Trans-High Corporation, et al v. State of Colorado, The et al
Filing
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OPINION AND ORDER denying 2 Motion for Preliminary Injunction: For these reasons, the Court finds that the Complaint does not allege sufficient facts to establish that the Plaintiffs have standing to assert the claim. As a result, the Court lacks subject matter jurisdiction over the action. The Motion for Preliminary Injunction (# 2) is DENIED, without prejudice to refiling if the Complaint is amended to establish that a plaintiff has standing. The Plaintiffs are granted 21 days from the date of this Order to amend their Complaint. Failure to do so will result in dismissal of the case. By Chief Judge Marcia S. Krieger on 2/14/14.(msklc2, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Marcia S. Krieger
Civil Action No. 14-cv-00370-MSK
TRANS-HIGH CORPORATION, d/b/a High Times Magazine, and
DENVER WESTWORD, LLC,
Plaintiffs,
v.
THE STATE OF COLORADO,
BARBARA J. BROHL, in her official capacity as Executive Director of the Colorado
Department of Revenue, and
JOHN W. HICKENLOOPER, JR., in his official capacity as Governor of Colorado,
Defendants.
OPINION AND ORDER DENYING
MOTION FOR PRELIMINARY INJUNCTION
AND GRANTING LEAVE TO AMEND COMPLAINT
THIS MATTER comes before the Court on the Plaintiffs’ Motion for Preliminary
Injunction (#2). It appears that the Complaint and the Motion have not yet been served on the
Defendants. However, based on the Court’s preliminary review of the Plaintiffs’ Complaint (#1)
and motion, the Court sua sponte determines that it lacks subject matter jurisdiction over the
action as currently configured.
FACTS
The Complaint alleges that the Colorado Department of Revenue, Marijuana
Enforcement Division (“MED”), recently adopted regulations that restrict the ability of a retail
marijuana establishment1 to advertise via television, radio, print media, and the internet. As
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The regulations define a “retail marijuana establishment” to include retail marijuana
stores, cultivation facilities, marijuana product manufacturers, and marijuana testing facilities.
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relevant here, the regulations prohibit a retail marijuana establishment from advertising in print
media unless the marijuana establishment “has reliable evidence that no more than 30 percent of
the publication’s readership is reasonably expected to be under the age of 21,” and prohibit
advertising in internet media unless the marijuana establishment “has reliable evidence that no
more than 30 percent of the audience for the internet web site is reasonably expected to be under
the age of 21.” See 1 C.C.R. 212-2, R1106, R1107.2
The Plaintiffs identify their business as “publishing and distributing magazines and/or
newspapers that carry and seek to carry advertisements” by retail marijuana establishments
“through print media and the Internet.” Neither Plaintiff purports to be a retail marijuana
establishment,3 nor identifies any request by a retail marijuana establishment to advertise in its
publications. Moreover, neither Plaintiff asserts that 30% of more of its readership or audience
is reasonably expected to consist of persons under the age of 21. Indeed, the Complaint makes
no reference whatsoever to the composition of the Plaintiffs’ readership.
The Complaint asserts a single claim, pursuant to 42 U.S.C. § 1983, that the regulations
violate the Plaintiffs’ right to free speech under the First Amendment of the United States
Constitution.
2
Similar rules apply to television and radio advertising, requiring that the marijuana
establishment possess evidence that the program the advertisement appears in have at least 70%
of its audience over the age of 21. The regulations also prohibit certain forms of outdoor
advertising and advertising targeting out-of-state residents, but nothing in the Complaint
indicates facts suggesting that the two named Plaintiffs are affected by these restrictions.
3
The Complaint alleges that Plaintiff Trans-High Corporation has licensed its trademarks
to a “seed cultivation company” (presumably, marijuana seeds), and that Trans-High Corporation
intends to carry advertising relating to that company. Assuming that a “seed cultivation
company” falls within the regulations’ definition of “retail marijuana establishment,” the Court
notes that the seed cultivation company itself is not currently a party to this action.
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ANALYSIS
Federal courts have limited jurisdiction to consider issues brought before them. Whether
a federal court has jurisdiction must be considered by the court in accordance with limits set out
in the United States Constitution. Such limits cannot be modified or waived by the parties to the
lawsuit. See Gonzalez v. Thaler, 132 S.Ct. 641, 648 (2012); Hertz Corp. v. Friend, 559 U.S. 77,
94 (2010).
Article III of the United States Constitution limits the jurisdiction of federal courts to the
adjudication of “cases” or “controversies.” U.S. Const. art. III, § 2, cl. 1. For there to be a
cognizable “case” or “controversy,” there must be a claim that can be brought in a federal court,
and it must be brought by a plaintiff with legal standing to do so. To have legal standing, a
plaintiff must have a right or interest that has been, or will be, affected by the challenged law or
regulation. Allen v. Wright, 468 U.S. 737, 750-51 (1984). If there is no plaintiff with standing to
assert the identified claims, the federal court lacks subject matter jurisdiction to hear the action.
Summers v. Earth Island Inst., 555 U.S. 488, 492-93 (2009)
Here the Plaintiffs assert a claim that the subject regulations have or will violate their
right to free speech as guaranteed by the First Amendment to the United States Constitution.
This type of claim is one that a federal court can hear; the question is whether either of the
named plaintiffs has legal standing to present it. To have standing, the Plaintiffs must state
sufficient facts in the Complaint to demonstrate that: (i) they will suffer a violation of a protected
right or interest (ii) by virtue of the enforcement of the regulation, and (iii) if the regulation were
not enforced, there would be no injury. See, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555,
560-61 (1992); Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180-81
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(2000); Tandy v. City of Wichita, 380 F.3d 1277, 1283 (10th Cir. 2004). For purposes of this
inquiry, the Court treats the allegations in the Complaint as true.
Unfortunately, the allegations in the Complaint are insufficient to establish that either
Plaintiff has standing to assert the claim. First, it is noteworthy to observe that the regulations in
question do not address conduct by the Plaintiffs — who are publishers. Instead, the regulations
limit conduct by advertisers — i.e, retail marijuana establishments. Thus, it is retail marijuana
establishments who seek advertising who are directly affected by enforcement of the regulations.
Generally, a party cannot challenge laws or regulations that burden someone else’s
rights. See, e.g., Outdoor Media Group, Inc. v. City of Beaumont, 464 Fed.Appx. 611, 613 (9th
Cir. 2011) (unpublished), citing Craig v. Boren, 429 U.S 190, 192-97 (1976). However, courts
have allowed publishers to challenge regulations that restrict the speech of putative advertisers if
there is a colorable assertion that the regulation had a “chilling effect” on the potential
advertisers. See Penny Saver Publications, Inc. v. Village of Hazel Crest, 905 F.2d 150, 153-54
(7th Cir. 1990). Put another way, if a regulation discourages an advertiser from even seeking
advertising from a publisher, the publisher may have standing.
This Complaint makes only a conclusory assertion that “the regulations at issue would
reasonably chill a corporation of ordinary firmness,” without offering any factual elaboration.
There is no allegation that any advertiser has been discouraged from seeking to place
advertisements with either of the Plaintiffs. Thus, as currently drafted, the Complaint does not
contain a colorable showing sufficient for the Plaintiffs to pursue the rights of advertisers.
Second, the Complaint fails to clearly identify an injury to the Plaintiffs that is or would
be caused by the regulations. The interest that the Plaintiffs assert is their right to sell advertising
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to retail marijuana establishments.4 But the Complaint identifies no retail marijuana
establishment that 1) seeks or has sought to buy advertising from the Plaintiffs; and 2) was or
would be precluded from doing so by the Regulations. There is no allegation that any retail
marijuana establishment has inquired about or sought to procure advertising from the Plaintiffs.
More importantly, there is no allegation that the regulations would preclude an advertiser from
obtaining advertising from the Plaintiffs. The regulations affect only advertising in publications
with the more than 30% of the readership (audience) is under age 21.5 Only if the Plaintiffs have
a readership or audience falling within that parameter would Plaintiff’s advertisers be affected.
There is no allegation in the Complaint about the readership or audience of the Plaintiffs.
For these reasons, the Court finds that the Complaint does not allege sufficient facts to
establish that the Plaintiffs have standing to assert the claim. As a result, the Court lacks subject
matter jurisdiction over the action. The Motion for Preliminary Injunction (# 2) is DENIED,
without prejudice to refiling if the Complaint is amended to establish that a plaintiff has standing.
4
The Complaint alleges only that the Plaintiffs “wish to solicit customers . . . to
advertise.”
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The regulations appear to focus not on the actual demographics of a publication’s
readership, but rather, on the retail marijuana establishment’s “evidence” of its “reasonabl[e]
expectations” of those demographics. The Court does not speculate as to what sort of factual
allegation by the Plaintiffs would be necessary to demonstrate that retail marijuana
establishments would consider the Plaintiffs’ publications to fall within the scope of the
regulation.
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The Plaintiffs are granted 21 days from the date of this Order to amend their Complaint. Failure
to do so will result in dismissal of the case.
Dated this 14th day of February, 2014.
BY THE COURT:
Marcia S. Krieger
Chief United States District Judge
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