Stirling Hort LLC v. Industrial Ventilation Inc

• Court: District Court, W.D. Washington
• Decided: June 7, 2023
• Docket: 2:22-cv-01155
• Status: Unknown

Opinion

THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE 9 STIRLING HORT, LLC, CASE NO. C22-1155-JCC 10 Plaintiff, ORDER 11 v. 12 INDUSTRIAL VENTILATION, INC., 13 Defendant. 14

15 This matter comes before the Court on Plaintiff’s motion to abstain and remand (Dkt. No. 16 28) and Defendant’s motion to dismiss (Dkt. No. 25). Having thoroughly considered the parties’ 17 briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS 18 Plaintiff’s motion and DENIES Defendant’s motion for the reasons explained herein. 19 I. BACKGROUND1 20 Plaintiff is a Washington based company that grows and sells marijuana. (Dkt. No. 1-1 at 21 1, 3.) Defendant is an Idaho corporation registered to do business in Washington. (Id. at 2.) In 22 2018, Defendant was hired to fumigate harvested potatoes at a property adjacent to Plaintiff’s 23 facility. (Id. at 3.) Plaintiff alleges that, after Defendant applied an airborne substance to the 24 potatoes, the substance found its way onto Plaintiff’s facility and its marijuana plants. (Id. at 3– 25 1 Unless otherwise indicated, the facts contained herein are based on allegations contained in 26 Plaintiff’s complaint (Dkt. No. 1-1). 1 4.) A subsequent inspection by the Washington State Liquor and Cannabis Board (“LCB”) 2 determined that the plants contained an amount of chlorpropham higher than that allowed by 3 state regulations. (Id.) It seized all of Plaintiff’s marijuana plants. (Id.) 4 Plaintiff filed suit with the Skagit County Superior Court alleging trespass, nuisance, 5 timber trespass, strict liability, and negligence.2 (Dkt. No. 1-1.) Defendant then removed the case 6 to this Court. (Dkt. No. 1.) Plaintiff asks the Court to abstain and remand the case back to state 7 court (Dkt. No. 28). Defendant moves to dismiss the complaint. (Dkt. No. 25.) 8 II. DISCUSSION 9 Plaintiff asks the Court to abstain and remand the case to state court. (Dkt. No. 28.) 10 Defendant cursorily argues that a remand would be untimely under 28 U.S.C. § 1447(c). (Dkt. 11 No. 33 at 3.) But § 1447(c) does not apply to abstention-based remand. Quackenbush v. Allstate 12 Ins. Co., 517 U.S. 706, 712 (1996). Turning to the merits of the abstention issue, the Court notes 13 that “[a]bstention from the exercise of federal jurisdiction is the exception, not the rule.” Colo. 14 River Water Conservation Dist. v. U.S., 424 U.S. 800, 813 (1976). 15 However, Burford abstention may be appropriate in cases where “the exercise of federal 16 review of the question in a case and in similar cases would be disruptive of state efforts to 17 establish a coherent policy with respect to a matter of substantial public concern.” Id. at 814 18 (citing Burford v. Sun Oil Co., 319 U.S. 315 (1943)); see also Hawthorne Sav. F.S.B. v. Reliance 19 Ins. Co. of Illinois, 421 F.3d 835, 847 (9th Cir. 2005) (“Burford abstention is designed to limit 20 federal interference with the development of state policy. It is justified where the issues sought to 21 be adjudicated in federal court are primarily questions regarding that state’s laws.”) (internal 22 citations omitted). 23 In determining whether to apply Burford abstention, the Ninth Circuit has indicated that 24

25 2 Plaintiff initially included Knutzen Farms, LP, the company that hired Defendant to perform the fumigation, as a defendant. (See Dkt. No. 1-1.) However, Plaintiff and Knutzen Farm reached 26 a settlement and Knutzen was subsequently dismissed from the case. (Dkt. No. 1 at 19–20.) 1 this Court should consider a number of factors, including “(1) that the state has concentrated 2 suits involving the local issue in a particular court; (2) the federal issues are not easily separable 3 from complicated state law issues with which the state courts may have special competence; and 4 (3) that federal review might disrupt state efforts to establish a coherent policy.” Poulos v. 5 Caesars World, Inc., 379 F.3d 654, 671 (9th Cir. 2004) (citing Tucker v. First Maryland Sav. & 6 Loan, 942 F.2d 1401, 1405 (9th Cir. 1991)). But as the Supreme Court has made clear, 7 application of Burford should not be a formulaic test. See Quackenbush, 517 U.S. at 727–28. The 8 Court must carefully balance federal interests against the state’s interest in maintaining 9 uniformity over essentially local problems and local control over policy problems of substantial 10 public import. Id. 11 In arguing for abstention, Plaintiff primarily relies on Left Coast Ventures Inc. v. Bill’s 12 Nursery Inc., 2019 WL 6683518 (W.D. Wash. 2019). (Dkt. No. 28 at 5–6.) That case involves a 13 contract dispute over the rights to a license to distribute medical marijuana. Left Coast, 2019 WL 14 6683518, slip op. at 1. The state law at issue, granting a license to dispense cannabis, was in 15 direct conflict with the Federal Controlled Substances Act (“CSA”), 21 U.S.C. § 801 et seq. Id. 16 at 3. As a result, the court found abstention appropriate, concluding that the policy objectives of 17 Burford, namely to limit federal interference with the development of state policy, were largely 18 met. Id. It emphasized the court’s acceptance of the illegality defense could have adverse 19 consequences on the state regulated cannabis industry by making federal jurisdiction operate as 20 an absolute defense to private contract claims. Id. Other courts, have applied similar logic. See, 21 e.g., Peridot Tree, Inc. v. City of Sacramento, 2022 WL 10629241 (E.D. Cal. 2022) (abstaining 22 and acknowledging federal court’s application of the illegality doctrine could have significant 23 impact on state cannabis regulatory scheme); Gopal v. Luther, 2022 WL 504983 (E.D. Cal. 24 2022) (same). 25 While perhaps more attenuated than in Left Coast, this case presents a similar dilemma. 26 Washington has enacted a comprehensive regulatory scheme to manage the production, 1 processing, and retail sale of cannabis in Washington. See, e.g., RCW 69.50.302, 69.50.342. 2 These regulations are in direct conflict with the CSA. Here, Defendant would have the Court 3 dismiss this case based on the illegality defense. (See generally Dkt. No. 25.) However, as in Left 4 Coast, doing so could impact the state regulatory scheme regarding the production and sale of 5 cannabis products. If, in response to a tort-based cause of action brought by a regulated cannabis 6 business, a defendant could simply remove the case to federal court and plead an illegality 7 defense, this would preclude relief for many regulated businesses who suffer legal harms. Such a 8 categorical bar would clearly disrupt Washington’s efforts to establish a coherent marijuana 9 regulation regime. Moreover, here, there are no federal issues, other than Defendant’s proferred 10 one, at play in this case. 11 Accordingly, this Court FINDS that federal intervention in this case would directly 12 conflict with the state’s ability to exert control over policy issues of substantial public concern. 13 Rather than create such a federal conflict with state policy, the Court concludes it is appropriate 14 to abstain and to remand the case. Given the findings above, the Court need not consider the 15 merits of Defendant’s motion to dismiss. 16 III. CONCLUSION 17 For the foregoing reasons, Plaintiff’s motion to abstain and to remand (Dkt. No. 28) is 18 GRANTED and Defendant’s motion to dismiss (Dkt. No. 25) is DENIED without prejudice as 19 moot. This case is REMANDED to the Skagit County Superior Court for further proceedings. 20 21 DATED this 7th day of June 2023. A 22 23 24 John C. Coughenour 25 UNITED STATES DISTRICT JUDGE