MARIA-ELENA JAMES, United States Magistrate Judge.
Pending before the Court are: (1) the City of Oakland's Motion to Stay Landlords' Motions for Order Prohibiting Unlawful
The relevant facts, taken from the Complaints and the moving papers, are as follows.
Concourse is the owner of defendant real property, 2106 Ringwood Avenue, San Jose, California (the "San Jose Property"). Compl. ¶ 7, Dkt. No. 1, Case No. C 12-3566. The San Jose Property consists of an approximately 6,615 square foot office and warehouse space within a larger 26,460 square foot multi-tenant light industrial/office building. Con. Mot., Dkt. No. 13 at 2. In November 2009, Concourse leased the San Jose Property to tenants who used the offices and warehouse for a medical marijuana and herbal supplement dispensary. Id. Subsequently, on June 1, 2011, the lease was assigned to Patients Mutual Assistance Collective Corporation (Harborside), which has operated a medical marijuana dispensary on the San Jose Property since that time. Id.
On July 9, 2012, the United States filed the instant civil in rem forfeiture action pursuant to 21 U.S.C. § 881(a)(7), against the San Jose Property. Dkt. No. 1. After receiving notice of the action, Concourse served Harborside with a 30 Day Notice to Cure or Quit, demanding that it immediately cease unlawful activity on the San Jose Property, including the sale of medical cannabis. Con. Mot. at 3. On August 21, 2012, after Harborside declined to stop the operation of its marijuana dispensary, Concourse filed an unlawful detainer action in Santa Clara County Superior Court, Case No. 1-12-CV-230841. Id. Harborside thereafter moved to quash the unlawful detainer action, which the trial court denied on November 5, 2012. Tr. Dec. 17, 2012 Hearing at 21:21-22:8, Dkt. No. 59. Harborside thereafter filed a Petition for a Writ of Mandate, now pending before the Sixth District Court of Appeal. Id.
In the interim, on August 8, 2012, Concourse filed a Notice of Claim in the instant forfeiture action pursuant to Federal Rules of Civil Procedure, Supplemental Admiralty and Maritime Claims Rule G ("Rule G" or "Fed.R.Civ.P. Supp. R. G"), subdivision 5. Dkt. No. 5. Subsequently, on August 28, 2012, Concourse filed its Answer. Dkt. No. 12. The following day, on August 29, 2012, Concourse filed the instant Motion for Order Prohibiting Unlawful Use of Defendant Property, seeking to enjoin Harborside from use the San Jose Property to cultivate, possess with intent to distribute, and/or distributing marijuana. Con. Mot. at 7. Concourse argues that, despite its demand that Harborside cease sales of marijuana from the San Jose Property, Harborside continues to operate a medical marijuana dispensary and engage in retail sales of marijuana on the Property in violation of 21 U.S.C. § 841(a). Id. at 2. Concourse thus contends that, pursuant to 21 U.S.C. § 882 and Supplemental Rule G(7)(a), it is authorized to seek an order from this Court preventing Harborside from using the San Jose Property in a criminal offense. Id. On September
Ana Chretien owns the property located at 1840 Embarcadero, Oakland, California ("the Oakland Property"). Compl., ¶ 7, Dkt. No. 1, Case No. C 12-3567. The Oakland Property is a low-rise, multi-tenant commercial building with on-site parking. Id. ¶ 6. On January 21, 2006, Ms. Chretien leased a portion of the Oakland Property to Harborside for its operation of a medical marijuana dispensary licensed by the City of Oakland. Chretien Mot. at 2, Dkt. No. 64. The initial lease term was for five years with an option to renew. Id. On January 22, 2011, Ms. Chretien and Harborside executed a Lease Amendment, extending the term of the original lease for an additional five years. Id. at 2-3. Harborside has been operating a medical marijuana dispensary on the Property during this period. Id. at 3.
On July 9, 2012, the United States filed the instant civil in rem forfeiture action pursuant to 21 U.S.C. § 881(a)(7), against the Oakland Property. Compl., Dkt. No. 1. After receiving notice of the action, and after failing to convince Harborside to voluntarily cease its operations, Ms. Chretien served Harborside with a 3 Day Notice to Cure or Quit, demanding that Harborside immediately cease all alleged unlawful activity at the Property, including the sale of medical marijuana. Chretien Mot. at 3. Harborside declined to stop its operations. Id. Consequently, on August 14, 2012, Ms. Chretien filed an unlawful detainer action in Alameda County Superior Court, Case No. RG 12643579. Id. Harborside moved to quash Ms. Chretien's complaint and summons, which the trial court granted on November 27, 2012.
During this period, on September 17, 2012, Ms. Chretien filed a Notice of Claim to the Oakland Property pursuant to Supplemental Rule G. Dkt. No. 33. On that date, Ms. Chretien also filed her Answer and Affirmative Defenses, which she later amended. Dkt. Nos. 32, 40. Thereafter, on November 7, 2012, Ms. Chretien filed the pending Motion for Order Prohibiting Unlawful Use of Defendant Property, seeking to enjoin Harborside from operating its business on the Oakland Property. Dkt. No. 64. Like Concourse, Ms. Chretien asserts that pursuant to § 882 and Supplemental Rule G, she is authorized to seek an order in the forfeiture action prohibiting Harborside from operating its medical marijuana dispensary in violation of federal law. Chretien Mot. at 3-4. On November 8, 2012, the Government filed a Notice of Joinder in Ms. Chretien's Motion. Dkt. No. 66.
On October 10, 2012, Oakland filed a Complaint against the Government pursuant to the Declaratory Judgment Act, 5 U.S.C. § 702, and the Administrative Procedures Act, 28 U.S.C. §§ 2201-2202, seeking to restrain and declare unlawful the Government's forfeiture action against the Oakland Property. Dkt. No. 1, Case No. C 12-5245. Oakland alleges that it has established a comprehensive framework regulating the sale of medical cannabis that effectuates the mandates of California's Compassionate Use Act, Cal. Health & Safety Code § 11362.5, and Medical Marijuana Program Act, Cal. Health & Safety Code § 11362.71. Id. ¶ 11. According to Oakland, its residents will suffer irreparable harm if the Government's forfeiture action proceeds against the Oakland Property and results in the closure of Harborside's Oakland medical marijuana dispensary. Id. ¶¶ 32-35. Particularly, it alleges that if the Harborside dispensary is closed, patients will turn to street-level drug dealers to obtain marijuana, creating a public safety hazard for themselves, Oakland, and its residents, thereby increasing crime and diverting scarce resources from the Oakland Police Department. Id. ¶¶ 32-33. It further alleges that such closure will compromise Oakland's ability to monitor the quality and production methods of medical marijuana sold in the licensed dispensaries, creating a health risk for patients. Id. ¶ 34. Additionally, Oakland avers that closure of Harborside and the threatened closure of other dispensaries operating in Oakland will deprive it of tax revenue generated by the dispensaries. Id. ¶¶ 54, 75. Based on these allegations, Oakland asserts two claims seeking dismissal of the forfeiture action against the Oakland Property. First, it asserts that the forfeiture action against the Oakland Property is outside the five-year statute of limitations period applicable to civil forfeiture proceedings under 19 U.S.C. § 1621. Id. ¶¶ 61-70. Second, Oakland asserts that, having been aware of Harborside's operation at the Oakland Property and by electing not to interfere with such operations for years, the Government should be estopped from pursuing a forfeiture action as a means to now stop Harborside's operations. Id. ¶¶ 71-80.
On November 27, 2012, Oakland filed the pending Motion to Stay the Court's ruling on Ms. Chretien's and Concourse's Rule G Motions, arguing that because its lawsuit attacks the Government's authority to bring the forfeiture action against the Oakland Property, the Court should defer hearing the Rule G Motions until the merits of its claims have been determined. Dkt. No. 16. Harborside joins in Oakland's Motion (Dkt. No. 20); the Government and Concourse, however, oppose any stay of the forfeiture actions.
Because the Court finds Concourse's and Ms. Chretien's Rule G(7)(a) motions suitable for resolution, the Court turns to these Motions first.
As indicated above, the Government brings forfeiture actions against the San Jose and Oakland Properties pursuant to the forfeiture provision of the Controlled Substances Act ("CSA"), 21 U.S.C. § 881(a)(7). This section provides for the forfeiture of:
21 U.S.C.A. § 881(a)(7). The Government contends that Harborside's lease and use of the Oakland and San Jose properties to operate medical marijuana dispensaries violates 21 U.S.C. §§ 841(a) and 856. As violations of §§ 841 and 856 fall within the ambit of § 881(a)(7), the Government is authorized to seek forfeiture of the properties and interests therein pursuant to § 881(a)(7).
In actions pursuant to the CSA, Congress has vested district courts with jurisdiction to grant injunctive relief for violations of the Act. Specifically, § 882(a) of the CSA provides in part:
21 U.S.C. § 882(a). Concurrently, Rule G of the Supplemental Rules of the Federal Rules of Civil Procedure governs forfeiture actions in rem arising from a federal statute. Fed.R.Civ.P. Supp. R. G(1).
Concourse and Ms. Chretien (collectively, "Claimants") bring their motions pursuant to subdivision (7)(a) of Rule G. This subdivision, entitled, "Preserving and Preventing Criminal Use of Property," states:
Claimants assert that together, § 882 of the CSA and Rule G(7)(a), authorize this Court to enter an order enjoining Harborside from using the defendant properties to operate medical marijuana dispensaries in violation of the CSA. Con. Mot. at 4; Chretien Mot. at 4. Harborside, however, argues that Concourse's and Ms. Chretien's motions are not authorized by Rule G(7)(a), and even if the motions are properly before the Court, Claimants have failed to establish that they are entitled to injunctive relief. The Court agrees with Harborside.
The threshold question the Court must address is whether claimants, such as Concourse and Ms. Chretien, may bring a motion pursuant to § 882 and Rule G(7)(a) seeking to enjoin another claimant — in this instance, Harborside — from using the defendant real properties in alleged violations of the CSA. All parties acknowledge that there are no published decisions involving injunctive relief under Rule G(7)(a) in a forfeiture action. Moreover, Rule G's Advisory Committee Notes do not provide any guidance as to how the Court should treat such requests. Thus, whether Claimants have standing to bring their motions and the appropriate standard to apply when considering a request for injunctive relief under Rule G are issues of first impression.
The Court begins its analysis with the plain language of the Rule. See Bus. Guides v. Chromatic Comms. Enter., Inc., 498 U.S. 533, 540-41, 111 S.Ct. 922, 112 L.Ed.2d 1140 (1991) (applying principles of statutory construction to Federal Rules of Civil Procedure and noting that the Federal Rules are to be given their plain meaning).
Harborside, in contrast, argues that while there are no limitations in the language of Rule G(7)(a) itself, the CSA prevents Claimants from being proper movants under the Rule. Specifically, Harborside argues that only the Government, not private individuals, may enforce the CSA and cites several cases from other circuits holding that the CSA does not create any private right of action. According to Harborside, Claimants' Rule G(7)(a) Motions are simply veiled private enforcement actions which Claimants lack the authority to bring whether under the CSA directly or under Rule G(7)(a).
Turning to Claimants' argument first, the Court is unconvinced that the lack of restrictive language is sufficient for the Court to find that Claimants' are proper movants under Rule G(7)(a) within the context of the pending forfeiture actions. Reviewing other subdivisions of Rule G, in instances where Rule G intends claimants or other individuals with an interest in the property to have access to certain procedures, it expressly states so. See Fed. R.Civ.P. Supp. R. G(5)(a)(i) ("A person who asserts an interest in the defendant property may contest the forfeiture by filing a claim in the court where the action is pending."); Fed.R.Civ.P. Supp. R. G(5)(b) ("A claimant must serve and file an answer to the complaint or a motion under Rule 12 within 21 days after filing the claim."); Fed.R.Civ.P. Supp. R. G(8)(a) ("If the defendant property was seized, a party with standing to contest the lawfulness of the seizure may move to suppress use of the property as evidence."); Fed.R.Civ.P. Supp. R. G(8)(b)(i) ("A claimant who establishes standing to contest forfeiture may move to dismiss the action under Rule 12(b)"); Fed.R.Civ.P. Supp. R. G(8)(d)(i) ("If a United States agency or an agency's contractor holds property for judicial or nonjudicial forfeiture under a statute governed by 18 U.S.C. § 983(f), a person who has filed a claim to the property may petition for its release under § 983(f)."); Fed.R.Civ.P. Supp. R. G(8)(e) ("A claimant may seek to mitigate forfeiture under the Excessive Fines Clause of the Eighth Amendment by motion for summary judgment or by motion made after entry of a forfeiture judgment....") (emphasis added throughout). In fact, subdivision 7(b)(i) of Rule G, which concerns interlocutory sale or delivery of defendant property, expressly states that "On motion by a party or a person having custody of the property, the court may order all or part of the property sold...." Thus, when Rule G confers special procedural rights on claimants, it does so unambiguously. In contrast, subdivision (7)(a) does not expressly identify claimants as potential movants for injunctive relief. The plain language of Rule G(7)(a) therefore does not authorize Claimants to bring the pending motions.
Additionally, the Court is unconvinced that Supplemental Rule G(7)(a) was intended to apply to past criminal activity that forms the basis of the underlying forfeiture proceeding. Looking at the language of subdivision (7)(a), the Rule is concerned with protecting defendant property that the Government does not have in
Taken together, the absence of language identifying "claimants" as potential movants and the prospective nature of Rule G(7)(a) militate against a finding that Concourse and Ms. Chretien are authorized to bring their motions for injunctive relief under Rule G(7)(a).
Nevertheless, even if Rule G(7)(a) is construed to authorize Claimants to enjoin criminal use of property that forms the basis of the underlying forfeiture action, the Court agrees with Harborside that when a CSA violation is alleged, only the Government qualifies as a proper movant for purposes of Rule G(7)(a).
As indicated above, the starting point for this analysis is § 882 of the CSA, which authorizes district courts to enjoin violations of the CSA consistent with the Federal Rules of Civil Procedure. Thus, Rule G cannot be read in isolation; rather, the CSA provides the parameters for any
Concourse and Ms. Chretien's only response is that they are "not seeking to enforce the federal drug laws per se," but rather are "seeking to stop the use of [their] property in a criminal offense as asserted by the U.S. Attorney." Con. Reply, Dkt. No. 20 at 2, Case No. 12-3566; Chretien Reply, Dkt. No. 74 at 3, Case No. 12-3567. The Court does not see the distinction. Claimants' Rule G(7)(a) motions ask the Court to find that Harborside's operations violate certain provisions of the CSA and to prohibit Harborside from engaging in future conduct. Claimants are thus using the CSA to bring Harborside into compliance with the CSA. See Ringo, 2010 WL 3310240, at *3 ("An action based purely on the CSA ... that would require Defendants to come into compliance with the CSA ... amounts to a private enforcement action not allowed by the statute[].") While the relief they seek is injunctive rather than declaratory in nature and no sentence or fine will be imposed if Harborside is found to be in violation of the CSA, the role Claimants occupy is tantamount to the Government in a civil enforcement or criminal prosecution under the CSA. Consequently, because Claimants have no right of action under the CSA to force Harborside to cease its operations, they cannot take such action using Rule G(7)(a).
The fact that the Government has joined Claimants in their Rule G(7)(a) motions does not change this determination. The Government has not set forth any independent arguments or facts to support injunctive relief pursuant to Rule G(7)(a). Simply joining in Claimants' Motions does not confer standing on Claimants to bring the motions in the first instance and does not relieve the Government of its burden to make a sufficient showing to entitle it to an injunction under Rule G(7)(a). Moreover, the Government did not request injunctive relief in its forfeiture Complaints, indicating that the Government was not focused on suspending Harborside's operations during the pendency of the forfeiture actions.
Even assuming that Claimants' are proper movants under Rule G(7)(a),
Turning to the Winter test first, the Court finds that the second factor, which assesses irreparable harm, is dispositive in this matter as Claimants cannot make this showing.
Because Claimants cannot satisfy the irreparable injury factor, they could not prevail under a traditional preliminary injunction analysis and the Court declines to analyze the remaining factors.
When considering these facts and circumstances, the Court struggles to see how Claimants' Rule G(7)(a) Motions are an appropriate means of stopping Harborside's alleged illegal use of the Properties. While Rule G(7)(a) aims to protect property during the pendency of a forfeiture proceeding, it is not a vehicle to insert a CSA enforcement action by a private party into a forfeiture proceeding. Moreover, while the Court understands Claimants' concern over the potential forfeiture of their properties, Rule G(7)(a) is not a means to sever business relationships when they suddenly prove risky or to demonstrate cooperation with the Government. For these reasons, even under Claimants' proffered standard, the Court finds that Claimants have failed to demonstrate that they are entitled to injunctive relief under Rule G(7)(a).
In sum, the Court finds that the plain language of Rule G(7)(a) does not authorize Concourse or Ms. Chretien to bring their motions; the alleged criminal use of the property they seek to enjoin is not of the type envisioned by Rue G(7)(a); Claimants' are not authorized to enforce provisions of the CSA; and Claimants have failed to establish that injunctive relief is appropriate at this time. Based on these findings, he Court
In its action against the Government, Oakland has filed a Motion to Stay the Court's resolution of Claimants' Rule G(7)(a) Motions. Dkt. No. 16, Case No. 12-5245. Because the Court finds no just reason to delay resolution of the Rule G(7)(a) motions, the Court
Oakland has also moved to stay both forfeiture proceedings pending resolution of certain issues raised in its action, which it contends are potentially dispositive of the Government's forfeiture actions. At
For the reasons set forth above, the Court
Further, the Court
(citation omitted).
Like subdivision (a), this section is concerned with factors that prospectively may affect the existence or value of the property and authorizes the Court to take action to ensure that the property is not lost or compromised during the forfeiture action.
The Court finds OCBC inapposite to the pending motions. First, OCBC addressed the scope of the Court's discretion when fashioning injunctive relief in the context of a civil enforcement action that the Government filed pursuant to § 882 of the CSA against six medicinal cannabis cooperatives. See United States v. Cannabis Cultivator's Club et al., 1999 WL 111893, at *1 (N.D.Cal. Feb. 25, 1999). The decision did not address a request for injunctive relief by a third party pursuant to Supplemental Rule G(7)(a) in the context of a civil forfeiture action. This distinction is critical. Because injunctive relief was the core of the civil enforcement action, the Supreme Court admonished that, in exercising its discretion to fashion injunctive relief, the trial court could not consider public interest factors that "reject the balance that Congress has struck in a statute," but rather may only consider whether a particular means of enforcing the statute should be chosen over another permissible means. OCBC, 532 U.S. at 487, 121 S.Ct. 1711. In other words, in the context of a civil enforcement action under the CSA, the trial court could not consider the advantages and disadvantages of nonenforcement of the statute, but only the advantages and disadvantages of injunctive relief as compared to another permissible means of enforcement. Here, in contrast, the objective of the Government's lawsuit is forfeiture of the Defendant Properties, not enforcement of the CSA. In fact, the Government's Complaints do not contain any request for injunctive relief against Harborside. Significantly, unlike OCBC, denial of the Claimants' motions in this case does not amount to a decision that nonenforcement of the CSA is preferable to enforcement, only that a Rule G(7)(a) motion by a private individual is not an authorized means of enforcing the CSA in a civil forfeiture action. The Government is still free to pursue an injunction against Harborside in a civil enforcement action, as it did against the dispensary-defendants in OCBC. It has, however, opted to initiate a civil forfeiture proceeding against the Defendant Properties. In this procedural context, the Court does not read the holding of OCBC as restricting its discretion under Rule G(7)(a) to deny the Claimants' requests for injunctive relief.
Second, to the extent that Claimants cite OCBC for the proposition that the Court cannot deny injunctive relief based on considerations related to the medical needs of Harborside's patients or other public policy considerations related to the medicinal use of marijuana, Claimants argument is inapposite. The Court's decision in this matter is not based on such public policy considerations.
