SAN FRANCISCO — For MoFo's Cedric Chao, the government's position in a pot dispensary case is like The Twilight Zone.
"You can't be inside. You can't be outside. You have no remedy."
The Morrison & Foerster partner's comments came at a hearing Thursday as he tried to keep alive the city of Oakland's effort to block the U.S. Department of Justice from shutting down California's largest medical marijuana dispensary. The Justice Department maintains Oakland has no standing to oppose the civil forfeiture action against Harborside Health Center and the city's case should be dismissed.
Chao, who is representing Oakland pro bono, told U.S. Magistrate Judge Maria-Elena James that Oakland must have legal recourse.
"Congress could not have intended that a city and 400,000 people have no rights," Chao said.
The feds initiated forfeiture actions in July 2012 targeting Harborside in its Oakland and San Jose locations. In October, Oakland filed a separate suit under the Administrative Procedure Act to prevent the federal government from seizing the properties.
Oakland's suit claims the city will suffer grave public safety and health consequences and lose out on $1 million in annual tax revenue if licensed marijuana dispensaries close and customers turn to the black market.
Harborside and the city won a small victory in early January when James ruled the dispensary could continue operating during the pendency of the forfeiture actions.
James did not indicate on Thursday whether she would permit Oakland's suit, Oakland v. Holder, 12-5245, to go forward. Weighing both sides' arguments, she asked where it would end if courts allow outside entities to attack forfeiture proceedings under the APA.
"Where is the line drawn?" James asked in a list of written questions distributed before the hearing. "Could a company that manufactures and sells articles used to smoke marijuana to Harborside's customers and whose business would potentially be disrupted if Harborside can no longer operate also bring an APA claim challenging the forfeiture proceeding?"
Arguing for the Justice Department, D.C.-based trial attorney Kathryn Wyer said the only means to challenge a forfeiture action is through the forfeiture process itself, and both sides agree Oakland lacks standing in that proceeding.
Moreover, Wyer said filing a forfeiture action is not a "final agency action" reviewable under the APA. The mere filing of a lawsuit "has no impact on anyone," she said.
"At the end of the process in a court proceeding, it's not the agency that will be issuing the order, it's the court," Wyer added.
That prompted Chao to compare that logic to The Twilight Zone.
"The government's argument boils down to, 'You can't file a separate suit, you have to file a claim in the forfeiture structure. But if you do file a claim in the forfeiture, you'll be thrown out,'" Chao said.
