Cannabis litigation
How to end your cannabis litigation early

Last week we discussed frustrations that arise from the slow and methodical pace of cannabis litigation and the possibility of shortcutting the process through provisional remedies. Though provisional remedies do not directly bring a case to its conclusion, they can often force a quick settlement. This week I will discuss a litigant’s options to bring a quick end to a case via a motion to dismiss or a motion for summary judgment.

These two sorts of motions share many similarities, but this difference is key: motions to dismiss contend that a party’s allegations in its pleadings (complaint or counterclaims) are deficient. A motion for summary judgment requests the court apply the law to the facts a and determine the case is not even worth sending to a jury.

Motions to Dismiss. You can move to dismiss a claim against you for a variety of reasons including that: 1) the court lacks jurisdiction (legal authority to resolve the present dispute), 2) there is already another action between these parties attempting to resolve the present dispute, 3) the claim was brought outside the statute of limitations, or 4) the claimant failed to state facts sufficient to constitute a claim. Jurisdictional questions focus on whether the claim should have been brought in another state or county, or whether the parties complied with any binding dispute resolution clauses in any relevant contracts, such as mandatory arbitration provisions. A party can also move to dismiss on jurisdictional grounds if service was improper.

On a motion to dismiss for failure to state a claim, the question for the court is not whether the actual facts ultimately support a claim, but whether the pleadings as written support a claim. The party that files the motion to dismiss is asking the court to throw out the case as a whole (or at least certain claims) based solely on the face of the complaint or counterclaims. Essentially, by filing a motion to dismiss you are telling the court, “Even if everything my opponent claims is true, I still win so there is no point in our even continuing with this case.”

On a motion to dismiss the court must assume everything your opponent writes in its claims is true and apply your opponent’s ideal set of facts to the law and decide whether any valid claim exists. Any litigant should be mindful that a successful motion to dismiss for failure to state ultimate facts will not necessarily end the case. The court has broad discretion to allow the non-moving party to amend its pleadings to fix any deficiencies.

Motions for Summary Judgment. Though motions to dismiss are limited to the four corners of the pleadings, a motion for summary judgment digs into the underlying facts that exist outside the complaint and other pleadings. Motions to dismiss are usually filed pre-discovery, but since motions for summary judgment examine the underlying facts, they are typically brought after the parties have incurred significant expenses in discovery disputes and depositions. The party seeking summary judgment essentially asks the court to look at the evidence produced through the discovery process and rule that no reasonable jury (or other fact finder) could rule in the opponent’s favor. Both sides will submit sworn statements, called affidavits or declarations, laying out their side of the case, and will also submit documents obtained from discovery and deposition transcripts.

The court will review all of this evidence in the light most favorable to the non-movant. In other words, the court will draw all reasonable inferences in the non-movant’s favor. If the evidence, when viewed as favorably as possible to the non-movant, reveals the fact finder (usually the jury) would essentially have no choice but to rule in the movant’s favor, the trial is unnecessary and the court will enter a summary judgment in the movant’s favor on one or more of claims and defenses at issue. Even if some claims survive summary judgment, the summary judgment process can help narrow the scope of the dispute at trial and thereby save time and costs.

No cannabis business wants to be in litigation; at best it is an expensive distraction and at worst it can destroy a business. Motions to dismiss and motions for summary judgment can be good tools for trying to end the litigation early. In my next post, I will talk about alternative dispute resolution (“ADR”) and why it so often makes sense for cannabis businesses