The conflict doubtlessly arose from the song "Massacre" on the Dwarves' latest record The Dwarves Must Die. The song includes the lyrics "This one goes out to Queens of the Trust Fund/You slept on my floor/And now I'm sleeping through your motherfucking records." Bassist Nick Oliveri, a former member of both bands who was kicked out of QOTSA in February, appears on the track.
[UPDATE]: Check the QOTSA site for a statement on the incident, claiming that it has "already received the Dwarves, typical, historical alterations." Homme addresses the offending lyric as well "I have a question, which muthafuckin album of mine is Blag sleeping through? Is it 'Deaf' (which opens w/ him as a DJ ), Lullabies to Paralize (which he hasn't heard) or Good Charlotte's last album (which Blag wrote lyrics for w/ Eric Valentine), I can't tell. Ya know what, it doesn't matter which one, cuz he's Puuuuunk."