Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-15391/USCOURTS-ca9-13-15391-0/pdf.json

Parties Involved:
City of Oakland
Appellant
Melinda Haag
Appellee
Loretta E. Lynch
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CITY OF OAKLAND,

Plaintiff-Appellant,

v.

LORETTA E. LYNCH, Attorney

General of the United States;

MELINDA HAAG, United States

Attorney for the Northern District of

California,

Defendants-Appellees.

No. 13-15391

D.C. No.

3:12-cv-05245-

MEJ

OPINION

Appeal from the United States District Court

for the Northern District of California

Maria-Elena James, Magistrate Judge, Presiding

Argued and Submitted

February 3, 2015—San Francisco, California

Filed August 20, 2015

Before: Richard C. Tallman and Johnnie B. Rawlinson,

Circuit Judges, and Stephen Joseph Murphy, District

Judge.*

Opinion by Judge Murphy

* The Honorable Stephen Joseph Murphy, III, District Judge for the U.S.

District Court for the Eastern District of Michigan, sitting by designation.

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 1 of 14
2 CITY OF OAKLAND V. LYNCH

SUMMARY**

Article III Standing / Jurisdiction

The panel affirmed the district court’s order dismissing

for lack of jurisdiction the City of Oakland’s collateral attack

under the Administrative Procedure Act challenging the

government’s filing of a civil in rem forfeiture action against

Harborside Health Clinic, a medical marijuana dispensary.

The panel held that Oakland had standing to bring suit

under Article III where Oakland alleged a sufficient injury

with respect to the erosion of its tax revenues. The panel also

held, however, that judicial review under the Administrative

Procedure Act was precluded because the government’s

decision to file the forfeiture action was committed to agency

discretion by law, and because allowing the suit to proceed

would impermissibly disrupt the existing forfeiture

framework.

COUNSEL

Cedric C. Chao (argued), Stanley J. Panikowski, Roy K.

McDonald, Kathleen S. Kizer, and Saori Kaji, DLA Piper

LLP (US), San Francisco, California; Barbara J. Parker and

Kiran C. Jain, Oakland City Attorney, Oakland, California,

for Plaintiff-Appellant.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 2 of 14
CITY OF OAKLAND V. LYNCH 3

Stuart F. Delery, Assistant Attorney General, Melinda Haag,

United States Attorney, Mark B. Stern and Adam C. Jed

(argued), Attorney, Civil Division, United States Department

of Justice, Washington, D.C., for Defendants-Appellees.

OPINION

MURPHY, District Judge:

I. INTRODUCTION

The City of Oakland contests the Government’s filing of

a civil in rem forfeiture action against Harborside Health

Clinic, a medical marijuana dispensary acting in accordance

with local and state laws but in violation of the Controlled

Substances Act. Because Oakland lacks a property interest in

Harborside, it was unable to participate in the forfeiture

action. Instead, Oakland initiated a collateral attack against

the Government under the Administrative Procedure Act. The

Government moved for dismissal pursuant to Rule 12(b)(1),

for lack of subject matter jurisdiction, and Rule 12(b)(6), for

failure to state a claim.

Oakland appeals from the district court’s order granting

dismissal for lack of subject matter jurisdiction. The

Government asserts that Oakland lacks Article III standing,

that judicial review is precluded, and that, if the APA applies,

Oakland’s suit is barred because the forfeiture action does not

constitute “final agency action” and because Oakland has

another “adequate remedy in court.” We have jurisdiction

under 28 U.S.C. § 1291. We conclude that Oakland has

Article IIIstanding, but that judicial review is precluded. We

therefore affirm the district court.

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 3 of 14
4 CITY OF OAKLAND V. LYNCH

II. BACKGROUND

On July 9, 2012, the United States filed a civil in rem

forfeiture action pursuant to 21 U.S.C. § 881(a)(7) against the

real property and improvements located at 1840

Embarcadero, Oakland, California. United States v. Real

Prop. & Improvements Located at 1840 Embarcadero,

Oakland, Cal., Case No. C 12-3567. The action targeted

Harborside Health Center, a retail marijuana store that

distributes medical marijuana legally under state law but

allegedly in violation of the Controlled Substances Act

(“CSA”), 21 U.S.C. §§ 841 and 856. Because of Harborside’s

purported violations of the CSA, the Government asserts the

property is subject to forfeiture. 21 U.S.C. § 881(a)(7).

Pursuant to 18 U.S.C. § 983 and Rule G of the

Supplemental Rules for Admiralty or Maritime Claims and

Asset Forfeiture Actions, “[a] person who asserts an interest

in the defendant property may contest the forfeiture by filing

a claim in the court where the action is pending.” Fed. R. Civ.

P. Supp. R. G(5)(a)(i). Because Oakland does not assert an

interest in the Harborside property, it did not file a claim in

the forfeiture action.

Instead, Oakland filed the instant action, seeking a

“declaratory judgment that Defendants and any agency under

their authority have no right to seek civil forfeiture of the real

property located at 1840 Embarcadero, Oakland, California

based on purported violations of the Controlled Substances

Act,” as well as injunctive relief prohibiting the Government

from seeking forfeiture of the property. The Government

moved to dismiss Oakland’s complaint pursuant to Federal

Rule of Civil Procedure 12(b)(1), for lack of subject matter

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 4 of 14
CITY OF OAKLAND V. LYNCH 5

jurisdiction, and Rule 12(b)(6), for failure to state an

actionable claim.

Oakland asserts federal question jurisdiction under the

Administrative Procedure Act (“APA”), 5 U.S.C.

§§ 701–706. Although the United States is generally immune

from suit, the APA waives sovereign immunity and provides

for judicial review of executive action if certain requirements

are met. Match-E-Be-Nash-She-Wish Band of Pottawatomi

Indians v. Patchak, 132 S. Ct. 2199, 2204 (2012). Generally,

a plaintiff must be seeking non-monetary relief for legal

wrongs resulting from a final action undertaken by an agency

or by an agency officer or employee. Id. The plaintiff must

also show a lack of another adequate judicial remedy.

5 U.S.C. § 704. In this case, the district court granted the

Government’s 12(b)(1) motion, finding both that the

Government’s action was not final under the APA, and that

Supplemental Rule G(5)(a)(i) constitutes an adequate judicial

remedy. Because the district court found it lacked subject

matter jurisdiction, it did not consider the Government’s

12(b)(6) motion.

Oakland timely appealed from the district court’s

decision. In addition to the issue of whether the district court

has subject matter jurisdiction over Oakland’s action for

declaratory judgment and injunctive relief, the Government

questions, for the first time, whether Oakland has standing to

sue.

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 5 of 14
6 CITY OF OAKLAND V. LYNCH

III. STANDING

On appeal, the Government asserts that Oakland lacks

standing under Article III.

1

“A suit brought by a plaintiff

without Article IIIstanding is not a ‘case or controversy,’ and

an Article III federal court therefore lacks subject matter

jurisdiction over the suit.” Cetacean Cmty. v. Bush, 386 F.3d

1169, 1174 (9th Cir. 2004). “If a plaintiff lacks Article III

standing, Congress may not confer standing on that plaintiff

by statute.” Id. Because constitutional standing implicates

jurisdiction, “a challenge to constitutional standing is one

‘which we are required to consider, even though raised for the

first time on appeal.’” Laub v. U.S. Dep’t of Interior,

342 F.3d 1080, 1085 (9th Cir. 2003) (quoting Newdow v. U.S.

Congress, 313 F.3d 500, 503 (9th Cir. 2002)).

Standing requires injury, causation, and redressability.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992).

“[A]n injury must be concrete, particularized, and actual or

imminent . . . .” Clapper v. Amnesty Int’l USA, 133 S. Ct.

1138, 1147 (2013) (internal citations and quotation marks

omitted). The Government does not dispute that, if Oakland

demonstrates an injury “fairly traceable to the challenged

action,” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.,

1 The Government also asserts, for the first time on appeal, that Oakland

should not be permitted to bring suit on the basis of prudential standing.

We will not consider the argument, because “a party waives objections to

nonconstitutional standing not properly raised before the district court.”

Pershing Park Villas Homeowners Ass’n v. United Pac. Ins. Co., 219 F.3d

895, 899 (9th Cir. 2000). In any case, the Supreme Court’s recent decision

in Lexmark International, Inc. v. Static Control Components, Inc., 134 S.

Ct. 1377, 1386–87 (2014), calls into question the viability of the

prudential standing doctrine.

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 6 of 14
CITY OF OAKLAND V. LYNCH 7

Inc., 528 U.S. 167, 180 (2000), it would be redressable by a

favorable decision.

Oakland cites three direct injuries. First, it asserts injury

from an expected loss of tax revenue. Second, it states that it

“will suffer a rise in crime and diversion of police resources

due to the increase in black market sales of cannabis that will

follow if the forfeiture action succeeds.” Third, Oakland

argues that a forfeiture of the Harborside dispensary will

injure its “proprietary interest in regulating and taxing

medical cannabis and providing patients safe and affordable

access to medicinal quality cannabis in accordance with

California law.” Because we find the expected loss of tax

revenue constitutionally sufficient, we decline to address the

other two alleged injuries.2

Oakland projected it would receive more than $1.4

million in tax revenues from the city’s four permitted

dispensaries in 2012, “enough to pay for a dozen badly

needed additional police officers or firefighters.” A

substantial portion of this sum would be attributable to

Harborside, as it is “reputed to be the largest dispensary in the

country.” As of October 10, 2012, Harborside had “paid city

and state taxes in excess of one million dollars,” and

“customers pay an 8.75% sales tax on all purchases.”

2 Oakland also briefly references potential injuries to its citizens. “If the

DOJ succeeds in its forfeiture action, Harborside will not have a secure

and reliable place in which to operate,” and “patients cannot obtain the

medicine that California voters have decided should be available to them.”

As a municipality, however, Oakland may not assert injuries to its

citizens, but must allege injury of its own. City of Sausalito v. O’Neill,

386 F.3d 1186, 1197 (9th Cir. 2004).

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 7 of 14
8 CITY OF OAKLAND V. LYNCH

An expected loss of tax revenue can constitute a sufficient

injury for purposes of Article IIIstanding. In City of Sausalito

v. O’Neill, Sausalito, California brought suit to enjoin the

National Park Service (“NPS”) from implementing a plan to

develop and rehabilitate a former military base adjacent to the

city. 386 F.3d 1186, 1194 (9th Cir. 2004). Sausalito alleged

the plan violated a number of environmentally-oriented

federal statutes. Id. To establish Article III injury, it cited the

harm that would result from the addition of an expected 2,700

daily visitors to the city, including congested roadways,

increased crime, and lost sales and property tax revenue (“due

to impaired vehicular movement and commerce rendering

Sausalito less attractive to business”). Id. at 1198. The district

court held that Sausalito sufficiently demonstrated Article III

injury, and we affirmed, finding the asserted harm

“cognizable as both an aesthetic injury and . . . as an

economic injury.” Id. at 1198–99.

Oakland’s expected loss of tax revenue satisfies the

requirements of Article III. In Sausalito, it was conceded that

the NPS plan would “result in an increase in local traffic, an

increase in air pollutant emissions, and an incremental

contribution to the cumulative noise environment.” Id. at

1199. Because Sausalito alleged “that the aesthetic damage

will erode its tax revenue,” we found economic injury that

was actual or imminent, and not conjectural or hypothetical.

Id. Oakland’s injury is even less speculative. If Harborside is

closed, it will no longer provide Oakland with tax revenue,

either directly through income taxes or indirectly through

customer sales taxes. And our precedent makes clear that the

deprivation of revenue constitutes injury under Article III.

The Government’s argument to the contraryis unavailing.

It argues that Oakland’s “claim of lost tax revenues” is

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 8 of 14
CITY OF OAKLAND V. LYNCH 9

uncertain, because it “assumes that a forfeiture will be

ordered, that marijuana sales are not diverted to other

dispensaries in Oakland, and that the new tenant of the 1840

Embarcadero propertywill provide the City with less revenue

than the dispensary.” We agree that Oakland’s claim relies on

a forfeiture being ordered, but find that this alone is not so

speculative as to undermine the claim. See Susan B. Anthony

List v. Driehaus, 134 S. Ct. 2334, 2341 (2014) (“An

allegation of future injury may suffice if . . . there is a

substantial risk that the harm will occur.” (internal quotation

marks omitted)). We give no weight to the unsupported

claims that other dispensaries will see increased sales to make

up for Harborside’s losses, or that a new tenant might provide

more tax revenue than Harborside. It is the Government’s

assertions that are speculative; what is certain is that closing

Harborside will lead to a real and immediate erosion in

Oakland’s tax revenues.

We find that Oakland has standing to bring suit under

Article III. Oakland has alleged a sufficient injury with

respect to the erosion of its tax revenues. The loss of revenues

would be directly attributable to the Government’s forfeiture

action and redressable by a favorable ruling.

IV. JUDICIAL REVIEW UNDER THE APA

In addition to meeting the requirements of constitutional

standing, “[a] plaintiff must also satisfythe non-constitutional

standing requirements of the statute under which he or she

seeks to bring suit.” City of Sausalito, 386 F.3d at 1199.

Unlike Article III standing, non-constitutional analysis is a

“purely statutory inquiry” that “does not go to our subject

matter jurisdiction.” Id. The Government argues that the APA

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 9 of 14
10 CITY OF OAKLAND V. LYNCH

provides no basis for Oakland to bring a collateral action to

enjoin the forfeiture proceeding. We agree.

As a threshold matter, the APA does not apply if the

“agency action is committed to agency discretion by law” or

if “statutes preclude judicial review.” 5 U.S.C. § 701(a)(1),

(2). The APA does not “confer[] authority to grant relief if

any other statute that grants consent to suit expressly or

impliedly forbids the relief which is sought.” Id. § 702.

Because the Government’s decision to file the forfeiture

action is committed to agency discretion, and because

Oakland’s suit is impliedly forbidden by the existence of the

forfeiture statute, judicial review is precluded.

“[L]itigation decisions are generally committed to agency

discretion by law, and are not subject to judicial review under

the APA.” Didrickson v. U.S. Dep’t of Interior, 982 F.2d

1332, 1339 (9th Cir. 1992). “[R]eview is precluded when

plaintiff’s complaint is primarily that the agency made the

wrong choice when making an informed judgment.” Merrill

Ditch-Liners, Inc. v. Pablo, 670 F.2d 139, 140 (9th Cir. 1982)

(internal quotation marks omitted).

Here, the Government made an informed judgment to

initiate a civil forfeiture proceeding against Harborside. It had

to consider the likelihood that a violation actually occurred,

whether agency resources were available and should be

expended, whether an action would be likely to succeed if

initiated, and whether the action was consistent with the

Government’s policies and goals. See Heckler v. Chaney,

470 U.S. 821, 831–32 (1985) (identifying these factors as

important when consideringwhether an exercise of discretion

is suitable for judicial review). The Government’s decision

relied on the exercise of the equivalent of prosecutorial

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 10 of 14
CITY OF OAKLAND V. LYNCH 11

discretion and is thus immune from judicial review under the

APA. See Didrickson, 982 F.2d at 1339.

The existing forfeiture framework also impliedly forbids

judicial review of Oakland’s claims. It is a “well-established

principle that, in most contexts, a precisely drawn, detailed

statute pre-empts more general remedies.” Hinck v. United

States, 550 U.S. 501, 506 (2007) (internal quotation marks

omitted). “Congress did not intend the general grant of review

in the APA to duplicate existing procedures for review of

agency action.” Bowen v. Massachusetts, 487 U.S. 879, 903

(1988). In Hinck, the Supreme Court held that a section of the

Internal Revenue Code provided the plaintiff taxpayers with

an adequate remedy, and that judicial review was therefore

not available, because the code section “provides a forum for

adjudication, a limited class of potential plaintiffs, a statute of

limitations, a standard of review, and authorization for

judicial relief.” 550 U.S. at 506.

Granting Oakland a legal remedy under the APA would

impermissibly provide for duplicative review. As with the

statute in Hinck, the forfeiture statute provides a forum for

adjudication (the court in which the action is brought), a

limited class of potential plaintiffs (“any person claiming an

interest in the seized property”), a limitations period (claims

must be filed within “30 days after the date of service of the

Government’s complaint or . . . after the date of final

publication of notice of the filing of the complaint”), a

standard of review (the claimant may dispute that the

property in question was involved in a prohibited transaction

or attempted transaction), and authorization for judicial relief

(in the forfeiture proceeding). 18 U.S.C. §§ 981–983.

Oakland’s complaint seeks “a declaratory judgment that [the

Government has] no right to seek civil forfeiture of the

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 11 of 14
12 CITY OF OAKLAND V. LYNCH

[Harborside] property” and “a permanent injunction enjoining

[the Government] . . . from seeking forfeiture of the

[Harborside] property.” The forfeiture proceeding, and not a

collateral action, is the proper venue to seek such relief.

The fact that Oakland is unable to participate in the

forfeiture action, because it does not possess an interest in the

Harborside property, is irrelevant. Congress created a

framework permitting only certain parties to bring claims,

and allowing collateral attacks would disrupt that framework

by giving third parties a greater ability to initiate challenges.

Supplemental Rule G(5)(a)(ii) requires an interested party to

file a claim within 30 days of service. A general civil action

under the APA, however, is governed by a six-year

limitations period. 28 U.S.C. § 2401(a). Permitting parties to

file under the APA and circumvent the short deadlines

Congress established in the forfeiture law would make mush

of the law. Additionally, allowing a collateral action to

proceed would render meaningless the forfeiture statute’s

clear language limiting parties who may institute a forfeiture

challenge to those with a property interest.

Match-E-Be-Nash-She-WishBand ofPottawatomiIndians

v. Patchak, 132 S. Ct. 2199 (2012), upon which Oakland

relies, is inapposite. In that case, the owner of property near

the site of a proposed Indian casino filed an action under the

APA challenging the Secretary of the Interior’s

decision—made pursuant to the Indian Reorganization

Act—to take land into trust on behalf of the tribe. Id. at

2202–03. The plaintiff alleged economic, environmental, and

aesthetic harms, but did not assert a property interest in the

land. Id. Because the APA’s waiver of immunity does not

apply if another statute “grants consent to suit [and] expressly

or impliedly forbids the relief which is sought,” 5 U.S.C.

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 12 of 14
CITY OF OAKLAND V. LYNCH 13

§ 702, and because a separate statute, the Quiet Title Act,

authorized suits by plaintiffs with a “right, title, or interest”

in real property, 28 U.S.C. § 2409a(d), the federal

government argued that the plaintiff’s suit was barred. MatchE-Be-Nash, 132 S. Ct. at 2204–05.

But the Supreme Court held that the suit was not barred,

reasoning that “[w]hen a statute is not addressed to the type

of grievance which the plaintiff seeks to assert, then the

statute cannot prevent an APA suit.” Id. at 2205 (internal

quotation omitted). The Supreme Court explained that the

plaintiff was “bringing a different claim” and “seeking

different relief” from “the kind the [Quiet Title Act]

addresses.” Id. at 2209. Oakland argues that, because its

grievances concern public health and safety, tax revenues,

and its regulatory scheme, which are different from

Harborside’s grievances, it is not barred from bringing suit

under the APA. The argument fails, however, because both

parties do in fact seek the same relief: to stop the forfeiture.

Finally, even if Oakland overcame the preceding, Section

704 of the APA would nonetheless bar its claims. Judicial

review only applies to “[a]gency action made reviewable by

statute” (not relevant here), and “final agency action for

which there is no other adequate remedy in a court . . . .”

5 U.S.C. § 704 (emphasis added). The Government’s decision

to file the forefeiture action is not “final,” because it is not an

action “by which rights or obligations have been determined,

or from which legal consequences will flow.” Bennett v.

Spear, 520 U.S. 154, 177–78 (1997) (internal citations and

quotation marks omitted). A forfeiture action simply makes

evident the Government’s intention to challenge the status

quo; any rights, obligations, and legal consequences are to be

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 13 of 14
14 CITY OF OAKLAND V. LYNCH

determined later by a judge. And as discussed above, there is

another adequate remedy—the forfeiture action.

V. CONCLUSION

The City of Oakland has Article III standing to challenge

the Government’s forfeiture action because the closing of

Harborside will lead to a decrease in property and sales tax

revenues. Judicial review under the Administrative Procedure

Act is precluded, however, because the Government’s

decision to file the forfeiture action is committed to agency

discretion by law, and because allowing the suit to proceed

would impermissibly disrupt the existing forfeiture

framework.

For these reasons, we AFFIRM the district court’s

dismissal in favor of the defendant, the United States.

Each party shall bear its own costs on appeal.

 Case: 13-15391, 08/20/2015, ID: 9653572, DktEntry: 52-1, Page 14 of 14