Safe Streets Alliance v. Hickenlooper, 859 F.3d 865

Background

Colorado adopted Amendment 64 to legalize and regulate recreational marijuana while federal law (the CSA) still criminalizes manufacture/distribution of marijuana.
Reillys (landowners) and Safe Streets brought RICO claims against adjacent licensed marijuana operators alleging odorous nuisance and diminution in property value; plaintiffs also sued Colorado and Pueblo County seeking to enjoin enforcement of Amendment 64 as preempted by the CSA.
A separate group of sheriffs and county attorneys (Smith plaintiffs) sued Colorado asserting the CSA preempts Amendment 64 and sought injunctive relief.
Nebraska and Oklahoma sought to intervene on appeal asserting sovereign preemption claims against Colorado; they had previously filed an original action in the U.S. Supreme Court.
District court dismissed the RICO claims (for lack of plausible property injury/proximate cause) and dismissed the preemption/equity claims; appeals followed and were consolidated.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Reillys plausibly pleaded RICO (§1964(c)) claims against marijuana operators	Reillys: operators formed an association-in-fact enterprise violating the CSA; odorous nuisance and reduced market value are injury to property proximately caused by RICO predicate acts	Operators: alleged injuries speculative, plaintiffs failed to plead concrete financial loss or proximate cause	Reversed in part: Reillys plausibly alleged (1) odorous nuisance interfering with use/enjoyment, (2) present diminution in value from odors, and (3) present diminution in value from publicly operating a criminal enterprise; proximate causation adequately pleaded for those three injuries; remand for further proceedings on those claims.
Whether private plaintiffs may obtain equitable relief (declaratory/injunctive) to enforce CSA preemption (§903/Supremacy Clause) against state/local officials without a federal substantive right	Plaintiffs: equity is a standalone source; any citizen injured by state violation of federal law can seek injunction to enforce Supremacy/§903	State/County: plaintiffs lack any federal substantive right under the CSA to vindicate; Supremacy Clause does not create private cause of action; enforcement rests with federal actors/Congress	Affirmed: plaintiffs cannot enforce §903 or the Supremacy Clause in equity because they possess no federal substantive rights conferred by CSA; preemption claims dismissed.
Whether sheriffs/county attorneys can enjoin Colorado under CSA absent a statutory federal right	Plaintiffs (Smith): equitable enforcement of CSA available for their injuries (oath conflicts; cross-border marijuana flow increases costs)	Colorado: no federal substantive rights granted to these officials; claims seek to enforce federal law without a private right	Affirmed: same reasoning as Safe Streets — no private federal right to vindicate; dismissal upheld.
Whether Nebraska and Oklahoma may intervene on appeal to litigate sovereign preemption claims against Colorado	States: seek to intervene to defend/advance sovereign preemption claims; argued intervention timely	Opposing parties: controversy between States must be brought in Supreme Court; 28 U.S.C. §1251(a) gives original and exclusive jurisdiction to SCOTUS for disputes between States	Intervention vacated/denied: court lacks jurisdiction over controversies between States under §1251(a); order granting intervention vacated and motions to intervene denied.

Key Cases Cited

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) (RICO should be read broadly and creates civil cause of action for injury to business or property)
RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016) (defining RICO private-right elements and limits on scope of recoverable injuries)
Boyle v. United States, 556 U.S. 938 (2009) (association-in-fact enterprise elements)
Reves v. Ernst & Young, 507 U.S. 170 (1993) (operation-or-management test for §1962(c) liability)
Bridge v. Phoenix Bond & Indemn. Co., 553 U.S. 639 (2008) (proximate cause in civil RICO and that plaintiffs need not be direct victims of underlying fraud to proceed if injury is direct)
Holmes v. Sec. Inv’r Prot. Corp., 503 U.S. 258 (1992) (limiting RICO recovery to direct injuries; proximate causation analysis)
Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) (discussing indirect injuries and proximate cause in RICO context)
Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378 (2015) (Supremacy Clause does not itself create a private cause of action; courts must consider statutory text and remedial scheme before granting equitable relief)
Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) (statutory text must create rights-‑‑in‑persons‑benefited terms to support private enforcement)
Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89 (1984) (federal courts cannot enjoin state officials for violations of state law; federal rights required to obtain equitable relief)
Ex parte Young, 209 U.S. 123 (1908) (prospective injunctive relief against state officers to enjoin ongoing violations of federal law)
Gillmor v. Thomas, 490 F.3d 791 (10th Cir. 2007) (diminution in development potential is a cognizable property injury under §1964(c))
United States v. Oakland Cannabis Buyers’ Coop., 532 U.S. 483 (2001) (discussing federal enforcement discretion under CSA)