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Alternative Community Health Care Cooperative, Inc. et al v. Eric Holder

November 18, 2011


The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge


Plaintiffs in this civil rights action filed an application for a temporary restraining order, seeking to enjoin the prosecution of cooperatives operating marijuana dispensaries under California law and landlords leasing real property to such cooperatives. Defendants opposed the motion and Plaintiffs replied. For the reasons which follow, Plaintiffs' application for a temporary restraining order is DENIED.

California's Compassionate Use Act, Cal. Health & Safety Code § 11362.5, "was designed to ensure that seriously ill residents of the State have access to marijuana for medical purposes, and to encourage Federal and State Governments to take steps toward ensuring the safe and affordable distribution of the drug to patients in need. The Act creates an exemption from criminal prosecution for physicians, as well as for patients and primary caregivers who possess or cultivate marijuana for medicinal purposes with the recommendation or approval of a physician." Gonzales v. Raich, 545 U.S. 1, 5-6 (2005) (footnotes omitted) ("Raich I").

The federal Controlled Substances Act, 21 U.S.C. § 21 U.S.C. § 801 et seq. ("CSA"), is "a closed regulatory system making it unlawful to manufacture, distribute, dispense, or possess any controlled substance except in a manner authorized by the CSA." Raich I, 545 U.S. at 13. It is "a comprehensive framework for regulating the production, distribution, and possession of five classes of 'controlled substances.'" Id. at 24. Marijuana is classified as a Schedule I drug, 21 U.S.C. § 812(c), which makes its "manufacture, distribution, or possession . . . a criminal offense, with the sole exception being use of the drug as part of a Food and Drug Administration preapproved research study." Raich I, 545 U.S. at 14. "Schedule I drugs are categorized as such because of their high potential for abuse, lack of any accepted medical use, and absence of any accepted safety for use in medically supervised treatment. Id., citing 21 U.S.C. § 812(b)(1). This reflects a determination by Congress in passing the CSA "that marijuana has no medical benefits worthy of an exception (outside the confines of a Government-approved research project). Whereas some other drugs can be dispensed and prescribed for medical use, see 21 U.S.C. § 829, the same is not true for marijuana. Indeed, for purposes of the Controlled Substances Act, marijuana has 'no currently accepted medical use' at all. § 812." United States v. Oakland Cannabis Buyers' Cooperative, 532 U.S. 483, 491 (2001). "Despite considerable efforts to reschedule marijuana, it remains a Schedule I drug." Raich I, 545 U.S. at 15 (footnote omitted).

Plaintiffs are two patients and four medical marijuana cooperatives who operate marijuana dispensaries under the Act. Starting October 5, 2011, the United States Attorney for the Southern District of California sent letters to two of the dispensary Plaintiffs and the landlords of the remaining two dispensary Plaintiffs, formally notifying them "that the marijuana dispensary's operations violate United States law and that the violations of federal law relating to the marijuana dispensary's operations may result in criminal prosecution, imprisonment, fines, and the forfeiture of the proceeds of the operations, as well as the real and personal property used to facilitate the operations." (Compl. Exs. 1 -4.) The letters give the recipients 45 days to "discontinue sale and/or distribution" at the referenced locations or face the prospect of prosecution and forfeiture of assets. Plaintiffs seek a temporary restraining order enjoining Defendants from prosecuting the dispensaries and their landlords as stated in the letters.

Plaintiffs seek a temporary restraining order ("TRO") to give "breathing space to participants and supporting entities until the judicial system produces an adjudication on the merits." (Reply at 1-2.) Although the Court is not unsympathetic to providing "breathing space" to the parties (see Order Re: Briefing Schedule, filed Nov. 8, 2011), as it may benefit all concerned, this is not a sufficient reason under the law to issue a TRO. Outside of the confines of the law of preliminary injunctive relief, such breathing space could only be accomplished with Defendants' consent, which they refused to give. (See Opp'n at 2.)

Preliminary injunctive relief is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 129 S. Ct. 365, 376 (2008). A party seeking injunctive relief under Federal Rule of Civil Procedure 65 must show "that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Am. Trucking Ass'ns v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009)(quoting Winter, 129 S. Ct. at 374). With respect to the showing a plaintiff must make regarding his chances of success on the merits, the Ninth Circuit applies a sliding scale approach. See Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). Under the sliding scale approach, the elements of the preliminary injunction test are balanced and, where a plaintiff can make a stronger showing of one element, it may offset a weaker showing of another. Id. at 1131, 1134-35. "Therefore, 'serious questions going to the merits' and a hardship balance that tips sharply towards the plaintiff can support issuance of an injunction, so long as the plaintiff also shows a likelihood of irreparable injury and that the injunction is in the public interest." Id. at 1134-35.

Likelihood of Success on the Merits

Plaintiffs first contend that Defendants are judicially estopped from prosecuting the dispensaries and their landlords under the CSA. Judicial estoppel is an equitable doctrine which "generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase." New Hampshire v. Maine, 532 U.S. 742, 749 (2001).

Plaintiffs point to Defendants' representations made during proceedings in County of Santa Cruz v. Holder, U.S. District Court of the Northern District of California, case no. 03cv1802 (the "Santa Cruz Action"). Plaintiffs in the Santa Cruz Action raised largely the same legal issues as do Plaintiffs herein in opposition to federal enforcement of the CSA against medical marijuana dispensaries operating under the Compassionate Use Act. After a publicly-announced change in federal enforcement policy of the CSA in the states authorizing medical use of marijuana, the parties stipulated to dismiss the action. (Pls' Request for Judicial Notice Ex. 2, 3 & 5.) Under the new policy ("Medical Marijuana Guidance"), as a general matter, federal resources would not be focused on enforcing the CSA in the states which enacted laws authorizing the medical use of marijuana against individuals who were in clear and unambiguous compliance with state law. (Id. Ex. 3.) Plaintiffs in this action argue that Defendants should be judicially estopped from resuming CSA enforcement in California.

In considering whether to apply the equitable doctrine in a particular case, three factors may inform the decision:

First, a party's later position must be "clearly inconsistent" with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party's earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled. Absent success in a prior proceeding, a party's later inconsistent position introduces no risk of inconsistent court determinations, and thus poses little threat to judicial integrity. A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.

New Hampshire, 532 U.S. at 750-51 (internal quotation marks and citations omitted). These factors are not present here.

Prior to the dismissal of the Santa Cruz Action, Defendants argued the new policy rendered the case moot. (Pls' Request for Judicial Notice Ex. 5.) The plaintiffs disputed this based on the voluntary cessation doctrine. (Id.) The court was aware of the parties' contrary positions, which were based on the prospect that the federal enforcement policy could change. (Id.) However, rather than to resolve the mootness and voluntary cessation issues, the parties wanted to dismiss the case and entered into a Joint Stipulation of Dismissal Without Prejudice ("Stipulation") based on a shared understanding the enforcement policy could change in the future. Accordingly, the Stipulation provided: "If Defendants withdraw, modify or cease to follow the Medical Marijuana Guidance, the case may be reinstituted in its present posture on any Plaintiffs' motion . . .." (Id. Ex. 2.) Based on these facts it does not appear that the Court in the Santa Cruz Action was misled, that Defendants' current actions are ...

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