DISTRICT COURT, BOULDER COUNTY, COLORADO PO Box 4249 Boulder, Colorado 80306 (303) 441-3750 THE FRONT

TEA AND ART SHOP, LLC, VERONICA CARPIO, as Owner of The Front Tea and Art Shop, LLC, Plaintiffs, v. CITY OF LAFAYETTE,

DATE FILED: March 11, 2013

Defendant. J. Andrew Nathan, Reg. No. 3295 Marni Nathan Kloster, Reg. No. 34947 NATHAN, BREMER, DUMM & MYERS, P.C. 7900 E. Union Avenue, Suite 600 Denver, CO 80237-2776 Phone Number: (303) 691-3737 Email: anathan@nbdmlaw.com mnathan@nbdmlaw.com DEFENDANT’S RESPONSE TO PLAINTIFFS’ AMENDED MOTION TO RECONSIDER

▲ COURT USE ONLY ▲ Case Number: 2013CV30285 Div.: Ctrm:

Defendant, the City of Lafayette (the “City”), by and through its attorneys, Nathan, Bremer, Dumm & Myers, P.C., hereby submits the following Response to Plaintiff’s Ameded (sic) Motion to Reconsider pursuant to the Court’s Order dated February 26, 2013. INTRODUCTION This case is not about the City banning marijuana related businesses or even any real impact to the Plaintiffs, one of whom happens to be a serial litigant 1 . The City, like many

municipalities, after the vote on Amendment 64, properly and legally adopted a moratorium for a

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This is not the first marijuana related lawsuit filed by Ms. Carpio. She previously sued the City of Idaho Springs, albeit unsuccessfully. See Clear Creek County District Court Case Nos. 2011cv74 and 2011cv111.

definitive and limited period of time, so that the City could review and consider the recommendations by the State Task Force, the regulations to be adopted by the State, the impact of federal intervention should it occur and its position on any local regulations. Plaintiffs have

incorrectly alleged that the City’s valid use of its police powers constitutes unconstitutional conduct. business. Plaintiffs seem to believe that they have a fundamental right to a marijuana related That belief is neither supported by the law nor Amendment 64. Moreover, Plaintiffs

have alleged various claims, some of which are inconsistent with one another, such as a claim for preliminary injunction combined with a takings claim seeking damages. The bottom line is that,

as set forth herein, Plaintiffs do not have a valid or supportable request for a Preliminary Injunction, and Plaintiffs’ request to consolidate and advance a trial should be denied. PROCEDURAL HISTORY Plaintiffs have filed several Motions requesting reconsideration of the Court’s denial of a TRO, the first and last of which were denied by this Court sua sponte. However, the Court, as to the pleading entitled Amended Motion to Reconsider Plaintiffs’ Request for TRO and to set a Hearing for Preliminary Injunction and to Advance and Consolidate the Trial on the Merits with the Hearing for Preliminary Injunction, provided the City with an opportunity to respond. pleading serves as the City’s response to that Amended Motion. 2 ARGUMENT A. Standard of Review This

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The City does not intend to address Plaintiffs’ request for TRO since the request has already been denied several times by this Court and does not appear to currently be before the Court. If, however, the Court were ever inclined to consider granting a TRO in this matter, the City would request permission to respond as the City contends a TRO is neither appropriate nor supported by the law primarily for the same reasons set forth in this Response.

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Colorado Rule of Civil Procedure 65 governs the issuance of injunctive relief. Injunctive relief is generally only granted under extraordinary circumstances when necessary to protect a party from sustaining irreparable damages and to preserve the status quo allowing the court to issue a ruling after a full trial on the merits. Tesmer v. Colo. High Sch. Activities Ass’n, 140 P.3d 249, 252 (Colo. App. 2006). “The power to grant a preliminary injunction should be exercised sparingly and cautiously and with a full conviction on the part of the trial court of its urgent necessity.” omitted). Sanger v. Dennis, 148 P.3d 404, 409 (Colo. App. 2006)(internal quotes

This power is even more sparingly applied in matters involving governmental entities,

such as the City in this case. “Because equitable relief in the nature of an injunction constitutes a form of judicial interference with continuing activities, the courts have generally been reluctant to grant such relief where ‘the actions complained of are those of . . . branches of government, in the exercise of their authority.’” Rathke v. MacFarlane, 648 P.2d 648, 651 (Colo. 1982)(citing Plaquemines Parish Comm’n v. Perez, 379 So.2d 1373 (La. 1980)). A preliminary injunction may only be issued when the moving party is able to satisfy a six factor test. Rathke, 648 P.2d at 653-54. The moving party must demonstrate: (1) A reasonable probability of success on the merits; (2) a danger of real, immediate and irreparable injury which may only be prevented by injunctive relief; (3) a lack of a plain speedy and adequate remedy at law; (4) that the granting of an injunction will not disserve the public interest; (5) that the balance of equities favors an injunction; and (6) that an injunction will preserve the status quo pending a trial on the merits. Tesmer, 140 P.3d at 252(citing Rathke, 648 P.2d at 654)(the “Rathke Factors”). The moving party has a substantial burden, as the failure to satisfy even one of the six factors prevents the

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issuance of injunctive relief.

Id.

As explained in detail below, Plaintiffs simply cannot meet

their burden for a preliminary injunction. B. Plaintiffs do not have a reasonable probability of success on the merits. There are a number of deficiencies and problems with Plaintiffs’ alleged claims, which lead to the conclusion that Plaintiffs cannot prevail and, therefore, have no probability of success on the merits. First, Ms. Carpio, as an individual, would not have any standing. The question of standing involves a consideration of whether a given plaintiff has asserted a legal basis on which a claim for relief can be predicated. The answer to the standing issue requires an analysis of whether the plaintiff has alleged an injury in fact and, if so, whether the injury is to a legally protected or cognizable interest. Bd. of County Comm'rs, La Plata County v. Bowen/Edwards Associates, Inc., 830 P.2d 1045, 1052-53 (Colo. 1992). It is the business Plaintiff that is

claiming some sort of right to operate and related injury, not Ms. Carpio. Second, the Front Tea and Art Shop, LLC (the “business”) has never been shut down by the City or by the moratorium. The business, as set forth by Ms. Carpio in her application for a sales and use tax license, describes the nature of the business as one that deals with art, tea and custom orders. [App., Ex. A]. Neither Plaintiffs’ Complaint nor the business’s own website The website merely There

contend that the business sells marijuana or marijuana related products.

describes the business as being cannabis friendly. [www.thecoloradofront.com, Ex. B]. can be no dispute that the moratorium does not limit Plaintiffs’ ability to sell art and tea.

Third, Plaintiffs’ claims are not ripe for adjudication since various portions of Amendment 64 are not yet in effect. The State still has to take further action, such as developing and enacting additional regulations, before businesses that want to operate pursuant to

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Amendment 64 may even submit their license applications.

C.R.S.A. Const. Art. 18. § 16(5).

Similarly, the recent findings of the State Task Force indicate that various assertions made by Plaintiffs, such as that they have the right to have patrons smoke marijuana inside the business, may be banned by the State pursuant to the recommendation that marijuana be included in the smoking ban, which will bar cannabis clubs. See Executive Order B 2012-004, Creating a Task Force on the Implementation of Amendment 64. 3 [Amendment 64 Implementation Task Force has finished its meetings and its final recommendations will be delivered and posted the week of March 11, 2013]. Fourth, the City’s temporary moratorium is a valid exercise of its authority. As Plaintiffs acknowledge, the City is a home rule municipality and the moratorium was passed for a finite period of time, until October 1, 2013, while various state and federal issues associated with Amendment 64 are addressed. [Compl. ¶ 3 and Ex. A]. The use of moratoria is not a new

technique, nor even an unusual one.

“In the field of land use regulation, moratoria are often

employed to preserve the status quo in a particular area while developing a long-term plan for development.” Droste v. Bd. of County Comm’rs of Pitkin County, 159 P.3d 601 (Colo. 2007) (citing Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 337 (2002)). “The Moratorium is an ‘essential tool of successful development.’” Droste, 159 P.3d at 606 (citing Tahoe-Sierra, 535 U.S. at 337-38). In addition to the context of land use and zoning regulations, moratoriums are used for the general health and welfare of citizens, as an exercise of general police power. One example of non-land use moratoria that has arisen on multiple occasions are moratoria halting the
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Governor Hickenlooper’s Executive Order Creating a Task Force on the Implementation of Amendment 64 is attached hereto as Exhibit C for the Court’s convenience.

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issuance of taxi licenses. Airport Taxi Cab Advisory Comm. v. City of Atlanta, 584 F. Supp 961, 965-66 (N.D. Ga., 1983); Yellow Cab Co. v. City of Chicago, 71 N.E. 2d 652, 659 (Ill. 1947). Moratoria have also been used by municipalities in other states with respect to marijuana businesses. In an analogous case, City of Claremont v. Kruse, 177 Cal.App.4th 1153 (Cal.

2009), the city issued an almost two year moratorium, which was determined to be valid and enforceable. all respects. It should also be noted that “[g]enerally, statutes passed to protect the public’s health, safety, and welfare, are presumed to be reasonable.” Curious Theater Co. v. Colo. Dep’t of Pub. Health and Env., 216 P.3d 71, 76 (Colo. App. 2008). “An ordinance is presumed to be constitutional, the burden being on the party attacking the ordinance to establish its unconstitutionality beyond a reasonable doubt.” People ex rel. City of Arvada v. Nissen, 650 P.2d 547, 550 (Colo. 1982); see also Kruse v. Town of Castle Rock, 192 P.3d 591, 598 (Colo. App. 2008)(“We must uphold the ordinance unless the plaintiff proves it unconstitutional beyond a reasonable doubt.”). Accordingly, because the City’s temporary moratorium, in effect by In light of the above cases, the City’s moratorium is reasonable and appropriate in

ordinance, was intended to preserve the status quo until the State and its Task Force provided guidance on issues of first impression in Colorado, which in turn benefits the public’s health, safety and welfare, there is a presumption of reasonableness concerning the moratorium. More

importantly, Plaintiff cannot prove beyond a reasonable doubt that the moratorium is unconstitutional as Amendment 64 expressly permits local governance on consumption of marijuana, and the City’s ordinance is clearly in line with Amendment 64.

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Fifth, as it stands, even if the business merely allows people to congregate and use marijuana and no product is grown or sold, there is no dispute that the Federal Controlled Substances Act (“CSA”) still makes the possession, use, sale, and distribution of marijuana unlawful, and that such federal law is directly applicable to the states. Gonzales v. Raich, 545 U.S. 1 (2005). The City’s moratorium, by its own language, is based in part on the assumption

that the Federal government will provide some direction on the conflicting state and federal laws. Sixth, Plaintiffs’ assertion that this is solely a matter of statewide concern and, therefore, preempts the City’s right to take action, is inaccurate. Courts look at the totality of the

circumstances when analyzing whether something is a matter of state, local, or mixed concern. A declaration from the General Assembly that a matter is one of statewide or local concern is not conclusive. Town of Telluride v. Lot Thirty-Four Venture, L.L.C., 3 P.3d 30, 37 (Colo. 2000). While there is a general reference in Amendment 64 to matters of statewide concern, the article specifically exempts some of the matters set forth in the article. In that regard, part 5

specifically discusses the regulation of marijuana and states that each “locality shall enact an ordinance or regulation . . .” C.R.S. Const. Art. 18, § 16(5)(e). It goes on to state “[a] locality may enact ordinances or regulations, not in conflict with this section or with regulations or legislation enacted pursuant to this section, governing the time, place, manner and number of marijuana establishment operations; establishing procedures for the issuance, suspension, and revocation of a license issued by the locality . . .” C.R.S. Const. Art. 18, § 16(5)(f).

Furthermore, the City, as an entity who owns and controls property “may prohibit or regulate the possession, consumption, use, display, transfer, distribution, sale, transportation, growing of marijuana on or in that property.” C.R.S. Const. Art. 18 § 16(6)(d). In the same vein, land use is

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generally a matter of local concern. See City of Northglenn v. Ibarra, 62 P.3d 151, 159 (Colo. 2003). As a result, Amendment 64 is actually a mixed matter of state and local concern, and Id. at 155 (stating that

since the City’s moratorium does not conflict, 4 there is no preemption.

matters of mixed local and state concern may coexist if they do not conflict). Pursuant to these assertions, Plaintiffs cannot prevail on the merits of their claim, and a preliminary injunction should not be granted. C. Plaintiffs will not suffer real, immediate and irreparable injury if a preliminary injunction is not granted. Plaintiffs cannot demonstrate “a danger of real, imminent, and irreparable harm.” Irreparable harm is often defined as that which a monetary award does note adequately compensate. Gilitz v. Bellock, 171 P.3d 1274, 1278-79 (Colo. App. 2007). Because a

preliminary injunction is a drastic remedy, it should only be used if there is a present, existing threat of harm that cannot be remedied in a court of law. Holiday Inns of Am., Inc. v. B& B Corp., 409 F.2d 614, 618 (3d Cir. 1969). 5 Irreparable harm is not demonstrated when a threat poses a remote future possibility, or a future invasion of rights. Id.; See also Cobra North Am., LLC v. Cold Cut Sys. Svenska AB, 639 F.Supp.2d 1217, 1230 (D.Colo. 2008)(finding a preliminary injunction unjustified as no evidence was presented of an “imminent” harm). Instead, the danger must be actual, not

speculative or remote in nature. Holiday Inns of Am., Inc., 409 F.2d at 618. As irreparable harm is often considered the most salient element in determining whether to grant a preliminary
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The City’s moratorium limits certain business activities until October 1, 2013, which conforms with Amendment 64’s provisions. It also maintains uniformity in not permitting any such licenses until the date set forth in which the Department of Revenue is to begin accepting them. Further, the Ordinance does not affect any individuals outside of the municipality. 5 Colorado Rule 65 is substantially identical to Federal Rule 65 and, therefore, federal cases are persuasive in the construction of the Colorado rule. Duran v. Lamm, 701 P.2d 609 (Colo. App. 1984).

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injunction, evidence of a future, speculative harm is insufficient. 639 F.Supp.2d at 1230.

See Cobra North Am., LLC,

Plaintiffs’ claim of irreparable injury is based upon an unsupported conclusory assertion that the moratorium shuts down a portion of the Plaintiffs’ business. business was never shut down. As discussed above, the

The business sells tea and art, allegedly not marijuana or

marijuana products, and currently can sell art and tea regardless of the moratorium. D. A plain speedy and adequate remedy at law does exist. Injunctive relief cannot be granted when there is an adequate remedy at law. Benson v. Nelson, 725 P.2d 71, 72 (Colo. App. 1986). The Fourth claim for relief in Plaintiffs’ Complaint [Compl. ¶¶ 108-

is a takings claim for which Plaintiffs specifically demanded compensation. 119].

A claim for takings, specifically one alleging damages, is clearly a remedy at law. The

mere fact that Plaintiffs’ have alleged this claim and requested damages confirms that an adequate remedy at law exists and that an injunction is, therefore, not appropriate. E. The granting of a preliminary injunction will disserve the public interest and the balance of equities disfavors the issuance of a preliminary injunction. In actuality, Plaintiffs do not want the laws of the state upheld. Plaintiffs want to operate illegally and to have this Court prohibit the City from enforcing a properly adopted moratorium which was adopted with the best interests of the citizens of the City in mind. The public interest in no way favors or is benefited by the government being barred from enforcing its laws. The only parties who would benefit from such an order are the Plaintiffs. In addition to the public interest being disserved by Plaintiffs’ request, the balance of equities weigh against the Plaintiffs. On the one hand, there are the Plaintiffs who are

intentionally refusing to comply with City regulations and the ADA as to necessary

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modifications to the building where the business is located.

Plaintiffs are also failing to comply As for

with signage requirements and want the City to allow them to violate federal law.

Plaintiffs’ assertion in ¶ 16 of its Amended Motion that it commenced operation after Amendment 64 was passed, that is simply untrue. Plaintiffs own sales and use tax application

confirm that the business began in March 2012, eight months before the State vote on Amendment 64. [Ex. A]. On the other hand, there is the City who has enacted a temporary

moratorium on certain businesses while the State and its Task Force work out specific issues and recommendations associated with the Amendment, which by its own wording does not allow businesses permitting marijuana use or sales to operate yet and may ban places like Plaintiffs want to have altogether. The City also has the desire to ensure that matters, such as known

secondary affects and related land use planning, are properly evaluated before businesses operate pursuant to Amendment 64. selfish desires. F. A preliminary injunction will destroy the status quo pending a trial on the merits. A preliminary injunction would prevent the City from enforcing a valid moratorium and, therefore, would destroy the status quo, not preserve it. Moreover, since Plaintiffs can still Clearly, the City and the citizens’ interests outweigh the Plaintiffs’

operate a tea and art business, there is no need to issue any injunction. G. Consolidation of a trial and injunction hearing is not warranted or appropriate. Plaintiffs’ Complaint contains seven claims for relief, only one of which is a claim for injunction. Plaintiffs assert damage claims, such as takings, as well as due process and equal Contrary to Plaintiffs’ assertion, this is not purely a legal issue for which The City’s Answer, in which a variety of allegations are denied,

protection claims.

there are no disputed facts.

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confirms the disputed matters.

For example, there is a factual issue regarding whether the Further, there is discovery

moratorium has damaged or even impacted the Plaintiffs’ business. 6

which the City believes it must conduct, such as propounding written discovery and obtaining records related to the businesses’ operation, alleged damages, sales and compliance with federal, state and local laws and regulations. Also, the City believes a deposition of Ms. Carpio and

potentially others regarding various issues, including questions related to standing, the marijuana activities, the sales of the business and whether it will continue to operate in its existing location for unrelated matters and the like, are necessary before a ruling on the merits can occur. In

conclusion, the City believes that there are disputes of fact and various issues for which discovery must occur and, therefore, a consolidated and expedited trial and preliminary injunction hearing is not appropriate and would unfairly prejudice the City. CONCLUSION Pursuant to the arguments set forth above, it is clear that the City has acted within its authority and validly applied its police powers to enact the at-issue Ordinance and moratorium. The moratorium is plainly within the contours of the dictates of Amendment 64, and has a presumption of reasonableness that Plaintiffs simply cannot overcome. The City’s actions do not invade any of Plaintiffs’ constitutional rights, but simply maintain the status quo during the State and the Task Force’s investigations into how to regulate marijuana as envisioned in Amendment 64. Plaintiffs’ claims are both inconsistent, as they seek both an injunction and monetary

damages, and as demonstrated above, without merit. Moreover, Plaintiffs’ request to consolidate
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If Plaintiffs are willing to stipulate to issues, such as that Ms. Carpio has no standing, that the business has in no way shut down or suffered any damages, that Plaintiffs are not in compliance with federal, state and local law and other similar factual matters, the parties may be able to stipulate to a consolidated and advanced trial, however, in that situation Plaintiffs’ claims would be legally without merit.

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and advance a trial is inappropriate and prejudicial to the City. As a result, Plaintiffs’ request for preliminary injunction and their request to consolidate and advance a trial should be denied. WHEREFORE, Defendant respectfully asks this Court to deny Plaintiffs’ Amended Motion to Reconsider Plaintiffs’ Request for TRO and to set a Hearing for Preliminary Injunction and to Advance and Consolidate the Trial on the Merits with the Hearing for Preliminary Injunction for the reasons set forth herein. In conjunction with that request,

Defendant asks that the Court deny Plaintiff’s preliminary injunction request without a hearing. In the alternative, if the Court determines that a preliminary injunction hearing is necessary, that Defendant be permitted to conduct discovery prior to the hearing. Defendant also asks this Court to grant any further relief it deems just and proper.

Respectfully submitted,
NATHAN, BREMER, DUMM & MYERS, P.C.

s/ J. Andrew Nathan J. Andrew Nathan, #3295 Marni Nathan Kloster, #34947 Attorneys for Defendant
This DEFENDANT’S RESPONSE TO PLAINTIFFS’ AMENDED MOTION TO RECONSIDER was filed electronically pursuant to C.R.C.P. 121 §1-26. The original signed document is on file at the offices of Nathan, Bremer, Dumm & Myers, P.C.

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CERTIFICATE OF SERVICE I hereby certify that on this 11th day of March, 2013, a true and correct copy of the foregoing DEFENDANT’S RESPONSE TO PLAINTIFFS’ AMENDED MOTION TO RECONSIDER was served via the State of Colorado's ICCES e-filing system upon each of the following: Thomas West, Esq. The West Firm, P.C. tjw@westfirmpc.com Attorney for Plaintiff Peter Walters, Esq. Smittkamp & Walters, PC peter@smittkamptwalters.com Attorney for Plaintiff

s/ Cassandra Sudbeck Cassandra Sudbeck
This Certificate of Service was filed electronically pursuant to C.R.C.P. 121 §1-26. The original signed certificate is on file at the offices of Nathan, Bremer, Dumm & Myers, P.C.

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