Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_13-cv-02027/USCOURTS-cand-3_13-cv-02027-29/pdf.json

Nature of Suit Code: 625
Nature of Suit: Drug Related Seizure of Property
Cause of Action: 21:881 Forfeiture Property-Drugs

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Plaintiff,

v.

REAL PROPERTY AND 

IMPROVEMENTS LOCATED AT 2366 

SAN PABLO AVENUE, BERKELEY, 

CALIFORNIA,

Defendant.

Case No. 13-cv-02027-JST 

ORDER GRANTING MOTION TO 

STAY ACTION PENDING APPEAL

Re: ECF No. 163

Before the Court is the City of Berkeley’s Motion to Stay this Action Pending Appeal. 

ECF No. 163. For the reasons set forth below, the Court will grant the Motion.

I. BACKGROUND

The United States instituted this action in May 2013, seeking to forfeit property located at 

2366 San Pablo Avenue in Berkeley, California due to the property’s use as the site of a medical 

marijuana dispensary. ECF No. 1. Among others, Claimants Nahla Droubi, the owner of the 

property, Berkeley Patients Group, the lessee of the property and operator of the dispensary, and 

the City of Berkeley (“City” or “Berkeley”) challenged the forfeiture. See ECF Nos. 1, 12, 16.

On March 21, 2014, the United States filed a motion to strike Berkeley’s claim, contending 

that the City lacked Article III standing to participate in this action because its interest in the 

property was insufficient for standing purposes. ECF No. at 94. Berkeley asserted that its 

interests in tax revenues generated by the dispensary and its ability to regulate dispensaries within 

its jurisdiction are sufficient to confer on the City Article III standing. ECF No. 95 at 12-16. 

Ultimately, the Court granted the United States’ motion, and struck Berkeley from this action. See

ECF No. 130.

Berkeley then sought a separate judgment from this Court, which would allow the City to 

Case 3:13-cv-02027-JST Document 175 Filed 02/06/15 Page 1 of 8
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appeal the issue of standing to the Ninth Circuit Court of Appeals. See ECF No. 137. The Court 

granted Berkeley’s motion and entered final judgment against the City. ECF No. 153. The City 

then filed an appeal at the Ninth Circuit, and simultaneously filed its motion to stay these 

proceedings pending resolution of its appeal. See ECF Nos. 161, 163. 

II. LEGAL STANDARD

A court’s “power to stay proceedings is incidental to the power inherent in every court to 

control the disposition of the causes on its docket with economy of time and effort for itself, for 

counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). A stay is “an 

exercise of judicial discretion, and the propriety of its issue is dependent upon the circumstances 

of the particular case. The party requesting a stay bears the burden of showing that the 

circumstances justify an exercise of that discretion.” Nken v. Holder, 556 U.S. 418, 433-34 

(2009) (internal alterations, citations, and quotations omitted).

To decide whether a stay pending appeal is warranted, district courts consider four factors: 

(1) whether the movant has made a strong showing that it is likely to succeed on the merits; (2) 

whether the movant will be irreparably injured absent a stay; (3) whether a stay will substantially 

injure other parties to the proceeding; and (4) the public interest implicated by the grant or denial 

of the stay. Id. at 434; see also Leiva-Perez v. Holder, 640 F.3d 962, 964 (9th Cir. 2011).

III. DISCUSSION

A. Likelihood of Success on the Merits 

Berkeley argues that courts have interpreted the standard for evaluating the first factor—

the likelihood of success on the merits—to mean that a party seeking a stay “must show a 

‘minimum quantum of likely success necessary to justify a stay,’” such as when the moving party 

has raised “serious legal questions” on appeal. ECF No. 163 at 3 (citing Leiva-Perez, 640 F.3d at 

967-68). In particular, says the City, substantial issues of first impression in the Ninth Circuit 

represent “serious legal questions” for the purposes of deciding whether to stay a case. Id. at 4-5 

(citing Gray v. Golden Gate Nat’l Recreational Area, No. C 08-00722, 2011 WL 6934433, at *2 

(N.D. Cal. Dec. 29, 2011); Hunt v. Check Recovery Sys., Inc., Nos. C 05 4993 SBA, C 06 2037 

SBA, 2008 WL 2468473, at *3 (N.D. Cal. June 17, 2008); and City of Oakland v. Holder, 961 F. 

Case 3:13-cv-02027-JST Document 175 Filed 02/06/15 Page 2 of 8
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Supp. 2d 1005, 1012 (N.D. Cal. 2013)).

The United States argues that Berkeley has presented no serious legal question or question 

of first impression because “the Ninth Circuit has clearly stated that only those with ‘an ownership

interest or a possessory interest’ have standing to file a claim in a forfeiture proceeding.” ECF No. 

168 at 1-2 (citing United States v. $133,420 in U.S. Currency, 672 F.3d 629, 637-38 (9th Cir. 

2012)). Further, the United States believes that this factor weighs against a stay because the City

lost before this Court on the merits of the standing issue.

The Court finds that the City has raised a “serious legal question” that satisfies the 

likelihood-of-success prong of the stay analysis. The issue of Berkeley’s standing is a serious 

legal question of first impression. Gray, 2011 WL 6934433, at *2. Moreover, the issues raised by 

medical marijuana in local or state jurisdictions that permit its use, and those jurisdictions’ 

standing to assert their interests in medical marijuana regulation, present real, unanswered policy 

questions that are sufficiently “serious” to warrant consideration by the Ninth Circuit. Cf. City of 

Oakland, 961 F. Supp. 2d at 1012 (explaining that “Oakland raises novel legal questions about” its 

standing under the APA to contest the forfeiture of property on which a medical marijuana 

dispensary is located).1

The United States’ argument that the Ninth Circuit has already answered the standing 

question in these circumstances also fails. The Ninth Circuit has explained that an ownership or 

possessory interest in property is sufficient for standing purposes, but has not foreclosed the 

possibility that a city, like Berkeley here, has standing to contest a forfeiture based on its interests 

in tax revenue and regulating medical marijuana in its jurisdiction. See $133,420 in U.S. 

Currency, 672 F.3d at 637-38 (explaining that “a colorable interest in the property” subject to 

forfeiture “includes an ownership or a possessory interest”) (emphasis added).

This factor weighs in favor of a stay.

 

1 Contrary to the United States’ assertion, the fact that the City lost its standing claim on the merits 

does not preclude the Court from finding a “minimum quantum of likely success.” Were courts to 

use the Government’s metric to determine whether to grant a stay pending appeal, no stay would 

ever be granted, because only litigants who lose seek to appeal. 

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B. Irreparable Injury to the Moving Party

Berkeley argues that it will be irreparably harmed if the Court does not grant a stay 

because its claim will be mooted if this forfeiture action is resolved before the City’s appeal is. 

ECF No. 163 at 5. The purpose of the City’s claim is to protect its interests and those of its 

residents: interests in the tax revenue generated by the dispensary, which the City uses to fund its 

public programs, and in stemming the illegal trade in marijuana by providing a legal, regulated 

source of the drug. Id. at 5-7. Further prosecution of the case without the City’s ability to assert 

its claim may lead to the closure of the dispensary, thereby mooting the City’s claim. Berkeley 

also contends that it will be irreparably harmed if the Court does not grant a stay because, even if 

Berkeley’s interests are not mooted by the resolution of this case during the pendency of 

Berkeley’s appeal, Berkeley will be unable to shape the district court record, which “will impact 

Berkeley’s ability to prevail on its substantive defenses” to forfeiture. Id. at 7.

The United States responds that the City will not be irreparably harmed if the forfeiture 

action proceeds because the City has provided no documentation or other admissible evidence to 

support its claim that it will lose tax revenue if the dispensary closes. ECF No. 168 at 2. Further, 

the Government argues that Berkeley will not be irreparably harmed because Berkeley Patients 

Group provided tax revenue to the City via its delivery sales business before it opened at 2366 San 

Pablo Avenue (although the Government’s evidence shows that the delivery-sales revenue was 

substantially lower than the brick-and-mortar operation’s). Id. at 2-3 & Ex. 1. Finally, the United 

States argues that, because most of customers of the City’s medical marijuana dispensaries come 

from outside the City, those customers could decide “to purchase their marijuana elsewhere, or 

decide to cultivate their own.” Id. at 3 & Exs. 2-3. Thus, says the United States, Berkeley “has 

provided no evidence to show definite correlation between the tax revenue from illegal marijuana 

sales at the defendant real property and the instant forfeit action.” Id.

The City has the better argument regarding the potential irreparable harm it faces in the 

absence of a stay. First, the risk of mootness by itself is sufficient to show irreparable harm. See

City of Oakland, 961 F. Supp. 2d at 1013-14; In re Klein Sleep Prods., Inc., No. 93 CIV.7599 

(CSH), 1994 WL 652459, at *1 (S.D.N.Y. Nov. 18, 1994). So if this action were to proceed to 

Case 3:13-cv-02027-JST Document 175 Filed 02/06/15 Page 4 of 8
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conclusion before the City had the opportunity to return to the case, and if its appeal is successful, 

then Berkeley would suffer irreparable harm. The United States has not attempted to rebut this 

argument. 

Second, if this action does not proceed to conclusion before the City re-enters the case, 

assuming its appeal is successful, Berkeley will suffer the harm of being unable to contribute to, or 

develop and shape the record. The United States has not rebutted this argument. 

The only argument the United States presents in rebuttal is that the United States refutes 

that Berkeley will suffer reduced tax revenue if the property is forfeited while its appeal is 

pending. But the United States’ argument on this point only goes to the degree to which Berkeley 

will suffer harm—i.e., that Berkeley has only shown that it will lose some, rather than all, tax 

revenue from Berkeley Patients Group’s medical marijuana sales if the brick-and-mortar location 

is forfeited. There is no question that Berkeley will suffer at least some harm as a result of 

reduced tax revenue if a stay is not granted.2

The Court finds that this factor weighs in favor of granting a stay.

C. Substantial Injury to Other Parties

The United States contends that it will suffer harm if the Court stays this case because it 

will be unable to enforce its laws for an indefinite period of time during the stay. ECF No. 168 at 

4. The City counters that the United States will not be harmed by a stay because (1) the 

dispensary has been openly operating since 2000, so the United States “cannot credibly complain 

about preserving the status quo pending Berkeley’s appeal,” (2) the court in City of Oakland saw 

no “appreciable harm to the Government” by virtue of a stay, and (3) the other Claimants in the 

action would benefit, rather than be harmed, by a stay because if the City succeeds on appeal, the 

Claimants will have “an additional party [to] raise its challenges to the Government’s action.” 

ECF No. 163 at 7-8 (citing City of Oakland, 961 F. Supp. 2d at 1014-15).

 

2 As to the United States’ argument that dispensary clients will find other sources for medical 

marijuana or cultivate their own if Berkeley Patients Group is unable to operate at the subject 

property, the Court is not sure how this factors into the irreparable harm analysis, other than to 

show that closing Berkeley Patients Group’s current operations may result in that business losing 

customers, which would also tend to show that Berkeley will suffer reduced tax revenue if 

Berkeley Patients Group no longer operates at 2366 San Pablo Avenue.

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The court in City of Oakland considered the Government’s precise argument and reached 

this conclusion:

While the Court understands—indeed, shares—the Government's 

concern about ensuring that the 1840 Embarcadero action advances 

in a timely manner, the Court does not see any appreciable harm to 

the Government if the forfeiture proceeding is stayed during 

Oakland’s appeal. There is no risk that the defendant property will 

be lost or damaged or that evidence relevant to the forfeiture 

proceeding will become stale during a temporary stay of the action. 

The Court also appreciates the Government’s concern over 

protecting its ability to enforce federal law. While a stay may 

temporarily suspend the forfeiture proceeding against the defendant 

property, the Government has put the claimants in the 1840 

Embarcadero action—as well as any other individuals with 

connections to property used for similar medicinal cannabis 

dispensary operations—on notice of its intention to utilize the civil 

forfeiture process to compel compliance with federal drug laws. 

City of Oakland, 961 F. Supp. 2d at 1014. Thus, the City of Oakland court reasoned, a stay would 

not work any substantial injury to the United States’ interests. Id. at 1015. This court reaches the 

same conclusion. 

The lack of substantial injury to any party weighs in favor of a stay. 

D. The Public Interest

The City cites, in support of a stay, the public interests in: (1) the health and safety of 

Berkeley residents, as reflected in its medical marijuana regulations, (2) the adjudication of a 

novel and topical legal issue regarding a locality’s standing in forfeiture proceedings, and (3) 

promoting judicial economy, and avoiding re-litigation and the risk of inconsistent rulings. ECF 

Nos. 163 at 8, 170 at 5-6.

The United States argues that Berkeley’s first asserted interest is merely a re-framing of its 

asserted policy interest in its medical marijuana laws, and that because Congress has specifically 

rejected the notion that any public interest exists in medical marijuana, Berkeley may not assert 

this as a cognizable public interest. ECF No. 168 at 3-4 (citing Golden Gate, 512 F.3d at 1127). 

Moreover, the United States argues that a strong public interest, which is reflected in the federal 

Controlled Substances Act, weighs against permitting a stay here. Id. (citing Golden Gate, 512 

F.3d at 1127).

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The United States is correct that this Court is bound by federal precedent and by the word 

of Congress to recognize the public interest in enforcing congressional drug policy. See United 

States v. Oakland Cannabis Buyers’ Co-op, 532 U.S. 483, 495-98 (2001) (explaining that, when a 

district court considers whether to issue an injunction, it cannot evaluate whether enforcement of

congressional drug policy is in the public interest; the question is whether that policy should be 

enforced by injunction or in some other fashion, not whether enforcement is appropriate at all). 

And it is true that the public interest in enforcement of forfeiture laws will be impeded if the Court 

grants a stay, although only as to this property and for a limited time. City of Oakland, 961 F. 

Supp. 2d at 1014. But the Golden Gate court also made clear that district courts should recognize 

the public interest reflected in a properly enacted local ordinance. 512 F.3d at 1127 (“We are not 

sure on what basis a court could conclude that the public interest is not served by an ordinance 

adopted in such a fashion.”). And federal courts also act in the public interest when they “exercise 

their discretionary power with proper regard for the rightful independence of state governments in 

carrying out their domestic policy.” Id. (citing Burford v. Sun Oil Co., 319 U.S. 315, 318 (1943)). 

Thus, federalism interests tend to counterbalance the Court’s statement in Oakland Cannabis.

3

The Court also finds that there is some public interest in resolving the novel legal issue of 

whether a city has standing in these circumstances, and if so, what a city’s role might be in a 

forfeiture action. The fact that multiple states and localities have enacted medical marijuana laws 

suggests the existence of this public interest. Cf. City of Oakland, 961 F. Supp. 2d at 1015 

(finding a “significant public interest” in “the novel legal issue regarding whether a municipality 

has standing under the APA to challenge a civil forfeiture action against a property when the 

action may affect its [medical marijuana] regulatory scheme and its residents.”).

The City has also identified a cognizable public interest in promoting judicial economy, 

and avoiding duplicative litigation and inconsistent rulings by granting a stay. City of Oakland, 

961 F. Supp. 2d at 1015. If Berkeley succeeds on appeal and this forfeiture action has not been 

 

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The Court acknowledges, but does not resolve, the question of which public policy interest—

federal versus state or local—should be given more weight in this analysis. The combined force 

of the other factors in the stay analysis makes it unnecessary to resolve this question. 

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resolved at the time of its success, the Court might have to extend deadlines or order duplicative 

discovery, and the parties could also find themselves confronted with duplicative litigation tasks. 

If Berkeley succeeds on appeal and this forfeiture action is complete at that time, Berkeley could 

face the inconsistency of having succeeded on appeal only to find that it cannot vindicate its 

interest in the property.

Thus, the Court finds that this factor weighs in favor of a stay.

CONCLUSION

All four factors counsel in favor of a stay. Berkeley’s Motion to Stay is granted. 

The Court hereby stays this case. The Court further orders that, every ninety days from the 

date of this order, Berkeley shall file a status report apprising the Court of any additional deadlines 

or hearing dates set by the Ninth Circuit in its appeal. Berkeley shall also notify the Court that the 

stay should be lifted by filing a final status report within seven days of the issuance of the Ninth 

Circuit’s decision on appeal.

IT IS SO ORDERED.

Dated: February 6, 2015

______________________________________

JON S. TIGAR

United States District Judge

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