Case Name: Armstrong v. City of San Jose
Case No.: 2015-1-CV-287935

On October 24, 2014, City of San Jose (“City”) filed a complaint against Medimarts, Inc. (“Medimarts”) and David Armstrong (“Armstrong”) in City of San Jose v. Medimarts, Inc., et al. (Super. Ct. Santa Clara County, 2014, No. 2014-1-CV-272374) (“the 2014 action”). On April 13, 2015, Medimarts and Armstrong filed a cross-complaint (“XC”) against City, alleging that the imposition of the Marijuana Business Tax (“MBT”) violates their constitutional rights, asserting causes of action for:

1) Violation of rights against self-incrimination pursuant to the Fifth Amendment;
2) Violation of due process rights protected by the Fifth and Fourteenth Amendments;
3) Violation of constitutional rights protected by the Equal Protection Clause of the Fourteenth Amendment; and,
4) Declaratory relief.

On December 18, 2015, Armstrong filed a separate first amended complaint (“FAC”) against City, alleging that the imposition of the MBT violated constitutional rights, asserting causes of action for:

1) Violation of constitutional rights—Equal Protection of the Laws;
2) Violation of the Fourth Amendment;
3) Violation of rights against self-incrimination pursuant to the Fifth Amendment against;
4) Violation of due process rights protected by the Fifth and Fourteenth Amendments;
5) Violation of constitutional rights protected by the Equal Protection Clause of the Fourteenth Amendment;
6) Violation of right to privacy;
7) Violation of the Confidentiality of Medical Information Act;
8) Violation of due process rights—vagueness; and,
9) Declaratory relief.

City demurs to the third through fifth causes of action of the new FAC on the ground that there is another action pending between the same parties on the same causes of action. City also moves to consolidate the remaining causes of action with the 2014 action, on the ground that common questions of law and fact exist as between the two actions.

City’s request for judicial notice of the XC in the 2014 action is GRANTED. (Evid. Code § 452, subd. (d).) Armstrong’s request for judicial notice of his FAC, the first amended complaint in the 2014 action, and the XC of the 2014 action is GRANTED. Armstrong’s request for judicial notice of City’s appellate reply brief is GRANTED as to its existence. (Evid. Code § 452, subd. (d); see also Day v. Sharp (1975) 50 Cal.App.3d 904, 914 (stating that “a court cannot take judicial notice of hearsay allegations as being true, just because they are part of a court record or file… [but a] court may take judicial notice of the existence of each document in a court file”).)

Demurrer to third through fifth causes of action

In opposition to the demurrer, Armstrong contends that: the parties are not identical because the cross-complaint is brought by both Medimarts and Armstrong whereas the instant FAC is only brought by Armstrong; and, the primary rights are not the same because the rights in this action are Armstrong’s individual rights as opposed to those that are tied to the corporation. (See Pl.’s opposition to demurrer (“Opposition”), p.4:16-28, 5:1-28, 6:1-17.)

Here, it is clear that the parties are identical. In the 2014 action, Armstrong and Medimarts filed the XC. In the instant action, Armstrong filed the FAC. Armstrong’s reliance on Williams v. State of California (1976) 62 Cal.App.3d 960, is misplaced as there, the prior case: was no longer pending as the case was finally determined on appeal prior to the instant action; involved different causes of action; and, involved plaintiffs who did not suffer damages as was being asserted in the new case.

Here, the prior case is still pending, the causes of action are identical and arise from the same alleged facts constituting constitutional violations. Further, it should be noted that the FAC’s first allegation is that “MEDIMART alleges:” the allegations of the complaint (see FAC, p.1:19); Plaintiff is asserting his claims “as a collective of individuals” (see FAC, ¶73, 78, 90, 102); and, the damage alleged by the FAC in the instant action is by MediMarts (see FAC, ¶¶ 87 (alleging that “Defendant’s wrongful conduct has injured MediMarts because MediMarts was forced to either admit to countless felonies that it did not commit or cause their existing collective to run afoul of the SJMC”), 88 (alleging that “MediMarts has no adequate remedy at law for the injuries currently being suffered in that it will be impossible for MediMarts to determine the precise amount of damage which MediMarts will suffer if Defendant’s conduct is not restrained”), 97 (alleging that “[i]n failing to provide MediMarts a final hearing on the tax assessment the City has violated its due process rights under 5th and 14th Amendment of the United States Constitution”), 100 (alleging that “MediMarts has no adequate remedy at law for the injuries currently being suffered in that it will be impossible for MediMarts to determine the precise amount of damage which MediMarts will suffer if Defendant’s conduct is not restrained”), 105 (alleging that “[b]ecause MediMarts has been singled out by the current mayor, despite the past mayor stating on television that MediMarts provided an example of the correct way to operate, MediMarts has been treating [sic] differently than other medical marijuana operations”)). The allegations are largely identical, with identical issues. (Compare XC, ¶¶ 33-36 with FAC, ¶¶ 79-80, 82-83; compare also XC, ¶¶ 43-50 with FAC, ¶¶ 91, 93, 95-98, 101; compare also XC, ¶¶ 52-56 with FAC, ¶¶ 103-104, 107-109; compare also XC, ¶¶ 6-24 and 26-31 with FAC, ¶¶ 9, 12, 14-15, 22-23, 28, 31-32, 40, 42-43, 45-46, 52-53, 61-63.) Plaintiff’s arguments to the contrary are without merit. The demurrer to the third through fifth causes of action is SUSTAINED without leave to amend.

Motion to consolidate first, second, and sixth through ninth causes of action

“When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.” (Code Civ. Proc. § 1048, subd. (a).)

In opposition to the motion, Armstrong asserts that “[i]f these actions were consolidated, the court would have to consider throughout litigation whether ARMSTRONG’s personal rights are at issue or only Armstrong as an agent of MediMarts, Inc…. [c]onversely, MediMarts, Inc. is not litigating ARMSTRONG’s personal rights and would be left as a bystander on issues and allegations pertaining to the instant complaint.” (Opposition, p.6:18-27.) Whether the cases are consolidated into a single action or remain two separate actions, the Court will have to consider these issues. In fact, this is precisely why consolidation is favored in this situation: if a trier of fact in the instant action found against Armstrong, contending that MediMarts and not Armstrong suffered damage, and if a trier of fact in the 2014 action ultimately found that only Armstrong could have suffered damage, there would be a potential of inconsistent results. Armstrong’s arguments are without merit. (See also Jud Whitehead Heater Co. v. Obler (1952) 111 Cal.App.2d 861, 867 (stating that “the fact that all the parties are not the same… [or] that evidence in the one case might not have been admissible in the other does not bar a consolidation”).)

The motion to consolidate the remaining causes of action—the first, second, and sixth through ninth causes of action—is GRANTED.

The earlier action, the case of City of San Jose v. Medimarts, Inc., et al. (Super. Ct. Santa Clara County, 2014, No. 2014-1-CV-272374) shall be the lead case, and all further pleadings shall be filed in the lead action. This order shall be filed in both the instant action and the lead case.

The Court will prepare the order.