Variscite NY Four, LLC; Variscite NY Five, LLC v. New York State Cannabis Control Board; New York State Office of Cannabis Management; Tremaine Wright; Chris Alexander

CourtDistrict Court, N.D. New York
DecidedMay 7, 2026
Docket1:23-cv-01599
StatusUnknown

This text of Variscite NY Four, LLC; Variscite NY Five, LLC v. New York State Cannabis Control Board; New York State Office of Cannabis Management; Tremaine Wright; Chris Alexander (Variscite NY Four, LLC; Variscite NY Five, LLC v. New York State Cannabis Control Board; New York State Office of Cannabis Management; Tremaine Wright; Chris Alexander) is published on Counsel Stack Legal Research, covering District Court, N.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Variscite NY Four, LLC; Variscite NY Five, LLC v. New York State Cannabis Control Board; New York State Office of Cannabis Management; Tremaine Wright; Chris Alexander, (N.D.N.Y. 2026).

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

VARISCITE NY FOUR, LLC; VARISCITE NY FIVE, LLC, Plaintiffs, V. No. 1:23-CV-01599 NEW YORK STATE CANNABIS CONTROL (AMN/PJE) BOARD; NEW YORK STATE OFFICE OF CANNABIS MANAGEMENT; TREMAINE WRIGHT; CHRIS ALEXANDER; Defendants.

APPEARANCES: OF COUNSEL: Jeffrey M. Jensen JEFFREY M. JENSEN, ESQ. 9903 Santa Monica Blvd., Ste. 890 “| Beverly Hills, California 90212 Attorney for plaintiffs Hacker Murphy LLP THOMAS J. HIGGS, ESQ. 28 Second Street Troy, New York 12180 Attorneys for plaintiffs New York State Attorney General BENJAMIN L. LOEFKE, ESQ. The Capitol RYAN W. HICKEY, ESQ. Albany, New York 12224 ALEXANDER POWHIDA, ESQ. Attorney for defendants WILLIAM A. SCOTT, ESQ. PAUL J. EVANGELISTA U.S. MAGISTRATE JUDGE

ORDER & REPORT-RECOMMENDATION |. Introduction Plaintiffs Variscite NY Four, LLC and Variscite NY Five, LLC (collectively, “plaintiffs” or “Variscite[,]” where appropriate) filed a letter motion on January 7, 2026,

pursuant to New York Rule of Professional Conduct 1.12(d), seeking disqualification of defense counsel Bejamin L. Loefke, Esq. and the Office of the New York State Attorney General (“OAG”) and “instructing the New York State Attorney General's office to not share with substitute counsel any work product created after the date of Mr. Loefke’s hiring. See Dkt. No. 63. Alternatively, should the Court deny the disqualification request, plaintiffs seek this Court to certify, for immediate appeal, “the question” to the Second Circuit pursuant to 28 U.S.C. § 1292(b). The facts and procedural history underlying this case are presumed and will not be repeated here other than as necessary. ll. Arguments Plaintiffs argue that defense counsel Mr. Loefke, and the entire OAG, must be

_,| disqualified from representing defendants due to a conflict of interest — Mr. Loefke’s service as a law clerk for Judge Sharpe during the entire time he presided over Variscite One.' See Dkt. No. 63. Plaintiffs argue that Variscite One and Variscite Four,? the instant case, “involve the same defendants” because, in both cases, plaintiffs sued the New York State Office of Cannabis Management and its executive officer, and in both cases, the real defendant in interest is the State of New York.” Dkt. No. 63 at 2.

Further, they argue that plaintiffs’ counsel, Mr. Jensen, “owned? between 49% and 44% of plaintiff Variscite One during all times of the lawsuit” and owns “49% of each of plaintiff Variscite NY Four and plaintiff Variscite NY Five.” /d. at 3. He argues that

’ Mr. Jensen provides that he discovered Mr. Loefke’s former role as Judge Sharpe's law clerk through Google. See Dkt. No. 63. ? Before being assigned to District Judge Anne Nardacci, this case was assigned to Senior District Judge Hurd. See Dkt. No. 19. Variscite Four was never assigned to Judge Sharpe. 3 Mr. Jensen indicates that he “sold his shares of Variscite One after the Variscite One litigation and has no current interest in the company.” Dkt. No. 63 at 3 n.1.

defendants have positioned Mr. Jensen as the “true party of interest” in Variscite One and indicates that submissions in both cases “refer[] many times” to Mr. Jensen “in both cases by both sides and the courts.” /d. at 3. Plaintiffs argue that Variscite One “raised the question identical to the one in this case: whether New York’s cannabis license application program violates the dormant “| Commerce Clause.” Dkt. No. 63 at 1. Plaintiffs provide that the “Second Circuit relied on Variscite One in deciding the Variscite Four appeal” and, during oral argument, “analyzed at length the relevance of the facts of Variscite One to the facts of Variscite Four.” /d. at 5. Ill. Legal Standards “TT]he disqualification of an attorney upon the motion of an adversary is a

serious sanction that ought not to be imposed lightly.” Gabayzadeh v. Taylor, 639 F. Supp. 2d 298, 300-01 (E.D.N.Y. 2009) (quoting Sea Tow Int’, Inc. v. Pontin, No. CV-06- 3461, 2007 WL 4180679, at *1 (E.D.N.Y. Nov. 19, 2007)). “Indeed, it is well-established that ‘[m]Jotions to disqualify opposing counsel are viewed with disfavor in this Circuit because they are ‘often interposed for tactical reasons’ and result in unnecessary delay.” /d. (quoting Bennett Silvershein Assocs. v. Furman, 776 F.Supp. 800, 802 m|(S.D.N.Y. 1991)). “The Second Circuit has ‘been loathe to separate a client from his chosen attorney,’ Bohack Corp. v. Gulf & Western Indus., Inc., 607 F.2d 258, 263 (2d Cir.1979), noting that ‘[t]he delay and additional expense created by substitution of counsel is a factor to which [it has] attached considerable significance . . . .” /d. (first quoting Sea Tow Int’, Inc. v. Pontin, No. CV-06-3461, 2007 WL 4180679, at *1 then citing Lefrak v. Arabian Am. Oil Co., 527 F.2d 1136, 1138-40 (2d Cir.1975)). “Although

any doubts are to be resolved in favor of disqualification, see Cheng v. GAF Corp., 631 F.2d 1052, 1059 (2d Cir.1980), vacated on other grounds and remanded, 450 U.S. 903, 101 S.Ct. 1338, 67 L.Ed.2d 327 (1981), the party seeking disqualification bears a ‘heavy burden’ of demonstrating that disqualification is warranted.” /d. (citing Evans v. Artek, 715 F.2d 788, 794 (2d Cir. 1983)). “When deciding a motion to disqualify an attorney, federal district courts in New York consider various sources of law, including the ABA Model Rules of Professional Conduct, the ABA Model Code of Professional Responsibility, and the New York Code of Professional Responsibility.” Gabayzadeh v. Taylor, 639 F. Supp. 2d 298, 301 (E.D.N.Y. 2009) (quoting Blue Planet Software, Inc. v. Games Intl, LLC, 331 F.Supp. 2d 273, 275 (S.D.N.Y. 2004)). “However, ‘such rules merely provide general guidance and not every _,| Violation of a disciplinary rule will necessarily lead to disqualification.” /d. (quoting Hempstead Video, Inc. v. Incorporated Vil. of Valley Stream, 409 F.3d 127,132 (2d Cir. 2005)); see also Hum. Elecs., Inc. v. Emerson Radio Corp., 375 F. Supp. 2d 102, 105- 06 (N.D.N.Y. 2004) (same). “Decisions regarding motions to disqualify are within the sound discretion of the trial court.” Interiano v. Arch Specialty Ins. Co., No. CV 23-0238 (PKC) (AYS), 2025 WL 2412031, at *3 (E.D.N.Y. Aug. 20, 2025) (citing Purgess v.

m| Sharrock, 33 F.3d 134, 144 (2d Cir. 1994)). Both parties agree that Rule 1.12 of the New York Rules of Professional Conduct applies. See Dkt. Nos. 63 at 5, 65 at 6 (also citing ABA Model Rule 1.12(a)). New York Rule of Professional Conduct 1.12, covering “specific conflicts of interest for former judges, arbitrators, mediators or other third-party neutrals,” provides (b) except as stated in paragraph (3), and unless all parties to the proceeding give informed consent, confirmed in writing, a lawyer shall not

represent anyone in connection with a matter in which the lawyer participated personally and substantially as . . . (1) a law clerk to a judge or other adjudicative officer or an arbitrator, mediator or other third-party neutral.

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