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`Case 2:17-cv-02271-KJM-EFB Document 99 Filed 07/07/20 Page 1 of 13
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF CALIFORNIA
`
`No. 2:17-cv-02271-KJM-EFB
`
`ORDER
`
`FREE SPIRIT ORGANICS, NAC, et al.,
`Plaintiffs,
`
`v.
`SAN JOAQUIN COUNTY BOARD OF
`SUPERVISORS, et al.,
`Defendants.
`
`
`
`On October 10, 2017, the San Joaquin County Sheriff entered and seized a hemp
`crop from a 26.19 acre parcel of land on which plaintiffs owned and operated an industrial hemp
`operation. On October 27, 2017, plaintiffs initiated this action, claiming this seizure, perpetuated
`by a number of San Joaquin County officials, deprived them of certain constitutional protections.
`Defendants have now moved to dismiss the second amended complaint. Having considered the
`relevant briefing and conducted an evidentiary hearing to address a standing challenge against
`one of the plaintiffs, the court GRANTS defendants’ motion to dismiss on standing grounds.
`///
`///
`///
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`Case 2:17-cv-02271-KJM-EFB Document 99 Filed 07/07/20 Page 2 of 13
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`I.
`
`BACKGROUND
`A.
`Parties
`Plaintiffs in this action are as follows.1 Free Spirit Organics (“FSO”), NAC, is a
`tribal owned Native American company organized under the laws of the State of Nevada.2
`Second Am. Compl. (“SAC”) ¶ 3, ECF No. 35. FSO served as the manager and operator of a
`250-acre plot of land in Stockton, California on which the industrial hemp grow at issue took
`place. Id. American States University (“ASU”) is an institution of higher education, as defined
`under section 81000 of the California Food and Agricultural Code; ASU is FSO’s business
`partner in the Stockton hemp grow. Id. ¶ 4. HRM Farms, Inc., a California corporation with its
`principal place of business in Holt, California also was a partner in the grow operation. Id. ¶ 5.
`Cannabis Science, Inc. is a publicly traded company organized under the laws of Nevada, with its
`principal place of business in Orange County, California. Id. ¶ 6. Finally, plaintiff S.G. Farms is
`a California agricultural research organization based in Marin County, California that contracted
`with FSO “to assist with the subject grow and to conduct research in connection with the subject
`grow.” Id. ¶ 7.
`Plaintiffs name several San Joaquin County agencies and officials as defendants in
`this action. First, plaintiffs name the San Joaquin County Board of Supervisors, including its
`individual members acting in their official capacity (collectively, “Board”). Id. ¶ 10. Those
`members are Miguel Villapudua, Katherine Miller, Tom Patti, Bob Elliott and Chuck Winn. Id.
`Plaintiffs also name Erin Hiroko Sakata, an attorney working for the San Joaquin County
`
`
`
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`
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`1 On January 7 and 8, 2019, the court held an evidentiary hearing to address the issue of
`standing as to certain plaintiffs. See ECF Nos. 90, 91. During that hearing, the following
`plaintiffs were voluntarily dismissed from this action: Winnemucca Shoshoni, MBS, Gerard
`Galvez, Bruce Granados, Scott Rayborn, Justin Granados, Glen Burgin, Doreen Morales, Gil
`Granados and Gil Granados, Jr.
`
` 2
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` At the January 8, 2019 evidentiary hearing, the parties stipulated that wherever the
`record refences the entity Free Spirit Organics, LLC, that reference should be construed to
`identify Free Spirit Organics, NAC. ECF No. 91.
`2
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`counsel’s office. Id. ¶ 11. Finally, plaintiffs name the San Joaquin County Sheriff and Doe
`defendants.3 Id. ¶¶ 12–13.
`B.
`Factual Allegations
`Plaintiffs leased a 250-acre parcel of land in San Joaquin County for the purpose
`of operating an industrial hemp operation on 26.19 acres of that parcel. Id. ¶ 27. Plaintiffs
`applied for all necessary paperwork to conduct the grow. Id. FSO is an industrial hemp
`cultivator approved by the Nevada Department of Agriculture and HRM is a hemp grower
`registered with the San Joaquin County Agricultural Commission. Id. ¶¶ 28–29. Hoping to
`produce a yield of the highest quality, plaintiffs also allege they contacted S.G. Farms to provide
`consultation services regarding the grow. Id. ¶¶ 30–32. The parties reached a “cooperative
`consulting agreement” to achieve that end. Id. ¶¶ 31–32. Plaintiffs allege they were authorized to
`conduct grow operations by way of S.G. Farms’ qualifications under California Food and
`Agricultural Code section 81000(c)(1). Id. ¶ 33.
`In June 2017, plaintiffs began to cultivate the hemp grow. Id. ¶ 34. On July 31,
`2017, the County Agricultural Commission approved the grow operation. Id. The Commission
`identified HRM as a “grower of hemp” on the parcel; S.G. Farms regularly visited the parcel to
`perform testing and maintenance and Williams Bills (“Chief Bills”), a member of the Native
`American tribe of Winnemucca Shoshoni, oversaw general grow operations. Id. ¶¶ 8, 34.
`Plaintiffs further allege they tested the hemp to ensure it fell below the 0.3 percent THC
`[tetrahydrocannabinol] limit permitted for industrial hemp and posted signage on the grow site to
`ensure it was “unmistakably identified [] as industrial hemp.” Id. ¶¶ 35–36.
`On August 29, 2017, County Counsel Sakata sent plaintiffs a letter claiming that,
`based on an August 17, 2017 investigation, their “cannabis grow” was prohibited by County law.
`Id. ¶ 37. The letter further demanded plaintiffs produce evidence by September 11, 2017,
`supporting their claim of being an authorized “research cultivator.” Id. On September 11, 2017,
`
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`3 Plaintiffs also named the San Joaquin County District Attorney as a defendant in this
`action; however, at the April 20, 2018 motion hearing, the court dismissed the District Attorney
`from this action with prejudice.
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`3
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`plaintiffs responded to the County’s letter, providing a factual and legal basis for their alleged
`authorization to conduct the grow. Id. ¶ 38. Plaintiffs’ responsive letter is attached as exhibit B
`to the second amended complaint. See id., Ex. B at 32–48, ECF No. 36.4 On September 12,
`2017, the County responded by letter, taking the position plaintiffs’ letter was non-responsive and
`did not demonstrate they qualified as an “Established Agricultural Research Institution for the
`purposes of agricultural or academic research.” Id. ¶ 39. On September 15, 2017, plaintiffs again
`replied by letter and provided supporting evidence attempting to substantiate “currently approved
`[educational] programs” offered by ASU. Id. ¶ 40 (alteration in original).
`On September 26, 2017, the Board of Supervisors passed ordinance no. 4497, an
`“Interim Urgency Ordinance Declaring a Temporary Moratorium on the Cultivation of Industrial
`Hemp by ‘Established Agricultural Research Institutions’ within the Unincorporated Areas of San
`Joaquin County.” Id. ¶¶ 41–47; id., Ex. C at 49–56. Thereafter, on September 28, 2017, Sakata
`sent plaintiffs a letter attaching the ordinance, warning the ordinance was effective immediately,
`asserting plaintiffs’ grow was a public nuisance and demanding abatement. Id. ¶ 43; id., Ex. C.
`On October 3, 2017, in response to Sakata’s latest letter, plaintiffs again had their crop tested for
`THC levels. Id. ¶ 44. The test once again revealed THC levels at 0.24%, which plaintiffs allege
`“clearly designat[ed] it as hemp.” Id.
`On October 5, 2017, ASU’s Administrative Dean, Roger Agajanian, contacted the
`Board and requested a hearing be scheduled for October 24, 2017. Id. ¶ 45. His request was
`denied; however, he was informed his matter would be placed on the agenda for the Board’s
`November 7, 2017 meeting. Id. The next day, October 6, 2017, Agajanian sent the Board a letter
`confirming the November 7, 2017 agenda item and summarizing plaintiffs’ position regarding the
`ordinance. Id.; SAC, Ex. D at 57–71.
`
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`4 The court considers plaintiffs’ exhibits as incorporated by reference into the second
`amended complaint and therefore relies on their contents for purposes of resolving the present
`motion. See Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is an exhibit to a pleading
`is a part of the pleading for all purposes.”).
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`Case 2:17-cv-02271-KJM-EFB Document 99 Filed 07/07/20 Page 5 of 13
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`On October 9, 2017, a law enforcement agent named Michael Eastin obtained a
`warrant to search the grow property, and, “the next Tuesday, one day after Columbus [D]ay,”5 the
`Sheriff entered the property and seized the hemp crop. Id. ¶¶ 46, 52.
`C.
`Procedural History
` Plaintiffs initiated this suit on October 27, 2017, and, on October 30, 2017, filed
`a first amended complaint as a matter of course. ECF Nos. 1, 7. On November 17, 2017,
`plaintiffs moved for a temporary restraining order asking the court to temporarily enjoin
`ordinance no. 4479, stay any pending criminal charges brought by the County and order return of
`the industrial hemp seized based on the October 9, 2017 search warrant. ECF No. 21. On
`November 30, 2017, the court heard plaintiffs’ motion for the temporary restraining order and,
`after considering arguments, denied the motion for failure to show a likelihood of irreparable
`harm. See ECF Nos. 29, 32.
`On December 25, 2017, as the parties stipulated and the court approved, plaintiffs
`filed the operative second amended complaint. See SAC. The complaint makes the following
`claims: (1) ordinance no. 4479 is constitutionally preempted; (2) ordinance no. 4479 is
`unconstitutionally vague; (3) ordinance no. 4479 is an unlawful bill of attainder/ex post facto law;
`(4) defendants violated the procedural due process clause of the Fifth Amendment; and
`(5) defendants committed an unlawful seizure under the Fourth Amendment. See generally id.
`On January 16, 2018, defendants moved to dismiss the second amended complaint.
`Mot., ECF No. 37. Prior to filing an opposition, plaintiffs Free Spirit Organics, NAC, American
`States University, HRM Farms and Cannabis Science, Inc. (hereinafter “FSO plaintiffs”)
`substituted Ronda Baldwin-Kennedy as their new counsel of record.6 See ECF Nos. 46, 48. S.G.
`Farms is the only remaining plaintiff for which Joseph Salama serves as counsel of record. The
`
`5 The second amended complaint describes the significance of this timing given the
`history of Native American displacement beginning with the arrival of Christopher Columbus in
`1492. SAC ¶¶ 20–26.
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` Plaintiffs William Bills and Glen Burgin also substituted Ms. Baldwin-Kennedy as
`counsel of record; however, as noted above, those plaintiffs previously were voluntarily
`dismissed as parties to this action on January 8, 2019.
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`FSO plaintiffs have opposed the motion, FSO Opp’n, ECF No. 59; as has S.G. Farms, S.G. Farms
`Opp’n, ECF No. 58. Defendants filed a consolidated reply. Reply, ECF No. 61.
`On April 20, 2018, the court held a hearing on the motion to dismiss. See ECF
`No. 63. Counsel Ronda Baldwin-Kennedy appeared on behalf of the FSO plaintiffs and Joseph
`Salama appeared on behalf of S.G. Farms. Counsel Ronald Scholar and Derek Cole appeared for
`defendants. As noted above, at hearing the court dismissed the San Joaquin County District
`Attorney with prejudice, dismissed all but ten of the fifty unidentified Doe defendants and
`reserved judgment on the remainder of the motion pending resolution of the issue of standing.
`Thereafter, the court set an evidentiary hearing as to standing and ordered supplemental briefing
`on the matter. The court held the evidentiary hearing on January 7 and 8, 2019. After several
`stipulations dismissing certain parties and narrowing the issues to be addressed, the sole
`remaining question developed at hearing was whether S.G. Farms has standing in this action. See
`ECF Nos. 90, 91. On February 22, 2019, as permitted by the court, defendants and FSO plaintiffs
`each filed post-hearing supplemental briefs. Defs.’ Suppl. Br., ECF No. 94; FSO Suppl. Br., ECF
`No. 95.
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`The court resolves the question of S.G. Farms’ standing here, adversely to S.G.
`Farms as explained below.
`II.
`LEGAL STANDARD
`Although defendants’ motion to dismiss does not explicitly challenge standing
`under Federal Rule of Civil Procedure 12(b)(1), a jurisdictional challenge is, nonetheless,
`appropriately framed under that provision. See White v. Lee, 227 F.3d 1214, 1242 (9th Cir.
`2000). Given the developed record on the matter of standing, including multiple supplemental
`filings and an evidentiary hearing, the court considers defendants’ standing challenge under the
`rubric of Rule 12(b)(1). See Gemtel Corp. v. Cmty. Redevelopment Agency of City of Los
`Angeles, 23 F.3d 1542, 1544 n.1 (9th Cir. 1994) (construing district court’s dismissal under Rule
`12(b)(6) as one under Rule 12(b)(1) because it was “clear from the district court’s rationale that it
`was dismissing for lack of jurisdiction.”).
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`The U.S. Constitution “limits the jurisdiction of federal courts to ‘Cases’ and
`‘Controversies.’” Lujan v. Defs. of Wildlife, 504 U.S. 555, 559 (1992). “Standing to sue is
`doctrine rooted in the traditional understanding of a case or controversy.” Spokeo, Inc. v. Robins,
`136 S. Ct. 1540, 1547 (2016); see also Lujan, 504 U.S. at 560 (“[T]he core component of
`standing is an essential and unchanging part of the case-or-controversy requirement of Article
`III.”).
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`A plaintiff possesses Article III standing only if he or she has “(1) suffered an
`injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is
`likely to be redressed by a favorable judicial decision.” Spokeo, 136 S. Ct. at 1547 (citing Lujan,
`504 U.S. at 560). To establish an injury in fact, the plaintiff must show the defendant infringed
`on the plaintiff’s legally protected interest in a “concrete and particularized” manner that is
`“actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal quotations
`and citations omitted). “A ‘concrete’ injury must be ‘de facto’; that is, it must actually exist.”
`Spokeo, 136 S. Ct. at 1548 (citing Black’s Law Dictionary 479 (9th ed. 2009)).
`Lack of standing is “properly raised in a motion to dismiss under Federal Rule of
`Civil Procedure 12(b)(1), not Rule 12(b)(6).” White, 227 F.3d at 1242. “Rule 12(b)(1)
`jurisdictional attacks can be either facial or factual.” Id. “In a facial attack, the challenger asserts
`that the allegations contained in a complaint are insufficient on their face to invoke federal
`jurisdiction.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). “[I]n a
`factual attack, the challenger disputes the truth of the allegations that, by themselves, would
`otherwise invoke federal jurisdiction.” Id. A “district court resolves a facial attack as it would a
`motion to dismiss under Rule 12(b)(6): Accepting the plaintiff’s allegations as true and drawing
`all reasonable inferences in the plaintiff’s favor, the court determines whether the allegations are
`sufficient as a legal matter to invoke the court’s jurisdiction.” Leite v. Crane Co., 749 F.3d 1117,
`1121 (9th Cir. 2014) (citing Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013)). In a factual
`attack, however, the court may review evidence outside the pleadings to resolve factual disputes
`concerning the existence of jurisdiction. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.
`1988). “Once the moving party has converted the motion to dismiss into a factual motion by
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`presenting affidavits or other evidence properly brought before the court, the party opposing the
`motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing
`subject matter jurisdiction.” Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th
`Cir. 2003) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989)).
`Plaintiffs, as the parties invoking federal jurisdiction, bear the burden of
`establishing the elements to satisfy Article III standing. See Spokeo, 136 S. Ct. at 1547. “Where,
`as here, a case is at the pleading stage, the plaintiff must ‘clearly . . . allege facts demonstrating’
`each element.” Id. (alteration in original) (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)).
`III.
`DISCUSSION
`Defendants’ motion to dismiss is premised on three contentions: (1) plaintiff S.G.
`Farms lacks standing to sue, (2) the second amended complaint fails to satisfy Rule 8’s well-pled
`complaint standard, and (3) individual defendants are entitled to absolute or qualified immunity.
`See generally Mot. Given the procedural developments in this case, as explained below, the court
`addresses only the issue of standing here.
`A.
`S.G. Farms’ Standing to Sue
`As defendants appropriately frame it, “The only question remaining [as to
`standing] . . . is whether or not Plaintiff S.G. Farms was a vendor that sold seeds and was paid for
`them or was it a partner with an ongoing financial interest in the crop.” Defs.’ Suppl. Br. at 2.
`In opposition to defendants’ motion to dismiss, S.G. Farms submitted the
`declaration of George Bianchini, an S.G. Farms proprietor and CEO of its parent company M.C.
`Farmaceutical, Inc. Bianchini Decl. ¶ 1, ECF No. 68-3. Bianchini states that in early 2016, Chief
`Bills contacted S.G. Farms to purchase seed for an industrial hemp grow. Id. ¶ 4. Thereafter,
`having been “impressed with S.G. Farms’ research, accomplishment, and knowledge surrounding
`cannabis,” Chief Bills asked S.G. Farms to assist in the grow. Id. He further states that S.G.
`Farms provided advice and consultation services regarding the legality of the grow. Id. ¶ 5.
`The terms of S.G. Farms’ agreement with Chief Bills were that S.G. Farms would
`“basically oversee the grow, and ensure that it was as healthy as possible,” in exchange for “10–
`15% of [Chief Bills’s] (and his tribe’s) share of the crops.” Id. ¶ 8. To satisfy his obligations,
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`Bianchini spent “hundreds of hours, typically by [him]self or with one of [S.G. Farms’] workers,
`making sure everything stayed in proper shape.” Id. S.G. Farms relied on this 10 to 15 percent
`interest as an “important part of [its] revenue model” because it intended to rejuvenate its seed
`supply with its share of the crop. Id. ¶ 10. Additionally, Bianchini’s “estimate of the value of the
`CBD . . . would have provided S.G. Farms with the financial ability to continue its agricultural
`research for at least another three years.” Id.
`Bianchini also attaches to his declaration emails “showing [he] was involved with
`the grow.” Id. ¶ 11. One such email exchange with Chief Bills states, “I was out at the farm
`today and took some photos. . . . I also took a bud for testing. I will send it to you next week.
`Anyway the farm looks great.” Id.
`At the January 2019 evidentiary hearing, Bianchini testified the S.G. Farms
`agreement with Chief Bills was not in writing, Jan. 7, 2019 Tr. 89:14–18, ECF No. 93, and he
`was not a signatory to either of the Master Facilitator Agreements, id. 91:23–92:15. Additionally,
`other than documents in the form of receipts for payment for the seeds and clones, his agreement
`with Chief Bills was entirely oral. Id. 89:19–24. Bianchini testified that oral agreements are
`industry standard, their agreement did not contemplate services beyond this most recent grow
`season and the value rendered to S.G. Farms for the seeds and clones was $15,500. Id. 90:2–17.
`He stated that one of the cashier’s checks used to pay the $15,500 fee contained the notation
`“consulting fee” in the margin. Id. 109:13–20. He also testified he did not document the manner
`or hours he worked at the grow site, id. 90:25–91:12, but Chief Bills and Glen Burgin did witness
`him performing work on the property on several occasions, id. 81:5–15; Jan. 8 Tr. 137:7–15, ECF
`No. 93-1
`
`Bianchini testified he retained emails documenting his agreement with Chief Bills;
`however, he did not produce those emails during the evidentiary hearing. See Jan. 7, 2019 Tr.
`93:12–25; Jan. 8, 2019 Tr. 138:23–139:3. Finally, Bianchini testified he attended a conference
`call with other parties to the grow operation in which the nature of his agreement was discussed,
`but Chief Bills was not present during the call. Jan. 7, 2019 Tr. 94:3–17, 123:2–19; Jan. 8, 2019
`Tr. 143:18–144:7.
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`In their post-evidentiary hearing briefs, both defendants and FSO plaintiffs
`contend Bianchini’s testimony and lack of evidentiary support, taken together, do not establish
`S.G. Farms’ interest in the crop, and thus expose S.G. Farms’ lack of standing. See Defs.’ Suppl.
`Br. at 5; FSO Suppl. Br. at 3–4.
`The critical question here is whether S.G. Farms presents sufficient evidence
`demonstrating its injury would be redressed by a favorable decision from this court. “To
`establish redressability, a plaintiff must show that it is ‘likely, as opposed to merely speculative,
`that the injury will be redressed by a favorable decision.’” M.S. v. Brown, 902 F.3d 1076, 1083
`(9th Cir. 2018) (quoting Lujan, 504 U.S. at 561). “If . . . a favorable judicial decision would not
`require the defendant to redress the plaintiff’s claimed injury, the plaintiff cannot demonstrate
`redressability[.]” Id. (citation omitted). Here, S.G. Farms’ stated interest in the crop is purely
`contractual, see Bianchini Decl. ¶ 8; thus, to establish standing, S.G. Farms must show defendants
`infringed upon the benefit it anticipated from an enforceable contract.
`The court finds S.G. Farms has not shown it had or has an enforceable interest in
`any portion of the crop. Although this matter is predicated on federal question jurisdiction,
`contract formation between private parties is inherently a matter of state law. See Woodward
`Governor Co. v. Curtiss Wright Flight Sys., Inc., 164 F.3d 123, 126 (2d Cir. 1999) (describing
`limited circumstances in which federal common law applies, otherwise state law governs); cf.
`Ward v. Goossen, 71 F. Supp. 3d 1010, 1014 (N.D. Cal. 2014) (“In order to decide whether
`parties agreed to arbitrate a particular set of disputes, courts apply state-law principles governing
`contract formation.” (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)).
`Because the purported contract between S.G. Farms and Chief Bills involved California parties7
`and tangible goods produced in California, California contract law applies.
`California Commercial Code section 2102 governs “transactions in goods.” Goods
`are generally defined as “all things . . . which are movable at the time of identification to the
`
`
`7 The second amended complaint lists S.G. Farms as a California organization
`headquartered in Marin County and lists Chief Bills as residing in San Joaquin County,
`California. SAC ¶¶ 7–8.
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`contract for sale . . . .” Cal. Com. Code § 2105. Goods also can include “growing crops . . .
`attached to realty as described in the section . . . 2107[.]” Id. Section 2107(2) provides that “[a]
`contract for the sale apart from the land of growing crops or other things attached to realty and
`capable of severance without material harm thereto . . . is a contract for the sale of goods within
`this division . . . .” Cal. Com. Code § 2107(2). The transaction here involves the exchange of
`goods such that the California Commercial Code applies; as Bianchini testified, in exchange for
`his services, which included overseeing the grow, he would receive 10 to 15 percent of Chief
`Bills’ portion of the crop. Bianchini Decl. ¶ 8.
`Because the California Commercial Code applies, the transaction here must meet
`the threshold requirements of section 2201. Section 2201(1) provides that a contract for the sale
`of goods of $500 or more “is not enforceable . . . unless there is some writing sufficient to
`indicate that a contract for sale has been made between the parties and signed by the party against
`whom enforcement is sought.” Cal. Com. Code § 2201(1). Bianchini testified his expected
`return from the 10 to 15 percent crop share would be at least “enough to cover [his] costs[,] which
`were probably limited to about 15 or 20 thousand out-of-pocket as [he] covered all the labor for
`when [he] brought [his] crew in.” Jan. 7, 2019 Tr. 94:8–17. Bianchini also testified the
`agreement he made with Chief Bills was not memorialized in a writing. Id. 89:19–24. Therefore,
`because the purported agreement here involves a transaction greater than $500 and there is no
`writing documenting the agreement, S.G. Farms’ purported contractual interest in the grow is
`barred by Commercial Code section 2201, unless an exception applies.
`One possible exception under section 2201 is contained in a subsection of that
`section, providing that an unenforceable contract under subsection (1) is nonetheless enforceable
`“[i]f the party against whom enforcement is sought admits in his or her pleading, testimony, or
`otherwise in court that a contract for sale was made . . . .” Cal. Com. Code § 2201 (3)(b). Chief
`Bills’s testimony forecloses the availability of this exception. During the evidentiary hearing,
`when asked about the involvement of Bianchini and S.G. Farms in the grow, Chief Bills said:
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`So I called up George one day, and it so happened that he had plants.
`And so I told George, I go, well, we’re ready, trying to get our ground
`prepped, ready to grow hemp. And then I said, well, we’re trying to
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`figure out the seed issue. And he goes, well, I do have plants, and it’s
`going to be, you know, several weeks to a month to formulate those
`plants that he had. They were going to be going to the Pahrump grow
`with Duff’s son Jason. But there was some controversy working
`between those two. So it was like first come, first serve, who has the
`money to produce them. We came up with the money, and that’s how
`we started out.
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`Jan. 8 Tr. 214:13–215:4.
`Additionally, when describing the nature of his arrangement with S.G. Farms,
`Chief Bills testified that “[Bianchini] supplied what we needed and he got paid. So whenever he
`brought product there, I made sure that I was there so I could give him his check so he has no out
`of pocket.” Id. 227:4–8. Chief Bills also testified he did not make the “consulting fee” notation
`on one of the cashier’s checks for seed payment because such a notation would have been in
`computerized type format, as the bank customarily converts handwritten memo notes to
`computer-generated type when issuing cashier’s checks. Id. 227:16–23. Finally, although Chief
`Bills’s declaration does speak of a general partnership with S.G. Farms, it makes no reference to a
`written agreement to provide consultation services in exchange for a 10 to 15 percent stake in his
`share of the crop. See Bills Decl. ¶¶ 14, 15, 22. Given Bills’s testimony, which was not rebutted,
`it is clear the exception under section 2201(3)(b) does not apply.
`It is S.G. Farms’ burden to establish its standing, see WildEarth Guardians v. U.S.
`Dep’t of Agric., 795 F.3d 1148, 1154 (9th Cir. 2015), a burden it has not met. Despite
`Bianchini’s testimony, S.G. Farms produces no evidence of a formal written agreement for a 10–
`15 percent share of Chief Bills’s crop. The emails attached to Bianchini’s declaration are not
`proof of such an agreement, nor is the “consulting fee” notation appearing on one of the cashier’s
`checks remitted by Chief Bills because, as Bianchini’s testified, those checks were for the
`$15,500 worth of seeds and clones Chief Bills purchased for the grow. Moreover, any purported
`conference call in which S.G. Farms’ role was modified is inconsequential because Chief Bills
`was not a party to the call.
`Finally, despite being granted the opportunity to submit supplemental briefing
`after the evidentiary hearing, including the opportunity to reply, ECF No. 91, S.G. Farms did
`neither. As a result, S.G. Farms made no formal objection to defendants’ or FSO plaintiffs’
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`supplemental briefs contending S.G. Farms lacks standing in this matter. Defs.’ Suppl. Br. at 5;
`FSO Suppl. Br. at 3–4.
`In sum, S.G. Farms has not established standing in this matter by showing an
`enforceable contract redressable by a favorable decision from this court. Given that the complaint
`has been amended twice before, and S.G. Farms has been given a full opportunity to establish
`standing through briefing and the presentation of evidence at the evidentiary hearing, the court
`finds further amendment would be futile. See Novak v. United States, 795 F.3d 1012, 1020 (9th
`Cir. 2015) (“Futility alone can justify a court’s refusal to grant leave to amend.”). Accordingly,
`S.G. Farms is dismissed from this action with prejudice.
`B.
`Leave to Amend as to Remaining Plaintiffs
`As noted above, counsel Ronda Baldwin-Kennedy substituted in as counsel of
`record for the remaining plaintiffs, the FSO plaintiffs, after the second amended complaint had
`been filed. See ECF Nos. 46, 48. Since that time, the FSO plaintiffs have consistently sought
`leave to amend to cure shortcomings they identify in the complaint. See April 20, 2018 Tr. 7:25–
`8:2, 11:20–12:1, ECF No. 66; FSO Suppl. Br. at 2.
`Under the circumstances, the FSO plaintiffs will be given the opportunity one
`more time to amend the complaint.
`IV.
`CONCLUSION
`Defendants’ motion to dismiss, ECF No. 37, is GRANTED to the extent that S.G.
`Farms does not have standing to pursue this matter. S.G. Farms is dismissed with prejudice from
`this action. The remaining plaintiffs are granted one final opportunity to amend the complaint,
`with an amended complaint to be filed within twenty-one (21) days of the filed date of this order.
`The balance of defendants’ motion to dismiss is DENIED without prejudice, given plaintiffs’
`opportunity to amend.
`IT IS SO ORDERED.
`DATED: July 6, 2020.
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