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California Businesses Win Discovery Keep in Hemp Destruction Dispute – Canna Legislation Weblog™

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Again in April 2020, Apothio sued the County of Kern and the California Division of Fish and Wildlife, alleging that in October 2019, state and county regulation enforcement brokers entered its farm fields and ordered the destruction of 500 acres of hemp crops price roughly $1 billion. Apothio claims the companies’ search warrant was faulty as a result of it included an incorrect description of Apothio’s principal, Trent Jones, the acreage grown, and since it ignored Apothio’s standing as a analysis entity beneath California regulation. Most not too long ago, the defendant companies filed motions to dismiss Apothio’s case is in its entirety as a result of its crops represent contraband beneath federal regulation, and Apothio cannot have a property curiosity in such contraband.

Whereas the civil case commenced, Mr. Jones was then arraigned for felony misdemeanor fees for the unlawful cultivation and sale of marijuana (based mostly on the information of this case) in October 2020. Based mostly on this improvement, the defendant companies filed for a movement to remain discovery (primarily, pause discovery) within the case pending (1) completion of the felony investigation of Mr. Jones, or (2) at the very least a choice on the motions to dismiss.

For everybody’s profit, the Court docket issued a prolonged opinion breaking down its resolution.  It began with the defendant companies’ request to remain discovery pending completion of the felony investigation. It famous: “a celebration has no constitutional proper to a keep of civil proceedings throughout the pendency of a felony investigation or prosecution, nor does the Structure shield a celebration from being pressured to decide on between the implications of asserting or waiving his Fifth Modification rights within the civil proceedings.” In contemplating whether or not to problem a keep, the court docket ought to think about the extent to which the defendant’s Fifth Modification rights are implicated, in addition to the next 5 Keating components:

  • The curiosity of the plaintiffs in continuing expeditiously with this litigation or any explicit facet of it, and the potential prejudice to the plaintiffs of a delay;
  • The burden which any explicit facet of the proceedings might impose on defendants;
  • The comfort of the court docket within the administration of its instances, and the environment friendly use of judicial sources;
  • The pursuits of individuals not events to the civil litigation; and
  • The curiosity of the general public within the pending civil and felony litigation.

Total, the Court docket was not satisfied that Mr. Jones’ Fifth Modification privilege would implicate nice points within the civil case:

Even when the felony case trigger Jones, in his particular person capability, to say his Fifth Modification privilege given the factual and authorized overlap between the investigation and the civil case right here, company defendants are entitled to no such privilege. Nor does the privilege prolong to company data. Furthermore, a custodian of company data “has no privilege to refuse manufacturing [even if] their contents are likely to incriminate him.” … Defendants should elicit priceless testimony from unnamed company representatives and compel manufacturing of related data given the inapplicability of the Fifth Modification privilege to the company entities. The extent to which Jones’s Fifth Modification rights are implicated doesn’t warrant a keep of this motion. (Citations omitted).

The Court docket then mentioned every Keating issue, discovering that on stability, these components favored Apothio’s place as nicely:

  • “This issue weighs in [Apothio’s] favor” – Apothio had claimed an curiosity in gathering proof whereas it’s nonetheless contemporary, earlier than witnesses’ recollections fade and proof turns into stale; Apothio had additionally claimed its continued monetary viability was threatened so long as the litigation continued.
  • “To the extent that the Plaintiff is making an attempt to misuse the civil discovery course of and acquire supplies from an ongoing felony investigation, the Court docket finds {that a} keep can be warranted” – this was extremely fact-dependent and was largely a wash.
  • “This issue weighs in Plaintiff’s favor” – Apothio had contended the environment friendly use of judicial sources can be to proceed with discovery, as that would result in a faster decision of the case and facilitate life like settlement negotiations.
  • As to the curiosity of events and non-parties, the Court docket discovered that the overall precept of “the general public has an curiosity in comparatively speedy decision of civil issues” to outweigh any argument the defendant companies offered.

In the end, the Court docket refused to remain discovery based mostly on the continued felony proceedings. Nonetheless, it then thought of the defendant companies’ request to remain discovery pending decision of their motions to dismiss. In deciding this problem, it famous the general consideration can be to stability “the hurt produced by a delay in discovery towards the chance that the movement can be granted and completely remove the necessity for such discovery.” Two necessities have to be met for a keep to be issued:

  • The pending movement have to be doubtlessly dispositive of all the case, or at the very least dispositive on the problem at which discovery is aimed.
  • The pending, doubtlessly dispositive movement could be determined absent further discovery.

As to the primary prong, the defendant companies argued their pending motions to dismiss will get rid of the grievance primarily as a result of Apothio’s crops are legally and factually contraband beneath federal regulation, and Apothio can don’t have any property curiosity in such contraband. The Court docket agreed, writing it had taken a “preliminary peek” at Apothio’s opposition and located it unconvincing on its face, with none want for additional discovery. Due to this fact, the Court docket granted the defendant companies’ request for a keep pending a choice on their motions to dismiss. This was a reasonably large blow to Apothio – now, the events are primarily frozen of their efforts till the defendants’ motions are heard.

This case and opinion will certainly be one to observe – not just for the excessive stakes at play, but in addition for the perception into how civil and felony proceedings intersect, how the federal courts are typically and treating hemp firms, and the deference proven to authorities company events. We are going to report again when the motions are heard, as that call will definitely be telling.