Metropolitan News-Enterprise

 

Wednesday, March 16, 2022

 

Page 1

 

Court of Appeal:

Action by Cannabis Business Against City Not a SLAPP

Would-Be Operator of Dispensary Alleges City of Commerce Was Implicated in Kick-Back Scheme

 

By a MetNews Staff Writer

 

The Court of Appeal for this district yesterday rejected the contention by the City of Commerce that an action against it based on the denial of a license to conduct a cannabis business should be stricken as a SLAPP because conversations it allegedly had with a lobbyist setting up a conspiracy to exact bribes from license applicants was protected conduct.

Suing the city is “From The Earth,” a multi-state marijuana-dispensary company. Its complaint sets forth that “the action is based upon the corrupt conduct of the city of Commerce illegally conspiring with convicted felon and disgraced former Bell City Councilman Mario Beltran to develop a plan in which each would profit off the issuance of licenses in the city of Commerce.”

Alameda Superior Court Judge Noël Wise, sitting on assignment, wrote the unpublished opinion for Div. Seven. It affirms an order by Los Angeles Superior Court Judge Michael P. Linfield denying the city’s special motion to strike.

Flatley Not Applied

Wise did not base the decision on the California Supreme Court’s 2006 opinion in Flatley v. Mauro which held that the anti-SLAPP statute, Code of Civil Procedure §425.16, does not protect illegal conduct. She explained in a footnote that in Flatley, evidence of criminal activity “was uncontroverted and conclusive,” while the city “unequivocally denies From The Earth’s allegations regarding bribery.”

The visiting jurist grounded the holding on the nature of the city’s conduct that’s in issue: a license denial, not its communications with Beltran.

(The Los Angeles County District Attorney’s Office announced on Feb. 4 that Beltran and 10 others were charged in a 34-count complaint alleging widespread corruption. Beltran faces one count of filing false or fraudulent recall petitions.)

Plaintiff’s Allegations

What From the Earth alleges is that Beltran advised that unless he were paid off, a business license would be denied; he emailed a contract to From the Earth’s owner, Kintu Patel, on Nov. 30, 2018 at 4:39 p.m.; it required a $50,000 payment up front, with further payments to be made in installments; at 4:56 p.m. on Nov. 18, the city emailed an application license to Arion Jafari at From the Earth, with the salutation, “Hello Arrion, Kintu/Mario.”

Beltran, a Whittier political consultant, was not hired; From the Earth’s license application was denied. It sued based on a denial of equal protection, pointing to other applications from businesses similarly situated being granted.

The city’s anti-SLAPP motion was denied on the ground that the first prong of the statute—a showing that the action stemmed from protected conduct—was not met.

Appeals Court Decision

Wise wrote:

“We conclude that From The Earth’s Fourteenth Amendment equal protection claim against the City, for denying From The Earth’s cannabis business license application, does not arise from protected activity. Section 425.16 does not generally protect a governmental entity’s decisions to issue or deny permits….In analyzing a claim based on discriminatory government action, the court must distinguish between challenges to government decisions and ‘statements that may have led to those decisions.’…The foundation of From The Earth’s equal protection claim is the City’s denial of From The Earth’s cannabis license application and the City’s divergent treatment of similarly situated applicants—not the City’s ‘speech.’

“The purported or inferred communication between the City and Beltran is merely ‘evidence of liability’ supporting From The Earth’s claim that the City intentionally engaged in differential treatment when it denied From The Earth’s application; the communication itself is not ‘the wrong complained of’ in this cause of action.”

The case is From The Earth v. City of Commerce, B311070.

J. Brian Urtnowski and Lisamarie McDermott of the Irvine firm of Urtnowski & Associates represented From the Earth. Tania Ochoa and Roger A. Colvin of the City of Industry firm of Alvarez-Glasman & Colvin acted for the city.

 

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