Safe Streets Alliance et al v. Alternative Holistic Healing, LLC et al

Filing 114

ORDER granting 51 State Defendants' Motion To Sever Count VII of Plaintiffs' Complaint Into a Separate Civil Action or, Alternatively, To Bifurcate That Claim. Pueblo Defendants' Motion To Sever the Preemption Claims From Plaintiff s' Complaint or, Alternatively, To Bifurcate Those Claims 62 . That pursuant to Fed. R. Civ. P. 21, Counts VII and VIII of the First Amended Complaint 66 , filed April 13, 2015, are severed. By Judge Robert E. Blackburn on 7/14/2015.(mlace, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Action No. 1:15-cv-00349-REB-CBS
SAFE STREETS ALLIANCE,
PHILLIS WINDY HOPE REILLY, and
MICHAEL P. REILLY,
Plaintiffs,
v.
ALTERNATIVE HOLISTIC HEALING, LLC, d/b/a Rocky Mountain Organic,
JOSEPH R. LICATA,
JASON M. LICATA,
6480 PICKNEY, LLC,
PARKER WALTON,
CAMP FEEL GOOD, LLC,
ROGER GUZMAN,
BLACKHAWK DEVELOPMENT CORPORATION,
WASHINGTON INTERNATIONAL INSURANCE CO.,
JOHN W. HICKENLOOPER, JR., in his official capacity as Governor of Colorado,
BARBARA J. BROHL, in her official capacity as Executive Director of the
Colorado Department of Revenue,
W. LEWIS KOSKI, in his official capacity as Director of the Colorado Marijuana
Enforcement Division, and
PUEBLO COUNTY LIQUOR & MARIJUANA LICENSING BOARD,
Defendants.

ORDER GRANTING MOTIONS TO SEVER
Blackburn, J.
The matters before me are: (1) State Defendants' Motion To Sever Count VII
of Plaintiffs' Complaint Into a Separate Civil Action or, Alternatively, To Bifurcate
That Claim [#51],1 filed March 19, 2015; and (2) the Pueblo Defendants' Motion To
1
“[#51]” is an example of the convention I use to identify the docket number assigned to a specific
paper by the court’s case management and electronic case filing system (CM/ECF). I use this convention
throughout this order.

Sever the Preemption Claims From Plaintiffs' Complaint or, Alternatively, To
Bifurcate Those Claims [#62], filed April 1, 2015. I have jurisdiction over this matter
pursuant to 28 U.S.C. § 1331 (federal question). I grant the motions to sever.
By this lawsuit, plaintiffs seek a ruling from this court on the legality vel non of
Colorado’s Amendment 64, which legalized the possession of recreational marijuana in
the state. The present motions implicate the so-called “preemption counts” of plaintiffs’
Complaint [#1], filed February 19, 2015. Count VII is brought against Colorado
Governor John W. Hickenlooper; Barbara J. Brohl, the Executive Director of the
Colorado Department of Revenue; and W. Lewis Koski, Director of the Colorado
Marijuana Enforcement Division, all in their official capacities. Count VIII is brought
against the Pueblo County Liquor & Marijuana Licensing Board. Both such claims are
purportedly brought directly under the Supremacy Clause, claiming that Colorado’s
Amendment 64 is preempted by the federal Controlled Substances Act. By these
motions, defendants ask the court to sever these counts from the remainder of the
lawsuit, which alleges RICO violations as against a number of private entities and
individuals involved in the marijuana retail trade in Colorado.
A court may, on motion or on its own, "sever any claim against a party" during
any stage of the proceeding and on such terms as are just. FED. R. CIV. P. 21. The
Tenth Circuit has provided little guidance regarding when a motion for severance should
be granted, and specifically has not opined as to whether misjoinder is a prerequisite to

2

severance.2 Nevertheless, and although plaintiffs suggest that severance is
inappropriate in the absence of misjoinder, courts in this circuit generally have found
that misjoinder is not a prerequisite to severance. See WildEarth Guardians v. U.S.
Office of Surface Mining Reclamation & Enforcement, 2014 WL 503635 at *2 (D.
Colo. Feb. 7, 2014); Starr v. City of Lakewood, 2008 WL 4861955 at *1 (D. Colo. Nov.
10, 2008); Bicycle Peddler, LLC v. John Does 1-177, 2013 WL 1103473 (D. Colo.
Mar. 15, 2013); Tab Export International v. Aviation Simulation Technology, 215
F.R.D. 621,622 (D. Kan. 2003).3 But see Schudel v. Miller, 2013 WL 1815730 at *5
(D. Colo. Apr. 29, 2013);4 Magluta v. U.S. Federal Bureau of Prisons, 2013 WL
1151815 at *2 (D. Colo. Mar. 19, 2013).
I concur in these decisions. The language of Rule 21 is very broad. See FED. R.
CIV. P. 21 (“On motion, or on its own, the court may at any time, on just terms, add or
drop a party. The court may also sever any claim against a party.”). The court
therefore retains significant discretion in determining whether severance is appropriate.

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By contrast, the Tenth Circuit has provided considerably more guidance regarding the
standards for misjoinder under Rule 21. See, e.g., Ravenswood Investment. Co. v. Avalon Corr.
Services., 651 F.3d 1219, 1224 (10th Cir. 2011); Nasious v. City & County of Denver-Denver Sheriff's
Department, 415 Fed. Appx. 877, 881 (10th Cir. 2011); Bradsaw v. Lappin, 320 Fed. Appx. 846, 849
(10th Cir. 2009); Shaw v. AAA Engineering & Drafting Inc., 138 Fed. Appx. 62, 66-67 (10th Cir. 2005);
Jones v. Berry, 33 Fed. Appx. 967, 973 n.7 (10th Cir. 2002).
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These holdings also are in line with those of other federal courts of appeals. See, e.g., Safeco
Insurance Co. v. City of White House, 36 F.3d 540, 545-46 (6th Cir. 1994); Wyndham Associates v.
Bintliff, 398 F.2d 614, 618 (2nd Cir. 1968); Sporia v. Pennsylvania Greyhound Lines, 143 F.2d 105,
105 (3rd Cir. 1944).
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Although Schudel was assigned to me, the dispositive order denying severance in that case
was entered by the magistrate judge, and no objection to that order was ever submitted to this court for
review of that determination. My own review of the legal authority in this area convinces me that
severance is not tied to misjoinder. Nevertheless, the preponderant question in determining misjoinder is
whether the claims arise from the same transaction or occurrence. See Nasious, 415 Fed. Appx. at 880.
As I note herein, I find this factor is not satisfied in this case in any event.

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New York v. Hendrickson Brothers, Inc., 840 F.2d 1065, 1082 (2nd Cir. 1988). To
guide this discretion, courts have considered a number of factors, including:
(1) whether the claims arise out of the same transaction or
occurrence; (2) whether the claims present some common
questions of law or fact; (3) whether settlement of the claims
or judicial economy would be facilitated [by severance]; (4)
whether prejudice would be avoided if severance were
granted; and (5) whether different witnesses and
documentary proof are required for the separate claims.
In re Merrill Lynch & Co, Inc. Research Reports Securities Litigation, 214 F.R.D.
152, 155 (S.D.N.Y. 2003).5 See also Moore's Federal Practice – Civil § 21.05 (2002)
(“In exercising its discretion under Rule 21, the court must consider principles of
fundamental fairness and judicial efficiency. As part of this inquiry, the court should
consider whether an order under Rule 21 would prejudice any party, or would result in
undue delay.”) (footnotes and internal quotation marks omitted). “In substance, then,
this Court has broad discretion to sever claims and parties, so long as in doing so the
Court furthers the aims of justice, promotes judicial economy and efficiency, and avoids
prejudicing the rights of any party.” In re Merrill Lynch, 214 F.R.D. at 155.
Considering these factors, I am persuaded that the balance weighs in favor of
severance of the preemption claims. Although the RICO and preemption claims broadly
arise out of the same subject matter, they do not implicate the same transaction or
occurrence.6 Indeed, the RICO claims by their very nature implicate fact-specific

5

The court considered some of these same factors as well in WildEarth Guardians. See 2013
WL 503635 at *1-3.
6
In their response to the motions, plaintiffs appear to suggest that the state official defendants
are implicated in their RICO claims. The Amended Complaint, which controls here, shows otherwise.

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allegations of a particular enterprise, the development of which undoubtedly will involve
a significant amount of discovery. By contrast, the preemption claims present a pure
question of law as to which little or no discovery may be anticipated.
Nor do these matters present common questions of law, at least, not in the near
term. Instead, a significant jurisdictional question hangs over plaintiffs’ preemption
claims. Without prejudging the pending motions to dismiss, but mindful of the United
States Supreme Court’s recent decision in Armstrong v. Exceptional Child Center,
Inc., – U.S. –, 135 S.Ct. 1378, 1384, 191 L.Ed.2d 471 (2015), plaintiffs’ standing to
pursue Counts VII and VIII appears precarious. This same consideration further
suggests that severance of these claims will promote judicial efficiency and potentially
avoid prejudice to the implicated defendants. Indeed, the prospect that plaintiffs may
lack standing to pursue these claims weighs heavily in the court’s ultimate conclusion
that severance is appropriate here.7
THEREFORE, IT IS ORDERED as follows:
1. That State Defendants' Motion To Sever Count VII of Plaintiffs' Complaint
Into a Separate Civil Action or, Alternatively, To Bifurcate That Claim [#51], filed
March 19, 2015, is granted
2. That the Pueblo Defendants' Motion To Sever the Preemption Claims
From Plaintiffs' Complaint or, Alternatively, To Bifurcate Those Claims [#62], filed

7

Although plaintiffs suggest that movants have an adequate remedy by way of interlocutory
appeal under Rule 54(b), such motions are not routinely granted. See Livesay v. Shollenbarger, 19 F.3d
1443 (10th Cir. 1994). Moreover, in suggesting that interlocutory appeal would be appropriate, plaintiffs
essentially confess that the preemption claims are “separable from the others remaining to be
adjudicated’” Stockman's Water Co., LLC v. Vaca Partners, L.P., 425 F.3d 1263, 1265 (10th Cir. 2005)
(citation and internal quotation marks omitted).

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April 1, 2015, is granted;
3. That pursuant to Fed. R. Civ. P. 21, Counts VII and VIII of the First Amended
Complaint [#66], filed April 13, 2015, are severed; and
4. That Counts VII and VIII the First Amended Complaint [#66], filed April 13,
2015, shall be considered, determined, and, if necessary, tried, separately from the
remaining Counts in this lawsuit.
Dated July 14, 2015, at Denver, Colorado.
BY THE COURT:

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