Supreme Court Refuses to Hear Appeal of Oakland’s Attempted Attack on Forfeiture Action Against Harborside Dispensary

Since medical marijuana was legalized two decades ago in California, many cities and counties in the state have outlawed medical marijuana in their jursidictions, and these laws are largely upheld. See, e.g., See City of Riverside v Inland Empire Patients Health & Wellness Ctr. (2013) 56 C4th 729, 738. In a highly unusual case that began in the same year as the Riverside decision, the City of Oakland contested the federal government’s filing of a civil in rem forfeiture action against an Oakland property owner and its lessee, Harborside Health Clinic. Harborside operates a medical marijuana dispensary in compliance with local and state laws licensing and regulating the dispensing of medical marijuana but in violation of the federal Controlled Substances Act (CSA). Because Oakland lacked a property interest in Harborside, it was unable to intervene directly in the forfeiture action. Instead, Oakland initiated a collateral attack against the forfeiture under the Administrative Procedure Act; the government’s motion for dismissal was granted by the trial court, upheld by the Ninth Circuit, and denied review on March 21, 2016, by the U.S. Supreme Court.

In January, 2006, the owner first leased the building in Oakland to Harborside. Six years later, in July, 2012, the United States filed its civil in rem forfeiture action pursuant to 21 USC §881(a)(7), because of the violation of the CSA by Harborside. The CSA lists marijuana as a Schedule I drug, because Congress determined, among other things, that it "has no currently accepted medical use in treatment in the United States." After receiving notice of the action, and after failing to convince Harborside to voluntarily cease its operations, the owner served Harborside with a 3-Day Notice to Cure or Quit, demanding that Harborside immediately cease its operations or vacate the building. Harborside refused.

The landlord promptly filed an unlawful detainer action in the Alameda County Superior Court to evict Harborside, but the superior court judge refused to allow the eviction. The judge stated that "as a matter of law" a landlord cannot rely on CCP §1161(4) "to ask a California state court to find a lease terminated, and to issue a writ of possession, based solely on a tenant’s use of the premises to operate a medical marijuana dispensary if state law immunizes the tenant's conduct in operating the dispensary from criminal prosecution under state controlled-substance laws and the landlord’s only basis for alleging that the tenant is using the property 'for an unlawful purpose' under Section 1161(4) is a violation of federal controlled-substance laws." In these circumstances, "a state court could not enjoin the tenant from using the property to operate a dispensary. To impose the harsher remedy of declaring a lease terminated and authorizing the sheriff to evict a tenant would be to improperly enforce federal criminal law."

Shortly after the superior court decision denying eviction of Harborside, while the civil forfeiture action against the premises continued to proceed in federal court, the City of Oakland tried to halt the forfeiture in a separate, collateral suit, which was lost and appealed to the Ninth Circuit. On August 20, 2015, the Ninth Circuit (in a reported opinion) dismissed the City’s action "because the Government’s decision to file the forfeiture action is committed to agency discretion by law, and because allowing the [City’s] suit to proceed would impermissibly disrupt the existing forfeiture framework." City of Oakland v Lynch (9th Cir 2015) 798 F3d 1159, 1167. Oakland subsequently filed a Petition for Certiorari on Jan. 27, 2016 (No.15-941), but the United States Supreme Court denied review without comment on March 21, 2016. The forfeiture action in the district court by the government directly against the premises (United States v Real Prop. & Improvements Located at 1840 Embarcadero, Oakland, Cal., Case No. C 12-3567, N.D. California) is still pending.

The landlord had also tried to intervene in the forfeiture action by filing a motion asking the court to enjoin the illegal activity of Harborside. See United States v Real Prop. & Improvements Located at 1840 Embarcadero, Oakland, Cal. (ND Cal 2013) 932 F Supp 2d 1064. The federal district court held that the absence of language in the forfeiture statutes identifying claimants as potential movants and the prospective nature of Rule G(7)(a) (the forfeiture rule allowing the government to enjoin criminal activity) militated against a finding that landlord was authorized to bring a motion for injunctive relief against the activity of the tenant under Rule G(7)(a). Also the court ruled that the landlord lacked standing to bring a Rule G(7)(a) motion. 932 F Supp 2d at 1075.


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