Court Opinion

ID: 9408726
Source: CourtListenerOpinion
Date Created: 2023-07-13 16:04:45.375832+00
Date Added: 2024-06-11T17:20:46.541542
License: Public Domain

IN THE
             ARIZONA COURT OF APPEALS
                              DIVISION ONE

   SAGUARO HEALING, LLC, an Arizona limited liability company,
                        Petitioner,

                                     v.

THE HONORABLE ALISON BACHUS, Judge of the SUPERIOR COURT
 OF THE STATE OF ARIZONA, in and for the County of MARICOPA,
                      Respondent Judge,

STATE OF ARIZONA, a governmental entity; ARIZONA DEPARTMENT
 OF HEALTH SERVICES, a political subdivision of the State of Arizona;
JENNIE CUNICO, in her official capacity as acting director of the Arizona
                 Department of Health Services,
                       Real Parties in Interest.

                           No. 1 CA-SA 23-0066
                             FILED 7-13-2023

 Petition for Special Action from the Superior Court in Maricopa County
                            No. CV2017-054686
               The Honorable Alison Bachus, Judge (Retired)

      JURISDICTION ACCEPTED; RELIEF GRANTED IN PART

                                COUNSEL

Clark Hill PLC, Scottsdale
By Ryan J. Lorenz, Sean M. Carroll, Jarin K. Giesler, Daniel P. Thiel
Counsel for Petitioner
Sherman & Howard L.L.C., Phoenix
By Gregory W. Falls, Craig A. Morgan, Matthew A. Hesketh, Jake Tyler
Rapp
Counsel for Real Parties in Interest

                                  OPINION

Presiding Judge Maria Elena Cruz delivered the opinion of the Court, in
which Judge James B. Morse Jr. and Judge Paul J. McMurdie joined.

C R U Z, Judge:

¶1            Petitioner Saguaro Healing, LLC (“Saguaro”) seeks relief
from the superior court’s order denying its motion to unseal documents
submitted to the court by the Arizona Department of Health Services
(“ADHS”) for in camera inspection. For the following reasons, we accept
jurisdiction and grant relief in part.

               FACTUAL AND PROCEDURAL HISTORY

¶2            Under the Arizona Medical Marijuana Act (“AMMA”),
Arizona Revised Statutes (“A.R.S.”) sections 36-2801 to -2822, an individual
or entity must apply to ADHS for a dispensary registration certificate before
ADHS may approve the individual or entity to operate a dispensary.
ADHS may only issue a limited number of certificates. Each year, ADHS
reviews current valid dispensary certificates to determine if it may issue
additional dispensary registration certificates pursuant to A.R.S. § 36-
2804(C). Ariz. Admin. Code (“A.A.C.”) R9-17-303(A).

¶3             In 2016, ADHS determined it could issue new registration
certificates and announced it would accept applications between July 18
and July 29, 2016. Saguaro Healing LLC v. State, 249 Ariz. 362, 363, ¶ 4 (2020).
Saguaro applied for a certificate and indicated its dispensary would be
located in La Paz County. Id. During the application period, the only
dispensary operating in La Paz County left the county. Id. at ¶ 5. When
ADHS did not issue a certificate to Saguaro or any other applicant, Saguaro
sued ADHS. Id. at 364, ¶ 6. Ultimately, the Arizona Supreme Court ruled
in Saguaro’s favor, holding that A.R.S. § 36-2804(C) required ADHS to issue
at least one medical marijuana dispensary registration certificate in each
county with a qualified applicant. Id. at 366, ¶ 23. Our supreme court
remanded to the superior court for further proceedings. Id.

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                SAGUARO v. HON. BACHUS/STATE, et al.
                        Opinion of the Court

¶4            The superior court later remanded the case to ADHS for
further administrative proceedings “so ADHS may issue a marijuana
dispensary registration certificate consistent with the Arizona Supreme
Court’s [opinion] in Saguaro Healing LLC v. State, . . . under the applicable
statutes and rules in effect on October 6, 2016, after having considered
applications submitted for potential dispensaries in La Paz County between
July 18, 2016 and July 29, 2016.”

¶5           In February 2022, ADHS filed a notice of compliance in the
superior court, stating it had awarded the La Paz County medical
marijuana dispensary registration certificate to an applicant other than
Saguaro (“the successful applicant”). Saguaro opposed the notice of
compliance and moved to compel ADHS to produce documentation
proving it had properly issued the dispensary certificate. ADHS opposed
the motion to compel, relying on the AMMA confidentiality statute, A.R.S.
§ 36-2810(A). The superior court granted the motion to compel in part,
ordering ADHS to submit the requested documents to the court for an in
camera review.

¶6           ADHS submitted, ex-parte for in camera inspection, a thumb
drive which had electronic files containing seven documents:

       (i)     The rules and statutes applied by ADHS in its
               December 2021 allocation process- “Relevant 2016
               AMMA Statutes and Rules.”
       (ii)    The number of applicants considered in the 2021
               allocation process.
       (iii)   The 2016 application of the successful applicant and
               documents obtained by ADHS in its due diligence
               process and notes made as part of that process.
       (iv)    The scoring rubric used by ADHS during the
               December 2021 allocation process, as specified in
               A.A.C. § R9-17-303(B)(1)(b).
       (v)     The score of the successful party.
       (vi)    Saguaro’s score.
       (vii)   The certificate issued to the successful party.

¶7          In August 2022, after reviewing the documents, the superior
court concluded that ADHS had complied with the court’s order on
remand. The court filed its minute entry order under seal.

¶8          Saguaro appealed the August 2022 minute entry order in
1 CA-CV 22-0614. After filing its notice of appeal, Saguaro filed a motion

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               SAGUARO v. HON. BACHUS/STATE, et al.
                       Opinion of the Court

to unseal in superior court requesting access to the ex-parte documents. In
January 2023, the superior court denied the motion to unseal, and ordered
ADHS to submit the ex-parte documents to this court. The court sealed its
minute entry order. Saguaro filed a motion in 1 CA-CV 22-0614 requesting
this court to unseal the ex-parte documents, asserting it needed to review
the documents to prepare its opening brief. We denied the motion because
Saguaro had not challenged the superior court’s January 2023 order by
special action. This special action followed, and we stayed the appeal in
1 CA-CV 22-0614 pending our resolution of the special action.

                   SPECIAL ACTION JURISDICTION

¶9             Our decision to accept special action jurisdiction is
discretionary. State v. Superior Court (Landeros), 203 Ariz. 46, 47, ¶ 4 (App.
2002). Special action review is generally appropriate if a party has no
“equally plain, speedy, and adequate remedy by appeal.” Ariz. R.P. Spec.
Act. (“Rule”) 1(a); see generally Sw. Gas Corp. v. Irwin, 229 Ariz. 198, 201,
¶¶ 5-7 (App. 2012). Here, Saguaro has no equally plain, speedy, or
adequate remedy by appeal. In fact, our court will not consider Petitioner’s
stayed appeal until the special action proceedings in the instant matter are
concluded.       And, because this action addresses matters of the
confidentiality of certain materials, it is appropriate that we accept special
action jurisdiction. See Arpaio v. Figueroa, 229 Ariz. 444, 446, ¶ 5 (App. 2012)
(noting that special action jurisdiction is appropriate “when the subject of
the discovery order is ‘privileged or confidential material . . . .’”).
Accordingly, we accept special action jurisdiction.

                               DISCUSSION

¶10             We review a court’s decision denying a request to unseal
records for an abuse of discretion. See Ctr. for Auto Safety v. Goodyear Tire &
Rubber Co., 247 Ariz. 567, 571, ¶ 16 (App. 2019). “A court abuses its
discretion if, ‘in reaching its decision, it applies an erroneous rule of law.’”
Id. (quoting Pullen v. Pullen, 223 Ariz. 293, 296, ¶ 10 (App. 2009)). “We will
not disturb the superior court’s exercise of discretion if it is supported by
any reasonable evidence.” Id. We review questions of statutory
interpretation de novo. McHale v. McHale, 210 Ariz. 194, 196, ¶ 7 (App.
2005).

¶11         Generally, public records are subject to inspection under
Arizona’s Public Records Law (“PRL”), Chapter 1 of A.R.S. Title 39.
However, certain records kept by ADHS for purposes of administering the

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                  SAGUARO v. HON. BACHUS/STATE, et al.
                          Opinion of the Court

AMMA are confidential under A.R.S. § 36-2810 and exempt from the PRL.
The statute provides, in relevant part:

       A. The following information received and records kept by
          the department for purposes of administering this chapter
          are confidential, exempt from title 39, chapter 1, article 2
          . . . and not subject to disclosure to any individual or
          public or private entity, except as necessary for
          authorized employees of the department to perform
          official duties of the department pursuant to this chapter:

           ....

           2.   Applications or renewals, their contents and
           supporting information submitted by or on behalf of
           nonprofit medical marijuana dispensaries in compliance
           with this chapter, including the physical addresses of
           nonprofit medical marijuana dispensaries.

A.R.S. § 36-2810(A)(2). Under Arizona Rule of Civil Procedure 5.4(h), the
superior court must give its reasons for denying a motion to unseal a court
document. Here, however, the superior court provided no explanation for
its ruling that the sealed records were confidential and protected under
A.R.S. § 36-2810.

¶12           To the extent that the superior court found that all of the ex-
parte documents submitted by ADHS for in camera inspection were
confidential under § 36-2810(A), it erred. The statute is specific about what
information is protected—as relevant here, the dispensary applications
themselves and their supporting materials. Because most of the ex-parte
documents submitted for review by the superior court do not qualify for
protection under section 36-2810(A), the court’s order was overly broad. In
addition, the superior court’s August 12, 2022 and January 10, 2023 minute
entry orders do not contain information that is subject to the confidentiality
statute. Accordingly, we remand to the superior court to unseal its two
minute entry orders and those ex-parte documents which are not subject to
the confidentiality protections of § 36-2810(A).

¶13           Saguaro requests attorneys’ fees and costs under Rule 4(g)
and A.R.S. §§ 12-348(A) and -341. Because a decision on the merits has not
yet been made, we deny the request for attorneys’ fees. See A.R.S. § 12-
348(A); see also 4501 Northpoint LP v. Maricopa County, 212 Ariz. 98, 102,
¶¶ 21-22 (2006). We award Saguaro costs upon compliance with Rule 4(g)
and ARCAP 21.

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              SAGUARO v. HON. BACHUS/STATE, et al.
                      Opinion of the Court

                              CONCLUSION

¶14             For the foregoing reasons, we accept jurisdiction and grant
relief in part.

                          AMY M. WOOD • Clerk of the Court
                          FILED: AA

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