Court Opinion

ID: 4260033
Source: CourtListenerOpinion
Date Created: 2018-03-30 20:00:27.453911+00
Date Added: 2024-06-11T14:28:40.690741
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            MAR 30 2018
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

LENHOFF ENTERPRISES, INC., DBA                   No.   16-55739
Lenhoff and Lenhoff, a California
corporation,                                     D.C. No.
                                                 2:15-cv-01086-BRO-FFM
              Plaintiff-Appellant,

 v.                                              MEMORANDUM*

UNITED TALENT AGENCY, INC., a
California corporation;
INTERNATIONAL CREATIVE
MANAGEMENT PARTNERS, LLC, a
Delaware limited liability company,

              Defendants-Appellees.

                   Appeal from the United States District Court
                       for the Central District of California
                 Beverly Reid O’Connell, District Judge, Presiding

                     Argued and Submitted February 16, 2018
                              Pasadena, California

Before: BERZON and BYBEE, Circuit Judges, and GLEASON,** District Judge.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
              The Honorable Sharon L. Gleason, United States District Judge for
the District of Alaska, sitting by designation.
      Plaintiff Lenhoff Enterprises is a boutique talent agency. Defendants United

Talent Agency (“UTA”) and International Creative Management Partners (“ICM”)

are larger talent agencies and, together with two other agencies, comprise what

Lenhoff terms the “Big Four” or “Uber” Agencies. Lenhoff sued UTA and ICM,

asserting claims for (1) violation of § 1 of the Sherman Act, 15 U.S.C. § 1; (2)

violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code

§ 17200 et seq., and Cartwright Act, Cal. Bus. & Prof. Code § 16700 et seq.; (3)

intentional interference with contract under California common law; and (4)

intentional interference with prospective economic advantage under California

common law. The district court dismissed Lenhoff’s third amended complaint

with prejudice and denied Lenhoff’s motion for reconsideration. We affirm.

      1.     We have jurisdiction pursuant to 28 U.S.C. § 1291. “We review de

novo the district court’s dismissal of a complaint for failure to state a claim.” AE

ex rel. Hernandez v. County of Tulare, 666 F.3d 631, 636 (9th Cir. 2012). “In

conducting this review, we accept the factual allegations of the complaint as true

and construe them in the light most favorable to the plaintiff.” Id.

      2.     “Section 1 of the Sherman Act prohibits ‘[e]very contract,

combination in the form of trust or otherwise, or conspiracy, in restraint of trade or

commerce among the several States.’” Brantley v. NBC Universal, Inc., 675 F.3d
2
1192, 1196–97 (9th Cir. 2012) (quoting 15 U.S.C. § 1). The Supreme Court “has

repeatedly observed that Section 1 ‘outlaw[s] only unreasonable restraints.’” Id.

(quoting State Oil Co. v. Khan, 522 U.S. 3, 10 (1997)). Certain restraints—such as

horizontal agreements among competitors to fix prices or divide markets—are “per

se” unlawful. Id. at 1197 n.6. Others are evaluated under the “rule of reason.”

Id. at 1197. But irrespective of “[w]hether a plaintiff pursues a per se claim or a

rule of reason claim under § 1, the first requirement is to allege a contract,

combination in the form of trust or otherwise, or conspiracy.” William O. Gilley

Enters., Inc. v. Atl. Richfield Co., 588 F.3d 659, 663 (9th Cir. 2009) (quotation

marks omitted). The district court found that Lenhoff failed to plead this first

requirement of a § 1 claim, and we agree.

      To state a § 1 claim, “a formulaic recitation of the elements . . . will not do.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The complaint must allege

such facts as will nudge the claim “across the line from conceivable to plausible.”

Id. at 570. In this regard, “parallel conduct, such as competitors adopting similar

policies around the same time in response to similar market conditions, may

constitute circumstantial evidence of anticompetitive behavior.” In re Musical

Instruments & Equip. Antitrust Litig., 798 F.3d 1186, 1193 (9th Cir. 2015). “But

mere allegations of parallel conduct—even consciously parallel conduct—are

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insufficient . . . .” Id. “Plaintiffs must plead something more, some further factual

enhancement, a further circumstance pointing toward a meeting of the minds of the

alleged conspirators.” Id. (quotation marks omitted). That is, “plaintiffs must

plead evidentiary facts,” such as “who, did what, to whom (or with whom), where,

and when,” id. at 1194 n.6 (quotation marks omitted), or “circumstantial evidence

in the form of plus factors” that “coupled with parallel conduct . . . take a

complaint from merely possible to plausible,” id. at 1194 n.7; see also Kendall v.

Visa U.S.A., Inc., 518 F.3d 1042, 1048 (9th Cir. 2008).

      At best, Lenhoff’s third amended complaint pleads parallel conduct without

alleging the “something more” required to state a claim. With respect to Lenhoff’s

argument that the Uber Agencies conspired to fix a “3-3-10 packaging fee,” the

third amended complaint makes only passing reference to the Uber Agencies

charging such a fee. This is a bare, conclusory allegation of parallel conduct and

so does not adequately state a § 1 claim. See Kendall, 518 F.3d at 1047–48.

      The third amended complaint goes into greater detail with regard to the

Association of Talent Agents (“ATA”), a trade association that represents member

agencies in negotiations with talent unions and guilds, and “Rule 16(g).” Lenhoff

alleges the Uber Agencies acted through representatives at the ATA to allow Rule

16(g) to expire so as to gain access to outside funding and thereby increase their

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market dominance. Specifically, Lenhoff contends the “who” of its alleged

conspiracy is the ATA’s Strategic Planning Committee; the “what” is a conspiracy

to eliminate Rule 16(g); the “when” is from the Strategic Planning Committee’s

formation in 1999 onward; and the “where” is the ATA’s offices. But these facts

amount to nothing more than an allegation that defendants participated in a lawful

trade organization, and “mere participation in trade-organization meetings . . . does

not suggest an illegal agreement.” In re Musical Instruments, 798 F.3d at 1196.

      The third amended complaint’s other allegations concentrate on the Uber

Agencies co-packaging scripted television series “almost exclusively” with each

other and “coercing” television networks and studios to deal only with them. At

the same time, however, the complaint acknowledges a market-based reason for

why larger agencies might co-package predominantly amongst themselves: larger

agencies “are uniquely and advantageously situated to participate in packaging

[scripted television series] because of their large, exclusive, and in-demand talent

rosters.” Although the complaint attaches exhibits purporting to show the number

of times the Uber Agencies co-packaged with each other as opposed to with

smaller agencies, these exhibits are not particularly helpful to Lenhoff as they in

fact show that the Uber Agencies co-packaged with smaller agencies on several

occasions in the relevant timeframe. More fundamentally, the complaint nowhere

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pleads the evidentiary facts that would nudge its claim across the line from

conceivable to plausible. See Twombly, 550 U.S. at 570. Thus, Lenhoff has not

stated a § 1 claim.

      3.     Where a complaint alleges the same conduct as both a violation of the

Sherman Act and a violation of California’s Cartwright Act and UCL, the

determination that the alleged conduct is not an unreasonable restraint of trade

under the Sherman Act necessarily implies that the conduct is not unlawful under

the Cartwright Act or the “unlawful” prong of the UCL. See name.space, Inc. v.

Internet Corp. 2 for Assigned Names & Numbers, 795 F.3d 1124, 1131 & n.5 (9th

Cir. 015); William O. Gilley Enters., 588 F.3d at 669; County of Tuolumne v.

Sonora Cmty. Hosp., 236 F.3d 1148, 1160 (9th Cir. 2001); Nova Designs, Inc. v.

Scuba Retailers Ass’n, 202 F.3d 1088, 1092 (9th Cir. 2000). Lenhoff’s claim

under the Cartwright Act and the “unlawful” prong of the UCL is therefore

deficient for the same reasons given above.

      Lenhoff’s claims under the “unfair” prong of the UCL fail because it has not

adequately alleged—for the same reasons its other claims lack merit—that the

Uber Agencies’ conduct “threatens an incipient violation of an antitrust law, or

violates the policy or spirit of one of those laws because its effects are comparable

to or the same as a violation of the law, or otherwise significantly threatens or

                                           6
harms competition.” Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co.,

973 P.2d 527, 544 (Cal. 1999); City of San Jose v. Office of the Comm’r of

Baseball, 776 F.3d 686, 691–92 (9th Cir. 2015).

      4.     With respect to Lenhoff’s claims under California common law, a

defendant is ordinarily not subject to liability for intentional interference with

contract if the interference consists merely of extending an offer that induces an

individual to terminate an at-will relationship. Reeves v. Hanlon, 95 P.3d 513,

519–20 (Cal. 2004). To state a claim for intentional interference with an at-will

contract, a plaintiff must plead “an independently wrongful act” beyond the act of

interference itself—i.e., an act “proscribed by some constitutional, statutory,

regulatory, common law, or other determinable legal standard.” Id. at 520.

      Although Lenhoff alleges that defendants “poached” two of its clients by

promising them more favorable terms, it fails to allege that its contracts with those

clients were anything other than at will. Lenhoff’s argument that “Rider

D”—attached as an exhibit to its complaint—somehow limited these clients’

ability to terminate their contracts is meritless. Rider D plainly has nothing to do

with contracts for an unspecified duration (as Lenhoff admits these contracts were).

Rather, Rider D provides a limited ability to terminate a contract that would

otherwise have lasted for a specified duration.

                                           7
      Because Lenhoff did not plausibly allege that its relationship with its clients

was other than at will, it was required to plead an independently wrongful

act—which it did not do. See id. Lenhoff therefore did not state a claim for

intentional interference with contract, and its separate claim for intentional

interference with prospective economic advantage fails for the same reason. See

id. (applying the same “independently wrongful act” standard to intentional

interference with an at-will contract as to intentional interference with prospective

economic advantage). Accordingly, dismissal of Lenhoff’s third amended

complaint was proper.

      5.     “We review for abuse of discretion the district court’s denial of leave

to amend.” AE ex rel. Hernandez, 666 F.3d at 636. “Although leave to amend a

deficient complaint shall be freely given when justice so requires, leave may be

denied if amendment of the complaint would be futile.” Gordon v. City of

Oakland, 627 F.3d 1092, 1094 (9th Cir. 2010) (citation omitted). “[W]here the

plaintiff has previously been granted leave to amend and has subsequently failed to

add the requisite particularity to its claims, the district court’s discretion to deny

leave to amend is particularly broad.” Zucco Partners, LLC v. Digimarc Corp.,

552 F.3d 981, 1007 (9th Cir. 2009) (quotation marks and alteration omitted). Here,

the district court permitted Lenhoff to file three amended complaints, and with

                                            8
each amendment, Lenhoff failed to plead its claims with the requisite particularity.

Lenhoff provides no reason to suppose further amendment would be anything but

futile: the declarations attached to its opposition to defendants’ motions to dismiss

do not address the deficiencies identified above and are merely cumulative of

allegations already pled in the third amended complaint. Thus, the district court

did not abuse its discretion in denying leave to amend. See William O. Gilley

Enters., 588 F.3d at 669 n.8 (“[A]ssuming that Gilley could, in the abstract, amend

his complaint to state a claim . . . , his repeated failure to do just that suggests that

it would be futile to offer him another chance to do so.”).

       6.     Lenhoff filed its notice of appeal while its motion for reconsideration

was still pending before the district court and never filed a new or amended notice

of appeal after the district court denied its motion. The district court’s denial of

Lenhoff’s motion for reconsideration is therefore not properly before us. See

Harris v. Mangum, 863 F.3d 1133, 1137–38 n.1 (9th Cir. 2017).

       AFFIRMED.

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