326 F. Supp. 3d 1111
D. Or.2018Background
- Nine neighboring residential owners sued landowners and alleged participants, claiming a marijuana production operation on nearby property caused odors, noise, traffic, safety concerns, and reduced property value; claims: state-law nuisance and two civil RICO causes under 18 U.S.C. §§1962(c) and (d).
- Plaintiffs allege operation ran from late 2016 through at least Dec. 1, 2017, with greenhouse fans, burning of debris, increased vehicle traffic, loose guard dogs, and reported prowling/break-ins.
- Plaintiffs seek only damages (no injunctive relief), asserting three injuries: diminished fair market value, lost past/present use and enjoyment, and out-of-pocket security expenses.
- Defendants moved to dismiss for lack of subject-matter jurisdiction (standing) and for failure to state civil RICO claims, arguing plaintiffs lack constitutional and statutory (RICO) standing and any compensable property injury.
- Court held plaintiffs have Article III standing (at least via loss of use/enjoyment and past harms), denied 12(b)(1) dismissal, but granted 12(b)(6) dismissal of RICO claims because plaintiffs failed to plead a compensable RICO property injury (no concrete financial loss tied to a monetizable property interest).
- Court dismissed RICO claims without prejudice, retained nuisance claims for potential supplemental jurisdiction; Guild Mortgage was dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing | Plaintiffs suffered concrete injuries: reduced property value, lost use/enjoyment, and security expenditures, so they can sue for damages | Activities ceased, so injuries not redressable; expenses not traceable to defendants | Plaintiffs have constitutional standing (lost use/enjoyment and past harms suffice); 12(b)(1) denied |
| RICO—injury to business or property | Diminished fair market value, lost use/enjoyment, and security costs are property injuries causing concrete financial loss | Lost use/enjoyment and security costs are personal/emotional injuries not compensable under RICO; value loss is too abstract without intent to monetize | Lost use/enjoyment and security expenditures are non-proprietary/emotional and not RICO injuries; alleged drop in value insufficiently concrete because no allegation of intent to monetize; RICO injury element not met |
| RICO—proximate causation | The marijuana operation directly caused property-value decline and is the direct source of injuries | Any link is too remote; third parties or market factors may be intervening causes | Court finds proximate causation plausible (adopts Tenth Circuit Safe Streets approach) but analysis is moot because injury element fails |
| Remedy / jurisdictional posture | Plaintiffs seek damages only; ask court to retain supplemental jurisdiction over nuisance claims | Defendants seek dismissal; Guild argues no liability | RICO claims dismissed without prejudice; supplemental jurisdiction over state nuisance claims deferred; Guild dismissed with prejudice |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires concrete, particularized injury)
- Valley Forge Christian Coll. v. Americans United for Separation of Church & State, 454 U.S. 464 (redressability and injury-in-fact standards)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading legal conclusions vs. factual allegations)
- Oscar v. Univ. Students Co-Operative Ass'n, 965 F.2d 783 (9th Cir.) (diminution of enjoyment is personal injury; RICO requires property interest + concrete financial loss)
- Diaz v. Gates, 420 F.3d 897 (9th Cir.) (property interest determined by state law; concrete financial loss requirement)
- Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (RICO proximate-cause principles)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (directness in RICO proximate causation)
- Safe Streets Alliance v. Hickenlooper, 859 F.3d 865 (10th Cir.) (relevant decision finding property-use interference by marijuana operations may support RICO injury)