Opinion
1:23-cv-01452-CL
03-15-2024
JONATHAN QUTNTERO, AUSTEN LETRICK, RV MAIN, LLC, Plaintiffs, v. CITY OF MEDFORD, BEN LYTLE, RYAN GROOM, JACKSON COUNTY, Defendants.
FINDINGS AND RECOMMENDATION
MARK D. CLARKE, Magistrate Judge.
Plaintiffs Jonathan Quintero, Austen Letrick, and RV Main, LLC (collectively, "Plaintiffs") bring this action against Defendants Jackson County and Ryan Groom ("County Defendants") and Defendants City of Medford and Ben Lytle ("City Defendants"). Before the Court are the County Defendants' Motion to Dismiss, ECF No. 7, and City Defendants' Motion to Dismiss, ECF No. 8, Oral argument was held on February 28, 2024. For the reasons below, the Court recommends GRANTING the Motions.
The Court takes judicial notice of Exhibits A and G-l-G-7 to the Declaration of Alicia Wilson, ECF No. .9-1. See Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001); see also Shaw v. Hahn, 56 F.3d 1128, 1129 n.l (9th Cir. 1995) (noting that the court may look beyond plaintiff's complaint to matters of public record without converting the Rule 12(b)(6) motion into a motion for summary judgment). The Parties agree to the Exhibits' authenticity and do not contest their admissibility. City Reply, ECF No. 20 at 1; Pis. Resp. ECF No. 18 at 3.
From 2021 to 2022, the Illegal Marijuana Enforcement Team ("IMET"), a joint law enforcement task force between Medford and Jackson County, was actively investigating alleged illegal activity at ProPack & Ship, LLC located in Medford, Oregon. Compl., ECF No, 1-1 at ¶ 10. ProPack & Ship operated as a business open to the public, selling packaging supplies, shipping services, and private mailboxes. Id. at ¶ 9. Under the direction of Defendant Ryan Groom, the year-long investigation involved frequent surveillance of the premises and at least three recorded visits wherein an undercover officer, Detective Neville, shipped marijuana through ProPack & Ship with the assistance of its then-operator, Matthew Sachen. Id. at ¶ 10.
The first undercover visit occurred in March 2022. Id. at ¶ 11, IMET personnel placed an audio recording device on Det. Neville prior to him arriving at ProPack & Ship, Id. at ¶ 11. IMET provided Det, Neville with approximately 16 pounds of lawfully seized marijuana for him to attempt to ship. Id. The marijuana was loosely packed in multiple one-pound turkey bags and placed in a cardboard box intentionally designed to emit an overwhelmingly strong odor of marijuana. Id. Det. Neville was instructed to request assistance from Mr. Sachen with packaging the marijuana in a manner that would mask the odor. Id. The probable cause declaration later filed with the U.S. District Court for the District of Oregon summarized the first visit as follows:
[Neville] carried a large cardboard box, containing loosely packaged marijuana, and spoke with Matthew SACHEN at the counter about shipping the box. [Neville] pointed out the box he/she was shipping smelled strongly. [Neville] asked if Matthew SACHEN could "double-box" the package to conceal the smell. [Neville] did not say the word "marijuana," but it was clear that Matthew SA CHEN knew there was marijuana in the box when Matthew SACHEN began to advise the use of a "Vault" (Vettles [sic] Vault) for shipping. The Vettles Vauit is a plastic container that is made for shipping and storage of dog food, with a screw top lid. Matthew SACHEN began explaining the container could help conceal the smell and explained the different sized Vaults and how many "pounds" could fit in each Vault. Matthew SACHEN told [Neville] to repackage the shipment using the provided Vault and return with it. Matthew SACHEN explained the fault then would fit inside a cardboard box. [Neville] carried the shipping container out to his/her car and Matthew SACHEN followed him carrying
the purposefully smelly, marijuana filled cardboard box. At this time, Matthew SACHEN had not yet charged [Neville] for the container. [Neville] then drove his/her vehicle to the back of the Propack & Ship parking lot and placed the marijuana inside the Vault and then returned to the Propack & Ship store. Matthew SACHEN then placed the Vault in a cardboard box and placed package peanuts on and around the vault and secured the cardboard box with the marijuana inside. Matthew SACHEN and [Neville] •discussed the shipping time and settled on FedEx two-day ground. [Neville] provided the address he/she was shipping to, and they discussed that it was not necessary to put [Neville's] name on the shipment. Matthew SACHEN explained how he would just put the Propack & Ship address as the return address. Matthew SACHEN charged [Neville] $75 dollars for shipping materials and $470.88 for the shipment. [Neville] paid with cash. This transaction was audio record [sic] and a copy was later placed into evidence.Id.
The second undercover visit occurred in early April 2022. Id. at ¶ 12. Det. Neville arrived wearing an audio and recording device and carrying a similar package to the first shipment, emitting a strong odor. Id. The second visit was summarized as follows:
[Neville] entered Propack & Ship at mid-morning and met with Matthew SACHEN who was the only person working at the store. Matthew SACHEN seemed to recognize [Neville] from the previous shipment. [Neville] asked for another Vault for the package and Matthew SACHEN commented on how good the containers conceal the odor. Matthew SACHEN asked for the shipping address, and [Neville] told Matthew SACHEN the' address, which was the same as the first controlled shipment. As Matthew SACHEN inputted the address in the store computer, Matthew SACHEN stated the receiving party name, indicating the computer stored previous addresses and recipients. [Neville] confirmed the name was correct. [Neville] then opened the box of marijuana and Matthew SACHEN assisted [Neville] with repackaging the marijuana into a Vault. Matthew SACHEN did not handle the bag of marijuana but assisted with boxing and taping up the Vault. While doing this [Neville] asked if the store (Propack & Ship) had been busy. Matthew SACHEN stated business had been slow because everyone was working on their greenhouses, getting their grows all ready, the soil, and beds - indicating that his
business tempo is directly related to what marijuana growers are doing. While the marijuana was being repackaged, Matthew SACHEN asked [Neville] if he/she had ever tried vacuum sealing t them, clearly referring to the packaging of marijuana. Matthew SACHEN suggested this method would allow more product to fit In the Vettles Vault. [Neville] then asked if he/she was able to receive cash at Propack & Ship. Matthew SACHEN responded: "absolutely, so urn, you just tell us, like whatever name that you 're using, and then uh, we just charge 30 dollars a package, and we keep it in that back room when we get it, and then you just come in, 30 dollars, and it's all yours." Matthew SACHEN then suggested getting a P.O. Box and they waive the $30-dollar fee, Matthew SACHEN quoted the prices for the P.O. Boxes at $15, $20, $30 depending on the size. Matthew SACHEN then stated, "you can get mail, or anything, you know cash or packages, whatever you want." While [Neville] was speaking with Matthew SACHEN, an unknown male entered the Propack & Ship to ship a box. Matthew SACHEN moved from behind the counter and closed [Neville's] box containing additional marijuana and move the box to the side, concealing it from the male who entered. The male looked inside [Neville's] box with the Vittles Vault inside and made a comment how the vaults come in handy. Matthew SACHEN discussed the cost of shipping with the male and talked about how USPS is cheaper but less reliable, Matthew SACHEN eventually talked the male into shipping through UPS. Matthew SACHEN quickly helped the male and the male left the store. After the male left, Matthew SACHEN began discussing carrier options with [Neville]. Matthew SACHEN stated even [sic] though FedEx is more expensive, less packages get lost or go missing. Matthew SACHEN continued to discuss UPS, USPS, and FedEx before retrieving a stack of envelops [sic] from behind the counter. Matthew SACHEN held up the envelopes and explained to [Neville] that they were USPS "criminal investigations" envelopes that had been sent to Propack & Ship regarding package seizures. Matthew SACHEN stated, "I'm like, trying to tell people, dude like don't, like you're going to lose your stuff." Matthew charged [Neville] $506.12 for this second shipment. [Neville] paid in cash for the shipment, then left the store.Id.
The third undercover visit occurred later in April 2022. Id. at ¶ 13. Det. Neville again wore an audio and video recording device and brought a similar package. This time, however, Defendant Groom directed Det. Neville to determine Plaintiff Jonathan Quintero's role at ProPack & Ship. Id. At some point prior, IMET became aware that Mr. Sachen and Plaintiff Quintero had entered into negotiations regarding Plaintiffs' acquisition of ProPack & Ship. Id. Plaintiff Quintero had allegedly been hired at ProPack & Ship before the acquisition in order to learn how the business was run and minimize any interruption in services during the ownership transfer. Id. The third visit was timed to coincide with a period when both Plaintiff Quintero and Mr. Sachen were present. It is summarized as follows:
[Neville] entered the store at mid-day and contacted Matthew SACHEN. [Neville] asked about purchasing additional Vaults (Vettles Vault) for future shipping and discussed getting a discount on a bulk purchase on a later date. Matthew SACHEN asked for [Neville's] phone number to text [Neville] about purchasing more Vettles Vaults on a later date. [Neville] then mentioned he/she noticed a new guy working at Propack & Ship today and Matthew SACHEN introduced [Neville] to "Jonathan" who was in the back of the store at the time. Matthew SACHEN directed [Neville] to the back of the store this time and began assisting [Neville] with his/her package near QUINTERO. While talking with Matthew SACHEN, and with QUINTERO sitting a few feet away, [Neville] began removing the marijuana from the cardboard box and placing turkey bags of marijuana in the Vettles Vault. After filling the vault with marijuana, Matthew SACHEN began boxing up the vault in a cardboard box and placing foam peanuts around the vault inside the box. [Neville] talked about potentially having a "cash load" shipped to the Propack & Ship. Matthew SACHEN verified that he/she could receive the shipment for $35 dollars for an individual shipment. Matthew SACHEN then told [Neville] he would put [Neville's] phone number in his phone so they could text back and forth about the shipment. Matthew SACHEN told [Neville] to text him when the package was coming in and he would look out for it. This entire conversation took place just a few feet from QUINTERO, while QUINTERO was eating. Matthew SACHEN carried the box back over to the counter and began entering the
shipping information into his computer. [Neville] stated he was shipping to the same location as before and provided only the zip code. Matthew SACHEN then read from his computer aloud the false name that [Neville] made up with Matthew SACHEN on the first and second shipment as the recipient of the package in West Virginia. This, again, verified the computer at the Propack & Ship stores shipping information from all previous shipments. Matthew SACHEN printed the shipping sticker and continued to talk to [Neville] about the best shipping company to ship with. Again, Matthew SACHEN indicated UPS and FedEx were the best companies to ship with. Matthew SACHEN, again, grabbed a stack of envelopes. Matthew SACHEN stated USPS has sent notification to Propack & Ship about shipments being seized, and stated Propack & Ship received seven seizure notifications in the last two weeks. The total cost to ship the package was $567,53. Matthew SACHEN continued to discourage use of USPS saying it may be cheaper, but it is riskier. During this conversation, QUINTERO walked over, picked up the packaged marijuana, and walked the marijuana package to the back of the store. QUINTERO then handed [Neville] the cardboard box he/she brought it in and asked [Neville] if he/she wanted QUINTERO to break the box down for him/her. [Neville] told Jonathan he/she would do that and left the store.Id.
On April 30, 2022, Plaintiffs RV Main, Jonathan Quintero, and Austen Letrick executed an asset purchase agreement with ProPack & Ship. Pis. Resp., ECF No. 18 at 5; see also ECF No. 9-7, Ex. G-l. The closing date for the purchase was May 2, 2022. Id.,; see also ECF No. 1-1 at ¶ 9. From May 3, 2022, until May 24, 2022, ProPack and Ship continued to operate under the same name, but under the ownership and control of Plaintiffs, primarily Quintero. ECF No. 1-1, at ¶ 9.
The legitimacy of this purchase, as well as ownership of tshe business license, are disputed by the Parties. The Court does not reach that dispute in this Findings and Recommendation but acknowledges that Defendants have raised the question as to the subject matter jurisdiction of Plaintiffs' claims.
On or about May 11, 2022, Defendant Groom applied for a warrant to search the ProPack & Ship premises. Id. at ¶14. The Jackson County Circuit Court issued the search warrant on May 11. Id. at ¶ 15; see also ECF No. 9-9, Ex. G-3.
On May 13, 2022, personnel from the City of Medford and Jackson County, including Defendants Groom and Lytle, executed the search warrant at ProPack & Ship. ECF No. 1-1 at ¶16. Officers seized the following items: two packages of cash totaling $16,000 that were detected positively by the drug detective K9; two loaded firearms-a handgun and a shotgun; computers believed to be used for coordinating shipments; Plaintiff Quintero's cellphone; and various documents. ECF No. 9-1, Ex. A at 47-49, 72, 85; see also ECF No. 9-9, Ex. G-3. No marijuana was found and none of the items listed in the warrant were found. ECF No. 1-1 at ¶16.
Page numbers refer to the PDF's numbering, not the individual exhibits' original page numbers.
Defendant Lytle, in light of the investigation's findings, determined that the proximity of ProPack & Ship to a school and daycare created an imminent threat to life or property that justified a summary suspension of ProPack & Ship's business license. Id. at ¶17. Medford Police Sergeant Tom Venables affirmed Sergeant Lytle's determination. ECF No. 9-1, Ex. A at 109.
On May 20, 2022, Deputy City Attorney for Medford, Katie Zerkel, authored a letter to Mr. Sachen and Plaintiff Quintero informing them that ProPack and Ship's business license had been revoked and summarily suspended as a result of the Sergeants' determination. ECF No. 1-1 at ¶ 18. The letter contained the following:
Dear Mr. Sachen and Mr. Quintero,
You currently hold a City of Medford business license under the Medford Municipal Code's chapter 8 for ProPack and Ship. However, multiple concerns have been raised about that license. The licensed business has been found to be engaged in unlawful activity in the following ways: A search warrant was executed at your business location where evidence of criminal activity was
seized. Additionally, one or more business owners or employees are under investigation for the violation of state laws including the unlawful export/import of marijuana, money laundering, and racketeering. Pursuant to Medford Municipal Code 8.032(3), you are hereby given notice that your business license is revoked, and you are barred from doing business. The length of the revocation is one year. You are also being given notice that your license is summarily suspended under MMC 8.032(6) as it has been determined by the Medford Police Department that the conduct of the business licensee creates an imminent threat to life or property., The stated reason for the suspension is due to the unlawful activity occurring at the business, MPD has determined that there is an imminent threat to the life and property of customers at your business location. The suspension takes effect upon delivery of this letter to the business address. The length of the suspension can be continued as long as the City believes the reason for suspension exists or until a determination on appeal. If you disagree with this action, you a right to appeal this action under MMC 8.033. A written appeal must be filed with the City Manager or designee within ten business days of the date of this letter, The written, appeal must state the basis for the appeal and be accompanied by a filing fee of $100. The fee shall be refunded if the revocation decision is overturned.Id.; see also ECF No, 9-11, Ex. G-5. Medford Police Sergeant Tom Venables delivered the letter on May 24, 2022. ECF No. 1-1 at ¶ 20. Plaintiff Quintero closed the business that day and filed a request to appeal. Id. at ¶¶ 20-21. ProPack & Ship is now permanently closed. Id.
On June 24, 2022, an administrative hearing was held before Medford's City Recorder, Winnie Shepard, regarding Plaintiffs' appeal of ProPack and Ship's business license suspension and revocation. Id. at¶22; see also ECF No. 9-1. Defendants Groom and Lytle appeared as the City's witnesses. Id. Mrs. Shepard issued a written decision denying Plaintiffs' appeal and upholding summary suspension and revocation on July 8, 2022. ECF No. 9-1, Ex. A at 123-26.
On July 19, 2022, the Jackson County Sheriff's Office published a press release regarding the investigation titled "Marijuana Task Force Identified Medford Black-Market Cannabis Shipping Business, Seizes $1.19 Million, 16 Firearms." ECF No. 1-1 at ¶ 24. It provided detail about the investigation, including identifying Plaintiff Quintero and Mr, Sachen as potential criminal defendants and explaining law enforcement's theory that ProPack & Ship was used as part of a national illegal marijuana trade operation. Id.; see also ECF No, 9-1, Ex. A at 140-42.
Plaintiffs claim RV Main has incurred $8 million in damages as a result of Defendants' conduct. ECF No. 1-1 at ¶ 25. Quintero and Letrick claim mental and reputational harm. Id.
ISSUE
Plaintiffs filed this lawsuit on October 5, 2023, asserting two claims for relief. The First Claim for Relief alleges a 42 U.S.C. § 1983 claim against City Defendants, Ben Lytle and City of Medford, for deprivation of Plaintiffs' due process rights. The Second Claim for Relief alleges a 42 U.S.C, § 1983 claim against County Defendants, Ryan Groom and Jackson County, for judicial deception in the procurement of a search warrant. Both claims seek to hold the governing-body Defendants liable on various ratification or failure to train theories.
All Defendants move to dismiss the Complaint as a whole and the claims against them. City Defendants move pursuant to Federal Rules of Civil Procedure 12(b)(6), for failure to state a claim, 12(b)(1) and 17(a), for lack of subject matter jurisdiction, and 12(b)(7), for failure to join a/necessary party. City Mot., ECF No. 8. Defendant Lytle also moves independently, asserting a qualified immunity defense. County Defendants move pursuant to Federal Rules of Civil Procedure 8(a), 8(d), 12(b)(6), and 12(b)(1). County Mot., ECF No. 7. Defendant Groom also independently raises qualified immunity.
The Court finds the Complaint fails to state a claim upon which relief may be granted with respect to either the First or Second Claim for Relief. The Motions should therefore be granted, dismissing all claims. The other issues raised by Defendants regarding lack of subject matter jurisdiction and qualified immunity are accordingly moot.
LEGAL STANDARD
A Rule 12(b)(6) motion to dismiss will be granted where a plaintiff fails to state a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6). To state a claim for relief, a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). It should provide the defendant with fair notice of what the claim is and the grounds upon which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While "detailed factual allegations" are not required, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."' Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 135, 1041 (9th Cir. 2010). Facial plausibility exists where the factual allegations allow the court to infer a defendant's liability based on the alleged conduct. Iqbal, 556 U.S. at 678. A pleading that offers mere "labels and conclusions" is insufficient, as is "a formulaic recitation of the elements." Id.
In evaluating a motion to dismiss, the court must accept all allegations of material fact as true and construe those allegations in the light most favorable to the non-moving party. Odom v. Microsoft Corp., 486 F.3d 541, 545 (9th Cir. 2007). The court is "not bound to accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555. Nor must a court accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or -unreasonable inferences." Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010).
DISCUSSION
I. City Defendants' Motion to Dismiss
The First Claim for Relief alleges a Section 1983 claim against City Defendants, Ben Lytle and City of Medford, for deprivation of Plaintiffs' Fourteenth Amendment due process rights in the revocation and suspension of ProPack & Ship's business license, as well as in the post-deprivation remedy. City Defendants move to dismiss.
A claim for deprivation of constitutional rights under Section 1983 must show (1) a deprivation (2) of some protected constitutional right (3) under color of state law. Eg, Parrott v. Taylor, 451 U.S. 527, 536-37 (1981). A deprivation within the meaning of Section 1983 occurs where one performs an affirmative act, participates in another's affirmative act, or omits to perform a legally required act, which causes plaintiff's alleged deprivation. Leer v. Murphy, 844 F.2d 628, 633 (9th Cir. 1988). "The inquiry into causation must be individualized and focus on the duties and responsibilities of each individual defendant whose acts or omissions are alleged to have caused a constitutional deprivation." Id.
The Fourteenth Amendment guarantees procedural due process where a constitutionally protected property interest is at risk of deprivation. E.g., Ingraham v. Wright, 430 U.S. 651, 672-73 (1977). If a protected interest is "implicated, the right to some kind of prior hearing is paramount." The Bd of Regents of State Colleges v. Roth, 408 U.S. 564, 569-70 (1972). However, immediate seizure of a property interest, without a prior hearing, is constitutionally permissible where: (1) seizure is directly necessary to secure an important governmental or general public interest, (2) there is a special need for prompt action, and (3) "the person initiating the seizure has been a government official responsible for determining, under the standards of a narrowly drawn statute, that it was necessary and justified in the particular instance." Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 678 (1974).
Medford's business license revocation and summary suspension scheme is abbreviated as follows: A business license may be summarily suspended, without a prior hearing, "[u]pon the determination that the conduct of a business licensee creates an imminent threat to life or property." MMC § 8.032(6)(a). A business license may also be revoked for one year upon the finding of unlawful activity. § 8.032(3). Business license holders are issued a notice which includes reference to the appeals process and hearings rights for any revocation or suspension decision under MMC § 8.033. When an appeal of a revocation or suspension is received, the appellant is entitled to a hearing within 14 days of receipt. § 8.033(3). The first appeal is to the City Record, then to City Council, and then ultimately judicial review, if desired. § 8.033(4)-(5). Only a summary suspension takes effect during the appeals process; the revocation of a business license does not take effect until resolution of the appeals. § 8.033(2).
The Complaint here alleges that the revocation and suspension of ProPack & Ship's business license constituted a violation of Plaintiffs' due process rights because City Defendants "lacked a basis to determine that there was any imminent threat to persons or property from the continued operation of ProPack & Ship under Plaintiffs' ownership and control of the business" and that "the only threats that Medford identified involved baseless speculation that lacked any factual basis and ignored that Groom and Lytle were not aware of any violent activity occurring at or around the ProPack & Ship business." ECF No. 1-1 at ¶ 27. The bare allegations in the Complaint, however, demonstrate that Defendant Lytle did not act on "baseless speculation" void of a factual basis. To the contrary, Defendant Lytle made his determination after learning: ProPack & Ship had been under investigation for alleged illegal activity for a year, the operator was caught on camera shipping multiple packages of marijuana, known criminals were surveilled frequenting the premises, two loaded guns, packages of cash, and other evidence were seized from the premises, and that all of it was occurring a few hundred feet from a daycare and school. In light of those findings, Defendant Lytle determined ProPack & Ship's proximity to children and families created an imminent threat to life and property, which was later affirmed by Sergeant Venables. Plaintiffs' claims are therefore contradicted by the plain facts alleged in the Complaint.
Only in their Response do Plaintiffs illuminate that they take issue with the MMC § 8.032(6) statutorily, in that it is not "narrowly drawn" enough to ensure that summary suspensions without a prior hearing are necessary and justified in a particular instance. See ECF No. 18 at 16. Plaintiffs' argument hinges on Defendant Lytle's testimony that any City employee can make an "imminent threat" determination. Not only is this argument not sufficiently alleged in the Complaint, but it also fails in this matter because the two making the determination were Medford police sergeants, experts in their field and well-acquainted with the investigation and IMET. Thus, Plaintiffs' argument regarding a risk of erroneous deprivation does not appear to be supported by the facts of this case.
The Complaint also alleges Plaintiffs were deprived of constitutional due process throughout their post-deprivation hearing. It alleges that the "remedy allowed under Medford's Municipal Code, an appeal to an administrative hearing and then further appeal to Medford's City Council, was not constitutionally adequate in that, by the time a further appeal to Medford's City Council became necessary, the ProPack & Ship business had been closed." ECF No. 1-1 at ¶34. Had the business license not been summarily suspended, it could have "been relocated to a location outside of the jurisdiction of Medford and continued to operate." Id. "In other words, as" a direct result of Lytle's and Medford's determination to immediately suspend ProPack & Ship's, Plaintiffs had no alternative to salvage the value of the business, and the business was effectively killed ... without any prior notice." Id.
This is not a well-pled allegation. The Complaint offers only general harms that befell Plaintiffs as a result of the City's decision, but it completely fails to allege precisely how the City's statutory scheme fails constitutional muster and what procedural deprivations occurred in Plaintiffs' circumstance. As explained, City Defendants are constitutionally permitted to seize a property interest, without a prior hearing, where a threat of imminent harm to life or property is found. Such was the case here, according to the Complaint. Plaintiffs were granted a prompt post-deprivation hearing and multiple avenues for appealing the decision, yet they chose not to avail themselves of the available opportunities for review. Based on the factual allegations in the Complaint, it is not clear what additional procedural process is required in order for Medford's statutory scheme to pass as constitutional.
The Complaint includes some allegations as to the timeliness of the appeal, sufficiency of the notice, and evidentiary objections to the City Recorder's hearing. See ECF No. 1-1 at |f 22. However, without more detail as to how those failures rose to a level of constitutional due process deprivation, the Complaint fails to adequately plead a claim. As mentioned, the Fourteenth Amendment guarantees "some, hearing," not a perfect one, nor one that necessarily complies fully with the Federal Rules of Evidence or Civil Procedure.
Lastly, as to the failure to train, ratification, or final policymaking theories raised by the Complaint in an attempt to tie liability from Defendant Lytle to the City of Medford, such claims are without any supporting factual allegations. They should be dismissed for lack of support and for lack of any misconduct on the part of Defendant Lytle.
The Court finds the Complaint fails to state a claim for deprivation of Plaintiffs' Fourteenth Amendment due process rights. The Court therefore recommends granting City Defendants' Motion and dismissing the First Claim for Relief.
II. County Defendants' Motion to Dismiss
The Second Claim for Relief alleges a Section 1983 claim" against County Defendants, Ryan Groom and Jackson County, for judicial deception in pursuit of a search warrant. County Defendants move to dismiss for failure to state a claim.
A Section 1983 claim for judicial deception in the procurement of a search warrant requires a plaintiff to "(1) establish that the warrant affidavit contained misrepresentations or omissions material to the finding of probable cause, and (2) make a "substantial showing" that the misrepresentations or omissions were made intentionally or with reckless disregard for the truth." Bravo v. City of Santa Maria, 665 F.3d 1076, 1083 (9th Cir. 2011) (original citations omitted). The materiality of the omitted facts is determined by considering "whether the, affidavit, once corrected and supplemented, establishes probable cause." Id. at 1084 (quoting Ewing v. City of Stockton, 588 F.3d 1218, 1224 (9th Cir. 2009)). "If probable cause remains after amendment, then no constitutional error has occurred." Id.
The Complaint here alleges that Defendant Groom applied for a search warrant from the Jackson County Circuit Court to search the ProPack & Ship premises on or around May 11, 2022. ECF No. 1-1 at ¶ 14. In that search warrant application, according to Plaintiffs, Defendant Groom intentionally or with reckless disregard for the truth made one or more of the following misrepresentations or omissions of fact that were material to finding probable cause:
• Groom omitted that cannabis has two distinct legal classifications that bear directly on the legality or illegality of its ability to be shipped across state lines-hemp, which under federal law is cannabis that contains less than 0.3 percent delta-9 THC on a dry weight basis and for which states are prohibited from interfering with interstate transfers, and marijuana which is all cannabis with a delta-9 THC content of 0.3 percent on a dry weight basis, which is illegal to ship interstate under state and federal law.
• Groom omitted that marijuana and hemp, being the same plant but with different delta-9 THC content, is impossible to distinguish through the use of human senses alone. ... [E]ven trained police dogs are unable to distinguish between legal hemp and illegal marijuana, ... only a scientific test was, capable of distinguishing cannabis as marijuana or hemp. ...
• Groom omitted to inform the court in his search warrant . application that, due to federal banking regulations and the risk tolerance of financial institutions, it is common for legal hemp producers and/or wholesale purchasers to lack access to traditional banking, and that a large portion of the hemp market accordingly operates on a cash basis. ... Further, ... that it is common for hemp producers to ship legal hemp interstate and receive their payments back via cash that is also shipped interstate.
• Groom omitted to inform the court that, due to failures of law enforcement in intermediate and destination jurisdictions to be able to easily distinguish illegal marijuana from legal hemp, there is a significant risk to hemp shippers that their shipments will be seized for investigation by law enforcement, and thus legal hemp producers have an incentive to minimize the" odors that their legal product gives off during shipment.
• Groom omitted to inform the court that the hemp growing process is identical in all material respects to the growing of marijuana and that the two crops have an identical production cycle.
• Groom omitted to inform the court that the failure of Neville to at any point identify the product as marijuana to Sachen or Quintero deprived the court of any basis to find that there was probable cause to believe that a crime had been committed by any person other than Neville.Id. (hereinafter, "Paragraph 14"). The Complaint alleges that "had Groom not omitted the information discussed in paragraph 14 above, the judge would not have issued the warrant," and therefore, the judge issued the warrant in reliance of Defendant Groom's "deceptive application materials," Id. ¶ 15. The Complaint goes on to allege that Defendant Jackson County is liable for Defendant Groom's alleged deception based on a ratification or failure to train theory. Id. at ¶¶ 41-42. The Court finds that the Complaint fails to state a claim for judicial deception.
First, the Complaint does not establish that the affidavit contained misrepresentations or omissions material to the finding of probable cause. Probable cause presents a relatively low hurdle. A judge issuing a warrant considers the totality of the circumstances to determine if there is a "fair probability" that contraband or evidence of a crime will be found. E.g., United States v. Gil, 58 F.3d 1414, 1419 (9th Cir. 1995). It is viewed as a "practical, non-technical" standard. Illinois v. Gates, 462 U.S. 213, 231-32 (1983).
Here, the affidavit, as alleged in the Complaint, reflects a year-long investigation wherein an undercover officer recorded a suspect performing illegal shipments of marijuana on at least three occasions. Where a search warrant affidavit reflects such an investigation with comprehensive detail like the one here, and is further corroborated by audio and video recordings, it allows the judge to rely on such an affidavit and conclude there is a fair probability that evidence of a crime or contraband could be found. Supplementing the affidavit with the contents of Paragraph 14 does not negate that probable cause finding. There is plenty of detail that remains unaffected by Paragraph 14 and would have still allowed the judge to believe evidence of a crime or contraband existed at ProPack & Ship. For example, Mr. Sachen was caught advising Det. Neville how to avoid disclosing his name and address in relation to the shipment. He was caught explaining that ProPack & Ship has instituted a system for facilitating package-cash transfers wherein Mr. Sachen holds the package in the "backroom" for a $30 payment until pickup. He encouraged Det. Neville to get a P.O. Box as a cheaper alternative for such transfers. When Det. Neville told Mr. Sachen he potentially had a "cash load" being shipped to ProPack & Ship, Mr, Sachen verified he could receive the package for $35 and took Det. Neville's phone number to text about the incoming shipment. Mr. Sachen also advised Det. Neville how to best avoid having his package seized by authorities. And lastly, Mr. Sachen revealed a stack of envelopes and explained that they were USPS "criminal investigations" that had been sent to ProPack & Ship regarding package seizures. IMET personnel had additionally been made aware of a shift in ownership occurring around this time, indicating a possible scheme to evade liability. All of this is in addition to Mr. Sachen literally being caught on camera shipping pounds of marijuana on three separate occasions. The supplementation of Paragraph 14 does not neutralize those details. At most, Paragraph 14 provides an unlikely alternative explanation for how Mr. Sachen could have possibly assumed it was hemp rather than .marijuana that he was shipping. It does nothing to invalidate the otherwise indicative detail provided in the affidavit showing that illegal activities were likely occurring at ProPack & Ship.
The allegation in the Complaint that a judge in receipt of Paragraph 14 would not have found probable cause to issue the warrant is nothing more than pure speculation. As such, it does . not earn a favorable inference. Because probable cause remains after amendment, the contents of Paragraph 14 were not material to finding probable cause.
Second, the Complaint fails to show that Defendant Groom acted with "intentional or reckless disregard for the truth." The Complaint merely recites those words and neglects to provide any supporting factual allegations as to how Defendant Groom's actions constituted, intentional or reckless deceit. There is also no legal support for the proposition that a reasonable officer in Defendant Groom's position is required to provide all possible lawful alternatives to the behavior described in the affidavit. Without such an obligation, the allegations in the Complaint only show that Defendant Groom failed to disclose potentially contradictory information which was not relevant given that the materials shipped by Det. Neville were not hemp. That does raise to the level of judicial deception.
Plaintiffs' dependent claims against Defendant Jackson County should likewise be dismissed for lack of any alleged misconduct on the part of Defendant Groom. Alternatively, the claims against Defendant Jackson County should be dismissed for lack of any supporting factual allegations. The Complaint is void of any specific actions by Jackson County that could - plausibly constitute ratification of Defendant Groom's alleged deception or any concrete policies that could demonstrate a failure to train.
The Court finds the Complaint fails to state a claim for judicial deception. The Court recommends granting County Defendants' Motion and dismissing the Second Claim for Relief.
III. Plaintiffs' Leave to Amend
Federal Rule of Civil Procedure 15(a) provides that leave to amend a pleading "shall be freely given when justice so requires." This rule represents a "strong policy permitting amendment." Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 798 (9th Cir. 1991). The liberality of the rule is qualified by the requirement that the amendment not cause undue prejudice to the opposing party, is not sought in bad faith, and is not futile. Green v. City of Tucson, 255 F.3d 1086, 1093 (9th Cir, 2001). Thus, whether leave to amend should be granted is generally determined by considering the following: undue delay, bad faith, futility of amendment, and prejudice to the opposing party. Lockheed Martin v. Network Solutions Inc., 194 F.3d 980, 986 (9th Cir. 1999). The Court here finds that amendment of the Complaint is futile.
The First Claim for Relief is defeated by the allegations in the Complaint and the transcript of the City's hearing. The City of Medford is constitutionally permitted to suspend a license upon an imminent threat determination, and any required due process is preserved in the multiple channels for appeal afforded by Medford's revocation and suspension scheme. IMET's investigation yielded enough information to justify Defendant Lytle's determination. Plaintiffs were given a prompt post-deprivation hearing and chose not to pursue all available appeals. Plaintiffs underwent one appeal with the City Recorder, for which the Court has the transcript and can see the process afforded to Plaintiffs. It reflects that Plaintiffs were given a hearing. It cannot be a sham hearing, but to be constitutional, it does not need to be a perfect hearing, as Plaintiffs contend. Their claims fail to show any actual procedural due process deprivations, and instead reflect a dissatisfaction with the way the hearing was conducted and its end result. Amendment cannot turn that into a legally viable claim for deprivation of constitutional rights. Further, Plaintiffs allege no specific insufficiencies as to the notice. They may not have been prepared, but they were adequately made aware of their right to an appeal, how and when to file an appeal, why the license was being revoked and suspended, what the allegations were, and where to go in Medford's municipal code for further information. Amendment as to their claim cannot change the contents of the notice.
The Second Claim for Relief is likewise defeated by the allegations in the Complaint. Given the strong presence of probable cause evident in the affidavit, as alleged in the Complaint, the Court finds it extremely unlikely that Plaintiffs could allege any set of factual omissions that, when supplemented, would negate all the other probative detail provided by the investigation. It is also extremely unlikely that Plaintiff could succeed based on any alleged misrepresentations given that the events relied upon by the affidavit were all video and audio recorded, and as such are easily confirmed.
CONCLUSION
For the reasons stated above, the Court finds that Plaintiffs have failed to state a claim upon which relief can be granted with respect to either of their claims. It is extremely unlikely that Plaintiffs can sufficiently state a claim for relief based on these facts. The Court therefore recommends dismissing Plaintiffs' First and Second Claims for Relief with prejudice and without leave to amend. All Defendants should be dismissed from this cause of action.
RECOMMENDATION
The Court recommends GRANTING the Motions. The Motion to Dismiss filed by City Defendants, Ben Lytle and City of Medford, ECF No. 8, and the Motion to Dismiss filed by County Defendants, Ryan Groom and Jackson County, ECF No. 7, should be granted, dismissing all claims and Defendants, with prejudice and without leave to amend.
This Findings and Recommendation will be referred to a district judge. Objections, if any, are due fourteen (14) days after the date this recommendation is entered. If objections are filed, any response to the objections is due fourteen (14) days after the date the objections are filed. See Fed. R Civ. P. 72, 6. Parties are advised that the failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).