Marijuana lawsuit

A federal judge has ruled that a vineyard’s racketeering allegations against a neighboring marijuana operation are plausible enough to move forward in court.

A federal judge has ruled that an Oregon vineyard has plausibly alleged harm from a neighboring marijuana operation and may proceed with a racketeering lawsuit against it.

U.S. Senior District Judge Anna Brown has denied the marijuana-growing neighbor’s motion to dismiss the complaint, finding that Momtazi Vineyard has legal standing under the Racketeer Influenced and Corrupt Organization Act to pursue the case.

The vineyard has plausibly claimed under RICO that it’s suffered a “concrete financial loss” because a customer canceled an order over fears the grapes were contaminated with the smell of marijuana, the judge said.

“The customer’s concerns, whether valid or invalid, arose directly from the proximity of defendants’ marijuana-grow operation,” Brown wrote in the 20-page opinion.

The defendants — Mary and Steven Wagner, along with their son Richard — had argued that Momtazi’s allegations of lost grape sales, reduced grape marketability and reduced property rental income weren’t “concrete” damages caused by a RICO violation, but the judge rejected those claims.

The Momtazi family, which owns the vineyard in Yamhill County, filed the lawsuit earlier this year accusing the Wagners of running a “criminal enterprise” because marijuana is illegal under federal law. The complaint seeks compensation for “three times the damages” caused by this alleged “racketeering activity.”

Capital Press was unable to reach the plaintiff’s or defendants’ attorneys for comment as of press time.

Earlier this year, a federal judge dismissed a similar lawsuit filed against another marijuana-growing operation near Lebanon, Ore., because the alleged drop in real estate values to neighboring landowners wasn’t considered a “compensable property injury” under RICO.

Damage claims must be more than “purely speculative” to proceed under RICO and allegations of diminished market value are considered insufficient, according to the 9th U.S. Circuit Court of Appeals, which has jurisdiction over much of the West.

The Momtazi lawsuit’s survival of the motion to dismiss could mean it will become a “template” for other litigation against marijuana operations, said Alex Tinker, an attorney representing marijuana growers in another lawsuit.

“They’re looking for ways to create a replicable model,” Tinker said.

With alleged grape contamination now ruled a plausible injury under RICO, that may invite similar accusations involving other agricultural commodities, he said.

However, it will still be “a tough thing to prove causation,” Tinker said.

In Oregon, several cases against marijuana growers and retailers have been filed alleging RICO violations, with attorney Rachel McCart representing the plaintiffs.

Tinker said the cases are driven at least partly by an ideological opposition to marijuana that hasn’t proven successful in the legislature or with the public.

“These are part of a coordinated effort to fight the cannabis industry through the courts,” he said.

I've been working at Capital Press since 2006 and I primarily cover legislative, regulatory and legal issues.

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