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Dresser v. Ohio Hempery, Inc.

United States District Court, E.D. Louisiana
Mar 8, 2004
CIVIL ACTION NO. 98-2425 SECTION "R"(5) (E.D. La. Mar. 8, 2004)

Opinion

CIVIL ACTION NO. 98-2425 SECTION "R"(5)

March 8, 2004


ORDER AND REASONS


Before the Court is the motion of defendant, Oakmont Investment Company, Inc. to reissue a stay order in these proceedings. For the following reasons, the Court grants defendant's motion.

The Court notes that the motion was filed on behalf of Oakmont Investment and Health From the Sun, Inc. The docket in this case reveals that plaintiff amended his complaint in August 1999 and terminated defendant Health From the Sun, Inc. and added defendant Health From the Sun Products, Inc. The Court later granted plaintiff's motion to dismiss defendant Health From the Sun Products, Inc. on February 28, 2000. Therefore, it appears that the motion was improperly filed on behalf of Health From the Sun, Inc., and the Court considers the motion as filed only on behalf of Oakmont Investment, Inc.

I. Background

Plaintiff was a United States Coast Guard-licensed vessel engineer. Before taking a Coast Guard drug test, he allegedly ingested "Hemp Liquid Gold," a product manufactured and distributed by defendant Oakmont Investment, and other similar products. Plaintiff contends that he believed that the products were healthful and free of any ingredients that produce any of the risks associated with marijuana use. Plaintiff later tested positive for marijuana/THC. As a result of the positive test result, the Coast Guard charged plaintiff with Use of a Dangerous Drug and sought to have plaintiff's license revoked. A Coast Guard Administrative Law Judge ("ALJ") held a hearing on the charges against Dresser in April and June of 1998. On August 17, 1998, plaintiff sued defendants in this Court as manufacturers, markets, distributers, and sellers of certain products, the consumption of which caused a "false positive" on the drug test. Plaintiff seeks damages for emotional distress, as well as for a significant loss of earnings, earning capacity, pension benefits, medical insurance benefits and loss of other job related benefits.

The "Hemp Liquid Gold" literature states that the product provides all your essential fatty acid needs and is a "nutritional wonder" which, while being a member of the Cannibus Sativa family, does not contain THC, the active ingredient in marijuana.

In a written opinion dated February 4, 1999, the ALJ ordered plaintiff's license revoked. After the hearing in mid-1998, but before the ALJ rendered his written decision, the ALJ learned that his son was counsel for one of the defendants in this civil case. Plaintiff appealed the ALJ's decision, and the Coast Guard Commandant affirmed the ALJ's decision on June 3, 2002. Plaintiff appealed the Commandant's decision to the National Transportation Safety Board ("NTSB"). The NTSB reversed the Coast Guard's decisions and remanded the case to the Commandant for further proceedings. The NTSB noted that nothing in the record suggested that the ALJ's decision was based on improper considerations but found, however, that the circumstances of the case presented an unacceptable appearance of impartiality by the ALJ. The NTSB concluded that a determination in the administrative proceedings that the positive drug test was not a result of the hemp seed oil ingestion would directly benefit the defendants, and consequently the ALJ's son, in this civil action. The NTSB found that the appearance of a conflict of interest was sufficient to warrant reversal of the previous Coast Guard decisions. The NTSB did not opine on any of Dresser's other assignments of error.

After the ALJ rendered his written decision on February 9, 1999, but before the Commandant decided Dresser's administrative appeal, defendants moved to stay the proceedings in this Court pending the outcome of the appeal. The Court granted the stay in the interests of fairness and judicial economy because a stay would avoid duplicative litigation of the same issue and because if the ALJ's finding that plaintiff used marijuana were affirmed, plaintiff could be collaterally estopped in this Court, thus obviating the need to relitigate the issue. As a result, the Court stayed these proceedings and administratively closed the case. After the NTSB reversed the Coast Guard's decisions in June 2003, Dresser moved to reopen this case because there was no longer a Coast Guard opinion to form the basis for a collateral estoppel claim by the defendants. The Court reopened the case on July 2, 2003. Defendant now moves this Court to reissue the stay in these proceedings. Defendant contends that whether plaintiff's positive drug test was a result of hemp seed oil ingestion remains an issue that will be decided in the on-going administrative proceedings. Defendant urges this Court to exercise its discretion and again stay these proceedings until the administrative proceedings are completed. The Court heard oral argument on defendant's motion and ordered the parties to file supplemental memoranda on issues raised at oral argument.

II. Discussion

This Court has the inherent power to stay any matter pending before it in the interest of justice and "economy of time and effort for itself, for counsel and for litigants." Laitram Machinery, Inc. v. Carnitech A/S, 908 F. Supp. 384, 387 (E.D. La. 1995) (quoting Landis v. North American Co., 299 U.S. 248, 254, 57 S.Ct. 163, 166 (1936)). A court may stay an action, pending resolution of independent proceedings which bear upon the case, regardless of whether the parallel proceedings are "judicial, administrative, or arbitral in character." Mediterranean Enterprises, Inc. v. Ssangyong Corp., 708 F.2d 1458, 1465 (9th Cir. 1983). The rule does not require that the issues in the other proceedings are necessarily controlling of the action before this Court. Id. Thus, the Court has the discretion to stay these proceedings pending the resolution of the administrative proceedings. Cf. Ricci v. Chicago Mercanfile Exchange, 409 U.S. 289 (1983) (upholding stay pending administrative proceedings); Rogers v. Columbia/HCA of Central Louisiana, Inc., 961 F. Supp. 960, 966-68 (W.D.La. 1937) (applying primary jurisdiction doctrine to stay case pending outcome of hospital peer review proceedings). The potential for the administrative proceedings to have preclusive effect on the issue of plaintiff's marijuana use is a factor favoring a stay. Plaintiff argues, however, that the administrative proceedings cannot have a preclusive effect in this Court and therefore a stay is unwarranted.

As noted in the Court's previous opinion in this case, the Fifth Circuit has held that federal courts must apply federal law to the question of the preclusive effect of a previous federal court proceeding, regardless of the basis of jurisdiction in either the earlier or the present action. See RecoverEdge L.P. v. Pentecost, 44 F.3d 1284, 1290, 1290 n. 11 (5th Cir 1995) (citing Avondale Shipyards, Inc. v. Insured Lloyd's, 786 F.2d 1265, 1269 n. 4 (5th. Cir. 1986)). Although in this case the previous proceedings are not federal court proceedings, courts have recognized the preclusive effect of the final judgment of a federal administrative proceeding, provided that the parties had a fair opportunity to litigate in the earlier proceeding and that certain other requirements are met. See Grace v. Keystone Shipping Co., 805 F. Supp. 436 (E.D. Tex. 1992) (granting preclusive effect to Coast Guard ALJ's finding in administrative hearing in later maritime action) (citing Astoria Fed. Sa v. Loan Ass'n v. Solimino, 501 U.S. 104, 107 (1991); United States v. Utah Constr. Mining Co., 384 U.S. 394, 422 (1966)); see also Castillo v. Railroad Retirement Bd., 725 F.2d 1012, 1014 (5th Cir. 1984) (prior administrative determination that employee was not disabled precluded relitigation in subsequent proceeding); Painters District Council No. 38 v. Edgewood Contracting Co., 416 F.2d 1081, 1083-84 (5th Cir. 1969) (N.L.R.B. finding that union had engaged in an unfair labor practice was entitled to preclusive effect in a subsequent lawsuit). In Grace, the district court held that an ALJ's determination that a seaman possessed marijuana could not be relitigated in a separate proceeding, because it was "judicial" and satisfied the elements of collateral estoppel, namely, that (1) the issues in both proceedings are identical; (2) the issue was actually litigated; and (3) the determination of the issue in the prior litigation was crucial to the judgment in the earlier action. See Id. at 441-42; see also Matter of Levisville Properties, Inc., 849 F.2d 946, 949 (5th Cir. 1988) (listing requirements for federal issue preclusion).

Plaintiff asserts that a future decision from the Coast Guard ALJ cannot form the basis of a collateral estoppel claim because he will not be able to fully and fairly litigate the issue before the ALJ. In support of his argument, plaintiff relies on a policy memorandum issued to the Coast Guard administrative law judges. Plaintiff argues that the policy memo precludes him from raising his hemp oil defense in the administrative proceedings, and therefore the ALJ will not decide the issue of whether the positive drug test was a result of plaintiff's hemp oil consumption. At oral argument and in his supplemental memorandum, plaintiff also argues that the he faces a higher burden of proof in the administrative proceedings, and therefore any decision by the ALJ would not have preclusive effect in this case. Plaintiff also asserts that the issue of collateral estoppel no longer applies because there is no decision in the administrative proceedings on which defendant can base a collateral estoppel argument. The Court addresses each argument in turn.

A. Plaintiff's Hemp Oil Defense

Title 46, Code of Federal Regulations Section 16.201(b) provides: "If any individual fails a chemical test for dangerous drugs under this part, the individual will be presumed to be a user of a dangerous drugs." Plaintiff contends that he will not be able to rebut this presumption with evidence that the positive test resulted from his consumption of hemp oil because after the ALJ's initial finding in his proceedings, the Chief ALJ issued a policy memorandum to the Coast Guard ALJ's that eliminates introduction of evidence pertaining to ingestion of hemp oil to rebut the presumption that the individual is a user of dangerous drugs. Plaintiff argues that because he will be unable to rebut this presumption, he will not have an opportunity to fully and fairly litigate whether he used marijuana in the administrative proceeding. The policy memo states in pertinent part:

to the extent that the hemp product a Respondent allegedly ingested contains any amount of [Tetrahydrocannabinols ("THC")], it is a controlled substance under the [Controlled Substance Act ("CSA"), 21 U.S.C. § 801, et seq.,] and it is a dangerous drug under Coast Guard chemical testing regulations, which incorporates [sic] the CSA by reference. See generally 46 U.S.C. § 16,105. Thus, hemp oil should not be accepted as a defense to the charge of use of a dangerous drug under 46 U.S.C. § 7704[c].
Moreover, accidental or inadvertent ingestion of a food product containing THC will only serve as a valid defense to a charge of use of dangerous drug if the Respondent produces reliable and credible evidence. For instance, in Dresser, Docket No. 08-0062-ARB-98, ALJ Boggs rejected the Respondent's hemp seed oil defense to a charge of use of dangerous drugs where the only evidence that he used hemp oil and the product was innocently ingested was the Respondent's own self serving testimony. Similarly, in Appeal Decision 2546 (SWEENEY), the Vice Commandant upheld the ALJ's rejection of the Respondent's accidental ingestion of brownies laced with marijuana defense where the judge's finding was factually supported and not inherently incredible. . . . Furthermore, in Appeal Decision 2529 (WILLIAMS), the Commandant upheld the ALJ's ruling that inadvertant ingestion of brownies laced with marijuana is insufficient to overcome the presumption of use provided by 46 C.F.R. § 16.201 where the Respondent presented weak, conflicting, and uncorroborated hearsay evidence to support his defense.
Coast Guard Chief Administrative Law Judge Memorandum, dated Oct. 22, 2001. Plaintiff argues that the Coast Guard's policy that "hemp oil should not be accepted as a defense" will preclude him from offering evidence of his hemp oil consumption to rebut the presumption of dangerous drug use. Based on the evidence before it, the Court cannot conclude that plaintiff will be unable to offer evidence of his hemp oil consumption in the administrative proceedings. First, the legal effect of a policy declaration is uncertain. Second, the policy addresses only the defense that hemp oil with THC is not a controlled substance. Here, Dresser's argument is not that he knowingly ingested Hemp Liquid Gold with THC because he believed such THC would not qualify as a controlled substance. Rather, he argues that he ingested the product ignorant that it contained THC. Indeed, the Hemp Liquid Gold literature specifically states that it does not contain THC, and the parties dispute whether it actually contains THC. Thus Dresser's defense will not rely on the argument that he ingested hemp oil that he knew contained THC, as prohibited by the policy memo. The Coast Guard's policy still permits the presentation of evidence of "accidental or inadvertent ingestion of a food product containing THC" to rebut the presumption of dangerous drug use. Id. The policy requires that a defense of accidental or inadvertent ingestion be supported by reliable and credible evidence. Although the memorandum offers no guidance about what constitutes "accidental" or "inadvertent" ingestion, it does cite Dresser's case as an example of a case in which the defense was raised but the ALJ concluded that plaintiff had not proven the defense by reliable and credible evidence. Notably, the memorandum does not cite Dresser's case as an example of a case in which his defense would no longer be permitted. Further, in his appeal decision in respondent Turbeville's proceedings, Appeal Decision 2637 (TURBEVILLE), 2003 WL 1891871, the Vice Commandant noted that the respondent raised an affirmative defense of hemp seed products consumption to rebut the presumption of dangerous drug use at his hearing before the ALJ. The hearing occurred on October 30, 2001, which is after the Chief ALJ Judge issued the above policy memo on October 22, 2001. The ALJ permitted presentation of evidence to support Turbeville's affirmative defense but concluded that the evidence was not credible. In his appeal decision dated March 6, 2003, the Vice Commandant never indicated that the respondent's affirmative defense was improper or disallowed under Coast Guard policy. In light of the statements by the Chief ALJ in the policy memo and the Turbeville decision, it does not appear that plaintiff will be unable to present evidence of hemp oil ingestion as an affirmative defense at the administrative hearing. Accordingly, the Court cannot conclude that plaintiff will not have an opportunity to fully and fairly litigate the issue of whether his positive test result was caused by his hemp oil ingestion upon rehearing before another ALJ in accordance with the NTSB's order.

B. Administrative Legal Standard

As noted above, the issues in both the administrative proceedings and the proceedings in this case must be identical for collateral estoppel to apply. The Fifth Circuit has recognized that for issues to be identical, "[n]ot only the facts, but also the legal standard used to assess them, must be identical." Brister v. A.W.I., Inc., 946 F.2d 350, 354 n. 1 (5th Cir. 1991) (emphasis added). Thus, even if the facts underlying the issues in both proceedings are the same, the issues may not be identical if the second action involves the application of a different legal standard. See RecoverEdge, 44 F.3d at 1291 (citing 18 CHARLES ALAN WRIGHT, ARTHUR R. MILLER EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 4417, 165).

Plaintiff can prove his affirmative defense "by a preponderance of the evidence" to overcome the presumption in the administrative hearing that he was a user of dangerous drugs. 33 C.F.R. § 20.701 (2004). Plaintiff argues that he will suffer prejudice if the Court gives preclusive effect to a finding by the ALJ in light of this standard of proof. See Cobb v. Pozzi, 352 F.3d 79, 101-102 (2nd Cir. 2003) (citing RESTATEMENT (SECOND) OF JUDGMENTS § 28(4) (1982) for the proposition that "relitigation of the issue in a subsequent action between the parties is not precluded . . . [where] [t]he party against whom preclusion is sought had a significantly heavier burden of persuasion with respect to the issue in the initial action than in the subsequent action.") In this Court, plaintiff will attempt to establish that defendant's product caused false positive test result for marijuana/THC. Thus, in both proceedings, he must prove by a preponderance of the evidence that his use of Hemp Liquid Gold produced the positive test result. Accordingly, the standards of proof are the same in both proceedings, and plaintiff's argument that he will be prejudiced if this Court gives preclusive effect to an ALJ decision due to different standards of proof lacks merit.

The Court notes that the regulations that establish the applicable burden of proof in Coast Guard proceedings have been clarified since this Court's previous opinion that stayed this action.

C. Stay of These Proceedings

In this case, the interests of justice, economy and time warrant a stay. It is inherently wasteful for two tribunals to proceed simultaneously to resolve the same issue. Further, plaintiff could be collaterally estopped from relitigating whether he used marijuana if the ALJ determines that he failed to overcome the presumption of marijuana use by a preponderance of the evidence. If this occurs, plaintiff will not be able to pursue his theory of damages, and defendant will move to dismiss this case. In addition, plaintiff's theory of damages is premised on the loss of his license, and a jury may award future damages based on speculation that plaintiff will lose his license. Proceeding with this case before final resolution of the license revocation proceedings could lead to an anomalous result if a jury awards Dresser future damages for the loss of his license but the Coast Guard ultimately does not revoke his license. The issuance of a stay of these proceedings conserves both judicial resources, relieves plaintiff from the burden of litigating the same issue in two fora, and prevents potentially anomalous results.

Plaintiff argues that a stay is premature because there currently is no ALJ decision upon which defendants may base a collateral estoppel argument. The Court previously stayed these proceedings pending the final outcome of the administrative proceedings because those proceedings would decide the issue of plaintiff's marijuana use. When the Court previously stayed these proceedings, the determination of whether defendants could raise arguments of collateral estoppel was still contingent on the final outcome of the administrative proceedings and a conclusion that the issue before this Court was decided in those proceedings. The current situation is analogous — defendants again move the Court to stay the proceedings pending the resolution of on-going administrative proceedings, and the determination of whether collateral estoppel will apply is still dependent on a conclusion that the issue before this Court was decided in those proceedings. Thus, the Court again concludes that the issuance of a stay is appropriate in this case pending the final resolution of the Coast Guard administrative proceedings.

III. Conclusion

For the foregoing reasons, the Court grants defendant's motion to reissue a stay in this case.


Summaries of

Dresser v. Ohio Hempery, Inc.

United States District Court, E.D. Louisiana
Mar 8, 2004
CIVIL ACTION NO. 98-2425 SECTION "R"(5) (E.D. La. Mar. 8, 2004)
Case details for

Dresser v. Ohio Hempery, Inc.

Case Details

Full title:CHRISTOPHER J. DRESSER VERSUS THE OHIO HEMPERY, INC., ET AL

Court:United States District Court, E.D. Louisiana

Date published: Mar 8, 2004

Citations

CIVIL ACTION NO. 98-2425 SECTION "R"(5) (E.D. La. Mar. 8, 2004)

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