Pharmacann Penn, LLC v. BV Dev. Superstition RR, LLC
| Decision Date | 14 March 2018 |
| Docket Number | CIVIL ACTION NO. 17–4625 |
| Citation | 297 F.Supp.3d 537 |
| Parties | PHARMACANN PENN, LLC, Plaintiff, v. BV DEVELOPMENT SUPERSTITION RR, LLC, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Robert S. Tintner, Abraham C. Reich, Joshua Horn, Fox Rothschild O'brien & Frankel LLP, Philadelphia, PA, for Plaintiff.
James T. Smith, Lewis Wayne Schlossberg, Evan Lechtman, Blank Rome, LLP, Philadelphia, PA, for Defendants.
The deed to a property at a shopping center prohibits using the property as a drug store or for any "unlawful" purpose. PharmaCann Penn, the new owner of the property, sued in state court, seeking a declaratory judgment that it may open a medical marijuana dispensary on the property despite these deed restrictions.
The defendants (PharmaCann's predecessors in interest and the partnership entities that operate the shopping center) removed the case to federal court. PharmaCann then moved to remand, challenging the defendants' assertion of federal question jurisdiction, questioning the removal procedure, and invoking doctrines of abstention. For the reasons that follow, the Court concludes that (1) it has federal question jurisdiction, (2) the removal process was proper, and (3) abstention doctrines do not control the case. The motion to remand to state court is therefore denied.
The property in question is part of the Franklin Mills shopping center (now called the Philadelphia Mills). The shopping center is managed by defendants Simon Property Group, Franklin Mills Associates, and Franklin Mills Residual. Defendants Western Franklin Mills and BV Development Superstition are previous owners of the property.
In 2017, BV Development conveyed the property to PharmaCann. PharmaCann then obtained a permit from the Commonwealth of Pennsylvania to operate a medical marijuana dispensary pursuant to the Pennsylvania Medical Marijuana Act, 35 P.S. § 10231.101. In addition, the City of Philadelphia granted PharmaCann a zoning permit for the dispensary.
The deed to PharmaCann's property contains several restrictions. Two restrictions potentially block PharmaCann from opening a "medical marijuana dispensary"; hence, this case. First, the deed prohibits "[a]ny activity or use which is unlawful." This prohibition is the basis of the parties' dispute over federal question jurisdiction, discussed below. Second, the deed prohibits PharmaCann from operating a drug store, defined in part as "a store used for the sale and display of drugs." This prohibition bears on the merits of the case and, thus, is not address in this Memorandum.
PharmaCann sued in state court for a declaratory judgment interpreting the deed's prohibitions on "unlawful" uses and on "drug stores" as inapplicable. Franklin Mills removed to this Court. After a motion to remand and an amended notice of removal, PharmaCann filed the amended motion to remand at issue now.
PharmaCann's motion to remand presents three questions:
The Court addresses each question in turn and concludes that (1) the Court has federal question jurisdiction over this case; (2) the removal process was proper because the only defendants who did not consent to removal were fraudulently joined; and (3) abstention doctrines do not control this case.1
The deed to PharmaCann's property prohibits "unlawful" uses. That single term opens the door for federal question jurisdiction by teeing up a fundamental clash between state and federal law in this case.
Pennsylvania recently established a system for certain medical marijuana use, joining a substantial number of states in the Union to do so. See 35 P.S. § 10231.101 et seq. The federal Controlled Substances Act, on the other hand, flatly prohibits the distribution of marijuana, 21 U.S.C. § 841(a)(1), and recognizes no "accepted medical use" for the drug, id. § 812(b)(1). In other words, "[d]espite the Commonwealth of Pennsylvania's enactment of its medical marijuana law, the distribution of marijuana remains illegal under federal law." United States v. Dinh , 194 F.Supp.3d 353, 356–57 (W.D. Pa. 2016).
Federal question jurisdiction exists over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. For the "vast bulk" of cases, this means that "federal law creates the cause of action asserted." Gunn v. Minton , 568 U.S. 251, 257, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013).
In some cases, however, a court has federal question jurisdiction even when the cause of action comes from state law. As the Supreme Court has recognized, a federal court should hear state-law claims "that nonetheless turn on substantial questions of federal law, and thus justify resort to the experience, solicitude, and hope of uniformity that a federal forum offers on federal issues." Grable & Sons Metal Products v. Darue Engineering & Manufacturing , 545 U.S. 308, 312, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005). In those instances, "federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn , 568 U.S. at 258, 133 S.Ct. 1059. This case meets all four requirements.
The federal question of the dispensary's lawfulness is necessarily raised because a court must consider and ultimately apply federal law in order for PharmaCann to get the relief it seeks. In Gunn v. Minton , 568 U.S. 251, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013), a malpractice case against an attorney depended on whether a client would have prevailed in a previous case had the attorney made a specific patent-law argument. Thus, the "resolution of the federal patent question" was necessary for the client to show that the attorney's careless failure to make the federal patent law argument caused the client's loss. Id. at 259, 133 S.Ct. 1059. Likewise, in Smith v. Kansas City Title & Trust Co. , 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577 (1921), the federal question of the constitutionality of a government bond issuance was necessary to resolve a shareholder's state-law claim that a corporation had unlawfully purchased the government bonds. Id. at 199, 41 S.Ct. 243.
Similarly, here, the resolution of the federal question—namely, whether a medical marijuana dispensary is "unlawful" under the Controlled Substances Act—is necessary to decide whether the dispensary is an "unlawful" use under the deed. Indeed, PharmaCann seeks a court's declaration that its marijuana dispensary is lawful, which requires a court to apply federal law to PharmaCann's chosen use. Cf. In re Processed Egg Prods. Antitrust Litig. , 836 F.Supp.2d 290, 299 n.10 (E.D. Pa. 2011) ().
The parties here obviously and actually dispute whether federal law prohibits dispensing medical marijuana. Franklin Mills has filed a motion to dismiss in which it argues as much, and PharmaCann's counsel suggested at oral argument on the removal and remand issues that his counsel would dispute that point on the merits.
This federal issue is substantial. "[F]ederal jurisdiction demands not only a contested federal issue, but a substantial one, indicating a serious federal interest in claiming the advantages thought to be inherent in a federal forum." Grable , 545 U.S. at 313, 125 S.Ct. 2363. The federal issue must be substantial "to the federal system as a whole," Gunn , 568 U.S. at 260, 133 S.Ct. 1059, not only "to the particular parties in [the] case," id. at 264, 133 S.Ct. 1059.
In Grable , the notice requirements imposed before the IRS could seize the property of tax delinquents amounted to a substantial federal issue. See Grable , 545 U.S. at 315, 125 S.Ct. 2363. The Supreme Court reasoned that the Government and private actors had interests in (1) the "prompt and certain collection of delinquent taxes," id. (quoting United States v. Rodgers, 461 U.S. 677, 709, 103 S.Ct. 2132, 76 L.Ed.2d 236 (1983) ); and (2) review of their disputes by "judges used to federal tax matters," id.
On both points, the federal question in this case is substantial. First, the need to pursue certainty on the legal status of marijuana dispensaries looms large. By the Court's count, 29 states have authorized some form of medical marijuana and nine have authorized "recreational" marijuana. The federal status of these state schemes could be clarified or brought into sharper focus by a ruling on whether PharmaCann's proposed dispensary violates federal law.
Second, the issues at hand counsel in favor of review by a court used to federal drug law and versed in principles of federalism. The immediate law to be applied is the federal Controlled Substances Act. On a deeper level, too, federalism principles lurk in the background of this dispute. If a court were to rule that PharmaCann's dispensary violated federal law, the Supremacy Clause could cast doubt on the validity of dozens of state marijuana schemes. Such a ruling, in other words, would require a court to consider the delicate comity between our federal and state systems. The advantages of hearing this kind of federalism-adjacent dispute in a federal forum, free from the pressures of judicial election politics, are obvious.
Because this kind of case is exceedingly rare, resolving the...
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