Palmer v. Mont. Dep't of Health & Human Servs.
| Decision Date | 14 December 2021 |
| Docket Number | CV 21-38-BLG-SPW-TJC |
| Parties | STEVEN PALMER d/b/a MONTANA ORGANIC MEDICAL SUPPLY, Plaintiff, v. MONTANA DEPARTMENT OF HEALTH AND HUMAN SERVICES; DARCI WIEBE in her individual and official capacity; JAMIN GRANTHAM, in his individual and official capacity; CITY OF BILLINGS; STEVE HALLAM in his individual and official capacity; and JOHN DOES 1-10, Defendants. |
| Court | U.S. District Court — District of Montana |
FINDINGS AND RECOMMENDATION OF U.S. MAGISTRATE JUDGE
Plaintiff Steven Palmer, doing business as Montana Organic Medical Supply (“MOMS”) brings this action against Defendants State of Montana, Montana Department of Health and Human Services, Darci Wiebe, Jamin Grantham (collectively “State Defendants”), and the City of Billings and Detective Steve Hallam, for claims arising out of the revocation of his medical marijuana provider license. (Doc 3.)
Plaintiff's Motion to Strike (Doc. 26). The motions are fully briefed and ripe for the Court's review.
Having considered the parties' submissions, the Court RECOMMENDS the State Defendants' Motion to Dismiss be GRANTED; the City of Billings and Hallam's Motion to Dismiss be GRANTED in part and DENIED in part; and Plaintiff's Motion to Strike be DENIED.
Plaintiff became a licensed medical marijuana provider in 2011, and operated a cultivation facility near Emigrant, Montana and a dispensary in Billings, Montana. In June 2018, DPHHS inspected the cultivation facility and dispensary, and issued an inspection report on July 25, 2018. Plaintiff received the report on August 7, 2018. The report gave Plaintiff until September 18, 2018 to provide proof that the noted violations had been rectified. Plaintiff alleges the report did not identify any issues that needed to be resolved prior to September 18, 2018.
On August 13, 2018, however, DPHHS and Wiebe served the manager of MOMS dispensary with an Order Revoking Provider License and Notice for Judicial Review (“Revocation Order”). The Revocation Order was also sent to all of MOMS medical marijuana cardholders, advising them they could no longer obtain medical marijuana from MOMS. Plaintiff states the practical effect of the Revocation Order was to immediately close MOMS. Plaintiff alleges that he was never notified of the State's intent to revoke his provider license. Plaintiff further alleges DPHHS issued the Revocation Order in violation of the State's administrative rules and statutes.
Following the revocation, Plaintiff filed a petition for judicial review in Montana's Thirteenth Judicial District Court, Yellowstone County on September 12, 2018. District Court Judge Harris granted a temporary restraining order, and subsequently issued findings of fact and conclusions of law determining the Revocation Order was unlawful and enjoined its enforcement. Plaintiff alleges the parties later agreed that the District Court case should be dismissed “to allow MOMS to pursue a damages action, ” and District Court Judge Davies dismissed the action without prejudice on March 8, 2019.
On March 12, 2019, Grantham advised the Billings Police Department via email that MOMS did not have a valid license to operate a medical marijuana dispensary. Plaintiff alleges Grantham made this contact with law enforcement despite knowing that two judges had found the revocation unlawful. Grantham contacted the Billings Police Department again on March 19, 2019 and advised the petition for judicial review had been dismissed and the Revocation Order was in effect. Grantham provided the Billings Police Department with a copy of the order from Judge Davies, which, Plaintiff asserts, explicitly states multiple times that the Revocation Order was “unlawful.”
Also on March 19, 2019, police began surveilling MOMS and interviewed a number of individuals who were observed leaving the dispensary. Based on the interviews, Detective Hallam applied for, and was granted, a warrant to search MOMS. In the application for the warrant, Detective Hallam stated that a District Court judge had upheld the license revocation, and that MOMS was illegally selling marijuana without a license. Plaintiff contends these statements were untrue. Plaintiff alleges Detective Hallam knew or should have known MOMS was not operating illegally. Detective Hallam searched the dispensary pursuant to the warrant, and the Billings Police Department seized marijuana products and personal property.
On April 6, 2021, Plaintiff initiated this action. Plaintiff brings claims under 42 U.S.C. § 1983 against the State Defendants based on the revocation of the medical marijuana license (Count I) and against the City of Billings and Hallam based on the search warrant (Count IX). Plaintiff also asserts various state law claims against Defendants (Counts II-VII, X-XII).
“Dismissal under Rule 12(b)(6) is proper when the complaint either (1) lacks a cognizable legal theory or (2) fails to allege sufficient facts to support a cognizable legal theory.” Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)). The Court's standard of review under Rule 12(b)(6) is informed by Rule 8(a)(2), which requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677-678 (2009) (quoting Fed. R. Civ. P 8(a)).
To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A plausibility determination is context specific, and courts must draw on judicial experience and common sense in evaluating a complaint. Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014). A court considering a Rule 12(b)(6) motion must accept as true the allegations of the complaint and must construe those allegations in the light most favorable to the nonmoving party. See e.g., Wyler Summit P'ship v. Turner Broad. Sys., Inc. 135 F.3d 658, 661 (9th Cir. 1998).
The State Defendants move to dismiss Counts I (42 U.S.C. § 1983) and VIII (punitive damages) on grounds that there is no federally protected property interest in marijuana, which is illegal contraband under federal law.[1] Plaintiff concedes that the § 1983 claim should be dismissed as to the State of Montana, DPHHS, and Wiebe and Grantham in their official capacities. Plaintiff argues, however, that he has pled a viable § 1983 claim against Wiebe and Grantham in their individual capacities. Plaintiff contends he has a protected property interest in his profession, medical marijuana provider license, and the goodwill of his business, and therefore, can assert a claim for violation of his due process rights.
The Fourteenth Amendment provides that a state may not “deprive any person of life, liberty, or property, without due process of law.” U.S. Const. Amend. XIV. To state a claim for violation of his due process rights, Plaintiff must show he was deprived of a cognizable property interest protected by the Constitution. Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 9 (1978); Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002) (“Section 1983 provides a remedy only for the deprivation of “rights, privileges, or immunities secured by the Constitution and laws” of the United States.”).
Property interests “are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law[.]” Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972). But the determination of whether a particular interest is protected by the Due Process Clause is one of federal law. Town of Castle Rock, Colorado v. Gonzales, 545 U.S. 748, 756-57 (2005). “Although the underlying substantive interest is created by ‘an independent source such as state law,' federal constitutional law determines whether that interest rises to the level of a ‘legitimate claim of entitlement' protected by the Due Process Clause.” Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 9 (1978). If there is any conflict between federal and state law, the Supremacy Clause unambiguously provides federal law prevails. Gonzales v. Raich, 545 U.S. 1, 29 (2005).
Here, Plaintiff argues the property interests at issue in this case are his profession, provider license, and goodwill.[2] But at their core, all of those interests are based on Plaintiff's ability to sell medical marijuana - and medical marijuana is not federally protected. Under the federal Controlled Substances Act, it is illegal for any private person to possess marijuana for any purpose. 21 U.S.C. §§ 812(c); 841(a)(1), 844(a). Thus, regardless of its legality under Montana state law, medical marijuana is per se contraband under federal law. Gonzales v. Raich, 545 U.S. 1, 27 (2005). “No person can have a legally protected interest in contraband per se.” Marble v. Strecker, 2014 WL 1404896, *9 (D. Mont. April 10, 2014).
Indeed courts have found there is no federally protected property interest in medical marijuana or potential business or property interests that are based on medical marijuana. In River N. Props., LLC v. City and County of Denver, 2014 WL 7437048 (D. Colo. Dec. 30, 2014),...
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