United States District Court, S.D. West Virginia, Huntington Division
MEMORANDUM OPINION AND ORDER
C. CHAMBERS, UNITED STATES DISTRICT JUDGE.
the lapse of congressional appropriations and the impact it
has had on the Department of Justice and the United States
Attorney's Office, the Honorable Irene C. Berger entered
a General Order on December 26, 2018, staying civil cases in
this District in which the United States is a party. Gen.
Order Holding Civ. Matters in Abeyance, Misc. No.
2:18-mc-00196 (Dec. 26, 2018) (Berger, J.). As the lapse of
funding has not been resolved, Judge Berger entered a second
General Order on January 8, 2019, continuing the stay.
Gen. Order Holding Civ. Matters in Abeyance, (Jan.
8, 2019) (Berger, J.). Litigants, however, are permitted to
seek relief from the stay under both General Orders. On
January 3, 2019, Defendants Matthew Mallory (Mr. Mallory) and
Commonwealth Alternative Medicinal Options, LLC (collectively
the “CAMO Defendants”) filed a Motion for Relief
from the General Order. ECF No. 55. The Court directed an
expedited briefing schedule on the motion, and the motion is
now ripe. For the following reasons, the Court LIFTS
THE STAY and DISSOLVES the
Preliminary Injunction previously entered in this case.
case was filed by the United States on September 11, 2018. On
that same day, the Court entered an Ex Parte Temporary
Restraining Order and scheduled a hearing on the
Government's Motion for a Preliminary Injunction for
September 17, 2018. ECF No. 5. Following the hearing, the
Court converted the Ex Parte Temporary Restraining Order into
a Preliminary Injunction, but permitted Defendants to
harvest, dry, and mill the hemp. ECF No. 20. The Court
prohibited Defendants, however, from transporting or selling
any portion of the processed material. Id. On
October 22, 2018, the Court further clarified that Defendants
were not permitted to move the industrial hemp outside of
West Virginia without further order of the Court, and they
were directed to provide the Court and counsel for the
Government a timeline of their future plans for the hemp. ECF
No. 37. The CAMO Defendants complied with the Court's
Order and filed a response under seal. ECF No. 47.
meantime, since the time this action was filed, the CAMO
Defendants and the “Grassy Run Defendants, ” who
collectively are Gary Kale and the Grassy Run Farms, LLC,
also have filed two separate Motions to Dismiss. ECF Nos. 28
& 34. Additionally, the Government filed a Motion for
Leave to File an Amended Verified Complaint. ECF No. 48.
While the Court was considering these additional pleadings
and the merits of this case, the General Order staying such
civil actions was entered.
CAMO Defendants now move to lift that stay because certain
contractual obligations are at risk that were not in jeopardy
at the time the Preliminary Injunction originally was
entered. Specifically, according to the Affidavit of Mr.
Mallory attached to the motion, the plant material needs to
be processed into pure cannabidiol (CBD) isolate at a
facility located in Pennsylvania. Aff. of Matthew
Mallory, at ¶4, ECF No. 55-1. As the processing
takes approximately two-and-a-half weeks, Mr. Mallory stated
that the product needed to be transported to the Pennsylvania
processing facility by January 13, 2019 in order for
Defendant Commonwealth Alternative Medicinal Options to meet
its contractual obligations to provide the isolate by the end
of January. Id. at ¶¶2, 5-8. Mr. Mallory
further averred that “[t]he profit from the sale of the
CBD isolate is integral to the business' future plans and
investments.” Id. at ¶9.
the inherent power of the Court, “[a]n interlocutory
order is subject to reconsideration at any time prior to the
entry of a final judgment.” Fayetteville Inv'rs
v. Com. Builders, Inc., 936 F.2d 1462, 1469 (4th Cir.
1991); see also Centennial Broad., LLC v. Burns, 433
F.Supp.2d 730, 733 (W.D. Va. 2006) (“[T]he Court has
continuing plenary power to modify or dissolve a preliminary
injunction applying general equitable principles.”);
Notes of Advisory Comm. on Rules, Fed. R. Civ. P.
60(b) (“[I]nterlocutory judgments are not brought
within the restrictions of the rule, but rather they are left
subject to the complete power of the court rendering them to
afford such relief as justice requires.”).
Interlocutory orders “[can] be reviewed by the district
court, on motion or sua sponte[.]”
Fayetteville, 936 F.2d at 1472.
not necessary to label such reviews under a particular rule
of civil procedure. Id. However, “[b]ecause a
decision to issue a preliminary injunction is appealable
pursuant to 28 U.S.C. § 1292(a)(1), it is a
‘judgment' for the purposes of the Federal Rules of
Civil Procedure [Rule 54(a)].” Centennial
Broad, 433 F.Supp.2d at 733; see also Cap. Sprinkler
Inspection, Inc. v. Guest Servs., Inc., 630 F.3d 217,
227 (D.C. Cir. 2011) (stating that Rule 54(b) recognizes the
district court's inherent power to reconsider an
interlocutory order as justice requires). Under Rule 54,
“any order . . . that adjudicates fewer than all the
claims or the rights and liabilities of fewer than all the
parties . . . may be revised at any time before the entry of
judgment adjudicating all the claims and all the parties'
rights and liabilities.” Fed.R.Civ.P. 54(b).
Fourth Circuit has been careful to note that “a review
of an interlocutory order under Rule 54 is not subject to the
restrictive standards of motions for reconsideration of final
judgments.” Fayetteville, 936 F.2d at 1472.
Reconsideration cannot be treated under Rules 60 or 59, as
these rules apply only to final judgments. Id.;
see also Am. Canoe Ass'n, Inc. v. Murphy Farms,
Inc., 326 F.3d 505, 514 (4th Cir. 2003).
change in circumstances makes reconsideration of an
interlocutory order appropriate. “[A]n injunctive order
may be modified or dissolved in the discretion of the court
when conditions have so changed that it is no longer needed
or as to render it inequitable.” Tobin v. Alma
Mills, 192 F.2d 133, 136 (4th Cir. 1951) (citations
omitted); see also Dombrowski v. Pfister, 380 U.S.
479, 492 (1965) (“[T]he settled rule of our cases is
that district courts retain power to modify injunctions in
light of changed circumstances.”). “A court errs
when it refuses to modify an injunction or consent decree in
light of such changes.” Agostini v. Felton,
521 U.S. 203, 215 (1997) (citation omitted). Thus, “a
district court may modify a preliminary injunction in light
of subsequent changes in the facts or the law, or for any
other good reason.” Ohio Valley Envt'l. Coal.
v. United States Army Corps of Engineers, No. CV
3:08-0979, 2009 WL 10688886, at *1 (S.D. W.Va. Aug. 21, 2009)
(citing Centennial Broadcasting, 433 F.Supp.2d at
733) (internal quotations omitted).
considering these factors, the Court recognizes that the
passage of time has changed the circumstances of Defendants.
It is unrefuted that Commonwealth Alternative Medicinal
Options has contractual obligations to provide the isolate by
the end of January that will not be met if the plant material
is not immediately processed. Additionally, it is not
disputed that the sale of the CBD isolate is essential to the
future plans of the business. Unquestionably, Defendants will
experience certain, significant harm if the Preliminary
Injunction is not immediately dissolved to allow the hemp to
be processed and sold. Although the Government argues
Defendants' failure to meet their contractual obligations
is a product of their own making by not adhering to the
project description and relevant laws, the Court has become
increasingly doubtful of the Government's case on the
merits. Additionally, on December 20, 2018, the
President signed into law the Agricultural Improvement Act of
2018, Public Law No. 115-334, 132 Stat 4490 (“2018 Farm
Bill”). Despite being enacted after the issues in this
case arose, the 2018 Farm Bill expresses congressional intent
that current public policy supports States exercising primary
control over hemp production. In addition, Section 12619 of
the Farm Bill removes hemp from the controlled substance list
and from under the jurisdiction of the U.S. Department of
Justice. See § 12619 of the 2018 Farm Bill,
Conforming Changes to Controlled Substances Act (providing
“[t]he term ‘marihuana' does not include-(i)
hemp, as defined in section 297A of the Agricultural
Marketing Act of 1946”).
Government also argues that, even if the Controlled Substance
Act does not apply to the CBD isolate, it still is regulated
by the Food Drug and Cosmetic Act (“FDCA”) and
under the authority of the Commissioner of the Food and Drug
Administration (“FDA”). According to the
Government, the FDA only has approved the product for use in
Epidiolex, an epilepsy drug. Therefore, the Government
insists it is entitled to an injunction because its use is
prohibited by the FDCA and the Commissioner of the FDA.
However, as argued by Defendants, the mere potential of a
downstream use that may violate certain federal regulations
does not entitle the Government to an injunction on producing
and selling the CBD isolate here. In fact, there is no
evidence before this Court that Defendants will be adding the
CBD isolate to food or health products or making
unsubstantiated health claims about the benefits of CBD
without approval of these agencies. Therefore, the Court will
not extend the injunction on this ground.
in this Court's inherent authority and for the foregoing
reasons, the Court GRANTS the CAMO
Defendants' Motion for Relief from the General Order
Holding Civil Matters in Abeyance, LIFTS THE
STAY, and DISSOLVES the Preliminary
Injunction previously issued by the Court. Defendants shall
be able to immediately transport the product to the
Pennsylvania facility for processing and sale of the CBD
isolate. The Court cautions Defendants, however, its decision
rests on the standard for reconsidering a preliminary
injunction and the ultimate merits of this case have not been
resolved. Additionally, if Defendants intend to tout the
health benefits of CBD or add it to food or health products
without approval it risks running afoul of FDCA and FDA
Court DIRECTS the Clerk to send a copy of
this Order to counsel of record and ...