117 F.4th 1044
8th Cir.2024Background
- Absolute Essence LLC applied for a medical marijuana dispensary license in Arkansas after spending over $1 million on preparations.
- The Arkansas Medical Marijuana Commission outsourced the scoring of applications to Public Consulting Group, Inc., which scored nearly 200 applications in two weeks.
- Absolute Essence received a low score and, after investigating, alleged irregularities and conflicts of interest in the scoring process, including non-standardized scoring, invented criteria, and ties to competing applicants.
- The company claimed these irregularities favored larger, predominantly white-owned organizations and resulted in no "100% black-owned" businesses receiving licenses.
- Absolute Essence sued the scoring contractors in state court for tortious interference, fraud, racial discrimination, and civil conspiracy; the case was removed to federal court and dismissed for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Tortious Interference | Defendants interfered with business expectancy by manipulating scoring. | No specific third-party expectancy alleged; only generic interest in fair scoring. | Dismissed; element missing |
| Fraud | Defendants’ actions fraudulently caused financial harm to Absolute Essence. | No justifiable reliance; defendants played no role when plaintiff invested. | Dismissed; no reliance |
| Race Discrimination | Scoring process intentionally discriminated against black-owned businesses. | No facts showing intent; disparate impact doesn't show purposeful discrimination. | Dismissed; no intent pled |
| Civil Conspiracy | Defendants conspired to harm plaintiff via unlawful acts. | No viable underlying tort supports conspiracy. | Dismissed; not viable |
Key Cases Cited
- Apprentice Info. Sys., Inc. v. DataScout, LLC, 544 S.W.3d 39 (Ark. 2018) (elements of tortious interference under Arkansas law)
- SEECO, Inc. v. Hales, 22 S.W.3d 157 (Ark. 2000) (requirement of justifiable reliance in fraud claims)
- Village of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252 (1977) (proof of discriminatory intent necessary for Equal Protection claims)
- Stewart Title Guar. Co. v. Am. Abstract & Title Co., 215 S.W.3d 596 (Ark. 2005) (scope of tortious interference)
- Tyson Foods, Inc. v. Davis, 66 S.W.3d 568 (Ark. 2002) (fraud injury requirements)
- Gallagher v. Magner, 619 F.3d 823 (8th Cir. 2010) (discriminatory purpose requirement for disparate impact claims)
- Varner v. Peterson Farms, 371 F.3d 1011 (8th Cir. 2004) (civil conspiracy requires underlying tort)