Every day our inbox overflows with legal news aggregation emails. Some of the items are useful. Some must have been authored by Captain Obvious. Some are irrelevant to our practice. We would have thought that comfortably residing in that last category are discussions of the burgeoning marijuana field. The “Week in Weed” and other such periodic news blasts clue us in that there are loads of lawyers out there working on something that would have been unthinkable when we were in our salad days. It is just like high school again; there’s a clique of cool people over there, and we are definitely not a part of it.
Not that there was any reason for us to join the 420 gang. We were one of the five or six people who actually believed Bill Clinton when he said he tried pot but never inhaled. Like the non-inhaler-in-chief, we had a problem drawing hot leaf smoke into our lungs. Unlike other people who trained themselves to get past the initial revulsion, we took our body’s signal to heart and headed toward other dissipations. If something is called an acquired taste, doesn’t that really mean it’s bad? (We mean aside from scotch.)
Reefer was never our thing. It still isn’t. But we are not judging those who chose differently. As an AUSA tasked with prosecuting federal crimes, including drug crimes, we were grateful we never handled any marijuana cases. The fact that Title 21 makes a minor pot sale a federal crime seemed ridiculous to us then, and even more so now. Whither federalism? (But U.S. Attorney offices, at least in big cities, have internal guidelines about what to prosecute, and low-level marijuana distribution is unlikely to satisfy those guidelines. Heck, we wouldn’t indict on heroin trafficking if the amount was too small. This might be most useful thing we ever tell you.) Even crazier, marijuana is on schedule 1, which is supposed to be reserved for the highly dangerous and utterly useless controlled substances – even though there are doctors who prescribe it for legitimate uses.
This much too prolix lead-in brings us to today’s case, Horn v. Medical Marijuana, Inc., 2019 U.S. Dist. LEXIS 65609 (WDNY April 17, 2019). Lo and behold, it is almost a real product liability case involving medicinal marijuana. Almost. The plaintiffs were husband and wife residents of the broad-minded state of New York. They bought a form of cannabidiol (CBD) online from a seller in Colorado, an even broader-minded state. CBD is an oil derived from hemp. The husband had read that CBD might alleviate pain from a recent motorcycle accident. In deciding to purchase the CBD, the plaintiffs tried to make sure that CBD did not contain THC, the psychoactive part of marijuana that gets people high and potentially gets them into trouble with the law. The plaintiffs relied on four sources of information: (1) innitially, an article in High Times magazine, (2) YouTube videos, (3) the seller’s website, and (4) a call to the seller’s 1-800 number. The last three sources stated that CBD did not contain THC, and the magazine article (“CBD is for Everyone!”) said there was not enough THC in CBD to get anyone in trouble.
Guess what? The husband got in trouble. He was employed by a trucking company, which had a random drug testing program. He tested positive for THC and was fired. The wife also worked for the trucking company, and she resigned because she thought it unsafe to work alone. The plaintiffs sued the seller of the CBD, alleging, inter alia, fraud, breach of contract, violations of RICO, and – ta da! – product liability. We’ll leave the merits of the claim alone, although why someone subject to random drug testing would be reading High Times magazine would seem like a valid topic of inquiry.
As a preliminary matter, the court decided that CBD was a controlled substance in 2012, when plaintiffs bought the product, though it probably would not be considered such after Congress tinkered with the law in 2014. That ends up mattering with respect to the RICO claim, and it might also matter to those of you sucking hard on your CBD vape pens as a means of combatting stress from work, family, politics, or the Sixers’ inability to guard the perimeter. In any event, the defendant moved for summary judgment. It won some and lost some.
One of the fraud claims was based on a New York State consumer fraud statute. The Horn court ruled that law inapplicable, because the transaction was out-of-state and the statute is not applied extraterritorially. That result is a little surprising, because the defendant did ship the product to plaintiffs in New York, and that is where the consumption and testing and firing occurred. But the court reasoned that if the plaintiffs had been deceived, it was before anything had been shipped to New York. Hmmmm. Good defendant result. We might use it some day. If a typical, summary-judgment-hating, plaintiff-friendly judge adopts this reasoning, we’ll celebrate. Maybe CBD will be involved in said celebration.
Various other fraud claims failed for lack intent, or because the defendant was not responsible for the contents of a third party magazine article. Only the 800 number call-based fraud claim could proceed.
Amazingly, the court allowed the RICO claim. RICO, we daresay, is abused as much and as perniciously as most controlled substances. The Horn court held that interstate shipment of the product, which was a controlled substance at the time (remember earlier how we told you that hemp was legalized only later?), could constitute a “pattern of racketeering activity.” Yikes. That issue will go to the jury. The defendant must be hoping that at least some of the jurors will be offended by the notion that selling CBD with minimal THC equates to racketeering. Social media research on potential jurors could be crucial. We went on to a website (High Times, naturally) to learn what are the most reliable signs of marijuana use. Possession of drug paraphernalia is an easy one. Then there’s this list: lack of focus during conversation, decreased motivation, increased appetite, inappropriate laughter, financial problems …. Say, wait a minute, we appear to be surrounded by potheads.
For anyone looking for a deep insight from this case, the survival of the RICO claim provides a potentially cautionary tale. Cannabis may not be as illegal as it used to be, but under federal law it’s still a schedule 1 controlled substance. That there seems to be an informal federal moratorium on pot prosecutions is all well and good, but anyone in that business shouldn’t expect private plaintiff’s lawyers to practice the same restraint. As long as marijuana remains illegal, that status will hang over any and all product liability, or near product liability, litigation involving this product.
Speaking of product liability, the product liability discussion is almost an afterthought in the Horn opinion. The court dismissed those claims because New York product liability law does not permit recovery for economic loss. New York law is in accord with most other states. After all, Rest. (Second) of Torts section 402A is limited to “physical injury.” (By the way, the wife’s claimed economic damage was too remote.). To be sure, the plaintiffs in Horn also claimed negligent infliction of emotional distress, but at this point the court brings us back to law school torts class. Remember how courts fretted over claims of negligent infliction of emotional distress, trying to come up with limiting principles (e.g., special relationships) or guarantee of genuineness (e.g., concomitant physical injury)? It’s like a flashback from a drug much more potent than marijuana. The court found no such special circumstance in this case, so the court was able to weed out the marijuana product liability claims. But if ever we were to see such a claim, it might look a bit like the Horn case.