploit Trejo social media which Plaintiffs had already built, 10 including reasonable extensions thereof. 11 (FAC ¶ 190.) Plaintiffs agreed to “continue to put financial and other resources into 12 the Vengeance project” and not to pursue any form of lawsuit or enforcement 13 regarding the 2006 Agreements. (FAC ¶ 190.) These terms are substantially identical 14 to the terms of the 2006 Agreements, with the exception of exclusivity. (Compare 15 FAC ¶ 125 with ¶ 190.) Plaintiffs allege on information and belief that Trejo “told 16 both Hinojosa[4] and Rodriguez at the time about the essential terms” of the 2012 17 Agreement. (FAC ¶ 195.) 18 In August 2012, Medina met Steve and Janet Wozniak and conceived an 19 “innovative marketing strategy” wherein the Wozniaks would appear in an added 20 scene in the film and in a mobile app game tied to Vengeance (the “App Game”). 21 (FAC ¶¶ 197, 200, 213.) The Wozniaks “intended to and wanted to” make personal 22 appearances to support the App Game and film. (FAC ¶ 237.) Plaintiffs allege on 23 information and belief that Trejo “kept Rodriguez . . . and Hinojosa informed, 24 including about this development.” (FAC ¶ 202.) The Wozniaks filmed the game 25 scenes and made other contributions, and the App Game was released and available in 26 the app store for years. (FAC ¶¶ 212, 243.) 27 28 4 “Hinojosa Defendants” include Hinojosa and AEFH. 1 About this time, Trejo informed Plaintiffs that Defendants forbid him to work 2 with Plaintiffs on Vengeance. (FAC ¶¶ 208–09, 224.) As a result, the new film scene 3 with the Wozniaks was never completed. (FAC ¶ 209.) Additionally, one of the 4 defendants or someone acting on their behalf contacted the Wozniaks via telephone or 5 Facebook private message and insinuated that Medina was a con man and Trejo was 6 not involved with the App Game. (FAC ¶¶ 223, 225–35.) Thereafter, the Wozniaks 7 withdrew their active support for the project. (FAC ¶ 237.) 8 Plaintiffs assert that their marketing plan involving the App Game and the 9 Wozniaks allowed them to negotiate “potential agreements with theatrical exhibitors 10 and other distributors for a meaningful commercial release” of Vengeance in early 11 2013. (FAC ¶ 216.) Despite not entering into any of these agreements, Plaintiffs 12 claim that, by November 2012, they had “a realistic expectation of earning millions of 13 dollars in revenue imminently from both the App Game itself and from a meaningful 14 commercial release” of Vengeance in early 2013. (FAC ¶ 217.) However, Trejo’s 15 and the Wozniaks’ withdrawn support of the App Game and film caused offers for the 16 film to be reduced significantly or withdrawn altogether. (FAC ¶ 249.) Plaintiffs 17 claim that “if the Wozniaks had actively supported the [A]pp [G]ame, Plaintiffs would 18 have made in at least the hundreds of thousands of dollars from the App Game alone.” 19 (FAC ¶ 211.) Plaintiffs allege damages in the millions of dollars, including funds they 20 invested and expended on the Vengeance project as well as the millions in expected 21 profits from the App Game and film. (FAC ¶ 245.) 22 B. Procedural Background 23 In November 2014, Plaintiffs filed this action asserting nine claims against 24 various Defendants premised on the 2006 Agreements and generally the same facts as 25 detailed above, without the 2012 Agreement. (See Compl., ECF No. 1.) In May 26 2015, the Court dismissed Plaintiffs’ Complaint, finding, among other things, that the 27 2006 Agreements were unenforceable as unlawful restraints on trade. (Order Granting 28 Defs.’ Mots. to Dismiss 14, ECF No. 75.) 1 Plaintiffs appealed and Rodriguez Defendants cross-appealed. (Notices of 2 Appeal, ECF Nos. 77, 79.) On April 4, 2017, the Ninth Circuit issued its decision. 3 See ITN Flix, LLC v. Hinojosa, 686 F. App’x 441 (9th Cir. 2017). The Ninth Circuit 4 affirmed that the 2006 Agreements were unenforceable, unlawful restraints on trade 5 and affirmed dismissal of the complaint. Id. at 443–45. However, the Ninth Circuit 6 found that Plaintiffs should have been granted limited leave to amend the first and 7 fifth claims. Id. at 444–45. The Ninth Circuit issued its Mandate on August 16, 2017. 8 (Mandate, ECF No. 92.) 9 On October 29, 2018, fourteen months later, Plaintiffs filed their FAC. 10 Plaintiffs assert two claims in their FAC: (1) Intentional Interference with Contract 11 against Rodriguez Defendants, and (2) Intentional Interference with Prospective 12 Economic Advantage against both Hinojosa Defendants and Rodriguez Defendants. 13 (FAC ¶¶ 264–85, 286–307.) Defendants now move to dismiss and/or strike Plaintiffs’ 14 FAC. (See Rodriguez Defs.’ Mot. to Dismiss and/or Strike (“Rodriguez Mot.”), ECF 15 No. 107; Hinojosa Defs.’ Mot. to Dismiss (“Hinojosa Mot.”), ECF No. 109; Hinojosa 16 Mot. to Strike, ECF No. 110.) 17 III. REQUEST FOR JUDICIAL NOTICE [108, 111, 122, 128] 18 The parties seek judicial notice of numerous court filings and orders in the 19 appeal of this action, related actions before the United States District Court for the 20 District of Utah, and a related JAMS arbitration. (See generally Rodriguez Req. for 21 Judicial Notice (“RJN”), ECF No. 108; Hinojosa RJN, ECF No. 111; Pls.’ RJN, ECF 22 No. 122; Rodriguez Suppl. RJN, ECF No. 128.) 23 “[A] court may judicially notice a fact that is not subject to reasonable dispute 24 because it: (1) is generally known within the trial court’s territorial jurisdiction; or 25 (2) can be accurately and readily determined from sources whose accuracy cannot 26 reasonably be questioned.” Fed. R. Evid. 201(b). Court orders and filings are proper 27 subjects of judicial notice. See United States v. Black, 482 F.3d 1035, 1041 (9th Cir. 28 2007). Courts may take judicial notice of pleadings and court orders filed in other 1 courts, “both within and without the federal judicial system, if those proceedings” are 2 directly related to the matters at issue. Id. (citing U.S. ex rel. Robinson Rancheria 3 Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992).) However, a 4 court may take judicial notice only of the existence of these documents and not the 5 truth of disputed facts therein. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 6 2001). With this in mind, as each of the documents the parties seek to have the court 7 notice is a court filing, court order, or arbitration document related to the matters at 8 issue here, the Court grants the Requests as to the existence of these documents. 9 IV. MOTIONS TO DISMISS AND TO STRIKE [107, 109, 110] 10 Rodriguez Defendants and Hinojosa Defendants5 each move to dismiss 11 Plaintiffs’ FAC on various grounds, many overlapping. Both sets of defendants argue 12 that Plaintiffs’ FAC should be dismissed, in whole or in part, for amendment beyond 13 the Ninth Circuit’s Mandate, failure to diligently prosecute under Federal Rule of 14 Civil Procedure (“Rule”) 41(b), and failure to state a claim. Rodriguez Defendants 15 also move to strike the portions of Plaintiffs’ FAC they contend were amended 16 beyond the Ninth Circuit’s Mandate, and Hinojosa Defendants move to strike 17 Plaintiffs’ request for costs and punitive damages. As the Court finds dismissal 18 appropriate due to lack of diligent prosecution and failure to state a claim, the Court 19 does not reach Defendants’ additional arguments. 20 A. Ninth Circuit Memorandum 21 Defendants move to dismiss and/or strike on the basis that Plaintiffs amended 22 beyond the scope permitted. (Rodriguez Mot. 22–23; Hinojosa Mot. 5–7.) 23 Under the “Rule of Mandate,” the district court should “implement both the 24 letter and the spirit of the mandate, taking into account the [Ninth Circuit’s] opinion 25

26 5 Hinojosa Defendants’ moving and reply papers in connection with their motion to dismiss fail to comply with this Court’s local rules. The motion uses a font smaller than permitted, and the reply 27 exceeds the twelve-page limit. (See Hinojosa Mot.; Hinojosa Reply in Supp. of Mot. (“Hinojosa 28 Reply”), ECF No. 124.) Accordingly, the Court does not consider pages thirteen through twenty- four of Hinojosa Defendants’ Reply. 1 and the circumstances it embraces.” Pit River Tribe v. U.S. Forest Serv., 615 F.3d 2 1069, 1080 (9th Cir. 2010) (quoting Vizcaino v. U.S. District Court, 173 F.3d 713, 3 719 (9th Cir. 1999)). This Court has flexibility to enter orders, consider evidence and 4 do other things to implement the mandate, so long as they are not “counter to the spirit 5 of the circuit court’s decision.” United States v. Kellington, 217 F.3d 1084, 1092–93 6 (9th Cir. 2000) (internal quotation marks omitted); United States v. Thrasher, 483 7 F.3d 977, 981 (9th Cir. 2007). “Although amendment of pleadings following remand 8 may be permitted, such amendment cannot be inconsistent with the appellate court’s 9 mandate.” In re Beverly Hills Bancorp, 752 F.2d 1334, 1337 (9th Cir. 1984). A 10 district court may not reconsider “matters which were either expressly or implicitly 11 disposed of upon appeal.” United States v. Miller, 822 F.2d 828, 832 (9th Cir. 1987). 12 The Ninth Circuit affirmed dismissal of all claims but found limited leave to 13 amend warranted for the first and fifth causes of action. ITN Flix, 686 F. App’x at 14 444–45. As to the first, Plaintiff’s initially asserted this cause of action for intentional 15 interference with contract against Rodriguez Defendants. (Compl. ¶¶ 68–75.) The 16 Ninth Circuit affirmed dismissal but permitted leave to amend “because it does not 17 appear futile that [Medina] could plead facts establishing an oral contract with Trejo 18 to market and promote [Plaintiffs’] film.” ITN Flix, 686 F. App’x at 444. Rodriguez 19 Defendants argue Plaintiffs were permitted to amend only to the extent they could 20 allege facts supporting an oral promise “not reflected in the written contracts.” 21 (Rodriguez Mot. 13.) However, the language “not reflected in the alleged written 22 contracts” appears in the paragraph affirming dismissal, not in the paragraph granting 23 leave to amend. If the Ninth Circuit meant to limit leave to amend to “an oral contract 24 with Trejo to market and promote his films (not reflected in the written contracts),” it 25 could certainly have said so. It did not. Accordingly, Plaintiffs’ are permitted to 26 plead a cause of action against Rodriguez Defendants for intentional interference with 27 an oral agreement between Trejo and Plaintiffs for Trejo to market and promote 28 Plaintiffs’ film Vengeance. 1 Regarding the fifth cause of action, Plaintiffs initially asserted this cause of 2 action for intentional interference with prospective economic advantage against only 3 Hinojosa Defendants. (Compl. ¶¶ 94–100.) Plaintiffs now assert this cause of action 4 as their second and bring it against both Hinojosa Defendants and Rodriguez 5 Defendants. (FAC ¶¶ 286–307.) However, Plaintiffs initially, separately, asserted the 6 same cause of action against Rodriguez Defendants as Plaintiffs’ third cause of action, 7 of which the Ninth Circuit affirmed dismissal without leave to amend. (Compl. 8 ¶¶ 81–88); ITN Flix, 686 F. App’x at 444. Accordingly, Plaintiffs may not now assert 9 this cause of action against Rodriguez Defendants. The Court thus STRIKES as 10 impertinent and beyond the scope of the Mandate Plaintiffs’ second cause of action to 11 the extent it is brought against Rodriguez Defendants. 12 Additionally, the Ninth Circuit affirmed dismissal of Plaintiffs’ fifth cause of 13 action to the extent it was based on “Hinojosa facilitating Trejo’s casting in 14 Rodriguez’s movies,” “the Wozniaks’ failure to provide marketing and promotional 15 support to Medina’s App Game,” or “any economic relationship with unnamed 16 potential exhibitors and distributors.” ITN Flix, 686 F. App’x at 445. The Ninth 17 Circuit permitted amendment of this cause of action because “it does not appear futile 18 that [Medina] could plead facts about the Wozniaks’ promises to provide marketing or 19 support.” Id. Plaintiffs may not now revive those aspects of the fifth cause of action 20 for which the Ninth Circuit did not grant leave to amend. The Court thus STRIKES 21 as impertinent and beyond the scope of the Mandate Plaintiffs’ second cause of action 22 to the extent it alleges intentional interference with prospective economic advantage 23 other than the Wozniaks’ alleged promises to provide marketing or support for the 24 App Game. 25 Accordingly, and for clarity, Plaintiffs’ FAC may plead the following two 26 permitted causes of action: (1) intentional interference with an oral agreement 27 between Trejo and Plaintiffs for Trejo to market and promote Plaintiffs’ film 28 Vengeance, against Rodriguez Defendants; and (2) intentional interference with 1 prospective economic advantage with the Wozniaks as to their alleged promises to 2 provide marketing or support for the App Game, against Hinojosa Defendants. 3 B. Rule 41(b) and Local Rule 41-1 4 Defendants move to dismiss Plaintiffs’ FAC pursuant to Rule 41(b) and Local 5 Rule 41-1 for failure to diligently prosecute. (Rodriguez Mot. 24; Hinojosa Mot. 5.) 6 Federal Rule of Civil Procedure 41(b) allows a party, or the Court, to dismiss an 7 action “[i]f the plaintiff fails to prosecute or to comply with these rules or a court 8 order.” This rule is interpreted to require “reasonable diligence” in prosecution. 9 Anderson v. AirWest, Inc., 542 F.2d 522, 524 (9th Cir. 1976). Local Rule 41-1 10 provides that “[c]ivil suits which have been pending for an unreasonable period of 11 time without any action having been taken therein may, after notice, be dismissed for 12 want of prosecution.” C.D. Cal. L.R. 41-1. Thus, “[a] Rule 41(b) dismissal ‘must be 13 supported by a showing of unreasonable delay.’” Omstead v. Dell, Inc., 594 F.3d 14 1081, 1084 (9th Cir. 2010) (quoting Henderson v. Duncan, 779 F.2d 1421, 1423 (9th 15 Cir. 1986)). 16 The Ninth Circuit issued its Memorandum on April 4, 2017, and its Mandate on 17 August 16, 2017. Plaintiffs did not file their FAC until October 29, 2018. Plaintiffs 18 concede they delayed more than fourteen months after the Mandate before filing the 19 amended complaint but argue the delay should be excused as the result of Plaintiffs’ 20 financial difficulties and two months of settlement discussions. (Opp’n to Hinojosa 21 Mot. 16–18, ECF No. 119; Opp’n to Rodriguez Mot. 24–25, ECF No. 117.) 22 Defendants refute the assertions of settlement talks (see Hinojosa Reply 7; Rodriguez 23 Reply in Supp. of Mot. (“Rodriguez Reply”) 11, ECF No. 126), and Plaintiffs concede 24 that financial difficulties alone are insufficient to warrant such stagnation in 25 prosecution (see Opp’n to Hinojosa Mot. 16). See Malone v. U.S. Postal Serv., 833 26 F.2d 128, 131 (9th Cir. 1987) (finding that plaintiff’s lack of financial resources did 27 not excuse delay). Further, Plaintiffs pursued other federal litigation concerning these 28 films during the time period Plaintiffs were “unable” to pursue this litigation, 1 demonstrating Plaintiffs’ choice to prioritize other litigation. (See Rodriguez 2 Reply 11.) Finally, even assuming Plaintiffs engaged in negotiations with some of the 3 defendants for two months before amending, this does not excuse Plaintiff’s prior, 4 year-long delay. Thus, the Court finds Plaintiffs’ delay unreasonable. 5 When dismissing an action under Rule 41(b), courts must consider: “(1) the 6 public’s interest in expeditious resolution of litigation; (2) the court’s need to manage 7 its docket; (3) the risk of prejudice to the defendants; (4) the public policy favoring 8 disposition of cases on their merits; and (5) the availability of less drastic sanctions.” 9 Hernandez v. City of El Monte, 138 F.3d 393, 399 (9th Cir. 1998) (quoting Henderson, 10 779 F.2d at 1423); see also Morris v. Morgan Stanley & Co., 942 F.2d 648, 651 (9th 11 Cir. 1991). The Ninth Circuit affirms “a dismissal where at least four factors support 12 dismissal, . . . or where at least three factors ‘strongly’ support dismissal.” Yourish v. 13 Cal. Amplifier, 191 F.3d 983, 990 (9th Cir. 1999) (alterations in original) (internal 14 quotation marks omitted). “[T]he failure to prosecute diligently is sufficient by itself 15 to justify a dismissal, even in the absence of a showing of actual prejudice to the 16 defendant from the failure.” Morris, 942 F.2d at 651 (internal quotation marks 17 omitted). 18 The Ninth Circuit has recognized that the first and fourth factors cut in opposite 19 directions. See Yourish, 191 F.3d at 990 (first factor always weighs in favor of 20 dismissal); Hernandez, 138 F.3d at 401 (fourth factor always weighs against 21 dismissal). Although the fourth factor always weighs against dismissal, the plaintiff is 22 charged with moving the action towards that disposition with reasonable diligence. 23 Morris, 942 F.2d at 652. Plaintiffs failed for more than a year to do so here, and thus 24 this factor weighs only slightly against dismissal. 25 The second factor considers a court’s need to manage its own docket. The 26 Court must manage its docket to ensure efficient provision of justice. A district court 27 is in the best position to evaluate the effects of delay on the docket. Yourish, 191 F.3d 28 at 991; In re Eisen, 31 F.3d 1447, 1451 (9th Cir. 1994). Plaintiffs’ additional delay of 1 fourteen months unreasonably caused this litigation to stagnate and impeded 2 resolution of the action for over a year. Accordingly, the second factor weighs in 3 favor of dismissal. 4 The third factor considers the risk of prejudice to Defendants. Courts “examine 5 whether the plaintiff’s actions impair the defendant’s ability to go to trial or threaten to 6 interfere with the rightful decision of the case.” Malone, 833 F.2d at 131. “Whether 7 prejudice is sufficient to support an order of dismissal is in part judged with reference 8 to the strength of the plaintiff’s excuse for the [delay].” Id. Here, Plaintiffs have no 9 excuse for the delay in amending their complaint. The failure to amend in a 10 reasonable time delayed resolution of the action and prevented Defendants from 11 defending against Plaintiffs’ amended claims, thus interfering with the rightful 12 disposition of the case. What is more, Plaintiffs’ disregard for the Ninth Circuit’s 13 explicit order as to the scope of amendment forced Defendants to again defend, and 14 this Court to wade through, claims already dismissed and affirmed. Plaintiffs’ year- 15 long delay following remand also increases the likelihood that witnesses memories 16 will fade and material evidence will become stale. “The law presumes injury from 17 unreasonable delay.” In re Eisen, 31 F.3d at 1452 (quoting Anderson, 542 F.2d at 18 524). The Court finds the risk of prejudice to Defendants, both presumed and actual, 19 weighs in favor of granting dismissal. 20 Finally, the fifth factor considers the availability of less drastic alternatives. 21 “The district court need not exhaust every sanction short of dismissal before finally 22 dismissing a case, but must explore possible and meaningful alternatives.” 23 Henderson, 779 F.2d 1421, 1424 (9th Cir. 1986); see also Morris, 942 F.2d at 652 24 (quoting Anderson, 542 F.2d at 525 (“There is no requirement that every single 25 alternate remedy be examined by the court before the sanction of dismissal is 26 appropriate. The reasonable exploration of possible and meaningful alternatives is all 27 28 1 that is required.”).6 Here, Plaintiffs assert financial difficulties, so imposing a fine 2 would merely compound hardship and potentially further delay, as would placing the 3 case at the bottom of the calendar. Plaintiffs’ disingenuous disregard for the Ninth 4 Circuit’s limitations for amendment on remand demonstrates that a mere warning or 5 formal reprimand would also be ineffective. And dismissal without prejudice would 6 not function as a lesser sanction, as it appears the time may have run on Plaintiffs’ 7 claims. See Cal. Civ. Proc. Code § 339 (two-year statute of limitations for contract 8 claims). Thus, this factor also weighs in favor of dismissal. 9 As four factors weigh in favor of dismissal and one factor weighs slightly 10 against, the Court finds dismissal warranted under Rule 41(b) and GRANTS 11 Defendants’ motions to dismiss. However, in an abundance of caution, and in light of 12 the Ninth Circuit Mandate granting narrow leave to amend, the Court also considers 13 Defendants’ arguments under Rule 12(b)(6). 14 C. Rule 12(b)(6) 15 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable 16 legal theory or insufficient facts pleaded to support an otherwise cognizable legal 17 theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To 18 survive a dismissal motion, a complaint need only satisfy the minimal notice pleading 19 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. 20 Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to 21 raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 22 U.S. 544, 555 (2007). That is, the complaint must “contain sufficient factual matter, 23 accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 24 Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). 25 26

6 The Ninth Circuit has recognized less drastic alternatives may include “a warning, a formal 27 reprimand, placing a case at the bottom of the calendar, a fine, the imposition of costs or attorney 28 fees,” temporary suspension of counsel from practice, and preclusion of claims or defenses. See Malone, 833 F.2d at 132 n.1. 1 Whether a complaint satisfies the plausibility standard is a “context-specific 2 task that requires the reviewing court to draw on its judicial experience and common 3 sense.” Id. at 679. A court must construe all “factual allegations set forth in the 4 complaint . . . as true and . . . in the light most favorable” to the plaintiff. Lee v. City 5 of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001). However, a court need not blindly 6 accept conclusory allegations, unwarranted deductions of fact, and unreasonable 7 inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A 8 court is generally limited to the pleadings in ruling on a Rule 12(b)(6) motion but may 9 consider documents properly subject to judicial notice without converting a motion to 10 dismiss into one for summary judgment. See Lee, 250 F.3d at 688–89. 11 Defendants argue that Plaintiffs’ allegations in the FAC concerning the 2012 12 Agreement and its premise of non-exclusivity are inconsistent with the complaint’s 13 allegations of the (unenforceable) 2006 Agreements. Generally, an amended 14 complaint should contain “additional allegations that are consistent with the 15 challenged pleading and that do not contradict the allegations in the original 16 complaint.” United States v. Corinthian Colls., 655 F.3d 984, 955 (9th Cir. 2011) 17 (internal quotation marks omitted). However, as the parties note, Ninth Circuit 18 precedent is inconsistent as to whether amended pleadings may ever contradict earlier 19 allegations. Compare Airs Aromatics, LLC v. Opinion Victoria’s Secret Stores Brand 20 Mgmt., Inc., 744 F.3d 595, 600 (9th Cir. 2014) (disallowing contradictory 21 amendment) with PAE Gov’t Servs., Inc. v. MPRI, Inc., 514 F.3d 856, 860 (9th Cir. 22 2007) (finding it error to strike inconsistent pleadings). Regardless, a court may 23 consider prior pleadings in determining the plausibility of an amended complaint. See 24 Rodriguez v. Sony Computer Entm’t Am., LLC, 801 F.3d 1045, 1054 (9th Cir. 2015). 25 Accordingly, the Court considers Plaintiffs’ initial complaint as part of the “context- 26 specific” inquiry into the plausibility of Plaintiffs’ amended claims. 27 28 1 1. First Cause of Action against Rodriguez Defendants 2 Plaintiffs’ first cause of action is against Rodriguez Defendants for intentional 3 interference with an oral contract between Trejo and Plaintiffs for Trejo to market and 4 promote Plaintiffs’ film Vengeance. To state this claim, a plaintiff must allege facts 5 sufficient to establish: “(1) a valid contract between plaintiff and a third party; (2) 6 defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to 7 induce a breach or disruption of the contractual relationship; (4) actual breach or 8 disruption of the contractual relationship; and (5) resulting damage.” Pac. Gas & 9 Elec. Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 1126 (1990). To establish a valid 10 contract, California law requires parties capable of contracting, mutual consent, a 11 lawful object, and consideration. Cal. Civ. Code § 1550. 12 Here, the Ninth Circuit found that Plaintiffs’ first cause of action failed because 13 Plaintiffs “identifie[d] no consideration paid to or breach by Trejo” in their complaint. 14 ITN Flix, 686 F. App’x at 444. In the FAC, Plaintiffs again fail to sufficiently allege 15 consideration. 16 Plaintiffs allege that they and Trejo reached the 2012 Agreement “at about this 17 time,” which appears to mean somewhere around spring or summer of 2012. (FAC 18 ¶¶ 186, 190.) Although Plaintiffs do not allege precisely where or when they entered 19 the 2012 Agreement, they allege a laundry list of Trejo’s obligations, most of which 20 require Trejo to continue doing things he was already doing, like “[c]ontinue to film 21 new scenes,” “[c]ontinue to support the film actively,” and “[c]ontinue to lend the 22 active support of his name, likeness and celebrity to the project, including to 23 promotional, marketing and publicity activities.”7 (FAC ¶ 190.) Plaintiffs contend 24 they provided valid consideration by “continu[ing] to put financial and other resources 25 into the Vengeance project” and foregoing their right to sue on the 2006 Agreements. 26 (See FAC ¶ 190.) 27 To begin, an offer of consideration must be sufficiently definite that the 28 7 Trejo’s obligations appear to expand over time. (Compare FAC ¶ 190 with ¶ 266.) 1 performance promised is reasonably certain. Thus, indefinite consideration cannot 2 provide the basis for mutual assent necessary to form an agreement. See Weddington 3 Prods., Inc. v. Flick, 60 Cal. App. 4th 793, 811 (1998) (“If . . . a supposed ‘contract’ 4 does not provide a basis for determining what obligations the parties have agreed to, 5 and hence does not make possible a determination of whether those agreed obligations 6 have been breached, there is no contract.”). Plaintiffs contend their promise to 7 continue putting “financial and other resources in the Vengeance project” constitutes 8 valid consideration, but this vague promise does not sufficiently define Plaintiffs’ 9 obligation. “Financial and other resources” is indefinite, for instance, as to the amount 10 of funds or type of resources promised, and thus does not permit a determination of 11 whether Plaintiffs have met this commitment or breached it. 12 Further, “[c]ompromise of a wholly invalid claim, one with no foundation, is 13 not valid consideration.” Murphy v. T. Rowe Price Prime Reserve Fund, Inc., 8 F.3d 14 1420, 1423 (9th Cir. 1993). Although “the relinquishment of a colorable legal claim 15 is valid consideration,” to be colorable, “a claim must be asserted in good faith and 16 must be legally tenable under the theory advanced.” Id. (internal quotation marks 17 omitted); Prop. Cal. SCJLW One Corp. v. Leamy, 25 Cal. App. 5th 1155, 1167 n.7 18 (2018). Here, Plaintiffs’ claim of exclusivity was not colorable, and thus forgoing 19 enforcement did not constitute valid consideration. Long-standing and settled law 20 establishes that exclusivity provisions such as those in the 2006 Agreements constitute 21 unenforceable unlawful restraints on trade, contrary to public policy. See ITN Flix, 22 686 F. App’x at 443–44 (citing Kelton v. Stravinski, 138 Cal. App. 4th 941, 946 23 (2006)) (“[W]hen a contract creates an illegal restraint on trade, there is nothing that 24 the parties can do that will in any way add to its validity.”). “A contract made 25 contrary to public policy or against the express mandate of a statute may not serve as 26 the foundation of any action . . . .” Kelton, 138 Cal. App. 4th at 949 (internal 27 quotation marks omitted). Thus, Plaintiffs’ alleged offer to surrender a wholly invalid 28 claim, one with no foundation that was not colorable, was not valid consideration. 1 Plaintiffs fail to sufficiently allege consideration for the 2012 Agreement with 2 Trejo. Thus, no contract was formed, and Plaintiffs’ first cause of action fails. 3 Accordingly, the Court GRANTS Rodriguez Defendants’ motion to dismiss Plaintiffs’ 4 first claim. 5 2. Second Cause of Action against Hinojosa Defendants 6 Plaintiffs’ second cause of action is against Hinojosa Defendants for intentional 7 interference with prospective economic advantage as to the Wozniaks’ alleged 8 promises to provide marketing or support for the App Game. To state this claim, 9 Plaintiffs must allege: “(1) an economic relationship between the plaintiff and some 10 third party, with the probability of future economic benefit to the plaintiff; (2) the 11 defendant’s knowledge of the relationship; (3) intentional acts on the part of the 12 defendant designed to disrupt the relationship; (4) actual disruption of the relationship; 13 and (5) economic harm to the plaintiff proximately caused by the acts of the 14 defendant.” Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1153 15 (2003) (quoting Westside Ctr. Assocs. v. Safeway Stores 23, Inc. 42 Cal. App. 4th 507, 16 521–22 (1995)). The first element has two parts: “(1) an existing economic 17 relationship that (2) contains the probability of an economic benefit to the plaintiff.” 18 Roy Allan Slurry Seal, Inc. v. Am. Asphalt S., Inc., 2 Cal. 5th 505, 512 (2017). The 19 claim fails “when either the economic relationship with a third party is too attenuated 20 or the probability of economic benefit too speculative.” Id. at 515. 21 The Ninth Circuit previously affirmed dismissal of this claim because Plaintiffs 22 did “not allege facts to show the requisite probability of future economic benefit,” and 23 granted leave to amend to “plead facts about the Wozniaks’ promises to provide 24 marketing or support” for the App Game. ITN Flix, 686 F. App’x at 445. 25 Plaintiffs allege that the Wozniaks agreed to appear in a scene in the film 26 initially as a favor to a friend and later for their own enthusiasm (FAC ¶ 200); they 27 filmed scenes and made other contributions to App Game, which was released and 28 available in the App Store for years (FAC ¶¶ 212, 243); and they “intended to and 1 wanted to” do personal appearances to support the App Game, but later withdrew their 2 active support (FAC ¶¶ 237, 243). However, Plaintiffs do not allege any promises by 3 the Wozniaks to market or support the App Game, or facts supporting the existence of 4 an economic relationship with the Wozniaks. 5 Additionally, Plaintiffs again also fail to allege facts supporting the requisite 6 probability that any such relationship would yield future economic benefit. Plaintiffs 7 allege that “[b]ased on the performance of other similar app games with supported 8 marketing, if the Wozniaks had actively supported the [A]pp [G]ame, Plaintiffs would 9 have made in at least the hundreds of thousands of dollars from the App Game alone.” 10 (FAC ¶ 211.) But Plaintiffs provide no support for this assertion. See Westside Ctr. 11 Assocs., 42 Cal. App. 4th at 527 (internal quotation marks omitted) (“Without an 12 existing relationship with an identifiable buyer, [plaintiff]’s expectation of a future 13 sale was at most a hope for an economic relationship and a desire for future benefit.”). 14 Plaintiffs fail to sufficiently allege an economic relationship with the Wozniaks 15 with the probability of future economic benefit to Plaintiffs. Accordingly, the Court 16 GRANTS Hinojosa Defendants’ motion to dismiss Plaintiffs’ second cause of action.8 17 3. Leave to Amend 18 As a general rule, a court should freely give leave to amend a complaint that has 19 been dismissed, unless it is clear the complaint could not be saved by any amendment. 20 See Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 21 1025, 1031 (9th Cir. 2008). In evaluating the propriety of leave to amend, the Ninth 22 Circuit considers five factors: bad faith, undue delay, prejudice to the opposing party, 23 futility of amendment, and whether plaintiff previously amended his complaint. In re 24 W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716, 738 (9th Cir. 2013)). 25 Leave to amend may be denied when “the court determines that the allegation of other 26 facts consistent with the challenged pleading could not possibly cure the deficiency.” 27

28 8 As the Court grants dismissal of Plaintiffs’ second cause of action, Hinojosa Defendants’ motion to strike Plaintiffs’ request for costs and punitive damages is DENIED as MOOT. (ECF No. 110.) 1 || Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). Thus, leave to amend “is properly denied... if amendment would be futile.” 3 || Carrico v. City and Cty. of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011). 4 Plaintiffs request leave to amend in the conclusion of their oppositions. As 5 || discussed above, Plaintiffs delayed unreasonably for over a year in filing the FAC and 6 || Defendants have been prejudiced, by both the delay and having to defend against 7 || claims already dismissed and affirmed. Although the Court declines to find bad faith, 8 | Plaintiffs’ disingenuous disregard for the Ninth Circuit’s orders limiting the scope of 9 || amendment raises concern. Further, the Ninth Circuit explicitly directed Plaintiffs to 10 || the deficient aspects of Plaintiffs’ claims, yet Plaintiffs failed to remedy the identified 11 || deficiencies, focusing instead on developing theories previously dismissed. “At some 12 || point there must be finality.” Jn re Beverly Hills Bancorp, 752 F.2d at 1337. 13 || Accordingly, the Court DENIES leave to amend. 14 Vv. CONCLUSION 15 For the reasons discussed above, the Court GRANTS Defendants’ Motions to 16 || Dismiss without leave to amend (ECF Nos. 107, 109) and DENIES Hinojosa 17 | Defendants’ Motion to Strike as Moot (ECF No. 110.) 18 19 IT IS SO ORDERED. 20 21 August 6, 2019 22 ig

34 OTIS D. WRIGHT, II 05 UNITED STATES DISTRICT JUDGE

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