Biers v. Wash. State Liquor & Cannabis Bd.

• Decision Date: 01 June 2016
• Docket Number: CASE NO. C15-1518JLR
• Court: U.S. District Court — Western District of Washington
• Parties: SAMUEL L. BIERS, Plaintiff, v. WASHINGTON STATE LIQUOR AND CANNABIS BOARD, et al., Defendants.

SAMUEL L. BIERS, Plaintiff, v. WASHINGTON STATE LIQUOR AND CANNABIS BOARD, et al., Defendants.

CASE NO. C15-1518JLR

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

June 1, 2016

ORDER

I. INTRODUCTION

This matter comes before the court on three motions: (1) Defendants State of Washington ("the State"), Washington State Attorney General Robert Ferguson, Washington State Liquor and Cannabis Board ("the Board"), and Board members Jane Rushford, Ruthann Kurose, and Russ Hague's (collectively, "State Defendants") motion to dismiss (State MTD (Dkt. # 30)); (2) Defendants Daniel Kirby, Daniel Tighe, Nicole Michelle Pavon-Irwin-Smith, Celesteva, LLC, Canopy Park, LLC, and Kirby Properties, LLC's (collectively, "Private Defendants") motion to dismiss (Priv. MTD (Dkt. # 33)); and (3) pro se Plaintiff Samuel L. Biers' motion for partial summary judgment or, in the alternative, partial judgment on the pleadings (Biers Mot. (Dkt. # 27); see also Biers Mem. (Dkt. # 27-1) (presenting the majority of Mr. Biers' arguments in favor of his motion)). State Defendants ask the court to dismiss all claims against them for lack of standing and failure to state a claim on which relief can be granted. (See State MTD at 4.) Private Defendants seek dismissal of four of Mr. Biers' claims against them, also for lack of standing and failure to state a claim. (See Priv. MTD at 2.) Mr. Biers opposes Defendants' motions and in his own motion requests a determination that State Defendants are not entitled to immunity under the Eleventh Amendment or state law. (See Biers Resp. (Dkt. # 46); Biers Mem. at 3.)

The court has considered the motions, all submissions filed in support thereof and opposition thereto, the relevant portions of the record, and the applicable law. Being fully advised,¹ the court GRANTS State Defendants' motion, GRANTS Private Defendants' motion, DENIES as moot Mr. Biers' motion, and GRANTS Mr. Biers leave to amend as set forth below.

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II. BACKGROUND

A. Factual Background²

This case arises out of a failed business relationship. Mr. Biers alleges that he contracted with Celesteva, a State-licensed recreational marijuana producer, to find a buyer for Celesteva. (See Compl. (Dkt. # 4) ¶¶ 5, 7, 31, 33.) Under this contract, Mr. Biers was to receive 10% of the purchase price when Celesteva sold. (Id. ¶ 31, 33, Ex. H.) Mr. Biers alleges that he located several buyers but that Celesteva's board members—Mr. Kirby, Defendant James Harrison VanHoute, Defendant Brett Garrett Erwin,³ and Ms. Smith—as well as the other Private Defendants deprived him of his commission. (See id. ¶¶ 35-38, 40-43, 51, 53-54, 68, 73.) Mr. Biers alleges that in doing so Private Defendants, Mr. Harrison, and Mr. VanHoute committed a series of torts and statutory violations, including cultivating and selling a controlled substance, intercepting his communications, and defaming him. (See id. ¶¶ 39, 45-50, 52, 57-60, 62, 64-69, 71-75, 81, 83.)

Mr. Biers' allegations against State Defendants are more difficult to follow. His theory appears to be that State Defendants enabled Private Defendants to harm him by authorizing and regulating recreational marijuana businesses in violation of federal law. (See id. ¶¶ 2, 24-25, 86, 88, 90-91, 178, 182-88.) Mr. Biers suggests that if StateDefendants had not sanctioned marijuana businesses, he would not have entered into a relationship with Celesteva and Private Defendants would not have harmed him. (See id.; Biers Resp. at 4-5, 8 ("Thus, but for State Defendant's conduct violating federal law and inviting the public to participate in its 'legal' marijuana scheme, no injury to the Plaintiff results."), 10.) Mr. Biers also alleges that State Defendants' regulation of recreational marijuana has subjected members of the public, including Mr. Biers, to possible federal prosecution, involuntary servitude, and deprivation of constitutional and civil rights. (See Compl. ¶¶ 2 ("By creating an unlawful statutory and regulatory framework that invites citizens to participate, yet unknowingly attaching criminal status, Board created a system of involuntary servitude or slavery whereby individual citizens provide labor, property and services that benefit the state without receiving just compensation, in violation of the 5^th, 13^th and 14^th Amendments of the U.S. Constitution, inter alia." (emphasis in original)), 25 ("The issuance of this license to Celesteva, and others, unlawfully violates the Plaintiff's rights under the 5^th, 13^th and 14^th Amendment, Article IV -Privileges and Immunities Clause and the Equal Protection Clause, 42 U.S.C. §1981(a)-(c); 42 U.S.C. §§1983, 1985, 1986 and 1988 viz-a-viz the Supremacy Clause." (emphasis in original)), 88, 90-91, 188.)

B. Procedural Background

On September 23, 2015, Mr. Biers filed a motion for leave to proceed in forma pauperis ("IFP") and a proposed complaint. (IFP Mot. (Dkt. # 1); Prop. Compl. (Dkt. # 1-1).) On September 28, 2015, Magistrate Judge James P. Donohue granted Mr. Biersleave to proceed IFP. (IFP Order (Dkt. # 3).) Mr. Biers filed his complaint that same day. (Compl. at 1.)

In his 86-page complaint, Mr. Biers asserts the following causes of action: (1) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. (see Compl. ¶¶ 89-132); (2) violation of the Trafficking Victims Protection Act ("TVPA"), 18 U.S.C. § 1589 et seq. (see Compl. ¶¶ 133-35); (3) unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a) (see Compl. ¶¶ 136-37); (4) antitrust claims under the Sherman Act, 15 U.S.C. §§ 1-7, and the Clayton Act, 15 U.S.C. §§ 12-27 and 29 U.S.C. §§ 52-53 (see Compl. ¶¶ 138-48); (5) tortious interference (see Compl. ¶¶ 149-54); (6) interception of communications in violation of 18 U.S.C. § 2511 et seq. and RCW 9.73.030, .060, and .080 (see Compl. ¶¶ 155-66)⁴; (7) violation of Washington's Consumer Protection Act ("CPA"), RCW ch. 19.86 (see Compl. ¶¶ 167-71); (8) promissory fraud (see Compl. ¶¶ 172-76); (8) fraudulent misrepresentation (see Compl. ¶¶ 177-88); (9) fraudulent transfers in violation of RCW 19.40.041 and RCW 19.40.051 (see Compl. ¶¶ 189-98)⁵; (10) false description in violation of the Lanham Act, 15 U.S.C. § 1125 (see Compl. ¶¶ 199-201); (11) conversion (see Compl. ¶¶ 202-05); and (12) defamation (see Compl. ¶¶ 341-43).

Mr. Biers implicates some or all Private Defendants in all his claims. (See Compl. ¶¶ 89-201, 341-43.) However, he mentions State Defendants only in his RICO,fraudulent misrepresentation, and false description claims. (See id. ¶¶ 90-91, 177-88, 201.) Mr. Biers seeks damages, restitution, and an accounting, as well as injunctive and declaratory relief. (See id. ¶¶ 207-340.)⁶ He asks the court to declare the State's recreational marijuana system unconstitutional and illegal and to enjoin the continued operation of that system. (See id. ¶¶ 207, 209.)

On March 2, 2016, Mr. Biers filed his motion for partial summary judgment or, in the alternative, partial judgment on the pleadings. (See Biers Mot. at 1; Biers Mem.) He requests a determination that State Defendants are not entitled to immunity under the Eleventh Amendment or state law. (See Biers Mem. at 3.) On March 9, 2016, State Defendants filed their motion to dismiss all claims against them for lack of standing and failure to state a claim. (See State MTD at 4.) Private Defendants filed their motion to dismiss the next day. (See Priv. MTD at 1.) Private Defendants argue that the court should dismiss Mr. Biers' RICO, antitrust, CPA, and TVPA claims against them for lack of standing and failure to state a claim. (See id. at 2.)

State and Private Defendants have filed reply memoranda in support of their motions to dismiss and response memoranda in opposition to Mr. Biers' motion for partial summary judgment. (State Reply (Dkt. # 51); Priv. Reply (Dkt. # 52); State Resp. (Dkt. # 44); Priv. Resp. (Dkt. # 38).) Mr. Biers has filed a combined response memorandum in opposition to State and Private Defendants' motions to dismiss. (BiersResp.) He has not, however, filed a reply memorandum in support of his own motion. (See Dkt.) State and Private Defendants' motions to dismiss and Mr. Biers' motion for partial summary judgment are now before the court.

III. DISCUSSION

The court begins by addressing State and Private Defendants' requests for dismissal based on lack of constitutional standing. The court then addresses Private Defendants' arguments that Mr. Biers fails to state a claim on which relief can be granted. Finally, the court will address whether and under what circumstances Mr. Biers should receive leave to amend his complaint.

A. Constitutional Standing

A challenge to standing under Federal Rule of Civil Procedure 12(b)(1) may be facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). Where, as here, the challenge is facial—meaning that it is confined to whether the allegations are sufficient "on their face" to invoke federal jurisdiction, Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004)—the court assumes the allegations to be true and draws all reasonable inferences in the complaining party's favor, Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). The court may grant a Rule 12(b)(1) motion when the complaint on its face fails to allege sufficient facts to establish subject matter jurisdiction. See Safe Air for Everyone, 373 F.3d at 1039.

Article III of the United States Constitution limits federal court jurisdiction to cases and controversies. Lujan v. Defenders of Wildlife, 504 U.S. 555, 559 (1992). Standing is a "core component" of a case or controversy. Id. at 560. The party seekingto invoke federal jurisdiction bears the burden of establishing all three elements of constitutional standing: (1) that it suffered an "injury in fact" that is "concrete and particularized" and "actual or imminent," (2) that a "causal connection between the injury and the conduct complained of" exists that...