Last month, I wrote this post about the latest development in the Veritas Fine Cannabis (“VFC”) trademark infringement lawsuit filed against Veritas Farms. Unfortunately for VFC, Judge Michael E. Hegarty had issued a recommended order that the court should grant Veritas Farms’ motion for dismissal, without prejudice to the dismissal of the claims (i.e. VFC cannot change or retry those claims).
Since then, both VFC and Veritas Farms have submitted responses, and VFC’s main argument is that it should be allowed to change its claims and get a second try. This got me thinking about a problem that often arises at the beginning of many cannabis lawsuits: should the defendant file a motion to dismiss?
State Code of Civil Procedure 12 (b) (6) governs dismissal requests. Quote from Judge Hegarty:
The purpose of a motion for dismissal under Fed. R. Civ. P. 12 (b) (6) is intended to examine the adequacy of the plaintiff’s complaint. “In order to survive an application for dismissal, a complaint must contain sufficient facts that are recognized as true to assert what at first sight appears to be a plausible claim for relief.” Plausibility in connection with an application for dismissal means that the Plaintiff asserted facts which enable the court to reasonably conclude that the defendant is liable for the alleged wrongdoing. Twombly requires a bipolar analysis. First, a court needs to “identify the allegations in the complaint that are inconsistent with the truth,” that is, those allegations that are legal conclusions, mere allegations, or just conclusions. Second, the Court must examine the factual allegations “to see if they plausibly suggest a right to relief”. If the allegations contain a plausible claim for relief, that claim outlives the request for dismissal. (Quotes omitted).
As the cannabis industry grew more litigation, complaints have generally improved – but some still come across our desks so bare and inadequate by the above standard. When our complained customers ask what to do about it, we typically go through the following considerations:
Advantages of filing an application for dismissal:
- When the plaintiff is forced to resolve an ambiguous complaint, the claims to be treated are refined. Vague claims are harder to defend. This also often means that the scope of the discovery is limited.
- It can signal to the judge that the plaintiff’s case has weaknesses – we’ve seen everything from the judge keeping the parties at a higher level to real pressure on the parties to settle.
- It can also reveal potential defenses that can be used across the board in the practice of dispositive movement.
- When the plaintiff is eventually forced to resolve an ambiguous complaint, it often sends the signal that you are ready to have a full lawsuit – even at this very early stage.
Disadvantages of filing an application for dismissal:
- Customers often experience sticker shock when they see the cost of filing a dismissal so early in the case. (However, this should be weighed against the potential cost of defending against such claims in a full lawsuit.)
- It can inform the plaintiff and the opposing attorney early on about the weaknesses of his case and give them foresight as to how they can strengthen their claims.
- And of course, in most cases, the deficiency alleged by a petition for dismissal can be remedied, and the courts tend to give permission to change. In such cases, the defendant ultimately gains little (possibly several months late).
All of these factors should be carefully weighed in each case, as this decision can set the tone for the next year or two of a potential litigation. To ensure that you are considering all of the options available from the moment you become involved in a lawsuit, it is a good idea to consult a knowledgeable cannabis trial attorney from the start.