Back in April 2020, Apothio sued County Kern and the California Department of Fish and Wildlife. In October 2019, state and county law enforcement officers entered their agricultural fields and ordered the destruction of 500 acres of hemp plants valued at approximately $ 1 billion. Apothio claims the agency’s search warrant was flawed because it contained an incorrect description of Apothio’s principal Trent Jones, the acreage, and because it ignored Apothio’s status as a research unit under California law. Most recently, the defendant authorities have filed motions to dismiss the case of Apothio in full because his harvests are contraband according to federal law and Apothio cannot have any ownership interest in such contraband.
At the start of the civil case, Mr. Jones was charged with a criminal offense for growing and selling marijuana illegally (based on the facts of this case) in October 2020. As a result of this development, the defendant authorities filed a suspend motion (essentially suspend discovery) in the case until (1) completion of the criminal investigation against Mr Jones or (2) at least a decision on the dismissal motions.
For the benefit of all, the Tribunal issued a lengthy opinion that struck down its decision. It began with the defendant authorities’ request to suspend the discovery until the criminal investigation was completed. It stated: “A party has no constitutional right to stay civil proceedings while a criminal investigation or prosecution is pending, nor does the Constitution protect a party from being forced between the consequences of asserting or waiving their rights to the fifth Change to choose the civil procedure. “In considering whether to grant residence, the court should consider the extent to which the defendant’s rights to the Fifth Amendment are affected, as well as the following five Keating factors:
- Plaintiffs’ interest in resolving this dispute or any aspect of it expeditiously and the potential prejudice of delay for plaintiffs;
- The burden that a particular aspect of the trial may place on the accused;
- The convenience of the court in managing its cases and the efficient use of legal remedies;
- The interests of those who are not involved in civil litigation; and
- The public’s interest in the pending civil and criminal proceedings.
Overall, the Court was not convinced that the privilege of Mr Jones’ fifth amendment would create major problems in civil proceedings:
Even if the criminal case causes Jones in his individual capacity to assert his fifth amendment privilege, since the investigation and civil litigation actually and legally overlap here, corporate defendants are not entitled to such a privilege. The privilege does not extend to company records either. In addition, a corporate records manager “has no privilege to refuse production [even if] its content tends to burden it. “… Defendants can still obtain valuable testimony from undisclosed company representatives and force relevant records to be submitted as the fifth amendment privilege does not apply to the business units. The extent to which Jones’ rights to the Fifth Amendment are affected does not warrant a suspension of this action. (Quotes omitted).
We then discussed each Keating factor and found that these factors, taken together, also favored Apothio’s position:
- “This factor weighs [Apothio’s] Favor ”- Apothio had expressed an interest in gathering evidence while it is fresh, before the witnesses’ memories fade and the evidence becomes out of date. Apothio had also claimed that his continued financial viability was in jeopardy while the lawsuit continued.
- “To the extent that the plaintiff attempts to abuse the civil discovery process and obtain material from an ongoing criminal investigation, the court finds that stay would be warranted” – this was incredibly factual and largely a wash.
- “This factor speaks for the plaintiff” – Apothio had claimed that the efficient use of judicial resources would be to proceed with the discovery, as it could result in a faster resolution of the case and allow realistic settlement negotiations.
- With regard to the interests of parties and non-parties, the Court found that the general principle that “the public has an interest in a relatively rapid resolution of civil cases” was to outweigh all of the arguments put forward by the defendants.
Ultimately, the court refused to suspend the discovery due to the ongoing criminal proceedings. However, the defendant authorities’ request to suspend the discovery pending a decision on their dismissal requests was subsequently examined. In deciding on this issue, it was suggested that overall consideration should be given to “weighing the harm caused by delaying the discovery against the possibility of the application being granted and eliminating the need for such a discovery entirely”. Two requirements must be met in order for a residence permit to be issued:
- The pending application may need to be dispositive for the entire case or at least for the subject the discovery is aimed at.
- The upcoming, possibly dispositive movement can be decided without additional discovery.
With regard to the first pen, the defendant authorities argued that their pending motions to dismiss the complaint would largely reject the complaint because Apothio’s crops are legally and factually contraband under federal law and Apothio cannot have any ownership interest in such contraband. The court agreed, writing that it had taken a “preliminary look” at Apothio’s opposition and found it unconvincing at first glance, with no further discovery required. The Court therefore granted the defendant agencies’ applications for suspension pending a decision on their applications for dismissal. This was a rather severe blow to Apothio – now the parties are essentially frozen in their efforts until the defendants’ motions are heard.
This case and opinion will definitely be watchable – not just because of the high stakes, but also because of the insight into how civil and criminal proceedings overlap, how federal courts view and treat hemp companies in general, and how much respect is shown Ruling parties. We will get back to you when the motions are heard as this decision will certainly be meaningful.