Court Opinion

ID: 2828941
Source: CourtListenerOpinion
Date Created: 2015-08-20 17:01:51.512853+00
Date Added: 2024-06-11T13:40:08.676515
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 CITY OF OAKLAND,                                      No. 13-15391
               Plaintiff-Appellant,
                                                         D.C. No.
                       v.                             3:12-cv-05245-
                                                           MEJ
 LORETTA E. LYNCH, Attorney
 General of the United States;
 MELINDA HAAG, United States                             OPINION
 Attorney for the Northern District of
 California,
                Defendants-Appellees.

        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.
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.
                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 III standing, but that judicial review is precluded. We
therefore affirm the district court.
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
                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.
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 III standing 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.
                    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).
8                CITY OF OAKLAND V. LYNCH

    An expected loss of tax revenue can constitute a sufficient
injury for purposes of Article III standing. 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 contrary is unavailing.
It argues that Oakland’s “claim of lost tax revenues” is
                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 property will 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 satisfy the 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
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 considering whether an exercise of discretion
is suitable for judicial review). The Government’s decision
relied on the exercise of the equivalent of prosecutorial
                 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
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-Wish Band of Pottawatomi Indians
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.
                 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. Match-
E-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
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.