We CBD, LLC v. United States

• Decision Date: 31 March 2022
• Docket Number: 3:21-CV-00115-FDW-DCK
• Parties: WE CBD, LLC, Plaintiff, v. THE UNITED STATES OF AMERICA et al., Defendants.
• Court: U.S. District Court — Western District of North Carolina

WE CBD, LLC, Plaintiff,
v.
THE UNITED STATES OF AMERICA et al., Defendants.

No. 3:21-CV-00115-FDW-DCK

United States District Court, W.D. North Carolina, Charlotte Division

March 31, 2022

ORDER

FRANK D. WHITNEY UNITED STATES DISTRICT JUDGE

THIS MATTER is before the Court on Defendants' Motion to Dismiss for Lack of Jurisdiction, (Doc. No. 14), filed on July 15, 2021. The Motion has been fully briefed and is ripe for review. For the reasons set forth below, the Court GRANTS Defendants' Motion.

I. BACKGROUND

The facts relevant to the jurisdictional issues the Court addresses today are undisputed and relatively straightforward. In short, on or around November 8, 2020, Plaintiff shipped, by charter flight, 3, 328.05 pounds of what it asserts was “legal, industrial hemp belonging to [Plaintiff]” (the “Cargo”) from Oregon to Charlotte, North Carolina. (Doc. No. 13, p. 5). “The ultimate destination for the [Cargo] was a purchaser in Zurich, Switzerland.” Id. The day prior to flight, however, Plaintiff submitted a General Declaration affirmatively representing the flight would have no cargo. (Doc. No. 14-1, p. 2). During a border search in Charlotte, the Cargo tested positive for THC. Id. Defendants assert CBP then detained the Cargo for further testing, id.; Plaintiff, in contrast, asserts that CBP detained the Cargo “solely for the purpose of forfeiture, ” (Doc. No. 13, p. 6). Thereafter, according to Defendants:

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Samples were sent to CBP's laboratory, where eight out of the nine samples tested over the legal limit of 0.3% delta-9 THC. Pursuant to its statutory authority to do so, CBP forfeited and destroyed the 2, 779.83 pounds that tested as marijuana (the “Marijuana”) Despite Plaintiff's export violations making the remaining 548.22 pounds of the cargo that tested as hemp (the “Hemp”) subject to forfeiture CBP offered to return it upon the signing of a hold-harmless agreement

In response, Plaintiff filed the instant suit. The USAO provided Plaintiff with supporting information/documents and made essentially the same [] return offer again. Having received no response, the Government filed its forfeiture action against the Hemp and moved to dismiss here. Plaintiff then filed its Amended Complaint.

(Doc. No. 14-1, p. 3).

Seemingly ignoring its export violations, Plaintiff alleges in its Amended Complaint that the Cargo was legal hemp and was, therefore, categorically lawful to export to Switzerland. (Doc. No. 13, p. 1). Plaintiff contends that CBP failed to follow its own procedures; promised it would, but did not, provide Plaintiff with a “Notice of Seizure” before destroying any cargo; negligently failed to allow Plaintiff to independently test samples of the cargo or provide adequate information about CBP's testing procedures; wrongly destroyed the Marijuana; and wrongly fails to return the Hemp. Id. at pp. 3-2. Based on its contentions, Plaintiff brings six causes of action under a variety of tort and constitutional theories. Id. On July 15, 2021, Defendants filed the pending Motion to Dismiss for Lack of Jurisdiction, (Doc. No. 14).

II. STANDARD OF REVIEW

“A motion to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) ‘addresses whether [a plaintiff] has a right to be in the district court at all and whether the court has the power to hear and dispose of his claim.” Starr Indem. & Liab. Co. v. United States, No. CCB-18-3326, 2019 WL 4305529, at *3 (D. Md. Sept. 11, 2019) (quoting Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 452 (4th Cir. 2012)). “Sovereign immunity is jurisdictional in nature because, absent a waiver, sovereign immunity shields the

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federal government from suit.” NFF, LLC v. United States, No. CV-12-01091-PHX-PGR, 2013 WL 693430, at *2 (D. Ariz. Feb. 26, 2013) (citing FDIC v. Meyer, 510 U.S. 471, 475 (1994)). Therefore, the Court must first decide whether Defendants' immunity has been waived. Meyer, 510 U.S. at 475.

The plaintiff bears the burden of showing that the government has waived sovereign immunity at the motion to dismiss stage. Robinson v. U.S. Dep't of Educ., 917 F.3d 799, 802 (4th Cir. 2019) (citations omitted); see also Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (“The plaintiff has the burden of proving that subject matter jurisdiction exists.”). When a defendant challenges subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), “the district court is to regard the pleadings as mere evidence on the issue[] and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, 945 F.2d at 768. The district court should grant the Rule 12(b)(1) motion to dismiss “if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Id.; see also Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999).

III. ANALYSIS

a. Tort Claims

Defendants first assert the Court lacks subject matter jurisdiction over Plaintiff's tort claims because the claims are jurisdictionally barred under the Federal Tort Claims Act's (the “FTCA”)^[1]detention of goods exception, codified at 28 U.S.C. § 2680(c).^[2] (Doc. No. 14-1, pp. 4-14). Plaintiff

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disputes Defendants' assertion and instead contends its claims are subject to the FTCA's waiver of sovereign immunity and are not subject to the FTCA's exceptions. (Doc. No. 17, pp. 3-14). In the alternative, Plaintiff asserts its tort claims fall within the Civil Asset Forfeiture Reform Act's (“CAFRA”) “exception to the exception.” (Doc. No. 17, pp. 13-14).

i. The Detention of Goods Exception

It is well settled that under the doctrine of sovereign immunity, the United States can be sued only to the extent it has consented or waived its immunity to suit, and “the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.” See Lehman v. Nakshian, 453 U.S. 156, 160 (1981) (citations and internal quotations omitted). The FTCA sets forth certain circumstances under which the federal government has waived its immunity and provides generally that the United States shall be liable to the same extent as a private party, “for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment.” Kosak v. U.S., 465 U.S. 848, 851-52 (1984) (quoting 28 U.S.C. § 1346(b)). The Act's broad waiver of sovereign immunity is, however, subject to several exceptions. See 28 U.S.C. § 2680(a) - (n). Relevant here is § 2680(c), which exempts from the coverage of the FTCA “[a]ny claim arising in respect of… the detention of any goods, merchandise, or other property by any officer of customs….” 28 U.S.C. § 2680(c). Notably, the Supreme Court has explained that “the crucial portion of the provision[, ] ‘any claim arising in respect of' the detention of goods[, ] means any claim ‘arising out of' the detention of goods, and includes a claim resulting from negligent handling or storage of detained property. Kosak, 465 U.S. at 854.

In the instant matter, Plaintiff first argues its tort claims are not barred by the FTCA's

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detention of goods because its “tort claims are based on intervening torts - not detention.” (Doc. No. 17, p. 4). To support this fanciful contention, Plaintiff alleges several “intervening acts of negligence.” (Doc. No. 17, p. 4). Specifically, Plaintiff asserts:

The government failed to follow its own due process procedures; misrepresented that it would provide notice and communicate before destroying the hemp; destroyed legal hemp after failing to comply with its own rules, the Constitution, and its own commitments to Plaintiff (the intervening act is this non-compliance with law, not the mere destruction); wrongfully declined to allow Plaintiff to independently test the [Marijuana], even to this day; did not follow reliable testing procedures (after being put on notice by Plaintiff that Plaintiff's records showed the hemp tested as not contraband - again, the intervening act is failure to follow due process, not merely the flawed testing procedures); and did not provide Plaintiff with adequate information about its testing procedures.

(Doc. No. 17, p. 4). Plaintiff then relies heavily on Cervantes v. United States, 330 F.3d 1186 (9^th Cir. 2003), asserting Cervantes “aptly summarizes why the detention exception does not apply when claims arise from intervening negligent acts.” Id. at 5.

Plaintiff's reliance on Cervantes is sorely misplaced. Despite Plaintiff's assertions otherwise, the Court finds Cervantes inapplicable here, because Plaintiff's claims directly relate to, and arise from, the Cargo's detention. (Doc. No. 18, pp. 3-4). The District of Arizona has eloquently summarized the factual background and holding of Cervantes as follows:

Cervantes involved a FTCA negligence claim by a plaintiff who, after purchasing a previously-seized car at a government auction that had marijuana hiding in its bumpers at the time of the auction, was arrested and incarcerated after the marijuana was subsequently found during a customs inspection. The Ninth Circuit held that the “detention of goods” exception did not bar the plaintiff's FTCA claim because the government's alleged negligence arose not from the initial detention of the car but rather from the government's independent and subsequent decision to sell the car at auction without first inspecting it, which the Ninth Circuit reasoned was “an independent and intervening event from the detention itself.”

NFF, 2013 WL 693430, at *2 (citing Cervantes, 330 F.3d 1186). Furthermore, the Ninth Circuit, in Cervantes, explained, “Cervantes's claim does not ‘arise[e] in respect of… the detention' of...