Judge Stays Seizure|of Medical Pot Club

SAN FRANCISCO (CN) - A federal judge granted Oakland's request to stay federal forfeiture proceedings against a medical marijuana club while it defends its standing on appeal.

The city's claim that it can sue the federal government to stop it from seizing Harborside Health Center presented a novel legal theory, U.S. Magistrate Judge Maria Elena James wrote in her order granting the stay.

The city showed it would be harmed without a stay and that granting one would serve the public interest, according to the ruling, which also stayed a related forfeiture action against Harborside's San Jose outlet.

Medical marijuana is legal in California, and voters have approved recreational use of marijuana by adults in Washington and Colorado, but the drug is still illegal under federal law.

Oakland in 2012 sued the U.S. attorney general and the U.S. attorney for the Northern District of California, claiming they reneged on promises not to interfere with a state's plan to regulate medical marijuana shops.

Uncle Sam claims the action could not survive because only parties named in forfeiture actions have standing to challenge them.

James agreed in dismissing the case in February. She also found that the forfeiture proceeding did not constitute a final agency action that gave Oakland an avenue to sue under the Administrative Procedure Act.

As Oakland appeals to the 9th Circuit, it asked James to stay the forfeiture proceedings pending this appellate review.

While noting "uncertainty" in legal precedent as to the degree of likely success that a petitioner must show to be granted a stay, James indicated that at the minimum the city must show a "substantial case for relief on the merits."

James cited Gray v. Golden Nat'l Recreation Area, which held that raising "serious legal questions" on appeal would satisfy the requirement of "likelihood of success on the merits" and found that the arguments in that case raised issues of first impression, much like in this case.

James wrote: "Whether the claims process set forth in [civil forfeiture rules] provides an adequate remedy and whether the Government's initiation of the 1840 Embarcadero forfeiture action constitutes 'final agency action,' are serious legal questions sufficient to satisfy the requirement of likelihood of success on the merits. That these questions raise threshold jurisdictional issues underscores their legal significance. If this Court's analysis was incorrect, the Court's dismissal will have foreclosed Oakland from protecting its interests. Thus, at the heart of Oakland's appeal is its right to access the federal courts to assert its claims - a right of paramount importance."

The possibility that Oakland's claims might be mooted if the government is able to seize Harborside while its appeal is pending would constitute "irreparable harm," James ruled.

"While the Government is correct that the [forfeiture action] claimants' statute of limitations and equitable estoppel defenses may overlap with Oakland's claims, Oakland stands in a different position than any of the claimants and may therefore raise arguments or present evidence in support of either theory which is unique to it as a municipality. Given that the forfeiture action and the appeal would be proceeding simultaneously, the harm to Oakland's ability to litigate its claims is probable and not merely conjectural. Moreover, the mooting of its claims cannot be remedied by any damages award of other relief," James wrote.

She rejected the government's argument that imposing a stay would hinder its ability to enforce drug laws, the request for which the government deemed "simply another attempt by Oakland to delay the forfeiture proceeding indefinitely."

James found that while "the Court understands - indeed, shares - the Government's concern about ensuring that the 1840 Embarcadero action advances in a timely manner, the Court does not see any appreciable harm to the Government if the forfeiture proceeding is stayed during Oakland's appeal. There is no risk that the defendant property will be lost or damaged or that evidence relevant to the forfeiture proceeding will become stale during a temporary stay of the action."

By filing forfeiture proceedings against Harborside in Oakland and San Jose, and recently against another dispensary in San Francisco, the government has put "individuals with connections to property used for similar medicinal cannabis dispensary operations ... on notice of its intention to utilize the civil forfeiture process to compel compliance with federal drug laws," James wrote.

"Clearly, the Government's ability to enforce drug laws through forfeiture actions remains undiminished and the Court fails to see how suspending a single action will inhibit that ability. Moreover, issuance of a stay to allow Oakland to seek appellate review of its standing under the APA ensures that no party with legally cognizable interests and risks is excluded from the forfeiture proceeding, thereby mitigating the risk that the forfeiture proceeding may be subject to appeal on such grounds."

James said that interests of other claimants in the Oakland forfeiture action would be unaffected if the court granted a stay, and that if Oakland is ultimately allowed to assert its challenges to the forfeiture action, "the claimants may benefit from having an additional party to raise challenges to the Government's action."

Public interest considerations also weigh in favor of granting a stay.

"At the core of Oakland's lawsuit is the novel legal issue regarding whether a municipality has standing under the APA [Administrative Procedure Act] to challenge a civil forfeiture action against a property when the action may affects its regulatory scheme and its residents. Thus, the question regarding Oakland's standing to assert claims on behalf of its citizens in federal court is a matter of significant public interest. Likewise, the interest in conserving the Court's and the parties' resources by coordinating discovery and litigation of common claims and avoiding the possibility of inconsistent rulings is also of great importance," James wrote.

While these interests need to be measured against the government's right to proceed with the forfeiture case, James ruled that the "importance of the legal question now before the Ninth Circuit regarding Oakland's standing to bring this action" and in ensuring that future forfeiture actions are "litigated consistently and in the most efficient manner possible, tip the public interest factor squarely in favor of granting the stay."

James also found that a stay in a related forfeiture case against Harborside's San Jose location would be "prudent given the similarity of parties and issues."

She asked the city to provide status updates every 60 days while staying both cases pending the 9th Circuit's disposition of Oakland's appeal.

Oakland was represented by Cedric Chao, with DLA Piper in San Francisco. Henry Wykowski represents Harborside.

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